Document:

Exhibit 10.1

 

EXECUTION VERSION

 

 

 

STOCK PURCHASE AGREEMENT

dated as of July 8, 2010

 

between

TEACHER RETIREMENT SYSTEM OF
TEXAS

and

GENERAL GROWTH
PROPERTIES, INC.

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  PURCHASE
  OF NEW COMMON STOCK; CLOSING

  	
  2

  
	
  Section 1.1

  	
  Purchase
  of New Common Stock

  	
  2

  
	
  Section 1.2

  	
  Closing

  	
  3

  
	
  Section 1.3

  	
  Company
  Rights Offering Election

  	
  3

  
	
  Section 1.4

  	
  Company
  Election to Replace Certain Shares; Company Election to Reserve and
  Repurchase Certain Shares

  	
  3

  
	
  ARTICLE II

  	
  REPRESENTATIONS
  AND WARRANTIES OF THE COMPANY

  	
  4

  
	
  Section 2.1

  	
  Organization
  and Qualification

  	
  4

  
	
  Section 2.2

  	
  Corporate
  Power and Authority

  	
  5

  
	
  Section 2.3

  	
  Execution
  and Delivery; Enforceability

  	
  5

  
	
  Section 2.4

  	
  Authorized
  Capital Stock

  	
  5

  
	
  Section 2.5

  	
  Issuance

  	
  6

  
	
  Section 2.6

  	
  No
  Conflict

  	
  6

  
	
  Section 2.7

  	
  Consents
  and Approvals

  	
  7

  
	
  Section 2.8

  	
  Company
  Reports

  	
  8

  
	
  Section 2.9

  	
  No
  Undisclosed Liabilities

  	
  9

  
	
  Section 2.10

  	
  No
  Material Adverse Effect

  	
  10

  
	
  Section 2.11

  	
  No
  Violation or Default: Licenses and Permits

  	
  10

  
	
  Section 2.12

  	
  Legal
  Proceedings

  	
  10

  
	
  Section 2.13

  	
  Investment
  Company Act

  	
  10

  
	
  Section 2.14

  	
  Compliance
  With Environmental Laws

  	
  10

  
	
  Section 2.15

  	
  Company
  Benefit Plans

  	
  11

  
	
  Section 2.16

  	
  Labor
  and Employment Matters

  	
  12

  
	
  Section 2.17

  	
  Insurance

  	
  12

  
	
  Section 2.18

  	
  No
  Unlawful Payments

  	
  12

  
	
  Section 2.19

  	
  No
  Broker’s Fees

  	
  13

  
	
  Section 2.20

  	
  Real
  and Personal Property

  	
  13

  
	
  Section 2.21

  	
  Tax
  Matters

  	
  17

  
	
  Section 2.22

  	
  Material
  Contracts

  	
  19

  
	
  Section 2.23

  	
  No
  Other Representations or Warranties

  	
  19

  

 

i

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  REPRESENTATIONS
  AND WARRANTIES OF PURCHASER

  	
  20

  
	
  Section 3.1

  	
  Organization

  	
  20

  
	
  Section 3.2

  	
  Power
  and Authority

  	
  20

  
	
  Section 3.3

  	
  Execution
  and Delivery

  	
  20

  
	
  Section 3.4

  	
  No
  Conflict

  	
  20

  
	
  Section 3.5

  	
  Consents
  and Approvals

  	
  20

  
	
  Section 3.6

  	
  Compliance
  with Laws

  	
  21

  
	
  Section 3.7

  	
  Legal
  Proceedings

  	
  21

  
	
  Section 3.8

  	
  No
  Broker’s Fees

  	
  21

  
	
  Section 3.9

  	
  Sophistication

  	
  21

  
	
  Section 3.10

  	
  Purchaser
  Intent

  	
  21

  
	
  Section 3.11

  	
  Reliance
  on Exemptions

  	
  21

  
	
  Section 3.12

  	
  Financial
  Capability

  	
  21

  
	
  Section 3.13

  	
  No
  Other Representations or Warranties

  	
  21

  
	
  Section 3.14

  	
  Acknowledgement

  	
  21

  
	
  ARTICLE IV

  	
  COVENANTS
  OF THE COMPANY AND PURCHASER

  	
  22

  
	
  Section 4.1

  	
  Bankruptcy
  Court Motions and Orders

  	
  22

  
	
  Section 4.2

  	
  Listing

  	
  22

  
	
  Section 4.3

  	
  Use
  of Proceeds

  	
  23

  
	
  Section 4.4

  	
  Access
  to Information

  	
  23

  
	
  Section 4.5

  	
  Notification
  of Certain Matters

  	
  23

  
	
  Section 4.6

  	
  Further
  Assurances

  	
  24

  
	
  Section 4.7

  	
  Plan
  and Disclosure Statement

  	
  24

  
	
  ARTICLE V

  	
  ADDITIONAL
  COVENANTS OF PURCHASER

  	
  24

  
	
  Section 5.1

  	
  Information

  	
  24

  
	
  Section 5.2

  	
  Purchaser
  Efforts

  	
  24

  
	
  Section 5.3

  	
  Plan
  Support

  	
  24

  
	
  Section 5.4

  	
  Transfer
  Restrictions

  	
  25

  
	
  ARTICLE VI

  	
  CONDITIONS
  TO THE OBLIGATIONS OF PURCHASER

  	
  26

  

 

ii

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 6.1

  	
  Conditions
  to the Obligations of Purchaser

  	
  26

  
	
  ARTICLE VII

  	
  CONDITIONS
  TO THE OBLIGATIONS OF THE COMPANY

  	
  29

  
	
  Section 7.1

  	
  Conditions
  to the Obligations of the Company

  	
  29

  
	
  ARTICLE VIII

  	
  SURVIVAL
  OF REPRESENTATIONS AND WARRANTIES

  	
  30

  
	
  Section 8.1

  	
  Survival
  of Representations and Warranties

  	
  30

  
	
  ARTICLE IX

  	
  TERMINATION

  	
  31

  
	
  Section 9.1

  	
  Termination

  	
  31

  
	
  Section 9.2

  	
  Effects
  of Termination

  	
  33

  
	
  Section 9.3

  	
  Termination
  Payment

  	
  33

  
	
  ARTICLE X

  	
  DEFINITIONS

  	
  33

  
	
  Section 10.1

  	
  Defined
  Terms

  	
  33

  
	
  ARTICLE XI

  	
  MISCELLANEOUS

  	
  39

  
	
  Section 11.1

  	
  Notices

  	
  39

  
	
  Section 11.2

  	
  Assignment;
  Third Party Beneficiaries

  	
  40

  
	
  Section 11.3

  	
  Prior
  Negotiations; Entire Agreement

  	
  41

  
	
  Section 11.4

  	
  Governing
  Law; Venue

  	
  41

  
	
