Document:

exv10w1

 

Exhibit 10.1

AMENDMENT TO REVOLVING

CREDIT AGREEMENT

     THIS
AMENDMENT TO REVOLVING CREDIT AGREEMENT (this “Amendment”) is made as
of December 14, 2004, by and among EOP OPERATING LIMITED PARTNERSHIP (the
“Borrower”), the BANKS listed on the signature pages hereof, and BANK OF
AMERICA, N.A., as Administrative Agent for the Banks.

W I T N E S S E T H:

     WHEREAS, the Borrower and the Banks have entered into the Revolving Credit
Agreement, as of May 9, 2003 (the “Credit Agreement”); and

     WHEREAS, the parties desire to modify the Credit Agreement upon the terms
and conditions set forth herein.

     NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties do hereby agree as
follows:

1. Definitions. All capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Credit Agreement.

2. Amendments to Definitions.

(a) The definition of “FFO” is hereby deleted and the following substituted
therefore:

“FFO” means “funds from operations” as defined in accordance with
resolutions adopted by the Board of Governors of the National
Association of Real Estate Investment Trusts as in effect from
time to time; provided that FFO shall (i) be based on net income
before payment of distributions to holders of preferred
partnership units in the Borrower and distributions necessary to
pay holders of preferred stock of Guarantor, and (ii) at all
times exclude (a) charges for non-

 

 

cash impairments taken in accordance with GAAP, and (b)
non-recurring charges.

(b) The definition of “Joint Venture Subsidiary” is hereby deleted and the
following substituted therefore:

“Joint Venture Subsidiary” means any entity (other than a
Financing Partnership) in which (i) a Joint Venture Parent owns
at least 20% of the economic interests and (ii) the sale or
financing of any Property owned by such Joint Venture Subsidiary
is substantially controlled by a Joint Venture Parent, subject to
customary provisions set forth in the organizational documents of
such Joint Venture Subsidiary with respect to refinancings or
rights of first refusal granted to other members of such Joint
Venture Subsidiary. For purposes of the preceding sentence, the
sale or financing of a Property owned by a Joint Venture
Subsidiary shall be deemed to be substantially controlled by a
Joint Venture Parent if such Joint Venture Parent has the ability
to exercise a buy-sell right in the event of a disagreement
regarding the sale or financing of such Property. In addition,
the relationship of a Joint Venture Parent as a tenant in common
in any asset with other tenants in common in the same asset shall
be treated as if such relationship were a general partnership for
purposes of this definition.

(c) The definition of “Total Asset Value” is hereby amended by inserting the
phrase “exclusive of Properties, if any, that shall have produced a negative
EBITDA for the applicable period,”, after the words “for any Properties (other
than Unimproved Assets and Land under Development) owned by Borrower, any
Consolidated Subsidiary or Investment Affiliate which was neither acquired nor
disposed of by Borrower, a Consolidated Subsidiary or an Investment Affiliate
in the Fiscal Quarter most recently ended,”.

(d) For purposes of the definitions of “Unencumbered Asset Value” and
“Unencumbered Net Operating Income”, a Joint Venture Subsidiary also shall be
deemed to include any entity (other than a Financing Partnership) in which a

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Qualified Joint Venture Partner owns the balance of the interests. In addition,
clause (ii) of the definition of “Unencumbered Asset Value” is hereby amended
by inserting the phrase “exclusive of Qualifying Unencumbered Properties, if
any, that shall have produced a negative EBITDA for the applicable period,”,
after the words “for any Qualifying Unencumbered Properties which were neither
acquired or disposed of by Borrower, a Financing Partnership or a Joint Venture
Subsidiary in the Fiscal Quarter most recently ended”.

(e) The following definition shall be added after the definition of “Qualified
Institution”: “‘Qualified Joint Venture Partner’ means (a) pension funds,
insurance companies, banks, investment banks or similar institutional entities,
each with significant experience in making investments in commercial real
estate, and (b) commercial real estate companies of similar quality and
experience.”

3. Leverage. The reference in Sections 5.8(a) and 5.8(f) to “0.55:1” is hereby
deleted and “0.60:1” is substituted therefore.

4. Dividends. The reference in Section 5.8(i) to “90%” is hereby deleted and
“95%” substituted therefore. For purposes of Section 5.8(i), partnership
distributions shall include all distributions to common and preferred
unitholders of Borrower.

5. Calculations. Section 5.8(l) is hereby deleted and the following
substituted therefore: “(l) Calculation. With the exception of the
calculation required pursuant to Section 5.8(i), calculations of ratios and
financial requirements shall be made as of the last day of each Fiscal Quarter.
All calculations required pursuant to this Section 5.8 shall exclude the effect
of any consolidation required by FIN 46(R).

6. Effective Date. This Amendment shall become effective upon receipt by the
Administrative Agent of counterparts hereof signed by the Borrower

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and the Required Banks (the date of such receipt being deemed the “Effective
Date”).

7. Representations and Warranties. Borrower hereby represents and warrants
that as of the Effective Date, all the representations and warranties set forth
in the Credit Agreement, as amended hereby (other than representations and
warranties that expressly speak as of a different date), are true and complete
in all material respects.

8. Entire Agreement. This Amendment constitutes the entire and final agreement
among the parties hereto with respect to the subject matter hereof and there
are no other agreements, understandings, undertakings, representations or
warranties among the parties hereto with respect to the subject matter hereof
except as set forth herein.

9. Governing Law. This Amendment shall be governed by, and construed in
accordance with, the law of the State of New York.

10. Counterparts. This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
agreement, and any of the parties hereto may execute this Amendment by signing
any such counterpart.

11. Headings, Etc. Section or other headings contained in this Amendment are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Amendment.

12. No Further Modifications. Except as modified herein, all of the terms and
conditions of the Credit Agreement, as modified hereby shall remain in full
force and effect and, as modified hereby, the Borrower confirms and ratifies
all of the terms, covenants and conditions of the Credit Agreement in all
respects.

4

 

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the day and year
first above written.

	 	 	 	 	 
	 	 	EOP OPERATING LIMITED PARTNERSHIP,
	 	 	a Delaware limited partnership
	 
	 	 	 	 
	

	 	By:
	 	Equity Office Properties Trust, a Maryland real

estate investment trust, its general partner
	 
	 	 	 	 
	

	 	By:
	 	/s/ Marsha C. Williams
	

	 	 	 	

	

	 	Name:
	 	Marsha C. Williams
	

	 	Title:
	 	Executive Vice President and Chief
Financial Officer

FOR PURPOSES OF AGREEING TO BE

BOUND BY THE PROVISIONS OF

THIS AMENDMENT:

EQUITY OFFICE PROPERTIES TRUST, a Maryland

real estate investment trust

	 	 	 	 	 
	By:

	 	/s/ Marsha C. Williams
	 	 
	

	 	
 	 	 
	

	 	Name: Marsha C. Williams	 	 
	

	 	Title: Executive Vice President and Chief
Financial Officer	 	 

5

 

	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A., as Administrative
	 	 	Agent, as Swingline Lender, and as a Bank
	 
	 	 	 	 
	

	 	By:
	 	/s/ Eyal Namordl
	

	 	 	 	

	

	 	Name:
	 	Eyal Namordl
	

	 	Title:
	 	Vice President

6

 

	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A., as Syndication
	 	 	Agent and as a Bank
	 
	 	 	 	 
	

	 	By:
	 	/s/ Marc E. Costantino
	

	 	 	 	

	

	 	Name:
	 	Marc E. Costantino
	

	 	Title:
	 	Vice President

7

 

	 	 	 	 	 
	 	 	UBS AG, CAYMAN ISLANDS BRANCH, as Senior Managing
	 	 	Agent and as a Bank
	 
	 	 	 	 
	

	 	By:
	 	/S/ Wilfred V. Saint
	

	 	 	 	

	

	 	Name:
	 	Wilfred V. Saint
	

	 	Title:
	 	Director Banking Products Services, US
	 
	 	 	 	 
	

	 	By:
	 	/s/ Joselin Fernandes
	

	 	 	 	

	

	 	Name:
	 	Joselin Fernandes
	

	 	Title:
	 	Associate Director

Banking Products

Services, US

8

 

	 	 	 	 	 
	 	 	PNC BANK, NATIONAL ASSOCIATION, as Senior Managing
	 	 	Agent and as a Bank
	 
	 	 	 	 
	

	 	By:
	 	/s/ Michael E. Smith
	

	 	 	 	

	

	 	Name:
	 	Michael E. Smith
	

	 	Title:
	 	Senior Vice President

9

 

	 	 	 	 	 
	 	 	EUROHYPO AG, NEW YORK BRANCH, as
	 	 	Managing Agent and as a Bank
	 
	 	 	 	 
	

	 	By:
	 	/s/ Alfred Koch
	

	 	 	 	

	

	 	Name:
	 	Alfred Koch
	

	 	Title:
	 	Executive Director
	 
	 	 	 	 
	

	 	By:
	 	/s/ Stephen Cox
	

	 	 	 	

	

	 	Name:
	 	Stephen Cox
	

	 	Title:
	 	Vice President
	 
	 	 	 	 

10

 

	 	 	 	 	 
	 	 	U.S. BANK NATIONAL ASSOCIATION, as Senior
	 	 	Managing Agent and as a Bank
	 
	 	 	 	 
	

	 	By:
	 	/s/ Megan McBride
	

	 	 	 	

	

	 	Name:
	 	Megan McBride
	

	 	Title:
	 	Senior Vice President
	 
	 	 	 	 

11

 

	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A.(successor by
	 	 	merger to Bank One, NA), as Documentation Agent
	 	 	and as a Bank
	 
	 	 	 	 
	

	 	By:
	 	/s/ Marc E. Costantino
	

	 	 	 	

	

	 	Name:
	 	Marc E. Costantino
	

	 	Title:
	 	Vice President

12

 

