EXHIBIT 10.6
PUT OPTION AGREEMENT
THIS PUT OPTION AGREEMENT, dated as of November 30, 2001 by and between
NATIONAL SERVICE INDUSTRIES, INC., a California corporation ("Landlord") and
ACUITY BRANDS, INC., a Delaware corporation ("Tenant").
In order to induce Landlord to enter into that certain Lease Agreement
dated of even date herewith by and between Landlord and Tenant (the "Lease"),
Tenant has agreed to grant to Landlord the right to require Tenant to purchase
the "Property" (as hereinafter defined), subject to the terms and conditions of
this Agreement, and the parties desire to provide for said option on the terms
and conditions hereinafter set forth.
NOW, THEREFORE, for and in consideration of TEN AND NO/100 DOLLARS
($10.00) paid by Landlord to Tenant, the execution of the Lease, the foregoing
premises, the mutual covenants and agreements set forth herein, and other good
and valuable consideration, all of which each party respectively agrees
constitutes sufficient consideration received at or before the execution hereof,
the parties hereto do hereby agree as follows:
1. DEFINITIONS AND MEANINGS.
1.1 Definitions. In addition to any other terms whose definitions
are fixed and defined by this Agreement, each of the following defined terms,
when used in this Agreement with an initial capital letter, shall for purposes
of this Agreement have the meaning ascribed thereto by this Paragraph 1:
1.1.1 "Agreement" means this Put Option Agreement, together
with all exhibits attached hereto.
1.1.2 "Closing" means the consummation of the purchase and
sale of the Property contemplated by this Agreement by the deliveries
required under Paragraph 7 hereof if Landlord exercises the Put Option.
1.1.3 "Closing Date" means the time and date, established
under Paragraph 7 hereof, when the purchase and sale contemplated by
this Agreement is to be consummated if Landlord exercises the Put
Option, as such date may be extended by mutual agreement of the parties
or pursuant to the provisions of this Agreement.
1.1.4 "Date of this Agreement" means the date of the Lease.
1.1.5 "Exercise Deadline" means the deadline by which
Landlord must exercise the Put Option, as described in Paragraph 2
hereof.
1.1.6 "Existing Exceptions" means the encumbrances which
affect Landlord's title to the Property and which are set forth in
Exhibit B attached hereto, together with the Lease itself, together
with such additional encumbrances on the title to the Property as are
created by or at the request or with the consent of Tenant in
accordance with the terms of the Lease, exclusive, however, of any
mortgage, liens, deeds to secure debt or other loan documents
encumbering fee title to the Property.
1.1.7 "Permitted Exceptions" means (a) the Existing
Exceptions (other than any liens, mortgages, deeds to secure debt, or
other loan documents encumbering fee title to the Property which shall
be satisfied and canceled of record on or before the Closing) and any
matters affecting title to the Property approved by Tenant in writing
pursuant to Section 4.1 of this Agreement; (b) all other matters
affecting title approved in writing by Tenant, and (c) ad valorem taxes
for the calendar year of Closing not yet due and payable.
1.1.8 "Property" means that tract or parcel of land, as
more particularly described in Exhibit "A" to this Agreement, attached
hereto and made a part hereof by this reference, together with all
appurtenances, rights, easements, rights-of-way, tenements and
hereditaments incident thereto.
1.1.9 "Purchase Price" means the amount to be paid by
Tenant to Landlord for the Property as provided in Paragraph 3 hereof.
1.1.10 "Put Option" means the option granted to Landlord to
require Tenant to purchase the Property pursuant to Paragraph 2 hereof
and the provisions of this Agreement.
1.1.11 "Survey" means the boundary survey of the Property
prepared at Tenant's expense as provided in Paragraph 5 hereof.
1.1.12 "Title Objection" and "Title Objections" mean any
deeds to secure debt, mortgages, deeds of trust, liens, financing
statements, security interests, easements, leases, restrictive
covenants, agreements, options, and other encumbrances which affect
Landlord's title to the Property or impair the marketability of
Landlord's title to the Property, excluding, however, the Existing
Exceptions.
2. GRANT OF OPTION. Tenant hereby grants to Landlord the right
and option to require Tenant to purchase the Property pursuant to the terms and
conditions of this Agreement (said option being herein referred to as the "Put
Option"). The Put Option shall be exercisable by Landlord giving written notice
(the "Exercise Notice") to Tenant at any time after June 1, 2002 but no later
than May 31, 2003 (said exercise deadline is hereinafter referred to as the
"Exercise Deadline"). In the event Landlord fails to give written notice to
Tenant on or before the Exercise Deadline, then the Put Option and this
Agreement shall terminate and be of no further force and effect. In the event
the Put Option is exercised by Landlord pursuant to the
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provisions of this Paragraph 2, then the provisions of this Agreement relating
to the Put Option shall be in force and effect, and Landlord shall sell and
Tenant shall buy the Property pursuant to such terms and conditions.