  Section 11.5

  	
  Company
  Disclosure Letter

  	
  41

  
	
  Section 11.6

  	
  Counterparts

  	
  41

  
	
  Section 11.7

  	
  Expenses

  	
  41

  
	
  Section 11.8

  	
  Waivers
  and Amendments

  	
  41

  
	
  Section 11.9

  	
  Construction

  	
  42

  
	
  Section 11.10

  	
  Adjustment
  of Share Numbers and Prices

  	
  42

  
	
  Section 11.11

  	
  Certain
  Remedies

  	
  42

  
	
  Section 11.12

  	
  Bankruptcy
  Matters

  	
  43

  
	
  Section 11.13

  	
  Purchaser’s
  Status as an Entity of the State of Texas

  	
  43

  

 

iii

 

LIST
OF EXHIBITS AND SCHEDULES

 

	
  Exhibit A:

  	
  Form of REIT Opinion

  

 

iv

 

INDEX
OF DEFINED TERMS

 

	
  Defined Term

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Affiliate

  	
   

  	
  34

  
	
  Agreement

  	
   

  	
  1

  
	
  Approval Motion

  	
   

  	
  22

  
	
  Approval Order

  	
   

  	
  22

  
	
  Bankruptcy Cases

  	
   

  	
  1

  
	
  Bankruptcy Code

  	
   

  	
  1

  
	
  Bankruptcy Court

  	
   

  	
  1

  
	
  Brazilian Entities

  	
   

  	
  34

  
	
  Broker

  	
   

  	
  13

  
	
  Brookfield Agreement

  	
   

  	
  1

  
	
  Brookfield Investor

  	
   

  	
  1

  
	
  Business Day

  	
   

  	
  34

  
	
  Capital Raising
  Activities

  	
   

  	
  34

  
	
  Cash Equivalents

  	
   

  	
  34

  
	
  Chapter 11

  	
   

  	
  1

  
	
  Closing

  	
   

  	
  3

  
	
  Closing Date

  	
   

  	
  3

  
	
  Closing Restraint

  	
   

  	
  32

  
	
  Code

  	
   

  	
  11

  
	
  Common Stock

  	
   

  	
  1

  
	
  Company

  	
   

  	
  1

  
	
  Company Benefit Plan

  	
   

  	
  34

  
	
  Company Disclosure
  Letter

  	
   

  	
  4

  
	
  Company Ground Lease
  Property

  	
   

  	
  15

  
	
  Company Mortgage Loan

  	
   

  	
  16

  
	
  Company Option Plans

  	
   

  	
  5

  
	
  Company Properties

  	
   

  	
  13

  
	
  Company Property

  	
   

  	
  13

  
	
  Company Property Lease

  	
   

  	
  15

  
	
  Company Rights Offering

  	
   

  	
  3

  
	
  Company SEC Reports

  	
   

  	
  8

  
	
  Confirmation Order

  	
   

  	
  27

  
	
  Contract

  	
   

  	
  35

  
	
  Debt

  	
   

  	
  35

  
	
  Debtors

  	
   

  	
  1

  
	
  Designation Conditions

  	
   

  	
  2

  
	
  DIP Loan

  	
   

  	
  35

  
	
  Disclosure Statement

  	
   

  	
  35

  
	
  Effective Date

  	
   

  	
  3

  
	
  Encumbrances

  	
   

  	
  13

  
	
  Environmental Laws

  	
   

  	
  10

  
	
  Equity Exchange

  	
   

  	
  1

  
	
  Equity Securities

  	
   

  	
  6

  

 

v

 

	
  ERISA

  	
   

  	
  35

  
	
  ERISA Affiliate

  	
   

  	
  11

  
	
  Exchange Act

  	
   

  	
  35

  
	
  Excluded Non-US Plans

  	
   

  	
  12

  
	
  Expense Reimbursement

  	
   

  	
  33

  
	
  Fairholme

  	
   

  	
  35

  
	
  Fairholme Agreement

  	
   

  	
  35

  
	
  Foreign Plan

  	
   

  	
  12

  
	
  GAAP

  	
   

  	
  35

  
	
  GGO

  	
   

  	
  2

  
	
  GGP

  	
   

  	
  1

  
	
  Governmental Entity

  	
   

  	
  35

  
	
  Hazardous Materials

  	
   

  	
  11

  
	
  Identified Assets

  	
   

  	
  35

  
	
  Initial Investors

  	
   

  	
  35

  
	
  Investment Agreements

  	
   

  	
  36

  
	
  Joint Venture

  	
   

  	
  36

  
	
  Knowledge

  	
   

  	
  36

  
	
  Law

  	
   

  	
  36

  
	
  Material Adverse Effect

  	
   

  	
  36

  
	
  Material Contract

  	
   

  	
  37

  
	
  Material Lease

  	
   

  	
  16

  
	
  Measurement Date

  	
   

  	
  5

  
	
  New Common Stock

  	
   

  	
  1

  
	
  Non-Controlling
  Properties

  	
   

  	
  37

  
	
  NYSE

  	
   

  	
  22

  
	
  PBGC

  	
   

  	
  11

  
	
  Per Share Purchase
  Price

  	
   

  	
  2

  
	
  Permitted Replacement
  Shares

  	
   

  	
  37

  
	
  Permitted Title
  Exceptions

  	
   

  	
  14

  
	
  Pershing

  	
   

  	
  37

  
	
  Pershing Agreement

  	
   

  	
  37

  
	
  Person

  	
   

  	
  38

  
	
  Plan

  	
   

  	
  1

  
	
  Plan Summary Term Sheet

  	
   

  	
  1

  
	
  Proportionally
  Consolidated Debt

  	
   

  	
  38

  
	
  Proportionally
  Consolidated Unrestricted Cash

  	
   

  	
  38

  
	
  Purchase Price

  	
   

  	
  2

  
	
  Purchaser

  	
   

  	
  1

  
	
  REIT

  	
   

  	
  18

  
	
  REIT Subsidiary

  	
   

  	
  18

  
	
  Reorganized Company

  	
   

  	
  1

  
	
  Repurchase Notice

  	
   

  	
  4

  
	
  Reserved Shares

  	
   

  	
  4

  
	
  Rights Offering
  Election

  	
   

  	
  3

  
	
  Rule 144

  	
   

  	
  25

  

 

vi

 

	
  SEC

  	
   

  	
  8

  
	
  Securities Act

  	
   

  	
  8

  
	
  Share Equivalent

  	
   

  	
  38

  
	
  Shares

  	
   

  	
  2

  
	
  Significant
  Subsidiaries

  	
   

  	
  38

  
	
  Subsidiary

  	
   

  	
  38

  
	
  Tax Protection
  Agreements

  	
   

  	
  39

  
	
  Tax Return

  	
   

  	
  18

  
	
  Taxes

  	
   

  	
  18

  
	
  Termination Date

  	
   

  	
  39

  
	
  Termination Payment

  	
   

  	
  33

  
	
  Transactions

  	
   

  	
  39

  
	
  Unrestricted Cash

  	
   

  	
  39

  
	
  Warrant Agreement

  	
   

  	
  39

  

 

vii

 

STOCK PURCHASE AGREEMENT, dated as of July 8, 2010 (this “Agreement”),
by and between General Growth Properties, Inc., a Delaware corporation (“GGP”), and Teacher Retirement
System of Texas, a public pension plan and entity of the State of Texas
(together with its permitted assigns, “Purchaser”).