	 	 	 	 	 
	 	 	DEUTSCHE BANK TRUST COMPANY
	 	 	AMERICAS, as Co-Agent and as a Bank
	 
	 	 	 	 
	

	 	By:
	 	/s/ Steven P. Lapham
	

	 	 	 	

	

	 	Name:	 	Steven P. Lapham
	

	 	Title:
	 	Managing Director
	 
	 	 	 	 
	

	 	By:
	 	/s/ Brenda Casey
	

	 	 	 	

	

	 	Name:
	 	Brenda Casey
	

	 	Title:	 	Vice President

13

 

	 	 	 	 	 
	 	 	NATIONAL AUSTRALIA BANK LIMITED, as Co-
	 	 	Agent and as a Bank
	 
	 	 	 	 
	

	 	By:
	 	/s/ Thomas Matesich
	

	 	 	 	

	

	 	Name:	 	Thomas Matesich
	

	 	Title:
	 	Senior Vice President

14

 

	 	 	 	 	 
	 	 	THE BANK OF NOVA SCOTIA, NEW YORK
	 	 	AGENCY, as Senior Managing Agent and as a Bank
	 
	 	 	 	 
	

	 	By:
	 	/s/ R. H. Boese
	

	 	 	 	

	

	 	Name:
	 	R.H. Boese
	

	 	Title:
	 	Managing Director

15

 

	 	 	 	 	 
	 	 	WACHOVIA BANK, N.A., as Managing Agent and
	 	 	as a Bank
	 
	 	 	 	 
	

	 	By:
	 	/s/ David Blackman
	

	 	 	 	

	

	 	Name:
	 	David Blackman
	

	 	Title:
	 	Director

16

 

	 	 	 	 	 
	 	 	UNION BANK OF CALIFORNIA, N.A., as Co-
	 	 	Agent and as a Bank
	 
	 	 	 	 
	

	 	By:
	 	/s/ Gary Roberts
	

	 	 	 	

	

	 	Name:
	 	Gary Roberts
	

	 	Title:
	 	Vice President

17

 

	 	 	 	 	 
	 	 	LASALLE BANK NATIONAL ASSOCIATION,
	 	 	as Managing Agent and as a Bank
	 
	 	 	 	 
	

	 	By:
	 	/s/ Brad Feine
	

	 	 	 	

	

	 	Name:
	 	Brad Feine
	

	 	Title:
	 	Commercial Banking Officer

18

 

	 	 	 	 	 
	 	 	MORGAN STANLEY BANK, as Senior Managing
	 	 	Agent and as a Bank
	 
	 	 	 	 
	

	 	By:
	 	/s/ Daniel Twenge
	

	 	 	 	

	

	 	Name:
	 	Daniel Twenge
	

	 	Title:
	 	Vice President Morgan Stanley Bank

19

 

	 	 	 	 	 
	 	 	CREDIT SUISSE FIRST BOSTON, ACTING
	 	 	THROUGH ITS CAYMAN ISLANDS BRANCH as
	 	 	Managing Agent and as a Bank
	 
	 	 	 	 
	

	 	By:
	 	/s/ Cassandra Droogan
	

	 	 	 	

	

	 	Name:
	 	Cassandra Droogan
	

	 	Title:
	 	Associate
	 
	 	 	 	 
	

	 	By:
	 	/s/ Bill O'Daly
	

	 	 	 	

	

	 	Name:	 	Bill O'Daly
	

	 	Title:	 	Director

20

 

	 	 	 	 	 
	 	 	CITICORP NORTH AMERICA, INC., as Managing
	 	 	Agent and as a Bank
	 
	 	 	 	 
	

	 	By:
	 	/s/ Michael Chiopak
	

	 	 	 	

	

	 	Name:
	 	Michael Chiopak
	

	 	Title:
	 	Vice President

21

 

	 	 	 	 	 
	 	 	MERRILL LYNCH BANK USA, as Managing
	 	 	Agent and as a Bank
	 
	 	 	 	 
	

	 	By:
	 	/s/ Louis Alder
	

	 	 	 	

	

	 	Name:
	 	Louis Alder
	

	 	Title:
	 	Director

22

 

	 	 	 	 	 
	 	 	THE BANK OF NEW YORK, as a Bank
	 
	 	 	 	 
	

	 	By:
	 	/s/ Rick Laudisi
	

	 	 	 	

	

	 	Name:
	 	Rick Laudisi
	

	 	Title:
	 	Vice President

23

 

	 	 	 	 	 
	 	 	THE NORTHERN TRUST COMPANY, as a Bank
	 
	 	 	 	 
	

	 	By:
	 	/s/ Eleanor Grumman
	

	 	 	 	

	

	 	Name:
	 	Eleanor Grumman
	

	 	Title:
	 	Vice President

24

 

	 	 	 	 	 
	 	 	CHANG HWA COMMERCIAL BANK, LTD., LOS
	 	 	ANGELES. BRANCH, as a Bank
	 
	 	 	 	 
	

	 	By:
	 	/s/ Chen-Yu Chen
	

	 	 	 	

	

	 	Name:
	 	Chen-Yu Chen
	

	 	Title:
	 	Vice President & General Manager

25<PAGE>

                                                                   Exhibit 4.3.1

      SIXTEENTH SUPPLEMENTAL INDENTURE, dated as of December 20, 2004, between
The Kroger Co., a corporation duly organized and existing under the laws of the
State of Ohio (herein called the "Company"), having its principal office at 1014
Vine Street, Cincinnati, Ohio 45202, the Guarantors listed on the signature
pages and Schedule I hereto (each, a "Guarantor") and U.S. Bank, N.A. (formerly
known as Firstar Bank, N.A.), a banking corporation duly organized and existing
under the laws of the State of Ohio, as Trustee (herein called the "Trustee").

                            RECITALS OF THE COMPANY

      The Company has heretofore executed and delivered to the Trustee an
Indenture dated as of June 25, 1999 (the "Indenture"), providing for the
issuance from time to time of the Company's unsecured debentures, notes or other
evidences of indebtedness (herein and therein called the "Securities"), to be
issued in one or more series as in the Indenture provided.

      Section 201 of the Indenture permits the form of the Securities of any
series to be established pursuant to an indenture supplemental to the Indenture.

      Section 301 of the Indenture permits the terms of the Securities of any
series to be established in an indenture supplemental to the Indenture.

      Section 901(7) of the Indenture provides that, without the consent of any
Holders, the Company, when authorized by a Board Resolution, and the Trustee, at
any time and from time to time, may enter into one or more indentures
supplemental to the Indenture for the purpose of establishing the form or terms
of Securities of any series as permitted by Sections 201 and 301 of the
Indenture.

      Each of the Guarantors has duly authorized the issuance of a guarantee of
the Securities, as set forth herein, and to provide therefor, each of the
Guarantors has duly authorized the execution and delivery of this Sixteenth
Supplemental Indenture.

      The Company and the Guarantors, pursuant to the foregoing authority,
propose in and by this Sixteenth Supplemental Indenture to establish the terms
and form of the Securities of a new series and to amend and supplement the
Indenture in certain respects with respect to the Securities of such series.

<PAGE>

      All things necessary to make this Sixteenth Supplemental Indenture a valid
agreement of the Company and the Guarantors, and a valid amendment of and
supplement to the Indenture, have been done.

      NOW, THEREFORE, THIS SIXTEENTH SUPPLEMENTAL INDENTURE WITNESSETH:

      For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities of the series to be
created hereby, as follows:

                                   ARTICLE ONE

                                   DEFINITIONS

Section 101. Definitions.

      (a)   For all purposes of this Sixteenth Supplemental Indenture:

            (1) Capitalized terms used herein without definition shall have the
      meanings specified in the Indenture;

            (2) All references herein to Articles and Sections, unless otherwise
      specified, refer to the corresponding Articles and Sections of this
      Sixteenth Supplemental Indenture and, where so specified, to the Articles
      and Sections of the Indenture as supplemented by this Sixteenth
      Supplemental Indenture; and

            (3) The terms "hereof", "herein", "hereby", "hereto", "hereunder"
      and "herewith" refer to this Sixteenth Supplemental Indenture.

      (b)   For all purposes of the Indenture and this Sixteenth Supplemental
Indenture, with respect to the Securities of the series created hereby, except
as otherwise expressly provided or unless the context otherwise requires:

            "Adjusted Treasury Rate" means, with respect to any Redemption Date,
      the rate per annum equal to the semi-annual equivalent yield to maturity
      of the Comparable Treasury Issue, assuming a price for the Comparable
      Treasury Issue (expressed as a percentage of its principal amount) equal
      to the Comparable Treasury Price for such Redemption Date.

            "Attributable Debt" means, in connection with a Sale and Lease-Back
      Transaction, as of any particular time, the aggregate of

                                     - 2 -
<PAGE>

            present values (discounted at a rate per annum equal to the interest
            rate borne by the Securities of the series created by this Sixteenth
            Supplemental Indenture) of the obligations of the Company or any
            Restricted Subsidiary for net rental payments during the remaining
            primary term of the applicable lease, calculated in accordance with
            generally accepted accounting principles. The term "net rental
            payments" under any lease for any period shall mean the sum of the
            rental and other payments required to be paid in such period by the
            lessee thereunder, not including, however, any amounts required to
            be paid by such lessee (whether or not designated as rental or
            additional rental) on account of maintenance and repairs,
            reconstruction, insurance, taxes, assessments, water rates,
            operating and labor costs or similar charges required to be paid by
            such lessee thereunder or any amounts required to be paid by such
            lessee thereunder contingent upon the amount of sales, maintenance
            and repairs, reconstruction, insurance, taxes, assessments, water
            rates or similar charges.

                  "Business Day" means any day other than a Saturday or Sunday
            or a day on which banking institutions in New York City or
            Cincinnati, Ohio are authorized or obligated by law or executive
            order to close.

