Document:

Exhibit 10.11

 

FIVE-YEAR CREDIT AGREEMENT

 

Dated as of November 15, 2006

 

THE
KROGER CO., an Ohio corporation (the “Borrower”), the banks, financial
institutions and other institutional lenders (the “Initial Lenders”)
listed on Schedule I hereto, and JPMORGAN CHASE BANK, N.A. (“JPMorgan Chase”),
as an Issuing Bank (as defined below) and as an administrative agent (in such
capacity, an “Administrative Agent”) for the Lenders (as hereinafter
defined) and the Issuing Banks and paying agent (in such capacity, the “Paying
Agent”) for the Lenders and the Issuing Banks, CITIBANK, N.A. (“Citibank”),
as an Issuing Bank and as an administrative agent (in such capacity, an “Administrative
Agent”; the Administrative Agents and the Paying Agent are, collectively,
the “Agents”) for the Lenders and the Issuing Banks, and BANK OF
AMERICA, N.A., THE ROYAL BANK OF SCOTLAND PLC, UNION BANK OF CALIFORNIA, N.A.
and THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., CHICAGO BRANCH, as
co-syndication agents for the Lenders and the Issuing Banks, agree as follows:

 

ARTICLE I

 

DEFINITIONS AND ACCOUNTING TERMS

 

SECTION 1.01.
Certain Defined Terms.

 

As
used in this Agreement, the following terms shall have the following meanings
(such meanings to be equally applicable to both the singular and plural forms
of the terms defined):

 

“Acquired
EBITDA” means, for any period, with respect to any Acquired Entity, (a) the
sum of (i) Acquired Net Income for such period, (ii) depreciation and
amortization expense for such period, (iii) interest expense net of
interest income for such period, (iv) Federal and state income taxes for
such period as determined in accordance with GAAP, (v) extraordinary
losses that have been included in the calculation of Acquired Net Income for
such period, (vi) LIFO charges included in the calculation of Acquired Net
Income for such period and (vii) non-cash charges made with respect to “expected
post retirement benefit obligations” within the meaning of Statement of
Financial Accounting Standards No. 106 minus (b) the sum of (i) extraordinary
gains that have been included in the calculation of Acquired Net Income for
such period and (ii) LIFO credits included in the calculation of Acquired
Net Income for such period.

 

“Acquired
Entity” means any Person in the Borrower’s line of business or the assets
of any Person in the Borrower’s line of business to be invested in or acquired.

 

“Acquired
Entity Fiscal Quarter” means, with respect to any Acquired Entity, any
fiscal quarter of such Acquired Entity.

 

“Acquired
Net Income” means, for any period, with respect to any Acquired Entity, the
net income of such Acquired Entity for such period before the payment of
dividends on all capital stock, determined in accordance with GAAP.

 

“Administrative
Questionnaire” means an Administrative Questionnaire in the form of Exhibit D.

 

“Advance”
means a Revolving Credit Advance, drawings under Letters of Credit or a
Competitive Bid Advance.

 

 

“Affiliate”
means, with respect to any designated Person, any other Person that has a
relationship with the designated Person whereby either of such Persons directly
or indirectly controls or is controlled by or is under common control with the
other of such Persons, or holds or beneficially owns 10% or more of the equity
interest in the other Person or 10% or more of any class of voting securities
of the other Person. The term “control” means the possession, directly or
indirectly, of the power, whether or not exercised, to direct or cause the
direction of the management or policies of any Person, whether through
ownership of voting securities, by contract or otherwise.

 

“Anniversary
Date” means November 15, 2007 and November 15 in each succeeding
calendar year occurring during the term of this Agreement.

 

“Applicable
Lending Office” means, with respect to each Lender, such Lender’s Domestic
Lending Office in the case of a Base Rate Advance, such Lender’s Eurodollar
Lending Office in the case of a Eurodollar Rate Advance and, in the case of a
Competitive Bid Advance, the office of such Lender specified in a notice of
such Lender to the Paying Agent as such Lender’s Applicable Lending Office with
respect to such Competitive Bid Advance.

 

“Applicable
Margin” means, on any date, a percentage per annum determined by reference
to the Borrower’s Performance Level in effect on such date as set forth below:

 

	
  Performance

  Level

  	
   

  	
  Applicable Margin for

  Base Rate Advances

  	
   

  	
  Applicable Margin for

  Eurodollar Rate Advances,

  Standby Letters of Credit and

  Documentary Letters of Credit

  
	
  Level
  1

  	
   

  	
  0.000%

  	
   

  	
  0.190%

  
	
  Level
  2

  	
   

  	
  0.000%

  	
   

  	
  0.230%

  
	
  Level 3

  	
   

  	
  0.000%

  	
   

  	
  0.270%

  
	
  Level 4

  	
   

  	
  0.000%

  	
   

  	
  0.400%

  
	
  Level 5

  	
   

  	
  0.000%

  	
   

  	
  0.475%

  
	
  Level 6

  	
   

  	
  0.000%

  	
   

  	
  0.575%

  

 

“Applicable
Percentage Ratio” means the ratio (determined as of the last day of each
Fiscal Quarter for the Rolling Period ending on such day) of (a) Consolidated
EBITDA for such Rolling Period to (b) Consolidated Total Interest Expense
for such Rolling Period.

 

“Assignment
and Acceptance” means an assignment and acceptance entered into by a Lender
and an assignee, and to the extent required by Section 8.06, accepted by
the Borrower and the Administrative Agents, in substantially the form of Exhibit B
hereto or such other form as shall be approved by the Administrative Agents.

 

“Assuming
Lender” has the meaning specified in Section 2.17(c).

 

“Assumption
Agreement” has the meaning specified in Section 2.17(c).

 

“Available
Amount” of any Letter of Credit means, at any time, the maximum amount
available to be drawn under such Letter of Credit at such time (assuming
compliance at such time with all conditions to drawing).

 

“Base
Rate” means a fluctuating rate per annum equal to the highest from time to
time of:

 

(a) the
rate of interest announced publicly by JPMorgan Chase in New York, New York,
from time to time, as JPMorgan Chase’s base rate;

 

2

 

(b) the
sum (adjusted to the nearer 1/16 of 1% or, if there is no nearest 1/16 of 1%,
to the next higher 1/16 of 1%) of (i) 1/2 of 1% per annum, plus (ii) the
rate obtained by dividing (A) the latest three-week moving average of
secondary market morning offering rates in the United States for three-month
certificates of deposit of major United States money market banks, such
three-week moving average (adjusted to the basis of a year of 360 days) being
determined weekly on each Monday (or, if any such day is not a Business Day, on
the next succeeding Business Day) for the three-week period ending on the
previous Friday by JPMorgan Chase on the basis of such rates reported by
certificate of deposit dealers to and published by the Federal Reserve Bank of
New York or, if such publication shall be suspended or terminated, on the basis
of quotations for such rates received by the Paying Agent from three New York
certificate of deposit dealers of recognized standing selected by the Paying
Agent, by (B) a percentage equal to 100% minus the average of the daily
percentages specified during such three-week period by the Board of Governors
of the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, but not limited to, any emergency, supplemental
or other marginal reserve requirement) for JPMorgan Chase with respect to
liabilities consisting of or including (among other liabilities) three-month
U.S. dollar non-personal time deposits in the United States, plus (iii) the
average during such three-week period of the daily annual assessment rates
estimated by JPMorgan Chase for determining the current annual assessment
payable by JPMorgan Chase to the Federal Deposit Insurance Corporation (or any
successor) for insuring U.S. dollar deposits of JPMorgan Chase in the United
States; and

 

(c) a
rate equal to 1/2 of 1% per annum above the Federal Funds Rate.

 

“Base
Rate Advance” means a Revolving Credit Advance that bears interest as
provided in Section 2.07(a).

 

“Borrowing”
means a Revolving Credit Borrowing or a Competitive Bid Borrowing.

 

“Business
Day” means a day of the year on which banks are not required or authorized
to close in New York City and, if the applicable Business Day relates to any Eurodollar
Rate Advances, on which dealings are carried on in the London interbank market.

 

“Capital
Lease Obligation” means, with respect to any lessee, the obligations under
any lease of property that, in accordance with GAAP, should be capitalized on
such lessee’s balance sheet.

 

“Change
of Control” means any one or more of the following events:

 

(a) the
acquisition, by contract or otherwise (including the entry into a contract or
arrangement that upon consummation will result in such acquisition), by any
Person or group (as such term is defined for purposes of Section 13(d) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
and the rules and regulations pertaining thereto), other than the trusts
for the employee benefit plans (as defined in Section 3(2) of ERISA)
maintained by the Borrower or any Subsidiary of the Borrower that is an ERISA
Affiliate, of beneficial ownership (within the meaning of Rule 13d-3, or
any regulation or ruling promulgated to replace or supplement Rule 13d-3, of
the General Rules and Regulations under the Exchange Act), directly or
indirectly, of securities of the Borrower representing 20% or more of the
voting power of all securities of the Borrower, or

 

(b) during
any period of up to 24 consecutive months, commencing before or after the date
of this Agreement, individuals who at the beginning of such period were
directors of the Borrower (together with any new directors whose election by
the Board of Directors or whose nomination for election by the stockholders of
the Borrower was approved by a vote of at least 75% of the directors then in
office who either were directors at the beginning of such period or whose
election or nomination for election was previously so approved) shall cease for
any reason to constitute at least 75% of the Board of Directors of the
Borrower.

 

3

 

“Commitment”
means as to any Lender (a) the amount set forth opposite such Lender’s
name on Schedule I hereto as such Lender’s “Commitment”, (b) if such
Lender has become a Lender hereunder pursuant to an Assumption Agreement, the
amount set forth in such Assumption Agreement or (c) if such Lender has
entered into an Assignment and Acceptance, the amount set forth for such Lender
in the Register maintained by the Paying Agent pursuant to Section 8.06(d),
as such amount may be reduced pursuant to Section 2.05 or increased
pursuant to Section 2.19.

 

“Commitment
Date” has the meaning specified in Section 2.19(b).

 

“Commitment
Increase” has the meaning specified in Section 2.19(a).

 

“Competitive
Bid Advance” means an advance by a Lender to the Borrower as part of a
Competitive Bid Borrowing resulting from the competitive bidding procedure
described in Section 2.01(b).

 

“Competitive
Bid Borrowing” means a borrowing consisting of simultaneous Competitive Bid
Advances from each of the Lenders whose offer to make one or more Competitive
Bid Advances as part of such borrowing has been accepted by the Borrower under
the competitive bidding procedure described in Section 2.01(b).

 

“Consenting
Lender” has the meaning specified in Section 2.17(b).

 

“Consolidated”
refers to the consolidation of accounts in accordance with GAAP, including
principles of consolidation, consistent with those applied in the preparation
of the Consolidated financial statements referred to in Section 4.01(e).

 

“Consolidated
Cash Interest Expense” means, for any period, interest expense net of
interest income, whether paid or accrued (including the interest component of
Capital Lease Obligations) on all Debt of the Borrower and its Subsidiaries on
a Consolidated basis for such period, including (a) commissions and other
fees and charges payable in connection with Letters of Credit and other letters
of credit, (b) net payments payable in connection with all Interest Rate
Agreements, (c) interest capitalized during construction and (d) cash
dividends paid in respect of any preferred stock issued by the Borrower, but excluding,
however, the sum of (i) interest expense not payable in cash, (ii) amortization
of discount and deferred debt expense and (iii) gains and losses due to
the extinguishment of Debt, all as determined in conformity with GAAP.

 

“Consolidated
EBITDA” means, for any period, on a Consolidated basis for the Borrower and
its Subsidiaries, (a) the sum of (i) Consolidated Net Income for such
period, (ii) depreciation and amortization expense for such period, (iii) interest
expense net of interest income for such period, (iv) Federal and state
income taxes for such period as determined in accordance with GAAP, (v) extraordinary
losses (and any unusual losses in excess of $1,000,000 arising in or outside of
the ordinary course of business not included in extraordinary losses
(determined in accordance with GAAP) that have been included in the calculation
of Consolidated Net Income) for such period, (vi) LIFO charges that have
been included in the calculation of Consolidated Net Income for such period and
(vii) non-cash charges made with respect to “expected post retirement
benefit obligations” within the meaning of Statement of Financial Accounting
Standards No. 106 minus (b) the sum of (i) extraordinary
gains (and any unusual gains in excess of $1,000,000 arising in or outside of
the ordinary course of business not included in extraordinary gains (determined
in accordance with GAAP) that have been included in the calculation of
Consolidated Net Income) for such period and (ii) LIFO credits that have
been included in the calculation of Consolidated Net Income for such period.

 

4

 

“Consolidated
Net Income” means, for any period, the net income of the Borrower and its
Consolidated Subsidiaries for such period, before the payment of dividends on
all capital stock, determined in accordance with GAAP.

 

“Consolidated
Rental Expense” means, for any period, the aggregate rental expense
(including any contingent or percentage rental expense) of the Borrower and its
Subsidiaries on a Consolidated basis for such period (excluding real estate
taxes and common area maintenance charges) in respect of all rent obligations
under all operating leases for real or personal property minus any
rental income of the Borrower and its Subsidiaries on a Consolidated basis for
such period, all as determined in conformity with GAAP.

 

“Consolidated
Total Interest Expense” means, for any period, interest expense net of
interest income, whether paid or accrued (including the interest component of
Capital Lease Obligations) on all Debt of the Borrower and its Subsidiaries on
a Consolidated basis for such period, including (a) commissions and other
fees and charges payable in connection with Letters of Credit and other letters
of credit, (b) net payments payable in connection with all Interest Rate
Agreements and (c) cash dividends paid in respect of any preferred stock
issued by the Borrower, but excluding, however, (i) amortization
of deferred debt expense (ii) interest capitalized during construction and
(iii) gains and losses due to the extinguishment of Debt, all as determined
in conformity with GAAP.

 

“Convert”,
“Conversion” and “Converted” each refers to a conversion of
Revolving Credit Advances of one Type into Revolving Credit Advances of the
other Type pursuant to Section 2.02(b), 2.08 or 2.09.

 

“Debt”
of any Person means, without duplication, (a) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services (including all obligations, contingent or otherwise, of such Person in
connection with the Letters of Credit, letter of credit facilities, acceptance
facilities or other similar facilities and in connection with any agreement to
purchase, redeem, exchange into debt securities, convert into debt securities
or otherwise acquire for value (i) any capital stock of such Person or (ii) any
warrants, rights or options to acquire such capital stock, now or hereafter
outstanding), (b) all obligations of such Person evidenced by bonds,
notes, debentures or other similar instruments, (c) all indebtedness
created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the event
of default are limited to repossession or sale of such property), (d) all
Capital Lease Obligations of such Person, (e) all Debt referred to in
clause (a), (b), (c) or (d) above secured by (or for which the holder
of such Debt has an existing right, contingent or otherwise, to be secured by)
any lien, security interest or other charge or encumbrance upon or in property
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Debt, (f) all
Guaranteed Debt of such Person and (g) any preferred stock of such Person
that is classified as a liability on such Person’s Consolidated balance sheet.

 

“Default”
means any Event of Default or any event that would constitute an Event of
Default but for the requirement that notice be given or time elapse or both.

 

“Disclosed
Litigation” has the meaning specified in Section 3.01(b)

 

“Documentary
Letter of Credit” means any Letter of Credit that is issued under the
Letter of Credit Facility in support of trade obligations incurred in the
ordinary course of business and that includes, as a condition to drawing
thereunder, the presentation to the Issuing Bank of negotiable bills of lading,
invoices and related documents sufficient, in the judgment of the Issuing Bank,
to create a valid and perfected security interest in the goods covered thereby.

 

“Domestic
Lending Office” means, with respect to any Lender, the office of such
Lender specified as its “Domestic Lending Office” opposite its name on Schedule
I hereto or in the Assignment and Acceptance or the Assumption Agreement, as
the case may be, pursuant to which it became a Lender, or such other office of
such Lender as such Lender may from time to time specify to the Borrower and
the Paying Agent.

 

5

 

“Effective
Date” has the meaning specified in Section 3.01.

 

“Eligible
Assignee” means (i) a Lender; (ii) an Affiliate of a Lender; and (iii) any
other Person approved by the Administrative Agents and the Borrower, such
approval not to be unreasonably withheld; provided, however, that
neither the Borrower nor any Affiliate of the Borrower shall qualify as an
Eligible Assignee.

 

“Environmental
Laws” means all current and future Federal, state, local and foreign laws, rules or
regulations, codes, ordinances, orders, decrees, judgments or injunctions
issued, promulgated, approved or entered thereunder or other requirements of
Governmental Authorities or the common law, relating to health, safety, or
pollution or protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances, or wastes
into the environment (including ambient air, surface water, groundwater, land
surface or subsurface strata) or otherwise relating to the manufacture,
processing, distribution, use, generation, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances, or wastes, or underground storage tanks and
emissions therefrom.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, or any successor
statute, as the same may be amended from time to time.

 

“ERISA
Affiliate” means any trade or business (whether or not incorporated) that,
together with the Borrower, is treated as a single employer under Section 414
of the Internal Revenue Code.

 

“Eurocurrency
Liabilities” has the meaning assigned to that term in Regulation D of the
Board of Governors of the Federal Reserve System, as in effect from time to
time.

 

“Eurodollar
Lending Office” means, with respect to any Lender, the office of such
Lender specified as its “Eurodollar Lending Office” opposite its name on
Schedule I hereto or in the Assignment and Acceptance or the Assumption
Agreement, as the case may be, pursuant to which it became a Lender (or, if no
such office is specified, its Domestic Lending Office), or such other office of
such Lender as such Lender may from time to time specify to the Borrower and
the Paying Agent.

 

“Eurodollar
Rate” means, with respect to each day during each Interest Period for a
Eurodollar Rate Advance, the rate of interest determined on the basis of the
rate for deposits in United States dollars for a period equal to such Interest
Period appearing on Page 3750 of the Moneyline Telerate Markets screen as
of 11:00 A.M., London time, two Business Days prior to the beginning of
such Interest Period. In the event that such rate does not appear on Page 3750
of the Moneyline Telerate Markets Service (or otherwise on such service), the “Eurodollar
Rate” for the purposes of this paragraph shall be determined by reference to
such other publicly available service for displaying eurodollar rates as may be
agreed upon by the Paying Agent and the Borrower or, in the absence of such
agreement, the “Eurodollar Rate” for the purposes of this paragraph shall
instead be an interest rate per annum equal to the rate of interest (rounded
upward to the nearest whole multiple of 1/100 of 1% per annum, if such average
is not such a multiple) of the rate per annum at which deposits in U.S. dollars
are offered by the principal office of each of the Reference Banks in London,
England, to prime banks in the London interbank market at 11:00 a.m.
(London time) two Business Days before the first day of such Interest Period in
an amount substantially equal to such Reference Bank’s Eurodollar Rate Advance
to be outstanding during such Interest Period (or, if such Reference Bank shall
not have a Eurodollar Rate Advance that is to be outstanding during such
Interest Period, in an amount equal to $1,000,000) and for a period equal to
such Interest Period. The Eurodollar Rate for an Interest Period shall be
determined by the Paying Agent on the basis of applicable rates furnished to
and received by the Paying Agent two Business Days before the first day of such
Interest Period, subject, however, to the provisions of Section 2.08.

 

6

 

“Eurodollar
Rate Advance” means a Revolving Credit Advance that bears interest as
provided in Section 2.07(b).

 

“Eurodollar
Rate Reserve Percentage” means the reserve percentage under regulations
issued from time to time by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve requirement)
for a member bank of the Federal Reserve System in New York City with respect
to liabilities or assets consisting of or including Eurocurrency Liabilities
(or with respect to any other category of liabilities that includes deposits by
reference to which the interest rate on Eurodollar Rate Advances is
determined).

 

“Events
of Default” has the meaning specified in Section 6.01.

 

“Existing
Credit Agreement” has the meaning specified in Section 3.01(i).

 

“Existing
Lenders” has the meaning specified in Section 2.01(c)(ii).

 

“Existing
Letters of Credit” means each standby Letter of Credit that (a) was
issued for the account of the Borrower by one of the issuing banks under an
Existing Credit Agreement that is also an Issuing Bank under this Agreement, (b) is
outstanding on the Closing Date and (c) is listed on Schedule 2.01(c).

 

“Extension
Date” has the meaning specified in Section 2.17(b).

 

“Facility
Fee Percentage” means, on any date, a percentage per annum determined by
reference to the Borrower’s Performance Level in effect on such date as set
forth below:

 

	
  Performance

  Level

  	
   

  	
  Facility Fee

  Percentage

  
	
  Level
  1

  	
   

  	
  0.060%

  
	
  Level 2

  	
   

  	
  0.070%

  
	
  Level 3

  	
   

  	
  0.080%

  
	
  Level 4

  	
   

  	
  0.100%

  
	
  Level 5

  	
   

  	
  0.125%

  
	
  Level 6

  	
   

  	
  0.175%

  

 

“Facility
Fees” has the meaning specified in Section 2.04.

 

“Facility
Usage” means, at any time, without duplication, the sum of (a) the
amount of Advances outstanding at such time and (b) the aggregate Available
Amount of outstanding Letters of Credit.

 

“Federal
Funds Rate” means a fluctuating rate per annum equal for each day to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for such day on such transactions received by the Paying Agent from
three Federal funds brokers of recognized standing selected by it.

 

“Financial
Officer” means, with respect to any corporation, the chief financial
officer, principal accounting officer, treasurer or controller of such
corporation.

 

7

 

“Fiscal
Quarter” means (a) with respect to the first Fiscal Quarter of any
Fiscal Year, the first 16 calendar weeks of such Fiscal Year, (b) with
respect to the second Fiscal Quarter of such Fiscal Year, the next successive
period of 12 calendar weeks in such Fiscal Year, (c) with respect to the
third Fiscal Quarter of any Fiscal Year, the next successive period of 12
calendar weeks in such Fiscal Year and (d) with respect to the last Fiscal
Quarter of any Fiscal Year, the period of time after the first three Fiscal
Quarters of such Fiscal Year through the last day of such Fiscal Year.

 

“Fiscal
Year” means a year of 364 or 371 days, as the case may be, ending on the
Saturday closest to the 31st day of January in any calendar year, and such
Fiscal Year, when referred to from time to time herein by reference to a
calendar year shall be the Fiscal Year that includes February 28th of such
calendar year.

 

“Fitch”
means Fitch, Inc.

 

“Fixed
Charge Coverage Ratio” means the ratio (determined as of the last day of
each Fiscal Quarter for the Rolling Period ending on such day) of (a) the
sum of (i) Consolidated EBITDA for such Rolling Period and (ii) Consolidated
Rental Expense for such Rolling Period to (b) the sum of (i) Consolidated
Cash Interest Expense for such Rolling Period and (ii) Consolidated Rental
Expense for such Rolling Period.

 

“Fixed
Rate” means, for the period for each Fixed Rate Advance comprising part of
the same Competitive Bid Borrowing, the fixed interest rate per annum
determined for such Advance, as provided in Section 2.01(b).

 

“Fixed
Rate Advance” means a Competitive Bid Advance that bears interest at a
fixed rate per annum determined as provided in Section 2.01(b).

 

“GAAP”
has the meaning specified in Section 1.03.

 

“Governmental
Authority” means any Federal, state, local or foreign court or governmental
agency, authority, instrumentality or regulatory body.

 

“Guarantee
Agreement” means the Guarantee Agreement, substantially in the form of Exhibit E,
among the Guarantors and the Paying Agent, as amended, supplemented or
otherwise modified from time to time in compliance with Section 8.01.

 

“Guaranteed
Debt” of any Person means all Debt referred to in clause (a), (b), (c), (d) or
(e) of the definition of the term “Debt” in this Section guaranteed
directly or indirectly in any manner by such Person, or in effect guaranteed
directly or indirectly by such Person through an agreement (a) to pay or
purchase such Debt or to advance or supply funds for the payment or purchase of
such Debt, (b) to purchase, sell or lease (as lessee or lessor) property,
or to purchase or sell services, primarily for the purpose of enabling the
debtor to make payment of such Debt or to assure the holder of such Debt
against loss, (c) to supply funds to, or in any other manner invest in,
the debtor (including any agreement to pay for property or services
irrespective of whether such property is received or such services are rendered)
or (d) otherwise to assure a creditor against loss, but excluding leases
at a rental at least as favorable to the Borrower as could be obtained in an
arm’s-length transaction with a party that is not an Affiliate.

 

“Guarantor”
means (a) each existing and hereafter created or acquired Material
Subsidiary of the Borrower and (b) each other existing or hereafter
acquired Subsidiary of the Borrower designated from time to time by the
Borrower as a Guarantor.

 

“Hazardous
Materials” means any toxic substance, hazardous waste, hazardous
constituents, hazardous materials, asbestos or asbestos containing material,
polychlorinated biphenyls, petroleum, including crude oil and any fractions
thereof, or other wastes, chemicals, substances or materials regulated by any
Environmental Laws.

 

8

 

“Increase
Date” has the meaning specified in Section 2.19(a).

 

“Increasing
Lender” has the meaning specified in Section 2.19(b).

 

“Information
Memorandum” means the information memorandum dated October 20, 2006
used by the Agents in connection with the syndication of the Commitments.

 

“Interest
Period” means, for each Eurodollar Rate Advance comprising part of the same
Revolving Credit Borrowing, the period commencing on the date of such
Eurodollar Rate Advance or the date of the Conversion of any Base Rate Advance
into such Eurodollar Rate Advance and ending on the last day of the period
selected by the Borrower pursuant to the provisions below and, thereafter, each
subsequent period commencing on the last day of the immediately preceding
Interest Period and ending on the last day of the period selected by the
Borrower pursuant to the provisions below. The duration of each such Interest
Period shall be seven days, one, two, three or six months (or, if available
from all the Lenders, nine months), as the Borrower may, upon notice received
by the Paying Agent not later than 11:00 A.M. (New York City time) on the
third Business Day prior to the first day of such Interest Period, select; provided,
however, that:

 

(i) the
Borrower may not select any Interest Period that ends after the latest
Termination Date then in effect;

 

(ii) Interest
Periods commencing on the same date for Eurodollar Rate Advances comprising
part of the same Revolving Credit Borrowing shall be of the same duration;

 

(iii) whenever
the last day of any Interest Period would otherwise occur on a day other than a
Business Day, the last day of such Interest Period shall be extended to occur
on the next succeeding Business Day, provided that, if such extension
would cause the last day of such Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur on the next
preceding Business Day; and

 

(iv) whenever
the first day of any Interest Period occurs on a day of an initial calendar
month for which there is no numerically corresponding day in the calendar month
that succeeds such initial calendar month by the number of months equal to the
number of months in such Interest Period, such Interest Period shall end on the
last Business Day of such succeeding calendar month.

 

“Interest
Rate Agreement” means any forward contract, forward option, futures
contract, futures option, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate floor agreement or
other similar agreement or arrangement entered into by the Borrower.

 

“Internal
Revenue Code” means the Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated and rulings issued thereunder.

 

“Issuance”
with respect to any Letter of Credit means the issuance, amendment, renewal or
extension of such Letter of Credit.

 

“Issuing
Bank” means any Lender so long as such Lender expressly agrees to perform
in accordance with their terms all of the obligations that by the terms of this
Agreement are required to be performed by it as an Issuing Bank and notifies
the Paying Agent of its Applicable Lending Office (which information shall be
recorded by the Agent in the Register).

 

9

 

“Lenders”
means the Initial Lenders, each Assuming Lender that shall become a party
hereto pursuant to Section 2.17 or Section 2.19 and each Person that
shall become a party hereto pursuant to Section 8.06.

 

“Letter
of Credit” means any Standby Letter of Credit and any Documentary Letter of
Credit.

 

“Letter
of Credit Agreement” has the meaning specified in Section 2.03(a).

 

“Letter
of Credit Collateral” has the meaning specified in Section 6.02(b).

 

“Letter
of Credit Collateral Account” has the meaning specified in Section 6.02(a).

 

“Letter
of Credit Documents” has the meaning specified in Section 2.18.

 

“Letter
of Credit Facility” means, at any time, an amount equal to the lesser of (a) $750,000,000
and (b) the aggregate amount of the Commitments, as in effect from time to
time.

 

“Letter
of Credit Obligations” means, at any time, the sum of (a) the maximum
aggregate amount then available to be drawn under the Letters of Credit
outstanding at such time (the determination of such maximum amount to assume
the occurrence of, and compliance with, all conditions for drawing referred to
therein) plus (b) the aggregate amount of the Borrower’s
obligations then outstanding under this Agreement in respect of the Letters of
Credit, including all Advances resulting from drawings under Letters of Credit
and all fees and expenses in respect of the Letters of Credit payable pursuant
to Section 2.04.

 

“Lien”
means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, assignment for security (whether collateral or otherwise),
hypothecation, encumbrance, lease, sublease, charge or security interest in or
on such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement relating
to such asset and (c) in the case of securities, any purchase option, call
or similar right of a third party with respect to such securities.

 

“LIFO”
means the pretax charge against income determined by using the
last-in-first-out method of valuing inventory.

 

“Loan
Documents” means this Agreement and Notes, if any, the Letter of Credit
Documents and each Guarantee Agreement.

 

“Material
Adverse Change” means any material adverse change in the business, assets,
operations, properties, prospects or condition (financial or otherwise) of the
Borrower and its Subsidiaries, taken as a whole.

 

“Material
Adverse Effect” means (a) a materially adverse effect on the business,
assets, operations, properties, prospects or condition (financial or otherwise)
of the Borrower and its Subsidiaries, taken as a whole, (b) material
impairment of the ability of the Borrower to perform any of its obligations
under any Loan Document to which it is or will be a party or (c) material
impairment of the rights of or benefits available to the Administrative Agents,
the Paying Agent, the Issuing Banks or the Lenders under any Loan Document.

 

“Material
Subsidiary” of the Borrower means, at any time, any Subsidiary of the
Borrower (other than any Subsidiary of the Borrower that is a captive insurance
company) having (a) assets with a value of not less than 5% of the total
value of the assets of the Borrower and its Consolidated Subsidiaries, taken as
a whole, or (b) Consolidated EBITDA not less than 5% of the Consolidated
EBITDA of the Borrower and its Consolidated Subsidiaries, taken as a whole, in
each case as of the end of or for the most recently completed Fiscal Year of
the Borrower.

 

10

 

“Moody’s”
means Moody’s Investors Service, Inc.

 

“Multiemployer
Plan” means a multiemployer plan, as defined in Section 4001(a)(3) of
ERISA, to which the Borrower or any ERISA Affiliate (other than one considered
an ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414
of the Internal Revenue Code) is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years made or
accrued an obligation to make contributions.

 

“Net
Debt” means, on a Consolidated basis for the Borrower and its Subsidiaries
as of any date, (a) Debt minus (b) the sum as of such date of (i) the
aggregate outstanding amount of Debt represented by investments made by the
Borrower in Debt of another Person in connection with a real estate
transaction, so long as the Borrower or one of its Subsidiaries is or becomes
an anchor tenant of the real estate development with respect thereto and no
more than two anchor tenants exist with respect to such real estate development
or the Borrower or one of its Subsidiaries has a contractual obligation to make
lease or other payments to such Person as a result of the real estate
transaction in which such Debt was issued and (ii) the aggregate amount of
Permitted Investments in excess of $100,000,000.

 

“Non-Consenting
Lender” has the meaning specified in Section 2.17(b).

 

“Note”
has the meaning specified in Section 2.15.

 

“Notice
of Competitive Bid Borrowing” has the meaning specified in Section 2.01(b).

 

“Notice
of Issuance” has the meaning specified in Section 2.03(a).

 

“Notice
of Revolving Credit Borrowing” has the meaning specified in Section 2.02(a).

 

“Paying
Agent’s Account” means the account of the Paying Agent maintained by the
Paying Agent at JPMorgan with its office at 111 Fannin Street, 10th Floor, Houston , Texas, Account No. 323-243312,
Attention: Loan and Agency Services.

 

“PBGC”
means the Pension Benefit Guaranty Corporation referred to and defined in ERISA
or any successor thereto.

 

“Performance
Level” means, as of any date of determination, the numerically lowest level
set forth below as then in effect, as determined in accordance with the
following provisions of this definition:

 

	
  Level
  1

  	
   

  	
  The
  Public Debt Rating is A, A2 or A or better by two of S&P, Moody’s or
  Fitch, respectively, or the Applicable Percentage Ratio is 7.75:1.00
  or greater;

  
	
   

  	
   

  	
   

  
	
  Level
  2

  	
   

  	
  The
  Public Debt Rating is A-, A3 or A- or better by two of S&P, Moody’s or
  Fitch, respectively, or the Applicable Percentage Ratio is 7.25:1.00
  or greater but less than 7.75:1.00;

  
	
   

  	
   

  	
   

  
	
  Level
  3

  	
   

  	
  The
  Public Debt Rating is BBB+, Baa1 or BBB+ by two of S&P, Moody’s or Fitch,
  respectively, or the Applicable Percentage Ratio is 6.75:1.00 or
  greater but less than 7.25:1.00;

  
	
   

  	
   

  	
   

  
	
  Level
  4

  	
   

  	
  The
  Public Debt Rating is BBB, Baa2 or BBB by two of S&P, Moody’s or Fitch,
  respectively, or the Applicable Percentage Ratio is 6.25:1.00 or
  greater but less than 6.75:1.00;

  

 

11

 

	
  Level
  5

  	
   

  	
  The
  Public Debt Rating is BBB-, Baa3 or BBB- by two of S&P, Moody’s or Fitch,
  respectively, or the Applicable Percentage Ratio is 5.75:1.00 or
  greater but less than 6.25:1.00;

  
	
   

  	
   

  	
   

  
	
  Level
  6

  	
   

  	
  The
  Public Debt Rating is lower than BBB-, Baa3 or BBB- by two of S&P,
  Moody’s or Fitch and the Applicable Percentage Ratio is lower than 5.75:1.00;

  

 

provided (a) if
any rating established or deemed to have been established by S&P, Moody’s
or Fitch shall be changed (other than as a result of a change in the rating
system of any of S&P, Moody’s or Fitch), such change shall be effective as
of the date on which such change is first announced publicly by the rating
agency making such change, (b) any change in the Performance Level based
on a change in the Applicable Percentage Ratio shall be effective for all
purposes on and after the date of delivery to the Administrative Agents of a
certificate of the Borrower with respect to the financial statements to be
delivered, as applicable, pursuant to Section 5.01(h) for the most
recently ended Fiscal Quarter, (c) if two of the Public Debt Ratings by
S&P, Moody’s and Fitch and the Applicable Percentage Ratio shall fall
within different Levels the Applicable Margin, the Facility Fee Percentage and
the Utilization Fee Percentage shall be determined based upon the higher Level
(it being understood that Level 1 is the highest Level and Level 6 is the
lowest Level) and (d) notwithstanding the foregoing provisions of clause
(b), no increase in the Performance Level shall be effective if any Default
shall have occurred and be continuing. Any change in the Performance Level
shall be effective on the effective date of such change in the applicable
Performance Level and shall apply to all Eurodollar Rate Advances made or
continued on or after the commencement of the period (and to Base Rate Advances
that are outstanding at any time during the period) commencing on the effective
date of such change in the applicable Performance Level and ending on the date
immediately preceding the effective date of the next such change in the
applicable Performance Level.

 

“Permitted
Investments” means (a) cash, (b) readily marketable securities
issued or guaranteed by the government of the United States of America or any
agency thereof having a maturity at the time of issuance not exceeding one
year, (c) commercial paper rated at least A-1 by S&P, P-1 by Moody’s
or F-1 by Fitch, in each case having a maturity at the time of issuance not
exceeding 270 days, (d) commercial paper rated at least A-2 by S&P,
P-2 by Moody’s or F-2 by Fitch, in each case having a maturity at the time of
issuance not exceeding 30 days and not exceeding for any issuer thereof
$50,000,000, and (e) certificates of deposit of or time deposits with any
commercial bank, the long-term debt of which has been assigned a rating of at
least BBB by S&P or A3 by Moody’s and which is a Lender and is organized
and existing or doing business under the laws of the United States of America
or any state thereof or the District of Columbia.

 

“Person”
means an individual, partnership, corporation (including a business trust),
joint stock company, trust, unincorporated association, joint venture, limited
liability company or other entity, or a government (domestic or foreign) or any
political subdivision or agency thereof.

 

“Plan”
means any pension plan (other than a Multiemployer Plan) subject to the
provisions of Title IV of ERISA or Section 412 of the Internal Revenue
Code that is maintained for current or former employees, or any beneficiary
thereof, of the Borrower or any ERISA Affiliate.

 

“Public
Debt Rating” means, as of any date, the rating that has been most recently
announced by either S&P, Moody’s or Fitch, as the case may be, for any
class of non-credit enhanced long-term senior unsecured debt issued by the
Borrower. For purposes of the foregoing, (a) if only one of S&P, Moody’s
and Fitch shall have in effect a Public Debt Rating, the Applicable Margin, the
Facility Fee Percentage and the Utilization Fee Percentage shall be determined
by reference to the available rating; (b) if none of S&P, Moody’s or
Fitch shall have in effect a Public Debt Rating, the Applicable Margin, the
Facility Fee Percentage and the Utilization Fee Percentage will be set in
accordance with the Applicable Percentage Ratio; (c) if the ratings
established by S&P, Moody’s and Fitch shall fall within different levels,
the Applicable Margin, the Facility Fee Percentage and the Utilization Fee
Percentage shall be based upon the highest rating of two such agencies; (d) if
any rating established by S&P, Moody’s or Fitch shall be changed, such
change shall be effective as of the date on which such change is first
announced publicly by the rating agency making such change; and (e) if
S&P, Moody’s or Fitch shall change the basis on which ratings are
established, or any such rating agency shall cease to be in the business of
rating corporate debt obligations, the Borrower and the Lenders shall negotiate
in good faith to amend this definition to reflect such changed rating system or
the unavailability of ratings from such rating agency and, pending the
effectiveness of such amendment, the Applicable Margin, the Facility Fee
Percentage and the Utilization Fee Percentage shall be determined by reference
to the rating most recently in effect prior to such change or cessation.

 

12

 

“Ratable
Share” of any amount means, with respect to any Lender at any time, the
product of such amount times a fraction the numerator of which is the
amount of such Lender’s Commitment at such time (or, if the Commitments shall
have been terminated pursuant to Section 2.05 or 6.01, such Lender’s
Commitment as in effect immediately prior to such termination) and the
denominator of which is the aggregate amount of all Commitments at such time
(or, if the Commitments shall have been terminated pursuant to Section 2.05
or 6.01, the aggregate amount of all Commitments as in effect immediately prior
to such termination).

 

“Reference
Banks” means JPMorgan Chase, Citibank, Bank of America, N.A. and The Bank
of Tokyo-Mitsubishi UFJ, Ltd., Chicago Branch.

 

“Register”
has the meaning specified in Section 8.06(d).

 

“Reportable
Event” means any reportable event as defined in Section 4043(b) of
ERISA or the regulations issued thereunder with respect to a Plan (other than a
Plan maintained by an ERISA Affiliate that is considered an ERISA Affiliate
only pursuant to subsection (m) or (o) of Section 414 of the
Internal Revenue Code).

 

“Required
Lenders” means, at any time, Lenders holding at least 51% of the then
aggregate unpaid principal amount of all outstanding Advances (other than
Competitive Bid Advances) or, if no such principal amount is then outstanding,
Lenders having at least 51% of the Commitments.

 

“Responsible
Officer” of any corporation means any executive officer or Financial
Officer of such corporation and any other officer or similar official thereof
responsible for the administration of the obligations of such corporation in
respect of this Agreement.

 

“Revolving
Credit Advance” means an advance by a Lender to the Borrower as part of a
Revolving Credit Borrowing and refers to a Base Rate Advance or a Eurodollar
Rate Advance (each of which shall be a “Type” of Revolving Credit
Advance).

 

“Revolving
Credit Borrowing” means a borrowing consisting of simultaneous Revolving
Credit Advances of the same Type made by each of the Lenders pursuant to Section 2.01(a).

 

“Rolling
Period” means, in respect of any Fiscal Quarter, such Fiscal Quarter and
the three preceding Fiscal Quarters.

 

“S&P”
means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc.

 

“Standby
Letter of Credit” means a Letter of Credit other than a Documentary Letter
of Credit, including direct-pay Letters of Credit.

 

“Subsidiary”
of any Person means any corporation, partnership, joint venture, limited
liability company, trust or estate of which (or in which) more than 50% of (a) the
issued and outstanding capital stock having ordinary voting power to elect a
majority of the Board of Directors of such corporation (irrespective of whether
at the time capital stock of any other class or classes of such corporation
shall or might have voting power upon the occurrence of any contingency), (b) the
interest in the capital or profits of such limited liability company,
partnership or joint venture or (c) the beneficial interest in such trust
or estate is at the time directly or indirectly owned or controlled by such
Person, by such Person and one or more of its other Subsidiaries or by one or
more of such Person’s other Subsidiaries.

 

13

 

“Termination
Date” means the earlier of (a) November 15, 2011, subject to the
extension thereof pursuant to Section 2.17, and (b) the date of
termination in whole of the aggregate Commitments pursuant to Section 2.05
or 6.01; provided, however, that the Termination Date of any
Lender that is a Non-Consenting Lender to any requested extension pursuant to Section 2.17
shall be the Termination Date in effect immediately prior to the applicable
Extension Date for all purposes of this Agreement.

 

“Trade-Related
Letters of Credit” means Documentary Letters of Credit and Standby Letters
of Credit issued in support of trade obligations incurred in the ordinary
course of business.

 

“Type”
has the meaning specified in the definition of Revolving Credit Advance, and
refers to the distinction between Base Rate Advances and Eurodollar Rate
Advances.

 

“Unused
Commitment” means, with respect to each Lender at any time, (a) such
Lender’s Commitment at such time minus (b) the sum of (i) the
aggregate principal amount of all Revolving Credit Advances made by such Lender
(in its capacity as a Lender) and outstanding at such time, plus (ii) such
Lender’s Ratable Share of (A) the aggregate Available Amount of all the
Letters of Credit outstanding at such time and (B) the aggregate principal
amount of all Advances made by each Issuing Bank pursuant to Section 2.03(c) that
have not been ratably funded by such Lender and remain outstanding at such
time.

 

“Utilization
Fee Percentage” means, as of any date that the aggregate Advances exceed
50% of the aggregate Commitments, a percentage per annum determined by
reference to the Borrower’s Performance Level in effect on such date as set
forth below:

 

	
  Performance

  Level

  	
   

  	
  Utilization Fee

  Percentage

  
	
  Level
  1

  	
   

  	
  0.100%

  
	
  Level 2

  	
   

  	
  0.100%

  
	
  Level 3

  	
   

  	
  0.100%

  
	
  Level 4

  	
   

  	
  0.100%

  
	
  Level 5

  	
   

  	
  0.100%

  
	
  Level 6

  	
   

  	
  0.100%

  

 

“Withdrawal
Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.

 

SECTION 1.02.
Computation of Time Periods. In this Agreement in the computation of
periods of time from a specified date to a later specified date, the word “from”
means “from and including” and the words “to” and “until” each mean “to but
excluding”.

 

SECTION 1.03.
Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with generally accepted accounting principles
consistent with those applied in the preparation of the financial statements
referred to in Section 4.01(e) (“GAAP”).