 

RECITALS

 

WHEREAS, GGP is a debtor in possession in that certain bankruptcy case
under chapter 11 (“Chapter 11”) of Title 11 of the United States
Code, 11 U.S.C. §§ 101-1532 (as amended, the “Bankruptcy Code”) filed on
April 16, 2009 in the United States Bankruptcy Court for the Southern
District of New York (the “Bankruptcy Court”), Case No. 09-11977
(ALG).

 

WHEREAS,  Purchaser desires to assist GGP
in its plans to recapitalize and emerge from bankruptcy and has agreed to
participate in the implementation of a joint chapter 11 plan of reorganization
based on the Plan Summary Term Sheet (as defined below) (together with all
documents and agreements that form part of such plan or related plan supplement
or are related thereto, and as it may be amended, modified or supplemented from
time to time, in each case, to the extent it relates to the implementation and
effectuation of the Plan Summary Term Sheet and this Agreement, the “Plan”)
of GGP and its Subsidiaries and Affiliates who are debtors and
debtors-in-possession (the “Debtors”) in the chapter 11 cases pending
and jointly administered in the Bankruptcy Court (the “Bankruptcy Cases”).

 

WHEREAS, principal elements of the Plan (including a table setting forth
the proposed treatment of allowed claims and equity interests in the Bankruptcy
Cases) are set forth on the Plan Summary Term Sheet (the “Plan Summary Term
Sheet”) that is an exhibit to that certain Cornerstone Investment
Agreement, dated as of March 31, 2010, as amended (the “Brookfield
Agreement”), by and between GGP and REP Investments LLC (the “Brookfield
Investor”).

 

WHEREAS, the Plan will provide, among other things, that (i) each
holder of common stock, par value $0.01 per share, of GGP (the “Common Stock”)
shall receive, in exchange for each share of Common Stock held by such holder,
one share (subject to adjustment) of new common stock (the “New Common Stock”)
of a new company that succeeds to GGP in the manner contemplated by the
Brookfield Agreement upon consummation of the Plan (the “Reorganized Company”)
and (ii) any Equity Securities (other than Common Stock) of the Company
(as defined below) or any of its Subsidiaries (as defined below) outstanding
immediately after the Effective Date that were previously convertible into, or
exercisable or exchangeable for, Common Stock shall thereafter be convertible
into, or exercisable or exchangeable for, New Common Stock (based upon the
number of shares of Common Stock underlying such Equity Securities) (the transactions
contemplated by clauses (i) and (ii) of this recital being referred
to herein as the “Equity Exchange”). 
For purposes of this Agreement, the “Company” shall be deemed to
refer, prior to consummation of the Plan, to GGP and, on and after consummation
of the Plan, to the Reorganized Company, as the context requires.

 

WHEREAS,  Purchaser desires to make an
investment in the Reorganized Company on the terms and subject to the
conditions described herein in the form of the purchase of shares of New Common
Stock as contemplated hereby.

 

 

WHEREAS, in addition to the Equity Exchange and the sale of the Shares
(as defined below), the Plan will provide for the incorporation by the Company
of a new subsidiary, General Growth Opportunities, Inc. (“GGO”),
the contribution of certain assets (and/or equity interests related thereto) of
the Company to GGO and the assumption by GGO of the liabilities associated with
such assets, and the distribution to the shareholders of the Company of capital
stock of GGO, in each case, as contemplated by the Brookfield Agreement
(subject to adjustment as contemplated by the Brookfield Agreement).

 

WHEREAS,  the Company has requested that
Purchaser commit to purchase the Shares at a fixed price.

 

NOW, THEREFORE,
in consideration of the premises, and of the representations, warranties,
covenants and agreements set forth herein, the parties agree as follows:

 

ARTICLE I

 

PURCHASE OF NEW COMMON
STOCK; CLOSING

 

SECTION 1.1  Purchase of New Common Stock.

 

(a)           On the terms and subject to the conditions set forth
herein, at the Closing (as defined below), Purchaser shall purchase from the
Company, and the Company shall sell to Purchaser, Forty-Eight Million Seven
Hundred Eighty Thousand Four Hundred Eighty-Eight (48,780,488) shares of New Common
Stock (the “Shares”) for a price per share equal to $10.25 (the “Per
Share Purchase Price”) (in the aggregate, Five Hundred Million Dollars
($500,000,000) (the “Purchase Price”)). 
On the terms and subject to the conditions set forth herein, at the Closing
Purchaser shall cause the Purchase Price to be paid by wire transfer of
immediately available U.S. Dollar funds to such account or accounts as the
Company shall have designated in writing prior to the Closing.

 

(b)           All Shares shall be delivered with any and all issue,
stamp, transfer or similar taxes or duties payable in connection with such
delivery duly paid by the Company to the extent required under the Confirmation
Order or applicable Law.

 

(c)           Purchaser, in its sole discretion, may assign its rights
to receive the Shares hereunder or designate that some or all of the Shares be
issued in the name of, and delivered to, an Affiliate of Purchaser, subject to (i) such
action not causing any delay in the obtaining of, or significantly increasing
the risk of not obtaining, any material authorizations, consents, orders,
declarations or approvals necessary to consummate the transactions contemplated
by this Agreement or otherwise delaying the consummation of such transactions, (ii) such
Person shall be an “accredited investor” (within the meaning of Rule 501
of Regulation D under the Securities Act) and shall have agreed in writing with
and for the benefit of the Company to be bound by the terms of this Agreement
applicable to Purchaser set forth in Section 5.4, including the
delivery of the letter certifying compliance with the representations and
covenants set forth on Exhibit A to the extent applicable to such
assignee or designee and (iii) such initial Purchaser not being relieved
of any of its obligations under this Agreement ((i), (ii) and (iii) collectively,
the “Designation Conditions”). 
Notwithstanding anything to the contrary in this Agreement, 

 

2

 

Purchaser may not assign its rights to receive or designate
Shares to any Person if such assignment or designation would cause a failure of
the closing condition in Section 7.1(u) of the Brookfield Agreement.