                  "Capital Lease" means any lease of property which, in
            accordance with generally accepted accounting principles, should be
            capitalized on the lessee's balance sheet or for which the amount of
            the asset and liability thereunder as if so capitalized should be
            disclosed in a note to such balance sheet; and "Capitalized Lease
            Obligation" means the amount of the liability which should be so
            capitalized or disclosed.

                  "Comparable Treasury Issue" means the United States Treasury
            security selected by a Quotation Agent as having a maturity
            comparable to the remaining term of the Securities to be redeemed
            that would be utilized, at the time of selection and in accordance
            with customary financial practice, in pricing new issues of
            corporate debt securities of comparable maturity to the remaining
            term of such Securities.

                  "Comparable Treasury Price" means, with respect to any
            Redemption Date, (i) the average of the Reference Treasury Dealer
            Quotations, after excluding the highest and lowest such Reference
            Treasury Dealer Quotations for such Redemption Date, or (ii) if the

                                     - 3 -
<PAGE>

            Trustee obtains fewer than three such Reference Treasury Dealer
            Quotations, the average of all such Quotations.

                  "Consolidated Net Tangible Assets" means, for the Company and
            its Subsidiaries on a consolidated basis determined in accordance
            with generally accepted accounting principles, the aggregate amounts
            of assets (less depreciation and valuation reserves and other
            reserves and items deductible from gross book value of specific
            asset accounts under generally accepted accounting principles) which
            under generally accepted accounting principles would be included on
            a balance sheet after deducting therefrom (a) all liability items
            except deferred income taxes, commercial paper, short-term bank
            Indebtedness, Funded Indebtedness, other long-term liabilities and
            shareholders' equity and (b) all goodwill, trade names, trademarks,
            patents, unamortized debt discount and expense and other like
            intangibles, which in each case would be so included on such balance
            sheet.

                  "Credit Facility" means any credit agreement, loan agreement
            or credit facility, whether syndicated or not, involving the
            extension of credit by banks or other credit institutions, entered
            into by the Company or Fred Meyer, Inc. and outstanding on the date
            of this Sixteenth Supplemental Indenture, and any refinancing or
            other restructuring of such agreement or facility.

                  "Funded Indebtedness" means any Indebtedness maturing by its
            terms more than one year from the date of the determination thereof,
            including (i) any Indebtedness having a maturity of 12 months or
            less but by its terms renewable or extendible at the option of the
            obligor to a date later than 12 months from the date of the
            determination thereof and (ii) rental obligations payable more than
            12 months from the date of determination thereof under Capital
            Leases (such rental obligations to be included as Funded
            Indebtedness at the amount so capitalized at the date of such
            computation and to be included for the purposes of the definition of
            Consolidated Net Tangible Assets both as an asset and as Funded
            Indebtedness at the amount so capitalized).

                  "Non-Restricted Subsidiary" means any Subsidiary that the
            Company's Board of Directors has in good faith declared pursuant to
            a written resolution not to be of material importance, either singly
            or together with all other Non-Restricted Subsidiaries, to the
            business of the Company and its consolidated Subsidiaries taken as a
            whole.

                                     - 4 -
<PAGE>

                  "Operating Assets" means all merchandise inventories,
            furniture, fixtures and equipment (including all transportation and
            warehousing equipment but excluding office equipment and data
            processing equipment) owned or leased pursuant to Capital Leases by
            the Company or a Restricted Subsidiary.

                  "Operating Property" means all real property and improvements
            thereon owned or leased pursuant to Capital Leases by the Company or
            a Restricted Subsidiary and constituting, without limitation, any
            store, warehouse, service center or distribution center wherever
            located, provided that such term shall not include any store,
            warehouse, service center or distribution center which the Company's
            Board of Directors declares by written resolution not to be of
            material importance to the business of the Company and its
            Restricted Subsidiaries.

                  "Quotation Agent" means the Reference Treasury Dealer
            appointed by the Company.

                  "Reference Treasury Dealer" means (i) Goldman, Sachs & Co. and
            its successors; provided, however, that if the foregoing shall cease
            to be a primary U.S. Government securities dealer in New York City
            (a "Primary Treasury Dealer"), the Company shall substitute therefor
            another Primary Treasury Dealer, and (ii) any other Primary Treasury
            Dealer selected by the Company.

                  "Reference Treasury Dealer Quotations" means, with respect to
            each Reference Treasury Dealer and any Redemption Date, the average,
            as determined by the Company, of the bid and asked prices for the
            Comparable Treasury Issue (expressed in each case as a percentage of
            its principal amount) quoted in writing to the Trustee by such
            Reference Treasury Dealer at 5:00 p.m. on the third Business Day
            preceding such Redemption Date.

                  "Restricted Subsidiaries" means all Subsidiaries other than
            Non-Restricted Subsidiaries.

                  "Sale and Lease-Back Transaction" has the meaning specified in
            Section 1010.

                  "Subsidiary" means (i) any corporation or other entity of
            which securities or other ownership interests having ordinary voting
            power to elect a majority of the board of directors or other persons
            performing similar functions are at the time directly or

                                     - 5 -
<PAGE>

            indirectly owned by the Company and/or one or more Subsidiaries or
            (ii) any partnership of which more than 50% of the partnership
            interest is owned by the Company or any Subsidiary.

                                   ARTICLE TWO

                                 SECURITY FORMS

Section 201. Form of Securities of this Series.

            The Securities of this series shall be in the form set forth in this
Article.

Section 202. Form of Face of Security.

            This Security is a Global Security within the meaning of the
Indenture hereinafter referred to and is registered in the name of a Depositary
or a nominee of a Depositary. This Security is not exchangeable for Securities
registered in the name of a Person other than the Depositary or its nominee
except in the limited circumstances described in the Indenture, and no transfer
of this Security (other than a transfer of this Security as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary) may be registered except in
the limited circumstances described in the Indenture.

            Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to The Kroger
Co. or its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.

                                 THE KROGER CO.

                           4.95% Senior Notes due 2015

CUSIP No. 501044 CF 6
ISIN No. US 501044 CF 63                                $ _______________

            The Kroger Co., a corporation duly organized and existing under the
laws of the State of Ohio (herein called the "Company", which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to   , or registered assigns, the principal sum
of $     on January 15, 2015 and to pay interest thereon from December 20, 2004,
or from the most recent Interest Payment Date to which interest has been paid or
duly provided for, semi-annually on January 15 and July 15 in each year,

                                     - 6 -
<PAGE>

commencing July 15, 2005 at the rate of interest of 4.95% per annum until the
principal hereof is paid or made available for payment. Interest on the Security
will be computed on the basis of a 360-day year of twelve 30-day months. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest, which shall be
the January 1 or July 1 (whether or not a Business Day), as the case may be,
next preceding such Interest Payment Date. Any such interest not so punctually
paid or duly provided for will forthwith cease to be payable to the Holder on
such Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Securities
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in said Indenture.

            Payment of the principal of (and premium, if any) and interest on
this Security will be made at the office or agency of the Company maintained for
that purpose in Cincinnati, Ohio, in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register.

            In the case where any Interest Payment Date or the maturity date of
this Security does not fall on a Business Day, payment of interest or principal
otherwise payable on such day need not be made on such day, but may be made on
the next succeeding Business Day with the same force and effect as if made on
such Interest Payment Date or the maturity date of this Security.

            Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

                                     - 7 -
<PAGE>

            Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

            IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.

Dated: December 20, 2004

                                      THE KROGER CO.

                                      By  ____________________________

Attest:

            This is one of the Securities of the series designated therein
referred to in the within mentioned Indenture.

                                      U.S. BANK, N.A.,
                                      as Trustee

                                      By  ____________________________
                                               Authorized Officer

Attest:
_______________________

Section 203. Form of Reverse of Security.

            This Security is one of a duly authorized issue of Securities of the
Company (including the related Guarantees, the "Securities") issued and to be
issued under an Indenture dated as of June 25, 1999, as supplemented by the
First Supplemental Indenture dated as of June 25, 1999, the Second Supplemental
Indenture dated as of June 25, 1999, the Third Supplemental Indenture dated as
of June 25, 1999, the Fourth Supplemental Indenture dated as of September 22,
1999, the Fifth Supplemental Indenture dated as of September 22, 1999, the Sixth
Supplemental Indenture dated as of September 22, 1999, the Seventh Supplemental

                                     - 8 -
<PAGE>

Indenture dated as of February 11, 2000, the Eighth Supplemental Indenture dated
as of February 11, 2000, the Ninth Supplemental Indenture dated as of August 21,
2000, the Tenth Supplemental Indenture dated as of May 11, 2001, the Eleventh
Supplemental Indenture dated as of May 11, 2001, the Twelfth Supplemental
Indenture dated as of August 16, 2001, the Thirteenth Supplemental Indenture
dated as of April 3, 2002, the Fourteenth Supplemental Indenture dated as of
June 17, 2002, the Fifteenth Supplemental Indenture dated as of January 28,
2003, and the Sixteenth Supplemental Indenture dated as of December 20, 2004 (as
so supplemented, herein called the "Indenture"), each between the Company and
the Guarantors named therein, and Firstar Bank, N.A. (now known as U.S. Bank,
N.A.), as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Guarantors named therein, the Trustee and the Holders of the Securities and
of the terms upon which the Securities are, and are to be, authenticated and
delivered. This Security is one of the series designated on the face hereof,
initially limited in aggregate principal amount to $300,000,000.

            The Company may from time to time, without notice to or consent of
the registered holders of the Securities issue further Securities ("Additional
Securities"). The Additional Securities will rank equal with the Securities in
all respects (or in all respects other than the payment of interest accruing
prior to the issue date of the Additional Securities, or except for the first
payment of interest following the issue date of the Additional Securities). The
Additional Securities may be consolidated and form a single series with the
Securities and may have the same terms as to status, redemption, or otherwise,
as the Securities.