 

14

 

ARTICLE II

 

AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT

 

SECTION 2.01.
The Advances and the Letters of Credit. (a) The Revolving Credit
Advances. Each Lender severally agrees, on the terms and conditions
hereinafter set forth, to make Revolving Credit Advances to the Borrower from
time to time on any Business Day during the period from the Effective Date
until the Termination Date applicable to such Lender in an amount not to exceed
such Lender’s Unused Commitment at such time. Each Revolving Credit Borrowing
shall be in an aggregate minimum amount of $10,000,000 or any whole multiple of
$1,000,000 in excess thereof and shall consist of Revolving Credit Advances of
the same Type made on the same day by the Lenders ratably according to their
respective Commitments. Within the limits of each Lender’s Commitment, the
Borrower may borrow under this Section 2.01(a), prepay pursuant to Section 2.10
and reborrow under this Section 2.01(a).

 

(b) The
Competitive Bid Advances. (i) Each Lender severally agrees that the
Borrower may make Competitive Bid Borrowings under this Section 2.01(b) from
time to time on any Business Day during the period from the date hereof until
the date occurring 30 days prior to the latest Termination Date then in effect
in the manner set forth below; provided that, following the making of
each Competitive Bid Borrowing, the aggregate amount of the Advances plus the
Available Amount of Letters of Credit then outstanding shall not exceed the
aggregate amount of the Commitments of the Lenders.

 

(A) The
Borrower, either directly or through the Specified Administrative Agent (as
defined in paragraph (B) below), may request a Competitive Bid Borrowing or
Competitive Bid Borrowings under this Section 2.01(b) by delivering
to the Paying Agent and some or all of the Lenders, by telephone, confirmed
immediately in writing or by telecopier, a notice of a Competitive Bid
Borrowing or Borrowings (a “Notice of Competitive Bid Borrowing”), in
substantially the form of Exhibit A-2 or in such other form as the
Administrative Agents and the Borrower may agree upon specifying the date and
aggregate amount of the proposed Competitive Bid Borrowing, the maturity date
for repayment of each Competitive Bid Advance to be made as part of such
Competitive Bid Borrowing (which maturity date may not be earlier than the date
that is 27 days after the date of such Competitive Bid Borrowing in the case of
Eurodollar Rate Advances, may not be later than the date that is 270 days after
the date of such Competitive Bid Borrowing in the case of Fixed Rate Advances,
and in any case may not be later than the latest Termination Date then in
effect), whether the Lenders should offer to make Fixed Rate Advances or
Eurodollar Rate Advances, the interest payment date or dates relating thereto
and any other terms to be applicable to such Competitive Bid Borrowing, not
later than (1) 11:00 a.m. (New York City time) on the same Business
Day as any proposed Competitive Bid Borrowing consisting of Fixed Rate Advances
and (2) 12:00 noon (New York City time) at least three Business Days, or,
if through the Specified Administrative Agent, 10:00 a.m. (New York City
time) at least four Business Days prior to the date of a proposed Competitive
Bid Borrowing consisting of Eurodollar Rate Advances.

 

(B) Each
Lender so notified may, if, in its sole discretion, it elects to do so,
irrevocably offer to make one or more Competitive Bid Advances (which
Competitive Bid Advances may, subject to the provisos to the first sentence to
this Section 2.01(b), have a principal amount exceeding such Lender’s
Commitment) to the Borrower as part of such proposed Competitive Bid Borrowing
at a Fixed Rate or Fixed Rates or a margin or margins relative to the
Eurodollar Rate, as requested by the Borrower. Each Lender electing to make
such an offer shall do so by notifying the Borrower or one of the
Administrative Agents, as shall be specified in the Notice of Competitive Bid
Borrowing (the “Specified Administrative Agent”), before such time and
date as is specified in the Notice of Competitive Bid Borrowing in paragraph (A) above,
of the minimum amount and maximum amount of each Competitive Bid Advance that
such Lender would be willing to make as part of such proposed Competitive Bid
Borrowing (which amount may exceed such Lender’s Commitment), the Fixed Rate or
Rates or margin or margins relative to the Eurodollar Rate, as requested by the
Borrower, that such Lender would be willing to accept for such Competitive Bid
Advance and such Lender’s Applicable Lending Office with respect to such
Competitive Bid Advance, provided that, if the Specified Administrative
Agent in its capacity as a Lender shall, in its sole discretion, elect to make
any such offer, it shall notify the Borrower of such offer before 15 minutes
prior to the Borrower’s deadline specified in paragraph (A) above on the
date on which notice of such election is to be given to such Administrative
Agent by the other Lenders. If any Lender shall elect not to make such an
offer, such Lender shall so notify the Specified Administrative Agent, before
such time as is specified in the Notice of Competitive Bid Borrowing on the
date on which notice of such election is to be given to the Borrower or the
Specified Administrative Agent, as the case may be, by the other Lenders, and
such Lender shall not be obligated to, and shall not, make any Competitive Bid
Advance as part of such Competitive Bid Borrowing, provided that the
failure by any Lender to give such notice shall not cause such Lender to be
obligated to make any Competitive Bid Advance as part of such proposed
Competitive Bid Borrowing.

 

15

 

(C) The
Borrower (either directly or through the Specified Administrative Agent) shall,
in turn, before such time and date as is specified in the Notice of Competitive
Bid Borrowing, either

 

(1) cancel
such Competitive Bid Borrowing by giving the Lenders who received notice
pursuant to paragraph (A) above notice to that effect, or

 

(2) accept
one or more of the offers (or portions of such offers) made by any Lender or
Lenders pursuant to paragraph (B) above, in its sole discretion, by giving
notice to the applicable Lender or Lenders of the amount of each Competitive
Bid Advance to be made by each Lender as part of such Competitive Bid
Borrowing, with simultaneous notice thereof to the Paying Agent, and reject any
remaining offers made by Lenders pursuant to paragraph (B) above by giving
them notice to that effect.

 

(D) If
the Borrower notifies the Paying Agent that such Competitive Bid Borrowing is
canceled pursuant to paragraph (C)(1) above, the Borrower or the Specified
Administrative Agent, as the case may be, shall give prompt notice thereof to
the Lenders and such Competitive Bid Borrowing shall not be made.

 

(E) If
the Borrower accepts one or more of the offers (or portions of such offers)
made by any Lender or Lenders pursuant to paragraph (C)(2) above, the
Borrower or the Specified Administrative Agent, as the case may be, shall in
turn promptly notify each Lender that is to make a Competitive Bid Advance as
part of such Competitive Bid Borrowing, of the amount of each Competitive Bid
Advance to be made by such Lender as part of such Competitive Bid Borrowing.

 

(ii) Each
Lender that is to make a Competitive Bid Advance as part of a Competitive Bid
Borrowing shall, before 12:00 noon (New York City time) on the date of such
Competitive Bid Borrowing specified in the Notice of Competitive Bid Borrowing
relating thereto, make available for the account of its Applicable Lending
Office to the Paying Agent in same day funds, such Lender’s ratable portion of
such Competitive Bid Borrowing. Upon fulfillment of the applicable conditions
set forth in Article III and after receipt by the Paying Agent of such
funds, the Paying Agent will make such funds available to the Borrower.
Promptly after each Competitive Bid Borrowing, the Paying Agent will notify
each Lender of the amount and tenor of the Competitive Bid Borrowing.

 

(iii) Each
Competitive Bid Borrowing shall be in an aggregate principal amount of not less
than $1,000,000. Following the making of each Competitive Bid Borrowing, the
Borrower shall be in compliance with the limitations set forth in the proviso
to the first sentence of subsection (i) above.

 

(iv) Within
the limits and on the conditions set forth in this Section 2.01(b), the
Borrower may from time to time borrow under this Section 2.01(b), repay or
prepay pursuant to subsection (v) below, and reborrow under this Section 2.01(b).

 

(v) The
Borrower shall repay to the Paying Agent for the account of each Lender that
has made, or holds the right to repayment of, a Competitive Bid Advance on the
maturity date of each Competitive Bid Advance (such maturity date being that
specified by the Borrower for repayment of such Competitive Bid Advance in the
related Notice of Competitive Bid Borrowing delivered pursuant to subsection
(i)(A) above) the then-unpaid principal amount of such Competitive Bid
Advance. The Borrower shall not have any right to prepay any principal amount
of any Competitive Bid Advance unless, and then only on the terms, specified by
the Borrower for such Competitive Bid Advance in the related Notice of
Competitive Bid Borrowing delivered pursuant to subsection (i)(A) above.

 

16

 

(vi) The
Borrower shall pay interest on the unpaid principal amount of each Competitive
Bid Advance from and including the date of such Competitive Bid Advance to but
excluding the date the principal amount of such Competitive Bid Advance is
repaid in full, at the rate of interest for such Competitive Bid Advance
(including any rate specified for past due amounts) specified by the Lender
making such Competitive Bid Advance in its notice with respect thereto
delivered pursuant to subsection (i)(B) above, payable on the interest
payment date or dates specified by the Borrower for such Competitive Bid
Advance in the related Notice of Competitive Bid Borrowing delivered pursuant
to subsection (i)(A) above.

 

(c) The
Letters of Credit. (i) Upon the terms and subject to the conditions
hereinafter set forth, the Borrower may request any Issuing Bank to issue, and
any such Issuing Bank may in its discretion issue, letters of credit (each, a “Letter
of Credit”) for the account of the Borrower and its Subsidiaries from time
to time on any Business Day during the period from the Effective Date until 30
days before the latest Termination Date in an aggregate Available Amount (i) for
all Letters of Credit not to exceed at any time the Letter of Credit Facility
at such time and (ii) for each such Letter of Credit not to exceed an
amount equal to the Unused Commitments of the Lenders at such time. Each Letter
of Credit (other than Existing Letters of Credit) shall be for a period of no
more than one year or shall be renewable or terminable (upon no more than 180
days’ notice) annually and, in each case, shall contain such terms and
conditions as may be acceptable to the Administrative Agents and the Issuing
Bank in their sole discretion, but in any event shall expire no later than 30
days prior to the latest Termination Date in effect at the date of issuance
thereof, provided that Letters of Credit having an aggregate Available Amount
of not more than $25,000,000 may have an expiration date of later than one year
from the date of issuance, but in any event shall expire no later than 30 days
prior to the latest Termination Date; provided  further that no
Letter of Credit shall have an expiration date later than 30 days prior to the
Termination Date of Lenders having Commitments in an amount equal to or
exceeding the available undrawn amount of all Letters of Credit after giving
effect to the issuance of such Letter of Credit. The Issuing Bank may, in its
sole discretion, renew such Letter of Credit, and such renewal shall in any
case be subject to the conditions specified herein. Within the limits referred
to above, the Borrower may from time to time request the issuance of Letters of
Credit under this Section 2.01(c).

 

(ii) Each
letter of credit listed on Schedule 2.01(c) shall be deemed to constitute
a Letter of Credit issued hereunder, and each Lender that is an issuer of such
a Letter of Credit shall, for purposes of Section 2.03, be deemed to be an
Issuing Bank for each such letter of credit, provided than any renewal
or replacement of any such letter of credit shall be issued by an Issuing Bank
pursuant to the terms of this Agreement. Effective as of the Closing Date, the
lenders under each Existing Credit Agreement (the “Existing Lenders”)
will be deemed to have sold and transferred an undivided interest and
participation, pro rata to such Existing Lender’s “Commitment” under such
Existing Credit Agreement, in respect of the Existing Letters of Credit and
each Lender under this Agreement will be deemed to have purchased and received,
without further action on the part of any party, an undivided interest and
participation in such Existing Letters of Credit, equal to such Lender’s Ratable
Share.

 

SECTION 2.02.
Making the Revolving Credit Advances. (a) Each Revolving Credit
Borrowing (other than a Borrowing resulting from a drawing under a Letter of
Credit) shall be made on notice, given not later than 11:00 A.M. (New York
City time) on the third Business Day prior to the date of the proposed
Revolving Credit Borrowing in the case of a Revolving Credit Borrowing
consisting of Eurodollar Rate Advances, or the Business Day of the proposed
Revolving Credit Borrowing in the case of a Revolving Credit Borrowing
consisting of Base Rate Advances, by the Borrower to the Paying Agent, which
shall give to each Lender prompt notice thereof by telecopier. Each such notice
of a Revolving Credit Borrowing (a “Notice of Revolving Credit Borrowing”)
shall be by telephone, confirmed immediately in writing, or telecopier in
substantially the form of Exhibit A-1 hereto, specifying therein the
requested (i) date of such Revolving Credit Borrowing, (ii) Type of
Advances comprising such Revolving Credit Borrowing, (iii) aggregate
amount of such Revolving Credit Borrowing, and (iv) in the case of a
Revolving Credit Borrowing consisting of Eurodollar Rate Advances, initial
Interest Period for each such Revolving Credit Advance. Each Lender shall,
before 12:00 noon (New York City time) on the date of such Revolving Credit
Borrowing, make available for the account of its Applicable Lending Office to
the Paying Agent at the Paying Agent’s Account, in same day funds, such Lender’s
ratable portion of such Revolving Credit Borrowing. After the Paying Agent’s
receipt of such funds and upon fulfillment of the applicable conditions set
forth in Article III, the Paying Agent will make such funds available to
the Borrower at the Paying Agent’s address referred to in Section 8.02.

 

17

 

(b) Anything
in subsection (a) above or Section 2.09 to the contrary
notwithstanding,

 

(i) if
the Eurodollar Rate cannot be determined by reference to the Moneyline Telerate
Service page 3750 or such other publicly available service agreed by the
Paying Agent and the Borrower and fewer than two Reference Banks furnish timely
information to the Paying Agent for determining the Eurodollar Rate for any
Eurodollar Rate Advances, (A) the Paying Agent shall forthwith notify the
Borrower and the Lenders that the interest rate cannot be determined for such
Eurodollar Rate Advances, (B) each such Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Base Rate
Advance (or if such Advance is then a Base Rate Advance, will continue as a
Base Rate Advance), and (C) the obligation of the Lenders to make
Eurodollar Rate Advances or to Convert Revolving Credit Advances into
Eurodollar Rate Advances shall be suspended until the Paying Agent shall notify
the Borrower and the Lenders that the circumstances causing such suspension no
longer exist,

 

(ii) if,
with respect to any Eurodollar Rate Advances, the Lenders required to make at
least 51% of such Eurodollar Rate Advances notify the Paying Agent that the
Eurodollar Rate for any Interest Period for such Advances will not adequately
reflect the cost to such Lenders of making or funding their respective
Eurodollar Rate Advances for such Interest Period, the Paying Agent shall
forthwith so notify the Borrower and the Lenders, whereupon (A) each
Eurodollar Rate Advance will automatically, on the last day of the then
existing Interest Period therefor, Convert into a Base Rate Advance, and (B) the
obligation of the Lenders to make, or to Convert Revolving Credit Advances
into, Eurodollar Rate Advances shall be suspended until the Paying Agent shall
notify the Borrower and the Lenders that the circumstances causing such
suspension no longer exist, and

 

(iii) if
the Borrower shall select an Interest Period of nine months for any Eurodollar
Rate Advances and any Lender shall notify the Paying Agent that the Eurodollar
Rate for such Interest Period will not adequately reflect the cost to such
Lender of making or funding its Eurodollar Rate Advance for such Interest
Period, the Paying Agent shall forthwith so notify the Borrower and the
Lenders, whereupon (A) each such Eurodollar Rate Advance will
automatically, on the last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance, and (B) the obligations of the Lenders
to make, or to Convert Advances into, Eurodollar Rate Advances having an
Interest Period of nine months shall be suspended until the Paying Agent shall
notify the Borrower and such Lenders that the circumstances causing such
suspension no longer exist.

 

(c) Each
Notice of Revolving Credit Borrowing shall be irrevocable and binding on the
Borrower and, in respect of any Revolving Credit Borrowing comprised of or
including Eurodollar Rate Advances specified in such Notice of Revolving Credit
Borrowing, the Borrower shall indemnify each Lender against any loss, cost or
expense incurred by such Lender solely as a result of any failure by the
Borrower to borrow on the date specified in the Notice of Revolving Credit
Borrowing for such Borrowing, including any loss (including loss of anticipated
profits), cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by such Lender to fund the Eurodollar Rate Advance
to be made by such Lender as part of such Borrowing when such Eurodollar Rate
Advance, solely as a result of such failure, is not made on such date. Without
prejudice to the survival of any other provision of this Agreement, the
provisions of this paragraph shall survive any termination of this Agreement.

 

18

 

(d) Unless
the Paying Agent shall have received notice from a Lender prior to the time of
any Revolving Credit Borrowing that such Lender will not make available to the
Paying Agent such Lender’s ratable portion of such Revolving Credit Borrowing,
the Paying Agent may assume that such Lender has made such portion available to
the Paying Agent on the date of such Revolving Credit Borrowing in accordance
with subsection (a) of this Section 2.02 and the Paying Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent such Lender shall not have so made
available to the Paying Agent on the date of any Revolving Credit Borrowing
such Lender’s ratable portion of such Borrowing, such Lender agrees, and the
Borrower agrees, to pay or repay to the Paying Agent forthwith on demand such
amount together with interest thereon, for each day from the date such amount
is made available to the Borrower until the date such amount is paid or repaid
to the Paying Agent, at (in the case of such Lender) the Federal Funds Rate and
(in the case of the Borrower) the Base Rate plus the Applicable Margin
(provided that such payment at the Federal Funds Rate or the Base Rate (plus
the Applicable Margin) with respect to any Eurodollar Rate Advance shall not
affect the status of such Advance as a Eurodollar Rate Advance). If such Lender
shall pay to the Paying Agent such amount, the amount so paid shall constitute
such Lender’s Revolving Credit Advance as part of such Revolving Credit
Borrowing for purposes of this Agreement from and including the date of such
Revolving Credit Borrowing.

 

(e) The
failure of any Lender to make the Revolving Credit Advance to be made by it as
part of any Revolving Credit Borrowing shall not relieve any other Lender of
its obligation, if any, hereunder to make its Revolving Credit Advance on the
date of such Revolving Credit Borrowing, but no Lender shall be responsible for
the failure of any other Lender to make the Revolving Credit Advance to be made
by such other Lender on the date of any Revolving Credit Borrowing.

 

SECTION 2.03.
Issuance of and Drawings and Reimbursement Under Letters of Credit. (a) Request
for Issuance. (i) Each Letter of Credit shall be issued upon notice,
given not later than 11:00 A.M. (New York City time) on the fifth Business
Day prior to the date of the proposed Issuance of such Letter of Credit (or on
such shorter notice as the applicable Issuing Bank may agree), by the Borrower
to any Issuing Bank, and such Issuing Bank shall give the Paying Agent prompt
notice thereof. Each such notice by the Borrower of Issuance of a Letter of
Credit (a “Notice of Issuance”) shall be by telecopier or telephone,
confirmed immediately in writing, in substantially the form of Exhibit A-3,
specifying therein the requested (A) date of such Issuance (which shall be
a Business Day), (B) Available Amount of such Letter of Credit, (C) expiration
date of such Letter of Credit and (D) name and address of the beneficiary
of such Letter of Credit, such Letter of Credit shall be issued pursuant to
such application and agreement for letter of credit as such Issuing Bank and
the Borrower shall agree for use in connection with such requested Letter of
Credit (a “Letter of Credit Agreement”). If the requested form of such
Letter of Credit is acceptable to such Issuing Bank in its reasonable
discretion (it being understood that any such form shall have only explicit
documentary conditions to draw and shall not include discretionary conditions),
such Issuing Bank may, upon fulfillment of the applicable conditions set forth
in Section 3.03, make such Letter of Credit available to the Borrower at
its office referred to in Section 8.02 or as otherwise agreed with the
Borrower in connection with such Issuance. In the event and to the extent that
the provisions of any Letter of Credit Agreement shall conflict with this
Agreement, the provisions of this Agreement shall govern.

 

(b) Participations.
By the Issuance of a Letter of Credit (or an amendment to a Letter of Credit
increasing or decreasing the amount thereof) and without any further action on
the part of the applicable Issuing Bank or the Lenders, such Issuing Bank
hereby grants to each Lender, and each Lender hereby acquires from such Issuing
Bank, a participation in such Letter of Credit equal to such Lender’s Ratable
Share of the Available Amount of such Letter of Credit. The Borrower hereby
agrees to each such participation. In consideration and in furtherance of the
foregoing, in accordance with Section 2.03(c), each Lender hereby
absolutely and unconditionally agrees to pay to the Paying Agent, for the
account of such Issuing Bank, such Lender’s Ratable Share of each drawing made
under a Letter of Credit funded by such Issuing Bank and not reimbursed by the
Borrower on the date made, or of any reimbursement payment required to be
refunded to the Borrower for any reason, which amount will be advanced, and
deemed to be a Base Rate Advance to the Borrower hereunder, regardless of the
satisfaction of the conditions set forth in Section 3.02. Each Lender
acknowledges and agrees that its obligation to acquire participations pursuant
to this paragraph in respect of Letters of Credit is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including any
amendment, renewal or extension of any Letter of Credit or the occurrence and
continuance of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever. Each Lender further acknowledges and agrees that its
participation in each Letter of Credit will be automatically adjusted to
reflect such Lender’s Ratable Share of the Available Amount of such Letter of
Credit at each time such Lender’s Commitment is amended pursuant to a
Commitment Increase in accordance with Section 2.19, an assignment in
accordance with Section 8.06 or otherwise pursuant to this Agreement.

 

19

 

(c) Drawing
and Reimbursement. The payment by an Issuing Bank of a draft drawn under
any Letter of Credit which is not reimbursed by the Borrower on the date made
shall constitute for all purposes of this Agreement the making by any such
Issuing Bank of an Advance, which shall be a Base Rate Advance, in the amount
of such draft, without regard to whether the making of such an Advance would
exceed such Issuing Bank’s Unused Commitment. Each Issuing Bank shall give
prompt notice of each drawing under any Letter of Credit issued by it to the
Borrower and the Paying Agent. Upon written demand by such Issuing Bank, with a
copy of such demand to the Paying Agent and the Borrower, each Lender shall pay
to the Paying Agent such Lender’s Ratable Share of such outstanding Advance.
Each Lender acknowledges and agrees that its obligation to make Advances
pursuant to this paragraph in respect of Letters of Credit is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including any amendment, renewal or extension of any Letter of Credit or the
occurrence and continuance of a Default or reduction or termination of the
Commitments, and that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever. Promptly after receipt thereof,
the Paying Agent shall transfer such funds to such Issuing Bank. Each Lender
agrees to fund its Ratable Share of an outstanding Advance on (i) the
Business Day on which demand therefor is made by such Issuing Bank, provided
that notice of such demand is given not later than 11:00 A.M. (New York
City time) on such Business Day, or (ii) the first Business Day next
succeeding such demand if notice of such demand is given after such time. If
and to the extent that any Lender shall not have so made the amount of such
Advance available to the Paying Agent, such Lender agrees to pay to the Paying
Agent forthwith on demand such amount together with interest thereon, for each
day from the date of demand by any such Issuing Bank until the date such amount
is paid to the Paying Agent, at the Federal Funds Rate for its account or the
account of such Issuing Bank, as applicable. If such Lender shall pay to the
Paying Agent such amount for the account of any such Issuing Bank on any
Business Day, such amount so paid in respect of principal shall constitute an
Advance made by such Lender on such Business Day for purposes of this
Agreement, and the outstanding principal amount of the Advance made by such
Issuing Bank shall be reduced by such amount on such Business Day.

 

(d) Letter
of Credit Reports. Each Issuing Bank shall furnish (i) to the Paying
Agent (with a copy to the Borrower) on the first Business Day after the
Issuance, expiration, drawing or change of Available Amount of any Letter of Credit,
a report in the form of Exhibit F hereto or such other form as is
reasonably acceptable to the Paying Agent and (ii) to the Paying Agent
(with a copy to the Borrower) on the first Business Day of each month a written
report summarizing Issuance and expiration dates of Letters of Credit issued by
such Issuing Bank during the preceding month and drawings during such month
under all Letters of Credit.

 

(e) Failure
to Make Advances. The failure of any Lender to make the Advance to be made
by it on the date specified in Section 2.03(c) shall not relieve any
other Lender of its obligation hereunder to make its Advance on such date, but
no Lender shall be responsible for the failure of any other Lender to make the
Advance to be made by such other Lender on such date.

 

SECTION 2.04.
Fees. (a) Facility Fees. The Borrower agrees to pay to the
Paying Agent for distribution to each Lender until the Termination Date
applicable to such Lender a facility fee (the “Facility Fee”) with
respect to such Lender’s Commitment, at a rate per annum equal to the Facility
Fee Percentage from time to time in effect on the aggregate amount of such
Lender’s Commitment, regardless of usage. The Facility Fees will commence to
accrue on the date of execution of this Agreement and will be payable in
arrears on (i) the Effective Date, (ii) on the third day of each
January, April, July and October and (iii) on the Termination
Date applicable to such Lender.

 

(b) Paying
Agent’s Fees. The Borrower agrees to pay to the Paying Agent, for its own
account, such fees as may from time to time be agreed between the Borrower and
the Paying Agent.

 

(c) Letter
of Credit Fees. (i) Upon the issuance, extension or renewal of each
Letter of Credit by an Issuing Bank, the Borrower agrees to pay to such Issuing
Bank a fee in an amount to be agreed upon between such Issuing Bank and the
Borrower, payable on the date of such issuance (or on such other date as may be
agreed upon by such Issuing Bank and the Borrower).

 

20

 

(ii) The
Borrower agrees to pay to the Paying Agent, for the ratable benefit of the
Lenders (determined in accordance with the respective amounts of their
Commitments), a letter of credit fee at the Applicable Margin on the maximum
Available Amount of outstanding Letters of Credit issued pursuant to Section 2.01(c) for
the account of the Borrower, in each case payable quarterly in arrears on the
third day of each January, April, July and October after the date of
issuance until the date each such Letter of Credit shall expire or terminate in
accordance with its terms and on the date of such expiration or termination.

 

(d) Transfer
Fee; Amendment Fee. (i) The Borrower agrees to pay to each Issuing
Bank, upon each transfer or amendment of a Letter of Credit issued for the
account of the Borrower, the normal and customary transfer fee or amendment
fee, as the case may be (or such other fee as the Borrower and such Issuing
Bank may agree upon), charged by such Issuing Bank upon the transfer or amendment
of letters of credit.

 

(e) Letter
of Credit Expenses. The Borrower agrees to pay to each Issuing Bank, on
demand, sums equal to any and all reasonable charges such Issuing Bank may
assess, and expenses that such Issuing Bank may pay or incur, relative to the
issuance by such Issuing Bank of any Letter of Credit issued for the account of
the Borrower or to presentment to, or to a payment by, the Issuing Bank
thereunder.

 

SECTION 2.05.
Termination or Reduction of the Commitments. (a) The Commitment of
each Lender shall be automatically terminated on the Termination Date
applicable to such Lender.

 

(b) The
Borrower shall have the right, upon at least three Business Days’ notice to the
Administrative Agents, to terminate in whole, or, subject to Section 2.19,
permanently reduce ratably in part (in a minimum principal amount of
$10,000,000 or any whole multiple of $1,000,000 in excess thereof), the Unused
Commitments).

 

(c) The
Letter of Credit Facility shall not be reduced until such time as the
Commitments shall equal such Letter of Credit Facility, and thereafter shall
reduce proportionately with any reduction in the amount of the Commitments
pursuant to this Section 2.05.

 

SECTION 2.06.
Repayment of Revolving Credit Advances. The Borrower shall repay to the
Paying Agent for the account of each Lender on the Termination Date applicable
to such Lender the aggregate principal amount of the Revolving Credit Advances
owing to such Lender on such date.

 

SECTION 2.07.
Interest on Revolving Credit Advances. The Borrower shall pay interest
on the unpaid principal amount of each Revolving Credit Advance owing to each
Lender from the date of such Revolving Credit Advance until such principal
amount shall be paid in full, at the following rates per annum:

 

(a) Base
Rate Advances. During such periods as such Revolving Credit Advance is a
Base Rate Advance, a rate per annum equal at all times to the sum of (x) the
Base Rate in effect from time to time plus (y) the Applicable Margin plus (z) the
Utilization Fee Percentage, if any, payable quarterly in arrears on the third
day of each January, April, July and October and on the date such
Base Rate Advance shall be Converted into a Eurodollar Rate Advance or paid in
full; provided that commencing on the date and during the continuance of
any Event of Default the applicable interest rate for all outstanding Base Rate
Advances shall be a rate per annum equal at all times to 2% per annum above the
rate otherwise in effect for such Base Rate Advances pursuant to this Section 2.07(a) from
time to time.

 

(b) Eurodollar
Rate Advances. During such periods as such Revolving Credit Advance is a
Eurodollar Rate Advance, a rate per annum equal at all times during each
Interest Period for such Advance to the sum of (x) the Eurodollar Rate for
such Interest Period plus (y) the Applicable Margin plus (z) the
Utilization Fee Percentage, if any, payable on the last day of each Interest
Period and, if such Interest Period has a duration of six months or nine
months, on each day that occurs during such Interest Period every three months
from the first day of such Interest Period, provided that commencing on
the date and during the continuance of any Event of Default the applicable
interest rate for all outstanding Eurodollar Rate Advances shall be a rate per
annum equal at all times to 2% per annum above the rate otherwise in effect for
such Eurodollar Rate Advances pursuant to this Section 2.07(b).

 

21

 

SECTION 2.08.
Interest Rate Determination. (a) Each Reference Bank agrees to
furnish to the Paying Agent timely information for the purpose of determining
each Eurodollar Rate. If any one or more of the Reference Banks shall not
furnish such timely information to the Paying Agent for the purpose of determining
any such interest rate (but at least two Reference Banks shall have furnished
such information), the Paying Agent shall determine such interest rate on the
basis of timely information furnished by the remaining Reference Banks.

 

(b) The
Paying Agent shall give prompt notice to the Borrower and the Lenders of the
applicable interest rate determined by the Paying Agent for purposes of Section 2.07(a) or
(b), and the rate, if any, furnished by each Reference Bank for the purpose of
determining the interest rate under Section 2.07(b).

 

(c) If
the Borrower shall fail to select the duration of any Interest Period for any
Eurodollar Rate Advances in accordance with the provisions contained in the
definition of “Interest Period” in Section 1.01, the Paying Agent will
forthwith so notify the Borrower and the Lenders and such Advances will
automatically, on the last day of the then existing Interest Period therefor,
Convert into Base Rate Advances.

 

SECTION 2.09.
Conversion of Revolving Credit Advances. (a) The Borrower may on
any Business Day, upon notice given to the Paying Agent not later than 11:00 a.m.
(New York City time) on the third Business Day prior to the date of the
proposed Conversion, and subject to the provisions of Sections 2.02(c), 2.07,
2.08, 2.09(d) and 2.11(c), Convert all or any Revolving Credit Advances of
one Type into Advances of the other Type; provided, however, that
(i) except as provided in Section 2.11(d), any Conversion of any
Eurodollar Rate Advances into Base Rate Advances shall be made on, and only on,
the last day of an Interest Period for such Eurodollar Rate Advances and (ii) the
Borrower may not Convert any Base Rate Advances into Eurodollar Rate Advances
unless such Base Rate Advances are in an aggregate amount not less than $10,000,000.
Each such notice of a Conversion shall, within the restrictions specified
above, specify (i) the date of such Conversion, (ii) the Type and
aggregate amount of Advances to be Converted and (iii) if such Conversion
is into Eurodollar Rate Advances, the duration of the Interest Period for such
Advances.

 

(b) Each
notice of Conversion shall be irrevocable and binding on the Borrower and, in
respect of any notice of Conversion to Eurodollar Rate Advances, the Borrower
shall indemnify each Lender against any loss, cost or expense incurred by such
Lender solely as a result of any failure to Convert on the date specified in
such notice, including any loss (including loss of anticipated profits), cost
or expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Lender to fund the Eurodollar Rate Advance to be
made by such Lender as part of such Conversion when such Eurodollar Rate
Advance, solely as a result of such failure, is not made on such date. Without
prejudice to the survival of any other provision of this Agreement, the
provisions of this paragraph shall survive any termination of this Agreement.

 

(c) On
the date on which the aggregate unpaid principal amount of Eurodollar Rate
Advances having the same Interest Period shall be reduced, by payment or
prepayment or otherwise, to less than $10,000,000, such Advances shall
automatically Convert into Base Rate Advances.

 

(d) Upon
the occurrence of any Default and so long as such Default shall continue, (i) each
Eurodollar Rate Advance will automatically, on the last day of the then
existing Interest Period therefor, Convert into a Base Rate Advance and (ii) the
obligation of the Lenders to make, or to Convert any Advances into, Eurodollar
Rate Advances shall be suspended.

 

SECTION 2.10.
Prepayments. (a) Optional Prepayments. The Borrower may,
upon at least two Business Days’ notice in the case of Eurodollar Rate
Advances, and upon at least one Business Day’s notice in the case of Base Rate
Advances, to the Paying Agent stating the proposed date and aggregate principal
amount of the prepayment, and if such notice is given the Borrower shall,
prepay the outstanding principal amount of the Revolving Credit Advances
comprising part of the same Revolving Credit Borrowing in whole or ratably in
part, together with accrued interest to the date of such prepayment on the
principal amount prepaid; provided, however, that (x) each
partial prepayment pursuant to this Section 2.10 shall be in an aggregate
principal amount of $5,000,000 or any whole multiple of $1,000,000 in excess
thereof and (y) in the event of any such prepayment of a Eurodollar Rate
Advance, such prepayment shall either be made on the last day of an Interest
Period for such Eurodollar Rate Advance or shall be made together with payment
of all amounts required pursuant to Section 8.03(c).

 

22

 

(b) Mandatory
Prepayments. (i) The Borrower shall, on each Business Day, pay to the
Paying Agent for deposit in the Letter of Credit Collateral Account an amount
sufficient to cause the aggregate amount on deposit in such Account to equal
the amount by which the aggregate maximum Available Amount of Letters of Credit
then outstanding exceeds the Letter of Credit Facility on such Business Day.

 

(ii) All
prepayments by the Borrower under this subsection (b) shall be made
together with accrued interest to the date of such prepayment on the principal
amount prepaid and shall be applied first against the Advances to be prepaid that
are Base Rate Advances and thereafter against the Advances to be prepaid that
are Eurodollar Advances having Interest Periods ending as close as possible to
the date of such prepayment.

 

SECTION 2.11.
Increased Costs; Illegality. (a) If, due to either (i) the
introduction of or any change (including any change by way of imposition or
increase of reserve requirements included in the Eurodollar Rate Reserve
Percentage) in or change in the interpretation of any law or regulation or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
any increase in the cost to any Lender of agreeing to make or making, funding
or maintaining Eurodollar Rate Advances, then the Borrower shall from time to
time, upon demand by such Lender (with a copy of such demand to the
Administrative Agents), pay to the Paying Agent for the account of such Lender
additional amounts sufficient to compensate such Lender for such increased
cost. A certificate as to the amount of such increased cost, submitted to the
Borrower and the Administrative Agents by such Lender, shall be conclusive and
binding for all purposes, absent manifest error.

 

(b) If
any Lender determines that compliance with any law or regulation or any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law) affects or would affect the amount of
capital required or expected to be maintained by such Lender or any corporation
controlling such Lender and that the amount of such capital is increased by or
based upon the existence of such Lender’s commitment to lend hereunder and
other commitments of this type or of the Letters of Credit (or similar
contingent obligations), then, upon demand by such Lender (with a copy of such
demand to the Administrative Agents), the Borrower shall pay to the Paying
Agent for the account of such Lender, from time to time as specified by such
Lender, additional amounts sufficient to compensate such Lender in the light of
such circumstances, to the extent that such Lender reasonably determines such
increase in capital to be allocable to the existence of such Lender’s
commitment to lend hereunder or to the issuance or maintenance of the Letters
of Credit. A certificate as to such amounts, submitted to the Borrower and the
Administrative Agents by such Lender, shall be conclusive and binding for all
purposes, absent manifest error.

 

(c) If,
due to either (i) the introduction of or any change in the interpretation
of any law or regulation or (ii) the compliance with any guideline or
request from any central bank or other Governmental Authority (whether or not
having the force of law), there shall be any increase in the cost to any
Issuing Bank or any Lender of agreeing to issue or of issuing or maintaining
any Letter of Credit or any participation therein, then the Borrower shall from
time to time, upon demand by such Issuing Bank or Lender (with a copy of such
demand to the Administrative Agents), pay to the Paying Agent for the account
of such Issuing Bank or such Lender, as the case may be, additional amounts
sufficient to compensate such Issuing Bank or such Lender, as the case may be,
for such increased cost. A certificate as to the amount of such increased cost,
submitted to the Borrower and the Administrative Agents by such Issuing Bank or
such Lender, as the case may be, shall be conclusive and binding for all
purposes, absent manifest error.

 

(d) Notwithstanding
any other provision of this Agreement, if the introduction of or any change in
or in the interpretation of any law or regulation shall make it unlawful, as
determined by any Lender, or any central bank or other Governmental Authority
shall assert that it is unlawful, for such Lender or its Eurodollar Lending
Office to perform its obligations hereunder to make Eurodollar Rate Advances or
to continue to fund or maintain Eurodollar Rate Advances hereunder, then, on
notice thereof and demand therefor by such Lender to the Borrower through the
Administrative Agents, (i) the obligation of such Lender to make
Eurodollar Rate Advances and to Convert Advances into Eurodollar Rate Advances
shall terminate and (ii) the Borrower shall forthwith Convert all
Eurodollar Rate Advances of such Lender then outstanding into Base Rate
Advances in accordance with Section 2.09, except that such Conversion may
occur, notwithstanding Section 2.09, other than on the last day of the
respective Interest Periods for such Eurodollar Rate Advances, if the Borrower
has paid all amounts payable under Section 8.03(c).

 

23

 

SECTION 2.12.
Payments and Computations. (a) The Borrower shall make each payment
hereunder and under the Notes, if any, without set-off or counterclaim, not
later than 12:00 noon (New York City time) on the day when due in U.S. dollars
to the Paying Agent at the Paying Agent’s Account in same day funds. The Paying
Agent will promptly thereafter cause to be distributed like funds relating to
the payment of principal or interest, Letter of Credit fees payable pursuant to
Section 2.04(c)(ii) or Facility Fees ratably (other than amounts
payable pursuant to Section 2.04(b), 2.04(c)(i), 2.04(d), 2.11, 2.14, 2.17
or 8.03(c)) to the Lenders for the account of their respective Applicable
Lending Offices, and like funds relating to the payment of any other amount
payable to any Lender to such Lender for the account of its Applicable Lending
Office, in each case to be applied in accordance with the terms of this Agreement.
Upon any Assuming Lender becoming a Lender hereunder as a result of an
extension of the Termination Date pursuant to Section 2.17 or as a result
of a Commitment Increase pursuant to Section 2.19, and upon the Paying
Agent’s receipt of such Lender’s Assumption Agreement and recording of the
information contained therein in the Register, from and after the applicable
Extension Date, the Paying Agent shall make all payments hereunder and under
any Notes issued in connection therewith in respect of the interest assumed
thereby to the Assuming Lender. Upon its acceptance of an Assignment and
Acceptance and recording of the information contained therein in the Register
pursuant to Section 8.06(d), from and after the effective date specified
in such Assignment and Acceptance, the Paying Agent shall make all payments
hereunder and under the Notes, if any, in respect of the interest assigned
thereby to the Lender assignee thereunder, and the parties to such Assignment
and Acceptance shall make all appropriate adjustments in such payments for
periods prior to such effective date directly between themselves.

 

(b) The
Borrower hereby authorizes (i) each Issuing Bank on behalf of each Lender,
if and to the extent payment owed to such Lender is not made by the Borrower to
the Paying Agent when due hereunder, to charge from time to time against any or
all of the Borrower’s accounts with such Issuing Bank any amount so due and (ii) each
Lender, if and to the extent payment is not made when due hereunder, to charge
from time to time against any or all of the Borrower’s accounts with such
Lender any amount so due to such Lender prior to any sharing under Section 2.13.
Nothing contained in this subsection (b) shall impair the obligations of
any Lender under Section 2.13, the rights of the Administrative Agents,
the Paying Agent or any Lender under Section 8.04 or any other rights and
remedies (including other rights of set-off) that the Administrative Agents,
the Paying Agent or such Lender may have.

 

(c) All
computations of interest based on the Base Rate (when determined pursuant to
clause (a) of the definition thereof) and fees shall be made by the Paying
Agent on the basis of a year of 365 or 366 days, as the case may be, and all
computations of interest based on Base Rate (when determined pursuant to clause
(b) or (c) of the definition thereof), the Eurodollar Rate or the
Federal Funds Rate shall be made by the Paying Agent on the basis of a year of
360 days, in each case for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such interest or
facility fees are payable. Each determination by the Paying Agent of an
interest rate or fee hereunder shall be conclusive and binding for all
purposes, absent manifest error.

 

(d) Whenever
any payment hereunder or under the Notes, if any, shall be stated to be due on
a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be;
provided, however, that if such extension would cause payment of
interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.

 

(e) Unless
the Paying Agent shall have received notice from the Borrower prior to the date
on which any payment is due to the Lenders hereunder that the Borrower will not
make such payment in full, the Paying Agent may assume that the Borrower has
made such payment in full to the Paying Agent on such date and the Paying Agent
may, in reliance upon such assumption, cause to be distributed to each Lender
on such due date an amount equal to the amount then due such Lender. If and to
the extent the Borrower shall not have so made such payment in full to the
Paying Agent, each Lender shall repay to the Paying Agent forthwith on demand
such amount distributed to such Lender together with interest thereon, for each
day from the date such amount is distributed to such Lender until the date such
Lender repays such amount to the Paying Agent, at the Federal Funds Rate.

 

24

 

SECTION 2.13.
Sharing of Payments, Etc. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of the Revolving Credit Advances made by it (other
than (x) as payment of a Base Rate Advance made by an Issuing Bank
pursuant to the first sentence of Section 2.03(c) or (y) pursuant
to Section 2.04(b), 2.04(c)(i), 2.04(d), 2.04(e),2.11, 2.14, 2.17 or
8.03(c)) in excess of its ratable share of payments on account of the Revolving
Credit Advances obtained by all the Lenders, such Lender shall forthwith
purchase from the other Lenders such participations in the Revolving Credit
Advances made to the other Lenders as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with each of them; provided,
however, that if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender, such purchase from each Lender shall be
rescinded and each such other Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
each such other Lender’s ratable share (according to the proportion of (i) the
amount of such other Lender’s required repayment to (ii) the total amount
so recovered from the purchasing Lender) of any interest or other amount paid
or payable by the purchasing Lender in respect of the total amount so
recovered. The Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this Section 2.13 may, to the fullest
extent permitted by law, exercise all its rights of payment (including the
right of set-off) with respect to such participation as fully as if such Lender
were the direct creditor of the Borrower in the amount of such participation.

 

SECTION 2.14.
Taxes. (a) Any and all payments by the Borrower hereunder or under
any Note shall be made, in accordance with Section 2.12, free and clear of
and without deduction for any and all current or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto
(including interest, additions to tax, and penalties thereon) imposed by the
United States of America or any political subdivision thereof (or, in the event
that the Borrower assigns any of its rights or obligations or any interest hereunder
or under any Notes, by any foreign country and its political subdivisions in
which the assignee is incorporated or is resident), excluding, in the
case of each Lender, the Paying Agent and each Administrative Agent, taxes
imposed on or measured by its net income, and franchise taxes imposed on it, by
the jurisdiction under the laws of which such Administrative Agent, the Paying
Agent or such Lender (as the case may be) is organized or any political
subdivision thereof and, in the case of each Lender, taxes imposed on or
measured by its net income, and franchise taxes imposed on it, by the
jurisdiction of such Lender’s Applicable Lending Office or any political
subdivision thereof (all such nonexcluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as “Taxes”).
If the Borrower shall be required by law to deduct any Taxes from or in respect
of any sum payable hereunder to any Lender, the Paying Agent or either
Administrative Agent, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.14) such
Lender, the Paying Agent or such Administrative Agent (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law.

