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EXHIBIT 10.8
OPTION AGREEMENT
THIS AGREEMENT is made as of November 5 1998 by and between XXXXXXX
BROADCASTING OF NEW MEXICO, LLC, a Missouri limited liability company, 0000
Xxxxx Xxxxxxxxxxxx, Xx. Xxxxx, Xxxxxxxx 00000 ("OPTIONEE") and ACME TELEVISION
OF NEW MEXICO, LLC, a Delaware limited liability company, 00000 Xxxxx Xxxxxxxxx,
Xx. Xxxxx, Xxxxxxxx 00000 ("OPTIONOR").
W I T N E S S E T H:
WHEREAS, affiliates of Optionor and Optionee entered into and
consummated an Asset Purchase Agreement in which an affiliate of Optionor
acquired certain assets of KWBQ-TV, Santa Fe, New Mexico on December 15, 1997;
and
WHEREAS, in connection with the KWBQ-TV transaction, ACME Television
Holdings, LLC ("ACME") agreed to lease studio space from Optionee; and
WHEREAS, by Memorandum dated August 14, 1998 (the "Memorandum") ACME
agreed that, in exchange for a release from the obligation to lease studio space
from Optionee, ACME would acquire certain real property in Albuquerque, New
Mexico from Optionee for use as the KWBQ-TV studio, but expressly subject to and
conditioned upon the grant of an option (the "Option") by Optionee to reacquire
such real property at specific times in the future; and
WHEREAS, by Letter Agreement dated September 29, 1998 (the "Letter
Agreement"), ACME and Optionee agreed to further terms and conditions with
respect to the Option as set forth therein; and
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WHEREAS, ACME has assigned all of its rights and obligations with
respect to the Memorandum and the Letter Agreement to a subsidiary, the
Optionor; and
WHEREAS, among other things, Optionor will obtain significant accounting
and tax benefits as the owner of such real property; and
WHEREAS, as described in the Memorandum, Optionee entered into a
Purchase Agreement with a third party for certain improved real property located
at 0000 Xxxxxxxxxx, XX, Xxxxxxxxxxx, Xxx Xxxxxx described on Exhibit "A"
attached hereto (hereinafter referred to as the "Premises"); and
WHEREAS, Optionor entered into a Purchase Agreement with Optionee with
respect to the Premises; and
WHEREAS, the closing of the purchase by Optionor of the Premises
occurred on November 5, 1998; and
WHEREAS, the parties hereto intend to be bound by the provisions of this
Agreement and set forth their entire mutual understanding with respect to the
terms of the option as contemplated herein;
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. GRANT OF OPTION. For $10.00 and other valuable consideration,
including Optionee's release of ACME's obligation to enter into a lease with
Optionee, Optionor does
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hereby grant to Optionee the sole and exclusive option to purchase from Optionor
the Premises aforesaid on the terms hereinafter set forth.
2. OPTION PERIOD. The term of the Option will commence on November
6, 1998 and terminate at 11:59 p.m. on November 5, 2013.
3. EXERCISE OF OPTION. (a) Except as described in (b) below, the
Option shall be exercisable by Optionee during the period from November 6, 2008
through December 31, 2008 and, if not previously exercised, during the period
from November 6, 2013 through December 31, 2013 (the "Option Exercise Period").
Optionee may exercise the Option by giving written notice to that effect to
Optionor at any time during the Option Exercise Period. In that event, closing
of title will take place not more than forty-five (45) days after Optionor's
receipt of Optionee's exercise of the option, unless otherwise extended upon
mutual agreement by Optionor and Optionee. Neither party will unreasonably
withhold its consent to extend the closing date should it become necessary to do
so. The terms and conditions of the sale are described in Paragraph 8
hereinafter.
(b) Optionee may also exercise the Option at any time within
sixty (60) days after the occurrence of any of the following events ("Option
Events"):
(i) any affiliate of Optionor has completed a public
offering of equity securities pursuant to the Securities Act of 1933, as amended
(but not including any exempt transaction as permitted by Section 3 or Section 4
thereof); or
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(ii) notice to Optionee, which shall promptly be
given by Optionor, that any mortgage with respect to the Premises is subject to
foreclosure by a Lender (as defined below);
(iii) notice to Optionee that there has been a change
in control of Optionor. For purposes hereof, a change of control shall include a
sale or transfer of all or substantially all of Optionor's assets, a merger or
consolidation in which Optionor or an affiliate thereof is not the survivor, or
any transaction or series of transactions after which at least 50% of the voting
control of Optionor is held directly or indirectly by persons other than the
original investors in ACME. In the event Optionee does not exercise the option
after the occurrence of an Option Event, the Option shall be deemed to be
cancelled.