 

SECTION 1.2  Closing.  Subject to the satisfaction or waiver of the
conditions (excluding conditions that, by their nature, cannot be satisfied
until the Closing, but subject to the satisfaction or waiver of those
conditions as of the Closing) set forth in ARTICLE VI and ARTICLE VII,
the closing of the purchase of the Shares by Purchaser pursuant hereto (the “Closing”)
shall occur at 9:30 a.m., New York time, on the effective date of the Plan
(the “Effective Date”), at the offices of Weil, Gotshal &
Manges LLP located at 767 Fifth Avenue, New York, NY 10153, or such other date,
time or location as agreed by the parties. 
The date of the Closing is referred to as the “Closing Date”.

 

SECTION 1.3  Company Rights Offering Election.  The Company may at any time prior to the date
of filing of the Disclosure Statement, upon written notice to Purchaser in accordance
with the terms hereof (the “Rights Offering Election”), irrevocably
elect to convert the obligation of Purchaser to purchase the Shares as
contemplated by Section 1.1 hereof into an obligation of Purchaser
to participate in a rights offering by the Company pursuant to which
shareholders and/or creditors of the Company are offered rights to subscribe
for shares of New Common Stock (a “Company Rights Offering”), subject to
the execution and delivery of definitive documentation therefor and the satisfaction
of the conditions described therein and other customary conditions for a public
rights offering.  To the extent the
Company makes a Rights Offering Election, (i) Purchaser shall be entitled
to a minimum allocation of shares of New Common Stock in the Company Rights
Offering equal to the number of shares Purchaser would otherwise be required to
purchase pursuant to Section 1.1 hereof had no such election been
made, (ii) the purchase price per share payable by Purchaser shall be
equal to the Per Share Purchase Price and Purchaser shall not be otherwise
adversely affected as compared to the transactions contemplated hereby, (iii) the
Company Rights Offering shall be effected in a manner substantially consistent
with the procedures contemplated by the Brookfield Agreement; provided,
that the Company Rights Offering shall be completed by the Effective Date, and (iv) if
the Company elects to have a Company Rights Offering, the Company and Purchaser
shall cooperate in good faith to develop and agree upon documentation that is
reasonably acceptable to both the Company and Purchaser governing the further
terms and conditions of the Company Rights Offering to the extent it effects
the Purchaser.

 

SECTION 1.4  Company Election to Replace Certain
Shares; Company Election to Reserve and Repurchase Certain Shares.

 

(a)           In the event that the Company has sold, or has binding
commitments to sell on or prior to the Effective Date, Permitted Replacement
Shares, the Company may elect by written notice to reduce the number of Shares
purchased by Purchaser pursuant to Section 1.1(a) by such
number as the Company may determine in its discretion; provided, that
the number of Shares purchased by Purchaser pursuant to Section 1.1(a) shall
not be less than 24,390,244.  No election
by the Company under this Section 1.4(a) shall be effective
unless received by Purchaser at least five (5) Business Days prior to
Closing.  Any election by the Company
under this Section 1.4(a) shall be binding and irrevocable.

 

3

 

(b)           The Company may elect by written notice to Purchaser at
least five (5) Business Days prior to Closing to specify a number of
Shares to be purchased by Purchaser at Closing as Shares to be subject to
repurchase after Closing pursuant to this Section 1.4(b) (the “Reserved
Shares”); provided, that the excess of Shares purchased by Purchaser
pursuant to Section 1.1(a) (after taking into account any
reduction pursuant to Section 1.4(a)) minus the Reserved Shares
shall not be less than 24,390,244.  If
the Company elects to designate any Reserved Shares, the Company shall
thereafter have the right to elect by written notice to Purchaser (the “Repurchase
Notice”) on or prior to the 45th day after the Effective Date (or, if not a
Business Day, the next Business Day) to repurchase (with proceeds from the sale
of Permitted Replacement Shares) from Purchaser a number of Shares up to the
number of Reserved Shares.  The purchase
price for any repurchased Reserved Shares shall be $10.25 per Share, payable in
cash in immediately available funds against delivery of the repurchased
Reserved Shares on a settlement date determined by the Company and Purchaser
and not later than the date that is 45 days after the Effective Date. Any
Repurchase Notice under this Section 1.4(b) shall, when taken
together with this Agreement, constitute a binding offer and acceptance and be
irrevocable.

 

ARTICLE II

 

REPRESENTATIONS AND
WARRANTIES OF THE COMPANY

 

The Company represents and warrants to
Purchaser, as set forth below, except (i) as set forth in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2009 (but
not in documents filed as exhibits thereto or documents incorporated by
reference therein) filed with the SEC on March 1, 2010, as amended by the
Forms 10-K/A filed by the Company with the SEC on March 2, 2010 and April 30,
2010 (other than in any “risk factor” disclosure or any other forward-looking
disclosures contained in such reports under the headings “Risk Factors” or “Cautionary
Note” or any similar sections), or the Company’s Quarterly Report on Form 10-Q
for the quarter ended March 31, 2010 (but not in documents filed as
exhibits thereto or documents incorporated by reference therein) filed with the
SEC on May 12, 2010 (other than in any “risk factor” disclosure or any
other forward-looking disclosures contained in such reports under the headings “Risk
Factors” or “Cautionary Note” or any similar sections) or (ii) as set
forth in the disclosure schedule delivered by the Company to Purchaser on the
date of this Agreement (the “Company Disclosure Letter”); provided,
however, that the representations and warranties contained in Section 2.14,
Section 2.15, Section 2.16, Section 2.17, Section 2.18,
Section 2.20, Section 2.21, and Section 2.22
are made as of March 31, 2010 (except to the extent otherwise provided
therein as of a specified earlier date, in which case, as of such specified
earlier date):

 

SECTION 2.1  Organization and Qualification.  The Company and each of its direct and indirect
Significant Subsidiaries is duly organized and is validly existing as a
corporation or other form of entity, where applicable, in good standing under
the Laws of their respective jurisdictions of organization, with the requisite
power and authority to own, operate or manage its properties and conduct its
business as currently conducted, subject, as applicable, to the restrictions
that result from any such entity’s status as a debtor-in-possession under
Chapter 11, except to the extent the failure of such Significant
Subsidiary to be in good standing (to the extent the concept of good standing
is applicable in its jurisdiction of organization) would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.  The 

 

4

 

Company and each of its Significant Subsidiaries has
been duly qualified as a foreign corporation or other form of entity for the
transaction of business and, where applicable, is in good standing under the Laws
of each other jurisdiction in which it owns, manages, operates or leases
properties or conducts business so as to require such qualification, except to
the extent the failure to be so qualified or, where applicable, be in good
standing would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

 

SECTION 2.2  Corporate Power and Authority.

