Exhibit 10.2

Execution Version

PDC CONTINGENT VALUE RIGHTS AGREEMENT

BY AND AMONG

AB ACQUISITION LLC,

SAFEWAY INC.

THE SHAREHOLDER REPRESENTATIVE, AS DEFINED HEREIN

AND

COMPUTERSHARE INC. AND COMPUTERSHARE TRUST COMPANY, N.A., AS RIGHTS AGENT

DATED AS OF JANUARY 30, 2015

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TABLE OF CONTENTS

 

     Page  

ARTICLE I DEFINITIONS

     1                Section 1.1   Definitions      1   

ARTICLE II CONTINGENT VALUE RIGHTS

     10                Section 2.1   Appointment of the Rights Agent; Issuance
of CVRs      10                Section 2.2   Nontransferable      10   
            Section 2.3   No Certificate; Registration; Registration of
Transfer; Change of Address      10                Section 2.4   Payment
Procedures; Payment Amount      11                Section 2.5   No Voting,
Dividends or Interest; No Equity or Ownership Interest in Ultimate Parent or the
Company      18                Section 2.6   Establishment of PDC CVR Bank
Account      18   

ARTICLE III THE RIGHTS AGENT AND SHAREHOLDER REPRESENTATIVE

     18                Section 3.1   Certain Duties and Responsibilities      18
               Section 3.2   Certain Rights of Rights Agent      19   
            Section 3.3   Indemnity and Expenses      21                Section
3.4   Resignation and Removal of Rights Agent and Shareholder Representative;
Appointment of Successor      23                Section 3.5   Acceptance of
Appointment by Successor      24   

ARTICLE IV ADDITIONAL COVENANTS

     24                Section 4.1   Operations      24                Section
4.2   List of Holders      27                Section 4.3   PDC Sale Process     
27                Section 4.4   Books and Records      29   

ARTICLE V AMENDMENTS

     29   

 

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            Section 5.1   Amendments Without Consent of Holders      29   
            Section 5.2   Amendments with Consent of the Shareholder
Representative      30                Section 5.3   Execution of Amendments     
30                Section 5.4   Effect of Amendments      31    ARTICLE VI
CONSOLIDATION, MERGER, SALE OR CONVEYANCE      31                Section 6.1  
Company Consolidation, Merger, Sale or Conveyance      31                Section
6.2   Successor Substituted      32    ARTICLE VII OTHER PROVISIONS OF GENERAL
APPLICATION      32                Section 7.1   Notices to Ultimate Parent, the
Company, the Shareholder Representative and the Rights Agent      32   
            Section 7.2   Notice to Holders      34                Section 7.3  
Counterparts; Headings      35                Section 7.4   Assignment;
Successors      35                Section 7.5   Benefits of Agreement      35   
            Section 7.6   Governing Law      36                Section 7.7  
Waiver of Jury Trial      36                Section 7.8   Remedies      36   
            Section 7.9   Severability Clause      37   
            Section 7.10   Termination      37                Section 7.11  
Entire Agreement      37                Section 7.12   Suits for Enforcement   
  38   

 

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PDC CONTINGENT VALUE RIGHTS AGREEMENT

THIS PDC CONTINGENT VALUE RIGHTS AGREEMENT, dated as of January 30, 2015 (this
“Agreement”), is entered into by and among AB Acquisition LLC, a Delaware
limited liability company (“Ultimate Parent”), Safeway Inc., a Delaware
corporation (the “Company”), Computershare Inc. (“Computershare”) and its wholly
owned subsidiary, Computershare Trust Company, N.A. together as rights agent
(the “Rights Agent”) and the Shareholder Representative.

RECITALS

WHEREAS, the Parent Entities and the Company have entered into an Agreement and
Plan of Merger, dated as of March 6, 2014 (as amended, the “Merger Agreement”),
pursuant to which Merger Sub will merge with and into the Company, with the
Company surviving the Merger as a wholly-owned indirect Subsidiary of Ultimate
Parent;

WHEREAS, pursuant to the Merger Agreement, the Parent Entities have agreed to
cause the Company to create and issue in respect of each Closing Company Share,
certain rights to the CVR Payment Amount if and when payable pursuant to this
Agreement;

WHEREAS, as of, or prior to, the Effective Time, the Company, the Company
Subsidiaries, and PDC have consummated the PDC Restructuring and the Entire PDC
Sale;

WHEREAS, subject to the terms of the Merger Agreement, each share of Company
Common Stock is entitled to receive their pro rata portion of the PDC Net
Proceeds pursuant to Section 2.1(a) of the Merger Agreement, which amounts shall
be paid out in accordance with the Merger Agreement; and

WHEREAS, Ultimate Parent, the Company and the Shareholder Representative
acknowledge that in connection with the consummation of the Entire PDC Sale,
there remains deferred cash consideration potentially payable to the Holders
hereunder.

NOW, THEREFORE, for and in consideration of the agreements contained herein and
the consummation of the transactions contemplated by the Merger Agreement, it is
mutually covenanted and agreed as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions.

(a) For all purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:

(i) the terms defined in this Article have the meanings assigned to them in this
Article, and include the plural as well as the singular;

 

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(ii) the words “herein,” “hereof” and “hereunder” and other words of similar
import refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision;

(iii) unless the context otherwise requires, words describing the singular
number shall include the plural and vice versa, words denoting any gender shall
include all genders and words denoting natural Persons shall include
corporations, partnerships and other Persons and vice versa;

(iv) all references to “including” shall be deemed to mean including without
limitation;

(v) references to any Person include such Person’s successors and permitted
assigns; and

(vi) the Excluded Entities shall not be deemed to be Subsidiaries of the Company
or Company Subsidiaries.

(b) Capitalized terms used but not otherwise defined herein shall have the
meanings ascribed thereto in the Merger Agreement. The following terms shall
have the meanings ascribed to them as follows:

“Affiliate Transactions” means all Contracts, transactions and arrangements
between any PDC Entity, on the one hand, and the Company or any of its
Affiliates (other than any PDC Entity) on the other hand.

“Agreement” has the meaning given to such term in the Preamble.

“Board of Directors” means the board of directors of the Company.

“Board Resolution” means a copy of a resolution certified by the secretary or an
assistant secretary of the Company to have been duly adopted by the Board of
Directors and to be in full force and effect on the date of such certification,
and delivered to the Rights Agent.

“Company” has the meaning given to such term in the Preamble.

“CVRs” means the contingent value rights issued by the Company under this
Agreement.

“CVR Payment Amount” has the meaning set forth in Section 2.4(a).

“CVR Payment Date” means the date that any CVR Payment Amount is paid by the
Company to the Holders pursuant to Section 2.4.

“CVR Register” has the meaning given to such term in Section 2.3(b).

“Disputed Unsold Material PDC Asset” has the meaning given to such term in
Section 2.4(c)(i).

 

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“Entire CVR Payment Statement” has the meaning given to such term in Section
2.4(c).

“Entire PDC Sale” means, as of any date of determination, a direct or indirect
sale, transfer or other disposition (including by means of a merger or other
business combination transaction) in one or more transactions (i) of all of the
then remaining consolidated assets of the PDC Entities, (ii) of 100% of the
Company’s then remaining Equity Interests in the PDC Entities or (iii) the
effect of which is to divest 100% of the Company’s then remaining direct or
indirect investment in the PDC Entities.

“Excluded Expenses” means (i) any costs, fees or expenses of the Company or any
Company Subsidiary arising out of or relating to any dispute with the
Shareholder Representative or otherwise with respect to the terms of this
Agreement other than the Shareholder Representative’s equal share of the fees
and expenses of the Neutral Auditor and each Qualified Real Estate Appraiser
and/or Selected Real Estate Appraiser and except as otherwise set forth in
Section 7.8 and (ii) any amounts payable in connection with the Company-PDC
Loans.

“Fair Market Value” means the fair market value of any unsold assets of the PDC
Entities determined in accordance with Section 2.4(c)(i). For the avoidance of
doubt, the fair market value of any Unsold Material PDC Asset shall include any
office equipment, fixtures, development rights, leases, other agreements and any
other assets (tangible or intangible) primarily associated with such asset and
owned by PDC as of the Sale Deadline.

“Holder” means a Person in whose name a CVR is registered in the CVR Register.

“Merger Agreement” has the meaning given to such term in the Recitals.

“Neutral Auditor” has the meaning given to such term in Section 2.4(c)(vi).

“Notice of Agreement” has the meaning given to such term in Section 2.4(b)(ii).

“Notice of Objection” has the meaning given to such term in Section 2.4(b)(ii).

“Objections” has the meaning given to such term in Section 2.4(b)(iv).

“Officer’s Certificate” means a certificate signed by the chief executive
officer, president, chief financial officer, any vice president, the controller,
the treasurer or the secretary of the Company, in his or her capacity as such an
officer.

“Partial CVR Payment Statement” has the meaning given to such term in
Section 2.4(b)(i).

“Partial PDC Net Proceeds” means, as of any date of determination, with respect
to a Partial PDC Sale, the sum, if positive, of (i) the gross cash proceeds
actually received by the Company or any Company Subsidiary from and after the
Closing in consideration of such Partial PDC Sale (but excluding any escrow,
holdback, deferred cash consideration or similar amounts

 

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to the extent not released to the Company or any Company Subsidiary prior to the
consummation of the Partial PDC Sale) (without duplication of any amounts
previously paid to the Holders with respect to a prior Partial PDC Sale), plus
(ii) any cash amounts received (without duplication of any amounts (1) described
in clause (i), (2) previously paid to the Holders with respect to a prior
Partial PDC Sale or (3) paid to the Company or any Company Subsidiary in
connection with any Partial PDC Sale) by the Company or any Company Subsidiary
from and after January 1, 2014 through the closing date of such Partial PDC Sale
as a dividend or distribution from the operating earnings of PDC due to its
direct or indirect ownership of Equity Interests in PDC, minus (iii) the
aggregate amount of the PDC Sale Expenses actually incurred through the
consummation of such Partial PDC Sale (without duplication of any amounts
deducted from Partial PDC Net Proceeds previously paid to the Holders with
respect to a prior Partial PDC Sale, but including amounts incurred prior to the
Closing to the extent not previously deducted from a calculation of Partial PDC
Net Proceeds hereunder or under the Merger Agreement), minus (iv) the income
taxes incurred by the Company or any Company Subsidiary in connection with such
Partial PDC Sale which, for purposes of this definition, are deemed to equal the
product of (A) (1) the sum of the amounts referenced in clauses (i) and (ii) of
this paragraph, minus (2) the Company’s and the Company Subsidiaries’ tax basis
in the assets of the PDC Entities (directly or indirectly) disposed of in any
Partial PDC Sale, calculated under U.S. federal income tax principles, minus
(3) the sum of the amounts referenced in clauses (iii) and (v) of this paragraph
(but only to the extent that such amounts are deductible and not capitalized
into the tax basis referenced in clause (iv)(A)(2) of this definition) and
(without duplication of amounts described in clauses (iii) and (v) of this
definition) any interest paid with respect to any Company-PDC Loans from the
proceeds of any Partial PDC Sale, multiplied by (B) 39.25%, minus (v) (A) any
amounts required to repay and discharge any and all PDC Third Party
Indebtedness, (B) the amounts required to repay the PDC Loan Mandatory
Prepayment Amount applicable to such Partial PDC Sale, (C) any PDC Severance
Costs incurred by PDC, the Company or any Company Subsidiary in connection with
the portion of PDC being sold in such Partial PDC Sale, minus (vi) any amounts
set aside by PDC and consented to by the Shareholder Representative to allow PDC
to operate in the ordinary course of its business (including, without
limitation, the funding of development and redevelopment activity).

“Partial PDC Net Proceeds Per CVR” means an amount equal to (x) the Partial PDC
Net Proceeds divided by (y) the number of CVRs listed in the CVR Register as of
the date of such calculation; provided, that in the event such amount is
negative, the Partial PDC Net Proceeds Per CVR shall be zero; provided further,
that any CVR to which a Dissenting Stockholder would be entitled but for
Section 2.3 of the Merger Agreement shall be deemed to be outstanding and
included in the number of CVRs listed in the CVR Register for purposes of the
calculation of Partial PDC Net Proceeds Per CVR.

“Partial PDC Sale” means a direct or indirect sale, transfer or other
disposition (including by means of a merger or other business combination
transaction) (i) of less than all of the consolidated assets of the PDC
Entities, (ii) of less than 100% of the Company’s Equity Interests in the PDC
Entities or (iii) the effect of which is to divest the Company of less than all
of its direct or indirect investment in the PDC Entities.

“PDC” or “PDC Entities” means the group of companies comprised of (i) Property
Development Centers LLC and (ii) PDC I, Inc., as well as their respective
Subsidiaries.

 

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“PDC Business” shall mean the business and operations carried on by the PDC
Entities.

