EXHIBIT 4.3.10
OPTION AGREEMENT
This Agreement, dated as of December 21, 1993 by and between
CALIFORNIA-RELCO LIMITED PARTNERSHIP TRUST (the "Optionor"), and STATE
STREET BANK AND TRUST COMPANY OF CALIFORNIA, NATIONAL ASSOCIATION, not in
its individual capacity but solely as Owner Trustee (the "Optionee") for
PMCC Leasing Corporation under the Trust Agreement dated as of December 21,
1993.
R E C I T A L S :
WHEREAS, reference is made to that certain Participation Agreement
dated as of the date hereof (the "Participation Agreement") among Smith's
Food & Drug Centers, Inc., as Lessee, PMCC Leasing Corporation, as Owner
Participant, Philip Morris Capital Corporation, as Owner Participant
Parent, the Optionee, the Optionor, Wilmington Trust Company, not in its
individual capacity, except as expressly stated in the Participation
Agreement, but solely as Indenture Trustee, Pass Through Trustee and
Remainderman Trustee under the Remainderman Trust Agreement, California-
Relco Limited Partnership, as Remainderman Participant, and Bank of
America, National Trust and Savings Association, as Initial Noteholder.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings ascribed to them in Appendix A to the Participation Agreement.
WHEREAS, Optionor is the owner of fee simple estates in those certain
parcels of Land (such parcels of Land are more particularly described in
Exhibit A annexed hereto) subject to the Estates for Years (collectively,
the "Remainderman Interests") expiring January 2, 2019; and
WHEREAS, Optionee is (i) the owner of the Estates for Years and (ii)
the owner in fee simple of the Improvements on the Properties
(collectively, the "Optionee Interests"); and
WHEREAS, the Properties are comprised solely of the Optionee Interests
and the Remainderman Interests and are subject to the Leases, under which
Optionee is the lessor; and
WHEREAS, Optionee may wish to lease from Optionor all or a portion of
the Land upon the Estate for Years Expiration Date and Optionor is willing
to lease all or a portion of its right, title and interest therein to
Optionee and has agreed to grant to Optionee an option to lease the Land at
such times and upon the conditions as hereinafter set forth; and
WHEREAS, Optionee may wish to purchase from Optionor all or a portion
of the Land and Optionor is willing to grant to Optionee an option to
purchase the Land at the times and upon the conditions as hereinafter set
forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby mutually
covenanted and agreed by and between Optionor and Optionee as follows:
1. Grant of Option.
Optionor hereby grants to Optionee the exclusive and irrevocable
options (the "Option") (a) to lease from Optionor one or more parcels of
the Land in each case pursuant to a ground lease (the "Ground Lease")
substantially in the form attached as Exhibit B to the Participation
Agreement, the term of which will commence on the Estate for Years
Expiration Date, and shall expire as provided for herein, and (b) to
purchase one or more parcels of the Land on the terms set forth herein.
The purchase price for the Option shall be the Option Amount.
2. Exercise.
(a) If Lessee extends the Lease Term of the Leases for the first
Fixed-Rate Renewal Term as set forth in Section 12(a) of each Lease, and
unless Optionee has exercised the Purchase Option set forth in Section 6
hereof, the Option to enter into the Ground Lease with respect to the
Related Property will be deemed to have been exercised, without the need
for any action on the part of Optionee or Optionor. Optionee agrees to
give Optionor notice of the extension for the first Fixed-Rate Renewal Term
of the Leases by Lessee promptly after Optionee receives any notice of
extension from Lessee, and to deliver promptly two (2) counterparts of the
Ground Lease with respect to each parcel of the Land executed and
acknowledged by Optionee to Optionor, provided, that failure by Optionee to
give such notice will not affect the rights of Optionee hereunder.
(b) If Optionee desires to exercise the Option to enter into the
Ground Lease as to any parcel of Land and Section 2(a) is not applicable,
Optionee must exercise such Option by sending written notice to Optionor no
later than one hundred eighty (180) days prior to the Estate for Years
Expiration Date (the "Option Expiration Date") accompanied by two (2)
counterparts of the Ground Lease pertaining to such Land executed by
Optionee. Subject to the following sentence, failure of the Optionee to
give such notice on or prior to the Option Expiration Date shall cause the
Option to expire. Optionor shall give Optionee a reminder notice (the
"Reminder Notice") of the Option Expiration Date not more than twelve (12)
months prior to the Option Expiration Date; provided, however, that if
Optionor fails to give such Reminder Notice by the date which is sixty (60)
days prior to the Option Expiration Date, the Option Expiration Date shall
be extended to the date which is sixty (60) days after the date Optionee
receives the Reminder Notice; and further, provided, however, that if,
pursuant to the terms of this sentence, the Option, as so extended, expires
without being exercised, then Optionor may require Optionee to lease the
Property from Optionor pursuant to the terms of the Ground Lease for a
period of time (the "Remainder Term") commencing immediately upon
expiration of the Estate for Years and ending upon the earlier to occur of
(i) Optionee's written waiver of its right to exercise the Option and (ii)
11:59 p.m. on the date the Option, as so extended, expires. During the
Remainder Term, Optionee will pay rent, if any, monthly in arrears at the
rate set forth in the Ground Lease, pro rated for the number of days in the
Remainder Term (and payable on the last day of a month), and
notwithstanding any provision to the contrary in the Ground Lease, Optionee
will not be permitted to renew the Ground Lease at the expiration of the
Remainder Term.
