OPTION AGREEMENT
THIS OPTION AGREEMENT (this "Option Agreement"), dated as of
November ___, 1997, is by and between ENTERTAINMENT PROPERTIES TRUST, a
Maryland real estate investment trust having an address at 0000 Xxxxxxxxx
Xxxxxx, Xxxxxx Xxxx, Xxxxxxxx, 00000 ("Grantee"), and CLIP FUNDING, LIMITED
PARTNERSHIP, a Delaware limited partnership having an address at World
Financial Center, North Tower-10th Floor, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000-0000 ("Grantor").
W I T N E S S E T H
WHEREAS, Grantee and American Multi-Cinema, Inc. ("AMC") have
requested Grantor to grant to Grantee a non-assignable option to purchase (a)
Grantor's interest in the land and the improvements thereon known as Gulf
Pointe 30 located in Houston, Texas ("Option Property I") which is legally
described on Exhibit A attached hereto and made a part hereof by this
reference; (b) Grantor's interest in the land and the improvements thereon
known as Mesquite 30 located in Mesquite, Texas ("Option Property II") which
is legally described on Exhibit B attached hereto and made a part thereof by
this reference; and (c) Grantor's interest in the land and the improvements
thereon known as Hampton Town Center 24 located in Norfolk, Virginia ("Option
Property III") which is legally described on Exhibit C attached hereto and
made a part hereof by this reference; (Option Property I, Option Property II,
and Option Property III are hereinafter referred to individually as an
"Option Property" and collectively as the "Option Properties"); and
WHEREAS, prior to the date hereof, Grantor has executed a mortgage
and related security interests (the "Security Interest") with respect to each
Option Property in favor of one or more lenders (the "Assignee"); and
WHEREAS, Grantor is willing to grant to Grantee a personal,
non-assignable option to purchase Grantor's interest in the Option
Properties, exercisable from time to time with respect to one or more Option
Properties in any combination, all on the terms and conditions hereinafter
set forth;
NOW, THEREFORE, Grantor and Grantee hereby agree as follows:
1. GRANT OF OPTION. Subject to the conditions contained in this
Option Agreement, Grantor hereby grants to Grantee a personal, non-assignable
option to purchase Grantor's interest in the Option Properties (the "Option")
on or before December 20, 1998 (the "Option Termination Date"). The Option
may be exercised from time to time with respect to one or more Option
Properties in any combination. Each exercise of
the Option with respect to an Option Property shall be made no earlier than
the date on which the megaplex theatre located on such Option Property opens
to the public for business (the "Opening Date") and no later than the date
which is the earlier of (i) ninety (90) days following the Opening Date for
such Option Property or (ii) sixty-one (61) days prior to the Option
Termination Date by irrevocable written notice (the "Option Notice") to
Grantor at its address given above, sent by certified mail, return receipt
requested, and specifying a date no earlier than sixty (60) days after the
date of such Option Notice and no later than a date which is the earlier of
(x) ninety (90) days following the date of such Option Notice or (y) the
Option Termination Date for closing on the Option Property or Option
Properties specified in such Option Notice; provided that each exercise of
the Option and each closing thereunder shall be subject to the conditions
that, (a) on the date of closing, such Option Property specified shall be
leased pursuant to the terms, conditions, and provisions of the Lease
Agreement dated as of July 25, 1996 (the "Lease") between Grantor, as lessor,
and AMC, as lessee, (b) the date specified for such closing shall be the
twentieth (20th) day of a calendar month, time being of the essence; (c) at
the time of delivery of such Option Notice and on the date of closing on each
such Option Property, there shall be no Event of Default or Potential Default
(as each such term is defined in the Lease) by AMC under the Lease, and no
Event of Default or Potential Default (as each such term is defined in the
Agreement for Lease dated as of July 25, 1996 (the "AFL")) by AMC under the
AFL, and Grantor shall have received a certificate of AMC to such effect; and
(d) at the time of closing on an Option Property, all amounts otherwise
payable by AMC under the AFL or the Lease with respect to such Option
Property as of the date of such closing shall have been paid in full,
including, without limitation, all payments due under any indemnities and,
all payments of rent and other amounts of any kind due thereunder. On the
Option Termination Date, the Option shall terminate and Grantee shall have no
further rights under this Option Agreement, including any with respect to an
Option Property as to which the Option has been exercised but for which the
closing has not occurred.
2. PURCHASE PRICE. The purchase price for an Option Property
subject to the Lease shall be an amount equal to the Adjusted Acquisition
Cost (as defined in the Lease) for such Option Property as of the date of
closing. As a condition to each purchase and sale hereunder, Grantee shall
also pay the cost of any title reports or policies, surveys, all transfer
taxes, transfer gains taxes, mortgage recording tax, if any, recording and
filing fees, and all other similar taxes, fees, expenses, and closing costs
(including Grantor's and Assignee's attorney's fees), it being expressly
agreed that Grantor shall not be liable or responsible for any costs or
expenses in connection with the sale of any Option Property. All payments to
Grantor, including Grantor's legal fees in connection with the closing, shall
be wired directly to an account of Grantor identified by Grantor to Grantee
prior to closing.