“PDC Net Proceeds” means, with respect to the Entire PDC Sale, the sum of
(i) the gross cash proceeds actually received by the Company or any Company
Subsidiary from and after the Closing in consideration of any Partial PDC Sale
or the Entire PDC Sale (but excluding any escrow, holdback, deferred cash
consideration or similar amounts with respect thereto), plus (ii) any cash
amounts received (without duplication of any amounts (1) described in clause
(i), or (2) paid to the Company or any Company Subsidiary as a dividend or
distribution in connection with any Partial PDC Sale) by the Company or any
Company Subsidiary from and after January 1, 2014 through the consummation of
the Entire PDC Sale as a dividend or distribution paid from the operating
earnings of PDC due to its direct or indirect ownership of Equity Interests in
PDC, plus (iii) any interest or income received by the Company or any Company
Subsidiary pursuant to Section 2.6, minus (iv) the aggregate amount of the PDC
Sale Expenses actually incurred through the date of payment hereunder in
connection with the consummation of the Entire PDC Sale (including amounts
incurred prior to the Closing to the extent not previously deducted from a
calculation of Partial PDC Net Proceeds hereunder or under the Merger
Agreement), minus (v) the income taxes incurred by the Company or any Company
Subsidiary in connection with the Entire PDC Sale which, for purposes of this
definition, are deemed to equal the product of (A) (1) the sum of the amounts
referenced in clauses (i), (ii) and (iii) of this paragraph, minus (2) the
Company’s and the Company Subsidiaries’ tax basis in the assets of the PDC
Entities (including, for the avoidance of doubt, in such assets sold in a prior
Partial PDC Sale), calculated under U.S. federal income tax principles, minus
(3) the sum of the amounts referenced in clauses (iv) and (vi) of this paragraph
(but only to the extent that such amounts are deductible and not capitalized
into the tax basis referenced in clause (v)(A)(2) of this definition) and
(without duplication of amounts described in clauses (iv) and (vi) of this
definition) any interest paid with respect to any Company-PDC Loans from the
proceeds of any Partial PDC Sale or the Entire PDC Sale, multiplied by
(B) 39.25%, minus (vi) without duplication (A) any amounts required to repay and
discharge at the closing of the Entire PDC Sale any and all PDC Third Party
Indebtedness to the extent the Company or its Subsidiaries would have any
liability therefor after the closing of the Entire PDC Sale, (B) the amounts
required to repay the Company-PDC Loans, (C) any PDC Severance Costs to the
extent the Company or any Company Subsidiary would reasonably have any liability
therefor after the closing of the Entire PDC Sale and (D) with respect to any
Partial PDC Sales consummated after the Closing, any amounts deducted pursuant
to clause (v) of the definition of Partial PDC Net Proceeds, minus (vii) any
Partial PDC Net Proceeds actually paid to the Holders from and after the
Closing.

“PDC Net Proceeds Per CVR” means an amount equal to (x) the PDC Net Proceeds
divided by (y) the number of CVRs listed in the CVR Register as of the date of
such calculation; provided, that in the event such amount is negative, the PDC
Net Proceeds Per CVR shall be zero; provided further, that any CVR to which a
Dissenting Stockholder would be entitled but for Section 2.3 of the Merger
Agreement shall be deemed to be outstanding and included in the number of CVRs
listed in the CVR Register for purposes of the calculation of PDC Net Proceeds
Per CVR.

“PDC Restructuring” means such transfers, distributions and contributions to and
from the Company and the Company Subsidiaries, on the one hand, and PDC, on the
other,

 

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reasonably necessary to (i) transfer (A) fee simple title to the real property
comprising the Contributed Stores Real Estate, the Contributed Stores Centers,
the Development Stores Real Estate, the Development Stores Centers and the
Additional PDC Real Estate, (B) all personal property reasonably related to the
business of PDC (including, without limitation, equipment, plans and
specifications, contracts, reports and other data and presentation and marketing
materials) and (C) cash in the amount of Forty Million Dollars ($40,000,000) to
PDC and (ii) transfer any assets owned by PDC as of the date hereof, to the
extent such assets do not relate to PDC’s real estate development business to
the Company or a Company Subsidiary (other than PDC).

“PDC Sale” means an Entire PDC Sale or Partial PDC Sale, as applicable.

“PDC Sale Agreement” means an executed binding definitive transaction document
providing for a PDC Sale.

“PDC Sale Expenses” means (a) any out-of-pocket transaction costs, fees or
expenses (including any broker fees, finder’s fees, advisory fees, accountant or
attorney’s fees and transfer or similar taxes imposed by any jurisdiction)
incurred in connection with the Entire PDC Sale or a Partial PDC Sale (including
any amounts expressly deemed to be PDC Sale Expenses hereunder) by the Company
or any of its Subsidiaries (or Affiliates pursuant to Section 4.3(b)) and the
Shareholder Representative and (b) 50% of the fees and expenses of the Rights
Agent, the Neutral Auditor, the Selected Real Estate Appraiser and each
Qualified Real Estate Appraiser consulted pursuant to Section 2.4(c)(i), in each
case which are documented in reasonable detail, prepared in good faith, and
certified by the Shareholder Representative or the Company; provided, that PDC
Sale Expenses shall exclude any Excluded Expenses.

“PDC Severance Costs” means compensation, cost of benefits and other costs paid,
or due to be paid (including the employer portion of any taxes paid related
thereto) by the Company (or, in the case of a Partial PDC Sale, by PDC), to
employees of PDC or of the Company providing services to the business and
operations carried on by PDC, in connection with a termination of employment
from the Company, in each case, within one (1) month of the date thereof as a
result of the Entire PDC Sale or any Partial PDC Sale.

“PDC Third Party Indebtedness” means third-party Indebtedness of PDC in
connection with the Entire PDC Sale or any Partial PDC Sale (excluding, for the
avoidance of doubt, any Company-PDC Loans).

“Permitted Transfer” means (i) the transfer of any or all of the CVRs on death
by will or intestacy, (ii) transfer by instrument to an inter vivos or
testamentary trust in which the CVRs are to be passed to beneficiaries upon the
death of the trustee, (iii) transfers made pursuant to a court order (including
in connection with divorce, bankruptcy or liquidation), (iv) if the Holder is a
corporation, partnership or limited liability company, a distribution by the
transferring corporation, partnership or limited liability company to its
stockholders, partners or members, as applicable (provided that (A) such
distribution does not subject the CVRs to a requirement of registration under
the Securities Act or the Exchange Act, or (B) in the case of a transferring
corporation, the Company shall have reasonably determined after consultation
with counsel that such distribution does not subject the CVRs to a requirement
of registration under

 

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the Securities Act or the Exchange Act), and (v) a transfer made by operation of
law (including a consolidation or merger) or without consideration in connection
with the dissolution, liquidation or termination of any corporation, limited
liability company, partnership or other entity.

“Pre-Funded Amount” has the meaning given to such term in Section 3.3(b).

“Qualified Investment” means any (i) investment in a money market investment
program registered under the Investment Company Act of 1940, as amended, that
invests solely in direct obligations of the United States of America or
obligations the principal of and the interest on which are unconditionally
guaranteed by the United States of America or (ii) certificate of deposit issued
by any bank, bank and trust company or national banking association with a
combined capital and surplus in excess of $100,000,000 and insured by the
Federal Deposit Insurance Corporation or a similar governmental agency.

“Qualified Real Estate Appraiser” has the meaning given to such term in Section
2.4(c)(i).

“Referral Notice” has the meaning given to such term in Section 2.4(c)(i).

“Remaining Asset Amount” means the aggregate Fair Market Value, as of the Sale
Deadline, of all Unsold Material PDC Assets.

“Rights Agent” means the Rights Agent named in the Preamble, until a successor
Rights Agent shall have become such pursuant to the applicable provisions of
this Agreement, and thereafter “Rights Agent” shall mean such successor Rights
Agent.

“Sale Deadline” means the later of (i) the two (2) year anniversary of the
Effective Time and (ii) if one or more PDC Sales Agreements is executed prior to
the two (2) year anniversary of the Effective Time but the Partial PDC Sale or
Entire PDC Sale contemplated thereby, as applicable, has not closed, the Sale
Deadline shall be the date on which sixty (60) days have elapsed after the date
all such PDC Sales Agreements have either been terminated or any and all
closings under such PDC Sales Agreements have occurred.

“Sale Deadline Net Proceeds” means, as of the Sale Deadline, in the event there
is no Entire PDC Sale, the sum of (i) the gross cash proceeds actually received
by the Company or any Company Subsidiary from and after the Closing in
consideration of any Partial PDC Sale (but excluding any escrow, holdback,
deferred cash consideration or similar amounts pursuant thereto), plus (ii) any
cash amounts received (without duplication of any amounts (1) described in
clause (i) or (2) paid to the Company or any Company Subsidiary as a dividend or
distribution in connection with any Partial PDC Sale) by the Company or any
Company Subsidiary from and after January 1, 2014 through the Sale Deadline as a
dividend or distribution from the operating earnings of PDC due to its direct or
indirect ownership of Equity Interests in PDC, plus (iii) any Remaining Asset
Amount, plus (iv) any interest or income received by the Company or any Company
Subsidiary pursuant to Section 2.6, minus (v) the aggregate amount of the PDC
Sale Expenses actually incurred through the date of payment hereunder in
connection with the occurrence of the Sale Deadline (including amounts incurred
prior to the Closing to the extent not previously deducted from a calculation of
Partial PDC Net Proceeds hereunder or under the Merger Agreement), minus
(vi) certain income taxes incurred by the Company or any Company

 

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Subsidiary from and after the Closing which, for purposes of this definition,
are deemed to equal the product of (A) (1) the sum of the amounts referenced in
clauses (i), (ii), (iii) and (iv) of this paragraph minus (2) the Company’s and
the Company Subsidiaries’ tax basis in the assets of the PDC Entities whether
such assets were sold in a Partial PDC Sale or included in the determination of
any Remaining Asset Amount), calculated under U.S. federal income tax
principles, minus (3) the sum of the amounts referenced in clauses (v) and
(vii) of this paragraph (but only to the extent that such amounts are deductible
and not capitalized into the tax basis referenced in clause (vi)(A)(2) of this
definition) and (without duplication of amounts described in clauses (v) and
(vii) of this definition) any interest paid with regard to any Company-PDC Loans
from the proceeds of any Partial PDC Sale, multiplied by (B) 39.25%, minus
(vii) without duplication, with respect to any Partial PDC Sales consummated
after the Closing and prior to the Sale Deadline, any amounts deducted pursuant
to clause (v) of the definition of Partial PDC Net Proceeds, and minus
(viii) any Partial PDC Net Proceeds actually paid to the Holders consummated
from and after the Closing and prior to the Sale Deadline.

“Sale Deadline Net Proceeds Per CVR” means an amount equal to (x) the Sale
Deadline Net Proceeds divided by (y) the number of CVRs listed in the CVR
Register as of the date of such calculation; provided, that in the event such
amount is negative, the Sale Deadline Net Proceeds Per CVR shall be zero;
provided further, that any CVR to which a Dissenting Stockholder would be
entitled but for Section 2.3 of the Merger Agreement shall be deemed to be
outstanding and included in the number of CVRs listed in the CVR Register for
purposes of the calculation of Sale Deadline Net Proceeds Per CVR.

“Selected Real Estate Appraiser” means the real estate appraiser selected in
accordance with Section 2.4(c)(i).

“Shareholder Representative” means a committee, or Person controlled by a
committee, comprised of T. Gary Rogers and Arun Sarin, both of whom were
individual members of the Board of Directors immediately prior to the Effective
Time, who shall act by majority vote on behalf of the Holders as their sole and
exclusive representative in their capacities as Holders for all matters in
connection with this Agreement; provided, however, that the individual members
of the committee comprising or controlling the Shareholder Representative shall
act free of direction or instruction from any other members of the Board of
Directors immediately prior to the Effective Time, though the individual members
of the committee comprising or controlling the Shareholder Representative may
communicate with such former members regarding the status and substance of this
Agreement. Any instrument or document executed by a majority of the individual
members of the committee comprising or controlling the Shareholder
Representative, in the committee’s capacity as such, shall be deemed a valid
execution of such instrument or document on behalf of the Shareholder
Representative.

“Shareholder Representative Expense Amount” has the meaning given to such term
in Section 3.3(b).

“Shareholder Representative Persons” has the meaning given to such term in
Section 3.1(a).

 

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“Shareholder Representative Reimbursement Amount” has the meaning given to such
term in Section 3.3(b).

“Surviving Person” has the meaning given to such term in Section 6.1(a)(i).

“Ultimate Parent” has the meaning given to such term in the Preamble.

“Unsold Material PDC Assets” means all Contributed Stores Centers, Development
Stores Centers and Additional PDC Real Estate that are unsold as of the Sale
Deadline, including any office equipment, fixtures, development rights, leases,
other agreements and any other assets (tangible or intangible) primarily
associated with such asset and owned by PDC as of the Sale Deadline.

 

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ARTICLE II

CONTINGENT VALUE RIGHTS

Section 2.1 Appointment of the Rights Agent; Issuance of CVRs.

The Company hereby appoints the Rights Agent to act as agent for the Company in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company shall issue the CVRs at the Effective Time
pursuant to the terms of the Merger Agreement, and the CVRs shall represent the
right of the Holders to receive, in respect of each CVR held by such Holder, the
CVR Payment Amount (if any) if and when payable pursuant to this Agreement. The
administration of the CVRs shall be handled pursuant to this Agreement in the
manner set forth in this Agreement.

Section 2.2 Nontransferable.

The CVRs or any interest therein shall not be sold, assigned, transferred,
pledged, encumbered or in any other manner transferred or disposed of, in whole
or in part, other than through a Permitted Transfer.

Section 2.3 No Certificate; Registration; Registration of Transfer; Change of
Address.

(a) The CVRs shall not be evidenced by a certificate or other instrument.