 

(b) In
addition, the Borrower agrees to pay any current or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies that
arise from any payment made hereunder or under any Note or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or
any Note (hereinafter referred to as “Other Taxes”).

 

(c) The
Borrower will indemnify each Lender, the Paying Agent and each Administrative
Agent for the full amount of Taxes or Other Taxes (including any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this Section 2.14)
paid by such Lender, the Paying Agent or such Administrative Agent (as the case
may be) and any liability (including interest, expenses, additions to tax, and
penalties) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted. Payments under this
indemnification shall be made within 30 days from the date such Lender, the
Paying Agent or such Administrative Agent (as the case may be) makes written
demand therefor. However, in the case of any Taxes not required by law to be
deducted by the Borrower from or in respect of any sum payable hereunder to any
Lender, the Paying Agent or either Administrative Agent, payment under this
indemnification must be made by the Borrower only if such written demand has
been made within 60 days from the date on which such Lender, the Paying Agent
or such Administrative Agent, as the case may be, makes payment of the Taxes to
the relevant taxing authority.

 

(d) Within
30 days after the reasonable request therefor by the Paying Agent in connection
with any payment of Taxes or Other Taxes, the Borrower will furnish to the
Paying Agent, at its address referred to in, or determined pursuant to, Section 8.02,
the original or a certified copy of an official receipt from the jurisdiction
to which payment is made evidencing payment thereof or, if unavailable, a
certificate from the Borrower’s treasurer or responsible officer that states
that such payment has been made and that sets forth the date and amount of such
payment.

 

25

 

(e) Prior
to or on the Effective Date in the case of each Lender that is a Lender on the
Effective Date, and on the date of the Assignment and Acceptance or the
Assumption Agreement, as the case may be, pursuant to which it became a Lender
in the case of each other Lender, and from time to time thereafter if
reasonably requested by the Borrower or the Paying Agent, each Lender organized
under the laws of a foreign jurisdiction that is exempt from United States
Federal withholding tax, or that is subject to such tax at a reduced rate under
an applicable treaty, with respect to payments under this Agreement has
provided or is herewith providing the Borrower or the Paying Agent with an
Internal Revenue Form W-8BEN or Form W-8ECI or other certificate or
document required under United States law to establish entitlement to such
exemption or reduced rate. A determination of whether a Lender is exempt from
United States Federal withholding tax or is subject to such tax at a reduced
rate shall be within the reasonable judgment of the Lender.

 

(f) Without
prejudice to the survival of any other agreement of the Borrower hereunder, the
agreements and obligations of the Borrower contained in this Section 2.14
shall survive the payment in full of principal and interest hereunder.

 

SECTION 2.15.
Evidence of Debt. (a) Each Lender shall maintain in accordance with
its usual practice an account or accounts evidencing the indebtedness of the
Borrower to such Lender resulting from each Advance owing to such Lender from
time to time, including the amounts of principal and interest payable and paid
to such Lender from time to time hereunder. The Borrower agrees that upon
notice by any Lender to the Borrower (with a copy of such notice to the Paying
Agent) to the effect that a promissory note or other evidence of indebtedness
is required or appropriate in order for such Lender to evidence (whether for
purposes of pledge, enforcement or otherwise) the Advances owing to, or to be
made by, such Lender, the Borrower shall promptly execute and deliver to such
Lender a promissory note or other evidence of indebtedness, in form and
substance reasonably satisfactory to the Borrower and such Lender (each a “Note”),
payable to the order of such Lender in a principal amount equal to the
Commitment of such Lender.

 

(b) The
Register maintained by the Paying Agent pursuant to Section 8.06(d) shall
include a control account, and a subsidiary account for each Lender, in which
accounts (taken together) shall be recorded (i) the date and amount of
each Borrowing made hereunder, the Type of Advances comprising such Borrowing
and, if appropriate, the Interest Period applicable thereto, (ii) the
terms of each Assignment and Acceptance delivered to and accepted by it, (iii) the
amount of any principal or interest due and payable or to become due and
payable from the Borrower to each Lender hereunder, and (iv) the amount of
any sum received by the Paying Agent from the Borrower hereunder and each
Lender’s share thereof.

 

(c) Entries
made in good faith by the Paying Agent in the Register pursuant to subsection (b) above,
and by each Lender in its account or accounts pursuant to subsection (a) above,
shall be prima  facie evidence of the amount of principal and
interest due and payable or to become due and payable from the Borrower to, in
the case of the Register, each Lender and, in the case of such account or
accounts, such Lender, under this Agreement, absent manifest error; provided,
however, that the failure of the Paying Agent or such Lender to make an
entry, or any finding that an entry is incorrect, in the Register or such
account or accounts shall not limit or otherwise affect the obligations of the
Borrower under this Agreement.

 

SECTION 2.16.
Use of Proceeds. The proceeds of the Advances shall be available (and
the Borrower agrees that it shall use such proceeds) for general corporate
purposes of the Borrower and its Subsidiaries, including liquidity support for
commercial paper.

 

SECTION 2.17.
Extension of Termination Date. (a) At least 30 days but not more
than 60 days prior to either or both of the first and second Anniversary Dates,
the Borrower, by written notice to the Paying Agent, may request an extension
of the Termination Date in effect at such time by one year from its then
scheduled expiration. The Paying Agent shall promptly notify each Lender of
such request, and each Lender shall in turn, in its sole discretion, at least
20 days prior to such Anniversary Date, notify the Borrower and the Paying
Agent in writing as to whether such Lender will consent to such extension. If
any Lender shall fail to notify the Paying Agent and the Borrower in writing of
its consent to any such request for extension of the Termination Date at least
20 days prior to the scheduled occurrence thereof at such time, such Lender
shall be deemed to be a Non-Consenting Lender with respect to such request. The
Paying Agent shall notify the Borrower not later than 15 days prior to the
pending Anniversary Date of the decision of the Lenders regarding the Borrower’s
request for an extension of the Termination Date.

 

26

 

(b) If
all of the Lenders consent in writing to any such request in accordance with
subsection (a) of this Section 2.17, the Termination Date in effect
at such time shall, effective as at the next Anniversary Date (the “Extension
Date”), be extended for one calendar year; provided that on each
Extension Date, no Default shall have occurred and be continuing, or shall
occur as a consequence thereof and the giving of a request for extension shall
constitute a representation and warranty by the Borrower that the
representations and warranties contained in Section 4.01 are correct in
all material respects on and as of the date of such notice and on such
Extension Date, as though made on and as of such dates. If Lenders holding at
least a majority in interest of the aggregate Commitments at such time consent
in writing to any such request in accordance with subsection (a) of this Section 2.17,
the Termination Date in effect at such time shall, effective as at the
applicable Extension Date, be extended as to those Lenders that so consented
(each a “Consenting Lender”) but shall not be extended as to any other
Lender (each a “Non-Consenting Lender”). To the extent that the
Termination Date is not extended as to any Lender pursuant to this Section 2.17
and the Commitment of such Lender is not assumed in accordance with subsection (c) of
this Section 2.17 on or prior to the applicable Extension Date, the
Commitment of such Non-Consenting Lender shall automatically terminate in whole
on such unextended Termination Date without any further notice or other action
by the Borrower, such Lender or any other Person; provided that such
Non-Consenting Lender’s rights under Sections 2.11, 2.14, 8.03 and 8.07, and
its obligations under Section 7.05, shall survive the Termination Date for
such Lender as to matters occurring prior to such date. It is understood and
agreed that no Lender shall have any obligation whatsoever to agree to any
request made by the Borrower for any requested extension of the Termination Date.

 

(c) If
Lenders holding at least a majority in interest of the aggregate Commitments at
any time consent to any such request pursuant to subsection (a) of this Section 2.17,
the Borrower may arrange for one or more Consenting Lenders or other Eligible
Assignees (each such Eligible Assignee that accepts an offer to assume a
Non-Consenting Lender’s Commitment as of the applicable Extension Date, and
each Eligible Assignee that agrees to become a Lender hereunder pursuant to Section 2.19
being an “Assuming Lender”) to assume, effective as of the Extension
Date, any Non-Consenting Lender’s Commitment and all of the obligations of such
Non-Consenting Lender under this Agreement thereafter arising, without recourse
to or warranty by, or expense to, such Non-Consenting Lender; provided, however,
that the amount of the Commitment of any such Assuming Lender as a result of
such substitution shall in no event be less than $10,000,000 unless the amount
of the Commitment of such Non-Consenting Lender is less than $10,000,000, in
which case such Assuming Lender shall assume all of such lesser amount; and provided
further that:

 

(i) any
such Consenting Lender or Assuming Lender shall have paid to such
Non-Consenting Lender (A) the aggregate principal amount of, and any interest
accrued and unpaid to the effective date of the assignment on, the outstanding
Revolving Credit Advances, if any, of such Non-Consenting Lender plus (B) any
accrued but unpaid Facility Fees and fees pursuant to Section 2.04(c)(ii) owing
to such Non-Consenting Lender as of the effective date of such assignment;

 

(ii) all
additional costs reimbursements, expense reimbursements and indemnities payable
to such Non-Consenting Lender, and all other accrued and unpaid amounts owing
to such Non-Consenting Lender hereunder, as of the effective date of such
assignment shall have been paid to such Non-Consenting Lender; and

 

(iii) with
respect to any such Assuming Lender, the applicable processing and recordation
fee required under Section 8.06(a) for such assignment shall have
been paid;

 

27

 

provided  further
that such Non-Consenting Lender’s rights under Sections 2.11, 2.14, 8.03 and
8.07, and its obligations under Section 7.05, shall survive such
substitution as to matters occurring prior to the date of substitution. At
least three Business Days prior to any Extension Date, (A) each such
Assuming Lender, if any, shall have delivered to the Borrower and the Paying
Agent an assumption agreement, in form and substance satisfactory to the
Borrower and the Paying Agent (an “Assumption Agreement”), duly executed
by such Assuming Lender, the Borrower and the Paying Agent, (B) any such
Consenting Lender shall have delivered confirmation in writing satisfactory to
the Borrower and the Paying Agent as to the increase in the amount of its
Commitment and (C) each Non-Consenting Lender being replaced pursuant to
this Section 2.17 shall have delivered to the Paying Agent any Note or
Notes held by such Non-Consenting Lender. Upon the payment or prepayment of all
amounts referred to in clauses (i), (ii) and (iii) of the immediately
preceding sentence, each such Consenting Lender or Assuming Lender, as of the
Extension Date, will be substituted for such Non-Consenting Lender under this
Agreement and shall be a Lender for all purposes of this Agreement, without any
further acknowledgment by or the consent of the other Lenders, and the
obligations of each such Non-Consenting Lender hereunder shall, by the
provisions hereof, be released and discharged.

 

(d) If
Lenders holding a majority in interest of the aggregate Commitments (after
giving effect to any assumptions pursuant to subsection (c) of this Section 2.17)
consent in writing to a requested extension (whether by execution or delivery
of an Assumption Agreement or otherwise) not later than one Business Day prior
to such Extension Date, the Paying Agent shall so notify the Borrower, and, so
long as no Default shall have occurred and be continuing as of such Extension
Date, or shall occur as a consequence thereof, the Termination Date then in
effect with respect to the Commitment of such Consenting Lenders and Assuming
Lenders shall be extended for the additional one-year period described in
subsection (a) of this Section 2.17, and all references in this
Agreement, and in the Notes, if any, to the “Termination Date” shall,
with respect to each Consenting Lender and each Assuming Lender for such
Extension Date, refer to the Termination Date as so extended. Promptly
following each Extension Date, the Paying Agent shall notify the Lenders
(including, without limitation, each Assuming Lender) of the extension of the
scheduled Termination Date in effect immediately prior thereto and shall
thereupon record in the Register the relevant information with respect to each
such Consenting Lender and each such Assuming Lender.

 

(e) If
at any Termination Date, the sum of the aggregate outstanding principal amount
of Advances plus the Available Amount of Letters of Credit outstanding exceed
the Commitments of the Lenders having Commitments that extend to a date later
than such Termination Date, the Borrower shall repay Advances and/or deposit
funds into the Letter of Credit Collateral Account in an amount equal to such
excess.

 

SECTION 2.18.
Obligations Absolute. The obligations of the Borrower under this
Agreement in respect of any Letter of Credit, any Letter of Credit Agreement
and under any other agreement or instrument relating to any Letter of Credit
shall be unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement, such Letter of Credit Agreement
and such other agreement or instrument under all circumstances, including to
the extent permitted by law, the following circumstances:

 

(a) any
lack of validity or enforceability of any Letter of Credit, any Letter of
Credit Agreement or any other agreement or instrument relating thereto
(collectively, the “Letter of Credit Documents”) or any Loan Document;

 

(b) any
change in the time, manner or place of payment of, or in any other term of, all
or any of the obligations of the Borrower in respect of any Letter of Credit or
any other amendment or waiver of or any consent to departure from all or any of
the Letter of Credit Documents or any other Loan Document;

 

(c) any
exchange, release or nonperfection of any collateral, or any release or amendment
or waiver of or consent to departure from any guaranty, for all or any of the
obligations of the Borrower in respect of any Letter of Credit;

 

(d) the
existence of any claim, set-off, defense or other right that the Borrower may
have at any time against any beneficiary or any transferee of a Letter of
Credit (or any Persons for whom any such beneficiary or any such transferee may
be acting), any of the Lenders, the Administrative Agent, the Paying Agent or
any other Person, whether in connection with any Loan Document, the
transactions contemplated hereby or thereby or any unrelated transaction;

 

28

 

(e) any
statement or any other document presented under or in connection with any
Letter of Credit or other Loan Document proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;

 

(f) payment
in good faith by an Issuing Bank under a Letter of Credit against presentation
of a draft or certificate that does not comply with the terms of such Letter of
Credit; and

 

(g) any
other circumstance or happening whatsoever other than the payment in full of
all obligations hereunder in respect of any Letter of Credit or any agreement or
instrument relating to any Letter of Credit, whether or not similar to any of
the foregoing, that might otherwise constitute a defense available to, or a
discharge of, the Borrower.

 

SECTION 2.19.
Increase in the Aggregate Commitments. (a) The Borrower may, at any
time but in any event not more than twice in any calendar year prior to the
latest Termination Date, by notice to the Paying Agent, request that the
aggregate amount of the Commitment be increased by an amount of $10,000,000 or
an integral multiple thereof (each a “Commitment Increase”) to be
effective as of a date that is at least 90 days prior to the latest scheduled
Termination Date then in effect (the “Increase Date”) as specified in
the related notice to the Paying Agent; provided, however that (i) in
no event shall the aggregate amount of the Commitments at any time exceed
$3,000,000,000 and (ii) on the date of any request by the Borrower for a
Commitment Increase and on the related Increase Date no Default shall have
occurred and be continuing.

 

(b) The
Paying Agent shall promptly notify the Lenders of a request by the Borrower for
a Commitment Increase, which notice shall include (i) the proposed amount
of such requested Commitment Increase, (ii) the proposed Increase Date and
(iii) the date by which Lenders wishing to participate in the Commitment
Increase must commit to an increase in the amount of their respective
Commitments (the “Commitment Date”). Each Lender that is willing to
participate in such requested Commitment Increase (each an “Increasing
Lender”) shall, in its sole discretion, give written notice to the Paying
Agent on or prior to the Commitment Date of the amount by which it is willing
to increase its Commitment. If the Lenders notify the Paying Agent that they
are willing to increase the amount of their respective Commitments by an
aggregate amount that exceeds the amount of the requested Commitment Increase,
the requested Commitment Increase shall be allocated among the Lenders willing
to participate therein in such amounts as are agreed between the Borrower and
the Paying Agent. No Lender shall have any obligation to participate in such a
requested Commitment Increase, and the election of any Lender to Participate in
such a requested Commitment Increase shall not obligate any other Lender to so
participate.

 

(c) Promptly
following each Commitment Date, the Paying Agent shall notify the Borrower as
to the amount, if any, by which the Lenders are willing to participate in the
requested Commitment Increase. If the aggregate amount by which the Lenders are
willing to participate in any requested Commitment Increase on any such
Commitment Date is less than the requested Commitment Increase, then the
Borrower may extend offers to one or more Eligible Assignees to participate in
any portion of the requested Commitment Increase that has not been committed to
by the Lenders as of the applicable Commitment Date; provided, however,
that the Commitment of each such Eligible Assignee shall be not less than
$10,000,000.

 

(d) On
each Increase Date, each Eligible Assignee that accepts an offer to participate
in a requested Commitment Increase in accordance with Section 2.19(b) shall
become a Lender party to this Agreement as of such Increase Date and the
Commitment of each Increasing Lender for such requested Commitment Increase
shall be so increased by such amount (or by the amount allocated to such Lender
pursuant to the last sentence of Section 2.19(b)) as of such Increase
Date; provided, however, that the Paying Agent shall have
received on or before such Increase Date the following, each dated such date:

 

(i) (A) certified
copies of resolutions of the Board of Directors of the Borrower or the
Executive Committee of such Board approving the Commitment Increase and the
corresponding modifications to this Agreement and (B) an opinion of
counsel for the Borrower (which may be in-house counsel), in substantially the
form of Exhibit C hereto;

 

29

 

(ii) an
Assumption Agreement from each Assuming Lender, if any, duly executed by such
Eligible Assignee, the Paying Agent and the Borrower; and

 

(iii) confirmation
from each Increasing Lender of the increase in the amount of its Commitment in
a writing satisfactory to the Borrower and the Paying Agent.

 

On
each Increase Date, upon fulfillment of the conditions set forth in the
immediately preceding sentence of this Section 2.19(d), the Paying Agent
shall notify the Lenders (including, without limitation, each Assuming Lender)
and the Borrower, on or before 1:00 P.M. (New York City time), by
telecopier, of the occurrence of the Commitment Increase to be effected on such
Increase Date and shall record in the Register the relevant information with
respect to each Increasing Lender and each Assuming Lender on such date.

 

ARTICLE III

 

CONDITIONS TO EFFECTIVENESS AND LENDING

 

SECTION 3.01.
Conditions Precedent to Effectiveness of Section 2.01. Section 2.01
of this Agreement shall become effective on and as of the first date (the “Effective
Date”) on which the following conditions precedent have been satisfied:

 

(a) There
shall have occurred no Material Adverse Change since January 28, 2006.

 

(b) There
shall exist no action, suit, investigation, litigation or proceeding affecting
the Borrower or any of its Subsidiaries pending or threatened before any court,
governmental agency or arbitrator that (i) could be reasonably likely to
have a Material Adverse Effect other than the matters described on Schedule
3.01(b) hereto (the “Disclosed Litigation”) or (ii) purports
to affect the legality, validity or enforceability of this Agreement or any
Note or the consummation of the transactions contemplated hereby, and there
shall have been no adverse change in the status, or financial effect on the
Borrower or any of its Subsidiaries, of the Disclosed Litigation from that
described on Schedule 3.01(b) hereto.

 

(c) Nothing
shall have come to the attention of the Lenders during the course of their due
diligence investigation to lead them to believe that the Information Memorandum
was or has become misleading, incorrect or incomplete in any material respect;
without limiting the generality of the foregoing, the Lenders shall have been
given such access to the management, records, books of account, contracts and
properties of the Borrower and its Subsidiaries as they shall have requested.

 

(d) All
governmental and third party consents and approvals necessary in connection
with the transactions contemplated hereby shall have been obtained (without the
imposition of any conditions that are not acceptable to the Lenders) and shall
remain in effect, and no law or regulation shall be applicable in the
reasonable judgment of the Lenders that restrains, prevents or imposes
materially adverse conditions upon the transactions contemplated hereby.

 

(e) The
Borrower shall have notified each Lender and the Agents in writing as to the
proposed Effective Date.

 

(f) The
Borrower shall have paid all accrued fees and expenses of the Agents, the
Issuing Banks and the Lenders (including the accrued fees and expenses of
counsel to the Agents).

 

(g) On
the Effective Date, the following statements shall be true and the Agents shall
have received for the account of each Lender a certificate signed by a duly
authorized officer of the Borrower, dated the Effective Date, stating that:

 

30

 

(i) The
representations and warranties contained in Section 4.01 are correct on
and as of the Effective Date, and

 

(ii) No
event has occurred and is continuing that constitutes a Default.

 

(h) The
Agents shall have received on or before the Effective Date the following, each
dated such day, in form and substance satisfactory to the Agents and in
sufficient copies for each Lender:

 

(i) The
Guarantee Agreement, duly executed by each Guarantor existing on the Effective
Date.

 

(ii) Certified
copies of the resolutions of the Board of Directors of the Borrower approving
this Agreement, certified copies of the resolutions of the Board of Directors
of each Guarantor approving the Guarantee Agreement and of all documents
evidencing other necessary corporate action and governmental approvals, if any,
with respect to this Agreement and the other Loan Documents.

 

(iii) A
certificate of the Secretary or an Assistant Secretary of the Borrower and each
Guarantor certifying the names and true signatures of the officers of the
Borrower or such Guarantor, as applicable, authorized to sign this Agreement,
each other Loan Document to which it is a party and the other documents to be
delivered hereunder or thereunder.

 

(iv) A
favorable opinion of Paul W. Heldman, Executive Vice President, Secretary and
General Counsel for the Borrower, substantially in the form of Exhibit C
hereto and as to such other matters as any Lender through the Agents may
reasonably request.

 

(v) A
favorable opinion of Shearman & Sterling LLP, counsel for the Agents,
in form and substance satisfactory to the Agents.

 

(i) The
termination of the commitments of the lenders and the payment in full of all
Debt outstanding under (i) the Five-Year Credit Agreement dated as of May 22,
2002, as amended, among the Borrower, the lenders parties thereto, Citibank and
JPMorgan Chase, as administrative agents, and Bank of America, N.A., Bank One,
NA, The Bank of Tokyo-Mitsubishi Ltd., Chicago Branch and Union Bank of
California, as co-syndication agents, and (ii) the Five Year Credit
Agreement dated as of May 20, 2004, as amended, among the Borrower, the
lenders parties thereto, Citibank and JPMorgan Chase, as administrative agents,
and Bank of America, N.A., The Royal Bank of Scotland plc, The Bank of
Tokyo-Mitsubishi Ltd., Chicago Branch and Union Bank of California, as
co-syndication agents, and each of the Lenders that is a party to either of the
foregoing credit agreements (each, an “Existing Credit Agreement”)
hereby waives any requirement of prior notice for the termination of the
commitments or prepayment of advances under such credit agreement.

 

SECTION 3.02.
Conditions Precedent to Each Revolving Credit Borrowing and Issuance.
The obligation of each Lender to make a Revolving Credit Advance (other than a
Base Rate Advance made by any Issuing Bank or any Lender pursuant to Section 2.03(c))
on the occasion of each Revolving Credit Borrowing and the obligation of each
Issuing Bank to issue a Letter of Credit shall be subject to the conditions
precedent that the Effective Date shall have occurred and on the date of such
Revolving Credit Borrowing or Issuance (a) the following statements shall
be true (and each of the giving of the applicable Notice of Revolving Credit
Borrowing or Notice of Issuance and the acceptance by the Borrower of the
proceeds of such Revolving Credit Borrowing or of such Letter of Credit shall
constitute a representation and warranty by the Borrower that on the date of
such Borrowing or Issuance such statements are true):

 

(i) the
representations and warranties contained in Section Section 4.01
(other than the representations and warranties in the last sentence of
subsection (e) and in subsection (f) (other than clause (ii) thereof))
are correct in all material respects on and as of the date of such Revolving
Credit Borrowing, before and after giving effect to such Revolving Credit
Borrowing or Issuance of a Letter of Credit and to the application of the
proceeds therefrom, as though made on and as of such date, and

 

31

 

(ii) no
event has occurred and is continuing, or would result from such Revolving
Credit Borrowing or Issuance of a Letter of Credit or from the application of
the proceeds therefrom, that constitutes a Default;

 

and
(b) the Agents shall have received such other approvals, opinions or
documents as any Lender through the Agents may reasonably request.

 

SECTION 3.03.
Determinations Under Section 3.01. For purposes of determining
compliance with the conditions specified in Section 3.01, each Lender
shall be deemed to have consented to, approved or accepted or to be satisfied
with each document or other matter required thereunder to be consented to or
approved by or acceptable or satisfactory to the Lenders unless an officer of
any Agent responsible for the transactions contemplated by this Agreement shall
have received notice from such Lender prior to the date that the Borrower, by
notice to the Lenders, designates as the proposed Effective Date, specifying
its objection thereto. The Agents shall promptly notify the Lenders of the
occurrence of the Effective Date.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

 

SECTION 4.01.
Representations and Warranties of the Borrower. The Borrower represents
and warrants as follows:

 

(a) The
Borrower is a corporation duly organized, validly existing and in good standing
under the laws of the State of Ohio. Each Guarantor is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization.

 

(b) The
execution, delivery and performance by the Borrower and each Guarantor of the
Loan Documents to which it is a party and which are delivered hereunder and the
consummation of the transactions contemplated hereby and thereby, are within
the Borrower’s or such Guarantor’s corporate powers, have been duly authorized
by all necessary corporate action, and do not contravene (i) the Borrower’s
or such Guarantor’s charter, regulations or by-laws, as applicable, or (ii) law
or any contractual restriction binding on or affecting the Borrower or such
Guarantor.

 

(c) No
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body or any other third party is
required for the due execution, delivery and performance by the Borrower or any
Guarantor of any Loan Document to which it is a party, except for those
authorizations, approvals, actions, notices and filings listed on Schedule 4.01(c) hereto,
all of which have been duly obtained, taken, given or made and are in full
force and effect.

 

(d) This
Agreement has been, and each of the other Loan Documents to which it is a
party, will have been, duly executed and delivered by the Borrower. The Guarantee
Agreement has been duly executed and delivered by each Guarantor. This
Agreement and the Guarantee Agreement are, and each of the other Loan
Documents, when delivered hereunder, will be, the legal, valid and binding
obligation of the Borrower and each Guarantor party thereto, as the case may
be, enforceable against the Borrower and such Guarantor, as the case may be, in
accordance with their respective terms.

 

(e) The
Consolidated balance sheet of the Borrower and its Subsidiaries as at January 28,
2006, and the related Consolidated statements of income and cash flows of the
Borrower and its Subsidiaries for the Fiscal Year then ended, accompanied by an
opinion of PricewaterhouseCoopers LLP, independent public accountants, copies
of which have been furnished to each Lender, fairly present the Consolidated
financial condition of the Borrower and its Subsidiaries as at such date and
the Consolidated results of the operations of the Borrower and its Subsidiaries
for the period ended on such date, all in accordance with generally accepted
accounting principles consistently applied. Since January 28, 2006, there
has been no Material Adverse Change.

 

32

 

(f) There
is no pending or threatened action, suit, investigation, litigation or
proceeding affecting the Borrower or any of its Subsidiaries before any court,
governmental agency or arbitrator that (i) could be reasonably likely to
have a Material Adverse Effect (other than the Disclosed Litigation) and there
has been no adverse change in the status, or financial effect on the Borrower
or any of its Subsidiaries, of the Disclosed Litigation from that described on
Schedule 3.01(b) hereto, or (ii) purports to affect the legality,
validity or enforceability of the Loan Documents or the consummation of the
transactions contemplated hereby and thereby.

 

(g) Neither
the Borrower nor any Guarantor is engaged in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the Board of Governors of the Federal Reserve System),
and no proceeds of any Advance or of any Letter of Credit will be used to
purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock.

 

(h) Neither
the Borrower nor any Guarantor is an “investment company”, within the meaning
of the Investment Company Act of 1940, as amended.

 

ARTICLE V

 

COVENANTS OF THE BORROWER

 

SECTION 5.01.
Affirmative Covenants. So long as any Advance shall remain unpaid or any
Lender shall have any Commitment hereunder or any Letter of Credit shall remain
outstanding, the Borrower will:

 

(a) Compliance
with Laws, Etc. Comply, and cause each of its Subsidiaries to comply,
in all material respects, with all applicable laws, rules, regulations and
orders, such compliance to include, without limitation, compliance with ERISA
and Environmental Laws.

 

(b) Payment
of Taxes, Etc. Pay and discharge, and cause each of its Subsidiaries
to pay and discharge, before the same shall become delinquent, (i) all
taxes, assessments and governmental charges or levies imposed upon it or upon
its property and (ii) all lawful claims that, if unpaid, might by law
become a Lien upon its property; provided, however, that neither
the Borrower nor any of its Subsidiaries shall be required to pay or discharge
any such tax, assessment, charge or claim that is being contested in good faith
and by proper proceedings and as to which appropriate reserves are being
maintained.

 

(c) Maintenance
of Insurance. Maintain, and cause each of its Subsidiaries to maintain,
insurance with responsible and reputable insurance companies or associations in
such amounts and covering such risks as is usually carried by companies engaged
in similar businesses and owning similar properties in the same general areas
in which the Borrower or such Subsidiary operates; provided, however,
that the Borrower and its Subsidiaries may self-insure to the same extent as
other companies engaged in similar businesses and owning similar properties in
the same general areas in which the Borrower or such Subsidiary operates and to
the extent consistent with prudent business practice.

 

(d) Preservation
of Corporate Existence, Etc. Preserve and maintain, and cause each of
its Subsidiaries to preserve and maintain, its corporate existence, rights
(charter and statutory) and franchises; provided, however, that
the Borrower and its Subsidiaries may consummate any merger or consolidation
permitted under Section 5.02(b) and provided  further
that neither the Borrower nor any of its Subsidiaries shall be required to
preserve any right or franchise if a Responsible Officer of the Borrower or
such Subsidiary shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Borrower or such Subsidiary, as
the case may be, and that the loss thereof is not disadvantageous in any
material respect to the Borrower, such Subsidiary or the Lenders.

 

33

 

(e) Visitation
Rights. At any reasonable time and from time to time, permit any Agent or
any of the Lenders or any agents or representatives thereof, to examine and
make copies of and abstracts from the records and books of account of, and
visit the properties of, the Borrower and any of its Subsidiaries, and to
discuss the affairs, finances and accounts of the Borrower and any of its
Subsidiaries with any of their officers or directors and with their independent
certified public accountants.

 

(f) Keeping
of Books. Keep, and cause each of its Subsidiaries to keep, proper books of
record and account, in which full and correct entries shall be made of all
financial transactions and the assets and business of the Borrower and each
such Subsidiary in accordance with generally accepted accounting principles in
effect from time to time.

 

(g) Maintenance
of Properties, Etc. Maintain and preserve all of its properties in
good working order and condition, ordinary wear and tear excepted, and maintain
all necessary licenses and permits if, in each case, failure to so maintain and
preserve would result in a Material Adverse Effect.

 

(h) Reporting
Requirements. Furnish to the Lenders:

 

(i) as
soon as available and in any event within 50 days after the end of each of the
first three quarters of each Fiscal Year of the Borrower, the Consolidated
balance sheet of the Borrower and its Subsidiaries as of the end of such
quarter and Consolidated statements of income and cash flows of the Borrower
and its Subsidiaries for the period commencing at the end of the previous
Fiscal Year and ending with the end of such quarter, duly certified (subject to
year-end audit adjustments) by a Financial Officer of the Borrower as having
been prepared in accordance with generally accepted accounting principles and
certificates of a Financial Officer of the Borrower as to compliance with the
terms of this Agreement and setting forth in reasonable detail the calculations
necessary to demonstrate compliance with Section 5.03 and a calculation of
the Applicable Percentage Ratio, provided that in the event of any
change in generally accepted accounting principles used in the preparation of
such financial statements, the Borrower shall also provide, if necessary for
the determination of compliance with Section 5.03, a statement of
reconciliation conforming such financial statements to GAAP;

 

(ii) as
soon as available and in any event within 100 days after the end of each Fiscal
Year of the Borrower, a copy of the annual audit report for such year for the
Borrower and its Subsidiaries, containing the Consolidated balance sheet of the
Borrower and its Subsidiaries as of the end of such Fiscal Year and
Consolidated statements of income and cash flows of the Borrower and its
Subsidiaries for such Fiscal Year, in each case accompanied by an opinion
acceptable to the Required Lenders by PricewaterhouseCoopers LLP or other
independent public accountants acceptable to the Required Lenders, provided
that in the event of any change in generally accepted accounting principles
used in the preparation of such financial statements, the Borrower shall also
provide, if necessary for the determination of compliance with Section 5.03,
a statement of reconciliation conforming such financial statements to GAAP;

 

(iii) as
soon as possible and in any event within five days after the occurrence of each
Default continuing on the date of such statement, a statement of a Financial
Officer of the Borrower setting forth details of such Default and the action
that the Borrower has taken and proposes to take with respect thereto;

 

(iv) promptly
after the sending or filing thereof, copies of all quarterly and annual reports
and proxy solicitations that the Borrower sends to any of its securityholders,
and copies of all reports on Form 8-K that the Borrower or any Subsidiary
files with the Securities and Exchange Commission (other than reports on Form 8-K
filed solely for the purpose of incorporating exhibits into a registration
statement previously filed with the Securities and Exchange Commission);

 

34

 

(v) promptly
after the commencement thereof, notice of all actions and proceedings before
any court, governmental agency or arbitrator affecting the Borrower or any of
its Subsidiaries of the type described in Section 4.01(f); and

 

(vi) such
other information respecting the Borrower or any of its Subsidiaries as any
Lender through the Agents may from time to time reasonably request.

 

The
financial statements required to be delivered pursuant to clauses (i) and (ii) and
the reports required to be delivered pursuant to clause (iv) of this Section 5.01(h) shall
be deemed to have been delivered on the date on which the same have been posted
on the SEC’s website at www.sec.gov; provided that the Borrower shall
deliver paper copies of the reports referred to in clauses (i), (ii) and (iv) above
to the Agent or any Lender who requests the Borrower to deliver such paper
copies until written notice to cease delivering paper copies is given by the
Agent or such Lender.

 

(i) Guarantors.
Cause (i) each Material Subsidiary organized under the laws of the United
States of America or any political subdivision thereof created or acquired by
it from time to time and (ii) each Subsidiary that is not a Material
Subsidiary immediately prior to becoming such a Material Subsidiary to undertake
the obligation of and to become a Guarantor pursuant to the Guarantee Agreement
pursuant to one or more instruments or agreements satisfactory in form and
substance to the Paying Agent.

 

SECTION 5.02.
Negative Covenants. So long as any Advance shall remain unpaid or any
Lender shall have any Commitment hereunder or any Letter of Credit shall remain
outstanding, the Borrower will not:

 

(a) Liens, Etc.
Create or suffer to exist, or permit any of its Subsidiaries to create or
suffer to exist, any Lien on or with respect to any of its properties, whether
now owned or hereafter acquired, or assign, or permit any of its Subsidiaries
to assign, any right to receive income, other than:

 

(i) Liens
on any property or assets of any corporation existing at the time such
corporation becomes a Subsidiary provided that such Lien does not extend
to any other property of the Borrower or any of its Subsidiaries;

 

(ii) Liens
on any property or assets (including stock) existing at the time of acquisition
of such property or assets by the Borrower or any of its Subsidiaries, or Liens
to secure the payment of all or any part of the purchase price of such property
or assets (including stock), upon the acquisition of such property or assets by
the Borrower or any of its Subsidiaries or to secure Debt incurred, assumed or
guaranteed by the Borrower or any of its Subsidiaries for the purpose of
financing all or any part of the purchase price of such property or in the case
of real property, construction or improvements thereon or attaching to property
substituted by the Borrower to obtain the release of a Lien on other property
of the Borrower on which a Lien then exists, which Debt is incurred, assumed or
guaranteed prior to, at the time of, or within 18 months after such acquisition
(or in the case of real property, completion of construction (including any
improvements on an existing asset) or commencement of full operations at such
property, whichever is later (which in the case of a retail store is the
opening of the store for business to the public)), provided that in the
case of any such acquisition, construction or improvement, the Lien shall not
apply to any other property or assets theretofore owned by the Borrower or any
of its Subsidiaries;

 

(iii) Liens
securing Debt owing by any Subsidiary of the Borrower to the Borrower or to
another Subsidiary of the Borrower;

 

35

 

(iv) Liens
on any property or assets of the Borrower or any of its Subsidiaries in favor
of the United States of America or any State thereof, or any department, agency
or instrumentality or political subdivision of the United States of America or
any State thereof, or in favor of any other country, or any political
subdivision thereof, to secure partial, progress, advance or other payments
pursuant to any contract or statute or to secure any Debt incurred or
guaranteed for the purpose of financing all or any part of the purchase price
(or, in the case of real property, the cost of construction) of the property or
assets subject to such Liens (including, but not limited to, Liens incurred in
connection with pollution control, industrial revenue or similar financing);

 

(v) Liens
existing on properties or assets of the Borrower or any of its Subsidiaries
existing on the Effective Date securing obligations in an aggregate amount not
to exceed $300,000,000; provided that such Liens shall secure only those
obligations which they secure on the Effective Date or any extension, renewal
or replacement thereof;

 

(vi) any
extension, renewal or replacement (or successive extensions, renewals or
replacements), in whole or in part, of any Lien referred to in the foregoing
clauses (i) to (v), inclusive; provided that such extension, renewal or
replacement shall be limited to all or a part of the property or assets which
secured the Lien so extended, renewed or replaced (plus improvements and
construction on real property);

 

(vii) Liens
imposed by law, such as mechanics’, workmen’s, repairmen’s, materialmen’s,
carriers’ warehouseman’s, vendors’, or other similar Liens arising in the
ordinary course of business of the Borrower or any of its Subsidiaries, or
governmental (federal, state or municipal) Liens arising out of contracts for
the sale of products or services by the Borrower or any of its Subsidiaries, or
deposits or pledges to obtain the release of any of the foregoing Liens;

 

(viii) pledges,
Liens or deposits under worker’s compensation laws or similar legislation and
Liens or judgments thereunder which are not currently dischargeable, or in
connection with bids, tenders, contracts (other than for the payment of money)
or leases to which the Borrower or any of its Subsidiaries is a party, or to
secure the public or statutory obligations of the Borrower or any of its
Subsidiaries, or in connection with obtaining or maintaining self insurance or
to obtain the benefits of any law, regulation or arrangement pertaining to
unemployment insurance, old age pensions, social security or similar matters,
or to secure surety, appeal or customs bonds to which the Borrower or any of
its Subsidiaries is a party, or in litigation or other proceedings such as, but
not limited to, interpleader proceedings, and other similar pledges, Liens or
deposits made or incurred in the ordinary course of business;

 

(ix) Liens
created by or resulting from any litigation or other proceeding which is being
contested in good faith by appropriate proceedings, including Liens arising out
of judgments or awards against the Borrower or any of its Subsidiaries, with
respect to which the Borrower or such Subsidiary is in good faith prosecuting
an appeal or proceedings for review or for which the time to make an appeal has
not yet expired; or final unappealable judgment Liens which are satisfied
within 30 days of the date of judgment; or Liens incurred by the Borrower or
any of its Subsidiaries for the purpose of obtaining a stay or discharge in the
course of any litigation or other proceeding to which the Borrower or such
Subsidiary is a party;

 

(x) Liens
for taxes or assessments of governmental charges or levies not yet due or
delinquent, or which can thereafter be paid without penalty, or which are being
contested in good faith by appropriate proceedings; landlord’s Liens on
property held under lease; and any other Liens or charges incidental to the
conduct of the business of the Borrower or any of its Subsidiaries or the
ownership of the property or assets of any of them which were not incurred in
connection with the borrowing of money or the obtaining of advances or credit
and which do not, in the opinion of the Borrower, materially impair the use of
such property or assets in the operation of the business of the Borrower or
such Subsidiary or the value of such property or assets for the purposes of
such business; or

 

36

 

(xi) Liens
not permitted by the foregoing clauses (i) to (x), inclusive, if at the
time of, and after giving effect to, the creation or assumption of such Lien,
the aggregate amount of all Debt of the Borrower and its Subsidiaries secured
by all Liens not so permitted by the foregoing clauses (i) through (x) above
does not exceed 20% of the total assets from time to time before giving effect
to the LIFO reserve of the Borrower and its Subsidiaries on a Consolidated
basis.

 

(b) Mergers, Etc.
Merge or consolidate with or into any Person, or permit any of its
Subsidiaries to do so, except that any Subsidiary of the Borrower may merge or
consolidate with or into any other Subsidiary of the Borrower or into any other
Person (so long as the surviving corporation is a Subsidiary of the Borrower),
and except that any Subsidiary of the Borrower or any other Person may merge
into the Borrower, provided, in each case, that no Default shall have
occurred and be continuing at the time of such proposed transaction or would
result therefrom.

 

(c) Accounting
Changes. Make or permit, or permit any of its Subsidiaries to make or
permit, any significant change in accounting policies or reporting practices,
except as required by generally accepted accounting principles; provided,
however, that the Borrower may make or permit its Subsidiaries to make
any changes in accounting policies or reporting practices in order to conform
to any policies or practices of Fred Meyer, Inc. and its Subsidiaries or
to conform any policies or practices of Fred Meyer, Inc., or its
Subsidiaries to those of Borrower or its Subsidiaries. The parties acknowledge
that the Borrower and its Subsidiaries may change their fiscal years to conform
the fiscal years of the Borrower and its Subsidiaries (including Fred Meyer, Inc.
and its Subsidiaries).

 

(d) Sales, Etc.
of Assets. Sell, lease, transfer or otherwise dispose of, or permit any of
its Subsidiaries to sell, lease, transfer or otherwise dispose of, any assets,
or grant any option or other right to purchase, lease or otherwise acquire any
assets, except (i) dispositions of assets in the ordinary course of its
business, (ii) in a transaction authorized by subsection (b) of this
Section, (iii) pursuant to sale-leaseback transactions for not less than
fair market value, (iv) in a transaction with any Subsidiary that is, or
as a result of such transaction becomes, a Material Subsidiary and (v) sales
of assets for fair value, provided that the aggregate value of such
assets sold, leased, transferred or otherwise disposed of pursuant to clause (v) during
the term of this Agreement shall not be greater than 20% of the total assets
from time to time before giving effect to the LIFO reserve of the Borrower and
its Subsidiaries on a Consolidated basis.

 

SECTION 5.03.
Financial Covenants. So long as any Advance shall remain unpaid or any
Lender shall have any Commitment hereunder, the Borrower will:

 

(a) Leverage
Ratio. Maintain a ratio (determined as of the last day of each Fiscal
Quarter for the Rolling Period ending on such day) of (i) Net Debt on such
day to (ii) the sum of (A) Consolidated EBITDA for such Rolling
Period and (B) from and after the making of any investment or acquisition,
the Acquired EBITDA for such Rolling Period for any Acquired Entity so invested
in or acquired (determined as of the last day of the Acquired Entity Fiscal
Quarter ending during such Rolling Period) of not greater than: 3.50:1.00.

 

(b) Fixed
Charge Coverage Ratio. Maintain a Fixed Charge Coverage Ratio (determined
as of the last day of any Fiscal Quarter for the Rolling Period ending on such
day) of not less than 1.70:1.00.