(c) As to each parcel of the Land, in the event that the Option to
enter into the Ground Lease is not deemed to be exercised pursuant to
Section 2(a) or Optionee fails to exercise either the Option to enter into
the Ground Lease or the Option to purchase the Remainderman Interests
pursuant to Article 6 hereof, all of Optionee's right, title and interest
in and to the Optionee Interests in respect of such Land shall terminate
and automatically and without further consideration vest on the Estate for
Years Expiration Date in Optionor. Optionee agrees, upon request of
Optionor, to execute and deliver to Optionor such documents in recordable
form as Optionor may reasonably require to confirm the foregoing.
3. Title.
The Optionor covenants to cause title to the Land on the commencement
of the term of the Ground Lease to be subject only to Permitted Liens.
4. The Ground Lease Terms.
Upon the exercise by Optionee of the Option to enter into the Ground
Lease with respect to the Land and receipt by Optionor of the executed and
acknowledged counterparts of the Ground Lease for each of the Properties,
Optionor agrees to execute and acknowledge and promptly return a
counterpart copy of the Ground Lease to Optionee. Failure to execute and
acknowledge the Ground Lease prior to the Estate for Years Expiration Date
shall not affect Optionee's right to obtain the leasehold estate in the
Land on said date under the terms set forth herein and in the Ground Lease
and to continued possession of the Land and the Improvements.
The basic terms of the Ground Lease shall be as follows:
Term: The Term will commence on the Estate for Years Expiration Date
and will terminate on the seventy-fifth (75) anniversary of the Estate for
Years Expiration Date, provided, that the Optionee may elect to terminate
the Term at any time after the termination of the Lease Term upon not less
than six (6) months prior written notice to Optionor.
Ground Rent: Ground Rent will be payable semi-annually in arrears on
January 2 and July 2 of each year in an amount equal to the amounts set
forth on Schedule 1 hereto.
5. Recordation of Ground Lease.
The Ground Lease or a memorandum thereof may be recorded by either
Optionor or Optionee in the appropriate public office or offices in the
county where the Land is located so as to constitute notice to third
parties of the contents of the Ground Lease. The party causing or
requiring the Ground Lease, any memorandum thereof, any sublease or
assignment or memorandum thereof to be recorded shall pay any recordation,
transfer, or other tax or fee whatsoever incident to such recordation.
6. Purchase Option.
Optionor hereby grants to Optionee an irrevocable option to purchase
on the Estate for Years Expiration Date (or at any time, in the event of
the bankruptcy of Optionor or if Optionor is in default under any
Transaction Document), the Related Remainderman Interest, subject to the
Related Lease if such Lease remains in effect at such time, with six (6)
months written notice to Optionor of Optionee's intention to do so (or on
five (5) days notice in the event of a bankruptcy of Optionor or a default
by Optionor under any Transaction Document). The purchase price to be paid
on exercise of this option shall be the Fair Market Sales Value of the
Related Remainderman Interest. In the event Optionor and Optionee are
unable to agree upon such Fair Market Sales Value, the same shall be
determined by the Appraisal Procedure, provided, that the terms "Optionor"
and "Optionee" shall replace the terms "Lessee" and "Owner Participant",
respectively, set forth in the definition thereof.
In making a determination of such Fair Market Sales Value, the
appraisers shall value the Related Remainderman Interest, considered as
encumbered by the Related Ground Lease, the Tripartite Agreement and this
Option Agreement. If Optionee purchases the Related Remainderman Interest
following a bankruptcy or breach of any Transaction Document by Optionor,
Optionee will pay to Optionor Optionee's estimate of Fair Market Sales
Value, and after Fair Market Sales Value is determined under the preceding
paragraph, the purchase price will be adjusted to reflect such Fair Market
Sales Value.
On the closing date fixed for the purchase of the Related Remainderman
Interest with respect to any Property, Optionee shall pay to Optionor, in
lawful money of the United States, the Fair Market Sales Value of such
Related Remainderman Interest and Optionor shall execute and deliver to
Optionee a good and sufficient grant deed, assignment and/or other
instruments as may be appropriate, in recordable form reasonably acceptable
to Optionee, which shall transfer Optionor's interest in the Related
Remainderman Interest.
Optionor shall pay any and all taxes and fees at that time customarily
paid by the seller in a real estate transaction in the area where the
applicable Property is located and Optionee shall pay all fees at that time
customarily paid by the purchaser.
The Optionor covenants to cause title to the Related Remainderman
Interest to be subject only to Permitted Liens.