(b) The Rights Agent shall keep a register (the “CVR Register”) for the
registration of CVRs in a book-entry position for each Holder, transfers of CVRs
as herein provided and any new issuances of CVRs in respect of any Reverted
Company Shares. The CVR Register shall set forth the name and address of each
Holder, the number of CVRs held by such Holder and the Tax Identification Number
of each Holder, which information, if not available to the Company’s transfer
agent or provided by the Holder, shall be provided in writing to the Rights
Agent by the Company. The CVR Register will be updated as necessary by the
Rights Agent to reflect the addition or removal of Holders (including pursuant
to any Reverted Company Shares or Permitted Transfers), upon the written receipt
of such information by the Rights Agent. Each of the Company and the Shareholder
Representative may receive and inspect a copy of the CVR Register, from time to
time, upon written request made to the Rights Agent. Within five (5) Business
Days after receipt of such request, the Rights Agent shall mail a copy of the
CVR Register, as then in effect, to the Company and the Shareholder
Representative at the address set forth in Section 7.1.

(c) Subject to the restriction on transferability set forth in Section 2.2,
every request made to transfer a CVR must be in writing and setting forth in
reasonable detail the circumstances relating to the transfer, and must be
accompanied by (i) a written instrument of transfer duly executed by the
registered Holder thereof, the Holder’s attorney duly authorized in writing, the
Holder’s personal representative or survivor, (ii) the transfer certificate
attached hereto as Exhibit A duly completed and properly executed by both the
registered Holder thereof,

 

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the Holder’s attorney duly authorized in writing, the Holder’s personal
representative or survivor and the proposed transferee, and (iii) any other
requested documentation in form reasonably satisfactory to the Company and the
Rights Agent. Upon receipt of such written notice, the Rights Agent shall,
subject to its reasonable determination that the transfer instrument and the
transfer certificate are in proper form and the transfer otherwise complies with
the other terms and conditions herein including Section 2.2, register the
transfer of the CVRs in the CVR Register. The Rights Agent may rely on the
information contained in the transfer certificate and any of the documents
required to be provided with the transfer certificate. All duly transferred CVRs
registered in the CVR Register shall be the valid obligations of the Company,
evidencing the same right, and shall entitle the transferee to the same benefits
and rights under this Agreement, as those held immediately prior to the transfer
by the transferor. No transfer of a CVR shall be valid until registered in the
CVR Register, and any transfer not duly registered in the CVR Register will be
void ab initio (unless the transfer was permissible hereunder and such failure
to be duly registered is attributable to the fault of the Rights Agent). Any
transfer or assignment of the CVRs shall be without charge to the Holder;
provided, that the Company and the Rights Agent may require (i) payment of a sum
sufficient to cover any stamp, transfer or other similar tax or charge that is
imposed in connection with any such transfer or (ii) that the transferor
establish to the reasonable satisfaction of the Rights Agent that any such taxes
have been paid. The Rights Agent shall have no duty or obligation to take any
action under this Section 2.3(c) unless and until the Rights Agent is satisfied
that all such taxes or charges have been paid in full.

(d) A Holder may make a written request to the Rights Agent to change such
Holder’s address of record in the CVR Register. The written request must be duly
executed by the Holder. Upon receipt of such written notice, the Rights Agent
shall promptly record the change of address in the CVR Register.

Section 2.4 Payment Procedures; Payment Amount.

(a) The Holders shall be entitled to the following payments in respect of their
CVRs (any such payments, in the aggregate, the “CVR Payment Amount”):

(i) Payment for Partial PDC Sales. Subject to the procedures set forth in
Section 2.4(b), upon the consummation of any Partial PDC Sale, each Holder of a
CVR shall, in respect of such CVR, be entitled to and shall receive the Partial
PDC Net Proceeds Per CVR with respect to such Partial PDC Sale.

(ii) Payment for Entire PDC Sales. Subject to the procedures set forth in
Section 2.4(c), upon the consummation of the Entire PDC Sale, each Holder of a
CVR shall, in respect of such CVR, be entitled to and shall receive the PDC Net
Proceeds Per CVR.

(iii) Payment upon Sale Deadline. Subject to the procedures set forth in
Section 2.4(c), upon the Sale Deadline, each Holder of a CVR shall, in respect
of such CVR, be entitled to and shall receive the Sale Deadline Net Proceeds Per
CVR.

 

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(iv) Deferred Cash Consideration. To the extent that any consideration pursuant
to any Partial PDC Sale or Entire PDC Sale includes any deferred cash
consideration (including pursuant to any escrow, holdback or similar amount and
including any such deferred cash consideration in connection with a Partial PDC
Sale or Entire PDC Sale consummated prior to the Closing), each Holder of a CVR
shall be entitled to and shall receive an amount with respect to such CVR equal
to (x) the amount of such deferred cash consideration received by the Company or
any Company Subsidiary (minus the product of (A) 39.25% and (B) the amount of
such deferred cash consideration, less an allocable amount of the Company and
the Company Subsidiaries’ tax basis in the assets of the PDC Entities,
calculated under U.S. federal income tax principles, but only to the extent, if
any, that such basis was not previously taken into account in determining the
amount of the payments in clauses (i), (ii) and (iii) of this Section 2.4(a))
divided by (y) the number of CVRs listed in the CVR Register as of the date of
such calculation; provided, that any CVR to which a Dissenting Stockholder would
be entitled but for Section 2.3 of the Merger Agreement shall be deemed to be
outstanding and included in the number of CVRs listed in the CVR Register for
purposes of the calculation of the number of CVRs listed in the CVR Register in
this Section 2.4(a)(iv)(y). Such deferred cash consideration amounts received by
the Company or any Company Subsidiary shall be paid by the Company, within two
(2) Business Days after its receipt thereof, directly to the Rights Agent for
payment to the Holders.

(b) Procedure for Partial PDC Sales.

(i) Promptly following the closing of a Partial PDC Sale but in no event later
than ten (10) Business Days thereafter, the Company shall deliver to the
Shareholder Representative (with a copy to the Rights Agent and Ultimate Parent)
the Company’s good faith written calculation, in reasonable detail and with
supporting documentation, work papers and receipts of the Partial PDC Net
Proceeds and the resulting Partial PDC Net Proceeds Per CVR (the “Partial CVR
Payment Statement”), which shall be certified by the Company. The Partial CVR
Payment Statement shall incorporate any PDC Sale Expenses of the Shareholder
Representative set forth in writing by the Shareholder Representative to the
Company within such ten (10) Business Day period, which shall be certified by
the Shareholder Representative. Ultimate Parent and the Company shall be
protected in relying in good faith upon such certification.

(ii) Within five (5) Business Days after receipt of the Partial CVR Payment
Statement, the Shareholder Representative shall deliver to the Company and the
Rights Agent (with a copy to Ultimate Parent) a notice specifying whether the
Shareholder Representative agrees with (a “Notice of Agreement”) or objects to
(a “Notice of Objection”) such Partial CVR Payment Statement.

(iii) If the Shareholder Representative delivers a Notice of Agreement, then any
Partial PDC Net Proceeds Per CVR shall be due and payable to the Holders
pursuant to the procedures set forth in Section 2.4(c) below. If the Shareholder
Representative does not deliver either a Notice of Objection or a Notice of
Agreement within such five (5) Business Day period, then the Shareholder
Representative shall be deemed to have delivered a Notice of Agreement with
respect to such Partial CVR Payment Statement at the end of such period.

 

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(iv) Any Notice of Objection shall contain the Shareholder Representative’s
calculation of the Partial CVR Net Proceeds and the resulting Partial PDC Net
Proceeds Per CVR that such Shareholder Representative believes Holders are
entitled to receive. Such Notice of Objection must also be accompanied by a
description in reasonable detail of each of the objections to the calculations
reflected in the Notice of Objection (collectively, the “Objections”). For a
period of ten (10) Business Days after the delivery of the Notice of Objection,
the Company and the Shareholder Representative shall, in good faith, try to
resolve any Objections; provided, however, that to the extent that the Company
and the Shareholder Representative shall disagree, the Shareholder
Representative’s good faith calculation of the Partial CVR Net Proceeds and the
resulting Partial PDC Net Proceeds Per CVR (as modified to give effect to the
results of any discussions and negotiations pursuant to this clause (iv)) shall
control.

(c) Procedure for the Entire PDC Sale or upon the Sale Deadline.

(i) For a period of ten (10) Business Days following the occurrence of the Sale
Deadline, the Company and the Shareholder Representative shall attempt in good
faith to agree on the Fair Market Value of each Unsold Material PDC Asset using
a generally accepted valuation method. If the Company and the Shareholder
Representative cannot by mutual consent agree on the Fair Market Value of any
Unsold Material PDC Assets within such ten (10) Business Day period, then, with
respect to each Unsold Material PDC Asset on which the Company and the
Shareholder Representative do not agree on the Fair Market Value (a “Disputed
Unsold Material PDC Asset”), either the Company or the Shareholder
Representative may, by written notice to the other (the “Referral Notice”),
determine to refer such dispute to the Selected Real Estate Appraiser in
accordance with the provisions of this Section 2.4(c)(i). In the event that
either the Company or the Shareholder Representative determines to refer such
dispute to the Selected Real Estate Appraiser, then, within ten (10) Business
Days following the delivery of the Referral Notice, each of the Company and the
Shareholder Representative shall separately, by written notice to the other,
select an independent MAI certified real estate appraiser from a nationally
recognized appraisal firm that has not been engaged by PDC, the Company or the
Shareholder Representative in connection with the PDC sale process, which
appraiser shall have been active over the five (5) year period ending on the
date of such selection in the appraisal of shopping center properties located in
the vicinity of such Disputed Unsold Material PDC Asset (each such real estate
appraiser, a “Qualified Real Estate Appraiser”), and the Company and the
Shareholder Representative shall instruct such Qualified Real Estate Appraisers
to select and mutually agree upon a third Qualified Real Estate Appraiser, which
such Qualified Real Estate Appraiser shall be the Selected Real Estate Appraiser
with respect to such Disputed Unsold Material PDC Asset. The parties shall
instruct the Selected Real Estate Appraiser to, within twenty (20) Business Days
from the date of its retention, prepare and deliver to the Company and the
Shareholder Representative such Selected Real Estate Appraiser’s written opinion
of the Fair Market Value of such Disputed Unsold Material PDC Asset (taking into
consideration all office equipment, fixtures, development rights, leases and
other agreements and other property or assets (tangible or intangible)
associated with such Disputed Unsold Material PDC Asset and owned by PDC as of
the Sale Deadline). Notwithstanding anything to the contrary contained in this
Section 2.4, in the event that the Company or any Company Subsidiary enters into
an agreement to sell any Material Unsold PDC Assets after the two (2) year
anniversary of the Closing but prior to the final payment of the Sale

 

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Deadline Net Proceeds, then the Fair Market Value of each such Material Unsold
PDC Asset for purposes of this Section 2.4(c)(i) shall be the greater of (x) the
Fair Market Value as determined by either (A) the mutual consent of the Company
and the Shareholder Representative or (B) the Selected Real Estate Appraiser and
(y) the price of such Material Unsold PDC Assets set forth in such agreement.
The determination of the Fair Market Value of any Disputed Unsold Material PDC
Asset in accordance with this Section 2.4(c)(i) shall be final and binding upon
the Company and the Shareholder Representative and any other Person for purposes
of calculating the Remaining Asset Amount.

(ii) Promptly following the completion of the Entire PDC Sale or the occurrence
of the Sale Deadline, but in no event later than the later of (A) twenty
(20) Business Days thereafter and (B) three (3) Business Days following the date
that Fair Market Value of all Unsold Material PDC Assets has been determined in
accordance with Section 2.4(c)(i) above, the Company shall deliver to the
Shareholder Representative (with a copy to the Rights Agent and Ultimate Parent)
the Company’s good faith written calculation of the PDC Net Proceeds or the Sale
Deadline Net Proceeds (including any Partial PDC Sales), and the resulting PDC
Net Proceeds Per CVR or Sale Deadline Net Proceeds Per CVR, as applicable (the
“Entire CVR Payment Statement”). The Entire CVR Payment Statement shall
incorporate any PDC Sale Expenses of the Shareholder Representative set forth in
writing by the Shareholder Representative to the Company within such twenty
(20) Business Day period, which shall be certified by the Shareholder
Representative. Ultimate Parent and the Company may rely in good faith upon such
certification. For the avoidance of doubt, the Company shall deliver an Entire
CVR Payment Statement even if it believes that there are no PDC Net Proceeds Per
CVR or Sale Deadline Net Proceeds Per CVR due and payable. Such Entire CVR
Payment Statement will be accompanied by the Company’s calculation in reasonable
detail of the components of the PDC Net Proceeds or the Sale Deadline Net
Proceeds, as applicable, including a good faith written calculation, in
reasonable detail and with supporting documentation, work papers and receipts,
of the PDC Sale Expenses incurred by the Company and its Subsidiaries (other
than the Shareholder Representative Expense Amount and any Pre-Funded Amounts
pursuant to Section 3.3(b)), along with an Officer’s Certificate certifying such
PDC Sale Expenses and that the CVR Payment Amount was calculated in the manner
required under this Agreement. The Shareholder Representative may rely in good
faith on such certification.

(iii) Within thirty (30) days after receipt of the Entire CVR Payment Statement,
the Shareholder Representative shall deliver to the Company and the Rights Agent
(with a copy to Ultimate Parent) a Notice of Agreement or a Notice of Objection
to such Entire CVR Payment Statement. During such thirty (30) day period, the
Company shall cooperate with and permit, and Ultimate Parent shall cause the
Company to cooperate with and permit, the Shareholder Representative and any
accountant or other consultant or advisor retained by the Shareholder
Representative access during normal business hours to such records and personnel
(including the external auditors of the Company and its Subsidiaries) as may be
reasonably necessary to verify the accuracy of the Entire CVR Payment Statement
and the amounts underlying the calculation of the CVR Payment Amount.