            The Securities of this series will be redeemable, in whole or in
part, at the option of the Company at any time at a redemption price equal to
the greater of (i) 100% of the principal amount of such Securities or (ii) as
determined by a Quotation Agent, the sum of the present values of the remaining
scheduled payments of principal and interest thereon (not including any portion
of such payments of interest accrued as of the date of redemption) discounted to
the date of redemption on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Adjusted Treasury Rate plus 15 basis
points, plus, in each case, accrued interest thereon to the date of redemption.

            Notice of any redemption will be mailed at least 30 days but not
more than 60 days before the Redemption Date to each holder of the Securities to
be redeemed. Unless the Company defaults in payment of the redemption price, on
and after the Redemption Date, interest will cease to accrue on the Securities
or portions thereof called for redemption.

            The Indenture contains provisions for defeasance at any time of (i)
the entire indebtedness of this Security or (ii) certain restrictive covenants
and Events of Default with respect to this Security, in each case upon
compliance with certain conditions set forth therein.

                                     - 9 -
<PAGE>

            If an Event of Default shall occur and be continuing, the principal
of all Securities of this series may be declared due and payable in the manner
and with the effect provided in the Indenture.

            The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of 50% in aggregate principal amount of the Securities at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all the Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange therefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.

            As set forth in, and subject to, the provisions of the Indenture, no
Holder of any Security will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such Holder shall
have previously given to the Trustee written notice of a continuing Event of
Default, the Holders of not less than 25% in principal amount of the Outstanding
Securities shall have made written request, and offered reasonable indemnity, to
the Trustee to institute such proceeding as trustee, and the Trustee shall not
have received from the Holders of a majority in principal amount of the
Outstanding Securities a direction inconsistent with such request and shall have
failed to institute such proceeding within 60 days; provided, however, that such
limitations do not apply to a suit instituted by the Holder hereof for the
enforcement of payment of the principal of (and premium, if any) or any interest
on this Security on or after the respective due dates expressed herein.

            No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and any
premium and interest on this Security at the times, place and rate, and in the
coin or currency, herein prescribed.

            As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registerable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
like tenor, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.

                                     - 10 -
<PAGE>

            The Securities are issuable only in registered form without coupons
in denominations of $2,000 and integral multiples of $1,000. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of like tenor,
of a different authorized denomination, as requested by the Holder surrendering
the same.

            Except where otherwise specifically provided in the Indenture, no
service charge shall be made for any such registration of transfer or exchange,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.

            Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.

            All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.

Section 204. Form of Guarantee.

            The form of Guarantee shall be set forth on the Securities
substantially as follows:

                                    GUARANTEE

            For value received, each of the undersigned hereby absolutely, fully
and unconditionally and irrevocably guarantees, jointly and severally with each
other Guarantor, to the holder of the Security on which this Guarantee is
endorsed the payment of principal of, premium, if any, and interest on such
Security in the amounts and at the time when due and payable whether by
declaration thereof, or otherwise, and interest on the overdue principal and
interest, if any, of such Security, if lawful, and the payment or performance of
all other obligations of the Company under the Indenture or such Security, to
the holder of such Security and the Trustee, all in accordance with and subject
to the terms and limitations of such Security and Article Five of the Sixteenth
Supplemental Indenture to the Indenture. This Guarantee will not become
effective until the Trustee duly executes the certificate of authentication on
this Guarantee. This Guarantee shall be governed by and construed in accordance
with the laws of the State of New York, without regard to conflict of law
principles thereof.

Dated: December 20, 2004

                                  Each of the Guarantors Listed on Schedule I
                                  hereto, as Guarantor of the Securities

                                  - 11 -
<PAGE>

                                   By: _______________________________
                                       Name:
                                       Title:

                                     - 12 -
<PAGE>

                                  QUEEN CITY ASSURANCE, INC.,
                                  as Guarantor of the Securities
                                  RJD ASSURANCE, INC.,
                                  as Guarantor of the Securities
                                  VINE COURT ASSURANCE INCORPORATED,
                                  as Guarantor of the Securities

                                  By:________________________________
                                     Name: Bruce M. Gack
                                     Title: Senior Vice President/Vice President

                                  RICHIE'S, INC.,as Guarantor of the Securities,
                                  ROCKET NEWCO, INC.,
                                  as Guarantor of the Securities
                                  HENPIL, INC.,
                                  as Guarantor of the Securities

                                  By: ________________________________
                                      Name: Todd C. Frease
                                      Title: President/Vice President

                                     - 13 -
<PAGE>

This is one of the Guarantees referred to in the within mentioned Indenture.

Attest:                           U.S. BANK, N.A.
                                  as Trustee

___________________               By: ________________________________
                                      Name:
                                      Title:

                                     - 14 -
<PAGE>

                                   SCHEDULE I

                                   Guarantors

<TABLE>
<CAPTION>
Name of Guarantor                                       State of Organization
-----------------                                       ---------------------
<S>                                                     <C>
Alpha Beta Company                                      California
Bay Area Warehouse Stores, Inc.                         California
Bell Markets, Inc.                                      California
Cala Co.                                                Delaware
Cala Foods, Inc.                                        California
CB&S Advertising Agency, Inc.                           Oregon
Crawford Stores, Inc.                                   California
Dillon Companies, Inc.                                  Kansas
Dillon Real Estate Co., Inc.                            Kansas
Distribution Trucking Company                           Oregon
F4L L.P.                                                Ohio
FM, Inc.                                                Utah
FMJ, Inc.                                               Delaware
Food 4 Less GM, Inc.                                    California
Food 4 Less Holdings, Inc.                              Delaware
Food 4 Less Merchandising, Inc.                         California
Food 4 Less of California, Inc.                         California
Food 4 Less of Southern California, Inc.                Delaware
Fred Meyer, Inc.                                        Delaware
Fred Meyer Jewelers, Inc.                               California
Fred Meyer Stores, Inc.                                 Ohio
Hughes Markets, Inc.                                    California
Hughes Realty, Inc.                                     California
Inter-American Foods, Inc.                              Ohio
Junior Food Stores of West Florida, Inc.                Florida
J.V. Distributing, Inc.                                 Michigan
KRGP Inc.                                               Ohio
KRLP Inc.                                               Ohio
The Kroger Co. of Michigan                              Michigan
Kroger Dedicated Logistics Co.                          Ohio
Kroger Group Cooperative, Inc.                          Ohio
Kroger Limited Partnership I                            Ohio
Kroger Limited Partnership II                           Ohio
Kroger Texas L.P.                                       Ohio
Kwik Shop, Inc.                                         Kansas
Mini Mart, Inc.                                         Wyoming
Peyton's-Southeastern, Inc.                             Tennessee
Quik Stop Markets, Inc.                                 California
</TABLE>

                                     - 15 -
<PAGE>

<TABLE>
<CAPTION>
Name of Guarantor                                       State of Organization
-----------------                                       ---------------------
<S>                                                     <C>
Ralphs Grocery Company                                  Ohio
Second Story, Inc.                                      Washington
Smith's Beverage of Wyoming, Inc.                       Wyoming
Smith's Food & Drug Centers, Inc.                       Ohio
THGP Co., Inc.                                          Pennsylvania
THLP Co., Inc.                                          Pennsylvania
Topvalco, Inc.                                          Ohio
Turkey Hill, L.P.                                       Pennsylvania
</TABLE>

                                     - 16 -
<PAGE>

                                  ARTICLE THREE

                            THE SERIES OF SECURITIES

Section 301. Title and Terms.

            There shall be a series of Securities designated as the "4.95%
Senior Notes due 2015" of the Company. Their Stated Maturity shall be January
15, 2015, and they shall bear interest at the rate of 4.95% per annum.

            Interest on the Securities of this series will be payable
semi-annually on January 15 and July 15 of each year, commencing July 15, 2005,
until the principal thereof is made available for payment. Interest on the
Securities of this series will be computed on the basis of a 360-day year of
twelve 30-day months. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will be paid to the Person in whose
name the Securities of this series (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the January 15 or July 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date.

            In the case where any Interest Payment Date or the maturity date of
the Securities of this series does not fall on a Business Day, payment of
interest or principal otherwise payable on such date need not be made on such
day, but may be made on the next succeeding Business Day with the same force and
effect as if made on such Interest Payment Date or the maturity date of the
Securities of this series.

            The aggregate principal amount of Securities of this series which
may be authenticated and delivered under this Sixteenth Supplemental Indenture
is initially limited to $300,000,000, except for Securities authenticated and
delivered upon registration or transfer of, or in exchange for, or in lieu of,
other Securities of this series pursuant to Section 304, 305 and 306 of the
Indenture and except for any Securities of this series which, pursuant to
Section 303 of the Indenture, are deemed never to have been authenticated and
delivered under the Indenture. Notwithstanding the foregoing, the Company may
from time to time, without notice to or consent of the registered holders of the
Securities issue further Securities ("Additional Securities"). The Additional
Securities will rank equal with the Securities in all respects (or in all
respects other than the payment of interest accruing prior to the issue date of
the Additional Securities, or except for the first payment of interest following
the issue date of the Additional Securities). The Additional Securities may be
consolidated and form a single series with the Securities and may have the same
terms as to status, redemption, or otherwise, as the Securities.

            The Securities of this series will be represented by one or more
Global Securities representing the entire $300,000,000 aggregate principal
amount of the Securities of this series

                                     - 17 -
<PAGE>

(as such amount may be increased by the Additional Securities), and the
Depositary with respect to such Global Security or Global Securities will be The
Depository Trust Company.

            The Place of Payment for the principal of (and premium, if any) and
interest on the Securities of this series shall be the office or agency of the
Company in the City of Cincinnati, State of Ohio, maintained for such purpose,
which shall be the Corporate Trust Office of the Trustee and at any other office
or agency maintained by the Company for such purpose; provided, however, that at
the option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register.

            The Securities of this series are redeemable prior to maturity at
the option of the Company as provided in this Sixteenth Supplemental Indenture.

            The Securities of this series are not subject to a sinking fund and
the provisions of Section 501(3) and Article Twelve of the Indenture shall not
be applicable to the Securities of this series.