 

37

 

ARTICLE VI

 

EVENTS OF DEFAULT

 

SECTION 6.01.
Events of Default. If any of the following events (“Events of Default”)
shall occur and be continuing:

 

(a) The
Borrower shall fail to pay any principal of any Advance when the same becomes
due and payable; or the Borrower shall fail to pay any interest on any Advance
or make any other payment of fees or other amounts payable under this Agreement
or any Note within three Business Days after the same becomes due and payable;
or

 

(b) Any
representation or warranty made by the Borrower herein or by the Borrower (or
any of its officers) in connection with any Loan Document shall prove to have
been incorrect in any material respect when made; or

 

(c) (i) The
Borrower shall fail to perform or observe any term, covenant or agreement
contained in Section 5.01(d), (e) or (h), 5.02 or 5.03, or (ii) the
Borrower shall fail to perform or observe any other term, covenant or agreement
contained in any Loan Document on its part to be performed or observed if such
failure shall remain unremedied for 30 days after written notice thereof shall
have been given to the Borrower by any Agent or any Lender; or

 

(d) The
Borrower or any of its Subsidiaries shall fail to pay any principal of or
premium or interest on any Debt that is outstanding in a principal or notional
amount of at least $100,000,000 in the aggregate (but excluding Debt outstanding
hereunder) of the Borrower or such Subsidiary (as the case may be), when the
same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or any other event shall occur or condition
shall exist under any agreement or instrument relating to any such Debt and
shall continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or any
such Debt shall be declared to be due and payable, or required to be prepaid or
redeemed (other than by a regularly scheduled required prepayment or
redemption), purchased or defeased, or an offer to prepay, redeem, purchase or
defease such Debt shall be required to be made, in each case prior to the
stated maturity thereof; or

 

(e) The
Borrower or any of its Subsidiaries shall generally not pay its debts as such
debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against the Borrower or any of its
Subsidiaries seeking to adjudicate it as bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its property and, in the
case of any such proceeding instituted against it (but not instituted by it),
either such proceeding shall remain undismissed or unstayed for a period of 30
days, or any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment of a
receiver, trustee, custodian or other similar official for, it or for any
substantial part of its property) shall occur; or the Borrower or any of its
Subsidiaries shall take any corporate action to authorize any of the actions
set forth above in this subsection (e); or

 

(f) Any
judgment or order for the payment of money in excess of $100,000,000 shall be
rendered against the Borrower or any of its Subsidiaries and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order or (ii) there shall be any period of 10 consecutive days during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; provided, however,
that any such judgment or order shall not be an Event of Default under this Section 6.01(f) if
and for so long as (i) the amount of such judgment or order is covered by
a valid and binding policy of insurance between the defendant and the insurer
covering payment thereof and (ii) such insurer, which shall be rated at
least “A” by A.M. Best Company, has been notified of, and has not disputed
the claim made for payment of, the amount of such judgment or order; or

 

38

 

(g) Any
non-monetary judgment or order shall be rendered against the Borrower or any of
its Subsidiaries that could be reasonably expected to have a Material Adverse
Effect, and there shall be any period of 10 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or

 

(h) Any
Change in Control shall have occurred; or

 

(i) A
Reportable Event or Reportable Events, or a failure to make a required
installment or other payment (within the meaning of Section 412(n)(l) of
the Internal Revenue Code), shall have occurred with respect to any Plan or
Plans that reasonably could be expected to result in liability of the Borrower
or any of its Subsidiaries to the PBGC or to a Plan in an aggregate amount
exceeding $100,000,000 and, within 30 days after the Borrower has provided
written notice of any such Reportable Event to the Administrative Agents, the
Administrative Agents shall have notified the Borrower in writing that (i) the
Required Lenders have determined that, on the basis of such Reportable Event or
Reportable Events or the failure to make a required payment, there are
reasonable grounds (A) for the termination of such Plan or Plans by the
PBGC, (B) for the appointment by the appropriate United States District
Court of a trustee to administer such Plan or Plans or (C) for the
imposition of a lien in favor of a Plan and (ii) as a result thereof an
Event of Default exists hereunder; or a trustee shall be appointed by a United
States District Court to administer any such Plan or Plans; or the PBGC shall
institute proceedings (including giving notice of intent thereof) to terminate
any Plan or Plans; or

 

(j) (i) the
Borrower or any ERISA Affiliate shall have been notified by the sponsor of a
Multiemployer Plan that it has incurred Withdrawal Liability to such
Multiemployer Plan, (ii) the Borrower or such ERISA Affiliate does not
have reasonable grounds for contesting such Withdrawal Liability or is not in
fact contesting such Withdrawal Liability in a timely and appropriate manner
and (iii) the amount of the Withdrawal Liability specified in such notice,
when aggregated with all other amounts required to be paid to Multiemployer
Plans in connection with Withdrawal Liabilities (determined as of the date or
dates of such notification), either (A) exceeds $200,000,000 or requires
payments exceeding $100,000,000 in any year or (B) is less than
$200,000,000 but any Withdrawal Liability payment remains unpaid 30 days after
such payment is due (unless such Withdrawal Liability is being contested in
good faith by the Borrower or any ERISA Affiliate); or

 

(k) the
Borrower or any ERISA Affiliate shall have been notified by the sponsor of a
Multiemployer Plan that such Multiemployer Plan is in reorganization or is
being terminated, within the meaning of Title IV of ERISA, if solely as a
result of such reorganization or termination the aggregate contributions of the
Borrower and its ERISA Affiliates to all Multiemployer Plans that are then in
reorganization or have been or are being terminated have been or will be
increased over the amounts required to be contributed to such Multiemployer
Plans for their most recently completed plan years by an amount exceeding $100,000,000;
or

 

(l) any
Loan Document shall not be for any reason, or shall be asserted by the Borrower
or any Guarantor party thereto (except as otherwise expressly provided in this
Agreement or such Loan Document (including Section 11 of the Guarantee Agreement))
not to be, in full force and effect and enforceable in all material respects in
accordance with its terms;

 

then,
and in any such event, the Agents (i) shall at the request, or may with
the consent, of the Required Lenders, by notice to the Borrower, declare the
obligation of each Lender to make Advances (other than Advances to be made by
an Issuing Bank or a Lender pursuant to Section 2.03(c)) to be terminated,
whereupon the same shall forthwith terminate, (ii) shall at the request,
or may with the consent, of any Issuing Bank or of the Required Lenders, by
notice to the Borrower, declare the obligation of any Issuing Bank to issue
Letters of Credit to be terminated, whereupon the same shall forthwith
terminate, and (iii) shall at the request, or may with the consent, of the
Required

 

39

 

Lenders,
by notice to the Borrower, declare the Advances, all interest thereon and all
other amounts payable under this Agreement to be forthwith due and payable, whereupon
the Advances, all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower; provided,
however, that in the event of an actual or deemed entry of an order for
relief with respect to the Borrower under the Federal Bankruptcy Code, (A) the
obligation of each Lender to make Advances (other than Advances to be made by
an Issuing Bank or a Lender pursuant to Section 2.03(c)) and of any
Issuing Bank to issue Letters of Credit shall automatically be terminated and (B) the
Advances, all such interest and all such amounts shall automatically become and
be due and payable, without presentment, demand, protest or any notice of any
kind, all of which are hereby expressly waived by the Borrower.

 

SECTION 6.02.
Actions in Respect of Letters of Credit. (a) If, at any time and
from time to time, any Letters of Credit shall have been issued by any Issuing
Bank hereunder and (i) a Default shall have occurred and be continuing, (ii) the
Borrower shall have given notice of prepayment in whole under Section 2.10
of all Advances or shall have prepaid in whole all Advances, (iii) the
latest Termination Date shall have occurred or (iv) if at any time, as a
result of prepayments pursuant to Section 2.10, the latest Termination
Date shall be a date not more than 30 days following the expiration of any
Letter of Credit, then, upon the occurrence of any of the events described in
clauses (i) through (iv) above, the Administrative Agents may, and
upon the request of any Issuing Bank or of the Required Lenders shall, whether
in addition to the taking by the Administrative Agents of any of the actions
described in Article VI or otherwise, make demand upon the Borrower to,
and forthwith upon such demand the Borrower will, pay to the Paying Agent for
its benefit and the ratable benefit of the Lenders in same day funds at the
Paying Agent’s office designated in such demand, for deposit in a special cash
collateral account (the “Letter of  Credit Collateral Account”) to
be maintained in the name of the Paying Agent and under the sole dominion and
control of the Paying Agent for the benefit of the Paying Agent and the ratable
benefit of the Lenders at such place as shall be designated by the Paying
Agent, an amount equal to the amount of the Letter of Credit Obligations.

 

(b) The
Borrower hereby pledges and assigns to the Paying Agent for its benefit and the
ratable benefit of the Lenders, and grants to the Paying Agent for its benefit
and the ratable benefit of the Lenders a lien on and a security interest in,
the following collateral (the “Letter of Credit Collateral”):

 

(i) the
Letter of Credit Collateral Account, all cash deposited therein, and all
certificates and instruments, if any, from time to time representing or
evidencing the Letter of Credit Collateral Account;

 

(ii) all
Eligible Securities (as defined below) from time to time held by the Paying
Agent and all certificates and instruments from time to time representing or
evidencing Eligible Securities;

 

(iii) all
notes, certificates of deposit and other instruments from time to time
hereafter delivered to or otherwise possessed by the Paying Agent for or on
behalf of the Borrower in substitution for or in respect of any or all of the
then existing Letter of Credit Collateral;

 

(iv) all
interest, dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the then existing Letter of Credit Collateral; and

 

(v) to
the extent not covered by clauses (i) through (iv) above, all
proceeds of any or all of the foregoing Letter of Credit Collateral.

 

The
lien and security interest granted hereby secures the payment of all
obligations of the Borrower now or hereafter existing hereunder and under any
other Loan Document.

 

(c) The
Borrower hereby authorizes the Paying Agent to apply, from time to time after
funds are deposited in the Letter of Credit Collateral Account, funds then held
in the Letter of Credit Collateral Account to the payment of any amounts, in
such order as the Paying Agent may elect, as shall have become or shall become
due and payable by the Borrower to the Lenders in respect of the Letters of
Credit.

 

40

 

(d) Neither
the Borrower nor any Person claiming or acting on behalf of or through the
Borrower shall have any right to withdraw any of the funds held in the Letter
of Credit Collateral Account, except as provided in Section 6.02(h); provided,
however, that as long as no Default shall have occurred and be
continuing, and to the extent that there is an amount in excess of $1,000,000
in the Letter of Credit Collateral Account at the end of any Business Day after
taking into account applications of funds, if any, from the Letter of Credit
Collateral Account made pursuant to Section 6.02(c), the Paying Agent
will, at the written request of the Borrower, from time to time invest amounts
on deposit in the Letter of Credit Collateral Account in such instruments
described in clause (b), (c) or (d) of the definition of the term “Permitted
Investments” in Section 1.01 as the Borrower may select and the Paying
Agent may approve (the “Eligible Securities”); provided  further
that in order to provide the Paying Agent with a perfected security interest
therein, each investment in Eligible Securities shall be evidenced by
negotiable certificates or instruments, of which the Paying Agent shall take
physical possession. If the Borrower shall have the right to have amounts on
deposit in the Letter of Credit Collateral Account invested by the Paying
Agent, but shall have failed to request the Paying Agent to invest such
amounts, the Paying Agent will endeavor to invest such amounts in such Eligible
Securities as the Paying Agent shall select. Any interest received by the
Paying Agent in respect of Eligible Securities shall be credited against the
Letter of Credit Obligations. Non-interest proceeds from Eligible Securities
that are not invested or reinvested in Eligible Securities as provided above
shall be deposited and held in cash in the Letter of Credit Collateral Account
under the sole dominion and control of the Paying Agent.

 

(e) The
Borrower agrees that it will not (i) sell or otherwise dispose of any
interest in the Letter of Credit Collateral or (ii) create or permit to
exist any lien, security interest or other charge or encumbrance upon or with
respect to any of the Letter of Credit Collateral, except for the security
interest created by this Section 6.02.

 

(f) If
any Event of Default shall have occurred and be continuing:

 

(i) The
Paying Agent may, in its sole discretion, without notice to the Borrower except
as required by law and at any time from time to time, charge, set off and
otherwise apply all or any part of first, the Letter of Credit
Obligations and second, the obligations of the Borrower now or hereafter
existing under any of the Loan Documents, against the Letter of Credit
Collateral Account or any part thereof, in such order as the Paying Agent shall
elect. The Paying Agent agrees promptly to notify the Borrower after any such
set-off and application made by the Paying Agent, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Paying Agent under this Section 6.02(f) are
in addition to other rights and remedies (including other rights of set-off)
that the Paying Agent may have.

 

(ii) The
Paying Agent may also exercise, in its sole discretion, in respect of the
Letter of Credit Collateral Account, in addition to the other rights and
remedies provided for herein or otherwise available to it, all the rights and
remedies of a secured party upon default under the Uniform Commercial Code in
effect in the State of New York at that time, and the Paying Agent may, without
notice except as specified below, sell the Letter of Credit Collateral or any
part thereof in one or more parcels at public or private sale, at any of the
Paying Agent’s offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Paying Agent may deem commercially
reasonable. The Borrower agrees that, to the extent notice of sale shall be
required by law, at least ten days’ notice to the Borrower of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. The Paying Agent shall not be
obligated to make any sale of Letter of Credit Collateral or any part thereof,
regardless of notice of sale having been given. The Paying Agent may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.

 

(iii) Any
cash held in the Letter of Credit Collateral Account, and all cash proceeds
received by the Paying Agent in respect of any sale of, collection from or
other realization upon all or any part of the Letter of Credit Collateral
Account may, in the discretion of the Paying Agent, then or at any time
thereafter be applied (after payment of any amounts payable pursuant to Section 8.03)
in whole or in part by the Paying Agent for the ratable benefit of the Lenders
against all or any part of the obligations of the Borrower now or hereafter
existing under any of the Loan Documents in such order as the Paying Agent may
elect.

 

41

 

(g) The
Paying Agent shall be deemed to have exercised reasonable care in the custody
and preservation of the Letter of Credit Collateral if the Letter of Credit
Collateral is accorded treatment substantially equal to that which the Paying
Agent accords its own property, it being understood that the Paying Agent shall
not have any responsibility or liability (i) for ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Eligible Securities, whether or not the Paying
Agent has or is deemed to have knowledge of such matters, (ii) for taking
any necessary steps to preserve rights against any parties with respect to the
Letter of Credit Collateral, (iii) for the collection of any proceeds from
Eligible Securities, (iv) by reason of any invalidity, lack of value or uncollectability
of any of the payments received by the Paying Agent from obligors with respect
to Eligible Securities, or (v) for any loss resulting from investments
made pursuant to Section 6.02(d), except to the extent such loss was
attributable to the Paying Agent’s gross negligence or willful misconduct in
complying with Section 6.02(d), or (vi) in connection with any
investments made pursuant to Section 6.02(d) without a written
request from the Borrower, or any failure by the Paying Agent to make any such
investment.

 

(h) Any
surplus of the funds held in the Letter of Credit Collateral Account and
remaining after payment in full of all of the obligations of the Borrower under
this Agreement and under any other Loan Document after the latest Termination
Date shall be paid to the Borrower or to whomsoever may be lawfully entitled to
receive such surplus.

 

ARTICLE VII

 

THE AGENTS

 

SECTION 7.01.
Authorization and Action. Each Lender (in its capacity as a Lender and
an Issuing Bank (if applicable)) hereby appoints and authorizes each Agent to
take such action as agent on its behalf and to exercise such powers and
discretion under this Agreement as are delegated to the Agents by the terms
hereof, together with such powers and discretion as are reasonably incidental
thereto. As to any matters not expressly provided for by this Agreement
(including, without limitation, enforcement or collection of the Advances), no
Agent shall be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the instructions of the
Required Lenders, and such instructions shall be binding upon all Lenders and
all holders of Notes; provided, however, that no Agent shall be
required to take any action that exposes such Agent to personal liability or
that is contrary to this Agreement or applicable law. Each Agent agrees to give
to each Lender prompt notice of each notice given to it by the Borrower
pursuant to the terms of this Agreement.

 

SECTION 7.02.
Agent’s Reliance, Etc. No Agent nor any of its directors, officers,
agents or employees shall be liable for any action taken or omitted to be taken
by it or them under or in connection with this Agreement, except for its or
their own gross negligence or willful misconduct. Without limitation of the
generality of the foregoing, the Agents: (i) may treat the Lender which
made any Advance as the holder of the Debt resulting therefrom until the Paying
Agent receives and accepts an Assumption Agreement entered into by an Assuming
Lender as provided in Section 2.17 or Section 2.19, or an Assignment
and Acceptance entered into by such Lender, as assignor, and an assignee, as
provided in Section 8.06; (ii) may consult with legal counsel
(including counsel for the Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) make no warranty or representation to any
Lender and shall not be responsible to any Lender for any statements,
warranties or representations (whether written or oral) made in or in
connection with this Agreement; (iv) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms,
covenants or conditions of this Agreement on the part of the Borrower or to
inspect the property (including the books and records) of the Borrower; (v) shall
not be responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any
other instrument or document furnished pursuant hereto; and (vi) shall
incur no liability under or in respect of this Agreement by acting upon any
notice, consent, certificate or other instrument or writing (which may be by
telecopier or telex) believed by it to be genuine and signed or sent by the
proper party or parties.

 

42

 

SECTION 7.03.
JPMorgan Chase, Citibank and Affiliates. With respect to its
Commitment(s), the Advances made by it and any Note or Notes issued to it, each
of JPMorgan Chase and Citibank shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
an Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly
indicated, include each of JPMorgan Chase and Citibank in its individual capacity.
Each of JPMorgan Chase and Citibank and its Affiliates may accept deposits
from, lend money to, act as trustee under indentures of, accept investment
banking engagements from and generally engage in any kind of business with, the
Borrower, any of its Subsidiaries and any Person who may do business with or
own securities of the Borrower or any such Subsidiary, all as if it were not an
Agent and without any duty to account therefor to the Lenders.

 

SECTION 7.04.
Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon any Agent or any other Lender and based
on the financial statements referred to in Section 4.01 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon any Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.

 

SECTION 7.05.
Indemnification. (a) The Lenders agree to indemnify the Agents in
their capacity as such (to the extent not reimbursed by the Borrower without
limiting the obligation of the Borrower to do so), ratably according to the
respective principal amounts of the Revolving Credit Advances then owing to
each of them (or if no Revolving Credit Advances are at the time outstanding or
if any Revolving Credit Advances are then owing to Persons that are not
Lenders, ratably according to the respective amounts of their Commitments),
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by, or asserted
against any Agent in any way relating to or arising out of this Agreement or
any action taken or omitted by such Agent under the Loan Documents
(collectively, the “Indemnified Costs”), provided that no Lender
shall be liable for any portion of the Indemnified Costs resulting from such
Agent’s gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse each Agent promptly upon demand for
its ratable share of any out-of-pocket expenses (including counsel fees)
incurred by such Agent in connection with the preparation, execution, delivery,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, to the extent that such Agent is not
reimbursed for such expenses by the Borrower. In the case of any investigation,
litigation or proceeding giving rise to any Indemnified Costs, this Section 7.05
applies whether any such investigation, litigation or proceeding is brought by
any Agent, any Lender or a third party.

 

(b) The
Lenders agree to indemnify each Issuing Bank (to the extent not reimbursed by
the Borrower), ratably according to the respective principal amounts of the
Revolving Credit Advances then owing to each of them (or if no Revolving Credit
Advances are at the time outstanding or if any Revolving Credit Advances are
then owing to Persons that are not Lenders, ratably according to the respective
amounts of their Commitments), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by, or asserted against any Issuing Bank in any way relating to or
arising out of this Agreement or any action taken or omitted by such Issuing
Bank under the Loan Documents, provided that no Lender shall be liable
for any portion of such indemnified costs resulting from such Issuing Bank’s
gross negligence or willful misconduct. Without limitation of the foregoing,
each Lender agrees to reimburse such Issuing Bank promptly upon demand for its
ratable share of any costs and expenses (including counsel fees) payable by the
Borrower under Section 8.03, to the extent such Issuing Bank is not
promptly reimbursed for such costs and expenses by the Borrower.

 

43

 

SECTION 7.06.
Successor Agents. The Administrative Agents and the Paying Agent may
resign at any time by giving written notice thereof to the Lenders and the
Borrower and may be removed at any time with or without cause by the Required
Lenders. Upon any such resignation or removal, the Required Lenders shall have
the right to appoint a successor Administrative Agent or Paying Agent, as the
case may be. If no successor Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Agent’s giving of notice of resignation or the Required Lenders’
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be a commercial bank organized
under the laws of the United States of America or of any State thereof and
having a combined capital and surplus of at least $50,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, discretion, privileges and duties of the retiring Agent, and
the retiring Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Agent’s resignation or removal hereunder as Agent,
the provisions of this Article VII shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.

 

ARTICLE VIII

 

MISCELLANEOUS

 

SECTION 8.01.
Waivers; Amendments, Etc. (a) No failure or delay on the part
of the Administrative Agents, the Issuing Banks, the Paying Agent or any Lender
in exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuation of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agents, the
Issuing Banks, the Paying Agent and the Lenders hereunder are cumulative and
are not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of this Agreement or consent to any departure by the
Borrower therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below (other than a waiver of the minimum
amount of Commitment assumed by an Assuming Lender pursuant to Section 2.17
or by an assignee pursuant to Section 8.06, which may be waived by
unilateral consent of the Borrower), and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on the Borrower in any case shall entitle the Borrower to any
other or further notice or demand in similar or other circumstances.

 

(b) Neither
this Agreement nor any provision hereof may be waived, amended or modified
except (i) in the case of this Agreement, pursuant to an agreement or
agreements in writing entered into by the Borrower and the Required Lenders, (ii) in
the case of the Guarantee Agreement, pursuant to an agreement or agreements in
writing entered into by the Guarantors and the Paying Agent and consented to by
the Required Lenders or (iii) in the case of a Letter of Credit, pursuant
to an agreement or agreements entered into by the Borrower and the applicable
Issuing Bank; provided, however, that no such agreement shall (A) change
the principal amount of any Advance or Letter of Credit Obligation, extend the
final scheduled maturity of any Advance, extend the scheduled date for payment
(but not prepayments) of principal of or interest on any Advance (other than as
provided in Section 2.17), forgive any such payment or any part thereof or
reduce the rate of interest on any Advance, in each case without the prior
written consent of each Lender affected thereby, (B) increase the amount
or extend the termination date of the Commitment of any Lender (other than as
provided in Section 2.17 or 2.19) or reduce or extend the date for payment
of the Facility Fees or other amounts payable under this Agreement to any
Lender, in each case without the prior written consent of such Lender or (C) amend
or modify the provisions of this Section 8.01(b) or Section 8.05
or the definition of the term “Required Lenders” without the prior written
consent of each Lender; and provided  further that no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agents, the Issuing Banks or the Paying Agent hereunder without
the prior written consent of the Administrative Agents, the Issuing Banks or
the Paying Agent, respectively.

 

SECTION 8.02.
Notices, Etc. (a) Notices. Except as otherwise
expressly permitted herein, notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed or sent by telecopy, as follows:

 

(i) If
to the Borrower, to it at The Kroger Co., 1014 Vine Street, Cincinnati, Ohio
45202, Attention of Mr. Scott M. Henderson (Telecopy No. (513)
762-1203); with a copy to Mr. Paul W. Heldman (Telecopy No. (513)
762-4935).

 

44

 

(ii) If
to JPMorgan Chase in its capacity as an Administrative Agent, to it at 1111
Fannin Street, 10th Floor Houston, Texas 77002, Attention of
Cherry Arnaez (Telecopy No. (713) 750-2782); with a copy to 270 Park
Avenue, New York, New York 10017, Attention of Ms. Ruby Tulloch (Telecopy No. (212)
270-6937). If to Citibank in its capacity as an Administrative Agent or Paying
Agent, to it at 388 Greenwich Street, New York, NY 10013, Attention of Marc
Merlino (Telecopy No. (212) 816-8156).

 

(iii) If
to any other Lender as Issuing Bank, at its address (or telecopy number) set
forth on Schedule I or in the Assignment and Acceptance pursuant to which such
Lender shall have become a party hereto.

 

(iv) If
to a Lender, at its address (or telecopy number) as set forth on Schedule I or
in the Assumption Agreement or Assignment and Acceptance pursuant to which such
Lender shall have become a party hereto.

 

All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt if delivered by hand or overnight courier service or sent by
telecopy, or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in Section 8.02 or in accordance with
the latest unrevoked direction from such party given in accordance with this Section 8.02.
The Administrative Agents shall deliver to the Borrower a copy of each
Administrative Questionnaire received by it.

 

(b) Electronic
Communications. Notices and other communications to the Lenders and the
Issuing Banks hereunder may be delivered or furnished by electronic
communication (including e-mail and Internet or intranet websites) pursuant to
procedures approved by the Paying Agent, provided that the foregoing shall not
apply to notices to any Lender or Issuing Bank pursuant to Article II if
such Lender or Issuing Bank, as applicable, has notified the Paying Agent that
it is incapable of receiving notices under such Article by electronic
communication. The Paying Agent or the Borrower may, in its discretion, agree
to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it, provided that approval of
such procedures may be limited to particular notices or communications.

 

SECTION 8.03.
Expenses; Indemnity. (a) The Borrower agrees to pay (i) the
reasonable fees, disbursements and other charges of counsel for the
Administrative Agents, the Issuing Banks and the Paying Agent incurred in
connection with the preparation of this Agreement and the other Loan Documents
or in connection with any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions hereby
contemplated shall be consummated) and (ii) all reasonable out-of-pocket
expenses incurred by the Administrative Agents, the Issuing Banks, the Paying
Agent or any Lender in connection with the enforcement or protection of their
rights in connection with this Agreement and the other Loan Documents or in
connection with the Advances or the Letters of Credit issued hereunder,
including the reasonable fees, disbursements and other charges of Shearman &
Sterling LLP, counsel for the Administrative Agents, the Issuing Banks and the
Paying Agent, in connection with any such enforcement or protection and the
reasonable fees, disbursements and other charges of any other counsel for the
Administrative Agents, the Issuing Banks, the Paying Agent or any Lender. The
Borrower further agrees that it shall indemnify the Administrative Agents, the
Issuing Banks, the Paying Agent and the Lenders from, and hold them harmless
against, any documentary taxes, assessments or similar charges made by any
Governmental Authority by reason of the execution and delivery of this
Agreement or any Note.

 

(b) The
Borrower agrees to indemnify the Administrative Agents, the Paying Agent, the
Issuing Banks and each Lender and each of their respective directors, officers,
employees and agents (each such person being called an “Indemnitee”)
against, and to hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including reasonable counsel fees,
disbursements and other charges, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i) the
execution or delivery of this Agreement or any agreement or instrument
contemplated hereby or thereby, the performance by the parties hereto or
thereto of their respective obligations hereunder or thereunder or the
consummation of the transactions contemplated hereby or thereby, (ii) the
use of the Letters of Credit or proceeds of the Advances or (iii) any
claim, litigation, investigation or proceeding relating to any of the
foregoing, whether or not any Indemnitee is a party thereto, provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses have
resulted from the gross negligence or willful misconduct of such Indemnitee.

 

45

 

(c) If
any payment of principal of any Eurodollar Rate Advance is made other than on
the last day of the Interest Period for such Advance, as a result of any
Conversion, payment pursuant to Section 2.06, prepayment pursuant to
clause (ii) of the proviso to Section 2.10(a) or acceleration of
the maturity of the Advances pursuant to Section 6.01 or for any other
reason, the Borrower shall, upon demand by any Lender (with a copy of such
demand to the Administrative Agents), pay to the Paying Agent for the account
of such Lender any amounts required to compensate such Lender for any
additional losses, costs or expenses that such Lender may incur as a result of
such payment, including any loss (excluding loss of anticipated profits), cost
or expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by any Lender to fund or maintain such Advance.

 

(d) The
provisions of this Section 8.03 shall remain operative and in full force
and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Advances, the invalidity or unenforceability of any term or provision of
this Agreement, or any investigation made by or on behalf of the Administrative
Agents, the Issuing Banks, the Paying Agent or any Lender. All amounts due
under this Section 8.03 shall be payable on written demand therefor.

 

SECTION 8.04.
Right of Set-off. If an Event of Default shall have occurred and be
continuing, each Lender is hereby authorized, in addition to any other right or
remedy that any Lender may have by operation of law or otherwise, at any time
and from time to time, without notice to the Borrower (any such notice being
expressly waived by the Borrower), to exercise its banker’s lien or right of
setoff and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Lender to or for the credit or the account of the Borrower against any
of and all the obligations of the Borrower now or hereafter existing under this
Agreement and any Note held by such Lender, irrespective of whether such Lender
shall have made any demand under this Agreement or any Note and although such
obligations may be unmatured.

 

SECTION 8.05.
Binding Effect. This Agreement shall become effective (other than Section 2.01,
which shall only become effective upon satisfaction of the conditions precedent
set forth in Section 3.01) when it shall have been executed by the
Borrower, the Administrative Agents, the Issuing Banks and the Paying Agent and
when the Paying Agent shall have been notified by each Initial Lender that such
Initial Lender has executed it and thereafter shall be binding upon and inure
to the benefit of the Borrower, the Administrative Agents, the Issuing Banks,
the Paying Agent and each Lender and their respective successors and assigns,
except that the Borrower shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of the
Lenders.

 

SECTION 8.06.
Successors and Assigns. (a) Subject to Section 8.05, whenever
in this Agreement any of the parties hereto is referred to, such reference
shall be deemed to include the successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of the Borrower, the
Administrative Agents, the Issuing Banks, the Paying Agent or the Lenders that
are contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.

 

(b) Each
Lender may assign to one or more assignees all or a portion of its interests,
rights and obligations under this Agreement (including all or a portion of its
Commitment, the outstanding Letters of Credit and the Advances at the time
owing to it); provided, however, that (i) except in the case
of an assignment to a Lender or an Affiliate of a Lender, each of the
Administrative Agents and the Borrower must give its prior written consent to
such assignment (which consent shall not be unreasonably withheld); provided
further, however, the consent of the Borrower shall not be
required if a Default has occurred and is continuing on the date of the
Assignment and Acceptance, (ii) except in the case of an assignment to a
Lender or an Affiliate of a Lender, the amount of the Commitment of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to the
Administrative Agents) shall not be less than $5,000,000 (or an amount equal to
the remaining balance of such Lender’s Commitment), (iii) the parties to
each such assignment shall execute and deliver to the Paying Agent (with a copy
to the other Administrative Agent) an Assignment and Acceptance, together with
a processing and recordation fee of $3,500 (except that such fee shall not be
required with respect to assignments to Affiliates), and (iv) the
assignee, if it shall not be a Lender, shall

 

46

 

deliver
to the Administrative Agents an Administrative Questionnaire. Each assignment
shall be of a constant, and not a varying, percentage of the assigning Lender’s
rights and obligations under this Agreement (other than any right to make
Competitive Bid Advances and Competitive Bid Advances owing to it). Upon
acceptance and recording pursuant to paragraph (e) of this Section 8.06,
from and after the effective date specified in each Assignment and Acceptance,
which effective date shall be at least five Business Days after the execution
thereof and in no event shall precede the date of such recording, (i) the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, shall have the rights and
obligations of a Lender under this Agreement and (ii) the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of
an assigning Lender’s rights and obligations under this Agreement, such Lender
shall cease to be a party hereto, but shall continue to be entitled to the
benefits of Sections 2.11, 2.14 and 8.03, as well as to any Facility Fees
accrued for its account and not yet paid). Notwithstanding the foregoing, (i) any
Lender assigning its rights and obligations under this Agreement may retain any
Competitive Bid Advances made by it outstanding at such time, and in such case
shall retain its rights hereunder in respect of any Advances so retained until
such Advances have been repaid in full in accordance with this Agreement.

 

(c) By
executing and delivering an Assignment and Acceptance, the assigning Lender
thereunder and the assignee thereunder shall be deemed to confirm to and agree
with each other and the other parties hereto as follows: (i) such
assigning Lender warrants that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim created by
it and that its Commitment, and the outstanding balances of its Advances, in
each case without giving effect to assignments thereof that have not become
effective, are as set forth in such Assignment and Acceptance; (ii) except
as set forth in clause (i) above, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement, or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto, or the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under this
Agreement or any other instrument or document furnished pursuant hereto; (iii) such
assignee represents and warrants that it is legally authorized to enter into
such Assignment and Acceptance; (iv) such assignee confirms that it has
received a copy of this Agreement, together with copies of any amendments or
consents entered into prior to the date of such Assignment and Acceptance and
copies of the most recent financial statements delivered pursuant to Section 5.01(h) and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance; (v) such
assignee will independently and without reliance upon the Administrative
Agents, such assigning Lender or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement; (vi) such
assignee appoints and authorizes the Administrative Agents and the Paying Agent
to take such action as agent on its behalf and to exercise such powers under
this Agreement as are delegated to the Administrative Agents and the Paying
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all the obligations that by the terms of this
Agreement are required to be performed by it as a Lender.

 

(d) The
Paying Agent shall maintain at its address referred to in, or determined
pursuant to, Section 8.02 a copy of each Assignment and Acceptance
delivered to and accepted by it and a register (the “Register”) for the
recordation of the names and addresses of the Lenders and the Commitment of,
and principal amount of the Advances owing to, each Lender from time to time
and whether such Lender is a Lender on the Effective Date, or the assignee of
such a Lender or an Assuming Lender. The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Administrative Agent, the Paying Agent and the Lenders may treat
each Person whose name is recorded in the Register as a Lender hereunder for
all purposes of this Agreement. The Register shall be available for inspection
by the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.

 

47

 

(e) Upon
its receipt of a duly completed Assignment and Acceptance executed by an
assigning Lender and an assignee, together with an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph (b) above
to the extent required under paragraph (b) above and the written consent
(to the extent required under paragraph (b) above), of the Administrative
Agents and the Borrower, the Administrative Agents shall (i) accept such
Assignment and Acceptance, (ii) in the case of the Paying Agent, record
the information contained therein in the Register and (iii) give prompt
notice thereof to the Lenders and the Issuing Banks. No assignment shall be
effective unless it has been recorded in the Register as provided in this
paragraph (e).

 

(f) Each
Lender may, without the consent of the Borrower or the Administrative Agents,
sell participations to one or more banks or other entities in all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Commitment, the outstanding of Letters of Credit and the Advances owing
to it); provided, however, that (i) such Lender’s
obligations under this Agreement shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) the participating banks or other entities shall
be entitled to the benefit of the cost protection provisions contained in
Sections 2.11, 2.14 and 8.03 to the same extent as if they were Lenders (provided
that the Borrower shall not be required to reimburse the participating banks or
other entities pursuant to Section 2.11, 2.14 or 8.03 in an amount that
exceeds the amount that would have been payable thereunder to such Lender had
such Lender not sold such participation) and (iv) the Borrower, the
Administrative Agents, the Issuing Banks, the Paying Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement, and
such Lender shall retain the sole right to enforce the obligations of the
Borrower and to approve any amendment, modification or waiver of any provision
of this Agreement (provided that the participating bank or other entity
may be provided with the right to approve amendments, modifications or waivers
affecting it with respect to (A) any decrease in the Facility Fees or
other amounts payable hereunder with respect to Commitments in which the
participating bank or other entity has purchased a participation, (B) any
change in the amount of principal of, or decrease in the rate at which interest
is payable on, the Advances in which the participating bank or other entity has
purchased a participation or (C) any extension of the final scheduled
maturity of any Advance in which the participating bank or other entity has
purchased a participation.

 

(g) Notwithstanding
the limitations set forth in paragraph (b) above, any Lender may at any
time assign all or any portion of its rights under this Agreement to a Federal
Reserve Bank without the prior written consent of the Borrower or the
Administrative Agents, provided that no such assignment shall release a
Lender from any of its obligations hereunder or substitute any such Bank for
such Lender as a party hereto.

 

(h) Except
as expressly provided in this Agreement, the Issuing Banks may not assign or
delegate any of their respective rights and duties hereunder without the prior
written consent of the Borrower and the Administrative Agents.

 

(i) The
Borrower may, with the prior written consent of the Administrative Agents,
replace any of the Lenders with one or more assignees, provided (i) that
the Lender being replaced has been paid in full for all Advances made by such
Lender and all other amounts accrued or due to such Lender hereunder, (ii) that
the full amount of the Commitments remain unchanged and (iii) that the
percentages of the total Commitments allocated to the Lenders (other than any
replaced Lenders) remain unchanged unless prior written consent from any such
affected Lenders has been obtained. Upon any such replacement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.11, 2.14 and 8.03, as well as to any Facility Fees
accrued for its account under Section 2.04 and not yet paid.

 

(j) In
the event that:

 

(i) any
Lender shall have refused (and shall not have retracted such refusal) to make
available any Advance on its part to be made available hereunder, other than
solely as a result of the failure of any condition set forth in Article III
to be satisfied (such condition not having been effectively waived in
accordance with the terms hereof);

 

(ii) any
Lender shall have notified either the Administrative Agents or the Borrower
(and shall not have retracted such notification) that it does not intend to
comply with any of its obligations hereunder, other than solely as a result of
the failure of any condition set forth in Article III to be satisfied
(such condition not having been effectively waived in accordance with the terms
hereof);

 

48

 

(iii) (A) a
receiver, trustee, conservator or other custodian shall have been appointed
with respect to any Lender or its property at the direction or request of any
Governmental Authority or (B) an order, action, process or proceeding of
the type contemplated by paragraph (e) of Section 6.01 shall be
commenced by or against such Lender (or such Lender shall have consented to the
entry of any such order, action, process or proceeding); or

 

(iv) any
Lender shall make demand upon the Borrower for any amount pursuant to Section 2.11
or 2.14;

 

the
Borrower shall have the right, at its own expense, upon notice to such Lender
and the Administrative Agents (A) to require such Lender, and such Lender
hereby agrees, to use commercially reasonable efforts to transfer and assign
without recourse (in accordance with and subject to the restrictions contained
in Section 8.06(b)) all the interests, rights and obligations of such
Lender to an assignee; provided, however, that (1) no such
assignment shall conflict with any law, rule or regulation or order of any
Governmental Authority and (2) the Borrower or such assignee, as the case
may be, shall pay to such Lender in same day funds on the date of such
assignment the principal of and interest accrued on the date of payment on the
Advances made by such Lender hereunder and all other amounts accrued for such
Lender’s account or owed to it hereunder or (B) to replace such Lender
with one or more assignees, provided, in the case of this clause (B), (1) that
the Lender being replaced has been paid in full for all Advances made by such
Lender and all other amounts accrued or due to such Lender hereunder, (2) that
the full amount of the Commitments remains unchanged and (3) that the
percentage of the total Commitments allocated to the Lenders (other than any
replaced Lenders) remains unchanged unless prior written consent from such
Lenders has been obtained, (4) no Default shall have occurred and be
continuing, (5) the replacement Lender is acceptable to the Paying Agent
and (6) if such replacement Lender is not an existing Lender, the Borrower
shall have paid the Paying Agent a processing and recordation fee of $3,500.
Upon any assignment, such Lender shall cease to be a party hereto but shall
continue to be entitled to the benefits of Sections 2.11, 2.14 and 8.03, as
well as to any fees accrued for its account under Section 2.04 and not yet
paid.

 

(j) Notwithstanding
anything to the contrary contained herein, any Lender (a “Granting  Lender”)
may grant to a special purpose funding vehicle (an “SPC”) of such
Granting Lender, identified as such in writing from time to time by the
Granting Lender to the Administrative Agents and the Borrower, the option to
provide to the Borrower all or any part of any Loan that such Granting Lender
would otherwise be obligated to make to the Borrower pursuant to this Agreement
provided that (i) nothing herein shall constitute a commitment to
make any Advance by any SPC and (ii) if an SPC elects not to exercise such
option or otherwise fails to provide all or any part of such Advance, the
Granting Lender shall be obligated to make such Advance pursuant to the terms
hereof. The making of an Advance by an SPC hereunder shall utilize the
Commitment of the Granting Lender to the same extent, and as if, such Advance
were made by the Granting Lender. Each party hereto hereby agrees that no SPC
shall be liable for any payment under this Agreement for which a Lender would
otherwise be liable, for so long as, and to the extent, the related Granting
Lender makes such payment. In furtherance of the foregoing, each party hereto
hereby agrees that, prior to the date that is one year and one day after the
payment in full of all outstanding senior indebtedness of any SPC, it will not
institute against, or join any other person in instituting against, such SPC
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or similar proceedings under the laws of the United States or any
State thereof. In addition, notwithstanding anything to the contrary contained
in this Section 8.06, any SPC may (i) with notice to, but without the
prior written consent of, the Borrower or the Administrative Agents and without
paying any processing fee therefor, assign all or a portion of its interests in
any Advances to its Granting Lender or to any financial institutions (if
consented to by the Borrower and the Administrative Agent) providing liquidity
and/or credit facilities to or for the account of such SPC to fund the Advances
made by such SPC or to support the securities (if any) issued by such SPC to
fund such Advances and (ii) disclose on a confidential basis any
non-public information relating to its Advances to any rating agency,
commercial paper dealer or provider of a surety, guarantee or credit or
liquidity enhancement to such SPC.

 

49

 

SECTION 8.07.
Confidentiality. Unless otherwise agreed to in writing by the Borrower,
each Administrative Agent, the Paying Agent and each Lender hereby agree to
keep all Proprietary Information (as defined below) confidential and not to
disclose or reveal any Proprietary Information to any Person other than such
Administrative Agent’s, the Paying Agent’s or such Lender’s directors,
officers, employees, Affiliates and agents and to actual or potential assignees
and participants, and then only on a confidential basis; provided, however,
that either Administrative Agent, the Paying Agent or any Lender may disclose
Proprietary Information (a) as required by law, rule, regulation or
judicial process or in connection with any litigation or other proceeding
relating to this Agreement (provided that the applicable Person shall give the
Borrower notice of such disclosure on the same day on which it determines such
disclosure to be necessary and in any event prior to such disclosure to the
extent not prohibited by law, and, if prior notice is prohibited by law, shall
give notice of such disclosure as promptly as is legally permitted), (b) to
its attorneys and accountants or (c) as requested or required by any
state, or Federal or foreign authority or examiner regulating banks or banking.
For purposes of this Agreement, the term “Proprietary  Information”
shall include all information about the Borrower or any of its Affiliates that
has been furnished by the Borrower or any of its Affiliates, whether furnished
before or after the Effective Date, and regardless of the manner in which it is
furnished; provided, however, that Proprietary Information does
not include information that (i) is or becomes generally available to the
public other than as a result of a disclosure by either Administrative Agent,
the Paying Agent or any Lender not permitted by this Agreement, (ii) was
available to either Administrative Agent, the Paying Agent or any Lender on a
nonconfidential basis prior to its disclosure by either Administrative Agent,
the Paying Agent or such Lender by the Borrower or any of its Affiliates or (iii) becomes
available to either Administrative Agent, the Paying Agent or any Lender on a
nonconfidential basis from a Person other than the Borrower or its Affiliates
who, to the best knowledge of either Administrative Agent, the Paying Agent or
such Lender, as the case may be, is not otherwise bound by a confidentiality
agreement with the Borrower or any of its Affiliates, or is not otherwise
prohibited from transmitting the information to either Administrative Agent,
the Paying Agent or such Lender.

 

SECTION 8.08.
Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.

 

SECTION 8.09.
Execution in Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Agreement by telecopier
or other electronic medium shall be effective as delivery of a manually
executed counterpart of this Agreement.

 

SECTION 8.10.
Jurisdiction; Consent to Service of Process. (a) The Borrower
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or Federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to
this Agreement, or for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such New York State or, to the extent permitted by law, in such Federal
court. Each of the parties hereto 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.
Nothing in this Agreement shall affect any right that any Lender may otherwise
have to bring any action or proceeding relating to this Agreement against the
Borrower or its properties in the courts of any jurisdiction.

 

(b) The
Borrower hereby irrevocably and unconditionally waives, to the fullest extent
it may legally and effectively do so, any objection that it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement in any New York State or Federal court.
Each of the parties hereto hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.

 

(c) Each
party to this Agreement irrevocably consents to service of process in the
manner provided for notices in Section 8.02. 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 8.11.
Patriot Act. Each Lender hereby notifies the Borrower that pursuant to
the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)) (the “Act”), it is required to obtain, verify
and record information that identifies each borrower, guarantor or grantor (the
“Loan Parties”), which information includes the name and address of each Loan
Party and other information that will allow such Lender to identify such Loan
Party in accordance with the Act.