(iv) If the Shareholder Representative delivers a Notice of Agreement, then any
PDC Net Proceeds Per CVR or Sale Deadline Net Proceeds Per CVR, as applicable,
shall be due and payable to the Holders pursuant to the procedures set forth in
this

 

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Section 2.4(d) below, and, after delivery of any PDC Net Proceeds Per CVR or
Sale Deadline Net Proceeds Per CVR, as applicable, with respect to all Holders
to the Rights Agent, Ultimate Parent and the Company shall thereafter have no
further obligations with respect to such PDC Net Proceeds Per CVR or Sale
Deadline Net Proceeds Per CVR. If the Shareholder Representative does not
deliver either a Notice of Objection or a Notice of Agreement within such thirty
(30) day period, then the Shareholder Representative shall be deemed to have
delivered a Notice of Agreement with respect to such Entire CVR Payment
Statement at the end of such period.

(v) If the Shareholder Representative delivers a Notice of Objection to the
Company within such thirty (30) day period, such Notice of Objection shall
contain the Shareholder Representative’s calculation of the PDC Net Proceeds or
the Sale Deadline Net Proceeds (including any Partial PDC Sales), and the
resulting PDC Net Proceeds Per CVR or Sale Deadline Net Proceeds Per CVR, as
applicable. Such Notice of Objection must also be accompanied by a description
in reasonable detail of each of the Objections, and a certificate certifying
that the CVR Payment Amount reflected in the Notice of Objection was calculated
in the manner required under this Agreement.

(vi) If the Company does not agree with any of the Objections, the Objections
that are in dispute shall be submitted to Grant Thornton LLP (the “Neutral
Auditor”). Such Neutral Auditor shall, within thirty (30) Business Days of such
submission, resolve any differences between the Company and the Shareholder
Representative and such resolution shall, in the absence of manifest error, be
final, binding and conclusive upon Ultimate Parent, the Company, the Shareholder
Representative, each of the other parties hereto and each of the Holders. The
costs, fees and expenses of such Neutral Auditor shall be borne equally by the
Company and the Shareholder Representative; with any such costs, fees and
expenses of the Shareholder Representative being offset against any PDC Net
Proceeds or the Sale Deadline Net Proceeds (including any Partial PDC Sales),
and the resulting PDC Net Proceeds Per CVR or Sale Deadline Net Proceeds Per
CVR, as applicable. For the avoidance of doubt, and notwithstanding anything to
the contrary contained in this Agreement, any such costs, fees and expenses of
such Neutral Auditor to be borne by the Company shall not be considered to be
PDC Sale Expenses. Upon such resolution, the Company and the Shareholder
Representative shall notify the Rights Agent in writing of such resolution and
any PDC Net Proceeds Per CVR or Sale Deadline Net Proceeds Per CVR, as
applicable, shall be due and payable to the Holders in respect of each CVR held
by such Holder pursuant to the procedures set forth in this Section 2.4 below,
and, after delivery of any PDC Net Proceeds Per CVR or Sale Deadline Net
Proceeds Per CVR, as applicable, with respect to all Holders, the Rights Agent,
Ultimate Parent and the Company shall thereafter have no further obligations
with respect to the PDC Net Proceeds Per CVR or Sale Deadline Net Proceeds Per
CVR and shall, subject to Section 2.4(d), no longer be entitled to (i) any
amount to the extent reflected in any such finally resolved PDC Net Proceeds or
Sales Deadline Net Proceeds or (ii) any further PDC Sale Expenses. To the extent
that the PDC Net Proceeds or the Sale Deadline Net Proceeds are less than zero,
the Company shall bear any such costs, fees, expenses or losses.

(d) Once any Partial PDC Net Proceeds Per CVR, PDC Net Proceeds Per CVR, Sale
Deadline Net Proceeds Per CVR or any deferred cash consideration per CVR payable
pursuant to Section 2.4(a)(iv) becomes due and payable pursuant to
Section 2.4(a)(iv),

 

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Section 2.4(b), Section 2.4(c) or Section 2.4(d), the Company shall establish a
CVR Payment Date with respect to the CVR Payment Amount that is within five
(5) Business Days thereafter and shall provide written notice to the Rights
Agent and Shareholder Representative of the same. At least two (2) Business Days
prior to such CVR Payment Date, the Company shall cause all amounts to be paid
to the Holders on such CVR Payment Date, whether comprised of the Partial PDC
Net Proceeds, the PDC Net Proceeds, the Sale Deadline Net Proceeds and/or the
aggregate amount of deferred cash consideration payable pursuant to
Section 2.4(a)(iv), as applicable, to be delivered to the Rights Agent, who will
in turn, on the CVR Payment Date, pay the applicable Partial PDC Net Proceeds
Per CVR, PDC Net Proceeds Per CVR, Sale Deadline Net Proceeds Per CVR or
deferred cash consideration per CVR payable pursuant to Section 2.4(a)(iv) to
each of the Holders (recalculated by the Company and the Shareholder
Representative as of each CVR Payment Date to the extent needed to adjust for
any Reverted Company Shares multiplied by the number of CVRs held by such Holder
as reflected on the CVR Register) by check mailed to the address of each Holder
as reflected in the CVR Register as of the close of business on the last
Business Day prior to such CVR Payment Date. Any PDC Sale Expenses to the extent
not reflected in the finally resolved PDC Net Proceeds or Sale Deadline Net
Proceeds shall be deducted from any such deferred cash consideration. If no CVR
Payment Amount is due and payable to the Holders pursuant to any Partial PDC
Sale, the Entire PDC Sale or at the Sale Deadline, the Rights Agent, upon
written request from the Company and the Shareholder Representative, shall
deliver notice of the same to the Holders within five (5) Business Days of being
notified that no such CVR Payment Amount is owing to the Holders. Whenever a
payment is to be made by the Rights Agent, the Company shall deliver written
instructions with respect to such payment that includes the aggregate amount of
such payment to be paid to the Holders, and the amount per CVR to be paid to
each such Holder. Until such written instructions are received by the Rights
Agent, the Rights Agent may presume conclusively that no event has occurred that
would require such payment.

(e) The Company shall be entitled to deduct and withhold, or cause to be
deducted or withheld, from the CVR Payment Amount otherwise payable pursuant to
this Agreement, such amounts as it may be required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of state,
local or foreign Tax Law. To the extent that amounts are so withheld or paid
over to or deposited with the relevant Governmental Entity, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the Holder in respect of which such deduction and withholding was made.

(f) Any funds comprising the cash deposited with the Rights Agent under Section
2.4(d) that remain undistributed to the Holders twelve (12) months after the CVR
Payment Date with respect to the Entire PDC Sale or the Sale Deadline shall be
delivered to the Company by the Rights Agent, upon written demand by the
Company, and any Holders who have not theretofore received payment in exchange
for such CVRs shall thereafter look only to the Company for payment of their
claim therefor; provided, that to the extent any deferred cash consideration
pursuant to Section 2.4(a)(iv) becomes due and payable after such date, such
deferred cash consideration shall be deposited with the Rights Agent pursuant to
Section 2.4(d) and any such funds that remain undistributed shall only be
delivered to the Company, upon written demand by the Company, twelve (12) months
after the Rights Agent’s receipt thereof, and upon delivery of such funds to the
Company, the escheatment obligations of the Rights Agent with respect to such
funds shall terminate. Notwithstanding anything to the contrary

 

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herein, any portion of the consideration provided by the Company to the Rights
Agent that remains unclaimed immediately prior to such time as such amounts
would otherwise escheat to, or become property of, any Governmental Entity
shall, to the extent permitted by Law, become the property of the Company free
and clear of any claims or interest of any Person previously entitled thereto,
subject to any escheatment Laws.

(g) During the period that the Rights Agent is in possession of the funds
delivered to the Rights Agent for payment to Holders, the Rights Agent shall
identify, report and deliver all unclaimed portions of such amounts and related
unclaimed property to all states and jurisdictions for the Company in accordance
with applicable abandoned property law. None of the Company, the Shareholder
Representative or the Rights Agent shall be liable to any person in respect of
any funds delivered to a public official in compliance with any applicable
state, federal or other abandoned property, escheat or similar law. In
consideration of receiving compensation from the agents of the states for
processing and support services provided by the Rights Agent relating to initial
compliance with applicable abandoned property law, the Rights Agent shall not
charge the Company for such services. In connection with providing such
services, the Rights Agent may use the services of a locating service provider
selected by the Rights Agent to locate and contact Holders, if any, who have not
yet cashed their checks representing payment of the funds deposited with the
Rights Agent for payment to the Holders, which provider has agreed to compensate
the Rights Agent for processing and other services the Rights Agent provides in
connection with such locating services. Such provider shall inform any such
located Holders that they may choose either (i) to contact the Rights Agent
directly to receive a check for payment of such amounts at no charge other than
any applicable fees contemplated herein, or (ii) to utilize the services of such
provider for a fee to be specified in writing to such Holder, which may not
exceed the lesser of 15% of the total value of such payment amount or the
maximum statutory fee permitted by the applicable state jurisdiction. If the
Company requires the Rights Agent to work with a locating service provider other
than one selected by the Rights Agent, additional fees may apply.

(h) The Rights Agent shall not be obligated to perform wage or Form W-2 tax
reporting, and to the extent that any wage or W-2 reporting is required with
respect to the payment of any funds hereunder to Holders, the Company shall
promptly notify the Rights Agent of the person or entity responsible for such
wage or W-2 reporting.

(i) All funds received by the Rights Agent under this Agreement that are to be
distributed or applied by the Rights Agent in the performance of its duties,
obligations and responsibilities hereunder (the “Funds”) shall be held by
Computershare as agent for the Company and deposited in one or more bank
accounts to be maintained by Computershare in its name as agent for the Company.
Until disbursed pursuant to this Agreement, Computershare may hold or invest the
Funds through such accounts in obligations of, or guaranteed by, the United
States of America. The Rights Agent shall have no responsibility or liability
for any diminution of the Funds that may result from any deposit or investment
made by the Rights Agent in accordance with this paragraph, including any losses
resulting from a default by any bank, financial institution or other third
party. Computershare may from time to time receive interest, dividends or other
earnings in connection with such deposits or investments. No interest shall
accrue on any funds deposited with the Rights Agent pursuant to this Agreement.
Computershare shall not be obligated to calculate or pay such interest,
dividends or earnings to

 

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the Company, any Holder or any other person or entity. For the avoidance of
doubt, the preceding three sentences are not meant to cover any interest
included in the PDC Net Proceeds, Partial PDC Net Proceeds, Sale Deadline Net
Proceeds and/or any amounts paid pursuant to Section 2.4(a)(iv).

Section 2.5 No Voting, Dividends or Interest; No Equity or Ownership Interest in
Ultimate Parent or the Company.

(a) The CVRs shall not have any voting or dividend rights, and interest shall
not accrue on any amounts payable on the CVRs to any Holder (without prejudice
to the inclusion in PDC Net Proceeds and Sale Deadline Net Proceeds of the
amounts referenced in Section 2.6).

(b) The CVRs shall not represent any equity or ownership interest in Ultimate
Parent, the Company or any of their Affiliates, or in any constituent company to
the Merger.

Section 2.6 Establishment of PDC CVR Bank Account. Any amounts paid to the
Company or any of its Subsidiaries in connection with any Partial PDC Sale, any
Entire PDC Sale or in connection with any deferred cash consideration with
respect thereto shall be held in a segregated bank account at a banking
institution reasonably acceptable to the Shareholder Representative established
and maintained for the benefit of the Holders and invested in one or more
Qualified Investments until any CVR Payment Amount is required to be paid
pursuant to the terms hereof. Notwithstanding anything to the contrary contained
in this Agreement, other than in connection with any payment pursuant to
Section 2.4(d), the Company shall not withdraw any amounts from such bank
account without the prior written consent of the Shareholder Representative.

ARTICLE III

THE RIGHTS AGENT AND SHAREHOLDER REPRESENTATIVE

Section 3.1 Certain Duties and Responsibilities.

(a) Neither (i) the Rights Agent nor (ii) the Shareholder Representative, the
Shareholder Representative’s direct or indirect holders of Equity Interests, any
individual member of the committee that comprises or controls the Shareholder
Representative or, as applicable, any of their respective managers, directors,
officers, employees, agents or other representatives (such Persons described in
this clause (ii) in their capacities as such, the “Shareholder Representative
Persons”) shall have any liability or responsibility to any Person (A) of any
kind whatsoever for or in respect of its performance of any duties imposed
hereunder or for any actions taken, suffered or omitted to be taken in
connection with this Agreement (including, in the case of the Rights Agent, its
acceptance and administration of this Agreement and the exercise and performance
of its duties hereunder), (B) for any acts or omissions of the other parties
hereto or (C) for damages, losses or expenses arising out of this Agreement,
except (in the case of each of the foregoing clauses) to the extent of their
gross negligence, bad faith or willful or intentional misconduct (each as
determined by a final

 

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judgment of a court of competent jurisdiction). No Shareholder Representative
Person shall have any duties, fiduciary or otherwise, under this Agreement
except the duty to act in good faith and except as expressly set forth herein.
No provision of this Agreement shall require the Rights Agent or any Shareholder
Representative Person to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder or in the
exercise of any of its rights or powers. For purposes of this Section 3.1 and
Sections 3.2, 3.3 and 7.5 below, the term “Rights Agent” shall include the
Rights Agent’s managers, directors, officers, employees, agents or other
representatives in their capacity as such and, for the avoidance of doubt, the
Rights Agent shall be liable for breaches of this Agreement by the Rights
Agent’s managers, directors, officers, employees, agents or other
representatives.