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3. OPTION SUBJECT TO RIGHTS OF SECURED LENDER AND TERMS OF AFL AND
LEASE. This Option Agreement and the Option granted hereby are expressly
subject and subordinate to the Security Interest granted by Grantor to the
Assignee and to the terms and conditions of the AFL and the Lease. It is
expressly acknowledged that prior to the closing on an Option Property, the
Option Property is and will remain subject to the terms and conditions of the
AFL and/or the Lease, which terms and conditions contemplate that the sale of
all or part of an Option Property to parties other than the Grantee could
occur under certain circumstances. Grantee expressly acknowledges that if a
third party shall exercise its prior rights with respect to such a sale, or
Grantor or Assignee shall exercise its remedies under the AFL or the Lease
and shall pursuant to such exercise effect such a sale, at any time prior to
Grantee's closing on an Option Property, then (a) in the event of the
exercise of such rights with respect to all of such Option Property the
Option granted hereunder in respect of such Option Property and any exercise
thereof shall cease and be of no further force and effect, and (b) in the
event of the exercise of such rights with respect to a portion of an Option
Property, the Option granted hereunder in respect of such Option Property and
any exercise thereof shall remain binding and in full force and effect only
with respect to the remainder of such Option Property with respect to which
such rights were not exercised, and shall cease and be of no further force
and effect with respect to all other portions.
4. CLOSING. The closing shall take place through an escrow with a
title company chosen by Grantor and acceptable to Grantee. No documents will
be released from escrow unless and until all conditions required by Grantor
for closing have been complied with and Grantor has received all payments in
respect of the purchase price as set forth in the preceding paragraph.
5. STATE OF TITLE. The transfer of an Option Property shall be by
means of a quitclaim deed on an as-is, non-installment sale basis, without
warranty by, or recourse to, Grantor, which deed shall be in the form of
Exhibit D attached hereto, together with any changes that may be required by
local law for such quitclaim deed to comply with local recording statutes.
Grantee expressly acknowledges that Grantor has not made, and will not make,
any representations whatsoever with respect to any Option Property,
including, without limitation, any representation as to the state of title,
environmental conditions, zoning, structural soundness, quality of
construction, or the suitability of such Option Property for any purpose.
6. NO ASSIGNMENT. The Option granted hereby and Grantee's rights
under this Option Agreement, including, without limitation, the right to
close on an Option Property, are personal to Grantee, and, as an inducement
to Grantor to enter into this Option Agreement, it is expressly agreed that
Grantee has no right, directly or indirectly, to assign, mortgage or encumber
the Option or this Option Agreement in whole or in part. Any assignment or
attempted assignment shall immediately render this Option Agreement
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null and void. Transfer of a controlling interest, whether singly or in the
aggregate, in Grantee, whether by operation of law, or merger by or with
Grantee, or otherwise, shall each be deemed to be an assignment. Grantor
shall have no obligation or requirement to deal with any party other than
Grantee in all matters relating to this Option Agreement.
7. NO BROKER. Grantee represents that it has dealt with no broker
in connection with the Option granted hereby, and agrees to indemnify and
hold Grantor harmless from the claims of any broker in connection with the
transactions contemplated hereby.
8. NON-RECOURSE. Grantor's obligations hereunder are intended to
be the obligations of the limited partnership and of the corporation which is
the general partner thereof only and no recourse for the payment of any
amount due under this agreement or for any claim based thereon or otherwise
in respect thereof, shall be had against any limited partner of Grantor, any
incorporator, shareholder, member, officer, director or affiliate, as such,
past, present or future, of such corporate general partner or of any
corporate limited partner or of any successor corporation to such corporate
general partner or any corporate limited partner of Grantor, or against any
direct or indirect parent corporation of such corporate general partner or of
any limited partner of Grantor or any other subsidiary or affiliate or any
such direct or indirect parent corporation or any incorporator, shareholder,
member, officer, director, or affiliate, as such, past, present or future, of
any such parent or other subsidiary or affiliate, it being understood that
Grantor is a limited partnership formed for the purpose of the transactions
involved in and relating to the master lease program of AMC on the express
understanding aforesaid.
9. GOVERNING LAW. This Option Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
10. COMPLETE AGREEMENT. This Option Agreement constitutes the
entire understanding between Grantor and Grantee with respect to the subject
matter hereof and no representations, warranties, promises, guarantees or
agreements, oral or written, express or implied, have been made by Grantor
with respect to this Option except as expressly provided in this Option
Agreement. The Option Agreement may not be modified, amended or waived except
by a written instrument executed by both Grantor and Grantee. A waiver on one
occasion shall not be construed to be a waiver with respect to any other
occasion.
11. COUNTERPARTS. This Option Agreement may be executed in one or
more counterparts, each of which counterparts, when executed and delivered,
shall be deemed to be an original and all of which counterparts, when taken
together, shall constitute one and the same Option Agreement.
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12. DEFINITIONS. Capitalized terms used, but not otherwise defined
herein, shall have the meaning given such terms in the Lease.
IN WITNESS WHEREOF, Grantor and Grantee have executed this Option
Agreement as of the day and year first above written.
ENTERTAINMENT PROPERTIES TRUST,
a Maryland real estate investment trust
By: ________________________________
Name: ______________________________
Title: _____________________________
CLIP FUNDING, LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Clip Capital, Inc., its
general partner
By: ________________________________
Name: ______________________________
Title: _____________________________
Acknowledged and separately
consented to this _____ day
of November, 1997:
AMERICAN MULTI-CINEMA, INC.,
a Missouri corporation
By: ________________________________
Name: ______________________________
Title: _____________________________
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EXHIBIT B
OPTION PROPERTY II
Mesquite 30
(Dallas, Texas)
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