            The Securities of this series are subject to defeasance at the
option of the Company as provided in this Sixteenth Supplemental Indenture.

                                  ARTICLE FOUR

                  MODIFICATIONS AND ADDITIONS TO THE INDENTURE

Section 401. Modifications to the Consolidation, Merger,
             Conveyance, Transfer or Lease Provisions.

            With respect to the Securities of this series, Section 801 of the
Indenture shall be deleted in its entirety and the following shall be
substituted therefor:

            "Section 801. Covenant Not to Merge, Consolidate, Sell or Convey
      Property Except Under Certain Conditions.

            The Company covenants that it will not merge with or into or
      consolidate with any corporation, partnership, or other entity or sell,
      lease or convey all or substantially all of its assets to any other
      Person, unless (i) either the Company shall be the continuing corporation,
      or the successor entity or the Person which acquires by sale, lease or
      conveyance all or substantially all the assets of the Company (if other
      than the Company) shall be a corporation or partnership organized under
      the laws of the United States of America or any State thereof or the
      District of Columbia and shall expressly assume all obligations of the
      Company under this Indenture and the Securities of the series created by
      the Sixteenth Supplemental Indenture, including the due and punctual
      payment of the

                                     - 18 -
<PAGE>

      principal of and interest on all the Securities of the series created by
      the Sixteenth Supplemental Indenture according to their tenor, and the due
      and punctual performance and observance of all of the covenants and
      conditions of the Indenture to be performed or observed by the Company, by
      supplemental indenture in form satisfactory to the Trustee, executed and
      delivered to the Trustee by such entity, and (ii) the Company, such person
      or such successor entity, as the case may be, shall not, immediately after
      such merger or consolidation, or such sale, lease or conveyance, be in
      default in the performance of any such covenant or condition and,
      immediately after giving effect to such transaction, no Event of Default,
      and no event which, after notice or lapse of time or both, would become an
      Event of Default, shall have happened and be continuing.

            Section 802. Successor Substituted

            Upon any consolidation of the Company with, or merger of the Company
      into, any other Person or any sale, lease or conveyance of all or
      substantially all of the assets of the Company in accordance with Section
      801, the successor Person formed by such consolidation or into which the
      Company is merged or to which such sale, lease or conveyance is made shall
      succeed to, and be substituted for, and may exercise every right and power
      of, the Company under this Indenture with the same effect as if such
      successor Person had been named as the Company herein, and thereafter,
      except in the case of a lease, the predecessor Person shall be relieved of
      all obligations and covenants under this Indenture and the Securities."

Section 402. Other Modifications.

            With respect to the Securities of this series, the Indenture shall
be modified as follows:

            (a) The eighth paragraph of Section 305 of the Indenture shall be
modified by inserting ", and a successor Depositary is not appointed by the
Company within 90 days" at the end of clause (i) in such paragraph; and

            (b) Section 401 of the Indenture shall be modified by adding to the
end of such Section the following paragraph:

            "For the purpose of this Section 401, trust funds may consist of (A)
      money in an amount, or (B) U.S. Government Obligations (as defined in
      Section 1304) which through the scheduled payment of principal and
      interest in respect thereof in accordance with their terms will provide,
      not later than one day before the due date of any payment, money in an
      amount, or (C) a combination thereof, sufficient, in the opinion of a
      nationally recognized firm of independent public accountants expressed in
      a written certification thereof delivered to the Trustee, to pay and
      discharge, the principal of,

                                     - 19 -
<PAGE>

      premium, if any, and each installment of interest on the Securities of
      this series on the Stated Maturity of such principal or installment of
      interest on the day on which such payments are due and payable in
      accordance with the terms of this Indenture and of such Securities of this
      series."

Section 403. Additional Covenants; Defeasance and Covenant Defeasance.

            (a) With respect to the Securities of this series, the following
provisions shall be added as Sections 1009 and 1010 and as Article Thirteen
(Section references contained in these additional provisions are to the
Indenture as supplemented by this Sixteenth Supplemental Indenture):

            "Section 1009. Limitations on Liens.

            After the date hereof and so long as any Securities of the series
      created by the Sixteenth Supplemental Indenture are Outstanding, the
      Company will not issue, assume or guarantee, and will not permit any
      Restricted Subsidiary to issue, assume or guarantee, any Indebtedness
      which is secured by a mortgage, pledge, security interest, lien or
      encumbrance of any kind (including any conditional sale or other title
      retention agreement, any lease in the nature thereof, and any agreement to
      give any of the foregoing) (each being hereinafter referred to as a "lien"
      or "liens") of or upon any Operating Property or Operating Asset, whether
      now owned or hereafter acquired, of the Company or any Restricted
      Subsidiary without effectively providing that the Securities of the series
      created by the Sixteenth Supplemental Indenture (together with, if the
      Company shall so determine, any other Indebtedness of the Company ranking
      equally with the Securities) shall be equally and ratably secured by a
      lien on such assets ranking ratably with and equal to (or at the Company's
      option prior to) such secured Indebtedness; provided that the foregoing
      restriction shall not apply to:

                  (a) liens on any property or assets of any corporation
      existing at the time such corporation becomes a Restricted Subsidiary
      provided that such lien does not extend to any other property of the
      Company or any of its Restricted Subsidiaries;

                  (b) liens on any property or assets (including stock) existing
      at the time of acquisition of such property or assets by the Company or a
      Restricted Subsidiary, 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 Company or a Restricted
      Subsidiary or to secure any indebtedness incurred, assumed or guaranteed
      by the Company or a Restricted Subsidiary 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 Company to obtain the release of a lien on other
      property of the Company on which a lien then exists, which indebtedness is
      incurred, assumed or guaranteed prior to, at the

                                     - 20 -
<PAGE>

      time of, or within 18 months after such acquisition (or in the case of
      real property, the completion of construction (including any improvements
      on an existing asset) or commencement of full operation 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 Company or a
      Restricted Subsidiary;

                  (c) liens on any property or assets to secure Indebtedness of
      a Restricted Subsidiary to the Company or to another Restricted
      Subsidiary;

                  (d) liens on any property or assets of a corporation existing
      at the time such corporation is merged into or consolidated with the
      Company or a Restricted Subsidiary or at the time of a purchase, lease or
      other acquisition of the assets of a corporation or firm as an entirety or
      substantially as an entirety by the Company or a Restricted Subsidiary
      provided that such lien does not extend to any other property of the
      Company or any of its Restricted Subsidiaries;

                  (e) liens on any property or assets of the Company or a
      Restricted Subsidiary 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 Indebtedness 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 financings);

                  (f) liens existing on properties or assets of the Company or
      any Restricted Subsidiary existing on the date hereof; provided that such
      liens secure only those obligations which they secure on the date hereof
      or any extension, renewal or replacement thereof;

                  (g) 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 (a) through (f), 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);

                  (h) 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 Company or
      a Restricted Subsidiary, or governmental (federal, state or municipal)
      liens arising out of contracts for the sale of products or

                                     - 21 -
<PAGE>

      services by the Company or any Restricted Subsidiary, or deposits or
      pledges to obtain the release of any of the foregoing liens;

                  (i) 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
      Company or any Restricted Subsidiary is a party, or to secure the public
      or statutory obligations of the Company or any Restricted Subsidiary, 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 Company
      or any Restricted Subsidiary 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;

                  (j) 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 Company or any Restricted Subsidiary with respect to which the Company
      or such Restricted 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 Company or any
      Restricted Subsidiary for the purpose of obtaining a stay or discharge in
      the course of any litigation or other proceeding to which the Company or
      such Restricted Subsidiary is a party;

                  (k) liens for taxes or assessments or 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 Company
      or any Restricted Subsidiary 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 Company, materially impair the use of such property or
      assets in the operation of the business of the Company or such Restricted
      Subsidiary or the value of such property or assets for the purposes of
      such business; or

                  (l) liens not permitted by clauses (a) through (k) above if at
      the time of, and after giving effect to, the creation or assumption of any
      such lien, the aggregate amount of all Indebtedness of the Company and its
      Restricted Subsidiaries secured by all such liens not so permitted by
      clauses (a) through (k) above together with the Attributable Debt in
      respect of Sale and Lease-Back Transactions permitted by paragraph (a) of
      Section 1010 does not exceed 10% of Consolidated Net Tangible Assets.

            Section 1010. Limitations on Sale and Lease-Back Transactions.

                                     - 22 -
<PAGE>

            After the date hereof and so long as any Securities of the series
      created by the Sixteenth Supplemental Indenture are Outstanding, the
      Company agrees that it will not, and will not permit any Restricted
      Subsidiary to, enter into any arrangement with any Person providing for
      the leasing by the Company or a Restricted Subsidiary of any Operating
      Property or Operating Asset (other than any such arrangement involving a
      lease for a term, including renewal rights, for not more than 3 years and
      leases between the Company and a Restricted Subsidiary or between
      Restricted Subsidiaries), whereby such Operating Property or Operating
      Asset has been or is to be sold or transferred by the Company or any
      Restricted Subsidiary to such Person (herein referred to as a "Sale and
      Lease-Back Transaction"), unless:

                  (a) the Company or such Restricted Subsidiary would, at the
      time of entering into a Sale and Lease-Back transaction, be entitled to
      incur Indebtedness secured by a lien on the Operating Property or
      Operating Asset to be leased in an amount at least equal to the
      Attributable Debt in respect of such Sale and Lease-Back Transaction
      without equally and ratably securing the Securities of the series created
      by the Sixteenth Supplemental Indenture pursuant to Section 1009; or

                  (b) the proceeds of the sale of the Operating Property or
      Operating Asset to be leased are at least equal to the fair market value
      of such Operating Property or Operating Asset (as determined by the chief
      financial officer or chief accounting officer of the Company) and an
      amount in cash equal to the net proceeds from the sale of the Operating
      Property or Operating Asset so leased is applied, within 180 days of the
      effective date of any such Sale and Lease-Back Transaction, to the
      purchase or acquisition (or, in the case of Operating Property, the
      construction) of Operating Property or Operating Assets or to the
      retirement, repurchase, redemption or repayment (other than at maturity or
      pursuant to a mandatory sinking fund or redemption provision and other
      than Indebtedness owned by the Company or any Restricted Subsidiary) of
      Securities of the series created by the Sixteenth Supplemental Indenture
      or of Funded Indebtedness of the Company ranking on a parity with or
      senior to the Securities of the series created by the Sixteenth
      Supplemental Indenture, or in the case of a Sale and Lease-Back
      Transaction by a Restricted Subsidiary, of Funded Indebtedness of such
      Restricted Subsidiary; provided that in connection with any such
      retirement, any related loan commitment or the like shall be reduced in an
      amount equal to the principal amount so retired.