(b) The Shareholder Representative shall have the exclusive authority to act on
behalf of the Holders in enforcing any of their rights hereunder, including the
delivery of a Notice of Objection, statement of Objections and negotiation. The
Shareholder Representative shall be under no obligation to institute any action,
suit or legal proceeding or to take any other action likely to involve material
expense. All rights of action under this Agreement may be (and shall only be)
enforced by the Shareholder Representative, and any action, suit or proceeding
instituted by the Shareholder Representative shall be brought in its name as
Shareholder Representative on behalf of the Holders, and any recovery of
judgment shall be for the ratable benefit of all the Holders, as their
respective rights or interests may appear in the CVR Register.

Section 3.2 Certain Rights of Rights Agent.

The Rights Agent undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement, and no implied duties, covenants or
obligations shall be read into this Agreement against the Rights Agent. In
addition:

(a) the Rights Agent may rely in good faith upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order or other paper or document reasonably believed by it to be genuine and to
have been signed or presented by the proper party or parties;

(b) (i) whenever the Rights Agent shall reasonably require that a matter be
established or proved by the Company prior to taking, suffering or omitting to
take any action hereunder, the Rights Agent may request and rely upon a
certificate signed by the chief executive officer, president, chief financial
officer, any vice president, the controller, the treasurer or the secretary of
the Company on behalf of the Company, which certificate shall be, if signed by
the party or parties required to consent to such action, full authorization and
protection to the Rights Agent, and the Rights Agent shall, in the absence of
gross negligence, bad faith or willful or intentional misconduct (each as
determined by a final judgment of a court of competent jurisdiction) on its
part, incur no liability, and shall be protected and be held harmless by the
Company, for or in respect of any action taken, suffered or omitted to be taken
by it under the provisions of this Agreement in reliance upon such certificate;
and (ii) whenever the Rights Agent shall reasonably require that a matter be
established or proved by the Shareholder Representative prior to taking,
suffering or omitting to take any action hereunder, the Rights Agent may request
and rely upon a certificate signed by each then current individual member of

 

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the committee that comprises or controls the Shareholder Representative on
behalf of the Shareholder Representative, which certificate shall be, if signed
by the party or parties required to consent to such action, full authorization
and protection to the Rights Agent, and the Rights Agent shall, in the absence
of gross negligence, bad faith or willful or intentional misconduct (each as
determined by a final judgment of a court of competent jurisdiction) on its
part, incur no liability, and shall be protected and be held harmless by the
Company, for or in respect of any action taken, suffered or omitted to be taken
by it under the provisions of this Agreement in reliance upon such certificate;

(c) the Rights Agent may engage and consult with counsel of its selection (who
may be legal counsel for the Rights Agent or an employee of the Rights Agent)
and the written advice of such counsel or any opinion of counsel shall be full
and complete authorization and protection in respect of any action taken,
suffered or omitted to be taken by it hereunder in good faith and in reliance
thereon;

(d) the permissive rights of the Rights Agent to do things enumerated in this
Agreement shall not be construed as a duty;

(e) the Rights Agent shall not be required to give any note or surety in respect
of the execution of such powers or otherwise in respect of the premises;

(f) except as otherwise set forth in this Agreement, the Rights Agent shall have
no liability and shall be held harmless by the Company in respect of the
validity of this Agreement, the statements of fact or recitals contained herein
(or be required to verify the same), or the execution and delivery hereof
(except the due execution and delivery hereof by the Rights Agent and the
enforceability of this Agreement against the Rights Agent assuming the due
execution and delivery hereof by the other parties hereto); nor shall it be
responsible for any breach by the Company or any other party of any covenant or
condition contained in this Agreement nor shall the Rights Agent be responsible
for, nor chargeable with, knowledge of, nor have any requirements to comply
with, the terms and conditions of any other agreement, instrument or document,
including, without limitation, the Merger Agreement, nor shall the Rights Agent
be required to determine if any person or entity has complied with any such
agreements, instruments or documents, nor shall any additional obligations of
the Rights Agent be inferred from the terms of such agreements, instruments or
documents even though reference thereto may be made in this Agreement;

(g) notwithstanding anything in this Agreement to the contrary, (i) the Rights
Agent shall in no event be liable for special, punitive or unforeseeable
consequential damages (unless such damages are to third parties with respect to
third party claims that result in a judgment against the Rights Agent for such
damages), and (ii) any liability of the Rights Agent, including, but not limited
to, foreseeable consequential damages, shall be limited to the amount of fees
paid by the Company to the Rights Agent (excluding amounts paid to the Rights
Agent as reimbursement for expenses and other charges);

(h) the Rights Agent and any of its affiliates may buy, sell or deal in any
securities of the Company or the Ultimate Parent or become peculiarly interested
in any transaction in which the Ultimate Parent or the Company may be
interested, or contract with or

 

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lend money to the Ultimate Parent or the Company or otherwise act as fully and
freely as though it were not the Rights Agent under this Agreement. Nothing
herein shall preclude the Rights Agent from acting in any other capacity for the
Ultimate Parent or the Company or for any other Person; and

(i) the Rights Agent may execute and exercise any of the rights or powers hereby
vested in it or perform any duty hereunder either itself (through its directors,
officers and employees) or by or through its attorneys or agents; provided, that
the Rights Agent shall be liable for breaches of this Agreement by such
directors, officers, employees, attorneys or agents.

Section 3.3 Indemnity and Expenses.

(a) The Company agrees to indemnify, defend and hold harmless each Shareholder
Representative Person and the Rights Agent for, and to hold each Shareholder
Representative Person and the Rights Agent harmless against, any loss,
liability, judgment, fine, penalty, claim, demand, suit, cost, damage or
expense, including reasonable out-of-pocket expenses (including the reasonable
costs and expenses of legal counsel) arising out of or in connection with the
Rights Agent’s and the Shareholder Representative’s respective duties under this
Agreement, including the reasonable out-of-pocket costs and expenses of
defending the Rights Agent and each individual member of the Committee that
comprises or controls the Shareholder Representative against any claims,
charges, demands, investigations, suits or loss or liability, or enforcement of
its rights hereunder, unless it shall have been finally determined by a judgment
of a court of competent jurisdiction to be a direct result of the Rights Agent’s
or such Shareholder Representative Person’s, as applicable, gross negligence,
bad faith or willful or intentional misconduct. The right to indemnification
conferred in this Section 3.3(a) shall include the right to be paid or
reimbursed by the Company for the reasonable expenses incurred by such Person
entitled to be indemnified under this Section 3.3(a) who was, or is threatened
to be made a named defendant or respondent in a claim, charge, demand,
investigation or suit in advance of the final disposition thereof and without
any determination as to the Person’s ultimate entitlement to indemnification.
The rights granted pursuant to this Section 3.3(a) shall be deemed contract
rights, and no amendment, modification or repeal of this Section 3.3(a) shall
have the effect of limiting or denying any such rights with respect to claims,
charges, demands, investigations and suits arising prior to any such amendment,
modification or repeal. The Shareholder Representative Person’s aggregate
liability to any Person with respect to, arising from, or arising in connection
with this Agreement, or from all services provided or omitted to be provided
under this Agreement, whether in contract, or in tort, or otherwise, is limited
to, and shall not exceed, the amounts paid hereunder by the Company to the
Shareholder Representative as fees and charges, but not including reimbursable
expenses. Indemnification under this Section 3.3(a) shall continue as to a
Person who has ceased to serve in the capacity which initially entitled such
Person to indemnity hereunder. Any such amounts incurred by the Company in
connection with this Section 3.3(a) shall be a PDC Sale Expense.

(b) The Company or any of its Affiliates shall, if and as requested by the
Shareholder Representative at any time from and after the Effective Time through
the termination of this Agreement, pay to or at the direction of the Shareholder
Representative fees and expenses incurred at the direction of the Shareholder
Representative pursuant to this

 

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Agreement (“Shareholder Representative Reimbursement Amount”). Subject to the
next sentence, the Company or any of its Affiliates shall, if and as requested
by the Shareholder Representative at any time from and after the Effective Time
through the termination of this Agreement, transfer to a joint account of the
Company and the Shareholder Representative funds in the amount of $25,000,000
less the Shareholder Representative Reimbursement Amount actually paid through
that date for use as directed by the Shareholder Representative (the
“Shareholder Representative Expense Amount”) pursuant to this Agreement. If any
amounts are required in excess of $25,000,000 (and, to the extent the
Shareholder Representative Expense Amount has been funded, only after such
amount has been fully expended), then at the request of the Shareholder
Representative from time to time, the Company or an Affiliate of the Company
will promptly pay such additional fees and expenses incurred at the direction of
the Shareholder Representative pursuant to this Agreement and/or pre-fund to
such joint account an amount reasonably specified by the Shareholder
Representative in respect of expected expenses in connection with the PDC Sale
(including payments to such advisors as the Shareholder Representative may
choose to engage in connection with the PDC Sale) and performance of its
obligations and duties hereunder (any such amount, a “Pre-Funded Amount”). Any
amounts held in such joint account shall be treated as owned by the Company for
all income tax purposes, any interest or other income earned with respect to
such joint account shall be reported as income of the Company for tax purposes
and, for the avoidance of doubt, no portion of the Shareholder Representative
Reimbursement Amount, the Shareholder Representative Expense Amount or any
Pre-Funded Amount shall be considered income to the Shareholder Representative
for tax purposes. The parties hereto will prepare all Tax Returns in a manner
consistent with the foregoing sentence. Any Shareholder Representative
Reimbursement Amount and any amounts (and only such amounts) actually spent from
the Shareholder Representative Expense Amount or Pre-Funded Amounts shall be
included in the calculation of PDC Sale Expenses hereunder. Any funds from the
Shareholder Representative Expense Amount or Pre-Funded Amounts that remain
unused on the earlier of the consummation of the Entire PDC Sale and the Sale
Deadline (taking into account the completion of the procedures set forth in
Section 2.4) shall be distributed from the joint account to the Company five
(5) Business Days after the payment of the PDC Net Proceeds Per CVR or the Sale
Deadline Net Proceeds Per CVR. For the avoidance of doubt, the Company or one of
its Affiliates shall pay all PDC Sales Expenses, including any such PDC Sale
Expenses incurred at the direction of the Shareholder Representative, subject to
the deduction of such PDC Sale Expenses from the payments to the Holders as is
provided for hereunder. Notwithstanding the foregoing, after the completion of
an Entire PDC Sale, the Company’s consent, which shall not be unreasonably
withheld, will be required for any fees or expenses that the Shareholder
Representative may wish to incur pursuant to this Section 3.3(b), to the extent
that the aggregate amount of such fees and expenses would exceed the amount of
deferred consideration reasonably expected from such Entire PDC Sale.

(c) The Company agrees, in all events (i) to pay the fees and expenses of the
Rights Agent in connection with this Agreement as set forth on Schedule 3.3(c)
hereto and (ii) to reimburse the Rights Agent for all taxes and governmental
charges (other than taxes measured by the Rights Agent’s income) and reasonable
and customary out-of-pocket expenses (including reasonable and customary fees
and expenses of the Rights Agent’s counsel) paid or incurred by the Rights Agent
in connection with the preparation, delivery, amendment, administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. Any invoice for any out-of-pocket expenses and per item fees realized
will be

 

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rendered and payable by the Company within thirty (30) days after receipt by the
Company, except for postage and mailing expenses, which funds must be received
one (1) Business Day prior to the scheduled mailing date. For the avoidance of
doubt, 50% of such fees, expenses and reimbursements contained in this
Section 3.3 shall be PDC Sale Expenses and the remaining 50% of such fees,
expenses and reimbursements shall not be PDC Sale Expenses.

Section 3.4 Resignation and Removal of Rights Agent and Shareholder
Representative; Appointment of Successor.

(a) The Rights Agent may resign at any time by giving written notice thereof to
the Company (with a copy to Ultimate Parent) and the Shareholder Representative
specifying a date when such resignation shall take effect, which notice shall be
sent at least thirty (30) days prior to the date so specified. Any individual
members of the committee that comprises or controls the Shareholder
Representative may resign at any time by giving written notice thereof to the
Company (with a copy to Ultimate Parent), the Rights Agent and the Holders
specifying a date when such resignation shall take effect, which notice shall be
sent at least thirty (30) days prior to the date so specified.

(b) If at any time the Rights Agent shall resign, be removed or become incapable
of acting, the Company, by a Board Resolution, shall promptly appoint a
qualified successor Rights Agent reasonably satisfactory to the Shareholder
Representative. The successor Rights Agent so appointed shall, upon its
acceptance of such appointment in accordance with this Section 3.4(b), become
the successor Rights Agent.

(c) If (i) a successor Rights Agent has not been appointed pursuant to
Section 3.4(b) and has not accepted such appointment within thirty (30) days
after the initial Rights Agent delivers notice of its resignation pursuant to
Section 3.4(a) or (ii) at any time the Rights Agent shall become incapable of
acting, the incumbent Rights Agent, the Shareholder Representative or the
Company may petition any court of competent jurisdiction for the removal of the
Rights Agent, if applicable, and the appointment of a successor Rights Agent.