3. PURCHASE PRICE. In the event that Landlord exercises the Put
Option, the Purchase Price of the Property shall be Eighteen Million Seven
Hundred Thousand Dollars and 00/100 ($18,700,000) (the "Purchase Price"). At
Closing under the Put Option, Tenant shall pay the Purchase Price by cash,
federal funds check, federal funds wire transfer or cashier's check drawn on a
metropolitan Atlanta, Georgia bank. Provided Landlord has not otherwise become
entitled to the same pursuant to the Lease prior to the Closing, Tenant shall
receive a credit against the Purchase Price equal to any prepaid rent, prorated
as of the Closing Date.
4. TITLE EXAMINATION AND OBJECTIONS.
4.1 Title Examination and Policy. Landlord shall be
obligated to deliver title to the Property to Tenant such that Tenant's
title company, selected by Tenant and approved by Landlord, which
approval shall not be unreasonably withheld (the "Title Company") shall
be willing to insure Tenant's title to the Property in the amount of
the Purchase Price on the then standard Georgia form of Owner's title
insurance insuring marketability of title, subject only to the
Permitted Exceptions. Tenant shall have the title to the Property
examined and give written notice to Landlord within thirty (30) days
following Tenant's receipt of the Exercise Notice of any Title
Objections disclosed by such initial examination or by a survey of the
Property other than the Existing Exceptions. If Tenant fails to give
any such notice with respect to any Title Objections which appear of
record, then Tenant shall be deemed to have waived such Title
Objections. Thereafter, Tenant may re-examine the title to the Property
and may have surveys prepared or updated at any time and from time to
time up to and through the Closing Date and may give Landlord written
notice of any additional Title Objections which appear of record after
the Exercise Deadline.
4.2 Failure to Correct Title Objections. In the event
Landlord fails to satisfy or correct on or before the Closing Date any
Title Objection of which Landlord is notified, as provided above in
Paragraph 4.1, the Closing Date shall be extended for five (5) days and
prior to the expiration of such five (5) day extension Tenant may elect
by written notice to Landlord one of the following:
4.2.1 To waive such Title Objection and to close
the transaction in accordance with the terms of this
Agreement; provided, however, that with respect to any Title
Objection that constitutes a monetary lien (including any deed
to secure debt, mortgage, deed of trust or other security
interest), Landlord shall be required to deposit in escrow
with the Title Company (failing which Tenant may deposit with
the Title Company out of the sales proceeds that would
otherwise be payable to Landlord and receive a credit for the
same against the Purchase Price) such amount as the Title
Company shall reasonably
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estimate to be necessary to satisfy or to remove such Title
Objection so that the Title Company will insure over such
Title Objection and Landlord shall thereafter diligently
endeavor (which may include paying any additional sums as may
be necessary) to have such Title Objection so satisfied or
removed pursuant to the terms of an escrow agreement to be
entered into at the Closing between Landlord, Tenant, and the
Title Company.
4.2.2 To elect not to purchase the Property, in
which event neither Landlord nor Tenant shall have any further
rights, duties, or obligations under this Agreement with
respect to the Property.
5. SURVEY. Tenant may, at Tenant's expense, have the Property
accurately surveyed by a Georgia licensed surveyor or engineer reasonably
acceptable to Landlord to show the actual boundaries of the Property. Upon
receipt of such survey, Tenant shall promptly deliver a print of such survey to
Landlord, and such survey shall constitute the "Survey" hereunder.
6. THE CLOSING.
6.1 Closing Date. The Closing shall be held at 2:00 p.m. on the
forty-fifth (45th) day after Tenant receives the Exercise Notice, at the offices
of King & Spalding, 191 Peachtree Street, N.E., Atlanta, Georgia 30303-1763, or
at such earlier time and date and at such other location in the Atlanta,
Georgia, area as the parties shall agree.
6.2 Deliveries At Closing. On the Closing Date, the Closing shall
occur as follows, subject to satisfaction of all of the terms and conditions of
this Agreement:
6.2.1 Landlord shall convey good and marketable title to
the Property to Tenant, without exception for any Title Objections
other than the Permitted Exceptions, by limited warranty deed
containing warranties of title, excepting only the Permitted Exceptions
from such warranty, duly executed, witnessed, and notarized and in
recordable form.