            The foregoing restriction shall not apply to, in the case of any
      Operating Property or Operating Asset acquired or constructed subsequent
      to the date eighteen months prior to the date of this Indenture, any Sale
      and Lease-Back Transaction with respect to such Operating Asset or
      Operating Property (including presently owned real property upon which
      such Operating Property is to be constructed) if a binding commitment is
      entered into with respect to such Sale and Lease-Back Transaction within
      18 months after the later of the acquisition of the Operating Property or
      Operating Asset or the completion of improvements or construction thereon
      or commencement of full operations at such

                                     - 23 -
<PAGE>

      Operating Property (which in the case of a retail store is the opening of
      the store for business to the public).

                                ARTICLE THIRTEEN

                       DEFEASANCE AND COVENANT DEFEASANCE

            Section 1301. Company's Option to Effect Defeasance or Covenant
      Defeasance.

            The Company may at its option by Board Resolution, at any time,
      elect to have either Section 1302 or Section 1303 applied to the
      Outstanding Securities of this series upon compliance with the conditions
      set forth below in this Article Thirteen.

            Section 1302. Defeasance and Discharge.

            Upon the Company's exercise of the option provided in Section 1301
      applicable to this Section, the Company shall be deemed to have been
      discharged from its obligations with respect to the Outstanding Securities
      of the series created by the Sixteenth Supplemental Indenture on the date
      the conditions set forth below are satisfied (hereinafter, "Defeasance").
      For this purpose, such Defeasance means that the Company shall be deemed
      to have paid and discharged the entire indebtedness represented by the
      Outstanding Securities of this series and to have satisfied all its other
      obligations under such Securities of this series and this Indenture
      insofar as such Securities of this series are concerned (and the Trustee,
      at the expense of the Company, shall execute proper instruments
      acknowledging the same), except for the following which shall survive
      until otherwise terminated or discharged hereunder: (A) the rights of
      Holders of Outstanding Securities of this series to receive, solely from
      the trust fund described in Section 1304 and as more fully set forth in
      such Section, payments in respect of the principal of (and premium, if
      any) and interest on such securities when such payments are due, (B) the
      Company's obligations with respect to such Securities of this series under
      Sections 304, 305, 306, 1002 and 1003, (C) the rights, powers, trusts,
      duties and immunities of the Trustee hereunder and (D) this Article
      Thirteen. Subject to compliance with this Article Thirteen, the Company
      may exercise its option under this Section 1302 notwithstanding the prior
      exercise of its option under Section 1303.

            Section 1303. Covenant Defeasance.

            Upon the Company's exercise of the option provided in Section 1301
      applicable to this Section, the Company shall be released from its
      obligations under Section 501(4) (in respect of the covenants in Sections
      1008 through 1010), Section 801 and Sections 1008 through 1010, the
      Securities of this series and the Holders of Securities of this series, on
      and after the date the conditions set forth below are satisfied
      (hereinafter, "covenant Defeasance"). For this purpose, such covenant
      Defeasance means that the Company may omit to comply with and shall have
      no liability in respect of any term, condition or limitation set forth in
      any such Section, whether directly or indirectly, by

                                     - 24 -
<PAGE>

      reason of any reference elsewhere herein to any such Section or by reason
      of any reference in any such Section to any other provision herein or in
      any other document, but the remainder of this Indenture and such
      Securities of this series shall be unaffected thereby.

            Section 1304. Conditions to Defeasance or Covenant Defeasance.

            The following shall be the conditions to application of either
      Section 1302 or Section 1303 to the Outstanding Securities of this series:

                  (1) The Company shall irrevocably have deposited or caused to
            be deposited with the Trustee (or another trustee satisfying the
            requirements of Section 609 who shall agree to comply with the
            provisions of this Article Thirteen applicable to it) as trust funds
            in trust for the purpose of making the following payments,
            specifically pledged as security for, and dedicated solely to, the
            benefit of the Holders of such Securities of this series, (A) money
            in an amount, or (B) U.S. Government Obligations which through the
            scheduled payment of principal and interest in respect thereof in
            accordance with their terms will provide, not later than one day
            before the due date of any payment, money in an amount, or (C) a
            combination thereof, sufficient, in the opinion of a nationally
            recognized firm of independent public accountants expressed in a
            written certification thereof delivered to the Trustee, to pay and
            discharge, and which shall be applied by the Trustee (or other
            qualifying trustee) to pay and discharge, the principal of, premium,
            if any, and each installment of interest on the Securities of this
            series on the Stated Maturity of such principal or installment of
            interest on the day on which such payments are due and payable in
            accordance with the terms of this Indenture and of such Securities
            of this series. For this purpose, "U.S. Government Obligations"
            means securities that are (x) direct obligations of the United
            States of America for the payment of which its full faith and credit
            is pledged or (y) obligations of a Person controlled or supervised
            by and acting as an agency or instrumentality of the United States
            of America the payment of which is unconditionally guaranteed as a
            full faith and credit obligation by the United States of America,
            which, in either case, are not callable or redeemable at the option
            of the Company thereof, and shall also include a depository receipt
            issued by a bank (as defined in Section 3(a)(2) of the Securities
            Act of 1933, as amended) as custodian with respect to any such U.S.
            Government Obligation or a specific payment of principal of or
            interest on any such U.S. Government Obligation held by such
            custodian for the account of the holder of such

                                     - 25 -
<PAGE>

            depository receipt, provided that (except as required by law) such
            custodian is not authorized to make any deduction from the amount
            payable to the holder of such depositary receipt from any amount
            received by the custodian in respect of the U.S. Government
            Obligation or the specific payment of principal of or interest on
            the U.S. Government Obligation evidenced by such depositary receipt.

                  (2) No Event of Default or event which with notice or lapse of
            time or both would become an Event of Default shall have occurred
            and be continuing on the date of such deposit or, insofar as
            subsections 501(6) and (7) are concerned, at any time during the
            period ending on the 121st day after the date of such deposit (it
            being understood that this condition shall not be deemed satisfied
            until the expiration of such period).

                  (3) Such Defeasance or covenant Defeasance shall not cause the
            Trustee to have a conflicting interest as defined in Section 608 and
            for purposes of the Trust Indenture Act with respect to any
            securities of the Company.

                  (4) Such Defeasance or covenant Defeasance shall not result in
            a breach or violation of, or constitute a default under, this
            Indenture or any other agreement or instrument to which the Company
            is a party or by which it is bound.

                  (5) The Company shall have delivered to the Trustee an
            Officers' Certificate and an Opinion of Counsel, each stating that
            all conditions precedent provided for relating to either the
            Defeasance under Section 1302 or the covenant Defeasance under
            Section 1303 (as the case may be) have been complied with.

                  (6) In the case of an election under Section 1302, the Company
            shall have delivered to the Trustee an Opinion of Counsel stating
            that (x) the Company has received from, or there has been published
            by, the Internal Revenue Service a ruling, or (y) since the date of
            this Sixteenth Supplemental Indenture there has been a change in the
            applicable Federal income tax law, in either case to the effect that
            and based thereon such opinion shall confirm that, the Holders of
            the Outstanding Securities of this series will not recognize income,
            gain or loss for Federal income tax purposes as a result of such
            Defeasance or covenant Defeasance and will be subject to Federal
            income tax on the same amounts, in the same manner and at the same
            times as would have been the case if such Defeasance or covenant
            Defeasance had not occurred.

                                     - 26 -
<PAGE>

      Section 1305. Deposited Money and U.S. Government Obligations to Be Held
in Trust; Other Miscellaneous Provisions.

      Subject to the provisions of the last paragraph of Section 1003, all money
and U.S. Government Obligations (including the proceeds thereof) deposited with
the Trustee (or other qualifying trustee--collectively, for purposes of this
Section 1305, the "Trustee") pursuant to Section 1304 in respect of the
Securities of this series shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Securities of this series and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities of this series, of all sums due and
to become due thereon in respect of principal (and premium, if any) and
interest, but such money need not be segregated from other funds except to the
extent required by law.

      The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 1304 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of the Outstanding Securities of this series.

      Anything in this Article Thirteen to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 1304 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent Defeasance or covenant
Defeasance.

      Section 1306. Reinstatement.

      If the Trustee or the Paying Agent is unable to apply any money in
accordance with Section 1302 or 1303 by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's obligations under this Indenture and the
Securities of this series shall be revived and reinstated as though no deposit
had occurred pursuant to this Article Thirteen until such time as the Trustee or
Paying Agent is permitted to apply all such money in accordance with Section
1302 or 1303; provided, however, that if the Company makes any payment of
principal of (and premium, if any) or interest on any Security of this series
following the reinstatement of its obligations, the Company shall be subjugated
to the rights of the Holders of such Securities of this series to receive such
payment from the money held by the Trustee or the Paying Agent."

                                     - 27 -
<PAGE>

Section 404. Redemption of Securities.

            With respect to Securities of this series, Section 1101 of the
Indenture shall be deleted in its entirety and the following shall be
substituted therefor:

            "Section 1101. Optional Redemption.