(d) If at any time any individual members of the committee that comprises or
controls the Shareholder Representative shall resign, be removed or become
incapable of acting, the remaining members of the committee that comprises or
controls the Shareholder Representative shall promptly appoint a qualified
successor individual member to such committee. If the individual members of the
committee that comprises or controls the Shareholder Representative unanimously
determine that a third committee member would be appropriate, then the members
of the committee that comprises or controls the Shareholder Representative shall
appoint, upon unanimous agreement, a qualified individual member to such
committee. The successor or additional individual member so appointed shall,
forthwith upon its acceptance of such appointment in accordance with this
Section 3.4(d), become a successor or additional individual member of the
committee comprising the Shareholder Representative; provided, that (x) such
successor or additional individual member of the committee comprising the
Shareholder Representative may not be a director, officer or employee of the
Company or any of its Affiliates and (y) the Company agrees to indemnify the
Shareholder Representative for any and all actions taken in connection with this
Section 3.4(d).

 

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(e) The Company shall give written notice of each resignation and each removal
of a Rights Agent or individual member of the committee comprising the
Shareholder Representative and each appointment of a successor Rights Agent or
individual member of the committee comprising the Shareholder Representative to
the then acting members of the committee comprising the Shareholder
Representative or then acting Rights Agent, as applicable, within ten (10) days
after acceptance of appointment by a successor Rights Agent or individual member
of the committee comprising the Shareholder Representative. If requested, the
Rights Agent (or successor Rights Agent) shall mail notice of each resignation
and each removal of a Rights Agent or individual member of the committee
comprising the Shareholder Representative and each appointment of a successor
Rights Agent or individual member of the committee comprising the Shareholder
Representative to the Holders within ten (10) days after receipt of notice
thereof and all necessary information from the Company. Each such notice
provided to the Rights Agent, Shareholder Representative, or Holders shall
include the name and address of the successor Rights Agent or Shareholder
Representative, as applicable.

Section 3.5 Acceptance of Appointment by Successor.

Every successor Rights Agent or Shareholder Representative appointed hereunder
shall execute, acknowledge and deliver to the Company and to the retiring Rights
Agent or Shareholder Representative, as applicable, an instrument accepting such
appointment and a counterpart of this Agreement, and thereupon such successor
Rights Agent or Shareholder Representative, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Rights Agent or Shareholder Representative (as applicable); but,
on request of the Company or the successor Rights Agent, such retiring Rights
Agent shall execute and deliver an instrument transferring to such successor
Rights Agent all the rights, powers and trusts of the retiring Rights Agent.

ARTICLE IV

ADDITIONAL COVENANTS

Section 4.1 Operations.

(a) From and after the Effective Time until the payment of the PDC Net Proceeds
or the Sale Deadline Net Proceeds, (x) to the extent requested by the
Shareholder Representative, the consent of the Shareholder Representative shall
be required in connection with any material action or other material matter that
would, consistent with PDC’s past practice, require the approval of the board of
directors, the board of managers or the holders of the Equity Interests of any
of the PDC Entities (it being understood and agreed for the avoidance of doubt,
the officers of the PDC Entities shall have the authority to run the day to day
operations of the PDC Entities, subject to the foregoing and except as otherwise
determined by the Company and the Shareholder Representative) and (y) the
Shareholder Representative shall have the right to direct and cause the PDC
Entities to take or authorize any actions with respect to the entrance into,
renewal, termination, extension or material amendment or waiver by any PDC
Entity of any material Affiliate Transaction (other than, for the avoidance of
doubt, back-office, general and administrative, overhead and similar
arrangements in the ordinary course of business consistent with past practice
prior to Closing). Without limiting the foregoing, from and after the Effective

 

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Time until the payment of the PDC Net Proceeds or the Sale Deadline Net
Proceeds, whichever is earlier, the Company shall, and shall cause its
Subsidiaries to, (1) to the extent legally permissible (and subject to the
Shareholder Representative’s entry into a customary non-disclosure agreement to
the extent required by applicable Law), reasonably promptly provide to the
Shareholder Representative all information received by the Company or any of its
Subsidiaries relating to PDC or any of its Subsidiaries, (2) cause the PDC
Business to be operated substantially in the ordinary course of business
consistent with past practice, (3) cause the PDC Entities to distribute any
proceeds with respect to any Partial PDC Sale or the Entire PDC Sale to the
Company or any Company Subsidiary such that it may be distributed to the Holders
and (4) cause the PDC Entities not to, directly or indirectly, do, or agree to
do, any of the following:

(i) (A) amend or otherwise change the certificate of incorporation or bylaws or
equivalent organizational documents of any of the PDC Entities, or (B) adopt or
enter into a plan or agreement of complete or partial liquidation or dissolution
of any of the PDC Entities;

(ii) issue, sell, pledge, dispose of, grant, transfer or encumber, or authorize
the issuance, sale, pledge, disposition, grant, transfer or encumbrance of, any
equity interests of any of the PDC Entities or otherwise grant any equity or
equity-based awards, or allow for the commencement of any new offering periods
under any employee stock purchase plans;

(iii) except in connection with a PDC Sale Agreement, sell, pledge, dispose of,
abandon, mortgage, transfer or otherwise encumber or subject to any lien any
property or assets of the PDC Entities;

(iv) reclassify, combine, split or subdivide any of their outstanding Equity
Interests;

(v) redeem, repurchase or otherwise acquire any of their issued and outstanding
Equity Interests except in connection with transactions among the PDC Entities;

(vi) acquire (whether pursuant to merger, stock or asset purchase or otherwise)
in one transaction or any series of related transactions all or substantially
all of the Equity Interests in any Person or any business or division of any
Person or all or substantially all of the property or assets of any Person (or
business or division thereof) that would be material to the PDC Business;

(vii) incur any Indebtedness for borrowed money or issue any debt securities or
guarantee the obligations of any Person for borrowed money, except (A) for any
such Indebtedness among one or more of the PDC Entities, (B) for any such
Indebtedness for borrowed money incurred in the ordinary course of business,
(C) for guarantees by any of the PDC Entities of Indebtedness for borrowed money
of any of the PDC Entities, (D) Indebtedness for borrowed money pursuant to any
credit facilities, indentures or similar Contracts of any of the PDC Entities
existing as of the date hereof, or (E) indebtedness obtained by PDC for the
operation of its business (including, without limitation, the funding of
development and redevelopment activity);

 

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(viii) other than in the ordinary course of business and in connection with the
PDC Restructuring, (A) terminate or materially and adversely amend any Contract
material to the PDC Business (other than the expiration or termination of any
such material contract in accordance with its terms), or (B) enter into any
contract or agreement by and between any of the PDC Entities, on the one hand,
and any of their shareholders or any of their Affiliates (other than any of the
PDC Entities), on the other;

(ix) except as may be required by a benefit plan applicable to PDC employees (a
“PDC Benefit Plan”) in existence on the date of this Agreement or by applicable
Law: (A) increase the compensation or benefits payable or to become payable to
its directors, officers or senior-level employees (except for increases in the
ordinary course of business consistent with past practice), (B) grant any rights
to severance or termination pay to, or enter into any employment or severance
agreement with, any director, officer or other employee of any of the PDC
Entities other than in the ordinary course of business consistent with past
practice, (C) take any affirmative action to amend or waive any performance or
vesting criteria or accelerate vesting, exercisability or funding of any equity
interests, (D) except as required by GAAP, change any actuarial or other
assumption used to calculate funding obligations with respect to any PDC Benefit
Plan, (E) establish, adopt, enter into, materially amend or terminate any PDC
Benefit Plan (other than as may be required by the terms of an existing PDC
Benefit Plan or in connection with expiring collective bargaining agreements) or
(F) provide any funding to any rabbi trust or similar arrangement;

(x) (A) enter into or make any loans to any of its current or former executive
officers, directors, employees, agents or consultants (other than loans or
advances in the ordinary course of business consistent with past practice) or
make any change in its existing borrowing or lending arrangements for or on
behalf of any of such Persons, except as required by the terms of any PDC
Benefit Plan or (B) otherwise make any loans, advances or capital contributions
to or investments in any Person outside the ordinary course of business
consistent with past practice (other than any of the PDC Entities);

(xi) make any change in accounting policies or procedures, other than in the
ordinary course of business or as required by GAAP or by a Governmental Entity;

(xii) settle or compromise any material litigation involving amounts in excess
of $500,000 individually, or which settlement or compromise would impose a
non-monetary obligation on any of the PDC Entities after the Effective Time that
is material to the PDC Entities, taken as a whole;

(xiii) except as would be consistent with past practice of the Company and the
Company Subsidiaries, or as would not impact the CVR Payment Amount, make or
change any material tax election, settle or compromise any material liability of
any of the PDC Entities for taxes, file any material amendment to a previously
filed tax return, agree to an extension or waiver of the statute of limitations
with respect to the assessment or determination of material taxes, enter into
any closing agreement with respect to any material tax or surrender any right to
claim a material tax refund; or

 

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(xiv) authorize or enter into any agreement or otherwise make any commitment to
do any of the foregoing.

(b) Company-PDC Loans. During the period from and after the Effective Time until
the consummation of the PDC Sale or the Sale Deadline, whichever is earlier, the
Company shall, as reasonably requested by the Shareholder Representative,
continue to advance one or more Company-PDC Loans to PDC in accordance with the
definitive loan documents in respect of the Company-PDC Loans. All amounts
received by PDC in connection with any Partial PDC Sales (excluding the amounts
required to pay the PDC Loan Mandatory Prepayment Amount with respect to such
Partial PDC Sale) may be used by PDC in the ordinary course of its business
(including, without limitation, the funding of development and redevelopment
activity) and any amounts so used or set aside to be used shall not be Partial
PDC Net Proceeds. Any decision to use such amounts in the ordinary course of
business, and not as a distribution to Holders, shall be made by the Shareholder
Representative.

Section 4.2 List of Holders.

The Company shall furnish or cause to be furnished to the Rights Agent, in such
form as the Company receives from the transfer agent of the Company, or from
such other agent performing similar services for the Company, or from the
Company’s internal records with regard to Company Options, Restricted Shares,
Performance Share Awards, Restricted Stock Units and shares credited in the
“stock credit accounts” to the extent no records from a third party agent are
maintained in the ordinary course, the names and addresses of the Holders and
the number of CVRs held by each such Holder, within five (5) Business Days of
the Effective Time.

Section 4.3 PDC Sale Process.

(a) From and after the Effective Time until the consummation of the Entire PDC
Sale or the Sale Deadline, whichever is earlier, the Shareholder Representative
shall be responsible for conducting the sale process of PDC and shall be
empowered to take all actions necessary or advisable in order to consummate a
PDC Sale, including retaining advisors in connection with the PDC Sale,
soliciting potential purchasers for the PDC Entities or any of the assets or
business of the PDC Entities and determining which purchaser to select,
negotiating the terms and conditions of any PDC Sale Agreement, including the
purchase price thereof, and effectuating the consummation of such PDC Sale. The
Shareholder Representative shall seek in good faith to complete the sale process
of PDC prior to the Sale Deadline, whether as an Entire PDC Sale or as multiple
Partial PDC Sales, with the goal of not having any Unsold Material PDC Assets as
at the Sale Deadline.

(b) During the period from and after the Effective Time until the consummation
of the Entire PDC Sale or the Sale Deadline, whichever is earlier, the Company
shall, and shall cause its Affiliates to, use commercially reasonable efforts to
provide or cause to be provided to the Shareholder Representative all assistance
reasonably requested by the

 

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Shareholder Representative in the preparation of the sales process, the
negotiation and consummation of the transactions contemplated by the Entire PDC
Sale or any Partial PDC Sale, including the use of commercially reasonable
efforts (i) to provide such information, financial or otherwise, with respect to
the PDC Entities or the PDC Business as the Shareholder Representative may
reasonably request, to the extent such information is reasonably available to,
or can be reasonably attained by, the Company or any Company Subsidiary, (ii) to
assist in the preparation of disclosure schedules, exhibits and ancillary
agreements contemplated in the applicable sales agreement relating to the Entire
PDC Sale or any such Partial PDC Sale, to the extent such information is
reasonably available to, or can be reasonably attained by, the Company or any
Company Subsidiary, and (iii) to assist in obtaining approvals from Governmental
Entities and consents and notices required to be obtained from or made to other
Persons under the sales agreement relating to the Entire PDC Sale or any such
Partial PDC Sale; provided, that, for the avoidance of doubt, all out-of-pocket
costs, fees and expenses of the Company or its Affiliates in complying with this
Section 4.3(b) shall be PDC Sale Expenses, other than Excluded Expenses (which,
for the avoidance of doubt, shall not be PDC Sale Expenses). The Company shall,
and shall cause its Affiliates to, afford to the Shareholder Representative
reasonable access, upon reasonable prior notice and during normal business hours
to the Company’s officers, employees, properties, books, contracts and records
as the Shareholder Representative may reasonably request relating to the PDC
Entities; provided, that the Shareholder Representative shall conduct any such
activities in such a manner as not to interfere unreasonably with the business
or operations of the Company.

(c) The Shareholder Representative shall consult with the Company in the Entire
PDC Sale or any Partial PDC Sale and shall keep the Company and Ultimate Parent
reasonably informed on a current basis of the status, details and progress of
any negotiations for the Entire PDC Sale or any Partial PDC Sale, including by
providing copies of any marketing or information materials, the prospective
purchaser’s financial statements and the current interim drafts of any PDC Sale
Agreement, and shall provide reasonable time to the Company and Ultimate Parent
for review of such documents.