4. OPTIONOR'S WARRANTIES. Optionor represents and warrants to and
agrees with Optionee as follows:
(a) That Optionor has the authority to enter into this
Agreement and all necessary actions have been taken to authorize Optionor to
enter into this Agreement. If Optionee exercises the option, the Optionor agrees
to furnish, at closing, such evidence of authority to consummate the sale as
shall be reasonably acceptable to Optionee's counsel and the title company.
(b) That there are no recorded or unrecorded contracts,
leases and/or options pertaining to or affecting the sale of the Premises or any
part thereof other than this Agreement and such loan agreements ("Loan
Agreements") to which Optionor may be subject with a lender or lenders to
Optionor or its parent or affiliated entities (a "Lender").
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(c) If Optionee exercises the Option, the warranties and
representations contained herein will be true as of the time of closing as if
repeated and made to speak at the time.
(d) Optionor warrants that it is the sole owner of the
Premises.
5. RECORDING OF OPTION AGREEMENT OR A MEMORANDUM THEREOF. Optionor
and Optionee agree that a memorandum containing certain material terms of the
Option in form reasonably satisfactory to Optionor may be recorded by Optionee,
at its sole cost and expense, in the real estate records of Bernallilo County,
New Mexico. Optionee shall, upon the termination of this Agreement, execute such
discharges as requested by Optionor.
6. EMINENT DOMAIN. In the event of a partial taking by eminent
domain or condemnation, this Option shall remain in full force and effect, the
Purchase Price shall be equitably reduced in proportion to the decrease in the
value of the Premises, and Optionor shall retain all rights to all condemnation
or other awards. Subject to the preceding sentence, Optionee shall be entitled
to file its own claim with respect to any diminution of the value of the
Premises affected by this Option.
7. CASUALTY LOSS. In the event the Premises are substantially
damaged and rendered unusable by a casualty event such as fire, earthquake or
similar occurrence, Optionor may, in its sole discretion (i) abandon the
Premises in which event the Option shall be deemed to be cancelled, unless,
within forty-five days after notice, Optionee exercises the Option, in which
case the Purchase Price shall be reduced by the amount of the proceeds of
Optionor's insurance paid with respect to such casualty or (ii) rebuild the
Premises, in which event the Option shall remain in effect.
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8. TERMS AND PROVISION OF SALE. The parties hereto agree that if
and when Optionee exercises its Option, Optionee shall purchase the Premises and
Optionor shall sell the Premises on the following terms and conditions. For
purposes of the following provisions, Optionor shall be referred to as "Seller"
and Optionee shall be referred to as "Buyer":
(a) Purchase price - $460,000. The purchase price shall be
paid at closing by certified or cashier's check.
(b) Closing shall take place at a title insurance company
located in Bernallilo County, New Mexico, designated by the Buyer, or at such
other place as may be agreed upon by the parties hereto.
(c) Seller shall convey title by General Warranty Deed and
shall provide an adequate affidavit of title.
(d) Title shall be good and marketable and free and clear of
all claims and rights of others, except as expressly permitted herein or such
rights as do not materially interfere with Buyer's use and enjoyment of the
Premises, including covenants and easements now existing or entered in the
ordinary course with respect to the Premises.
(e) The premises shall be conveyed subject to then current
real estate taxes and such taxes shall be prorated as of the date of closing.
(f) Closing costs, title fees and related expenses shall be
paid by Buyer.
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9. LEASE OF PREMISES. In the event that Optionee exercises the
Option, for a period of 30 days following the exercise of the Option, Optionor
or any successor to or assignee of Optionor's rights hereunder, specifically
including any Lender granted a mortgage, security interest or collateral
assignment, with respect to the Premises or the personal property therein, shall
have the right but not the obligation to enter into a lease of the Premises on
the following terms: a triple net basis; an initial term of five years with one
five year renewal option; and at the rental amount described below:
(a) In the event the Option has been exercised pursuant to
Paragraph 3(b) hereof, the monthly rent for the Premises shall be $4,600.00 (the
"Base Rent") per month increased (but in no event decreased) by a percentage
equal to the percentage increase in the Consumer Price Index. All Urban
Consumers, Albuquerque Metropolitan Statistical Area (or any successor or
substitute index) ("Adjustment") between the date of this Agreement and the
commencement date of the lease, with subsequent Adjustments occurring as of
January 1 of the relevant year.