            The Securities will be redeemable, in whole or in part, at the
      option of the Company at any time at a redemption price equal to the
      greater of (i) 100% of the principal amount of such Securities or (ii) as
      determined by a Quotation Agent, the sum of the present values of the
      remaining scheduled payments of principal and interest thereon (not
      including any portion of such payments of interest accrued as of the date
      of redemption) discounted to the date of redemption on a semi-annual basis
      (assuming a 360-day year consisting of twelve 30-day months) at the
      Adjusted Treasury Rate plus 15 basis points plus, in each case, accrued
      interest thereon to the date of redemption."

                                  ARTICLE FIVE

                                    GUARANTEE

Section 501. Guarantee.

            Each Guarantor hereby jointly and severally fully and
unconditionally guarantees (each a "Guarantee") to each Holder of a Security
authenticated and delivered by the Trustee and to the Trustee and its successors
and assigns, irrespective of the validity and enforceability of the Indenture or
the Securities or the obligations of the Company or any other Guarantor to the
Holders or the Trustee hereunder or thereunder, that (a) the principal of,
premium, if any, and interest on the Securities will be duly and punctually paid
in full when due, whether at maturity, upon redemption, by acceleration or
otherwise, and interest on the overdue principal and (to the extent permitted by
law) interest, if any, on the Securities and all other obligations of the
Company or the Guarantor to the Holders of or the Trustee under the Indenture or
the Securities hereunder (including fees, expenses or others) (collectively, the
"Obligations") will be promptly paid in full or performed, all in accordance
with the terms of the Indenture and the Securities; and (b) in case of any
extension of time of payment or renewal of any Obligations, the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at Stated Maturity, by acceleration or otherwise.
If the Company shall fail to pay when due, or to perform, any Obligations, for
whatever reason, each Guarantor shall be obligated to pay, or to perform or
cause the performance of, the same immediately. An Event of Default under the
Indenture or the Securities shall constitute an event of default under this
Guarantee, and shall entitle the Holders of Securities to accelerate the
Obligations of the Guarantor hereunder in the same manner and to the same extent
as the Obligations of the Company.

                                      -28-

<PAGE>

            Each Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Securities or the Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Securities with respect to any provisions
of the Indenture or the Securities, any release of any other Guarantor, the
recovery of any judgment against the Company, any action to enforce the same,
whether or not a Guarantee is affixed to any particular Security, or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a Guarantor.

            Each Guarantor further agrees that, as between it, on the one hand,
and the Holders of Securities and the Trustee, on the other hand, (a) the
maturity of the Obligations may be accelerated as provided in Article Five of
the Indenture for the purposes of the Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
Obligations, and (b) in the event of any acceleration of such Obligations as
provided in Article Five of the Indenture, such Obligations (whether or not due
and payable) shall forthwith become due and payable by the Guarantor for the
purposes of its Guarantee.

Section 502. Waiver of Demand.

            To the fullest extent permitted by applicable law, each of the
Guarantors 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.

Section 503. Guarantee of Payment.

            Each of the Guarantors 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 Trustee or any Holder of the Securities to
the security, if any, held for payment of the Obligations.

Section 504. No Discharge or Diminishment of Guarantee.

            Subject to Section 510 of this Sixteenth Supplemental Indenture, the
obligations of each of the Guarantors hereunder shall not be subject to any
reduction, limitation, impairment or 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 of the Guarantors hereunder
shall not be discharged or impaired or otherwise affected by the failure of the
Trustee or any Holder of the Securities to assert any claim or demand or to
enforce any remedy under the Indenture or the Securities, any other guarantee or
any other agreement, by any waiver or modification of any provision of any
thereof, by any default,

                                      -29-

<PAGE>

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).

Section 505. Defenses of Company 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 Company 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 Company,
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 each of the Guarantors
against the Company or any security.

Section 506. Continued Effectiveness.

            Subject to Section 510 of this Sixteenth Supplemental Indenture,
each of the Guarantors further agrees that its Guarantee hereunder shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of or interest on any Obligation is
rescinded or must otherwise be restored by the Trustee or any Holder of the
Securities upon the bankruptcy or reorganization of the Company.

Section 507. Subrogation.

            In furtherance of the foregoing and not in limitation of any other
right of each of the Guarantors by virtue hereof, upon the failure of the
Company to pay any Obligation when and as the same shall become due, whether at
maturity, by acceleration, after notice of prepayment or otherwise, each of the
Guarantors hereby promises to and will, upon receipt of written demand by the
Trustee or any Holder of the Securities, forthwith pay, or cause to be paid, to
the Holders in cash the amount of such unpaid Obligations, and thereupon the
Holders shall, assign (except to the extent that such assignment would render a
Guarantor a "creditor" of the Company 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 rata to the extent 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 Holders, and
without any representation or warranty by the Holders). If (a) a Guarantor shall
make payment to the Holders of all or any part of the Obligations and (b) all
the Obligations and all other amounts payable under this Sixteenth Supplemental
Indenture shall be indefeasibly paid in full, the Trustee will, at such
Guarantor's request, execute and deliver to such Guarantor appropriate
documents, without recourse and

                                      -30-

<PAGE>

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 such Guarantor.

Section 508. Information.

            Each of the Guarantors assumes all responsibility for being and
keeping itself informed of the Company'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 each of the Guarantors
assumes and incurs hereunder, and agrees that the Trustee and the Holders of the
Securities will have no duty to advise the Guarantors of information known to it
or any of them regarding such circumstances or risks.

Section 509. Subordination.

            Upon payment by any Guarantor of any sums to the Holders, as
provided above, all rights of such Guarantor against the Company, 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 Trustee;
provided, however, that any right of subrogation that such Guarantor may have
pursuant to this Sixteenth Supplemental Indenture is subject to Section 507
hereof.

Section 510. Termination.

            A Guarantor shall, upon the occurrence of either of the following
events, be automatically and unconditionally released and discharged from all
obligations under this Sixteenth Supplemental Indenture and its Guarantee
without any action required on the part of the Trustee or any Holder if such
release and discharge will not result in any downgrade in the rating given to
the Securities by Moody's Investors Service and Standard and Poor's Rating
Services:

            (a) upon any sale, exchange, transfer or other disposition (by
merger or otherwise) of all of the Capital Stock of a Guarantor or all, or
substantially all, of the assets of such Guarantor, which sale or other
disposition is otherwise in compliance with the terms of the Indenture;
provided, however, that such Guarantor shall not be released and discharged from
its obligations under this Sixteenth Supplemental Indenture and its Guarantee
if, upon consummation of such sale, exchange, transfer or other disposition (by
merger or otherwise), such Guarantor remains or becomes a Guarantor under any
Credit Facility; or

            (b) at the request of the Company, at any time that none of the
Credit Facilities are guaranteed by any Subsidiary of the Company.

The Trustee shall deliver an appropriate instrument evidencing such release upon
receipt of a request of the Company accompanied by an Officers' Certificate
certifying as to the compliance with this Section. Any Guarantor not so released
will remain liable for the full

                                      -31-

<PAGE>

amount of the principal of, premium, if any, and interest on the Notes provided
in this Sixteenth Supplemental Indenture and its Guarantee.

Section 511. Guarantees of other Indebtedness.

            As long as the Securities are guaranteed by the Guarantors, the
Company will cause each of its Subsidiaries that becomes a Guarantor in respect
of (i) any Indebtedness of the Company which is outstanding on the date hereof
and (ii) any Indebtedness incurred by the Company after the date hereof (other
than in respect of asset-backed securities), to include in any guarantee given
by any such Guarantor, provisions similar to those set forth in Section 510
hereof.

Section 512. Additional Guarantors.

            The Company will cause each of its Subsidiaries that becomes a
Guarantor in respect of any Indebtedness of the Company following the date
hereof to execute and deliver a supplemental indenture pursuant to which it will
become a Guarantor under this Sixteenth Supplemental Indenture, if it has not
already done so or unless the Guarantor is prohibited from doing so by
applicable law or a provision of a contract to which it is a party or by which
it is bound.

Section 513. Limitation of Guarantor's Liability.

            Each Guarantor, and by its acceptance hereof each Holder, hereby
confirms that it is the intention of all such parties that the Guarantee by such
Guarantor not constitute a fraudulent transfer or conveyance for purposes of
Title 11 of the United States Code, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar Federal of state law. To
effectuate the foregoing intention, the Holders and such Guarantor hereby
irrevocably agree that the obligations of such Guarantor under this Sixteenth
Supplemental Indenture and its Guarantee shall be limited to the maximum amount
which, after giving effect to all other contingent and fixed liabilities of such
Guarantor, and after giving effect to any collections from or payments made by
or on behalf of, any other Guarantor in respect of the obligations of such
Guarantor under its Guarantee or pursuant to its contribution obligations under
this Sixteenth Supplemental Indenture, will result in the obligations of such
Guarantor under its Guarantee not constituting such fraudulent transfer or
conveyance.

Section 514. Contribution from Other Guarantors.

            Each Guarantor that makes a payment or distribution under its
Guarantee shall be entitled to a contribution from each other Guarantor in a pro
rata amount based on the net assets of each Guarantor, determined in accordance
with generally accepted accounting principles in effect in the United States of
America as of the date hereof.

                                      -32-

<PAGE>

Section 515. No Obligation to Take Action Against the Company.

            Neither the Trustee, any Holder nor any other Person shall have any
obligation to enforce or exhaust any rights or remedies or take any other steps
under any security for the Obligations or against the Company or any other
Person or any property of the Company or any other Person before the Trustee,
such Holder or such other Person is entitled to demand payment and performance
by any or all Guarantors of their liabilities and obligations under their
Guarantee.

Section 516. Dealing with the Company and Others.