7. Default Under Mortgage.
In the event that Optionee defaults under any mortgage or deed of
trust encumbering any of the Properties, Optionor agrees that Optionee's
rights hereunder, including the Related Option, may be exercised by
Optionee's mortgagee or the beneficiary of such deed of trust and their
respective assigns or by any purchaser or transferee of the applicable
Property at a foreclosure sale or in lieu of foreclosure or pursuant to a
plan or reorganization under the Bankruptcy Code in the same manner as if
exercised by Optionee hereunder. Optionor hereby acknowledges that
Optionee's rights hereunder have been assigned to the Indenture Trustee
pursuant to the Indenture and the Supplemental Indentures.
8. Broker.
The parties warrant and represent to each other that no broker or
finder brought about this Agreement.
9. Governing Law.
This Agreement shall be interpreted and governed by the laws of the
State of California.
10. Notices.
All notices and other instruments given or delivered pursuant to this
Agreement shall be delivered pursuant to the Participation Agreement, if to
the Optionee, in accordance with notices to be delivered to the Owner
Trustee in Section 13.1 of the Participation Agreement, and if to the
Optionor, in accordance with notice to be delivered to the Remainderman
under Section 13.1 of the Participation Agreement.
11. Amendment.
This Agreement cannot be modified in any way except by written
instrument signed by Optionor and Optionee.
12. Captions.
The captions to the Paragraphs are used for convenience only and
shall not be construed to modify, limit or expand any of the terms hereof
or otherwise affect the obligations of the parties hereto.
13. Successors and Assigns.
Optionor and Optionee shall each have the right to assign its
rights hereunder in connection with any sale or transfer of its interest in
the Properties as permitted by the Transaction Documents. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and
their respective heirs, administrators, successors, assigns and grantees.
14. Rule Against Perpetuities, etc.
If any Option under this Agreement would, in the absence of the
limitation imposed by this Article 14, be invalid or unenforceable as being
in violation of the rule against perpetuities or any other rule of law
relating to the vesting of an interest in property or the suspension of the
power of alienation of property, then any option of Optionee hereunder
shall be exercisable by Optionee only during the period which shall end 20
years and 6 months after the date of death of the last survivor of the
descendants of Joseph P. Kennedy, deceased father of the late President
John F. Kennedy, alive on the date of the execution and delivery of this
Agreement.
15. Certificates of Compliance. Upon the request of any party,
not more frequently than annually, each party to this Agreement will
deliver to the other party a certificate signed by an officer or general
partner of such party certifying that such party is in full compliance with
the terms and conditions of this Agreement.
16. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original and together shall
constitute one and the same instrument.
17. Nature of Obligations. The obligations hereunder are
covenants running with the Land and are superior to any subsequent
encumbrance or transfer of the Land.
18. Further Assurances. Each of the parties hereto agrees to
execute, acknowledge, deliver and/or file such further certificates,
instruments, or documents, and to do all such further acts and things, as
may be required by Applicable Law, or as may reasonably be necessary or
advisable to carry out the intents and purposes of and the transactions
contemplated by this Agreement.
19. No Waiver. No waiver or any provision of this Agreement
shall be effective unless it is in writing, signed by the party against
whom it is asserted and any such written waiver shall only be applicable to
the specific instance to which it relates and shall not be deemed to be a
continuing or future waiver.
20. Recordation. The parties hereto agree that, if required or
requested by any of them, this Agreement shall be recorded in the office of
the clerks of the counties in which the Properties are located.
21. Concerning the Trustee. State Street Bank and Trust Company
of California, National Association, is entering into this Option Agreement
not in its individual capacity but solely as Owner Trustee under the Trust
Agreement. Each of the obligations of the Trust herein are made solely for
the purpose of binding the Trust, and State Street Bank and Trust Company
of California, National Association, in its individual capacity shall have
no liability whatsoever with respect thereto.
IN WITNESS WHEREOF, the parties have executed this Option
Agreement as of the day and year first above written.
STATE STREET BANK AND TRUST COMPANY OF
CALIFORNIA, NATIONAL ASSOCIATION, not in
its individual capacity, but solely as
Owner Trustee
By:/s/W. Jeffrey Kramer
Name:
Title:
CALIFORNIA-RELCO LIMITED PARTNERSHIP TRUST,
as Remainderman
By:William J. Wade, not in his
individual capacity, but solely as
Trustee
By:/s/William J. Wade
William J. Wade
State of New York )
)
County of New York )
On December 27, 1993 before me, Rodney F. Felder, Notary Public,
personally appeared W. Jeffrey Kramer personally known to me (or proved to
me on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the
instrument.
Witness my hand and official seal
/s/Rodney F. Felder
SIGNATURE [seal]
State of New York )
)
County of New York )
On December 28, 1993 before me, Barbara A. Wheeler, Notary
Public, personally appeared William J. Wade, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged
to me that he/she/they executed the same in his/her/their authorized
capacity, and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed
the instrument.
Witness my hand and official seal
/s/Barbara A. Wheeler
SIGNATURE [seal]