 

(a)           Subject to the authorization of the Bankruptcy Court,
which shall be contained in the Confirmation Order, and the expiration or
waiver by the Bankruptcy Court of the 14-day period set forth in Bankruptcy Rule 3020(e) following
entry of the Confirmation Order, the Company has the requisite power and
authority to enter into, execute and deliver this Agreement and to perform its
obligations hereunder (except with respect to the provisions of the Approval
Order).  The Company has taken all
necessary corporate action required for the due authorization, execution,
delivery and performance by it of this Agreement.

 

(b)           Subject to the entry of the Approval Order, the Company
has the requisite power and authority to perform its obligations pursuant to
the provisions of the Approval Order.

 

SECTION 2.3  Execution and Delivery; Enforceability.

 

(a)           This Agreement has been duly and validly executed and
delivered by the Company, and subject to the authorization of the Bankruptcy
Court, which shall be contained in the Confirmation Order, and the expiration
or waiver by the Bankruptcy Court of the 14-day period set forth in Bankruptcy Rule 3020(e) following
entry of the Confirmation Order, shall constitute the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at Law or in equity) (except with respect
to the provisions of the Approval Order).

 

(b)           Subject to the entry of the Approval Order, the provisions
of this Agreement relating to the provisions of the Approval Order shall
constitute the valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms.

 

SECTION 2.4  Authorized Capital Stock.  As of the date of this Agreement, the
authorized capital stock of the Company consists of 875,000,000 shares of
Common Stock and of 5,000,000 shares of preferred stock.  The issued and outstanding capital stock of
the Company and the shares of Common Stock available for grant pursuant to the
Company’s 1993 Stock Incentive Plan, 1998 Stock Incentive Plan and  2003 Stock Incentive Plan (collectively, the “Company
Option Plans”) or otherwise as of March 26, 2010 (the “Measurement
Date”) is set forth on Section 2.4 of the Company Disclosure
Letter.  From the Measurement Date to the
date of this Agreement, other than in connection with the Investment Agreements
or in connection with the issuance of shares of Common Stock pursuant to the
exercise of options outstanding as of the Measurement Date, there has been no
change in the number of outstanding shares of capital stock of the Company or
the number of outstanding Equity Securities (as defined below).  

 

5

 

Except as set forth on Section 2.4 of
the Company Disclosure Letter, on the Measurement Date, there was not
outstanding, and there was not reserved for issuance, any (i) share of
capital stock or other voting securities of the Company or its Significant
Subsidiaries; (ii) security of the Company or its Subsidiaries convertible
into or exchangeable or exercisable for shares of capital stock or voting
securities of the Company or its Significant Subsidiaries; (iii) option or
other right to acquire from the Company or its Subsidiaries, or obligation of
the Company or its Subsidiaries to issue, any shares of capital stock, voting
securities or security convertible into or 
exercisable or exchangeable for shares of capital stock or voting
securities of the Company or its Significant Subsidiaries, as the case may be;
or (iv) equity equivalent interest in the ownership or earnings of the
Company or its Significant Subsidiaries or other similar right, in each case to
which the Company or a Significant Subsidiary is a party (the items in clauses (i) through
(iv) collectively, “Equity Securities”).  Other than as set forth on Section 2.4
of the Company Disclosure Letter or as contemplated by this Agreement or the
Investment Agreements, or pursuant to Contracts entered into by the Company
after the date hereof and prior to the Closing that are otherwise not
inconsistent with Purchaser’s rights hereunder and with respect to the
transactions contemplated hereby, and do not confer on any other Person rights
that are superior to those received by Purchaser hereunder or pursuant to the
transactions contemplated hereby other than rights and terms that are
customarily granted to holders of any such Equity Securities so issued and not
customarily granted in transactions such as the transactions contemplated hereby,
there is no outstanding obligation of the Company or its Subsidiaries to
repurchase, redeem or otherwise acquire any Equity Security.  Section 2.4 of the Company
Disclosure Letter sets forth a complete and accurate list of the outstanding
Equity Securities of the Company as of the Measurement Date, including the
applicable conversion rates and exercise prices (or, in the case of options to
acquire Common Stock, the weighted average exercise price) relating to the
conversion or exercise of such Equity Securities into or for Common Stock.

 

SECTION 2.5  Issuance.  Subject to the authorization of the
Bankruptcy Court, which shall be contained in entry of the Confirmation Order,
and the expiration or waiver by the Bankruptcy Court of the 14-day period set forth
in Bankruptcy Rule 3020(e) following entry of the Confirmation Order
and assuming the accuracy of the representations of Purchaser set forth on Exhibit A
hereto, the issuance of the Shares has been duly and validly authorized.  When the Shares are issued and delivered in
accordance with the terms of this Agreement against payment therefor, the
Shares shall be duly and validly issued, fully paid and non-assessable and free
and clear of all taxes, liens, pre-emptive rights, rights of first refusal and subscription
rights, other than rights and restrictions under this Agreement and applicable
state and federal securities Laws.

 

SECTION 2.6  No Conflict.

 

(a)           Subject to (i) the receipt of the consents set forth
on Section 2.6 of the Company Disclosure Letter, (ii) such
authorization as is required by the Bankruptcy Court or the Bankruptcy Code,
which shall be contained in the entry of the Confirmation Order, and the
expiration, or waiver by the Bankruptcy Court, of the 14-day period set forth
in Bankruptcy Rule 3020(e) following entry of the Confirmation Order
and (iii) any provisions of the Bankruptcy Code that override, eliminate
or abrogate such consents or as may be ordered by the Bankruptcy Court, the
execution and delivery (or, with respect to the Plan, the filing) by the
Company of this Agreement and the Plan, the performance by the Company of its
respective obligations under 

 

6

 

this Agreement and compliance by the Company with
all of the provisions hereof and thereof and the consummation of the
transactions contemplated herein and therein, (x) shall not conflict with,
or result in a breach or violation of, any of the terms or provisions of, or
constitute a default under, or result in the acceleration of, or the creation
of any lien under, or give rise to any termination right under, any Contract to
which the Company or any of the Company’s Subsidiaries is a party or by which
any of their material assets are subject or encumbered, (y) shall not
result in any violation or breach of any terms, conditions or provisions of the
certificate of incorporation or bylaws of the Company, or the comparable
organizational documents of the Company’s Subsidiaries, and (z) shall not
conflict with or result in any violation or breach of, or any termination or
impairment of any rights under, any statute or any license, authorization,
injunction, judgment, order, decree, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of its
Subsidiaries or any of their respective properties or assets, except, in the
case of each of clauses (x) and (z) above, for any such conflict,
breach, acceleration, lien, termination, impairment, failure to comply, default
or violation that would not, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect (except with respect to the
provisions of the Approval Order).