            The Holders, without releasing, discharging, limiting or otherwise
affecting in whole or in part the obligations and liabilities of any Guarantor
hereunder and without the consent of or notice to any Guarantor, may:

            (a) grant time, renewals, extensions, compromises, concessions,
waivers, releases, discharges and other indulgences to the Company or any other
Person;

            (b) take or abstain from taking security or collateral from the
Company or from perfecting security or collateral from the Company;

            (c) release, discharge, compromise, realize, enforce or otherwise
deal with or do any act or thing in respect of (with or without consideration)
any and all collateral, mortgages or other security given by the Company or any
third party with respect to the Obligations;

            (d) accept compromises or arrangements from the Company;

            (e) apply all monies at any time received from the Company or from
any security to such part of the Obligations as the Holders may see fit or
change any such application in whole or in part from time to time as the Holders
may see fit; and

            (f) otherwise deal with, or waive or modify their right to deal
with, the Company and all other Persons and any security as the Holders or the
Trustee may see fit.

Section 517. Execution and Delivery of the Guarantee.

            (a) To further evidence the Guarantee set forth in this Article
Five, each Guarantor hereby agrees that a notation of such Guarantee shall be
endorsed on each Security authenticated and delivered by the Trustee and
executed by either manual or facsimile signature of an officer of each
Guarantor. The corporate seal of a Guarantor may be reproduced on the executed
Guarantee and the execution thereof may be attested to by any appropriate
officer of the Guarantor, but neither such reproduction nor such attestation is
or shall be required.

                                      -33-

<PAGE>

            (b) Each of the Guarantors hereby agrees that its Guarantee set
forth in this Article Five shall remain in full force and effect notwithstanding
any failure to endorse on each Security a notation of such Guarantee.

            (c) If an officer of a Guarantor whose signature is on this
Sixteenth Supplemental Indenture or a Guarantee no longer holds that office at
the time the Trustee authenticates such Guarantee or at any time thereafter,
such Guarantor's Guarantee of such Security shall be valid nevertheless.

            (d) The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of any Guarantee
set forth in this Sixteenth Supplemental Indenture on behalf of each Guarantor.

                                   ARTICLE SIX

                                  MISCELLANEOUS

Section 601. Miscellaneous.

            (a) The Trustee accepts the trusts created by the Indenture, as
supplemented by this Sixteenth Supplemental Indenture, and agrees to perform the
same upon the terms and conditions of the Indenture, as supplemented by this
Sixteenth Supplemental Indenture.

            (b) The recitals contained herein shall be taken as statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Sixteenth Supplemental Indenture.

            (c) All capitalized terms used and not defined herein shall have the
respective meanings assigned to them in the Indenture.

            (d) Each of the Company and the Trustee makes and reaffirms as of
the date of execution of this Sixteenth Supplemental Indenture all of its
respective representations, covenants and agreements set forth in the Indenture.

            (e) All covenants and agreements in this Sixteenth Supplemental
Indenture by the Company or the Trustee and each Guarantor shall bind its
respective successors and assigns, whether so expressed or not.

            (f) In case any provisions in this Sixteenth Supplemental Indenture
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

            (g) Nothing in this Sixteenth Supplemental Indenture, express or
implied, shall give to any Person, other than the parties hereto and their
successors under the Indenture and

                                      -34-

<PAGE>

the Holders of the series of Securities created hereby, any benefit or any legal
or equitable right, remedy or claim under the Indenture.

            (h) If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act of 1939, as may be amended from time to
time, that is required under such Act to be a part of and govern this Sixteenth
Supplemental Indenture, the latter provision shall control. If any provision
hereof modifies or excludes any provision of such Act that may be so modified or
excluded, the latter provision shall be deemed to apply to this Sixteenth
Supplemental Indenture as so modified or excluded, as the case may be.

            (i) This Sixteenth Supplemental Indenture shall be governed by and
construed in accordance with the laws of the State of New York.

            (j) All amendments to the Indenture made hereby shall have effect
only with respect to the series of Securities created hereby.

            (k) All provisions of this Sixteenth Supplemental Indenture shall be
deemed to be incorporated in, and made a part of, the Indenture; and the
Indenture, as supplemented by this Sixteenth Supplemental Indenture, shall be
read, taken and construed as one and the same instrument.

            This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.

                                      -35-

<PAGE>

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

                              THE KROGER CO.
                              Each of the Guarantors Listed on Schedule I
                              hereto, as Guarantor of the Securities

                              By: /s/ Paul W. Heldman
                                  ----------------------------------------
                                  Name:  Paul W. Heldman
                                  Title: Senior Vice President/President/Vice
                                         President

                              QUEEN CITY ASSURANCE, INC.,
                              as Guarantor of the Securities
                              RJD ASSURANCE, INC.,
                              as Guarantor of the Securities
                              VINE COURT ASSURANCE INCORPORATED,
                              as Guarantor of the Securities

                              By: /s/ Bruce M. Gack
                                  ----------------------------------------
                                  Name:  Bruce M. Gack
                                  Title: Senior Vice President/Vice President

                              RICHIE'S, INC.,
                              as Guarantor of the Securities
                              ROCKET NEWCO, INC.,
                              as Guarantor of the Securities
                              HENPIL, INC.,
                              as Guarantor of the Securities

                              By: /s/ Todd C. Frease
                                  ----------------------------------------
                                  Name:  Todd C. Frease
                                  Title: President/Vice President

Attest:                       U.S. BANK, N.A.,
                              as Trustee

/s/ Bill Sicking              By: /s/ Robert t. Jones
----------------                  ----------------------------------------
Vice President                    Name:  Robert T. Jones
                                  Title: Vice President and Trust Officer

                                      -36-

<PAGE>

                                   SCHEDULE I

                                   Guarantors

<TABLE>
<CAPTION>
Name of Guarantor                             State of Organization
-----------------                             ---------------------
<S>                                           <C>
Alpha Beta Company                            California
Bay Area Warehouse Stores, Inc.               California
Bell Markets, Inc.                            California
Cala Co.                                      Delaware
Cala Foods, Inc.                              California
CB&S Advertising Agency, Inc.                 Oregon
Crawford Stores, Inc.                         California
Dillon Companies, Inc.                        Kansas
Dillon Real Estate Co., Inc.                  Kansas
Distribution Trucking Company                 Oregon
F4L L.P.                                      Ohio
FM, Inc.                                      Utah
FMJ, Inc.                                     Delaware
Food 4 Less GM, Inc.                          California
Food 4 Less Holdings, Inc.                    Delaware
Food 4 Less Merchandising, Inc.               California
Food 4 Less of California, Inc.               California
Food 4 Less of Southern California, Inc.      Delaware
Fred Meyer, Inc.                              Delaware
Fred Meyer Jewelers, Inc.                     California
Fred Meyer Stores, Inc.                       Ohio
Hughes Markets, Inc.                          California
Hughes Realty, Inc.                           California
Inter-American Foods, Inc.                    Ohio
Junior Food Stores of West Florida, Inc.      Florida
J.V. Distributing, Inc.                       Michigan
KRGP Inc.                                     Ohio
KRLP Inc.                                     Ohio
The Kroger Co. of Michigan                    Michigan
Kroger Dedicated Logistics Co.                Ohio
Kroger Group Cooperative, Inc.                Ohio
Kroger Limited Partnership I                  Ohio
Kroger Limited Partnership II                 Ohio
Kroger Texas L.P.                             Ohio
Kwik Shop, Inc.                               Kansas
Mini Mart, Inc.                               Wyoming
Peyton's-Southeastern, Inc.                   Tennessee
Quik Stop Markets, Inc.                       California
</TABLE>

                                      -37-

<PAGE>

<TABLE>
<CAPTION>
Name of Guarantor                             State of Organization
-----------------                             ---------------------
<S>                                           <C>
Ralphs Grocery Company                        Ohio
Second Story, Inc.                            Washington
Smith's Beverage of Wyoming, Inc.             Wyoming
Smith's Food & Drug Centers, Inc.             Ohio
THGP Co., Inc.                                Pennsylvania
THLP Co., Inc.                                Pennsylvania
Topvalco, Inc.                                Ohio
Turkey Hill, L.P.                             Pennsylvania
</TABLE>

                                      -38-

<PAGE>

STATE OF OHIO)
                 ) ss.:
COUNTY OF HAMILTON)

            On the 16th day of December, 2004, before me personally came Paul W.
Heldman, to me known, who, being by me duly sworn, did depose and say that he is
Senior Vice President of The Kroger Co., and President or Vice President of each
of the Guarantors Listed on Schedule I hereto, corporations described in and
which executed the foregoing instrument; that he knows the seals of said
corporations; that the seals affixed to said instrument are such corporate
seals; that they were so affixed by authority of the Board of Directors of such
corporations, and that he signed his name thereto by like authority.

                                              /s/ Dorothy D. Roberts
                                              ---------------------------------

STATE OF OHIO
                ) ss.:
COUNTY OF HAMILTON )

            On the 16th day of December, 2004, before me personally came Bruce
M. Gack, to me known, who, being by me duly sworn, did depose and say that he is
Senior Vice President of Queen City Assurance, Inc. and RJD Assurance, Inc. and
Vice President of Vine Court Assurance Incorporated, corporations described in
and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Boards of Directors of said
corporation, and that he signed his name thereto by like authority.

                                              /s/ Dorothy D. Roberts
                                              ---------------------------------

                                      -1-

<PAGE>

STATE OF TEXAS)
                   ) ss.:
COUNTY OF MONTGOMERY )

            On the 16th day of December, 2004, before me personally came Todd C.
Frease, to me known, who, being by me duly sworn, did depose and say that he is
President of Richie's Inc. and Vice President of Rocket Newco, Inc. and Henpil,
Inc., corporations described in and which executed the foregoing instrument;
that he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by authority of the
Boards of Directors of said corporation, and that he signed his name thereto by
like authority.

                                              /s/ Barbara Edwards
                                              ---------------------------------

                                       2

<PAGE>

STATE OF OHIO)
                 ) ss.:
COUNTY OF HAMILTON)

            On the 16th day of December, 2004, before me personally came Robert
T. Jones, to me known, who, being by me duly sworn, did depose and say that he
is a Vice President of U.S. Bank, N.A., one of the corporations described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.

                                              /s/ Dorothy D. Roberts
                                              ---------------------------------

                                      3

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