6.2.2 Landlord shall deliver to Tenant an affidavit
addressing such matters the Title Company shall reasonably require in
order to insure Tenant's good and marketable title to the Property.
6.2.3 Landlord shall deliver to Tenant copies of such
surveys, site plans, and plans and specifications relating to the
Property as are in the possession of Landlord or to which Landlord has
reasonable access.
6.2.4 Landlord shall deliver to Tenant either (i) a
certificate duly executed by Landlord and certifying that Landlord is
not a foreign person for purposes of the Foreign Investment in Real
Property Tax Act (hereinafter referred to as "FIRPTA"), as amended
through the date of Closing, or (ii) a withholding certificate from the
Internal Revenue
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Service to the effect that Landlord is exempt from withholding tax on
the Purchase Price under FIRPTA. If neither of the above certificates
is delivered, Tenant shall, at Closing, deduct and withhold such tax
amounts as are required under FIRPTA.
6.2.5 Landlord shall deliver to Tenant a certificate in
accordance with O.C.G.A. ss. 48-7-128, duly executed by Landlord and
certifying that Landlord is a resident of the State of Georgia or is
otherwise exempt from Georgia withholding tax.
6.2.6 Concurrently with Landlord's deliveries at the
Closing, Tenant shall pay to Landlord the Purchase Price as provided in
Paragraph 3.
6.3 Closing Costs. At the Closing, Landlord shall pay any transfer
taxes, documentary stamp fees or other similar taxes or fees imposed in
connection with the transfer of the Property and/or the recording of the deed.
In addition, Landlord and Tenant shall respectively pay the following costs and
expenses:
6.3.1 Tenant shall pay (a) rent under the Lease prorated
through the date of Closing, (b) the fees and expenses of Tenant's
attorneys, (c) all recording and filing fees for all recordable
instruments executed and delivered by Landlord or Tenant at the Closing
pursuant to the terms hereof, (d) title examination fees or charges
incurred by Tenant, (e) premiums for any owner's or lender's title
insurance policy or policies obtained by Tenant, (f) the cost of
Survey, and (g) any other costs and expenses actually incurred by
Tenant.
6.3.2 Landlord shall pay (a) the Georgia real estate
transfer tax applicable to the transaction, (b) the fees and expenses
of Landlord's attorneys and (c) any other costs and expenses actually
incurred by Landlord.
7. CONDEMNATION.
7.1 Condemnation. In the event of any Taking that materially
interferes with the use of the Property at that time, at any time after the
Exercise Notice and prior to the Closing Date, then Tenant shall have the
option, exercisable by notice to Landlord within thirty (30) days after
receiving notice from Landlord of such event, to terminate this Agreement
notwithstanding any prior exercise of the Put Option, provided that in the
absence of such an election by Tenant this Agreement shall continue in full
force and effect, the Purchase Price shall not be reduced, and Landlord at
Closing shall pay over to Tenant all condemnation awards collected by Landlord
and shall assign to Tenant all rights of Landlord in any uncollected
condemnation award.
7.2 Notice of Condemnation or Casualty. Landlord shall notify
Tenant upon Landlord's receiving notice of the occurrence or existence of any
damage, destruction, condemnation, or threat of condemnation affecting the
Property.
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8. NO BROKER. Tenant and Landlord represent and warrant to each
other that they have not discussed this Agreement or the subject matter hereof
with any real estate broker, agent, or salesman, so as to create any legal right
in any such broker, agent, or salesman to claim a real estate commission or
similar fee with respect to the conveyance of the Property and the other
transactions contemplated by this Agreement. Tenant and Landlord hereby
indemnify each other against, and agree to hold, save, and defend each other
harmless from, any liability or claim (and all expenses, including attorney's
fees, incurred in defending any such claim or in enforcing this indemnity) for a
real estate brokerage commission or similar fee or compensation arising out of
or in any way connected with any claimed agency or cooperative relationship with
the indemnitor and relating to this Agreement or the purchase and sale of the
Property. The foregoing indemnity shall survive the recision, cancellation,
termination, or consummation of this Agreement.
9. DEFAULT.
9.1 Landlord Default. If, after the exercise of the Put Option,
the purchase and sale of the Property contemplated by this Agreement is not
consummated on account of a Landlord Default, then Tenant shall have the right
to pursue any and all rights and remedies available to Tenant at law, in equity,
or under this Agreement, including, without limitation, the right to seek
specific performance of this Agreement against Landlord.