 

(b)           Subject to the entry of the Approval Order, the
performance by the Company of its respective obligations under the Approval
Order and compliance by the Company with all of the provisions thereof (x) shall
not conflict with, or result in a breach or violation of, any of the terms or
provisions of, or constitute a default under, or result in the acceleration of,
or the creation of any lien under, or give rise to any termination right under,
any Contract, (y) shall not result in any violation or breach of any
terms, conditions or provisions of the certificate of incorporation or bylaws
of the Company, or the comparable organizational documents of the Company’s
Subsidiaries, and (z) shall not conflict with or result in any violation
or breach of, or any termination or impairment of any rights under, any statute
or any license, authorization, injunction, judgment, order, decree, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company or any of its Subsidiaries or any of their respective properties or
assets, except, in the case of each of clauses (x) and (z) above, for
any such conflict, breach, acceleration, lien, termination, impairment, failure
to comply, default or violation that would not, individually or in the
aggregate, be reasonably expected to have a Material Adverse Effect.

 

SECTION 2.7  Consents and Approvals.

 

(a)           No consent, approval, authorization, order, registration
or qualification of or with any Governmental Entity having jurisdiction over
the Company or any of its Subsidiaries or any of their respective properties is
required for (i) the issuance, sale and delivery of Shares and (ii) the
execution and delivery by the Company of this Agreement or the Plan and
performance of and compliance by the Company with all of the provisions hereof
and thereof and the consummation of the transactions contemplated herein and
therein, except (A) such authorization as is required by the Bankruptcy
Court or the Bankruptcy Code, which shall be contained in the entry of the
relevant Court Order, and the expiration, or waiver by the Bankruptcy Court, of
the 14-day period set forth in Bankruptcy Rule 3020(e) following
entry of the Confirmation Order, as applicable (except with respect to the
provisions of the Approval Order), (B) filings required under, and
compliance with, the applicable requirements of the Exchange Act and the rules and

 

7

 

regulations promulgated thereunder, the Securities
Act and the rules and regulations promulgated thereunder, and the rules of
the New York Stock Exchange, and (C) such other consents, approvals,
authorizations, orders, registrations or qualifications that, if not obtained,
made or given, would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.

 

(b)           No consent, approval, authorization, order, registration
or qualification of or with any Governmental Entity having jurisdiction over
the Company or any of its Subsidiaries or any of their respective properties is
required for the performance of and compliance by the Company with all of the
provisions of the Approval Order except (A) the entry of the Approval
Order, (B) filings required under, and compliance with, the applicable
requirements of the Exchange Act and the rules and regulations promulgated
thereunder, the Securities Act and the rules and regulations promulgated
thereunder, and the rules of the New York Stock Exchange, and (C) such
other consents, approvals, authorizations, orders, registrations or
qualifications that, if not obtained, made or given, would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.

 

SECTION 2.8  Company Reports.

 

(a)           The Company has filed with or otherwise furnished to the
Securities and Exchange Commission (the “SEC”) all material forms,
reports, schedules, statements and other documents required to be filed or
furnished by it under the United States Securities Act of 1933, as amended (the
“Securities Act”) or the Exchange Act since December 31, 2007 (such
documents, as supplemented or amended since the time of filing, and together
with all information incorporated by reference therein, the “Company SEC
Reports”).  No Subsidiary of the
Company is required to file with the SEC any such forms, reports, schedules,
statements or other documents pursuant to Section 13 or 15 of the Exchange
Act.  As of their respective effective
dates (in the case of Company SEC Reports that are registration statements
filed pursuant to the requirements of the Securities Act) and as of their
respective filing dates (in the case of all other Company SEC Reports), except
as and to the extent modified, amended, restated, corrected, updated or
superseded by any subsequent Company SEC Report filed and publicly available
prior to the date of this Agreement, the Company SEC Reports (i) complied
in all material respects with the applicable requirements of the Securities Act
and the Exchange Act, and the rules and regulations of the SEC promulgated
thereunder applicable to such Company SEC Reports, and  (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

 

(b)           The Company maintains a system of “internal controls over financial
reporting” (as defined in Rules 13a-15(f) and 15a-15(f) under
the Exchange Act) that provides reasonable assurance regarding the reliability
of the Company’s financial reporting and the preparation of the Company’s
financial statements for external purposes in accordance with GAAP and that
includes policies and procedures that (i) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the Company, (ii) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with GAAP, and that receipts
and expenditures of the Company are being made only in accordance with
authorizations of management and 

 

8

 

directors of the Company, and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the Company’s assets that could have a material
effect on the Company’s financial statements.

 

(c)           The Company maintains a system of “disclosure controls and
procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under
the Exchange Act) that is reasonably designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under
the Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the rules and forms of the SEC, and that
information relating to the Company is accumulated and communicated to the
Company’s management as appropriate to allow timely decisions regarding
required disclosure and to make the certifications of the Chief Executive
Officer and Chief Financial Officer of the Company required under the Exchange
Act with respect to such reports.

 

(d)           Since December 31, 2008, the Company has not received
any oral or written notification of a “material weakness” in the Company’s
internal controls over financial reporting. 
The term “material weakness” shall have the meaning assigned to it in
the Statements of Auditing Standards 112 and 115, as in effect on the date
hereof.

 

(e)           Except as and to the extent modified, amended, restated,
corrected, updated or superseded by any subsequent Company SEC Report filed and
publicly available prior to the date of this Agreement, the audited
consolidated financial statements and the unaudited consolidated interim
financial statements (including any related notes) included in the Company SEC
Reports fairly present in all material respects, the consolidated financial
position of the Company and its consolidated Subsidiaries as of the dates
thereof and the consolidated results of their operations and their consolidated
cash flows for the periods set forth therein (subject, in the case of financial
statements for quarterly periods, to normal year-end adjustments) and were
prepared in conformity with GAAP consistently applied during the periods
involved (except as otherwise disclosed in the notes thereto).

 

SECTION 2.9  No Undisclosed Liabilities.  None of the Company or its Subsidiaries has
any material liabilities (whether absolute, accrued, contingent or otherwise)
required to be reflected or reserved against on a consolidated balance sheet of
the Company prepared in accordance with GAAP, except for liabilities (i) reflected
or reserved against or provided for in the Company’s consolidated balance sheet
as of December 31, 2009 or disclosed in the notes thereto, included in the
Company’s Annual Report on Form 10-K for the year ended December 31,
2009, (ii) incurred in the ordinary course of business consistent with
past practice since the date of such balance sheet, (iii) for fees and
expenses incurred in connection with the Bankruptcy Cases, which have been
estimated and included in the Admin/Priority Claims identified in the Plan
Summary Term Sheet; provided, however, that such amount is an
estimate and actual results may be higher or lower, (iv) incurred in the
ordinary course of performing this Agreement or the Investment Agreements and
certain other asset sales, transfers and other actions permitted under this
Agreement or the Investment Agreements and (v) other liabilities at
Closing as contemplated by the Plan Summary Term Sheet.