(d) In the event a definitive agreement is to be entered into prior to the Sale
Deadline with respect to the Entire PDC Sale or one or more Partial PDC Sales,
such agreement shall not, without the consent of the Company (which such consent
shall not be unreasonably withheld, delayed or conditioned), (i) require the
Company or any Company Subsidiary to agree to any material operating
restrictions applicable to the Company or any Company Subsidiary (other than
customary (A) confidentiality and/or employee non-solicitation restrictions that
survive for no more than two (2) years from and after the Effective Time, (B)
restrictions relating to the PDC Entities, any of their respective properties or
assets, the PDC Business, any portions thereof or the Company’s or any Company
Subsidiary’s management, operation or oversight thereof, and (C) restrictions
contained in the PDC Lease Agreement for each of the Contributed Stores), (ii)
require the Company or any Company Subsidiary to agree to any recourse
applicable to the Company or any Company Subsidiary in excess of any escrow
amount, holdback or similar amount after the closing of such agreement other
than with respect to any customary indemnity obligations for (A) any breaches by
the Company or any Company Subsidiaries of (x) its covenants or agreements
contained in such agreement or (y) any customary representations in such
agreement relating to organization, qualification, capitalization, title to
assets, authority, no conflicts, brokers, taxes, environmental matters or
employee benefits or (B)

 

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pre-closing taxes relating to the PDC Entities, any of their respective
properties or assets, the PDC Business, or any portions thereof, (iii) require
the Company or any Company Subsidiary to retain any material excluded or
retained liabilities (other than in connection with the matters described in
(ii) above) relating to the securities or assets of any of the PDC Entities
being directly or indirectly sold, transferred or otherwise disposed of in
connection with such Entire PDC Sale or Partial PDC Sale after the closing of
such agreement or (iv) be sold for a price that is payable in consideration
other than cash or that, in the good faith judgment of the Shareholder
Representative, would cause the PDC Net Proceeds or the Partial PDC Net Proceeds
from such sale agreement to be less than zero. For the avoidance of doubt, and
notwithstanding anything in any definitive agreement with respect to the Entire
PDC Sale or any Partial PDC Sale, the Shareholder Representative shall control
any third party claims relating to or arising under any such definitive
agreement to the extent that any damages claimed thereunder are reasonably
likely to be covered in full by any escrow, holdback or similar amount
thereunder, without direct liability of the Company or any Company Subsidiary
and any costs, fees or expenses incurred by such Shareholder Representative in
connection therewith shall be included in PDC Sale Expenses. If, in connection
with any Entire PDC Sale or Partial PDC Sale which includes employees of PDC, if
so requested by the purchaser, the Company shall provide personnel transition
services to such purchaser for no more than six (6) months and at no additional
cost to the Company, pursuant to a transition services agreement in form and
substance reasonably acceptable to the Company.

(e) Upon the consummation of the Entire PDC Sale or any Partial PDC Sale, unless
otherwise agreed to between the Company and the purchaser under such PDC Sale
Agreement, all intercompany arrangements and obligations between the Company and
the PDC Entities will be terminated and the Company shall take all actions
necessary or advisable to cause such termination.

Section 4.4 Books and Records.

The Company shall, and shall cause its Subsidiaries to, use commercially
reasonable efforts to keep true, complete and accurate records in sufficient
detail to enable the Shareholder Representative and its consultants or
professional advisors to determine the amounts payable hereunder.

ARTICLE V

AMENDMENTS

Section 5.1 Amendments Without Consent of Holders.

(a) Without the consent of any Holders, the Rights Agent, or the Shareholder
Representative, the Company (when authorized by a Board Resolution), at any time
and from time to time, may enter into one or more amendments hereto, subject to
Section 6.1, to evidence the succession of another Person to the Company and the
assumption by any such successor of the covenants of the Company herein.

 

29

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(b) Without the consent of any Holders, the Company (when authorized by a Board
Resolution), the Shareholder Representative and the Rights Agent, at any time
and from time to time, may enter into one or more amendments hereto, for any of
the following purposes:

(i) to evidence the removal or replacement of the Rights Agent or any individual
member of the committee comprising the Shareholder Representative and the
succession of another Person as a successor Rights Agent or individual member of
the committee comprising or controlling the Shareholder Representative, as
applicable, and the assumption by any successor of the obligations of the Rights
Agent or Shareholder Representative, as applicable, herein, in accordance with
Sections 3.4 and 3.5;

(ii) to add to the covenants of the Company such further covenants,
restrictions, conditions or provisions as the Company, the Rights Agent and the
Shareholder Representative shall consider to be for the protection of the
Holders; provided, that, in each case, such provisions shall not adversely
affect the interests of the Holders as determined by the Shareholder
Representative;

(iii) to cure any ambiguity, to correct or supplement any provision herein that
may be defective or inconsistent with any other provision herein, or to make any
other provisions with respect to matters or questions arising under this
Agreement; provided, that, in each case, such provisions shall not adversely
affect the interests of the Holders as determined by the Shareholder
Representative; or

(iv) as may be necessary to ensure that the CVRs are not subject to registration
under the Securities Act or the Exchange Act.

(c) Promptly after the execution by the Company (and the Rights Agent, as
applicable), of any amendment pursuant to the provisions of this Section 5.1,
the Company will mail (or cause the Rights Agent to mail) a notice thereof by
first class mail to the Holders at their addresses as they appear on the CVR
Register, setting forth such amendment.

Section 5.2 Amendments with Consent of the Shareholder Representative.

(a) With the written consent of the Shareholder Representative, the Company
(when authorized by a Board Resolution), the Shareholder Representative and the
Rights Agent may enter into one or more amendments hereto for the purpose of
adding, eliminating or changing any provisions of this Agreement, even if such
addition, elimination or change is adverse to the interest of the Holders.

(b) Promptly after the execution by the Company, the Shareholder Representative
and the Rights Agent of any amendment pursuant to the provisions of this
Section 5.2, the Company will mail (or cause the Rights Agent to mail) a notice
thereof by first class mail to the Holders at their addresses as they appear on
the CVR Register, setting forth such amendment.

Section 5.3 Execution of Amendments.

 

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In executing any amendment permitted by this ARTICLE V, the Rights Agent will be
entitled to receive, and will be fully protected in relying upon, an opinion of
counsel selected by the Company stating that the execution of such amendment is
authorized or permitted by this Agreement. The Rights Agent may, but is not
obligated to, enter into any such amendment that affects the Rights Agent’s own
rights, privileges, covenants or duties under this Agreement or otherwise.

Section 5.4 Effect of Amendments.

Upon the execution of any amendment permitted under this ARTICLE V, this
Agreement shall be modified in accordance therewith, such amendment shall form a
part of this Agreement for all purposes and each Holder, Ultimate Parent, the
Company, the Shareholder Representative and the Rights Agent shall be bound
thereby.

ARTICLE VI

CONSOLIDATION, MERGER, SALE OR CONVEYANCE

Section 6.1 Company Consolidation, Merger, Sale or Conveyance.

(a) From and after the Effective Time until such time as all of the Company’s
payment obligations shall have been discharged, the Company shall not
consolidate with or merge into any other Person or convey, assign, transfer or
lease its properties and assets substantially as an entirety to any Person,
unless:

(i) in the case that the Company shall consolidate with or merge into any other
Person or convey, assign, transfer or lease its properties and assets
substantially as an entirety to any Person, the Person formed by such
consolidation or into which the Company is merged or the Person that acquires by
conveyance or transfer, or that leases, the properties and assets of the Company
substantially as an entirety (the “Surviving Person”) shall expressly assume
payment of amounts on all the CVRs and the performance of every duty and
covenant of this Agreement on the part of the Company to be performed or
observed; and

(ii) prior to such transaction, the Company has delivered to the Shareholder
Representative an Officer’s Certificate stating that such consolidation, merger,
conveyance, transfer or lease complies with this ARTICLE VI and that all
conditions precedent herein provided for relating to such transaction have been
complied with.

(b) For purposes of this Section 6.1, “convey, transfer or lease its properties
and assets substantially as an entirety” shall mean properties and assets
contributing in the aggregate at least a majority of the Company’s and its
Subsidiaries’ total consolidated revenues as reported in the last available
periodic financial report (quarterly or annual, as the case may be).

(c) In the event the Company conveys, transfers or leases its properties and
assets substantially as an entirety in accordance with the terms and conditions
of this Section 6.1, the Company and the Surviving Person shall be jointly and
severally liable for the payment of the CVR Payment Amount and the performance
of every duty and covenant of this Agreement

 

31

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on the part of the Company to be performed or observed. Notwithstanding anything
to the contrary contained herein, no consolidation, merger, sale, conveyance or
assignment involving the Company shall relieve the Company of its obligations
and liabilities to the Rights Agent hereunder, unless by written consent of the
Rights Agent, such consent not to be unreasonably withheld, conditioned or
delayed.

Section 6.2 Successor Substituted.

Upon any consolidation of or merger by the Company with or into any other
Person, or any conveyance, transfer or lease of the properties and assets
substantially as an entirety to any Person in accordance with Section 6.1, the
Surviving Person shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under this Agreement with the same effect
as if the Surviving Person had been named as the Company herein; provided, that
notwithstanding any such transaction, if the Company is a surviving entity in
the transaction, the Company shall also remain liable for the performance by the
“Company” hereunder.

ARTICLE VII

OTHER PROVISIONS OF GENERAL APPLICATION

Section 7.1 Notices to Ultimate Parent, the Company, the Shareholder
Representative and the Rights Agent.

All communications, notices and disclosures required or permitted by this
Agreement shall be in writing and will be deemed to have been given when
delivered by first class mail or one (1) Business Day after having been
dispatched for next-day delivery by a nationally recognized overnight courier
service to the appropriate party at the address specified below:

If to Ultimate Parent, to:

AB Acquisition LLC

250 Parkcenter Blvd.

Boise, ID 83706

Attention: Robert G. Miller

Email: Robert.Miller@albertsons.com

Facsimile: (208) 395-4625

with a copy (which shall not constitute notice) to:

Cerberus Capital Management, L.P.

875 Third Avenue, 11th Floor

New York, NY 10022

Attention: Lenard Tessler, Mark Neporent, Lisa Gray

Email: LTessler@cerberuscapital.com;

 

32

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Cerberus Capital Management, L.P.

MNeporent@cerberuscapital.com

LGray@cerberuschicago.com

Facsimile: (212) 891-1540

with a copy (which shall not constitute notice) to:

Schulte Roth & Zabel LLP

919 Third Avenue

New York, NY 10022

Attention: Stuart D. Freedman; Robert B. Loper,

John M. Pollack

Email: Stuart.Freedman@srz.com;

Robert.Loper@srz.com;

John.Pollack@srz.com

Facsimile: (212) 593-5955

If to the Company, to:

Safeway Inc.

5918 Stoneridge Mall Road

Pleasanton, California 94588

Attn: General Counsel

Facsimile: (925) 467-3231

If to the Shareholder Representative, to:

Saturn Shareholder Rep, LLC

10 Clay Street, Suite 201

Oakland, California 94607

Attention: T. Gary Rogers

Email: tgrogers@ssrllc.net

Facsimile: (510) 899-7915

and

Saturn Shareholder Rep, LLC

10 Clay Street, Suite 201

Oakland, California 94607

Attention: Arun Sarin

Email: asarin@ssrllc.net

Facsimile: (510) 899-7915

With copies (which shall not constitute notice) to:

 

33

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Latham & Watkins LLP

505 Montgomery Street

Suite 2000

San Francisco, CA 94111-6538

Tel: (415) 391-0600

Attention: Scott R. Haber

Email: scott.haber@lw.com

Facsimile: (415) 395-8095

Latham & Watkins LLP

885 Third Avenue

New York, NY 10022

Tel: (212) 906-1200

Attention: M. Adel Aslani-Far

                  Eli G. Hunt

Email: adel.aslanifar@lw.com

            eli.hunt@lw.com

Facsimile (212) 751-4864

If to the Rights Agent, to:

Computershare Trust Company, N.A.

480 Washington Boulevard

Jersey City, NJ 07310

Attention: Relationship Manager

With a copy to:

Computershare Trust Company, N.A.

480 Washington Boulevard

Jersey City, NJ 07310

Attention: Legal Department

Section 7.2 Notice to Holders.

Where this Agreement provides for notice to Holders, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing,
sent by overnight courier (providing proof of delivery) or mailed, first-class
postage prepaid, to each Holder affected by such event, at his, her or its
address as it appears in the CVR Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such notice. In
any case where notice to Holders is given by mail, neither the failure to mail
such notice, nor any defect in any notice so mailed, to any particular Holder
shall affect the sufficiency of such notice with respect to other Holders.

 

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Section 7.3 Counterparts; Headings.

This Agreement may be executed in one or several counterparts (whether by
facsimile, pdf or otherwise), each of which shall be deemed an original, but
such counterparts shall together constitute but one and the same Agreement and
shall become effective when counterparts have been signed by each of the parties
and delivered to the other parties (including by facsimile or other electronic
image scan transmission). The Article and Section headings in this Agreement are
inserted for convenience of reference only and shall not constitute a part
hereof.

Section 7.4 Assignment; Successors.