 

50

 

SECTION 8.12.
No Liability of the Issuing Banks. The Borrower assumes all risks of the
acts or omissions of any beneficiary or transferee of any Letter of Credit with
respect to its use of such Letter of Credit. Neither an Issuing Bank nor any of
its officers or directors shall be liable or responsible for: (a) the use
that may be made of any Letter of Credit or any acts or omissions of any
beneficiary or transferee in connection therewith; (b) the validity,
sufficiency or genuineness of documents, or of any endorsement thereon, even if
such documents should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (c) payment by such Issuing Bank against
presentation of documents that do not comply with the terms of a Letter of
Credit, including failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or (d) any other circumstances
whatsoever in making or failing to make payment under any Letter of Credit, except
that the Borrower shall have a claim against such Issuing Bank, and such
Issuing Bank shall be liable to the Borrower, to the extent of any direct, but
not consequential, damages suffered by the Borrower that the Borrower proves
were caused by such Issuing Bank’s willful misconduct or gross negligence when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. In furtherance and not in limitation of
the foregoing, such Issuing Bank may accept documents that appear on their face
to be in order, without responsibility for further investigation, regardless of
any notice or information to the contrary; provided that nothing herein
shall be deemed to excuse such Issuing Bank if it acts with gross negligence or
willful misconduct in accepting such documents.

 

[The rest of this page is intentionally left blank.]

 

51

 

SECTION 8.13
Waiver of Jury Trial. Each of the Borrower, the Agents and the Lenders
hereby irrevocably waives all right to trial by jury in any action, proceeding
or counterclaim (whether based on contract, tort or otherwise) arising out of
or relating to this Agreement or the actions of any Agent or any Lender in the
negotiation, administration, performance or enforcement thereof.

 

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.

 

	
   

  	
  THE
  KROGER CO.

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Scott M. Henderson

  
	
   

  	
  Name:

  	
  Scott
  M. Henderson

  
	
   

  	
  Title:

  	
  Vice
  President and Treasurer

  
	
   

  	
   

  
	
   

  	
  JPMORGAN
  CHASE BANK, N.A., as

  
	
   

  	
  Administrative
  Agent, Issuing Bank and as

  
	
   

  	
  Paying
  Agent

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Christine Herrick

  
	
   

  	
  Name:

  	
  Christine
  Herrick

  
	
   

  	
  Title: 

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  CITIBANK,
  N.A.

  
	
   

  	
  as
  Administrative Agent and Issuing Bank

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Marc Merlino

  
	
   

  	
  Name:

  	
  Marc
  Merlino

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

52

 

	
   

  	
  Lenders

  
	
   

  	
   

  
	
   

  	
  JPMORGAN
  CHASE BANK, N.A.

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Christine Herrick

  
	
   

  	
  Name:

  	
  Christine
  Herrick

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  CITIBANK,
  N.A.

  
	
   

  	
   

  
	
   

  	
  By
  

  	
  /s/
  Marc Merlino

  
	
   

  	
  Name:

  	
  Marc
  Merlino

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  BANK
  OF AMERICA, N.A.

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Ross Evans

  
	
   

  	
  Name:

  	
  Ross
  Evans

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  THE
  BANK OF TOKYO-MITSUBISHI UFJ, LTD.,

  
	
   

  	
  CHICAGO
  BRANCH

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Hirotsugu Hayashi

  
	
   

  	
  Name:

  	
  Hirotsugu
  Hayashi

  
	
   

  	
  Title:

  	
  General
  Manager

  
	
   

  	
   

  
	
   

  	
  UNION
  BANK OF CALIFORNIA, N.A.

  
	
   

  	
   

  
	
   

  	
  By
  

  	
  /s/
  Ching Lim

  
	
   

  	
  Name:
  

  	
   Ching
  Lim

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  THE
  ROYAL BANK OF SCOTLAND PLC

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Mica Galluzzo

  
	
   

  	
  Name:

  	
  Mica
  Galluzzo

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  BARCLAYS
  BANK PLC

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Alison McGuigan

  
	
   

  	
  Name:

  	
  Alison
  McGuigan

  
	
   

  	
  Title:

  	
  Associate
  Director

  
	
   

  	
   

  
	
   

  	
  THE
  BANK OF NEW YORK

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Randolph E.J. Medrano

  
	
   

  	
  Name:

  	
  Randolph
  E.J. Medrano

  
	
   

  	
  Title:

  	
  Vice
  President

  
				

 

53

 

	
   

  	
  COOPERATIEVE
  CENTRALE

  
	
   

  	
  RAIFFEISENBORENLEENBANK
  B.A.,

  
	
   

  	
  “RABOBANK
  INTERNATIONAL”

  
	
   

  	
  NEW
  YORK BRANCH

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Peter Glawe

  
	
   

  	
  Name:

  	
  Peter
  Glawe

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Andrew Sherman

  
	
   

  	
  Name:

  	
  Andrew
  Sherman

  
	
   

  	
  Title:

  	
  Executive
  Director

  
	
   

  	
   

  
	
   

  	
  US
  BANK, N.A.

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Patrick H. McGraw

  
	
   

  	
  Name:

  	
  Patrick
  H. McGraw

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  WELLS
  FARGO BANK NATIONAL

  
	
   

  	
  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Steven M. Buehler

  
	
   

  	
  Name:

  	
  Steven
  M. Buehler

  
	
   

  	
  Title:

  	
  Senior
  Vice President

  
	
   

  	
   

  
	
   

  	
  FIFTH
  THIRD BANK

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Megan S. Heisel

  
	
   

  	
  Name:

  	
  Megan
  S. Heisel

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  FORTIS
  CAPITAL CORPORATION

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Timothy Streb

  
	
   

  	
  Name:

  	
  Timothy
  Streb

  
	
   

  	
  Title:

  	
  Managing
  Director

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Clay Jackson

  
	
   

  	
  Name:

  	
  Clay
  Jackson

  
	
   

  	
  Title:

  	
  Managing
  Director

  
	
   

  	
   

  
	
   

  	
  COBANK,
  ACB

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Teresa L. Fountain

  
	
   

  	
  Name:

  	
  Teresa
  L. Fountain

  
	
   

  	
  Title:

  	
  Assistant
  Corporate Secretary

  
	
   

  	
   

  
	
   

  	
  REGIONS
  BANK

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Monty Trimble

  
	
   

  	
  Name:

  	
  Monty
  Trimble

  
	
   

  	
  Title:

  	
  Senior
  Vice President

  

 

54

 

	
   

  	
  THE
  BANK OF NOVA SCOTIA

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  V.H. Gibson

  
	
   

  	
  Name:

  	
  V.H.
  Gibson

  
	
   

  	
  Title:

  	
  Assistant
  Agent

  
	
   

  	
   

  
	
   

  	
  COMERICA
  BANK

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Blake Arnett

  
	
   

  	
  Name:

  	
  Blake
  Arnett

  
	
   

  	
  Title:

  	
  Assistant
  Vice President

  
	
   

  	
   

  
	
   

  	
  MELLON
  BANK, N.A.

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Mark F. Johnston

  
	
   

  	
  Name:

  	
  Mark
  F. Johnston

  
	
   

  	
  Title:

  	
  First
  Vice President

  
	
   

  	
   

  
	
   

  	
  PNC
  BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  C. Joseph Richardson

  
	
   

  	
  Name:

  	
  C.
  Joseph Richardson

  
	
   

  	
  Title:

  	
  Senior
  Vice President

  
	
   

  	
   

  
	
   

  	
  THE
  NORTHERN TRUST COMPANY

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Thomas Hasenauer

  
	
   

  	
  Name:

  	
  Thomas
  Hasenauer

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  GREENSTONE
  FARM CREDIT SERVICES,

  
	
   

  	
  ACA/FLCA

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Alfred S. Compton, Jr.

  
	
   

  	
  Name:

  	
  Alfred
  S. Compton, Jr.

  
	
   

  	
  Title:

  	
  Vice
  President/Senior Lending Officer

  
	
   

  	
   

  
	
   

  	
  SOVEREIGN
  BANK

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Judith C.E. Kelly

  
	
   

  	
  Name:

  	
  Judith
  C.E. Kelly

  
	
   

  	
  Title:

  	
  Senior
  Vice President

  
	
   

  	
   

  
	
   

  	
  U.S.
  AGBANK, FCB

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Patrick Zeka

  
	
   

  	
  Name:

  	
  Patrick
  Zeka

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  AGFIRST
  FARM CREDIT BANK

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  John W. Burnside, Jr.

  
	
   

  	
  Name:

  	
  John
  W. Burnside, Jr.

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

55

 

	
   

  	
  BRANCH
  BANKING AND TRUST COMPANY

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Robert Bass

  
	
   

  	
  Name:

  	
  Robert
  Bass

  
	
   

  	
  Title:

  	
  Senior
  Vice President

  

 

56

 

SCHEDULE I

THE KROGER CO.

FIVE-YEAR CREDIT AGREEMENT

APPLICABLE LENDING OFFICES

 

	
  Name
  of Initial Lender

  	
   

  	
  Commitment

  	
   

  	
  Domestic Lending Office

  	
   

  	
  Eurodollar Lending Office

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AgFirst Farm Credit Bank

  	
   

  	
  $

  	
  20,000,000

  	
   

  	
  1401
  Hampton Street

  	
   

  	
  1401
  Hampton Street

  
	
   

  	
   

  	
   

  	
   

  	
  Columbia,
  SC 29202

  	
   

  	
  Columbia,
  SC 29202

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  Felicia Morant

  	
   

  	
  Attn:
  Felicia Morant

  
	
   

  	
   

  	
   

  	
   

  	
  F:
  803 254-4219

  	
   

  	
  F:
  803 254-4219

  
	
  Amsouth Bank

  	
   

  	
  $

  	
  50,000,000

  	
   

  	
  315
  Deaderick Street

  	
   

  	
  315
  Deaderick Street

  
	
   

  	
   

  	
   

  	
   

  	
  Nashville,
  TN 37237-0310

  	
   

  	
  Nashville,
  TN 37237-0310

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  Betty Parker

  	
   

  	
  Attn:
  Betty Parker

  
	
   

  	
   

  	
   

  	
   

  	
  T:
  615 770-4405

  	
   

  	
  T:
  615 770-4405

  
	
   

  	
   

  	
   

  	
   

  	
  F:
  615 748-2731

  	
   

  	
  F:
  615 748-2731

  
	
  Bank of America, N.A.

  	
   

  	
  $

  	
  230,000,000

  	
   

  	
  901
  Main Street

  	
   

  	
  901
  Main Street

  
	
   

  	
   

  	
   

  	
   

  	
  Dallas,
  TX 75202

  	
   

  	
  Dallas,
  TX 75202

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  Portfolio Management

  	
   

  	
  Attn:
  Portfolio Management

  
	
   

  	
   

  	
   

  	
   

  	
  T:
  214 209-0978

  	
   

  	
  T:
  214 209-0978

  
	
   

  	
   

  	
   

  	
   

  	
  F:
  214 209-0905

  	
   

  	
  F:
  214 209-0905

  
	
  The Bank of New York

  	
   

  	
  $

  	
  150,000,000

  	
   

  	
  One
  Wall Street

  	
   

  	
  One
  Wall Street

  
	
   

  	
   

  	
   

  	
   

  	
  New
  York, NY 10286

  	
   

  	
  New
  York, NY 10286

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  USCM Administration or

  	
   

  	
  Attn:
  USCM Administration or

  
	
   

  	
   

  	
   

  	
   

  	
  Patricia
  Butler

  	
   

  	
  Patricia
  Butler

  
	
   

  	
   

  	
   

  	
   

  	
  T:
  212 635-8208

  	
   

  	
  T:
  212 635-8208

  
	
   

  	
   

  	
   

  	
   

  	
  F:
  212 635-7926

  	
   

  	
  F:
  212 635-7926

  
	
  The Bank of Nova Scotia

  	
   

  	
  $

  	
  50,000,000

  	
   

  	
  600
  Peachtree St., NE

  	
   

  	
  600
  Peachtree St., NE

  
	
   

  	
   

  	
   

  	
   

  	
  Suite 2700

  	
   

  	
  Suite 2700

  
	
   

  	
   

  	
   

  	
   

  	
  Atlanta,
  GA 30308

  	
   

  	
  Atlanta,
  GA 30308

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  Shannon Law

  	
   

  	
  Attn:
  Shannon Law

  
	
   

  	
   

  	
   

  	
   

  	
  T:
  404 877-1561

  	
   

  	
  T:
  404 877-1561

  
	
   

  	
   

  	
   

  	
   

  	
  F:
  404 888-8998

  	
   

  	
  F:
  404 888-8998

  
	
  The Bank of Tokyo-Mitsubishi UFJ, Ltd., Chicago
  Branch

  	
   

  	
  $

  	
  150,000,000

  	
   

  	
  227
  West Monroe Street

  	
   

  	
  227
  West Monroe Street

  
	
   

  	
   

  	
   

  	
  Suite 2300

  	
   

  	
  Suite 2300

  
	
   

  	
   

  	
   

  	
   

  	
  Chicago, IL

  	
   

  	
  Chicago, IL

  
	
   

  	
   

  	
   

  	
   

  	
  Cheryl
  Lyons/Vigi Luz

  	
   

  	
  Cheryl
  Lyons/Vigi Luz

  
	
   

  	
   

  	
   

  	
   

  	
  T:
  312 782-4709/4702

  	
   

  	
  T:
  312 782-4709/4702

  
	
   

  	
   

  	
   

  	
   

  	
  F:
  312 696-4532

  	
   

  	
  F:
  312 696-4532

  
	
  Barclays Bank PLC

  	
   

  	
  $

  	
  150,000,000

  	
   

  	
  200
  Park Avenue

  	
   

  	
  200
  Park Avenue

  
	
   

  	
   

  	
   

  	
   

  	
  New
  York, NY 10166

  	
   

  	
  New
  York, NY 10166

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  Jan Becker

  	
   

  	
  Attn:
  Jan Becker

  
	
   

  	
   

  	
   

  	
   

  	
  T:
  212 412-3795

  	
   

  	
  T:
  212 412-3795

  
	
   

  	
   

  	
   

  	
   

  	
  F:
  212 412-5308

  	
   

  	
  F:
  212 412-5308

  
	
  Branch Banking and Trust Company

  	
   

  	
  $

  	
  20,000,000

  	
   

  	
  200
  West 2nd Street

  	
   

  	
  200
  West 2nd Street

  
	
   

  	
   

  	
   

  	
  16th Floor

  	
   

  	
  16th Floor

  
	
   

  	
   

  	
   

  	
   

  	
  Winston
  Salem, NC 27101

  	
   

  	
  Winston
  Salem, NC 27101

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  Beth Cook

  	
   

  	
  Attn:
  Beth Cook

  
	
   

  	
   

  	
   

  	
   

  	
  T:
  336 733-2726

  	
   

  	
  T:
  336 733-2726

  
	
   

  	
   

  	
   

  	
   

  	
  F:
  336 733-2740

  	
   

  	
  F:
  336 733-2740

  

 

 

	
  Citibank, N.A.

  	
   

  	
  $

  	
  230,000,000

  	
   

  	
  Two
  Penns Way, Suite 200

  	
   

  	
  Two
  Penns Way, Suite 200

  
	
   

  	
   

  	
   

  	
   

  	
  New
  Castle, DE 19720

  	
   

  	
  New
  Castle, DE 19720

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  Brian Maxwell

  	
   

  	
  Attn:
  Brian Maxwell

  
	
   

  	
   

  	
   

  	
   

  	
  T:
  302 894-6023

  	
   

  	
  T:
  302 894-6023

  
	
   

  	
   

  	
   

  	
   

  	
  F:
  302 894-6120

  	
   

  	
  F:
  302 894-6120

  
	
  CoBank, ACB

  	
   

  	
  $

  	
  75,000,000

  	
   

  	
  5500
  S. Quebec Street

  	
   

  	
  5500
  S. Quebec Street

  
	
   

  	
   

  	
   

  	
   

  	
  Greenwood
  Village, CO 80111

  	
   

  	
  Greenwood
  Village, CO 80111

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  D. Moran

  	
   

  	
  Attn:
  D. Moran

  
	
   

  	
   

  	
   

  	
   

  	
  T:
  303 740-4033

  	
   

  	
  T:
  303 740-4033

  
	
   

  	
   

  	
   

  	
   

  	
  F:
  303 740-4021

  	
   

  	
  F:
  303 740-4021

  
	
  Comerica Bank

  	
   

  	
  $

  	
  35,000,000

  	
   

  	
  500
  Woodward Avenue,

  	
   

  	
  500
  Woodward Avenue,

  
	
   

  	
   

  	
   

  	
   

  	
  MC3268

  	
   

  	
  MC3268

  
	
   

  	
   

  	
   

  	
   

  	
  Detroit,
  MI 48226

  	
   

  	
  Detroit,
  MI 48226

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  Stacie McVeigh

  	
   

  	
  Attn:
  Stacie McVeigh

  
	
   

  	
   

  	
   

  	
   

  	
  T:
  313 222-4515

  	
   

  	
  T:
  313 222-4515

  
	
   

  	
   

  	
   

  	
   

  	
  F:
  313 222-9514

  	
   

  	
  F:
  313 222-9514

  
	
  Cooperatieve Centrale RaiffeisenBorenleenbank
  B.A., “Rabobank International” New York Branch

  	
   

  	
  $

  	
  150,000,000

  	
   

  	
  245
  Park Avenue

  	
   

  	
  245
  Park Avenue

  
	
   

  	
   

  	
   

  	
  New
  York, NY 10167

  	
   

  	
  New
  York, NY 10167

  
	
   

  	
   

  	
   

  	
  T:
  201 499-5200

  	
   

  	
  T:
  201 499-5200

  
	
   

  	
   

  	
   

  	
  F:
  201 499-5326

  	
   

  	
  F:
  201 499-5326

  
	
  Fifth Third Bank

  	
   

  	
  $

  	
  120,000,000

  	
   

  	
  38
  Fountain Square Plaza

  	
   

  	
  38
  Fountain Square Plaza

  
	
   

  	
   

  	
   

  	
   

  	
  Cincinnati,
  OH 45263

  	
   

  	
  Cincinnati,
  OH 45263

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  Judy Brown

  	
   

  	
  Attn:
  Judy Brown

  
	
   

  	
   

  	
   

  	
   

  	
  T:
  513 579-4224

  	
   

  	
  T:
  513 579-4224

  
	
   

  	
   

  	
   

  	
   

  	
  F:
  513 534-0875

  	
   

  	
  F:
  513 534-0875

  
	
  Fortis Capital Corporation

  	
   

  	
  $

  	
  100,000,000

  	
   

  	
  Two
  Embarcadero Center

  	
   

  	
  Two
  Embarcadero Center

  
	
   

  	
   

  	
   

  	
   

  	
  Suite 1330

  	
   

  	
  Suite 1330

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  Gladysa Valverde

  	
   

  	
  Attn:
  Gladysa Valverde

  
	
   

  	
   

  	
   

  	
   

  	
  T:
  201 631-8190

  	
   

  	
  T:
  201 631-8190

  
	
   

  	
   

  	
   

  	
   

  	
  F:
  201 631-8181

  	
   

  	
  F:
  201 631-8181

  
	
  GreenStone Farm Credit Services, ACA/FLCA

  	
   

  	
  $

  	
  25,000,000

  	
   

  	
  1760
  Abbey Road

  	
   

  	
  1760
  Abbey Road

  
	
   

  	
   

  	
   

  	
  East
  Lansing, MI 48823

  	
   

  	
  East
  Lansing, MI 48823

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  Laura Roessler

  	
   

  	
  Attn:
  Laura Roessler

  
	
   

  	
   

  	
   

  	
   

  	
  T:
  517 318-4139

  	
   

  	
  T:
  517 318-4139

  
	
   

  	
   

  	
   

  	
   

  	
  F:
  517 318-1240

  	
   

  	
  F:
  517 318-1240

  
	
  JPMorgan Chase Bank, N.A.

  	
   

  	
  $

  	
  230,000,000

  	
   

  	
  1111
  Fannin Street, 10th
  Floor

  	
   

  	
  1111
  Fannin Street, 10th
  Floor

  
	
   

  	
   

  	
   

  	
   

  	
  Houston,
  TX 77002

  	
   

  	
  Houston,
  TX 77002

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  Cherry Arnaez

  	
   

  	
  Attn:
  Cherry Arnaez

  
	
   

  	
   

  	
   

  	
   

  	
  T:
  713 750-

  	
   

  	
  T:
  713 750-

  
	
   

  	
   

  	
   

  	
   

  	
  F:
  713 750-2782

  	
   

  	
  F:
  713 750-2782

  
	
  Mellon Bank, N.A.

  	
   

  	
  $

  	
  35,000,000

  	
   

  	
  Three
  Mellon Bank Center

  	
   

  	
  Three
  Mellon Bank Center

  
	
   

  	
   

  	
   

  	
   

  	
  Room 1203

  	
   

  	
  Room 1203

  
	
   

  	
   

  	
   

  	
   

  	
  Pittsburgh,
  PA 15259

  	
   

  	
  Pittsburgh,
  PA 15259

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  Richard Bouchard

  	
   

  	
  Attn:
  Richard Bouchard

  
	
   

  	
   

  	
   

  	
   

  	
  T:
  412 234-5767

  	
   

  	
  T:
  412 234-5767

  
	
   

  	
   

  	
   

  	
   

  	
  F:
  412 234-6124

  	
   

  	
  F:
  412 234-6124

  
	
  The Northern Trust Company

  	
   

  	
  $

  	
  35,000,000

  	
   

  	
  50
  South LaSalle

  	
   

  	
  50
  South LaSalle

  
	
   

  	
   

  	
   

  	
   

  	
  Chicago, IL
  60603

  	
   

  	
  Chicago, IL
  60603

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  Sharon Jackson

  	
   

  	
  Attn:
  Sharon Jackson

  
	
   

  	
   

  	
   

  	
   

  	
  T:
  312 630-1609

  	
   

  	
  T:
  312 630-1609

  
	
   

  	
   

  	
   

  	
   

  	
  F:
  312 630-1566

  	
   

  	
  F:
  312 630-1566

  

 

2

 

	
  PNC Bank, National Association

  	
   

  	
  $

  	
  35,000,000

  	
   

  	
  201
  East Fifth Street

  	
   

  	
  201
  East Fifth Street

  
	
   

  	
   

  	
   

  	
   

  	
  Cincinnati,
  OH 45201

  	
   

  	
  Cincinnati,
  OH 45201

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  C. Joseph Richardson

  	
   

  	
  Attn:
  C. Joseph Richardson

  
	
   

  	
   

  	
   

  	
   

  	
  T:
  513 651-8688

  	
   

  	
  T:
  513 651-8688

  
	
   

  	
   

  	
   

  	
   

  	
  F:
  513 651-8957

  	
   

  	
  F:
  513 651-8957

  
	
  The Royal Bank of Scotland plc

  	
   

  	
  $

  	
  205,000,000

  	
   

  	
  Level
  12, 101 Park Avenue

  	
   

  	
  Level
  12, 101 Park Avenue

  
	
   

  	
   

  	
   

  	
   

  	
  New
  York, NY 10178

  	
   

  	
  New
  York, NY 10178

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  Juanita Baird

  	
   

  	
  Attn:
  Juanita Baird

  
	
   

  	
   

  	
   

  	
   

  	
  T:
  212 401-1420

  	
   

  	
  T:
  212 401-1420

  
	
   

  	
   

  	
   

  	
   

  	
  F:
  212 401-1336

  	
   

  	
  F:
  212 401-1336

  
	
  Sovereign Bank

  	
   

  	
  $

  	
  25,000,000

  	
   

  	
  75
  State Street

  	
   

  	
  75
  State Street

  
	
   

  	
   

  	
   

  	
   

  	
  4th Floor

  	
   

  	
  4th Floor

  
	
   

  	
   

  	
   

  	
   

  	
  Boston,
  MA 02109

  	
   

  	
  Boston,
  MA 02109

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  Roxanne Ellison

  	
   

  	
  Attn:
  Roxanne Ellison

  
	
   

  	
   

  	
   

  	
   

  	
  T:
  610 378-6677

  	
   

  	
  T:
  610 378-6677

  
	
   

  	
   

  	
   

  	
   

  	
  F:
  610 378-6718

  	
   

  	
  F:
  610 378-6718

  
	
  U.S. AgBank, FCB

  	
   

  	
  $

  	
  25,000,000

  	
   

  	
  245
  N. Waco

  	
   

  	
  245
  N. Waco

  
	
   

  	
   

  	
   

  	
   

  	
  Wichita,
  KS 67202

  	
   

  	
  Wichita,
  KS 67202

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  Kathy Scobee

  	
   

  	
  Attn:
  Kathy Scobee

  
	
   

  	
   

  	
   

  	
   

  	
  T:
  316 266-5688

  	
   

  	
  T:
  316 266-5688

  
	
   

  	
   

  	
   

  	
   

  	
  F:
  316291-5085

  	
   

  	
  F:
  316291-5085

  
	
  Union Bank of California, N.A.

  	
   

  	
  $

  	
  55,000,000

  	
   

  	
  1980
  Saturn Street

  	
   

  	
  1980
  Saturn Street

  
	
   

  	
   

  	
   

  	
   

  	
  Monterey
  Park, CA 91755

  	
   

  	
  Monterey
  Park, CA 91755

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  Ruby Gonzales

  	
   

  	
  Attn:
  Ruby Gonzales

  
	
   

  	
   

  	
   

  	
   

  	
  T:
  323 720-7055

  	
   

  	
  T:
  323 720-7055

  
	
   

  	
   

  	
   

  	
   

  	
  F:
  323 724-6198

  	
   

  	
  F:
  323 724-6198

  
	
  US Bank, N.A.

  	
   

  	
  $

  	
  150,000,000

  	
   

  	
  425
  Walnut Street

  	
   

  	
  425
  Walnut Street

  
	
   

  	
   

  	
   

  	
   

  	
  CN-OH-W8

  	
   

  	
  CN-OH-W8

  
	
   

  	
   

  	
   

  	
   

  	
  Cincinnati,
  OH 45202

  	
   

  	
  Cincinnati,
  OH 45202

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  Patrick McGraw

  	
   

  	
  Attn:
  Patrick McGraw

  
	
   

  	
   

  	
   

  	
   

  	
  T:
  513 632-3032

  	
   

  	
  T:
  513 632-3032

  
	
   

  	
   

  	
   

  	
   

  	
  F:
  513 632-2068

  	
   

  	
  F:
  513 632-2068

  
	
  Wells Fargo Bank National Association 

  	
   

  	
  $

  	
  150,000,000

  	
   

  	
  230
  West Monroe, Suite 2900

  	
   

  	
  230
  West Monroe, Suite 2900

  
	
   

  	
   

  	
   

  	
  Chicago, IL
  60606

  	
   

  	
  Chicago, IL
  60606

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  Scott Miller

  	
   

  	
  Attn:
  Scott Miller

  
	
   

  	
   

  	
   

  	
   

  	
  T:
  312 845-4522

  	
   

  	
  T:
  312 845-4522

  
	
   

  	
   

  	
   

  	
   

  	
  F:
  312 553-4783

  	
   

  	
  F:
  312 553-4783

  

 

3

 

SCHEDULE 2.01(c)

 

STAND-BY LETTERS OF CREDIT

 

	
  BANK

  	
   

  	
  LOC #

  	
   

  	
  FACE

  AMOUNT

  	
   

  	
  EXP

  DATE

  	
   

  	
  BENEFICIARY

  	
   

  	
  REFERENCE

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  USBank

  	
   

  	
  CIN 00133

  	
   

  	
  $

  	
  7,614,905.00

  	
   

  	
  11/15/07

  	
   

  	
  USBank 7/1/11

  	
   

  	
  IRB - Lucas Co. OH

  
	
  USBank

  	
   

  	
  MMSP02172

  	
   

  	
  $

  	
  9,775,891.00

  	
   

  	
  8/15/07

  	
   

  	
  USBank 11/1/12

  	
   

  	
  IRB - Crawfordsville

  
	
  USBank

  	
   

  	
  MMSP02341

  	
   

  	
  $

  	
  8,108,844.00

  	
   

  	
  11/15/07

  	
   

  	
  USBank 2/1/12

  	
   

  	
  IRB - Bradley Cnty, TN

  
	
  USBank

  	
   

  	
  MMSP02342

  	
   

  	
  $

  	
  1,029,042.00

  	
   

  	
  11/15/07

  	
   

  	
  USBank 2/1/12

  	
   

  	
  IRB - Winchester, KY

  
	
  USBank

  	
   

  	
  MMSP02343

  	
   

  	
  $

  	
  1,029,042.00

  	
   

  	
  11/15/07

  	
   

  	
  USBank 2/1/12

  	
   

  	
  IRB - Murray, KY

  
	
  USBank

  	
   

  	
  MMSP02068

  	
   

  	
  $

  	
  9,107,014.00

  	
   

  	
  8/15/07

  	
   

  	
  USBank 8/1/15

  	
   

  	
  IRB - Bluffton, IN

  
	
  USBank

  	
   

  	
  MMSP02535

  	
   

  	
  $

  	
  7,717,809.00

  	
   

  	
  4/15/07

  	
   

  	
  USBank 4/1/09

  	
   

  	
  IRB - Colorado Housing

  
	
  USBank

  	
   

  	
  MMSP02538

  	
   

  	
  $

  	
  2,824,718.00

  	
   

  	
  4/15/07

  	
   

  	
  USBank 8/1/11

  	
   

  	
  IRB - Town of Avon, CO

  
	
  USBank

  	
   

  	
  MMSP02537

  	
   

  	
  $

  	
  1,543,562.00

  	
   

  	
  4/15/07

  	
   

  	
  USBank 8/1/11

  	
   

  	
  IRB - Hotchkiss, CO

  
	
  USBank

  	
   

  	
  MMSP02536

  	
   

  	
  $

  	
  4,630,685.00

  	
   

  	
  4/15/07

  	
   

  	
  USBank 8/1/11

  	
   

  	
  IRB - Thornton, CO

  
	
  USBank

  	
   

  	
  MMSP02642

  	
   

  	
  $

  	
  2,881,316.00

  	
   

  	
  5/15/07

  	
   

  	
  USBank 8/1/12

  	
   

  	
  IRB - Meigs County

  
	
  USBank

  	
   

  	
  MMSP02643

  	
   

  	
  $

  	
  3,704,548.00

  	
   

  	
  5/15/07

  	
   

  	
  USBank 8/1/12

  	
   

  	
  IRB - Hilliard

  
	
  USBank

  	
   

  	
  MMSP02644

  	
   

  	
  $

  	
  3,087,124.00

  	
   

  	
  5/15/07

  	
   

  	
  USBank 8/1/12

  	
   

  	
  IRB - Warren County

  
	
  USBank

  	
   

  	
  CIN123465

  	
   

  	
  $

  	
  3,185,445.00

  	
   

  	
  11/30/07

  	
   

  	
  Chase Trust

  	
   

  	
  Montgom. Cnty IRB

  
	
  USBank

  	
   

  	
  MMSP02735

  	
   

  	
  3,591,480.00

  	
   

  	
  9/15/07

  	
   

  	
  USBank 11/1/11

  	
   

  	
  IRB-Rome/Floyd County

  
	
  USBank

  	
   

  	
  MMSP02734

  	
   

  	
  3,215,754.00

  	
   

  	
  9/15/07

  	
   

  	
  USBank 12/1/13

  	
   

  	
  IRB-East Peoria, IL

  
	
  USBank

  	
   

  	
  MMSP02733

  	
   

  	
  1,029,042.00

  	
   

  	
  9/15/07

  	
   

  	
  USBank 12/1/13

  	
   

  	
  IRB-Hutchinson, KS

  
	
  USBank

  	
   

  	
  MMSP02791

  	
   

  	
  3,601,644.00

  	
   

  	
  9/15/07

  	
   

  	
  USBank 11/1/11

  	
   

  	
  IRB-Lawrence Cnty, OH

  
	
  USBank

  	
   

  	
  MMSP02917

  	
   

  	
  3,344,384.00

  	
   

  	
  1/15/07

  	
   

  	
  USBank 10/1/09

  	
   

  	
  IRB-Panola County, MS

  
	
  USBank

  	
   

  	
  MMSP02916

  	
   

  	
  4,836,494.00

  	
   

  	
  1/15/08

  	
   

  	
  USBank 10/1/09

  	
   

  	
  IRB-Montgomery County, OH

  
	
  USBank

  	
   

  	
  MMSP03068

  	
   

  	
  2,263,891.00

  	
   

  	
  6/15/07

  	
   

  	
  USBank 12/1/12

  	
   

  	
  IRB-City of Ripley

  
	
  USBank

  	
   

  	
  MMSP03067

  	
   

  	
  2,855,590.00

  	
   

  	
  6/15/07

  	
   

  	
  USBank 12/1/12

  	
   

  	
  IRB-Harison

  

 

 

	
  USBank

  	
   

  	
  MMSP03066

  	
   

  	
  3,190,028.00

  	
   

  	
  6/15/07

  	
   

  	
  USBank 12/1/12

  	
   

  	
  IRB-Monongolia

  
	
  USBank

  	
   

  	
  MMSP02956

  	
   

  	
  2,109,535.00

  	
   

  	
  8/15/07

  	
   

  	
  USBank 11/1/12

  	
   

  	
  IRB-Madeira

  
	
  USBank

  	
   

  	
  MMSP02955

  	
   

  	
  823,233.00

  	
   

  	
  8/15/07

  	
   

  	
  USBank 11/1/12

  	
   

  	
  IRB-W. Frankfort, IL

  
	
  USBank

  	
   

  	
  MMSP02957

  	
   

  	
  3,190,028.00

  	
   

  	
  8/15/07

  	
   

  	
  USBank 9/1/12

  	
   

  	
  IRB-Stark County

  
	
  USBank

  	
   

  	
  MMSP03195

  	
   

  	
  3,190,028.00

  	
   

  	
  8/15/07

  	
   

  	
  USBank 11/1/12

  	
   

  	
  IRB-Marmet WVA

  
	
  USBank

  	
   

  	
  MMSP03423

  	
   

  	
  3,190,028.00

  	
   

  	
  10/15/07

  	
   

  	
  USBank 7/1/10

  	
   

  	
  IRB-Allegheny County

  
	
  USBank

  	
   

  	
  MMSP03379

  	
   

  	
  3,344,384.00

  	
   

  	
  10/15/07

  	
   

  	
  USBank  7/1/10

  	
   

  	
  IRB-City of Charlotte, VA

  
	
  USBank

  	
   

  	
  MMSP03380

  	
   

  	
  1,029,042.00

  	
   

  	
  10/15/07

  	
   

  	
  USBank  7/1/10

  	
   

  	
  IRB-Rutherford County, TN

  
	
  USBank

  	
   

  	
  MMSP03251

  	
   

  	
  4,630,685.00

  	
   

  	
  8/15/07

  	
   

  	
  USBank  2/1/12

  	
   

  	
  IRB-Springfield, TN

  
	
  USBank

  	
   

  	
  MMSP03250

  	
   

  	
  4,630,685.00

  	
   

  	
  8/15/07

  	
   

  	
  USBank  2/1/12

  	
   

  	
  IRB-Kanawha, Wva

  
	
  USBank

  	
   

  	
  MMSP03583

  	
   

  	
  3,009,946.00

  	
   

  	
  3/15/07

  	
   

  	
  USBank 3/1/16

  	
   

  	
  IRB-Montgomery County, OH 2

  
	
  USBank

  	
   

  	
  MMSP03289

  	
   

  	
  7,048,932.00

  	
   

  	
  10/15/07

  	
   

  	
  USBank 4/1/13

  	
   

  	
  IRB-Kanawha, Wva 2

  
	
  USBank

  	
   

  	
  CIN00198

  	
   

  	
  14,060,668.00

  	
   

  	
  2/8/08

  	
   

  	
  Continental Casualty #1

  	
   

  	
  Insurance

  
	
  USBank

  	
   

  	
  CINS124412

  	
   

  	
  $

  	
  443,014.67

  	
   

  	
  5/1/07

  	
   

  	
  City of Greenwood (IN)

  	
   

  	
  Indy KMA

  
	
  USBank

  	
   

  	
  CIN00268

  	
   

  	
  $

  	
  650,000.00

  	
   

  	
  5/5/07

  	
   

  	
  USF&G

  	
   

  	
  Insurance (Tibbet/Brit)

  
	
  USBank

  	
   

  	
  CIN00427

  	
   

  	
  $

  	
  2,300,000.00

  	
   

  	
  9/18/07

  	
   

  	
  USF&G #2

  	
   

  	
  Insurance

  
	
  USBank

  	
   

  	
  STL02613

  	
   

  	
  $

  	
  5,800,000.00

  	
   

  	
  8/31/07

  	
   

  	
  Michigan Dept of Agriculture

  	
   

  	
  Mich Dairy

  
	
  USBank

  	
   

  	
  CIN122303

  	
   

  	
  $

  	
  250,000.00

  	
   

  	
  12/31/06

  	
   

  	
  COMM OF INS (St of VT) #1

  	
   

  	
  VINE CT

  
	
  USBank

  	
   

  	
  CIN124954

  	
   

  	
  $

  	
  250,000.00

  	
   

  	
  10/1/07

  	
   

  	
  COMM OF INS (St of VT) #2

  	
   

  	
  Queen City Assurance

  
	
  USBank

  	
   

  	
  SLCC122681

  	
   

  	
  $

  	
  250,000.00

  	
   

  	
  2/1/07

  	
   

  	
  COMM OF INS (St of VT) #3

  	
   

  	
  RJD Assurance

  
	
  USBank

  	
   

  	
  CIN00505

  	
   

  	
  $

  	
  157,452.90

  	
   

  	
  12/10/07

  	
   

  	
  Manor Township

  	
   

  	
  Turkey Hill Dairy

  
	
  USBank

  	
   

  	
  CIN00152

  	
   

  	
  $

  	
  5,000,000.00

  	
   

  	
  1/30/07

  	
   

  	
  Albert Kessel

  	
   

  	
  Kessel Trx (D.Schroeder info)

  
	
  USBank

  	
   

  	
  CIN00151

  	
   

  	
  $

  	
  2,350,000.00

  	
   

  	
  1/30/07

  	
   

  	
  James Kessel (dec. Beg 5/1/06)

  	
   

  	
  Kessel Trx (D.Schroeder info)

  
	
  USBank

  	
   

  	
  CIN00150

  	
   

  	
  $

  	
  1,800,000.00

  	
   

  	
  1/30/07

  	
   

  	
  Thomas Kessel

  	
   

  	
  Kessel Trx (D.Schroeder info)

  
	
  USBank

  	
   

  	
  CIN00149

  	
   

  	
  $

  	
  2,000,000.00

  	
   

  	
  1/30/07

  	
   

  	
  Timothy Kessel

  	
   

  	
  Kessel Trx (D.Schroeder info)

  
	
  USBank

  	
   

  	
  CIN00164

  	
   

  	
  $

  	
  50,000.00

  	
   

  	
  1/11/07

  	
   

  	
  San Isabel Electric Co.

  	
   

  	
  GHC

  
	
  USBank

  	
   

  	
  SLCC122276

  	
   

  	
  $

  	
  602,426.00

  	
   

  	
  11/4/07

  	
   

  	
  First Chicago

  	
   

  	
  7.88% mtg bonds

  
	
  USBank

  	
   

  	
  CIN00583

  	
   

  	
  $

  	
  11,000.00

  	
   

  	
  2/27/07

  	
   

  	
  Twp of West Lampeter

  	
   

  	
  Turkey Hill Minit Mkts

  

 

2

 

	
  USBank

  	
   

  	
  CIN00600

  	
   

  	
  $

  	
  700,000.00

  	
   

  	
  3/20/07

  	
   

  	
  Arkansas WC

  	
   

  	
  Arkansas W/C

  
	
  USBank

  	
   

  	
  CIN00615

  	
   

  	
  $

  	
  31,088.00

  	
   

  	
  4/2/07

  	
   

  	
  City of Brentwood, TN

  	
   

  	
  L-896

  
	
  USBank

  	
   

  	
  CIN00620

  	
   

  	
  $

  	
  2,500,000.00

  	
   

  	
  4/9/07

  	
   

  	
  Nevada WC

  	
   

  	
  Nevada W/C

  
	
  USBank

  	
   

  	
  CIN00590

  	
   

  	
  $

  	
  61,130.00

  	
   

  	
  3/11/08

  	
   

  	
  County of Franklin

  	
   

  	
  Mid Atl

  
	
  USBank

  	
   

  	
  STL00775

  	
   

  	
  $

  	
  1,309,531.98

  	
   

  	
  11/29/06

  	
   

  	
  Town of Bennett

  	
   

  	
  Kings

  
	
  USBank

  	
   

  	
  STL00875

  	
   

  	
  $

  	
  89,854.00

  	
   

  	
  11/20/07

  	
   

  	
  Bd of Comm, Fairfield Cnty, OH

  	
   

  	
  Columbus N532

  
	
  USBank

  	
   

  	
  STL00978

  	
   

  	
  $

  	
  940,909.00

  	
   

  	
  2/3/07

  	
   

  	
  Old Republic #5

  	
   

  	
  Republic Risk Manag.

  
	
  USBank

  	
   

  	
  STL00979

  	
   

  	
  $

  	
  818,547.00

  	
   

  	
  2/3/07

  	
   

  	
  Old Republic #6

  	
   

  	
  Republic Risk Manag.