 

9

 

SECTION 2.10  No Material Adverse Effect.  Since December 31, 2009, there has not
occurred any event, fact or circumstance that has had or would reasonably be
expected to have, individually, or in the aggregate, a Material Adverse Effect.

 

SECTION 2.11  No Violation or Default: Licenses and
Permits.  The Company and its
Subsidiaries (a) are in compliance with all Laws, statutes, ordinances,
rules, regulations, orders, judgments and decrees of any court or governmental
agency or body having jurisdiction over the Company or any of its Subsidiaries
or any of their respective properties, and (b) has not received written
notice of any alleged material violation of any of the foregoing except, in the
case of  each of clauses (a) and (b) above,
for any such failure to comply, default or violation that would not,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect or as may be the result of the Company’s or any of its
Subsidiaries’ Chapter 11 filing or status as a debtor-in-possession under
Chapter 11.  Subject to the restrictions
that result from the Company’s or any of its Subsidiaries’ status as a
debtor-in-possession under Chapter 11 (including that in certain instances the
Company’s or such Subsidiary’s conduct of its business requires Bankruptcy
Court approval), each of the Company and its Subsidiaries holds all material
licenses, franchises, permits, certificates of occupancy, consents,
registrations, certificates and other governmental and regulatory permits,
authorizations and approvals required for the operation of the business as
currently conducted by it and for the ownership, lease or operation of its
material assets except, in each case, where the failure to possess or make the
same would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.

 

SECTION 2.12  Legal Proceedings.  There are no legal, governmental or
regulatory investigations, actions, suits or proceedings pending or, to the
Knowledge of the Company, threatened against the Company or any of its
Subsidiaries which, individually, if determined adversely to the Company or any
of its Subsidiaries, would reasonably be expected to have a Material Adverse
Effect.

 

SECTION 2.13  Investment Company Act.  The Company is not, and, after giving effect
to the offering and sale of the Shares and the application of the proceeds
thereof, shall not be required to register as an “investment company” or an
entity “controlled” by an “investment company” within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations
of the SEC thereunder.

 

SECTION 2.14  Compliance With Environmental Laws.  Except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, (i) each
of the Company and its Subsidiaries are and have been in compliance with and
each of the Company Properties are and have been maintained in compliance with,
any and all applicable federal, state, local and foreign Laws relating to the
protection of the environment or natural resources, human health and safety as
such relates to the environment, or the presence, handling, or release of
Hazardous Materials (collectively, “Environmental Laws”), which
compliance includes obtaining, maintaining and complying with all permits,
licenses or other approvals required under Environmental Laws to conduct
operations as presently conducted, and no action is pending or, to the
Knowledge of the Company, threatened that seeks to repeal, modify, amend,
revoke, limit, deny renewal of, or otherwise appeal or challenge any such
permits, licenses or other approvals, (ii) none of the Company or its
Subsidiaries have received any written notice of, and none of the Company
Properties have been the subject of any written notice received by the 

 

10

 

Company or any of its Subsidiaries of, any actual or
potential liability or violation for the presence, exposure to, investigation,
remediation, arrangement for disposal, or release of any material classified,
characterized or regulated as hazardous, toxic, pollutants, or contaminants
under Environmental Laws, including petroleum products or byproducts,
radioactive materials, asbestos-containing materials, radon, lead-containing materials,
polychlorinated biphenyls, mold, and hazardous building materials
(collectively, “Hazardous Materials”), (iii) none of the Company
and its Subsidiaries are a party to or the subject of any pending, or, to the
Knowledge of the Company, threatened, legal proceeding alleging any liability,
responsibility, or violation under any Environmental Laws with respect to their
past or present facilities or their respective operations, (iv) none of
the Company and its Subsidiaries have released Hazardous Materials on any real
property in a manner that would reasonably be expected to result in an
environmental claim or liability against the Company or any of its Subsidiaries
or Affiliates, (v) none of the Company Properties is the subject of any
pending, or, to the Knowledge of the Company, threatened, legal proceeding
alleging any liability, responsibility, or violation under any Environmental
Laws, and (vi) to the Knowledge of the Company, there has been no release
of Hazardous Materials on, from, under, or at any of the Company Properties
that would reasonably be expected to result in an environmental claim or
liability against the Company or any of its Subsidiaries or Affiliates.

 

SECTION 2.15  Company Benefit Plans.

 

(a)           Except as would not, individually or in the aggregate,
have a Material Adverse Effect, each Company Benefit Plan is in compliance in
design and operation in all material respects with all applicable provisions of
ERISA and the U.S. Internal Revenue Code of 1986, as amended (the “Code”)
and each Company Benefit Plan that is intended to be qualified under
Section 401(a) of the Code has received a favorable determination
letter from the Internal Revenue Service with respect to its qualified status
under Section 401(a) of the Code and its related trust’s exempt
status under Section 501(a) of the Code and the Company is not aware
of any circumstances likely to result in the loss of the qualification of any
such plan under Section 401(a) of the Code.

 

(b)           Except as would not, individually or in the aggregate,
have a Material Adverse Effect, with respect to each Company Benefit Plan that
is subject to Title IV or Section 302 of ERISA or Section 412 or 4971
of the Code:  (A) no Company Benefit
Plan has failed to satisfy the minimum funding standard (within the meaning of
Sections 412 and 430 of the Code or Section 302 of ERISA) applicable to
such Company Benefit Plan, whether or not waived and no application for a
waiver of the minimum funding standard with respect to any Company Benefit Plan
has been submitted; (B) no reportable event within the meaning of
Section 4043(c) of ERISA for which the 30-day notice requirement has
not been waived has occurred (other than in connection with the Bankruptcy
Cases); (C) no liability (other than for premiums to the Pension Benefit
Guaranty Corporation (the “PBGC”)) under Title IV of ERISA has been
or is expected to be incurred by the Company or any entity that is required to
be aggregated with the Company pursuant to Section 414 of the Code (an “ERISA
Affiliate”); (D) the PBGC has not instituted proceedings to terminate
any such plan or made any inquiry which would reasonably be expected to lead to
termination of any such plan, and, no condition exists that presents a risk
that such proceedings will be instituted or which would constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of
a trustee to administer, any such plan; and (E) no 

 

11

 

Company Benefit Plan is, or is expected to be, in “at-risk”
status (as defined in Section 303(i)(4) of ERISA or
Section 430(i)(4) of the Code).