9.2 Tenant Default. If, after the exercise of the Put Option, the
purchase and sale of the Property contemplated by this Agreement is not
consummated because of a Tenant Default, then Landlord shall have right to
pursue any and all rights available to Landlord at law, in equity, or under this
Agreement, including, without limitation, the right to seek specific performance
of this Agreement against Tenant. Notwithstanding anything to the contrary
contained in this Agreement or the Lease, a Tenant Default shall under no
circumstances be or give rise to an Event of Default under the Lease, and the
Lease shall remain in full force and effect following a Tenant Default.
9.3 Definition of Landlord Default. "Landlord Default" means the
default or failure or refusal of Landlord to perform under this Agreement, and
the continuance of such default, failure or refusal to perform for fifteen (15)
days after Tenant has given Landlord Notice of such default or failure or
refusal to perform.
9.4 Definition of Tenant Default. "Tenant Default" means Tenant's
default or failure or refusal to perform under this Agreement, and the
continuance of such default or failure or refusal to perform for fifteen (15)
days after Tenant has given Landlord Notice of such failure.
10. TERMINATION OF LEASE. Notwithstanding anything contained in
this Agreement or the Lease to the contrary, in the event Tenant suffers or
causes a default past applicable notice and cure periods under the Lease and
Landlord terminates the Lease as a result
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of such default, then this Agreement shall terminate and be of no further force
and effect from and after the date of such termination of the Lease.
11. MISCELLANEOUS.
11.1 Governing Law. This Agreement shall be construed, interpreted
and enforced in accordance with the laws of the State of Georgia.
11.2 Notices. Any notice, request or other communication (a
"notice") required or permitted to be given hereunder shall be in writing and
shall be delivered by hand delivery, by reputable courier (such as United Parcel
Service or Federal Express), by telecopy or mailed by United States registered
or certified mail, return receipt requested, postage prepaid and addressed to
each party at its address as first set forth below. Any such notice shall be
considered given on the date of (i) such hand delivery, (ii) deposit with such
courier for same day or next business day delivery, (iii) actual receipt of
telecopy or (iv) deposit in the United States mail, but the time period (if any
is provided herein) in which to respond to such notice shall commence on the
date of hand or courier delivery or on the date received following telecopy or
deposit in the United States mail as provided above. Rejection or other refusal
to accept or inability to deliver because of changed address of which no notice
was given shall be deemed to be receipt of the notice. By giving at least five
(5) days' prior written notice thereof, any party may from time to time and at
any time change its mailing address hereunder. Any notice, request or other
communication hereunder of any party may be given by such party's counsel.
Landlord:
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National Service Industries, Inc.
1420 Peachtree Street, N.E.
Atlanta, Georgia 30309-3002
Attn: General Counsel
Telecopy No.: 404-853-1015
Tenant:
------
Acuity Brands, Inc.
1420 Peachtree Street, N.E.
Atlanta, Georgia 30309-3002
Attn: General Counsel
Telecopy No.: 404-853-1415
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11.3 Entire Agreement; Modification. This Agreement supersedes all
prior discussions and agreements between Landlord and Tenant with respect to the
Put Option and contains the sole and entire understanding between Landlord and
Tenant with respect to the Put Option. All promises, inducements, offers,
letters of intent, solicitations, agreements, commitments, representations and
warranties heretofore made between such parties with regard to the Put Option
are merged into this Agreement. This Agreement shall not be modified or amended
in any respect except by a written instrument executed by or on behalf of each
of the parties to this Agreement.
11.4 Survival. This Agreement shall not be merged into any of the
instruments or documents executed and delivered at the Closing, but shall
survive the Closing, and the provisions, representations and warranties made
herein shall remain in full force and effect.
11.5 Exhibits. Each and every exhibit referred to or otherwise
mentioned in this Agreement is attached to this Agreement and is and shall be
construed to be made a part of this Agreement by such reference or other mention
at each point at which such reference or other mention occurs, in the same
manner and with the same effect as if each exhibit were set forth in full and at
length every time it is referred to or otherwise mentioned.
11.6 Captions. All captions, headings, Article, Section and
subsection numbers and letters and other reference numbers or letters are solely
for the purpose of facilitating reference to this Agreement and shall not
supplement, limit or otherwise vary in any respect the text of this Agreement.
[SIGNATURES ON THE FOLLOWING PAGES]
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IN WITNESS WHEREOF, the parties hereto have duly signed, sealed, and
delivered this Agreement.
LANDLORD:
NATIONAL SERVICE INDUSTRIES, INC.,
a California corporation
By: /s/ Brock A. Hattox
--------------------------------
Brock A. Hattox
Executive Vice President and
Chief Financial Officer
TENANT:
ACUITY BRANDS, INC.
a Delaware corporation
By: /s/ James S. Balloun
--------------------------------
James S. Balloun
Chairman, President and
CEO
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