  
	
  USBank

  	
   

  	
  STL01106

  	
   

  	
  $

  	
  10,027,045.00

  	
   

  	
  4/8/07

  	
   

  	
  Commission of Arizona

  	
   

  	
  Fry’s

  
	
  USBank

  	
   

  	
  STL01472

  	
   

  	
  $

  	
  2,232,000.00

  	
   

  	
  10/29/06

  	
   

  	
  State of Nevada

  	
   

  	
   

  
	
  USBank

  	
   

  	
  STL01472

  	
   

  	
  $

  	
  2,483,000.00

  	
   

  	
  10/29/07

  	
   

  	
  State of Nevada

  	
   

  	
   

  
	
  USBank

  	
   

  	
  STL01780

  	
   

  	
  $

  	
  1,000.00

  	
   

  	
  5/23/07

  	
   

  	
  TN Dept. of Agriculture

  	
   

  	
  Delight

  
	
  USBank

  	
   

  	
  STL01791

  	
   

  	
  $

  	
  38,000.00

  	
   

  	
  5/31/07

  	
   

  	
  Jefferson County Public Works

  	
   

  	
  Mid-South

  
	
  USBank

  	
   

  	
  STL01943

  	
   

  	
  $

  	
  8,065,000.00

  	
   

  	
  9/13/07

  	
   

  	
  Ohio Bureau of Workers Comp

  	
   

  	
  Insurance

  
	
  USBank

  	
   

  	
  STL02087

  	
   

  	
  $

  	
  22,050.00

  	
   

  	
  11/28/07

  	
   

  	
  Witchita

  	
   

  	
  Dillons Stores

  
	
  USBank

  	
   

  	
  STL02227

  	
   

  	
  $

  	
  2,182,819.00

  	
   

  	
  2/23/07

  	
   

  	
  Ace American Insurance

  	
   

  	
  insurance - auto liability

  
	
  USBank

  	
   

  	
  STL02228

  	
   

  	
  $

  	
  2,065,313.00

  	
   

  	
  2/23/07

  	
   

  	
  Ace American Insurance

  	
   

  	
  insurance - insured w/c

  
	
  USBank

  	
   

  	
  STL02230

  	
   

  	
  $

  	
  1,225,000.00

  	
   

  	
  2/23/07

  	
   

  	
  Ace American Insurance

  	
   

  	
  insurance - self insured w/c

  
	
  USBank

  	
   

  	
  STL02261

  	
   

  	
  $

  	
  5,000.00

  	
   

  	
  2/23/07

  	
   

  	
  Jefferson County Public Works

  	
   

  	
  Mid-South

  
	
  USBank

  	
   

  	
  STL02309

  	
   

  	
  $

  	
  10,000.00

  	
   

  	
  3/15/07

  	
   

  	
  Jefferson County Public Works

  	
   

  	
  Mid-South

  
	
  USBank

  	
   

  	
  STL02652

  	
   

  	
  $

  	
  150,000.00

  	
   

  	
  9/14/07

  	
   

  	
  City of Murfreesboro

  	
   

  	
  Mid-South

  
	
  USBank

  	
   

  	
  STL02684

  	
   

  	
  $

  	
  10,000.00

  	
   

  	
  9/28/07

  	
   

  	
  Jefferson County Public Works

  	
   

  	
  Mid-South

  
	
  USBank

  	
   

  	
  STL2744

  	
   

  	
  $

  	
  316,701.70

  	
   

  	
  10/24/07

  	
   

  	
  City of Andover, KS

  	
   

  	
  Dillon Stores

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Union Bank

  	
   

  	
  S233496

  	
   

  	
  9,000.00

  	
   

  	
  6/4/07

  	
   

  	
  Mutual Indemnity

  	
   

  	
  Insurance

  
	
  Union Bank

  	
   

  	
  S233495

  	
   

  	
  55,000.00

  	
   

  	
  2/23/07

  	
   

  	
  Bkrs Std Insur

  	
   

  	
  Fred Meyer

  
	
  Union Bank

  	
   

  	
  S006588

  	
   

  	
  7,311,110.00

  	
   

  	
  12/31/07

  	
   

  	
  Reliance Insurance

  	
   

  	
  Ralphs/hughes

  
	
  Union Bank

  	
   

  	
  S234643

  	
   

  	
  424,512.00

  	
   

  	
  1/10/08

  	
   

  	
  Old Republic #1

  	
   

  	
  Auto Deductible

  
	
  Union Bank

  	
   

  	
  S234782

  	
   

  	
  4,950,000.00

  	
   

  	
  3/7/07

  	
   

  	
  IL Workers Comp

  	
   

  	
  Illinois W/C

  
	
  Union Bank

  	
   

  	
  S234774

  	
   

  	
  9,073,737.00

  	
   

  	
  3/6/08

  	
   

  	
  WV Workers Comp

  	
   

  	
  West Va W/C

  
	
  Union Bank

  	
   

  	
  S234862

  	
   

  	
  732,625.00

  	
   

  	
  1/10/08

  	
   

  	
  Old Republic #2

  	
   

  	
  insurance

  

 

3

 

	
  Union Bank

  	
   

  	
  S234892

  	
   

  	
  1,867,038.00

  	
   

  	
  5/7/07

  	
   

  	
  Old Republic #3

  	
   

  	
  insurance

  
	
  Union Bank

  	
   

  	
  S234958

  	
   

  	
  1,900,000.00

  	
   

  	
  2/3/07

  	
   

  	
  Continental Casualty #3

  	
   

  	
  insurance

  
	
  Union Bank

  	
   

  	
  S235183

  	
   

  	
  19,448,000.00

  	
   

  	
  9/17/07

  	
   

  	
  State of Washington

  	
   

  	
  Washington W/C

  
	
  Union Bank

  	
   

  	
  S235184

  	
   

  	
  3,077,330.00

  	
   

  	
  9/17/07

  	
   

  	
  State of Oregon

  	
   

  	
  Oregon W/C

  
	
  Union Bank

  	
   

  	
  S235206

  	
   

  	
  6,125,000.00

  	
   

  	
  10/1/07

  	
   

  	
  State of New Mexico

  	
   

  	
  New Mex W/C

  
	
  Union Bank

  	
   

  	
  S235266

  	
   

  	
  9,642,770.00

  	
   

  	
  10/30/07

  	
   

  	
  Commonwealth of KY

  	
   

  	
  KY W/C

  
	
  Union Bank

  	
   

  	
  s235301

  	
   

  	
  8,540,000.00

  	
   

  	
  11/21/07

  	
   

  	
  Kansas Workers Comp

  	
   

  	
  KS W/C

  
	
  Union Bank

  	
   

  	
  s235461

  	
   

  	
  1,500,000.00

  	
   

  	
  2/3/07

  	
   

  	
  Continental Casualty #4

  	
   

  	
  cna

  
	
  Union Bank

  	
   

  	
  s236107

  	
   

  	
  1,634,868.00

  	
   

  	
  2/3/07

  	
   

  	
  Ace American Insurance

  	
   

  	
  insurance

  
	
  Union Bank

  	
   

  	
  s236108

  	
   

  	
  2,621,365.00

  	
   

  	
  2/3/08

  	
   

  	
  Old Republic #7

  	
   

  	
  insurance

  
	
  Union Bank

  	
   

  	
  s236816

  	
   

  	
  114,600.00

  	
   

  	
  3/9/07

  	
   

  	
  Town of Colierville

  	
   

  	
  Delta

  
	
  Union Bank

  	
   

  	
  s236817

  	
   

  	
  100,000.00

  	
   

  	
  3/9/07

  	
   

  	
  Town of Colierville #2

  	
   

  	
  Delta

  
	
  Union Bank

  	
   

  	
  s237098

  	
   

  	
  595,000.00

  	
   

  	
  8/23/07

  	
   

  	
  Ace American insurance

  	
   

  	
  Vernon meat plant (Bicara)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PNC

  	
   

  	
  S257160OHO

  	
   

  	
  24,145.46

  	
   

  	
  5/1/07

  	
   

  	
  Twp of Derry, PA

  	
   

  	
  THMM

  
	
  PNC

  	
   

  	
  18100259

  	
   

  	
  92,150.00

  	
   

  	
  1/7/08

  	
   

  	
  West Pottsgrove Twp

  	
   

  	
  THMM

  
	
  PNC

  	
   

  	
  18100273

  	
   

  	
  117,144.00

  	
   

  	
  7/19/07

  	
   

  	
  Penn DOT 2

  	
   

  	
  THMM

  
	
  PNC

  	
   

  	
  18102108

  	
   

  	
  122,404.51

  	
   

  	
  8/24/07

  	
   

  	
  Twp of South Hanover

  	
   

  	
  THMM

  
	
  PNC

  	
   

  	
  18102921

  	
   

  	
  58,311.00

  	
   

  	
  3/10/07

  	
   

  	
  Shippensburg

  	
   

  	
  THMM

  
	
  PNC

  	
   

  	
  18103140

  	
   

  	
  294,788.92

  	
   

  	
  5/3/07

  	
   

  	
  Clay Township

  	
   

  	
  THMM

  
	
  PNC

  	
   

  	
  18103141

  	
   

  	
  7,925,000.00

  	
   

  	
  5/31/07

  	
   

  	
  Penn DOT 3

  	
   

  	
  THMM

  
	
  PNC

  	
   

  	
  18103183

  	
   

  	
  45,000.00

  	
   

  	
  11/10/07

  	
   

  	
  Red Hill Borough 2

  	
   

  	
  THMM

  
	
  PNC

  	
   

  	
  18103278

  	
   

  	
  237,027.29

  	
   

  	
  5/31/07

  	
   

  	
  Hampden Twp

  	
   

  	
  THMM

  
	
  PNC

  	
   

  	
  18103327

  	
   

  	
  470,502.56

  	
   

  	
  6/8/07

  	
   

  	
  Borough of Mount Joy

  	
   

  	
  THMM

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Comerica

  	
   

  	
  582779-01

  	
   

  	
  3,000,000.00

  	
   

  	
  5/1/07

  	
   

  	
  Dept of Cons/Industry Svcs

  	
   

  	
  Mich W/C

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AmSouth

  	
   

  	
  1612758

  	
   

  	
  6,000,000.00

  	
   

  	
  3/8/09

  	
   

  	
  UFCW LOCAL #1529

  	
   

  	
  DELTA H.R.

  
	
  AmSouth

  	
   

  	
  1814740

  	
   

  	
  8,100,000.00

  	
   

  	
  1/9/08

  	
   

  	
  Georgia Self-Insurers Guaranty

  	
   

  	
  Georgia Insurance

  
	
  AmSouth

  	
   

  	
  1815235

  	
   

  	
  5,795,000.00

  	
   

  	
  8/25/07

  	
   

  	
  TN Dept of Commerce & Insurance

  	
   

  	
  Insurance

  

 

4

 

SCHEDULE 3.01(b)

DISCLOSED LITIGATION

 

Any
actions, suits, investigations, litigation or proceedings disclosed in Borrower’s
periodic or current reports filed with the SEC are incorporated by reference in
this Schedule 3.01(b).

 

 

EXHIBIT A-1 - FORM OF NOTICE OF

REVOLVING CREDIT BORROWING

 

JPMorgan
Chase Bank, N.A., as Paying Agent

     for the Lenders parties

     to the Credit Agreement

     referred to below 

[Address]                                                                                                                                               
[Date]

                        
Attention: Loan and Agency Services

 

Ladies
and Gentlemen:

 

The
undersigned, The Kroger Co., refers to the Five-Year Credit Agreement, dated as
of November 15, 2006 (as amended or modified from time to time, the “Credit
Agreement”, the terms defined therein being used herein as therein
defined), among the undersigned, certain Lenders parties thereto, JPMorgan
Chase Bank, N.A., as Administrative Agent and as Paying Agent for said Lenders,
Citibank, N.A., as Administrative Agent for said Lenders, and Bank of America,
N.A., The Royal Bank of Scotland plc, Union Bank of California, N.A. and The
Bank of Tokyo-Mitsubishi UFJ, Ltd., Chicago Branch, as Syndication Agents,
and hereby gives you notice, irrevocably, pursuant to Section 2.02 of the
Credit Agreement that the undersigned hereby requests a Revolving Credit
Borrowing under the Credit Agreement, and in that connection sets forth below
the information relating to such Revolving Credit Borrowing (the “Proposed
Revolving Credit Borrowing”) as required by Section 2.02(a) of
the Credit Agreement:

 

(i) The
Business Day of the Proposed Revolving Credit Borrowing is
                              ,
200  .

 

(ii) The
Type of Advances comprising the Proposed Revolving Credit Borrowing is [Base
Rate Advances] [Eurodollar Rate Advances].

 

(iii) The
aggregate amount of the Proposed Revolving Credit Borrowing is
$                              .

 

[(iv) The
initial Interest Period for each Eurodollar Rate Advance made as part of the
Proposed Revolving Credit Borrowing is           
month[s].]

 

The
undersigned hereby certifies that the following statements are true on the date
hereof, and will be true on the date of the Proposed Revolving Credit
Borrowing:

 

(A) the
representations and warranties contained in Section 4.01 of the Credit
Agreement (other than the representations and warranties in the last sentence
of subsection (e) and in subsection (f) (other than clause (ii) thereof))
are correct, before and after giving effect to the Proposed Revolving Credit
Borrowing and to the application of the proceeds therefrom, as though made on
and as of such date;

 

(B) no
event has occurred and is continuing, or would result from such Proposed
Revolving Credit Borrowing or from the application of the proceeds therefrom,
that constitutes a Default; and

 

 

(C) the
aggregate amount of the Proposed Revolving Credit Borrowing and all other
Borrowings to be made on the same day under the Credit Agreement is within the
aggregate amount of the Unused Commitments.

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  THE
  KROGER CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Title:

  

 

2

 

EXHIBIT A-2 - FORM OF NOTICE OF

COMPETITIVE BID BORROWING

 

                                         ,
as Agent

     for the Lenders parties

     to the Credit Agreement

     referred to below

	
                                           

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [Date]

  

 

Attention:
Loan and Agency Services

 

Ladies
and Gentlemen:

 

The
undersigned, The Kroger Co., refers to the Five-Year Credit Agreement, dated as
of November 15, 2006 (as amended or modified from time to time, the “Credit
Agreement”, the terms defined therein being used herein as therein
defined), among the undersigned, certain Lenders parties thereto, JPMorgan
Chase Bank, N.A., as Administrative Agent and as Paying Agent for said Lenders,
Citibank, N.A., as Administrative Agent for said Lenders, and Bank of America,
N.A., The Royal Bank of Scotland plc, Union Bank of California, N.A. and The
Bank of Tokyo-Mitsubishi UFJ, Ltd., Chicago Branch, as Syndication Agents,
and hereby gives you notice, irrevocably, pursuant to Section 2.01(b) of
the Credit Agreement that the undersigned hereby requests a Competitive Bid
Borrowing under the Credit Agreement, and in that connection sets forth the
terms on which such Competitive Bid Borrowing (the “Proposed Competitive Bid
Borrowing”) is requested to be made:

 

	
  (A)

  	
  Date
  of Competitive Bid Borrowing

  	
   

  	
   

  
	
  (B)

  	
  Amount
  of Competitive Bid Borrowing

  	
   

  	
   

  
	
  (C)

  	
  [Maturity
  Date] [Interest Period]

  	
   

  	
   

  
	
  (D)

  	
  Interest
  Rate Basis

  	
   

  	
   

  
	
  (E)

  	
  Interest
  Payment Date(s)

  	
   

  	
   

  
	
  (F)

  	
   

  	
   

  	
   

  	
   

  
	
  (G)

  	
   

  	
   

  	
   

  	
   

  
	
  (H)

  	
   

  	
   

  	
   

  	
   

  

 

The
undersigned hereby certifies that the following statements are true on the date
hereof, and will be true on the date of the Proposed Competitive Bid Borrowing:

 

(a) the
representations and warranties contained in Section 4.01 are correct,
before and after giving effect to the Proposed Competitive Bid Borrowing and to
the application of the proceeds therefrom, as though made on and as of such
date;

 

(b) no
event has occurred and is continuing, or would result from the Proposed
Competitive Bid Borrowing or from the application of the proceeds therefrom,
that constitutes a Default; and

 

(c) the
aggregate amount of the Proposed Competitive Bid Borrowing and all other
Borrowings to be made on the same day under the Credit Agreement is within the
aggregate amount of the Unused Commitments.

 

 

The
undersigned hereby confirms that the Proposed Competitive Bid Borrowing is to
be made available to it in accordance with Section 2.01(b) of the
Credit Agreement.

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  THE
  KROGER CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Title:

  

 

2

 

EXHIBIT A-3 - FORM OF

NOTICE OF ISSUANCE

 

                                     ,
as Issuing Bank

[Address]

 

JPMorgan
Chase Bank, N.A., as Paying Agent

     for the Lenders parties

     to the Credit Agreement

     referred to below 

[Address]                                                                                                         
[Date]

                        
Attention: Loan and Agency Services

 

Ladies
and Gentlemen:

 

The
undersigned, The Kroger Co., refers to the Five-Year Credit Agreement, dated as
of November 15, 2006 (as amended or modified from time to time, the “Credit
Agreement”, the terms defined therein being used herein as therein
defined), among the undersigned, certain Lenders parties thereto, JPMorgan
Chase Bank, N.A., as Administrative Agent and as Paying Agent for said Lenders,
Citibank, N.A., as Administrative Agent for said Lenders, and Bank of America,
N.A., The Royal Bank of Scotland plc, Union Bank of California, N.A. and The
Bank of Tokyo-Mitsubishi UFJ, Ltd., Chicago Branch, as Syndication Agents,
and hereby gives you notice pursuant to Section 2.03 of the Credit
Agreement that the undersigned hereby requests a Letter of Credit under the
Credit Agreement, and in that connection sets forth below the information
relating to the Issuance of such Letter of Credit (the “Proposed Issuance”)
as required by Section 2.03(a) of the Credit Agreement:

 

(i) The
Business Day of the Proposed Issuance is
                    ,
200  .

 

(ii) The
Available Amount of such Letter of Credit is
                    .

 

(iii) The
expiration date of such Letter of Credit is
                    ,
200  .

 

(iv) The
name and address of the beneficiary of such Letter of Credit is
                    .

 

The
undersigned hereby certifies that the following statements are true on the date
hereof, and will be true on the date of the Proposed Issuance:

 

(A) the
representations and warranties contained in Section 4.01 of the Credit
Agreement (other than the representations and warranties in the last sentence
of subsection (e) and in subsection (f) (other than clause (ii) thereof))
are correct, before and after giving effect to the Proposed Issuance and to the
application of the proceeds therefrom, as though made on and as of such date;

 

(B) no
event has occurred and is continuing, or would result from such Proposed
Issuance or from the application of the proceeds therefrom, that constitutes a
Default; and

 

 

(C) the
aggregate Available Amount of the Proposed Issuance is within (i) the
aggregate amount of the Unused Commitments and (ii) the Letter of Credit
Facility.

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  THE
  KROGER CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Title:

  

 

2

 

EXHIBIT B - FORM OF

ASSIGNMENT AND ACCEPTANCE

 

Reference
is made to the Five-Year Credit Agreement dated as of November 15, 2006
(as amended or modified from time to time, the “Credit Agreement”) among
The Kroger Co., an Ohio corporation (the “Borrower”), the Lenders (as
defined in the Credit Agreement), JPMorgan Chase Bank, N.A., as Administrative
Agent and as Paying Agent for said Lenders, Citibank, N.A., as Administrative
Agent for said Lenders, Bank of America, N.A., The Royal Bank of Scotland plc,
Union Bank of California, N.A. and The Bank of Tokyo-Mitsubishi UFJ, Ltd.,
Chicago Branch, as Syndication Agents. Terms defined in the Credit Agreement
are used herein with the same meaning.

 

The
“Assignor” and the “Assignee” referred to on Schedule I hereto agree as
follows:

 

1.
The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby
purchases and assumes from the Assignor, an interest in and to the Assignor’s rights
and obligations under the Credit Agreement as of the date hereof (other than in
respect of Competitive Bid Advances and Competitive Bid Notes) equal to the
percentage interest specified on Schedule 1 hereto of all outstanding rights
and obligations under the Credit Agreement (other than in respect of
Competitive Bid Advances and Competitive Bid Notes). After giving effect to
such sale and assignment, the Assignee’s Commitment and the amount of the
Revolving Credit Advances owing to the Assignee will be as set forth on
Schedule 1 hereto.

 

2.
The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim created by it; (ii) makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or any other
instrument or document furnished pursuant thereto; (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or the performance or observance by the
Borrower of any of its obligations under the Credit Agreement or any other
instrument or document furnished pursuant thereto; and (iv) attaches the
Revolving Credit Note held by the Assignor and requests that the Agent exchange
such Revolving Credit Note for a new Revolving Credit Note payable to the order
of the Assignee in an amount equal to the Commitment assumed by the Assignee
pursuant hereto or new Revolving Credit Notes payable to the order of the
Assignee in an amount equal to the Commitment assumed by the Assignee pursuant
hereto and the Assignor in an amount equal to the Commitment retained by the
Assignor under the Credit Agreement, respectively, as specified on Schedule 1
hereto.

 

3.
The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in Section 4.01
thereof and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Assignment and
Acceptance; (ii) agrees that it will, independently and without reliance
upon the Agent, the Assignor or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Credit Agreement;
(iii) appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers and discretion under the Credit
Agreement as are delegated to the Agent by the terms thereof, together with
such powers and discretion as are reasonably incidental thereto; (iv) agrees
that it will perform in accordance with their terms all of the obligations that
by the terms of the Credit Agreement are required to be performed by it as a
Lender; and (v) attaches any U.S. Internal Revenue Service forms required
under Section 2.14 of the Credit Agreement.

 

4.
Following the execution of this Assignment and Acceptance, it will be delivered
to the Agent for acceptance and recording by the Agent. The effective date for
this Assignment and Acceptance (the “Effective Date”) shall be the date
of acceptance hereof by the Agent, unless otherwise specified on Schedule 1
hereto.

 

 

 

5.
Upon such acceptance and recording by the Agent, as of the Effective Date, (i) the
Assignee shall be a party to the Credit Agreement and, to the extent provided
in this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.

 

6.
Upon such acceptance and recording by the Agent, from and after the Effective Date,
the Agent shall make all payments under the Credit Agreement and the Revolving
Credit Notes in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and facility fees with respect
thereto) to the Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement and the Revolving Credit
Notes for periods prior to the Effective Date directly between themselves.

 

7.
This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of New York.

 

8.
This Assignment and Acceptance may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement. Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by telecopier or
other electronic medium shall be effective as delivery of a manually executed
counterpart of this Assignment and Acceptance.

 

IN
WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to this
Assignment and Acceptance to be executed by their officers thereunto duly
authorized as of the date specified thereon.

 

2

 

Schedule 1

to

Assignment and Acceptance

 

 

	
  Percentage interest assigned: 

  	
   

  	
   

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Assignee’s Commitment:

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Aggregate outstanding principal amount of
  Revolving Credit Advances assigned:

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Principal amount of Revolving Credit Note payable
  to Assignee:

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Principal amount of Revolving Credit Note payable
  to Assignor:

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
								

 

Effective Date*:
                              ,
200  

 

	
   

  	
   

  	
  [NAME
  OF ASSIGNOR], as Assignor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dated:
                                ,
  200  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [NAME
  OF ASSIGNEE], as Assignee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dated:
                                ,
  200  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Domestic
  Lending Office:

  
	
   

  	
   

  	
  [Address]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Eurodollar
  Lending Office:

  
	
   

  	
   

  	
  [Address]

  
	
  Accepted
  and Approved this

  	
   

  	
   

  
	
            
  day of                               ,
  200  

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  JPMORGAN
  CHASE BANK, N.A., as Administrative

  	
   

  	
   

  
	
  Agent
  and as Paying Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

*     This date should be no earlier than five
Business Days after the delivery of this Assignment and Acceptance to the
Agent.

 

3

 

	
  Approved
  this            day

  	
   

  	
   

  
	
  of
                                ,
  200  

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  CITIBANK,
  N.A.,

  	
   

  	
   

  
	
  as
  Administrative Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Approved
  this            day

  	
   

  	
   

  
	
  of
                                ,
  200  

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  THE
  KROGER CO.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

4

 

EXHIBIT C - FORM OF

OPINION OF COUNSEL

FOR THE BORROWER

 

To
each of the Lenders parties

     to the Credit Agreement referred to below

     and to JPMorgan Chase Bank, N.A.,

     as Administrative Agent

     and Paying Agent, and Citibank, N.A.,

     as Administrative Agent

 

The Kroger Co.

 

Ladies
and Gentlemen:

 

As
Executive Vice President, Secretary and General Counsel of The Kroger Co., an
Ohio corporation (the “Company”), I am familiar with its affairs
and, to the extent necessary to render this opinion, the affairs of its
subsidiaries and in particular the Five-Year Credit Agreement, dated as of November 15,
2006 (the “Credit Agreement”), among the Company, the banking
institutions listed on the signature pages thereof (the “Lenders”),
JPMorgan Chase Bank, N.A. and Citibank, N.A., as Administrative Agents, and
Bank of America, N.A., The Royal Bank of Scotland plc, Union Bank of
California, N.A. and The Bank of Tokyo-Mitsubishi UFJ, Ltd., Chicago
Branch, as Syndication Agents. This opinion is delivered to you pursuant to the
Credit Agreement. All capitalized terms used herein which are defined in, or by
reference in, the Credit Agreement have the meanings assigned to such terms in,
or be reference in, the Credit Agreement unless otherwise indicated herein.

 

In
connection with the preparation of this opinion, I have examined
originals, or certified, conformed or reproduction copies, of such corporate
records, agreements, instruments and documents of the Borrower, such
certificates of public officials and such other documents as I have deemed
necessary or appropriate to its preparation and delivery. In all such
examinations, I have assumed the genuineness of all signatures on original
or certified, conformed or reproduction copies of documents of all parties
other than the Company and the conformity to original or certified copies of
all copies submitted to me as conformed or reproduction copies. As to various
questions of fact relevant to such opinions, I have relied upon, and
assume the accuracy of, statements or certificates of public officials and
statements or certificates of officers or representatives of the Borrower and
others. I am familiar with the proceedings of the Board of Directors of the
Borrower in connection with the Credit Agreement.

 

Based
on the foregoing, and subject to the limitations, qualifications and
assumptions set forth herein, I am of the opinion that:

 

(1) The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Ohio. The Borrower has all requisite
corporate power and authority to own or lease and operate its properties, and
to carry on its business as presently conducted. The Borrower has the corporate
power and authority to execute and deliver the Credit Agreement, and to perform
its obligations under the Credit Agreement. The Borrower is duly qualified or
licensed to do business as a foreign corporation in good standing in all
jurisdictions in which it owns or leases assets or in which the conduct of its
business requires it to so qualify or be licensed except where the failure to
be so licensed or qualified is not likely to have a material adverse effect on
the business, condition (financial or otherwise), performance, operation,
properties or prospects thereof.

 

(2) The
Credit Agreement has been duly executed and delivered on behalf of the
Borrower.

 

 

(3) There
are no pending or overtly threatened actions or proceedings against the Company
or any of its Subsidiaries before any court, governmental agency or arbitrator
which, (a) except as set forth in the Credit Agreement, are reasonably
likely to have a Material Adverse Effect or (b) purport to affect the
legality, validity or enforceability of the Credit Agreement.

 

(4) The
execution and delivery by the Borrower of the Credit Agreement and the
performance by the Borrower of its obligations under the Credit Agreement (a) have
been duly authorized by all necessary corporate action, (b) do not require
any filing or registration with, or approval or consent of, any governmental
agency or authority generally applicable to corporations for profit that has
not been made or obtained, and (c) do not contravene (i) any
provisions of the Articles of Incorporation of the Borrower or Regulations of
the Borrower and all amendments thereto, or (ii) any present law, or
governmental regulation of any governmental agency or authority of the State of
Ohio generally applicable to corporations for profit which, to my knowledge, is
applicable to the Borrower.

 

(5) The
execution and delivery by the Borrower of the Credit Agreement and the
performance by it of its obligations thereunder, to my knowledge, will not
contravene any indenture, loan or credit agreement, lease, guarantee, mortgage,
security agreement, bond, note or other agreement or instrument, or any order,
writ, judgment, award, injunction or decree, which affect or purport to affect
any of the rights or obligations of the Borrower under the Credit Agreement,
except as disclosed in the Credit Agreement.

 

(6) No
authorization, consent, approval or other action by, and no notice to or filing
with, any governmental authority is required for the due execution, delivery
and performance by the Borrower of the Credit Agreement.

 

(7) The
Credit Agreement constitutes the legal, valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its terms.

 

(8) In
general, an Ohio court would give effect to the choice of law provisions in the
Credit Agreement which specify New York law as the applicable law (other than
instances where Ohio law specifically governs Ohio property, persons or
activities, for example, with respect to real property and choice of law rules under
the Uniform Commercial Code (“UCC”)). The Supreme Court of Ohio has validated
contractual choice of law provisions. Jarvis v. Ashland Oil, Inc.,
17 Ohio St. 3d 189 (1985); Schulke Radio Productions, Ltd. v.
Midwestern  Broadcasting Co., 6 Ohio St. 3d 436 (1983). In the latter
case, the Supreme Court held that the parties may choose the law applicable to
their contract unless (i) the state whose law is chosen has no substantial
relationship to the parties or to the transaction and there is no other
reasonable basis for the parties’ choice or (ii) application of the chosen
law would be contrary to a fundamental policy of a state having a materially
greater interest in the issue than the chosen state and such other state would
be the state of applicable law in the absence of a choice by the parties. In
addition, Ohio Revised Code (“R.C.”) § 1301.05 (UCC 1-105) provides generally
with respect to UCC matters (not including issues specifically addressed to the
contrary by the Ohio UCC, for example, perfection issues governed by R.C. §
1309.03 (UCC 9-103)) that when a transaction bears a reasonable relation to
Ohio and also to another state, the parties may agree that the law of either
Ohio or of such other state shall govern their rights and duties. Under the
present circumstances, it would appear that the parties’ stipulation that the
law of New York should control should be given effect in Ohio. This conclusion
is based upon our understanding that the transactions provided for in the
Credit Agreement were negotiated primarily in New York, were executed and
delivered in New York, and are to be performed, in whole or in part, in New
York and that the Administrative Agents and the Paying Agent have their chief
places of business outside of the State of Ohio.

 

The
opinions set forth above are subject to the following qualifications:

 

(a) My
opinion in paragraph 7 above as to enforceability is subject to the effect of
any applicable bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar law
affecting creditors’ rights generally.

 

(b) My
opinion in paragraph 7 above as to enforceability is subject to the effect of
general principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing (regardless of whether
considered in a proceeding in equity or at law).

 

2

 

(c) I
express no opinion as to (i) Section 2.13 of the Credit Agreement
insofar as it provides that any Lender purchasing a participation from another
Lender pursuant thereto may exercise set-off or similar rights with respect to
such participation and (ii) the effect of the law of any jurisdiction
other than the State of Ohio wherein any Lender may be located or wherein
enforcement of the Credit Agreement or the Notes may be sought that limits the
rates of interest legally chargeable or collectible.

 

The
opinions stated herein are limited to the federal laws of the United States of
America and the laws of the State of Ohio. To the extent the opinions stated
herein relate to laws of a jurisdiction other than the United States of America
or the State of Ohio, I have assumed for purposes of such opinions that
the laws of such jurisdiction are identical to the laws of the State of Ohio.
The opinions are limited to the matters on which I have been expressly asked to
opine and do not extend beyond such limits. The opinions expressed herein are
solely for the benefit of the Agent and the Lenders and may not be relied on in
any manner or for any purpose by any other person or entity.

 

	
   

  	
  Very
  truly yours,

  

 

3

 

 

EXHIBIT D - FORM OF

ADMINISTRATIVE QUESTIONNAIRE

 

	
   

  	
  

  	
  JANUARY 2005

  

 

JPMorgan

 

ADMINISTRATIVE QUESTIONNAIRE

 

The Kroger Co.

 

	
  Agent Address:

  	
  JPMorgan
  Chase Bank, N.A.

  	
  Return form to:

  	
  Omar Musule

  
	
   

  	
  JPMorgan Loan Services

  	
  Telephone:

  	
  713-286-3247

  
	
   

  	
  1111
  Fannin Street, 10th Fl.

  	
  Facsimile:

  	
  713-750-2666

  
	
   

  	
  Houston,
  TX  77002

  	
  E-mail:

  	
  Omar.P.Musule@JPMorgan.com

  

 

It is very important that all of the requested information be
completed accurately and that this questionnaire be returned promptly.  If your institution is sub-allocating its
allocation, please fill out an administrative questionnaire for each legal
entity.

 

	
  Legal Name of Lender to
  appear in Documentation:

  
	
   

  

 

Tax ID Number:

 

	
  Signature Block
  Information:

  	
   

  
	
   

  	
   

  
	
  ·

  	
  Signing Credit Agreement

  	
  Yes

  	
  No

  
	
   

  	
   

  	
   

  	
   

  
	
  ·

  	
  Coming in via Assignment

  	
  Yes

  	
  No

  
					

 

	
  Type of Lender:

  	
   

  

 

(Bank, Asset Manager,
Broker/Dealer, CLO/CDO, Finance Company, Hedge Fund, Insurance, Mutual
Fund, Pension Fund, Other Regulated Investment Fund, Special Purpose Vehicle,
Other-please specify)

 

	
  Lender Parent:

  	
   

  

 

	
  Domestic Address

  	
   

  	
  Eurodollar
  Address

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

LSTA JANUARY 2005                   Copyright © LSTA 2005.  All rights
reserved.

 

 

Contacts/Notification
Methods:  Borrowings, Paydowns, Interest,
Fees, etc.

 

	
  Primary Credit Contact

  	
   

  	
  Secondary Credit Contact

  
	
   

  	
   

  	
   

  

 

Syndicate-level
information (which may contain material non-public information about the
Borrower and its related parties or their respective securities) will be made
available to the Credit Contact(s).  The
Credit Contacts identified must be able to receive such information in
accordance with his/her institution’s compliance procedures and applicable
laws, including Federal and state securities laws.

 

Name:

 

Company:

 

Title:

 

Address:

 

 

Telephone:

 

Facsimile:

 

E-Mail Address:

 

	
  Primary Operations Contact

  	
   

  	
  Secondary Operations Contact

  
	
   

  	
   

  	
   

  

 

Name:

 

Company:

 

Title:

 

Address:

 

 

Telephone:

 

Facsimile:

 

E-Mail Address:

 

	
  Bid Contact

  	
   

  	
  L/C Contact

  
	
   

  	
   

  	
   

  

 

Name:

 

Company:

 

Title:

 

Address:

 

 

Telephone:

 

Facsimile:

 

E-Mail
Address:

 

 

	
  Lender’s Domestic Wire Instructions

  
	
   

  
	
  Bank Name:

  	
   

  
	
   

  	
   

  
	
  ABA/Routing No.:

  	
   

  
	
   

  	
   

  
	
  Account Name:

  	
   

  
	
   

  	
   

  
	
  Account No.:

  	
   

  
	
   

  	
   

  
	
  FFC
  Account Name:

  	
   

  
	
   

  	
   

  
	
  FFC Account No.:

  	
   

  
	
   

  	
   

  
	
  Attention:

  	
   

  
	
   

  	
   

  
	
  Reference:

  	
   

  
	
   

  
	
  Lender’s Foreign Wire Instructions

  
	
   

  
	
  Currency:

  	
   

  
	
   

  	
   

  
	
  Bank Name:

  	
   

  
	
   

  	
   

  
	
  Swift/Routing No.:

  	
   

  
	
   

  	
   

  
	
  Account Name:

  	
   

  
	
   

  	
   

  
	
  Account No.:

  	
   

  
	
   

  	
   

  
	
  FFC
  Account Name:

  	
   

  
	
   

  	
   

  
	
  FFC Account No.:

  	
   

  
	
   

  	
   

  
	
  Attention:

  	
   

  
	
   

  	
   

  
	
  Reference:

  	
   

  
	
   

  
	
  Agent’s Wire Instructions

  
	
   

  
	
  Bank Name:

  	
  JPMorgan Chase Bank, N.Al

  
	
   

  	
   

  
	
  ABA/Routing No.:

  	
  021 0000 021

  
	
   

  	
   

  
	
  Account Name:

  	
   

  
	
   

  	
   

  
	
  Account No.:

  	
   

  
	
   

  	
   

  
	
  Attention:

  	
  Cherry Arnaez

  
	
   

  	
   

  
	
  Reference:

  	
  Kroger Co.

  

 

 

Tax
Documents

 

NON-U.S. LENDER INSTITUTIONS:

 

I. Corporations:

 

If your institution is
incorporated outside of the United States for U.S. federal income tax purposes,
and is the beneficial owner of the interest and other income it
receives, you must complete one of the following three tax forms, as applicable
to your institution: a.)
Form W-8BEN
(Certificate of Foreign Status of
Beneficial Owner), b.)  Form W-8ECI (Income Effectively Connected to a U.S. Trade or
Business), or c.)
Form W-8EXP
(Certificate of Foreign Government or
Governmental Agency).

 

A U.S. taxpayer
identification number is required for any institution submitting Form W-8ECI.  It is also required on Form W-8BEN for
certain institutions claiming the benefits of a tax treaty with the U.S.  Please refer to the instructions when
completing the form applicable to your institution.  In addition, please be advised that U.S. tax
regulations do not permit the acceptance of faxed forms.  An original
tax form must be submitted.

 

II. Flow-Through Entities:

 

If your institution is
organized outside the U.S., and is classified for U.S. federal income tax
purposes as either a Partnership, Trust, Qualified or Non-Qualified
Intermediary, or other non-U.S. flow-through entity, an original Form W-8IMY (Certificate of Foreign Intermediary, Foreign
Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding)
must be completed by the intermediary together with a withholding
statement.  Flow-through entities other
than Qualified Intermediaries are required to include tax forms for each of the
underlying beneficial owners.

 

Please refer to the
instructions when completing this form. 
In addition, please be advised that U.S. tax regulations do not permit
the acceptance of faxed forms.  Original tax form(s) must be submitted.

 

U.S. LENDER
INSTITUTIONS:

 

If your institution is
incorporated or organized within the United States, you must complete
and return Form W-9
(Request  for Taxpayer Identification Number and
Certification).  Please be advised that we request that you submit an
original Form W-9.

 

Pursuant to the language contained in the tax section of the Credit
Agreement, the applicable tax form for your institution must be completed and
returned prior to the first payment of income. 
Failure to provide the proper tax form when requested may subject your
institution to U.S. tax withholding.

 

 

 

EXHIBIT E - FORM OF

GUARANTEE AGREEMENT

 

GUARANTEE
AGREEMENT dated as of November 15, 2006, made by the subsidiaries of The Kroger
Co., an Ohio corporation (the “Borrower”), listed on the signature page
hereof and the Additional Guarantors (as defined in Section 21) (such
subsidiaries so listed and the Additional Guarantors being, collectively, the “Guarantors”)
to JPMorgan Chase Bank, N.A. (“JPMorgan”), with an office at 270 Park
Avenue, New York, New York  10017, as
paying agent (such paying agent, together with any successor thereto appointed
pursuant to the Credit Agreement referred to below, being the “Paying Agent”)
for the lenders (the “Lenders”) parties to the Credit Agreement (as
hereinafter defined) .

 

Reference
is made to the Five-Year Credit Agreement dated as of November 15, 2006 (as
amended or modified from time to time, the “Credit Agreement”), among
the Borrower, the Lenders parties thereto, JPMorgan Chase Bank, N.A., as an
Administrative Agent and as the Paying Agent, and Citibank, N.A., as an
Administrative Agent.

 

The
Lenders have agreed to make Advances to the Borrower pursuant to, and upon the
terms and subject to the conditions specified in, the Credit Agreement.  The obligations of the Lenders to make
Advances are conditioned on, among other things, the execution and delivery by
each Guarantor of a guarantee agreement in the form hereof.  Capitalized terms used herein and not defined
herein shall have the meanings assigned to such terms in the Credit Agreement
or, to the extent not defined in the Credit Agreement, in the other Loan
Documents.

 

Accordingly,
the parties hereto agree as follows:

 

SECTION
1.   Guarantee. 
Each Guarantor unconditionally guarantees, jointly with the other
Guarantors and severally, as a primary obligor and not merely as a surety, all
obligations of the Borrower under or in respect of the Credit Agreement and the
other Loan Documents in respect of loans, advances, debts, liabilities,
covenants and indemnities of any kind or nature, present or future, whether or not
evidenced by any note, guaranty or other instrument, whether or not for the
payment of money, whether arising by reason of an extension of credit, loan,
guaranty, letter of credit, indemnification, or in any other manner, whether
direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising and however
acquired (the “Obligations”). 
Without limitation of the foregoing, the Borrower’s obligations under
the Credit Agreement and the other Loan Documents include (a) all principal,
interest, charges, expenses, indemnities, fees, attorneys’ fees and
disbursements and any other amounts payable to or to become payable by the
Borrower under the Credit Agreement or any other Loan Document and (b) any
amount in respect of any of the foregoing which any Lender, in its sole
discretion, may elect to advance on behalf of the Borrower.  Each Guarantor further agrees that the
Obligations may be extended or renewed, in whole or in part, without notice to
or further assent from it, and that it will remain bound upon its guarantee
notwithstanding any extension or renewal of any Obligation.

 

SECTION
2.   Obligations Not Waived.  To the fullest extent permitted by applicable
law, each Guarantor waives presentment to, demand of payment from and protest
of any of the Obligations, and also waives notice of acceptance of its
guarantee and notice of protest for nonpayment. 
To the fullest extent permitted by applicable law, the obligations of
each Guarantor hereunder shall not be affected by (a) the failure of the Paying
Agent to assert any claim or 

 

1

 

demand
or to enforce any right or remedy against the Borrower or any other Guarantor
pursuant to provisions of this Agreement, any Loan Document or otherwise; (b)
any rescission, waiver, amendment or modification of, or any release from any
of the terms or provisions of this Agreement, any other Loan Document, any
guarantee or any other agreement, including with respect to any other Guarantor
under this Agreement; (c) the release of any security held by the Paying Agent
for the Obligations or any of them; or (d) the failure of the Paying Agent to
exercise any right or remedy against any other Guarantor or guarantor of the
Obligations.

 

SECTION
3.   Guarantee of Payment.  Each Guarantor further agrees that its
guarantee constitutes a guarantee of payment when due and not of collection,
and waives any right to require that any resort be had by the Paying Agent to
the security, if any, held for payment of the Obligations or to any balance of
any deposit account or credit on the books of the Paying Agent in favor of the
Borrower or any other Person.

 

SECTION
4.   No Discharge or Diminishment of Guarantee.  The obligations of each Guarantor hereunder
shall not be subject to any reduction, limitation, impairment or termination
for any reason (other than the indefeasible payment in full in cash of the
Obligations), including any claim of waiver, release, surrender, alteration or
compromise of any of the Obligations, and shall not be subject to any defense
or setoff, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality or unenforceability of the Obligations or otherwise.  Without limiting the generality of the
foregoing, the obligations of each Guarantor hereunder shall not be discharged
or impaired or otherwise affected by the failure of the Paying Agent to assert
any claim or demand or to enforce any remedy under the Credit Agreement, any
other Loan Document, any other guarantee or any other agreement, by any waiver
or modification of any provision of any thereof, by any default, failure or
delay, willful or otherwise, in the performance of the Obligations, or by any
other act or omission that may or might in any manner or to any extent vary the
risk of any Guarantor or that would otherwise operate as a discharge of any
Guarantor as a matter of law or equity (other than the indefeasible payment in
full in cash of all the Obligations). 
The liability of each Guarantor shall not exceed at any time the Maximum
Amount (as hereinafter defined) less the sum of the amounts, if any, collected
by or on behalf of the Paying Agent from such Guarantor pursuant to any Loan
Documents executed by such Guarantor. 
The “Maximum Amount” means, with respect to each Guarantor, 95%
of the difference between (i) fair salable value of the property of such
Guarantor and (ii) the total liabilities of such Guarantor (including
contingent liabilities, but excluding liabilities of such Guarantor under the
Loan Documents) from time to time.

 

SECTION
5.   Defenses of Borrower Waived.  To the extent permitted by applicable law,
each of the Guarantors waives any defense based on or arising out of any
defense of the Borrower or any other Guarantor or the unenforceability of the
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Borrower or any other Guarantor, other than final and
indefeasible payment in full in cash of the Obligations.  Each of the Guarantors waives any defense
arising out of any such election even though such election operates to impair
or to extinguish any right of reimbursement or subrogation or other right or
remedy of such Guarantor against the Borrower or any other Guarantor, as the
case may be, or any security.

 

SECTION
6.   Continued Effectiveness.  Each Guarantor further agrees that its
guarantee hereunder shall continue to be effective or be reinstated, as the
case may be, if at any 

 

2

 

time
payment, or any part thereof, of principal of or interest on any Obligation is
rescinded or must otherwise be restored by the Paying Agent upon the bankruptcy
or reorganization of the Borrower, any other Guarantor or otherwise.