(a) Subject to Section 6.1, neither this Agreement nor any of the rights,
interests or obligations under this Agreement may be assigned by any of the
parties (whether by operation of Law or otherwise) without the prior written
consent of the other parties; provided, that any entity into which the Rights
Agent may be merged or consolidated, or any entity resulting from any merger or
consolidation to which the Rights Agent shall be a party, or any entity to which
the Rights Agent shall sell or otherwise transfer all or substantially all of
its assets and business, shall be the successor Rights Agent under this
Agreement upon the delivery of notice to the other parties hereto. Subject to
the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by all of the parties and their respective
successors and assigns; provided, that this Agreement may not be enforced
directly by any Holder but may only be enforced on behalf of the Holders by the
Shareholder Representative.

Section 7.5 Benefits of Agreement.

Except as set forth in ARTICLE III with respect to the Shareholder
Representative Persons or the Rights Agent, nothing in this Agreement, is
intended to or be deemed to confer upon any Person other than the parties hereto
and their respective successors and permitted assigns any rights or remedies
hereunder. The Shareholder Representative shall be the sole and exclusive
representative of the Holders for all matters in connection with this Agreement
and this Agreement may not be enforced directly by any Holder but may only be
enforced on behalf of the Holders by the Shareholder Representative.

 

35

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Section 7.6 Governing Law.

This Agreement shall be governed by and construed in accordance with the Laws of
the State of Delaware, without regard to Laws that may be applicable under
conflicts of laws principles (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the Laws of any jurisdiction
other than the State of Delaware. Other than with respect to disputes submitted
to the Selected Real Estate Appraiser under Section 2.4(c)(i) or a Neutral
Auditor under Section 2.4(c)(vi), each party hereby irrevocably and
unconditionally submits, for itself and its property, to the exclusive
jurisdiction of the Court of Chancery in the State of Delaware and any appellate
court thereof, in any action or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby or for recognition or
enforcement of any judgment relating thereto, and each of the parties hereby
irrevocably and unconditionally (i) agrees not to commence any such action or
proceeding except in such court, (ii) agrees that any claim in respect of any
such action or proceeding may be heard and determined in such Delaware court,
(iii) waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any such
action or proceeding in such Delaware court, and (iv) waives, to the fullest
extent permitted by Law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in such Delaware court. Each of the parties agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by Law. Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 7.1. Nothing in
this Agreement will affect the right of any Party to this Agreement to serve
process in any other manner permitted by Law.

Section 7.7 Waiver of Jury Trial.

EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER
THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH
PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY
OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH
WAIVERS, (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH
WAIVERS, (III) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (IV) IT HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 7.7.

Section 7.8 Remedies.

 

36

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The parties hereto agree that irreparable damage would occur in the event that
the parties hereto do not perform their obligations under the provisions of this
Agreement (including failing to take such actions as are required of them
hereunder) in accordance with its specified terms or otherwise breach such
provisions. The parties acknowledge and agree that prior to the termination of
this Agreement in accordance with Section 7.10, (a) the Parties shall be
entitled to an injunction, specific performance, or other equitable relief, to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof without proof of damages or the posting of any collateral,
bond or other security, this being in addition to any other remedy available at
law, in equity, under this Agreement or otherwise and (b) the right of
injunctive relief, specific enforcement and other equitable relief is an
integral part of this Agreement and transactions related hereto. The parties
also agree that the non-prevailing party (as determined by a court of competent
jurisdiction in a final, non-appealable order) in any litigation relating to the
enforcement of this Agreement shall reimburse the prevailing party for all costs
incurred by the prevailing party (including reasonable legal fees in connection
with any litigation). To the extent the Shareholder Representative is the
non-prevailing party, its reimbursement obligation under this Section 7.8 shall
be a PDC Sale Expense.

Section 7.9 Severability Clause.

If any term or other provision of this Agreement is determined by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced by
any rule of Law or public policy, all other terms, provisions and conditions of
this Agreement shall nevertheless remain in full force and effect. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable Law in an acceptable
manner to the end that the transactions contemplated by the Merger Agreement and
this Agreement are fulfilled to the extent possible.

Section 7.10 Termination.

This Agreement and each CVR shall be terminated and of no further force or
effect, and the parties hereto shall have no liability hereunder, upon (i) the
one (1) year anniversary of the later of (a) the payment of all Partial PDC Net
Proceeds, PDC Net Proceeds, Sale Deadline Net Proceeds and the payment of all
deferred cash consideration pursuant to Section 2.4(a)(iv), or (b) the Sale
Deadline, or (ii) the written agreement of the Company and the Shareholder
Representative to terminate this Agreement. Notice of any such termination will
be promptly mailed by the Rights Agent, upon the written request of the Company
and the Shareholder Representative and accompanied by the form of such notice,
to the Holders. Notwithstanding anything to the contrary contained in this
Agreement, Section 3.1, Section 3.2, Section 3.3, and this ARTICLE VII shall
survive the termination of this Agreement indefinitely and the resignation,
replacement or removal of the Rights Agent.

Section 7.11 Entire Agreement.

This Agreement, the Merger Agreement, all documents and instruments referenced
herein and therein, and all exhibits and schedules attached to the foregoing,
constitute the entire agreement of the parties (other than the Rights Agent) and
supersede all other prior

 

37

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agreements and understandings, both written and oral, among the parties, or any
of them, with respect to the subject matter hereof and thereof. If and to the
extent that any provision of this Agreement is inconsistent or conflicts with
the Merger Agreement, this Agreement shall govern and be controlling.
Notwithstanding the foregoing, as between the Rights Agent, on the one hand, and
any other person or entity, on the other hand, this Agreement alone constitutes
the entire understanding and agreement of such parties with respect to the
subject matter of this Agreement.

Section 7.12 Suits for Enforcement.

In a case where breach has occurred, has not been waived and is continuing, the
Shareholder Representative may in its discretion proceed to protect and enforce
the rights vested in it by this Agreement by such appropriate judicial
proceedings as the Shareholder Representative shall deem most effectual to
protect and enforce any of such rights (unless authorization and/or appearance
of each of the Holders is required by applicable Law), either at Law or in
equity or in bankruptcy or otherwise, whether for the specific enforcement of
any covenant or agreement contained in this Agreement or in aid of the exercise
of any power granted in this Agreement or to enforce any other legal or
equitable right vested in the Shareholder Representative by this Agreement or by
Law. Notwithstanding anything to the contrary contained in this Agreement, any
liability of any of the parties hereunder (including the Shareholder
Representative) for breach of its obligations under this Agreement shall not
(other than in connection with fraud or willful misconduct, or third party
claims from third parties arising out of such party’s breach of this Agreement)
include any unforeseeable and remote indirect or consequential damages, or any
special or punitive damages. Subject to the immediately preceding sentence, any
liability of the Company may include the benefit of the bargain lost by the
Holders to the extent proximately caused by such breach (taking into
consideration relevant matters, including the total amount payable to such
Holders under this Agreement but for such breach, the time value of money, and
any costs, fees and expenses incurred by the Shareholder Representative Persons
in connection therewith) which shall be deemed in such event to be damages
recoverable by the Shareholder Representative for the benefit of the Holders.
With respect to any party other than the Company, under no circumstances shall
such party be liable for monetary damages hereunder.

[Remainder of Page Intentionally Left Blank]

 

38

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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
on its behalf by its duly authorized officers as of the day and year first above
written.

 

AB ACQUISITION LLC

By:

/s/ Paul Rowan

Name:

Paul Rowan

Title:

Executive Vice President

General Counsel & Secretary

[Signature Page to PDC CVR Agreement]

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SAFEWAY INC.

By:

/s/ Robert A. Gordon

Name: Robert A. Gordon Title:

Senior Vice President

Secretary & General Counsel

[Signature Page to PDC CVR Agreement]

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SATURN SHAREHOLDER REP, LLC By:

/s/ T. Gary Rogers

Name: T. Gary Rogers Title: Member By:

/s/ Arun Sarin

Name: Arun Sarin Title: Member

[Signature Page to PDC CVR Agreement]

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COMPUTERSHARE TRUST COMPANY, N.A.

By:

/s/ Neda Sheridan

Name: Neda Sheridan Title: Vice President COMPUTERSHARE INC. By:

/s/ Neda Sheridan

Name: Neda Sheridan Title: Vice President

[Signature Page to PDC CVR Agreement]

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EXHIBIT A

Form of Transfer Certificate

See attached.

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TRANSFER CERTIFICATE

Safeway Inc.

5918 Stoneridge Mall Road

Pleasanton, California 94588

Attn: General Counsel

Computershare Trust Company, N.A.

480 Washington Boulevard

Jersey City, New Jersey 07310

Attention: Relationship Manager

 

  Re: CVRs issued by Safeway Inc.

Ladies and Gentlemen:

                                          as Holder intends to transfer the
above captioned CVR to                                          (“Permitted
Transferee”), for registration in the name of
                                        .

1. In connection with such transfer and in accordance with Section 2.3(c) of the
PDC CONTINGENT VALUE RIGHTS AGREEMENT, dated as of January 30, 2015, entered
into by and among AB Acquisition LLC, a Delaware limited liability company,
Safeway Inc., a Delaware corporation, Computershare Inc. and its wholly owned
subsidiary, Computershare Trust Company, N.A., together as rights agent, and the
Shareholder Representative (the “Agreement”), the Holder hereby certifies that
this transfer is a Permitted Transfer and that the Permitted Transferee is
permitted to hold the CVRs in accordance with the terms of the Agreement.

2. The transfer is a Permitted Transfer for the following reason:

[Check the appropriate box and initial any applicable substatement]

¨    The CVRs are being transferred as a result of the death of a Holder by will
or intestacy.

             An official copy of the death certificate of the Holder and such
Holder’s last will and testament and a signed copy of Letters Testamentary,
Letters of Administration or equivalent document dated within 60 days are being
provided herewith.

             An official copy of the death certificate of the Holder is being
provided herewith; the Holder has no will and the CVRs are passing via the rules
of intestacy.

¨    The CVRs are being transferred by instrument to an inter vivos or
testamentary trust in which the CVRs are to be passed to beneficiaries upon the
death of the trustee. The trustee is the Holder immediately prior to the
transfer. Official copies of the death certificates and applicable trust
documents authorizing distribution to the named beneficiaries are being provided
herewith.

 

A-1

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¨    The CVRs are being transferred pursuant to a court order (including a court
order issued in connection with divorce, bankruptcy or liquidation). A copy of
the court order and, if appointed, evidence of appointment as: Tutor, Guardian,
Conservator, Committee, Attorney or Agent dated within 60 days are being
provided herewith.

¨    The Holder is a corporation and the CVRs are being transferred pursuant to
a distribution by the Holder to its stockholders. Such distribution does not
subject the CVRs to a requirement of registration under the Securities Act or
the Exchange Act and the company has reasonably determined after consultation
with counsel that such distribution does not subject the CVRs to a requirement
of registration under the Securities Act or the Exchange Act. A copy of the
unanimous written consent of the board of the company or an executed copy of the
corporate resolution dated within 180 days authorizing and approving such
distribution (and authorizing the signing officer to effect the transaction) and
a certificate by or on behalf of the company stating that that such distribution
does not subject the CVRs to a requirement of registration under the Securities
Act or the Exchange Act are being provided herewith. Evidence of such Permitted
Transferee being a shareholder of the Holder is also being provided herewith.
The corporate resolution, if provided, is not executed solely by the signing
officer.

¨    The Holder is a partnership and the CVRs are being transferred pursuant to
a distribution by the Holder to its partners. Such distribution does not subject
the CVRs to a requirement of registration under the Securities Act or the
Exchange Act. A copy of the current partnership agreement is being provided
herewith, together with evidence of the authority of any signatory on behalf of
the partnership.

¨    The Holder is a limited liability company and the CVRs are being
transferred pursuant to a distribution by the Holder to its members. Such
distribution does not subject the CVRs to a requirement of registration under
the Securities Act or the Exchange Act. A copy of the operating agreement is
being provided herewith, together with an executed copy of the resolution dated
within 180 days authorizing the signing managing member/manager to effect the
transaction. If the limited liability company has more than one managing
member/manager, this resolution is not executed solely by the signing managing
member/manager.

¨    The CVRs are being transferred by a transfer made by operation of law
(including a consolidation, dissolution or merger) or without consideration in
connection with the dissolution, liquidation or termination of any corporation,
limited liability company, partnership or other entity. Documents sufficiently
evidencing such activities are being provided herewith, together with, if such
transfer by operation of law requires shareholder or board of director or
similar approval, an executed copy of the resolution dated within 180 days
authorizing the signing officer, managing member/manager or other signatory to
effect the event. If such entity has more than one signing officer, managing
member/manager or other signatory, this resolution is not executed solely by the
signing officer, managing member/manager or other signatory.

 

A-2

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3. If not previously provided to the Rights Agent and if requested by the Rights
Agent, a fully completed and executed Form W-9 or Form W-8, as applicable, of
the Permitted Transferee is being provided herewith.

4. All capitalized terms used but not defined herein shall have such meanings as
are ascribed to such terms in the Agreement.

5. By execution hereof the Permitted Transferee agrees to be bound, as Holder,
by all of the terms, covenants and conditions of the Agreement.

6. This document may be executed in one or more counterparts and by the
different parties hereof on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same document. The Holder and the Permitted Transferee
both understand that the Rights Agent may require a Medallion Guarantee of
Signature at a level acceptable to the Rights Agent.

IN WITNESS WHEREFORE, each of the parties have caused this document to be
executed individually or by their duly authorized officers or representatives as
of the date set forth below.

 

 

 

          Holder           Permitted Transferee By:

 

By:

 

Name: Name: Title: Title: Taxpayer Identification Taxpayer Identification No.
                             No.                              Date:

 

Date:

 

 

A-3