(b) At any time after November 6, 2008, the fair market
rent. In the event the parties cannot agree upon the fair market rent, such rent
shall be determined by final and binding arbitration. Pending agreement on or
determination of the fair market rent by arbitration, Lessee shall pay the Base
Rent plus Adjustment, and upon determination of the fair market rent, such
amount shall be applied retroactively to November 6, 2008 with payment to be
made to Lessor of the balance due within ten days after such determination, or,
as the case may be, recoupment by Lessee of any excess payment to be made by
credits towards future rent amounts, provided, that such credit shall not be
applied in any one month for an amount greater than 50% of the monthly rent.
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10. NOTICES. Any notice required, permitted or appropriate hereunder
shall be served upon the respective parties by personal delivery or by certified
mail, return receipt requested, at the addresses indicated above, and shall be
effective as of the date of delivery or mailing. All notices required to be
given hereunder shall be in writing.
11. EFFECT OF AGREEMENT. This Option Agreement shall inure to the
benefit of and be binding upon the parties hereto, and their respective
successors and assigns.
12. ENTIRE AGREEMENT. This Option Agreement represents the entire
agreement and understanding between the parties hereto and no oral
representations or promises have been made with respect thereto.
13. MODIFICATION OF AGREEMENT. This Option Agreement may not be
altered or modified orally, except by written agreement executed by the parties
hereto.
14. AGREEMENT. This Agreement and the rights under the Option may
not be assigned by a party except (i) to an affiliate of such party, or (ii)
with the express written consent of the other party, which shall not be
unreasonably withheld, or (iii) as otherwise provided herein, specifically
including a collateral assignment to a Lender.
15. COSTS AND EXPENSES. In the event either party brings an action
to enforce its rights under this Agreement, the prevailing party shall be
entitled to recover all costs and expenses including reasonable attorney's fees.
16. BROKERS. Each party warrants to the other that it has not dealt
with or incurred liability for any commissions relating to this Option or the
sale contemplated hereby. Each party
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agrees to indemnify the other from any claims and expenses of brokers claiming a
commission based on claims of having dealt with the indemnifying party.
17. TRANSFER OR CHANGE IN PREMISES. Optionor warrants and covenants
that during the Option term it will not sell, contract to sell, lease or
sub-lease the Premises, nor will it take any actions which change the allowed
use of the Premises as a commercial office building and/or television studio.
Notwithstanding any other provision of this Agreement, Optionor may (i) enter
into customary Loan Documents, specifically including mortgages, or security
agreements or collateral assignments with respect to the Premises, personal
property located therein or this Option Agreement, provided that any such Lender
shall acknowledge in writing the first priority of Optionee's rights under this
Agreement and Optionee shall acknowledge in writing Lender's rights under this
Agreement and any Loan Agreement; or (ii) sell the Premises to any purchaser of
all or substantially all of the assets of KWBQ-TV subject to Optionee's rights
and obligations under this Agreement.
18. FURTHER ACTS. The parties agree to execute such further
documents and take such further actions as may be reasonably required to carry
out the provisions and intent of this Agreement.
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IN WITNESS WHEREOF, the parties have hereunto set their hands and seals and
caused this
Option Agreement to be executed the day and year first above written.
WITNESS: ACME TELEVISION
OF NEW MEXICO, LLC
By: /s/ Xxxxxx Xxxxx
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Name: Xxxxxx Xxxxx
Title:
XXXXXXX BROADCASTING OF
NEW MEXICO, LLC
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
Title:
STATE OF ____________ )
) ss.
COUNTY OF _________ )
I CERTIFY that on ________________, 1998, _________________________
personally came before me, _____________________________, and acknowledged under
oath, to my satisfaction, that this person: (a) was the maker of the attached
instrument; (b) was authorized to and did execute this instrument as
_________________ of Xxxxxxx Broadcasting of New Mexico, LLC, the entity named
in this instrument; and (c) executed this instrument as the act of the entity
named in this instrument.
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Notary Public
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STATE OF _____________ )
) ss.
COUNTY OF __________ )
I CERTIFY that on ________________, 1998, ______________________
personally came before me, ______________________________, and acknowledged
under oath, to my satisfaction, that this person: (a) was the maker of the
attached instrument; (b) was authorized to and did execute this instrument as
______________ of ACME Television of New Mexico, LLC, the entity named in this
instrument; and (c) executed this instrument as the act of the entity named in
this instrument.
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Notary Public
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