 

SECTION
7.   Subrogation. 
In furtherance of the foregoing and not in limitation of any other right
that the Paying Agent has at law or in equity against any Guarantor by virtue
hereof, upon the failure of the Borrower or any other Guarantor to pay any
Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each Guarantor hereby
promises to and will, upon receipt of written demand by the Paying Agent,
forthwith pay, or cause to be paid, to the Paying Agent as is designated
thereby in cash the amount of such unpaid Obligations, and thereupon the Paying
Agent shall, assign (except to the extent that such assignment would render
such Guarantor a “creditor” of the Borrower or another Guarantor within the
meaning of Section 547 of Title 11 of the United States Code as now in effect
or hereafter amended or any comparable provision of any successor statute) the
amount of the Obligations owed to it and paid by such Guarantor pursuant to
this guarantee to such Guarantor, such assignment to be pro  tanto
to the extent to which the Obligations in question were discharged by such
Guarantor, or make such other disposition thereof as such Guarantor shall
direct (all without recourse to the Paying Agent, and without any
representation or warranty by the Paying Agent).  If (a) any Guarantor shall make payment to
the Paying Agent of all or any part of the Obligations, (b) all the Obligations
and all other amounts payable under this Agreement shall be indefeasibly paid
in full and (c) the Commitments shall have expired or terminated, the Paying
Agent will, at such Guarantor’s request, execute and deliver to such Guarantor
appropriate documents, without recourse and without representation or warranty,
necessary to evidence the transfer by subrogation to such Guarantor of an
interest in the Obligations resulting from such payment by the Guarantor.

 

SECTION
8.   Information. 
Each of the Guarantors assumes all responsibility for being and keeping itself
informed of the Borrower’s financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the Obligations and the
nature, scope and extent of the risks that such Guarantor assumes and incurs
hereunder, and agrees that the Paying Agent will have no duty to advise any of
the Guarantors of information known to it or any of them regarding such
circumstances or risks.

 

SECTION
9.   Subordination. 
Upon payment by any Guarantor of any sums to the Paying Agent, as provided
above, all rights of such Guarantor against the Borrower, arising as a result
thereof by way of right of subrogation or otherwise, shall in all respects be
subordinated and junior in right of payment to the prior indefeasible payment
in full in cash of all the Obligations to the Paying Agent; provided, however,
that any right of subrogation that such Guarantor may have pursuant to the
Credit Agreement or this Agreement is subject to Section 7 hereof.

 

SECTION
10. Representations and Warranties. 
Each of the Guarantors represents and warrants as to itself that all
representations and warranties relating to it contained in the Credit Agreement
are true and correct.

 

SECTION
11. Termination.  The
guarantees made hereunder shall terminate when all the Obligations have been
indefeasibly paid in full and the Lenders have no further commitment to lend
under the Credit Agreement.  This
Agreement will terminate as to any Guarantor upon any sale or other disposition
of such Guarantor that is permitted by the Credit 

 

3

 

Agreement
or upon the date such Guarantor otherwise ceases to be a Material Subsidiary of
the Borrower, provided that such Guarantor shall give notice to the
Lenders promptly upon such termination.

 

SECTION
12. Binding Agreement; Assignments. 
Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors and assigns of such
party; and all covenants, promises and agreements by or on behalf of the
Guarantors that are contained in this Agreement shall bind and inure to the
benefit of each party hereto and their respective successors and assigns.  This Agreement shall become effective as to
any Guarantor when a counterpart hereof executed on behalf of such Guarantor
shall have been delivered to the Paying Agent, and thereafter shall be binding
upon such Guarantor and the Paying Agent and their respective successors and
assigns, and shall inure to the benefit of such Guarantor, the Paying Agent, and
their respective successors and assigns, except that no Guarantor shall have
the right to assign its rights or obligations hereunder (and any such attempted
assignment shall be void), except as expressly contemplated by this Agreement
or the other Loan Documents.

 

SECTION
13. Waivers; Amendment.  (a)  No failure or delay of the Paying Agent in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power.  The rights and remedies
of the Paying Agent hereunder are cumulative and are not exclusive of any rights
or remedies that it would otherwise have. 
No waiver of any provisions of this Agreement or consent to any
departure by any Guarantor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given.  No notice or demand on any
Guarantor in any case shall entitle such Guarantor to any other or further
notice or demand in similar or other circumstances.

 

(b)                                 Neither this
Agreement nor any provision hereof may be waived, amended or modified except
pursuant to a written agreement entered into between the Guarantors and the
Paying Agent, with the prior written consent of the Required Lenders.

 

SECTION 14.  Governing
Law.  THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.

 

SECTION
15.  Notices.  All communications and notices hereunder
shall be in writing and given as provided in Section 8.02 of the Credit
Agreement.

 

SECTION
16.  Survival of Agreement;
Severability.  (a)  All covenants, agreements, representations
and warranties made by the Guarantors herein and in the certificates or other
instruments prepared or delivered in connection with or pursuant to this
Agreement or any other Loan Document shall be considered to have been relied
upon by the Paying Agent and shall survive the making by the Lenders of the
Advances regardless of any investigation made by such parties or on their
behalf, and shall continue in full force and effect as long as the principal of
or any accrued interest on any Advance or any other fee or amount payable under
this Agreement or any other Loan Document is outstanding and unpaid and as long
as the Commitments have not been terminated.

 

4

 

(b)                                 In the event
any one or more of the provisions contained in this Agreement or in any other
Loan Document should be held invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby (it
being understood that the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision
in any other jurisdiction).  The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

 

SECTION
17.  Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument, and shall become
effective as provided in Section 12.

 

SECTION
18.  Rules of Interpretation.  The rules of interpretation specified in
Section 1.02 of the Credit Agreement shall be applicable to this Agreement.

 

SECTION
19.  Jurisdiction, Consent to Service
of Process.  (a)  Each Guarantor hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or Federal court of the United States
of America sitting in New York City, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement or the
other Loan Documents, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court.  Each of the parties hereto
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. 
Nothing in this Agreement shall affect any right that the Paying Agent
may otherwise have to bring any action or proceeding relating to this Agreement
or the other Loan Documents against any Guarantor or its properties in the
courts of any jurisdiction.

 

(b)                                 Each Guarantor
hereby irrevocably and unconditionally waives, to the fullest extent it may
legally and effectively do so, any objection that it may now or hereafter have
to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement or the other Loan Documents in any New York State or
Federal court.  Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.

 

(c)                                  Each party to
this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 15. 
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
20.  Waiver of Jury Trial.  Each party hereto hereby waives, to the
fullest extent permitted by applicable law, any right it may have to a trial by
jury in respect of any litigation directly or indirectly arising out of, under
or in connection with this Agreement. 
Each party hereto (a) certifies that 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 the
foregoing waiver and (b) acknowledges that it and the other parties hereto have
been 

 

5

 

induced
to enter into this Agreement by, among other things, the mutual waivers and
certifications in this Section.

 

SECTION
21.  Additional Guarantors.  Pursuant to Section 5.01(i) of the Credit
Agreement, certain Subsidiaries of the Borrower are required to enter into this
Agreement as Guarantors (the “Additional Guarantors”).  Upon execution and delivery, after the date
hereof, by a subsidiary of an instrument in the form of this Agreement, such
subsidiary shall become a Guarantor hereunder with the same force and effect as
if originally named as a Guarantor herein. 
The execution and delivery of any instrument adding an additional
Guarantor as a party to this Agreement shall not require the consent of any Guarantor
hereunder.  The rights and obligations of
each Guarantor hereunder shall remain in full force and effect notwithstanding
the addition of any new Guarantor as a party to this Agreement.

 

SECTION
22.  Right of Setoff.  If an Event of Default shall have occurred
and be continuing and the Agents shall have declared, or the Required Lenders
shall have requested the Agents to declare, the Advances immediately due and
payable pursuant to Article VI of the Credit Agreement, each Lender is hereby
authorized at any time and from time to time, to the fullest extent permitted
by law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other Debt at any time owing
by such Lender to or for the credit or the account of any Guarantor against any
of and all the obligations of such Guarantor now or hereafter existing under
the Credit Agreement and the other Loan Documents held by such Lender,
irrespective of whether or not such Lender shall have made any demand under the
Credit Agreement or any such other Loan Document and although such obligations
may be unmatured.  The rights of each
Lender under this Section are in addition to other rights and remedies (including
other rights of setoff) that such Lender may have.

 

IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the
day and year first above written.

 

	
   

  	
  DILLON
  COMPANIES, INC.

  
	
   

  	
  FOOD
  4 LESS HOLDINGS, INC.

  
	
   

  	
  FRED
  MEYER, INC.

  
	
   

  	
  FRED
  MEYER STORES, INC.

  
	
   

  	
  THE
  KROGER CO. OF MICHIGAN

  
	
   

  	
  KROGER
  LIMITED PARTNERSHIP I

  
	
   

  	
  By:  KRGP Inc., its General Partner

  
	
   

  	
  KROGER TEXAS L.P.

  
	
   

  	
  By:  KRGP Inc., its General Partner

  
	
   

  	
  RALPHS
  GROCERY COMPANY

  
	
   

  	
  SMITH’S
  FOOD & DRUG CENTERS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

6

 

 

EXHIBIT F - FORM OF

ISSUING BANK REPORT

 

JPMorgan
Chase Bank, N.A.,

     as Paying Agent for the Lenders parties

     to the Credit Agreement

     referred to below

[Address]

 

Fax:
713 750
2782                                                                     
[Date]

 

Attention:
Loan and Agency Services

 

Ladies
and Gentlemen:

 

Reference
is made to the Five-Year Credit Agreement dated as of November 15, 2006
(as amended or modified from time to time, the “Credit Agreement”) among
The Kroger Co., an Ohio corporation (the “Borrower”), the Lenders (as
defined in the Credit Agreement), JPMorgan Chase Bank, N.A., as Administrative
Agent and as Paying Agent for said Lenders, Citibank, N.A., as Administrative
Agent for said Lenders, Bank of America, N.A., The Royal Bank of Scotland plc,
Union Bank of California, N.A. and The Bank of Tokyo-Mitsubishi UFJ, Ltd.,
Chicago Branch, as Syndication Agents. Terms defined in the Credit Agreement
are used herein with the same meaning.

 

The
undersigned is an Issuing Bank under the Credit Agreement. Pursuant to Section 2.03(d) of
the Credit Agreement, undersigned hereby notifies you of the following event(s) (check
all that apply):

 

	
  o

  	
  New
  issue Letter of Credit

  
	
   

  	
   

  
	
  o

  	
  Cancellation
  of Letter of Credit

  
	
   

  	
   

  
	
  o

  	
  Letter
  of Credit expiry date change

  
	
   

  	
   

  
	
  o

  	
  Increase
  of Available Amount of Letter of Credit

  
	
   

  	
   

  
	
  o

  	
  Decrease
  of Available Amount of Letter of Credit

  

 

	
  Letter
  of Credit #:

  	
   

  	
   

  	
  Effective
  date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Beneficiary:

  	
   

  	
   

  	
  Expiry
  date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Original
  Available Amount:

  	
   

  	
   

  	
  New
  Available Amount:

  	
   

  	
   

  

 

Please
contact                               
[name] at                               
[phone #] or                               
[email address] with any questions.

 

	
   

  	
  [NAME
  OF ISSUING BANK], as Issuing Bank

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Dated:
                                ,
  200  

  

 

 

cc:
The Kroger Co., Assistant TreasurerExhibit 10.73

 

ASSET PURCHASE AGREEMENT

 

by and between

 

ML MACADAMIA ORCHARDS L.P.

a Delaware limited partnership

(“Buyer”)

 

and

 

IASCO

a California corporation

(“Seller”)

 

 

Effective as of June 22, 2010

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I.

  	
  DEFINITIONS

  	
  5

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Definitions

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE II.

  	
  PURCHASE
  AND SALE OF ASSETS

  	
  8

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Purchase
  of Assets

  	
  8

  
	
  2.2

  	
  Retained
  Assets

  	
  8

  
	
  2.3

  	
  Retained
  Liabilities

  	
  9

  
	
  2.4

  	
  Purchase
  Price

  	
  9

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Amount
  of Purchase Price

  	
  9

  
	
   

  	
  (b)

  	
  Payment

  	
  10

  
	
   

  	
  (c)

  	
  Escrow

  	
  10

  
	
   

  	
  (d)

  	
  Price
  Adjustment

  	
  10

  
	
   

  	
  (e)

  	
  Closing
  Costs

  	
  10

  
	
   

  	
   

  	
   

  
	
  2.5

  	
  Allocation
  of Purchase Price

  	
  10

  
	
  2.6

  	
  Time
  and Place of Closing

  	
  10

  
	
  2.7

  	
  Penalty
  for Delay

  	
  10

  
	
  2.8

  	
  Execution
  and Delivery of Documents

  	
  11

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Purchase
  Documents

  	
  11

  
	
   

  	
  (b)

  	
  Option
  Agreement

  	
  11

  
	
   

  	
   

  	
   

  
	
  2.9

  	
  Due
  Diligence

  	
  11

  
	
  2.10

  	
  Financing
  Contingency

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE III.

  	
  REPRESENTATIONS
  AND WARRANTIES OF SELLER AND MEMBERS

  	
  12

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Organization
  and Qualification

  	
  12

  
	
  3.2

  	
  Authority;
  No Violation

  	
  12

  
	
  3.3

  	
  Title,
  Sufficiency, and Condition of the Purchased Assets

  	
  12

  
	
  3.4

  	
  Contracts

  	
  13

  
	
  3.5

  	
  Compliance
  with Laws

  	
  13

  
	
  3.6

  	
  Taxes

  	
  14

  
	
  3.7

  	
  No
  Employees; No Employee Benefit Plans

  	
  14

  
	
  3.8

  	
  “As
  Is” Purchase: Disclaimer

  	
  15

  
	
  3.9

  	
  Litigation

  	
  15

  
	
  3.10

  	
  Brokers

  	
  15

  
	
  3.11

  	
  Burdensome
  Agreements

  	
  15

  
	
  3.12

  	
  Disclosure
  of Material Information

  	
  15

  
	
  3.13

  	
  Sole
  Representations and Warranties

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV.

  	
  REPRESENTATIONS
  AND WARRANTIES OF BUYER

  	
  16

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Organization
  and Qualification

  	
  16

  
	
  4.2

  	
  Authority

  	
  16

  
	
  4.3

  	
  Disclosure
  of Material Information

  	
  16

  
	
  4.4

  	
  Sole
  Representations and Warranties

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE V.

  	
  COVENANTS

  	
  16

  
					

 

i

 

	
  5.1

  	
  Covenants
  of Seller

  	
  16

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Interim
  Conduct of Business

  	
  16

  
	
   

  	
  (b)

  	
  Transfer
  of Necessary Permits

  	
  17

  
	
   

  	
  (c)

  	
  Satisfaction
  of Conditions

  	
  17

  
	
   

  	
  (d)

  	
  Tax
  Matters

  	
  17

  
	
   

  	
  (e)

  	
  Books
  and Records

  	
  17

  
	
   

  	
  (f)

  	
  No
  Solicitation, Confidentiality, Etc.

  	
  17

  
	
   

  	
  (g)

  	
  Accuracy
  of Representations and Warranties

  	
  17

  
	
   

  	
  (h)

  	
  Satisfaction
  of Conditions

  	
  18

  
	
   

  	
  (i)

  	
  Disclosure
  Supplements

  	
  18

  
	
   

  	
  (j)

  	
  Compliance
  with Bulk Sales Certificate Requirements

  	
  18

  
	
   

  	
  (k)

  	
  Roll-back
  Taxes

  	
  18

  
	
   

  	
   

  	
   

  
	
  5.2

  	
  Covenants
  of Buyer

  	
  18

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Confidentiality

  	
  18

  
	
   

  	
  (b)

  	
  Accuracy
  of Representations and Warranties

  	
  18

  
	
   

  	
  (c)

  	
  Satisfaction
  of Conditions

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI.

  	
  CLOSING
  CONDITIONS

  	
  19

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Conditions
  to Obligations of Buyer

  	
  19

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  No
  Pending Action

  	
  19

  
	
   

  	
  (b)

  	
  Purchase
  Permitted by Applicable Laws; Legal Investment

  	
  19

  
	
   

  	
  (c)

  	
  Proceedings
  Satisfactory

  	
  19

  
	
   

  	
  (d)

  	
  Consents;
  Necessary Permits

  	
  19

  
	
   

  	
  (e)

  	
  Option
  Agreement

  	
  20

  
	
   

  	
  (f)

  	
  Representations,
  Warranties, and Covenants

  	
  20

  
	
   

  	
  (g)

  	
  Corporate
  Documents

  	
  20

  
	
   

  	
  (h)

  	
  Transfer
  of Purchased Assets

  	
  20

  
	
   

  	
  (i)

  	
  Transfer
  of Necessary Permits

  	
  20

  
	
   

  	
  (j)

  	
  Bill
  of Sale

  	
  20

  
	
   

  	
  (k)

  	
  General
  Assignment

  	
  20

  
	
   

  	
  (l)

  	
  Warranty
  Deed

  	
  21

  
	
   

  	
  (m)

  	
  Option
  Agreement

  	
  21

  
	
   

  	
  (n)

  	
  Due
  Diligence

  	
  21

  
	
   

  	
  (o)

  	
  Non-Foreign
  Status Certificate

  	
  21

  
	
   

  	
  (p)

  	
  HARPTA
  Affidavit

  	
  21

  
	
   

  	
  (q)

  	
  Tax
  Clearance Certificates

  	
  21

  
	
   

  	
  (r)

  	
  Bulks
  Sales Certificate

  	
  21

  
	
   

  	
   

  	
   

  
	
  6.2

  	
  Conditions
  to Obligations of Seller

  	
  21

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Representations
  and Warranties

  	
  21

  
	
   

  	
  (b)

  	
  Partnership
  Documents

  	
  21

  
	
   

  	
  (c)

  	
  No
  Pending Action

  	
  21

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII.

  	
  INDEMNIFICATION

  	
  22

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Continuation
  and Survival

  	
  22

  
					

 

ii

 

	
  7.2

  	
  Indemnification
  by Seller

  	
  22

  
	
  7.3

  	
  Indemnification
  of Seller

  	
  22

  
	
  7.4

  	
  Notice
  and Opportunity to Defend

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII.

  	
  TERMINATION

  	
  23

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Termination
  of Agreement

  	
  23

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Mutual
  Consent

  	
  23

  
	
   

  	
  (b)

  	
  Court
  Order

  	
  23

  
	
   

  	
  (c)

  	
  Failure
  to Close

  	
  23

  
	
   

  	
  (d)

  	
  Termination
  by Seller

  	
  24

  
	
   

  	
  (e)

  	
  Termination
  by Buyer

  	
  24

  
	
   

  	
   

  	
   

  
	
  8.2

  	
  Effect
  of Termination

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX.

  	
  MISCELLANEOUS

  	
  24

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Prohibited
  Transactions

  	
  24

  
	
  9.2

  	
  Financial
  Statements

  	
  24

  
	
  9.3

  	
  Easements

  	
  24

  
	
  9.4

  	
  Further
  Assurances

  	
  24

  
	
  9.5

  	
  Fees
  and Expenses

  	
  25

  
	
  9.6

  	
  Publicity
  and Disclosures

  	
  25

  
	
  9.7

  	
  Press
  Releases and Announcements

  	
  25

  
	
  9.8

  	
  Notices

  	
  25

  
	
  9.9

  	
  Successors
  and Assigns

  	
  26

  
	
  9.10

  	
  Counterparts

  	
  26

  
	
  9.11

  	
  Severability;
  Entire Agreement

  	
  26

  
	
  9.12

  	
  Attorney’s
  Fees

  	
  27

  
	
  9.13

  	
  Course
  of Dealing

  	
  27

  
	
  9.14

  	
  Tax
  Matters

  	
  27

  
	
  9.15

  	
  Governing
  Law

  	
  27

  
	
  9.16

  	
  Mediation

  	
  27

  
	
  9.17

  	
  Waiver
  of Jury Trial

  	
  27

  
	
  9.18

  	
  Dispute
  Resolution

  	
  28

  
	
  9.19

  	
  Neutral
  Construction

  	
  28

  
	
  9.20

  	
  Time
  of the Essence

  	
  29

  
	
  9.21

  	
  Limitation
  of Liability

  	
  29

  
					

 

iii

 

	
  EXHIBITS

  	
   

  
	
  EXHIBIT A

  	
  Bill
  of Sale

  
	
  EXHIBIT B

  	
  Assignment
  and Assumption of Intangible Property

  
	
  EXHIBIT C

  	
  Warranty
  Deed

  
	
  EXHIBIT D

  	
  Option
  Agreement

  
	
  EXHIBIT E

  	
  Non-Foreign
  Status Certificate

  
	
   

  	
   

  
	
  DISCLOSURE SCHEDULES

  
	
  Schedule 2.5

  	
  Allocation
  of Purchase Price

  
	
  Schedule 3.4

  	
  Contracts

  
	
  Schedule 3.9

  	
  Litigation

  

 

iv

 

ASSET PURCHASE AGREEMENT

 

THIS
ASSET PURCHASE AGREEMENT (this “Agreement”) is
made and entered into as of June 22, 2010 (the “Effective
Date”), by and between ML MACADAMIA ORCHARDS L.P.,
a Delaware limited partnership (“Buyer”), whose
address is 26-238 Hawaii Belt Road, Hilo, Hawaii 96720, and IASCO, a California corporation (“Seller”),
whose address is 210 Twin Dolphin Road, Suite B, Redwood City, California
94065.

 

This
Agreement sets forth the terms and conditions upon which Buyer will purchase
from Seller, and Seller will sell to Buyer, certain assets of Seller (other
than the Retained Assets, as such term is hereinafter defined), for the
consideration provided herein.

 

In
consideration of the foregoing, the mutual representations, warranties and
covenants set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties to this
Agreement hereby agree as follows:

 

ARTICLE I.

DEFINITIONS

 

1.1           Definitions.  For this Agreement, all capitalized words or
expressions used in this Agreement (including the Schedules and Exhibits
annexed hereto) shall have the meanings specified in this Article I,
unless otherwise defined herein (such meanings to be equally applicable to both
the singular and plural forms of the terms defined):

 

“Agreement” means this Agreement, as the same may be amended,
modified, or supplemented from time to time in writing by the parties hereto.

 

“Articles” means the articles of incorporation or articles of
organization or other organizational document of a corporation or other entity,
as amended and restated through the date hereof.

 

“Bill of Sale” means a bill
of sale duly executed by Seller conveying to Buyer all of Seller’s right,
title, and interest in and to the Purchased Assets on the Closing Date, in the
form set forth in Exhibit A.

 

“Books and Records” means all
financial and other books and records maintained by or for the benefit of
Seller solely in connection with the Purchased Assets within the possession or
control of Seller, including any such records maintained in electronic format,
and shall not include any internal memoranda, correspondence or notes.

 

“Business Day” means any day, excluding Saturday, Sunday, and
any other day on which commercial banks in Honolulu, Hawaii, are authorized or
required by law to close.

 

“Buyer” means ML Macadamia Orchards L.P., a Delaware limited
partnership.

 

“Claim” means an action, suit, proceeding, hearing,
investigation, litigation, charge, complaint, claim or demand.

 

“Closing” means,
concerning the purchase and sale of the Purchased Assets, consummation of its
purchase by Buyer as contemplated by this Agreement.

 

5

 

“Closing Date” means the date
on which the Closing occurs, set by the parties after necessary documents have
been prepared and are ready for execution. 
The Closing Date is defined in Section 2.6.

 

“Code” means the Internal Revenue Code of 1986, as amended,
and the regulations thereunder, published Internal Revenue Service rulings, and
court decisions in respect thereof, all as the same shall be in effect at the
time.

 

“Contracts”  means the
material contracts, leases, licenses, and agreements that Seller holds in
relation to the Purchased Assets, including the Farming Operations, as
specified on Schedule 3.4.

 

“DCCA” means the State of Hawaii Department of Commerce and
Consumer Affairs.

 

“Default”  has the
meaning ascribed to such term in Section 3.4.

 

“Disputes” means and includes any and all Claims,
controversies, and disagreements of any nature whatsoever between Seller and
Buyer, at law or in equity, that relate to or arise out of, directly or
indirectly, this Agreement (including all exhibits thereto and any letter
agreements between Seller and Buyer that relate thereto).

 

“Effective Date” means the date first above written.

 

“ERISA” means the Employee Retirement Income Security Act of
1974, and any similar or successor federal statute, and the rules, regulations
and interpretations thereunder, all as the same shall be in effect at the time.

 

“ERISA Affiliate” means, for Title IV of ERISA, any trade or
business, whether or not incorporated, that together with Seller would be
deemed to be a “single employer” within the meaning of Section 4001 of
ERISA, and, for the Code, any member of any group that, together with Seller is
treated as a “single employer” for Section 414 of the Code.

 

“Escrow” shall mean Escrow Number TO-101-1268 at the offices
of Escrow Agent.

 

“Escrow Agent” means Title Guaranty Escrow Services, Inc.,
235 Queen Street, Honolulu, Hawaii 96813.

 

“Escrow Agreement” means the escrow agreement, to be executed
by Seller, Buyer, and Escrow Agent.

 

“Farming Operations” means Seller’s farming operations
related to the Purchased Assets and conducted on the Real Property.

 

“FFE&I” means any and
all furniture, fixtures, equipment (or equipage), inventory, tools, machinery,
leasehold improvements, plant, and other tangible personal property related to
or used in connection with the Farming Operations and located on or within the
Real Property, including (a) the fixtures appurtenant to the Real
Property, including the Palima Well and the spare engines, replacement parts,
and pump(s) ancillary thereto, and the irrigation system.

 

“General Assignment” means an Assignment and Assumption of Intangible Property, duly
executed and acknowledged by Seller and Buyer, assigning to Buyer (to the
extent assignable) all of Seller’s right, title, and interest in and to the
Intangible Property on the Closing Date, in the form set forth in Exhibit B.

 

6

 

“Indemnifying Party” has the meaning ascribed to such term in
Section 7.4.

 

“Intangible Property” means the following items of intangible
personal property relating to the Purchased Assets:  (a) the Contracts; (b) all existing
technology and technical information; (c) all warranties, guarantees and
indemnities from any third parties, to the extent assignable; and (d) all
permits with respect to the Farming Operations, to the extent transferable.

 

“IRS” means the Internal Revenue Service and any similar or
successor agency of the federal government administering the Code.

 

“Knowledge” or words of similar meaning shall mean the actual
knowledge of any officer or director of Seller, after due inquiry and an
examination of the books and records of Seller.

 

“Lien” means, with respect to any asset, any mortgage, deed
of trust, pledge, hypothecation, assignment, security interest, lien, charge,
restriction, adverse Claim by a third party, title defect or encumbrance of any
kind (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any assignment or other conveyance of any right to
receive income and any assignment of receivables with recourse against
assignor), any filing of any financing statement as debtor under the Uniform
Commercial Code or comparable law of any jurisdiction and any agreement to give
or make any of the foregoing.

 

“Losses” has the meaning ascribed to such term in Section 7.2.

 

“Material Adverse Effect” means a material adverse impact or
effect on (a) the Purchased Assets, (b) the ability of Seller to
perform its obligations under any of the Purchase Documents, (c) the
validity or enforceability of any of the Purchase Documents, or (d) the
rights and remedies of Buyer under any of the Purchase Documents.

 

“Necessary Permits” has the meaning ascribed to such term in Section 3.5.

 

“Non-Foreign Status
Certificate” means a
certificate, to be executed by Seller, in the form set forth in Exhibit E.

 

“Officer’s Certificate” means a certificate signed in the
name of a corporation, partnership, association, trust or limited liability
company by its President, Chief Executive Officer, Treasurer, Chief Financial
Officer, or, if so specified, the Secretary or officer appointed to execute on
behalf of the partnership, corporation, or other business entity, acting in his
or her official capacity.

 

“Option Agreement” means the agreement attached as Exhibit D.

 

“Person” means any individual, firm, partnership,
association, trust, corporation, limited liability company, governmental body
or other entity.

 

“Plan” has the meaning ascribed to such term in Section 3.7.

 

7

 

“Purchase Documents” means this Agreement, the Bill of Sale (Exhibit A), the General Assignment (Exhibit B), and the Warranty Deed (Exhibit C),
and any other certificate, document, instrument, stock power, or agreement
executed in connection therewith.

 

“Purchase Price” has the meaning ascribed to such term in Section 2.4.

 

“Purchased Assets” has the meaning ascribed to such term in Section 2.1.

 

“Real Property”  has the
meaning ascribed to such term in Section 2.1(a).

 

“Regulatory Authority” means any federal, state, local, or
other government authority or instrumentality, domestic, or foreign.

 

“Retained Assets” has the meaning ascribed to such term in Section 2.2.

 

“Retained Liabilities” has the meaning ascribed to such term
in Section 2.3.

 

“Seller” means IASCO, a California corporation.

 

“Tax” means any federal, state, local or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties, capital
stock, franchise, profits, withholding, social security, unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other
tax of any kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not.

 

“Tax Return” means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.

 

“Warranty Deed” means the deed, to be executed by Seller, in
form set forth as Exhibit C.

 

ARTICLE II.

PURCHASE AND SALE OF ASSETS

 

2.1           Purchase of Assets.  Upon the terms and subject to the conditions
contained in this Agreement, at the Closing (as defined in Section 2.6),
Seller shall sell, assign, transfer, and convey to Buyer, and Buyer shall
purchase, acquire, and accept from Seller, the following assets and property
(collectively, the “Purchased Assets”)
(but specifically excluding the Retained Assets):

 

(a)           the Real Property (as described
in the Warranty Deed) and all improvements affixed or appurtenant to the Real
Property, and all furniture, fixtures, equipment, and inventory used in
connection with Farming Operations (“FFE&I”);

 

(b)           all Intangible
Property.

 

2.2           Retained Assets.  Seller will retain ownership of all other
assets of Seller, including all other items of property, real or personal,
tangible or intangible, relating to Seller or Seller’s business or operations
(collectively, the “Retained Assets”).

 

8

 

2.3           Retained Liabilities.  Except as specifically set forth in this
Agreement, Buyer shall not assume, or become obligated with respect to, any
obligations or liabilities of Seller (and Seller shall remain unconditionally liable
therefor), including the following (collectively, the “Retained
Liabilities”):

 

(a)           obligations of Seller now
existing or which may arise before the Closing with respect to any accounts
payable or other payables;

 

(b)           obligations of Seller now
existing or which may hereafter arise under, by reason of, or in connection
with the Purchased Assets before the Closing;

 

(c)           obligations arising before
the Closing of any term, covenant, or provision of any Plan, Contract, Lease,
or other agreement;

 

(d)           obligations of Seller now
existing or that hereafter may arise under, by reason of, or in connection with
any Retained Asset;

 

(e)           obligations of Seller now
existing or that hereafter may exist by reason of or in connection with any
alleged misfeasance or malfeasance by Seller in the conduct of Seller’s Farming
Operations, including any tort liability before the Closing;

 

(f)            obligations of Seller
incurred in connection with or relating to the transfer of the Purchased Assets
under this Agreement, including any federal, state, or local income, sales, or
other tax incurred by reason of said transfer, all of which shall be the sole
responsibility of Seller;

 

(g)           any obligation of Seller for
federal, state, local, or foreign income or other tax liability attributable to
Seller’s ownership of the Purchased Assets or otherwise related to Farming
Operations before the Closing;

 

(h)           any liabilities or
obligations resulting from any litigation or claim or dispute, regardless of
whether such litigation or claim or dispute commences before or after the
Closing, arising from Seller’s operation of the Purchased Assets or other
events occurring before the Closing;

 

(i)            any and all liabilities
incurred by Seller in connection with the negotiation, execution or performance
of this Agreement (including all legal, accounting, brokers, finders, and other
professional fees and expenses);

 

(j)            any and all liabilities
relating to indebtedness for borrowed money; and

 

(k)           any and all liabilities
incurred by Seller from and after the Closing.

 

2.4           Purchase Price.

 

(A)          Amount of Purchase Price.  The purchase price (the “Purchase
Price”), payable by Buyer to Seller in consideration for the
Purchased Assets, is the sum of $12,500,000.00,
subject to increase or decrease by the adjustments provided for in this
Agreement, payable in the following manner:

 

9

 

On May 21, 2010, Buyer
shall deposit an initial refundable deposit of $100,000 with the Escrow Agent.

 

Within three (3) days
after Buyer notifies Seller that the Financing Contingency (defined in Section 2.10) has been satisfied, Buyer shall deposit a
second deposit of $100,000 with the Escrow Agent.  When Seller makes that deposit, the aggregate
$200,000 in deposits held by the Escrow Agent shall become non-refundable.

 

At the Closing, the balance
of the Purchase Price shall be paid by Buyer to Seller.

 

(B)           Payment.  The cash amounts paid under Section 2.4(a)(iii) are to be by wire transfer of
immediately available federal funds to Escrow Agent.

 

(C)           Escrow.  Buyer and Seller have established an escrow
account (Escrow Number TO 101-1268) with the Escrow Agent into which Buyer
shall deliver the deposits under Section 2.4(a).  The parties shall enter into the Escrow
Agreement and deliver it to the Escrow Agent.

 

(D)          Price Adjustment.  Any contract pricing adjustments made by
Mauna Loa Macadamia Nut Corporation (“MLMNC”) regarding the 2009-2010 crop year
harvest, resulting from adjustments to the USDA price for Hawaii macadamia nuts
(as further described in the Contracts), whether or not made before the Closing
Date, shall belong to Seller (in the event of an upward adjustment) or to be
owed by Seller to Buyer for payment to MLMNC (in the event of a downward
adjustment).

 

(E)           Closing Costs.  Buyer and Seller agree to split equally the
escrow closing fees and costs.

 

2.5           Allocation of Purchase Price.  The Purchase Price shall be allocated among
the Purchased Assets for Section 1060 of the Code, as set forth in Schedule 2.5.  Seller
and Buyer agree to be bound by such allocations and to complete and attach
Internal Revenue Form 8594 to their respective federal income tax returns
to reflect such allocations.  After the
Closing Date, the parties will make consistent use of the allocation for all
tax purposes and in all filings, declarations, and reports with the IRS in
respect thereof, including the reports required to be filed under Section 1060
of the Code.  Buyer will prepare and
deliver IRS Form 8594 to Seller within forty-five (45) days after the
Closing Date to be filed with the IRS. 
In any litigation related to the determination of any tax, Buyer and
Seller must not represent that such allocation is not a correct allocation.

 

2.6           Time and Place of Closing.  The closing of the transactions described herein
(the “Closing”) shall take place at the
offices of the Escrow Agent, at 10:00 a.m., Hawaii Standard Time) on July 15,
2010, or at such other place or time as the parties hereto may mutually
agree.  The date and time at which the
Closing actually occurs is hereinafter referred to as the “Closing Date.”

 

2.7           Penalty for Delay.  Buyer shall pay $5,000 per day for every
calendar day that Closing is delayed beyond July 15, 2010, except for
delays that are outside the reasonable control of Buyer.

 

10

 

2.8           Execution and Delivery of
Documents.

 

(A)          Purchase Documents.  At the Closing, Seller shall execute and
deliver to Buyer a Bill of Sale in substantially the form attached hereto as Exhibit A (the “Bill of Sale”)
and such deeds, conveyances, certificates of title, assignments, assurances,
and other instruments and documents as Buyer may reasonably request to effect
the sale, conveyance, and transfer of the Purchased Assets from Seller to
Buyer, including the Assignment and Assumption of Intangible Property
substantially in the form attached hereto as Exhibit B
(the “General Assignment”) and the warranty
deed substantially in the form attached hereto as Exhibit C
(“Warranty Deed”).  Such instruments and documents shall be
sufficient to convey to Buyer good and merchantable title in all of the
Purchased Assets.  Seller will, from time
to time after the Closing Date, take such additional actions and execute and
deliver such further documents as Buyer may reasonably request to more
effectively sell, transfer and convey the Purchased Assets to Buyer and to
place Buyer in a position to operate and control all of the Purchased Assets.

 

(B)           Option Agreement.  At the Closing, Buyer shall execute and
deliver to Seller the Option Agreement substantially in the form attached
hereto as Exhibit D (the “Option Agreement”).

 

2.9           Due Diligence.

 

(a)           Buyer shall have until June 16,
2010 (the “Due Diligence Period”) within
which to conduct such due diligence activities, inspections, and studies of the
Purchased Assets as it deems necessary or appropriate, and examine and
investigate to its full satisfaction all facts, circumstances, and matters
relating to the Purchased Assets that Buyer deems necessary or appropriate for
purposes of consummating this transaction (collectively, “Buyer’s Due
Diligence”).

 

(b)           Buyer, at Buyer’s sole cost
and expense, shall retain such professional consultants as Buyer may deem
appropriate to assist Buyer in Buyer’s Due Diligence.  Seller, at no cost to itself but without
charge to Buyer, shall execute and deliver such authorizations and consents as
reasonably may be necessary to Buyer’s conduct of Buyer’s Due Diligence.

 

(c)           During the Due Diligence
Period, Seller shall make available to Buyer and its agents and
representatives, or provide Buyer and its representatives with, copies of any
and all documents such as records, leases, agreements, permits and licenses,
studies (e.g., environmental, archaeological, appraisal, survey, etc.),
contracts and tenant leases and licenses, real property tax records, legal
settlement documents, and title-related documents, that relate to the Purchased
Assets and are in Seller’s possession or control or which are readily
available.

 

(d)           On or before 5:00 p.m.
(Hawaii Standard Time) on the last day of the Due Diligence Period, Buyer shall
advise Seller, in writing, if Buyer intends to proceed with the transaction or
advise Seller if Buyer intends not to proceed with the transaction, subject to
the Financing Contingency, or advise Seller, in writing, if Buyer intends not
to proceed with the transaction.

 

(e)           Buyer assumes the sole risk
of all of Buyer’s costs and expenses of Buyer’s Due Diligence, and Seller shall
have no liability for any such costs and expenses.

 

11

 

(f)            Buyer shall indemnify and
hold Seller harmless from and against any and all loss, cost, injury and
damage, including reasonable attorney’s fees, arising out of, resulting from,
or in any way connected with Buyer’s Due Diligence.

 

(g)           Termination of this
Agreement shall not relieve any party of liability for a breach of any
provision of this Agreement before such termination.

 

2.10         Financing Contingency.  Buyer shall have until June 28, 2010
within which to obtain the financing that Buyer deems necessary or appropriate
to consummate this transaction (the “Financing Contingency”).  As soon as the Financing Contingency has been
satisfied, Buyer shall advise Seller of that fact in writing.  If Buyer fails to provide that notice before
5:00 p.m. (Hawaii Standard Time) on June 28, 2010, then this
Agreement shall terminate automatically.

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF SELLER AND MEMBERS

 

Seller
hereby represents and warrants to Buyer, as follows:

 

3.1           Organization and Qualification.  Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of
California.  Seller has full power and
authority to own, use and lease its properties and to conduct its business as
such properties are owned, used or leased and as such business is currently
conducted and as it is proposed to be conducted.  Seller is qualified to do business in the
State of Hawaii as a foreign corporation.

 

3.2           Authority; No Violation.  Seller has all requisite power and authority
to enter into this Agreement, the Purchase Documents, and any other agreements
and instruments executed by Seller in connection herewith or therewith and to
carry out the transactions contemplated hereby or thereby.  The execution, delivery, and performance of
this Agreement by Seller has been duly and validly authorized and approved by
all necessary corporate action.  This
Agreement and the Purchase Documents constitute the legal and binding
obligation of Seller, enforceable against each in accordance with its terms,
except that the enforceability hereof may be subject to bankruptcy, insolvency,
reorganization, moratorium, or other similar laws now or hereafter in effect
relating to creditors’ rights generally and that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court before which any
proceeding may be brought.  The entering
into of this Agreement by Seller does not, and the consummation by Seller of
the transactions contemplated hereby, including specifically the transfer of
the Purchased Assets to Buyer by Seller, will not violate the provisions of
(a) any applicable federal, state, local, or foreign laws, (b) Seller’s
Articles or bylaws, or (c) any provision of, or result in a Default or
acceleration of any obligation under, or result in any change in the rights or
obligations of Sellers under, any Lien, contract, agreement, license, lease,
instrument, indenture, order, arbitration award, judgment, or decree to which
Seller is a party or by which any of them is bound, or to which any property of
Seller is subject.

 

3.3           Title, Sufficiency, and Condition
of the Purchased Assets. 
Seller has good and marketable title to, or a valid leasehold interest
in, all of the Purchased Assets, free and clear of all Liens except as noted in
the Preliminary Title Report which has been furnished to Buyer.  The sale and delivery of the Purchased Assets
to Buyer hereunder shall vest in Buyer good and marketable title thereto, free
and clear of any and all Liens except as noted in the Preliminary 

 

12

 

Title Report. 
Without limiting the general scope of the preceding language,
(i) Seller has good and marketable title to the Real Property, free and
clear of any Lien, easement, covenant, or other restriction, except for
installments of special assessments not yet delinquent and recorded, lease and
licenses noted in the Preliminary Title Report, and easements, covenants, and
other restrictions that do not materially impair the current use, occupancy, or
value, or the marketability of title, of the Real Property subject thereto;
(ii) there are no pending or, to the Knowledge of Seller, threatened condemnation
proceedings, lawsuits, or administrative actions relating to the Real Property;
and (iii) the legal description for the Real Property contained in the
Warranty Deed (Exhibit D) describes such
parcel fully and adequately, the buildings and improvements are located within
the boundary lines of the Real Property, are not in violation of applicable
setback requirements, zoning laws, and ordinances, and do not encroach on any
easement that may burden the Real Property, and the Real Property does not
serve any adjoining property for any purpose inconsistent with the use of the
Real Property.

 

3.4           Contracts.

 

Seller’s material Contracts concerning the farming
operations related to the Purchased Assets are listed on Schedule
3.4.  Copies of all those
Contracts have been provided to Buyer before the execution of this Agreement,
and all such copies are true, correct and complete and have been subject to no
further amendment, extension or other modification as of the date hereof.  Seller is not in Default under any of those
Contracts (a “Default” being defined for
purposes hereof as an actual default or event of default or the existence of
any fact or circumstance that would, upon receipt of notice or passage of time,
constitute a default).  Except as set forth
in Schedule 3.4, no consent, permit,
license, authorization or approval form, or filing or registration with, or the
giving of notice to, any public body or authority, or other Person or entity
(including any party other than Seller to any real property lease, capital
lease, agreement or contract), is required to be obtained or made in connection
with the execution, delivery and performance by Seller of this Agreement or any
other agreement, document instrument or certificate to be delivered by or on
behalf of Seller in connection therewith.

 

3.5           Compliance with Laws.

 

(a)           Seller has all licenses,
permits, franchises, orders, approvals, accreditations, written waivers and
other authorizations as are necessary to enable it to own the Purchased Assets
and conduct the Farming Operations on the Real Property as currently conducted
and to occupy and use its real and personal properties without incurring any
material liability (“Necessary Permits”).  Buyer and Seller agree that they will jointly
insure that all registrations, filings, applications, notices, transfers,
consents, approvals, orders, qualifications, waivers, or other actions of any
kind required by virtue of the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby to effect the transfer to
Buyer of such Necessary Permits is obtained at or as soon as administratively
feasible after Closing.  Seller is in
full compliance with the terms and conditions of all Necessary Permits.

 

(b)           Seller has conducted and is
conducting the Farming Operations in material compliance with applicable
federal, state, and local laws, statutes, ordinances, regulations, rules or
orders or other requirements of any governmental, regulatory or administrative
agency or authority or court or other tribunal relating to it (including, but
not limited to, any law, statute, ordinance, regulation, rule, order or
requirement relating to securities, properties, business, products,
advertising, sales or employment practices, immigration, terms and conditions
of employment, wages and hours, safety, occupational safety, health or welfare
conditions relating 

 

13

 

to premises occupied, product safety and liability
or civil rights).  Seller is not now
charged with, and, to the Knowledge of Seller, as to the Farming Operations and
Intangible Property, is not now under investigation with respect to, any
possible material violation of any applicable law, statute, ordinance,
regulation, rule, order or requirement relating to any of the foregoing in
connection with the business of Seller, and Seller has filed all material
reports required to be filed with any governmental, regulatory or
administrative agency or authority.

 

3.6           Taxes.

 

(a)           Seller has timely filed all
Tax Returns that it was required to file. 
All such Tax Returns were true, correct, and complete in all
respects.  All Taxes owed by Seller have
been timely paid (whether or not shown on any Tax Return).  No Claim has ever been made by an authority
in a jurisdiction where Seller does not file Tax Returns that it is or may be
subject to the imposition of any Tax by that jurisdiction.  Seller has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or
owing to any employee, consultant, independent contractor, creditor, or other
third party.  Seller is not aware of any
dispute or Claim concerning any liability for Taxes of Seller.

 

(b)           Seller is not a party to any
pending action or proceeding, nor, to the best Knowledge of Seller, is any
action or proceeding threatened by any governmental authority for the
assessment or collection of any Taxes, and no Claim for the assessment or
collection of any Taxes has been asserted or proposed to be asserted against
Seller, which has not been settled with all amounts due having been paid.  There are no matters under discussion with
any taxing authority that might result in the assessment of additional Taxes
against or relating to Seller with respect to the Purchased Assets.

 

(c)           Seller is not a party to any
agreement, arrangement, or practice for the sharing of Taxes or is obligated to
indemnify any other party for Taxes.

 

(d)           There are no liens for Taxes
on the Purchased Assets.

 

(e)           Seller is not a “foreign person”, as such term is defined in Section 1445
of the Code.  The sale transaction herein
contemplated is not subject to Section 897 of the Code or to the
withholding requirements of Section 1445 of the Code.  Seller is a “resident
person,” as such term is defined in Section 235-68 of the
Hawaii Revised Statutes.  The sale
transaction herein contemplated is not subject to the withholding requirements
of Section 235-68 of the Hawaii Revised Statutes.

 

(f)            Exhibit E contains a
Non-Foreign Status Certificate that Seller will execute.

 

3.7           No Employees; No Employee Benefit
Plans.  With respect to the Farming
Operations, Seller has no employees and therefore no “Employee Pension Benefit
Plan” (as such term is defined in Section 3(2) of ERISA), “Multiemployer
Plan” (as such term is defined in Section 3(37) of 4001(a)(3) of
ERISA), “Employee Welfare Benefit Plan” (as such term is defined in Section 3(3) of
ERISA); or Stock purchase, option, or bonus plan, deferred compensation,
severance pay, incentive, merit or performance bonus, vacation, sick pay or
leave, fringe benefit plan, policy, or arrangement, or payroll practice, which
is maintained or contributed to by Seller or any ERISA Affiliate, or under
which Seller or any ERISA Affiliate has any liability or contingent liability
(individually a “Plan” and collectively, the “Plans”).

 

14

 

3.8           “As Is” Purchase: Disclaimer.  Buyer acknowledges and agrees that (a) Buyer
has had an opportunity to inspect and is familiar with the Purchased Assets, (b) Buyer
is fully satisfied with the condition of the Purchased Assets, and (c) Buyer
has elected to proceed with this transaction. 
BASED ON SUCH FAMILIARITY, KNOWLEDGE, AND
INSPECTION, BUYER ACCEPTS THE ASSETS ON AN “AS IS, WHERE IS AND WITH ALL FAULTS”
BASIS, WITH NO REPRESENTATIONS OR WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING,
WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, EXCEPT FOR THOSE REPRESENTATIONS AND WARRANTIES OF SELLER
EXPRESSLY SET FORTH IN THIS AGREEMENT.

 

3.9           Litigation.  Except as disclosed on Schedule 3.9,
there is no Claim pending or, to the Knowledge of Seller, threatened (or, to
the Knowledge of Seller, any facts that could lead to such a Claim) by,
against, affecting or regarding the Purchased Assets.  Nothing listed on Schedule 3.9,
either individually or when aggregated with other listings on such schedule,
would reasonably be expected to have a Material Adverse Effect with respect to
the Purchased Assets.

 

3.10         Brokers.  Clint Van Ostrand of Colliers International
and Mark D. Bratton (R) of Colliers Monroe Friedlander Inc. (collectively,
“Colliers”) represent Seller in this
transaction, and Colliers shall be paid solely and exclusively by Seller under
a separate agreement between Seller and Colliers.  Except as expressly specified in this Section 3.10, neither Seller nor any Person acting on
Seller’s behalf, has engaged, retained, or incurred any liability to any
broker, investment banker, finder or agent or has agreed to pay any brokerage
fees, commissions, finder’s fees, or other fees with respect to this Agreement
or the transactions contemplated hereby. 
Buyer represents itself and has not engaged any broker for this
transaction.

 

3.11         Burdensome Agreements.  Seller is not subject to or bound by any
agreement, judgment, decree, or order, except for the documents set forth in
Schedule 3.4, that will result in a Material Adverse Effect with respect to the
Purchased Assets.

 

3.12         Disclosure of Material
Information.  Neither this
Agreement (including the Schedules and Exhibits hereto) nor any document,
certificate, or instrument furnished in connection therewith contains, with
respect to Seller, any untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein not misleading.  There is no fact known to Sellers that has or
would reasonably be expected in the future to result in a Material Adverse
Effect and that has not been set forth in this Agreement or in any other
document delivered in connection herewith.

 

3.13         Sole Representations and
Warranties.  The
representations and warranties contained in this Article III,
together with those contained in the Deed and Option Agreement made between
Buyer and Seller, are the only representations and warranties made by Seller in
connection with the transactions contemplated by this Agreement and supersede
any and all previous written or oral statements made by Seller to Buyer.

 

15

 

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer
hereby represents and warrants to Seller as follows:

 

4.1           Organization and Qualification.  Buyer is a limited partnership duly
organized, validly existing and in good standing under the laws of the state of
Delaware, with full power and authority to own, use or lease its properties and
to conduct its business as such properties are owned, used or leased and as
such business is conducted.

 

4.2           Authority.  Buyer has the requisite partnership power and
authority to enter into this Agreement and to carry out the transactions
contemplated hereby.  The execution,
delivery, and performance of this Agreement by Buyer has been duly and validly
authorized and approved by all necessary partnership action on the part of
Buyer and this Agreement constitutes the legal and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, except that the
enforceability hereof may be subject to bankruptcy, insolvency, reorganization,
moratorium, or other similar laws now or hereafter in effect relating to
creditors’ rights generally and that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding may be
brought.  Assuming the accuracy of the
representations and warranties of Seller hereunder, the entering into of this
Agreement by Buyer does not, and the consummation by Buyer of the transactions
contemplated hereby will not, violate the provisions of: (a) any
applicable laws of the United States or any other state or jurisdiction in
which Buyer does business; (b) the certificate of limited partnership or
partnership agreement of Buyer; or (c) any provision of, or result in a
Default or acceleration of any obligation under, or result in any change in the
rights or obligations of Buyer under, any mortgage, Lien, lease, agreement,
contract, instrument, order, arbitration award, judgment, or decree to which
Buyer is a party.

 

4.3           Disclosure of Material
Information.  Neither this
Agreement (including the Schedules and Exhibits hereto) nor any document,
certificate, or instrument furnished in connection therewith contains, with
respect to Buyer, any untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein not misleading.

 

4.4           Sole Representations and
Warranties.  The
representations and warranties contained in this Article IV,
together with those contained in the Option Agreement made between Buyer and
Seller, are the only representations and warranties made by Buyer in connection
with the transactions contemplated by this Agreement and supersede any and all
previous written or oral statements made by Buyer to Seller.

 

ARTICLE V.

COVENANTS

 

5.1           Covenants of Seller.  Seller shall keep, perform and fully
discharge the following covenants and agreements:

 

(A)          Interim Conduct of Business.  From the date hereof until the Closing,
Seller shall operate the Farming Operations consistent with prior practice and
in the ordinary course of business. 
Without limiting the generality of the foregoing, from the date hereof
until the Closing, except for transactions contemplated by this Agreement or
expressly approved in writing by Buyer, Seller shall continue to conduct normal
farming practices per the farming 

 

16

 

contract between Buyer and Seller consistent with
past years of operation.  The obligation
to conduct normal farming practices does not include an obligation to purchase
greater inventory or to stockpile any supplies beyond what is needed to conduct
the farming practices until Closing (e.g., Seller does not need to purchase
more engine fuel than is expected to be necessary through Closing), even if in
the past Seller may have purchased some supplies in quantity to achieve a lower
price or for some other reason.  Randy Cabral for Buyer and Jim Makaweo
for Seller shall be responsible for finalizing a farming budget for the escrow
period to the mutual benefit of Buyer and Seller.

 

(B)           Transfer of Necessary
Permits.  From and after the date hereof
through to the Closing Date and following the Closing, Seller shall use its
best efforts to effect the transfer to Buyer of all of the Necessary Permits
and all other permits, licenses, and leases associated with the Farming
Operations as presently conducted, to the extent the same are by their terms
transferable.

 

(C)           Satisfaction of Conditions.  Seller shall use its best efforts to
accomplish the satisfaction of the conditions precedent to Closing contained in
Section 6.1 herein on or before
the Closing Date.

 

(D)          Tax Matters.  Seller shall be responsible for and shall
cause to be prepared and duly filed all Tax Returns relating to Taxes of
Seller.  Seller shall be responsible for
and shall indemnify and hold harmless Buyer with respect to all Taxes of Seller.

 

(E)           Books and Records.  For a period of three (3) years
commencing on the Closing Date, or for such longer period as may be required by
applicable law, Seller shall make all such books and records with respect to
the Purchased Assets not included as part of the Books and Records available
for inspection and copying by Buyer and its representatives during regular
business hours upon ten (10) Business Days’ prior notice.

 

(F)           No Solicitation,
Confidentiality, Etc.  Before the termination of this Agreement under
Article VII, Seller shall not (i) solicit
or negotiate with respect to any inquiries or proposals relating to the
possible direct or indirect acquisition of all or a portion of the Purchased
Assets; except with respect to the sale of the undeveloped land, or (ii) discuss
or disclose either this Agreement or other confidential information pertaining
to Seller with any Person (except as may be required by law or except as may be
required in connection with the transactions contemplated by this Agreement to
officers, directors, employees, and agents of Seller) without the prior written
approval of Buyer.  Buyer acknowledges
that the prior distribution of material regarding Seller to interested parties
shall not be deemed to violate this Section 5.1(g).  Seller shall advise such parties of the
existence of this Agreement and shall refrain from entering into further
discussions with such parties concerning the sale of Seller to the extent
otherwise prohibited by this Section 5.1(g).

 

(G)           Accuracy of Representations
and Warranties.  Without the
prior written consent of Buyer, Seller shall not take any action from the date
hereof to the Closing Date, whether as an officer or director of Seller or
otherwise, that would cause any representation or warranty of Seller contained
in this Agreement to become untrue or cause the breach of any agreement hereof
or covenant contained herein.  Seller
promptly shall bring to the attention of Buyer any facts that come to its
attention that would cause any of the representations and warranties of Seller
to be untrue or materially misleading in any respect.

 

17

 

(H)          Satisfaction of Conditions.  Seller shall use its best efforts to comply
with this Section 5.1 and to accomplish the satisfaction
of the conditions precedent to Closing contained in Section 6.1
below on or before the Closing Date.

 

(I)            Disclosure Supplements.  From time to time before the Closing, Seller
shall supplement or amend the Schedule(s) hereto with respect to any
matter hereafter arising that, if existing or occurring at or before the date
of this Agreement, would have been required to be set forth or described in any
such Schedule or that is necessary to complete or correct any information in
any such Schedule or in any representation or warranty of Seller that has been
rendered inaccurate thereby.  To
determine the satisfaction of the conditions set forth in Section 6.1,
no such supplement or amendment shall be given effect.

 

(J)            Compliance with Bulk Sales
Certificate Requirements. 
Seller shall comply with all of the requirements imposed on a transferor
in a bulk sales certificate under Haw. Rev. Stat. § 237-45, such that the
transfer of the Purchased Assets to Buyer will be effective against all
creditors of Seller free and clear of any lien, charge or encumbrance arising
under that law.  Seller shall satisfy all
creditors with respect to the Purchased Assets and in connection with the
Farming Operations before the Closing, and Seller shall remove any and all Liens
against the Purchased Assets.

 

(K)          Roll-back Taxes. If any action
or inaction by Seller before Closing causes any rollback taxes to become due
upon any portion of the 200 acre portion of the Real Property that is not being
used as agricultural land, which portion was removed from the active orchard to
unusable land, Seller shall be responsible for the prompt payment of all
rollback taxes for the period of Seller’s ownership of said 200 acre
portion.  Should any rollback taxes
become due after the Closing Date, Buyer shall be responsible for the immediate
payment of all rollback taxes assessed from the Closing Date forward.

 

5.2           Covenants of Buyer.  Buyer shall keep, perform and fully discharge
the following covenants and agreements:

 

(A)          Confidentiality.  Buyer shall hold, and cause its officers,
directors, employees, consultants, agents and shareholders to hold, all
information heretofore or hereafter obtained from Seller or its advisors in
strict confidence and to use the information so obtained only for the purpose
of evaluating the purchase of the Purchased Assets; provided, however, that
Buyer shall also be entitled to share such information with any Person with
whom it is discussing the possibility of providing funds to finance the
transactions contemplated hereby; provided, further, that, notwithstanding
anything to the contrary contained in this Agreement, Buyer shall have the
right to disclose any information regarding this Agreement or the transactions
contemplated hereby to any federal and/or state regulators of Buyer.  Buyer shall promptly return all such
information to Seller if the Closing is not consummated as contemplated hereby.

 

(B)           Accuracy of Representations
and Warranties.  Without the
prior written consent of Seller, Buyer will not take any action from the date
hereof to the Closing Date that would cause any representation or warranty of
Buyer contained in this Agreement to become untrue or cause the breach of any
agreement hereof or covenant contained herein. 
Buyer will promptly bring to the attention of Seller any facts that come
to its attention that would cause any of the representations and warranties of
Buyer to be untrue or materially misleading in any respect.

 

18

 

(C)           Satisfaction of Conditions.  Buyer shall use its best efforts to
accomplish the satisfaction of the conditions precedent to Closing contained in
Section 6.2 herein on or before
the Closing Date.

 

ARTICLE VI.

CLOSING CONDITIONS

 

6.1           Conditions to Obligations of
Buyer.  The obligations of Buyer to
consummate this Agreement and the transactions contemplated hereby are subject
to the fulfillment, before or at the Closing, of the following conditions
precedent:

 

(A)          No Pending Action.  No legislation, order, rule, ruling or regulation
shall have been proposed, enacted or made by or on behalf of any governmental
body, department or agency, and no legislation shall have been introduced in
either House of Congress or in the legislature of any state, and no
investigation by any governmental authority shall have been commenced or
threatened, and no action, suit, investigation or proceeding shall have been
commenced before, and no decision shall have been rendered by, any court or
other governmental authority or arbitrator, which, in any such case, in the
reasonable judgment of Buyer, could adversely affect, restrain, or prevent the
transactions contemplated by this Agreement.

 

(B)           Purchase Permitted by
Applicable Laws; Legal Investment.  Buyer’s purchase of and payment for the Purchased
Assets (i) shall not be prohibited by any applicable law or governmental
order, rule, ruling, regulation, release or interpretation, (ii) shall not
subject Buyer to any penalty, Tax, liability or, in Buyer’s reasonable
judgment, any other onerous condition under any applicable law, statute,
ordinance, regulation or rule, (iii) shall not constitute a fraudulent or
voidable conveyance under any applicable law and (iv) shall be permitted
by all applicable laws, statutes, ordinances, regulations and rules of the
jurisdictions to which Buyer is subject.

 

(C)           Proceedings Satisfactory.  All proceedings taken in connection with the
purchase and sale of the Purchased Assets, all of the other Purchase Documents
and all documents and papers relating thereto, shall be in form and substance
reasonably satisfactory to Buyer.  Buyer
and its counsel shall have received copies of such documents and papers as
Buyer or its counsel may reasonably request in connection therewith, all in
form and substance reasonably satisfactory to Buyer.  Any Purchase Document, any Schedule or Exhibit to
this Agreement and any other document, agreement or certificate contemplated by
this Agreement, not approved by Buyer in writing as to form and substance on
the date this Agreement is executed, shall be reasonably satisfactory in form
and substance to Buyer.

 

(D)          Consents; Necessary Permits.  Seller shall have received (and there shall
be in full force and effect) all material consents, approvals, licenses,
permits, orders, and other authorizations of, and shall have made, or will as
soon as administratively feasible after Closing 
make, all such filings, registrations, qualifications, and declarations
with, any Person under any applicable law, statute, ordinance regulation, or rule or
under any agreement, order, or decree to which Seller is a party or to which it
is subject, in connection with the transactions contemplated by this Agreement
and the sale of the Purchased Assets. 
Seller also shall have obtained all consents from Mauna Loa Macadamia
Nut Corporation concerning the assignment to Buyer of any agreements between
Mauna Loa Macadamia Nut Corporation and Seller, and Buyer shall have assumed
any such agreements.  All approvals,
consents, and licenses of any Regulatory 

 

19

 

Authority required with respect to Seller in
connection with the transactions contemplated by this Agreement or to permit
Buyer to conduct its business using the Purchase Assets from and after the
Closing Date shall have been granted and shall have become final, and all
notices and filings required by any Regulatory Authority with respect to such
matters shall have been given or made except to: (i) the extent that the
failure to (1) obtain such an approval, consent or license, or (2) give
such notice or make such filing, has not had and would not reasonably be
expected to have a Material Adverse Effect; or (ii) except for approvals,
consents, or licenses of a Regulatory Authority that are obtainable or issuable
only on a post-Closing basis.

 

(E)           Option Agreement.  Buyer shall have executed the Option
Agreement (Exhibit D).

 

(F)           Representations, Warranties,
and Covenants.  Each of the
representations and warranties of Seller contained in this Agreement shall
remain true and correct at the Closing Date as fully as if made on the Closing
Date; Seller shall have performed, on or before the Closing Date, all of its
respective obligations under this Agreement and the other Purchase Documents
that by the terms thereof are to be performed on or before the Closing Date;
and Seller shall have delivered to Buyer an Officer’s Certificate dated the
Closing Date of Seller to such effect.

 

(G)           Corporate Documents.  Seller shall have delivered to Buyer:

 

(1)           an Officer’s Certificate of
the Secretary of Seller certifying (1) the incumbency and genuineness of
signatures of all officers of Seller, as the case may be, executing this
Agreement, any document delivered by Seller at the Closing and any other
document, instrument or agreement executed in connection herewith, and (2) the
truth and correctness of resolutions of Seller authorizing the entry by Seller
into this Agreement and the transactions contemplated hereby; and

 

(2)           a certificate of good
standing and legal existence of Seller from the Secretary of State of
California as of a recent date before the Closing and a certificate from the
Department of Commerce and Consumer Affairs that Seller is in good standing as
a foreign corporation doing business in Hawaii.

 

(H)          Transfer of Purchased Assets.  All of the Purchased Assets shall have been
effectively sold, transferred, conveyed and assigned to Buyer, free and clear
of all Liens, and all of the deeds, conveyances, certificates of title,
assignments, assurances and other instruments and documents referenced in Section 2.8, shall have been executed, delivered and,
if appropriate, filed or recorded.

 

(I)            Transfer of Necessary
Permits.  All of the Necessary Permits
shall have been transferred to or obtained by Buyer on the Closing Date.

 

(J)            Bill of Sale.  Seller shall have executed the Bill of Sale
in substantially the form attached hereto as Exhibit A.

 

(K)          General Assignment.  Seller shall have executed the General
Assignment in substantially the form attached hereto as Exhibit B.

 

20

 

(L)           Warranty Deed.  Seller shall have executed the Warranty Deed
in substantially the form attached hereto as Exhibit C.

 

(M)         Option Agreement.  Seller shall have executed the Option
Agreement in substantially the form attached hereto as Exhibit D.

 

(N)          Due Diligence.  Buyer shall have successfully completed its
due diligence investigation of the Purchased Assets.

 

(O)          Non-Foreign Status
Certificate.  Seller must
prepare and deliver to Buyer an executed Non-Foreign Status Certificate (for
FIRPTA purposes) in substantially the form of Exhibit E.

 

(P)           HARPTA Affidavit.  Seller must prepare and deliver to Buyer a
Hawaii Department of Taxation Form N-289 (or any successor to such form)
to the effect that Seller is a “resident person” as that term is defined in Section 235-68
of the Hawaii Revised Statutes.

 

(Q)          Tax Clearance Certificates.  Buyer shall have received from Seller current
tax clearance certificates for Seller from the Hawaii Department of Taxation.

 

(R)           Bulks Sales Certificate.  Buyer shall have received from Seller a
completed Bulks Sales Certificate executed by Seller.

 

The
documents and other items described in this Section 6.1
are deemed to be delivered properly, if left in the possession of an authorized
representative of Buyer.

 

6.2           Conditions to Obligations of
Seller.  The obligations of Seller to
consummate this Agreement and the transactions contemplated hereby are subject
to the fulfillment, before or at the Closing, of the following conditions
precedent:

 

(A)          Representations and
Warranties.  Each of the
representations and warranties of Buyer in this Agreement shall remain true and
correct at the Closing Date, and Buyer shall, on or before the Closing Date,
have performed all of its obligations under this Agreement and the other
Purchase Documents that by the terms thereof are to be performed by it on or
before the Closing Date; and Buyer shall have delivered an Officer’s
Certificate to Seller dated the Closing Date to such effect.

 

(B)           Partnership Documents.  Buyer shall have delivered to Seller:

 

(1)           an Officer’s Certificate of
the Secretary of Buyer certifying (1) the incumbency and genuineness of
signatures of all officers of Buyer, as the case may be, executing this
Agreement, any document delivered by Buyer at the Closing and any other document,
instrument or agreement executed in connection herewith, and (2) the truth
and correctness of resolutions of Buyer authorizing the entry by Buyer into
this Agreement and the transactions contemplated hereby; and

 

(ii)           a certificate of good
standing and legal existence of Buyer from the Secretary of State of Delaware
as of a recent date before the Closing.

 

(C)           No Pending Action.  No legislation, order, rule, ruling, or
regulation shall have been proposed, enacted or made by or on behalf of any
governmental body, department or 

 

21

 

agency, and no legislation shall have been
introduced in either House of Congress or in the legislature of any state, and
no investigation by any governmental authority shall have been commenced or
threatened, and no action, suit, investigation, or proceeding shall have been
commenced before, and no decision shall have been rendered by, any court or
other governmental authority or arbitrator, which, in any such case, was not
known by Seller on the date or which could adversely affect, restrain, prevent,
or rescind the transactions contemplated by this Agreement (including the
purchase and sale of the Purchased Assets) or result in a Material Adverse
Effect.

 

ARTICLE VII.

INDEMNIFICATION

 

7.1           Continuation and Survival.  Except as otherwise specifically provided
herein, all covenants, representations, and warranties contained herein are
intended to and shall remain true and correct as of the Closing Date, shall be
deemed to be material, and shall survive the execution and delivery of this
Agreement, the execution and delivery of all instruments of conveyance, and the
transfer of title to the Purchased Assets to Buyer. All covenants and
agreements of Buyer and Seller contained herein shall also constitute
representations and warranties.

 

7.2           Indemnification by Seller.  Seller shall, jointly and severally,
indemnify, defend and hold Buyer, and its officers, directors, partners,
consultants, employees, and agents, harmless from and against any and all
obligations, liabilities, claims, accounts, demands, damages, liens or
encumbrances, whether direct, contingent or consequential and no matter how
arising, and all costs and expenses, including reasonable attorneys’ fees and
expenses, related to any actions, suits or judgments incident thereto
(collectively, “Losses”), arising out of, with
respect to, or based upon the following: 
(a) the inaccuracy in any respect of any representation or
warranty, or a breach or Default in the performance of any covenant, of Seller
contained herein; (b) any material misrepresentation in, or omission of a
material fact from, or a breach or Default in the performance of, any opinion,
certificate or instrument of transfer or conveyance furnished to Buyer by or on
behalf of Seller, under this Agreement; (c) the ownership, maintenance or
operation of the Purchased Assets before the Closing Date, except to the extent
caused by Buyer’s acts or omissions; (d) any Taxes required to be paid by
Sellers or with respect to the Purchased Assets for any period ending on or
before the Closing Date; or (e) any of the Retained Assets or Retained
Liabilities.

 

7.3           Indemnification of Seller.  Buyer shall indemnify, defend and hold
harmless Seller from and against any and all Losses, arising out of, with
respect to, or based upon the following: 
(a) the inaccuracy in any respect of any representation or
warranty, or a breach of any covenant, of Buyer contained herein; (b) any
material misrepresentation in, or omission of a material fact from, or a breach
or Default in the performance of, any opinion, certificate or instrument of
transfer or conveyance furnished to Seller by or on behalf of Buyer under this
Agreement; or (c) the ownership, maintenance or operation of the Purchased
Assets by Buyer from and after the Closing Date, except to the extent caused by
Seller’s acts or omissions.

 

7.4           Notice and Opportunity to Defend.

 

(a)           If there occurs an event
that a party asserts is an indemnifiable event under Section 7.2
or 7.3, the parties seeking
indemnification shall promptly notify the other parties obligated to provide
indemnification (collectively, the “Indemnifying Party”).  If such event 

 

22

 

involves (i) any Claim or (ii) the
commencement of any action, suit or proceeding by a third Person, the party
seeking indemnification will give such Indemnifying Party prompt written notice
of such Claim or the commencement of such action, suit or proceeding; provided,
however, that the failure to provide prompt notice as provided herein will
relieve the Indemnifying Party of its obligations hereunder only to the extent
that such failure prejudices the Indemnifying Party hereunder.

 

(b)           In case any such action,
suit, or proceeding shall be brought against any party seeking indemnification
and it shall notify the Indemnifying Party of the commencement thereof, the
Indemnifying Party shall be entitled to participate therein and, to the extent
that it desires to do so, to assume the defense thereof, with counsel
reasonably satisfactory to such party seeking indemnification and, after notice
from the Indemnifying Party to such party seeking indemnification of such
election so as to assume the defense thereof, the Indemnifying Party shall not
be liable to the party seeking indemnification hereunder for any attorneys’
fees or any other expenses, in each case subsequently incurred by such party,
in connection with the defense of such action, suit or proceeding.  The party seeking indemnification agrees to
cooperate fully with the Indemnifying Party and its counsel in the defense
against any such action, suit or proceeding. In any event, the party seeking
indemnification shall have the right to participate at its own expense in the
defense of such action, suit or proceeding.

 

(c)           In no event shall an
Indemnifying Party be liable for any settlement or compromise effected without
its prior consent.  If, however, the
party seeking indemnification refuses its consent to a bona fide offer of settlement
that the Indemnifying Party wishes to accept (which must include the
unconditional release of the parties seeking indemnification from all liability
with respect to the Claim at issue), the party seeking indemnification may
continue to pursue such matter, free of any participation by the Indemnifying
Party, at the sole expense of the party seeking indemnification.  In such event, the obligation of the
Indemnifying Party to the party seeking indemnification shall be equal to the
lesser of (i) the amount of the offer or settlement that the party seeking
indemnification refused to accept plus the costs and expenses of such party
before the date the Indemnifying Party notifies the party seeking
indemnification of the offer of settlement and (ii) the actual out-of-pocket
amount the party seeking indemnification is obligated to pay as a result of
such party’s continuing to pursue such matter.

 

ARTICLE VIII.

TERMINATION

 

8.1           Termination of Agreement.  This Agreement and the transactions
contemplated hereby may (at the option of the party having the right to do so)
be terminated at any time on or before the Closing Date:

 

(A)          Mutual Consent.  By mutual written consent of Buyer and
Seller;

 

(B)           Court Order.  By Buyer or Seller if any court of competent
jurisdiction shall have issued an order under the request of a third party
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement;

 

(C)           Failure to Close.  By Buyer or Seller if the transactions
contemplated hereby shall not have been consummated on or before the Closing
Date; provided, however, that such right to terminate this Agreement shall not
be available to any party whose failure to fulfill any obligation of this
Agreement has been the cause of, or resulted in, the failure of the
transactions contemplated hereby to be consummated on or before such date;

 

23

 

(D)          Termination by Seller.  By Seller upon notice to Buyer at any time
before the Closing Date, if (i) a condition to the performance of Seller
set forth in Section 6.2 shall not be
fulfilled at the time specified for the fulfillment thereof, (ii) a
material Default under or a material breach of this Agreement shall be made by
Buyer, or (iii) any representation or warranty set forth in this Agreement
or in any instrument delivered by Buyer pursuant hereto shall be materially
false or misleading; or

 

(E)           Termination by Buyer.  By Buyer by notice to Seller at any time
before the Closing Date, if (i) a condition to the performance of Buyer
set forth in Section 6.1 shall not be
fulfilled at the time specified for the fulfillment thereof that is outside of
Buyer’s reasonable control, (ii) a material Default under or a material
breach of this Agreement shall be made by Seller or (iii) any
representation set forth in this Agreement or in any instrument delivered by
Seller pursuant hereto shall be materially false or misleading.

 

8.2           Effect of Termination.  Each party’s right of termination under Section 8.1 is in addition to any other rights it may
have under this Agreement or otherwise, and the exercise of a right of
termination will not be an election of remedies.  If this Agreement is terminated under Section 8.1, all further obligations of the parties
under this Agreement will terminate, except that the obligations in Sections 2.3, 5.2(a), 7.1, 7.2, 7.3, 7.4, 8.1, 9.3, 9.4, 9.10, 9.13, and 9.14 will
survive; provided, however, that if this Agreement is terminated by a party
because of a Default hereof by the other party or because one or more of the
conditions to the terminating party’s obligations under this Agreement is not
satisfied as a result of the other party’s failure to comply with its
obligations under this Agreement, the terminating party’s right to pursue all
legal remedies shall survive such termination unimpaired.

 

ARTICLE IX.

MISCELLANEOUS

 

9.1           Prohibited Transactions.  The parties acknowledge and agree that Buyer
is subject to federal and/or state regulatory requirements, and that the
provisions of this Agreement shall be expressly subject to applicable federal
and state laws governing Buyer.  The
parties further agree that, notwithstanding anything to the contrary herein
contained, if any term or condition set forth herein or in any other related
agreement is at any time deemed impermissible or questionable by federal and/or
state regulators of Buyer, Buyer shall have the unconditional right to
immediately terminate this Agreement by giving written notice thereof to
Seller.

 

9.2           Financial Statements.  Seller agrees to reasonably cooperate with
Buyer with respect to any financial statements that may be required by Buyer, a
publicly traded company, due to any federal and/or state regulatory
requirements that must be fulfilled by Buyer.

 

9.3           Easements.  Buyer and Seller agree to work together to
reasonably resolve any and all outstanding issues relating to easements,
including working with New Hawaii Mac Nut Company, the Hawaii State Department
of Transportation, and Bishop Estate. 
Both Buyer and Seller agree that resolving the easement issues shall not
be a condition to Closing.

 

9.4           Further Assurances.  Seller shall, from time to time on or after
the Closing Date, upon the request of Buyer, do, execute, acknowledge and
deliver, or cause to be done, executed, 

 

24

 

acknowledged and delivered, all such further acts,
deeds, assignments, transfers, conveyances, powers of attorney, consents, and
assignments as may be required to transfer to and vest in Buyer and to protect
Buyer’s right, title, and interest in and to all of the Purchased Assets being
transferred to Buyer hereunder and otherwise to confer upon Buyer the benefits
contemplated by this Agreement.

 

9.5           Fees and Expenses.  Each of the parties hereto will pay and
discharge its own expenses and fees in connection with the negotiation of and
entry into this Agreement and the consummation of the transactions contemplated
hereby.

 

9.6           Publicity and Disclosures.  Before the Closing, no press release or any
public disclosure, either written or oral, of the transactions contemplated by
this Agreement shall be made by any party without the prior knowledge and
written consent of Seller and Buyer.

 

9.7           Press Releases and Announcements.  Buyer is required by law to disclose the
existence and material terms of this Agreement by filing a Form 8-K with
the SEC.  Seller acknowledges that Buyer
will file a copy of this Agreement in such Form 8-K filing. Thereafter,
unless required by the SEC, neither party shall issue any other press release
or public announcement or disclosure of the existence or terms of this
Agreement (or its related agreements), amendments, or the transactions
contemplated hereby or thereby, without the prior written approval of the other
party, which written approval must not be unreasonably withheld, conditioned,
or delayed.

 

9.8           Notices.  All notices, requests, demands, consents and
communications necessary or required under this Agreement or any other Purchase
Document shall be made in the manner specified, or, if not specified, shall be
delivered by hand or sent by registered or certified mail, return receipt
requested, email or by telecopy (receipt confirmed) to:

 

	
  If
  to Buyer:

  	
  ML
  Macadamia Orchards, L.P.

  26-238
  Hawaii Belt Road

  Hilo,
  Hawaii, 96720

  Attention:  Dennis Simonis

  Telephone:
  (808) 969-8052

  FAX:
  (808) 060-8152

  dsimonis@mlnut.com

  
	
   

  	
   

  
	
  with
  a copy to:

  	
  Carlsmith
  Ball LLP

  ASB
  Tower, Suite 2200

  1001
  Bishop Street

  Honolulu,
  Hawaii 96813

  Attention:
  James H. Case, Esq.

  Telephone:
  (808) 523-2501

  FAX:
  (808) 523-0842

  jcase@carlsmith.com

  
	
   

  	
   

  
	
  If
  to Seller:

  	
  IASCO

  210
  Twin Dolphin Drive, Suite B

  Redwood
  City, California, 94065

  Attention:
  John Lee

  Telephone: (650) 593-8100 x103

  FAX:
  (650) 593-8101

  jlee@iasco.com

  

 

25

 

	
  with
  a copy to:

  	
  Kessner
  Umebayashi Bain & Matsunaga

  Central
  Pacific Plz.

  220
  S. King St., Fl. 9

  Honolulu, Hawaii 96813

  Attention:  Steven Guttman, Esq.

  Telephone:
  (808) 536-1900

  FAX:
  (808) 529-7177

  sguttman@kdubm.com

  

 

All
such notices, requests, demands, consents, and other communications shall be
deemed to have been duly given or sent three (3) Business Days following
the date on which mailed, or on the date on which delivered by hand, email, or
by facsimile transmission (receipt confirmed), as the case may be, and
addressed as aforesaid.

 

9.9           Successors and Assigns.  All covenants and agreements set forth in
this Agreement and made by or on behalf of any of the parties hereto shall bind
and inure to the benefit of the successors and permitted assigns of such party,
whether or not so expressed, except that neither party may assign or transfer
any of its rights or obligations under this Agreement without the consent in
writing of the other party.

 

9.10         Counterparts.  This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which together shall constitute one and the same instrument, and it shall not
be necessary in making proof of this Agreement to produce or account for more
than one such counterpart. This Agreement may also be executed by way of
facsimile signature and such signature shall be sufficient to bind the party so
executing this Agreement.  Such party shall
thereafter promptly forward a confirming copy of such facsimile signature to
the other party.

 

9.11         Severability; Entire Agreement.  If any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason in any
jurisdiction, the validity, legality, and enforceability of any such provision
in every other respect and of the remaining provisions shall not be in any way
impaired or affected, it being intended that each of the parties’ rights and
privileges shall be enforceable to the fullest extent permitted by law, and any
such invalidity, illegality and unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.  To the fullest extent
permitted by law, the parties hereby waive any provision of any law, statute,
ordinance, rule, or regulation that might render any provision hereof invalid,
illegal, or unenforceable.  This
Agreement, including the Schedules and Exhibits referred to herein, is
complete, and all promises, representations, understandings, warranties, and
agreements with reference to the subject matter hereof, and all inducements to
the making of this Agreement relied upon by any of the parties hereto, have
been expressed herein or in said Schedules or Exhibits.  This Agreement may not be amended except by
an instrument in writing signed by Seller and Buyer.

 

26

 

9.12         Attorney’s Fees.  In any action or proceeding brought to
enforce any provision of this Agreement or the other Purchase Documents, or
where any provision hereof or thereof is validly asserted as a defense, the
successful party shall be entitled to recover reasonable attorneys’ fees in
addition to any other available remedy.

 

9.13         Course of Dealing.  No course of dealing and no delay on the part
of any party hereto in exercising any right, power, or remedy conferred by this
Agreement shall operate as a waiver thereof or otherwise prejudice such party’s
rights, powers and remedies.  The failure
of either of the parties to this Agreement to require the performance of a term
or obligation under this Agreement or the waiver by any of the parties to this
Agreement of any breach hereunder shall not prevent subsequent enforcement of
such term or obligation or be deemed a waiver of any subsequent breach
hereunder.  No single or partial exercise
of any rights, powers, or remedies conferred by this Agreement shall preclude
any other or further exercise thereof or the exercise of any other right, power
or remedy.

 

9.14         Tax Matters.  Seller shall pay all real property and other
transfer taxes, sales taxes, bulk sales taxes, documentary stamp taxes,
recording charges and other similar Taxes resulting from, arising under or in
connection with the transfer of the Purchased Assets or any other related
transaction under this Agreement, whether imposed in accordance with federal,
state, or local law and imposed upon either Buyer or Seller.

 

9.15         Governing Law.  This Agreement, including the validity hereof
and the rights and obligations of the parties hereunder, shall be construed in
accordance with and governed by the laws of the State of Hawaii (without regard
to otherwise applicable conflict of laws principles).

 

9.16         Mediation.  Any and all claims, controversies, or
disputes arising out of or relating to this Agreement, or the breach thereof,
which remain unresolved after direct negotiations between Seller and Buyer,
must first be submitted to confidential mediation in the State of Hawaii, in
accordance with the Rules, Procedures, and Protocols for Mediation of Disputes
of Dispute Prevention & Resolution, Inc. (based in Honolulu,
Hawaii), then in effect.  The mediator’s
fees and expenses are to be shared equally between Seller and Buyer.

 

9.17         Waiver of Jury Trial.  BUYER AND SELLER HEREBY EXPRESSLY IRREVOCABLY
WAIVES ITS OR HIS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OTHER PURCHASE DOCUMENT
OR THE PURCHASED ASSETS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT
MATTER OF THIS AGREEMENT.  SELLER AND
BUYER ALSO WAIVE ANY BOND OR SURETY OR SECURITY UPON SUCH BOND THAT MIGHT, BUT
FOR THIS WAIVER, BE REQUIRED OF ANY PARTY. 
THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND
ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS.  SELLER AND BUYER FURTHER WARRANT
AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL; AND
THAT EACH VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH
LEGAL COUNSEL.  THIS WAIVER IS
IRREVOCABLE AND MAY ONLY BE MODIFIED IN AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT, ANY OTHER PURCHASE DOCUMENT OR THE
SHARES.  IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL (WITHOUT A JURY) BY
THE COURT.

 

27

 

9.18         Dispute Resolution.  If there is any Dispute asserted by either
party, then, to the extent permitted by law, the parties agree that all actions
or proceedings arising in connection with that Dispute must be tried and
litigated only in the state or federal courts located in the State of
Hawaii.  That choice of venue is
mandatory and not permissive in nature, thereby precluding the possibility of
jurisdiction or venue other than specified in this Section 9.15.  To the extent permitted by law, (a) the
parties hereby waive any right each may have to assert the doctrine of forum non conveniens or to object to venue for any Proceeding
brought in accordance with this Section 9.15;
and (b) the parties stipulate that the state and federal courts located in
the State of Hawaii will have in personam
jurisdiction and venue over the parties for the litigation of any Dispute
arising out of or related to this Agreement asserted by either party before the
Closing Date.  Service
of process sufficient for personal jurisdiction in any action against any party
hereto may be made by registered or certified mail, to its address indicated
herein.  Each
party agrees that any final judgment rendered against it in any action or
proceeding will be conclusive as to the subject of such final judgment, and it
may be enforced in other jurisdictions in any manner provided by law.

 

9.19         Neutral Construction.  The parties to this Agreement agree that this
Agreement was negotiated fairly between them at arm’s length and that the final
terms of this Agreement are the product of the parties’ negotiations.  Each party
represents and warrants that it has sought and received legal counsel of its
own choosing with regard to the content of this Agreement and the rights and
obligations affected hereby.  The parties agree that this
Agreement shall be deemed to have been jointly and equally drafted by them, and
that the provisions of this Agreement therefore should not be construed against
a party or parties on the grounds that the party or parties drafted, or was
more responsible for drafting, the provision(s).

 

(a)           In this Agreement, the
masculine, feminine, or neuter gender and the singular or plural number is
deemed to include the other whenever the context so requires, and “shall,” “must” and “agrees” are mandatory, and “may”
is permissive.

 

(b)           The captions appearing at
the commencement of the provisions of this Agreement are descriptive only and
for convenience in reference.  If there is any conflict between
any such caption and the provision at the head of which it appears, then the
provision, and not the caption, controls and governs in the construction of
this Agreement.

 

(c)           The parties acknowledge,
understand, and agree that their respective agents and representatives
executing this Agreement on behalf of each of parties are learned and
conversant in the English language, and that the English language controls the
construction, enforcement, governance, interpretation, and performance of this
Agreement.

 

(d)           Unless otherwise indicated
herein, with respect to any reference made in this Agreement to a Section (or
Article, Subsection, Paragraph, Subparagraph, or Clause), Annex, Exhibit, or
Schedule, such reference is a section (or article, subsection, paragraph,
subparagraph, or clause) of, or an annex, exhibit, or schedule to, this
Agreement.

 

(e)           Whenever the words “include,”
“includes” or “including” are used in this Agreement, they are deemed, as the
context indicates, to be followed by the words “but (is/are) 

 

28

 

not limited to.”  Whenever the
conjunction “or” is used in this Agreement, it is deemed, as the context
indicates, to be inclusive (i.e., “A or B” means A, B, or A and B) and not
exclusive (i.e., “A or B” means A or B, but not A and B), thereby avoiding
the use of “and/or” to show the intended inclusiveness.

 

(f)            Where specific language is
used to clarify or illustrate by example a general statement contained herein,
such specific language is not deemed to modify, limit, or restrict the
construction of the general statement that is being clarified or illustrated.

 

(g)           All Schedules and Exhibits,
if any, described in this Agreement and attached hereto are by this reference
incorporated fully herein; the words “this Agreement” must be considered to
include all such Schedules and Exhibits, if any.

 

9.20         Time of the Essence.  Time is of the essence to this Agreement with
respect to the performance by each party of its duties, obligations and
responsibilities under this Agreement, and also each and every condition,
covenant, provision, and term of this Agreement.

 

9.21         Limitation of
Liability.  NOTWITHSTANDING ANYTHING TO
THE CONTRARY HEREIN, EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY CLAIM
AGAINST THE OTHER PARTY FOR PUNITIVE, SPECIAL, INCIDENTAL, EXEMPLARY, AND
CONSEQUENTIAL DAMAGES.

 

29

 

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.

 

	
   

  	
  Buyer:

  
	
   

  	
   

  
	
   

  	
  ML
  MACADAMIA ORCHARDS L.P.,

  
	
   

  	
  a
  Delaware limited partnership

  
	
   

  	
   

  
	
   

  	
   

  	
  By
  ML Resources, Inc., its General Partner

  
	
   

  	
   

  	
  a
  Hawaii corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Dennis J. Simonis

  
	
   

  	
   

  	
   

  	
  Name:
  Dennis J. Simonis

  
	
   

  	
   

  	
   

  	
  Title:
  CEO and President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Seller:

  
	
   

  	
   

  
	
   

  	
  IASCO,

  
	
   

  	
  a
  California corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John Lee

  
	
   

  	
   

  	
  Name:
  John Lee

  
	
   

  	
   

  	
  Title:
  Executive Vice President, CFO

  

 

30

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