 

(c)           Except as would not, individually or in the aggregate,
have a Material Adverse Effect, with respect to each Company Benefit Plan
maintained primarily for the benefit of current or former employees, officers
or directors employed, or otherwise engaged, outside the United States (each a “Foreign
Plan”), excluding any Foreign Plans that are statutorily required,
government sponsored or not otherwise sponsored, maintained or controlled by
the Company or any of its Significant Subsidiaries (“Excluded Non-US Plans”):
(A) (1) all employer and employee contributions required by Law or by
the terms of the Foreign Plan have been made, and all liabilities of the
Company and its Significant Subsidiaries have been satisfied, or, in each case
accrued, by the Company and its Significant Subsidiaries in accordance with
generally accepted accounting principles, and (2) the Company and its
Significant Subsidiaries are in compliance with all requirements of applicable
Law and the terms of such Foreign Plan; (B) as of the Effective Date, the
fair market value of the assets of each funded Foreign Plan, or the book
reserve established for each Foreign Plan, together with any accrued contributions,
is sufficient to procure or provide for the accrued benefit obligations with
respect to all current and former participants in such Foreign Plan determined
on an ongoing basis (rather than on a plan termination basis) according to the
actuarial assumptions and valuations used to account for such obligations as of
the Effective Date in accordance with applicable generally accepted accounting
principles; and (C) the Foreign Plan has been registered as required and
has been maintained in good standing with applicable regulatory authorities.

 

SECTION 2.16  Labor and Employment Matters.  (i) Neither the Company nor any of its
Significant Subsidiaries is a party to or bound by any collective bargaining
agreement or any labor union contract, nor are any employees of the Company or
any of its Significant Subsidiaries represented by a works council or a labor
organization (other than any industry-wide or statutorily mandated agreement in
non-U.S. jurisdictions); (ii) to the Knowledge of the Company, as of March 31,
2010, there are no activities or proceedings by any labor union or labor
organization to organize any employees of the Company or any of its Significant
Subsidiaries or to compel the Company or any of its Significant Subsidiaries to
bargain with any labor union or labor organization; and (iii), except as would
not, individually or in the aggregate, have a Material Adverse Effect, there is
no pending or, to the Knowledge of the Company, threatened material labor
strike, lock-out, walkout, work stoppage, slowdown, demonstration, leafleting,
picketing, boycott, work-to-rule campaign, sit-in, sick-out, or similar
form of organized labor disruption.

 

SECTION 2.17  Insurance.  The Company maintains for itself and its
Subsidiaries insurance policies in those amounts and covering those risks, as
in its judgment, are reasonable for the business and assets of the Company and
its Subsidiaries.

 

SECTION 2.18  No Unlawful Payments.  No action is pending or, to the Knowledge of
the Company, is threatened against the Company or any of its Subsidiaries or
Affiliates, or any of their respective directors, officers, or employees
resulting from any (a) use of corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to political
activity, including without limitation to any Texas State official or member of
the Texas legislature, (b) direct or indirect unlawful payment to any
foreign or domestic government 

 

12

 

official or employee from corporate funds, (c) violations
of any provision of the Foreign Corrupt Practices Act of 1977 or any other
applicable local anti-bribery or anti-corruption Laws in any relevant
jurisdictions or (d) other unlawful payment, except in any such case, as
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.  No unlawful
payment has been made to any Person by, or on behalf of the Company, in
connection with the Purchaser’s investigation, negotiation or entering into
this Agreement or purchase of the Shares.

 

SECTION 2.19  No Broker’s Fees.  Other than pursuant to agreements (including
amendments thereto) by and between the Company and each of UBS Securities LLC
and Miller Buckfire & Co., LLC (each, a “Broker” ), or
otherwise disclosed to Purchaser prior to the date hereof, none of the Company
or any of its Subsidiaries is a party to any contract, agreement or
understanding with any person (other than this Agreement) that would give rise
to a valid claim against the Company or any of its Subsidiaries for an
investment banking fee, finder’s fee or like payment in respect of the sale of
the Shares contemplated by this Agreement. 
None of the Company or any of its Subsidiaries is a party to any
contract, agreement or understanding with any Person that would give rise to a
valid claim against Purchaser for a brokerage commission, finder’s fee,
investment banking fee or like payment in connection with the transactions
contemplated by this Agreement.  Each
Broker is registered with either the SEC or the Financial Industry Regulatory
Authority.

 

SECTION 2.20  Real and Personal Property.

 

(a)           Section 2.20(a) of the Company Disclosure
Letter sets forth a true, correct and complete list in all material respects of
each material real property asset owned or leased (as lessee), directly or
indirectly, in whole or in part, by the Company and/or any of its Subsidiaries
(other than Identified Assets) (each such property that is not a
Non-Controlling Property and has a fair market value (in the reasonable
determination of the Company) in excess of $10,000,000 is individually referred
to herein as “Company Property” and collectively referred to herein as
the “Company Properties”).  All
Company Properties, Non-Controlling Properties and the Identified Assets are
reflected in accordance with the applicable rules and regulations of the
SEC in the Annual Report in Form 10-K as of, and for the year ended, December 31,
2009.

 

(b)           Except (i) for such breach of this Section 2.20(b) as
may be caused fully or substantially by the third party member or partner in
any Joint Venture, without the Knowledge or consent of the Company or any of
its Subsidiaries or (ii) as would not individually or in the aggregate be
reasonably expected to have a Material Adverse Effect, the Company or one of
its Subsidiaries owns good and valid fee simple title or valid and enforceable
leasehold interests (except with respect to the Company’s right to reject any
such ground lease as part of a Bankruptcy plan of reorganization for the
remaining Debtor entities and subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar Laws affecting creditors’ rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at Law or
in equity)), as applicable, to each of the Company Properties, in each case,
free and clear of liens, mortgages or deeds of trust, claims against title,
charges that are liens or other encumbrances on title, rights of way,
restrictive covenants, declarations or reservations of an interest in title
(collectively, “Encumbrances”), 

 

13

 

except for the following (collectively, the “Permitted
Title Exceptions”): (i) Encumbrances relating to the DIP Loan and to
debt obligations reflected in the Company’s financial statements and the notes
thereto (including with respect to debt obligations which are not consolidated)
or otherwise disclosed to Purchaser in Section 2.20(g)(i) of
the Company Disclosure Letter, (ii) Encumbrances that result from any
statutory or other liens for Taxes or assessments that are not yet due or
delinquent or the validity of which is being contested in good faith by
appropriate proceedings and for which a sufficient and appropriate reserve has
been set aside for the full payment thereof, (iii) any contracts, or other
occupancy agreements to third parties for the occupation or use of portions of
the Company Properties by such third parties in the ordinary course of the
business of the Company or its Subsidiaries, (iv) Encumbrances imposed or
promulgated by Law or any Governmental Entity, including zoning, entitlement
and other land use and environmental regulations, (v) Encumbrances
disclosed on existing title policies and current title insurance commitments or
surveys made available to Purchaser, (vi) Encumbrances on the landlord’s
fee interest at any Company Property where the Company or its Subsidiary is the
tenant under any ground lease, provided that, except as disclosed to Purchaser
in Section 2.20(b)(ii) of the Company Disclosure Letter,
neither the Company nor any of its Subsidiaries have received a notice
indicating the intention of the landlord under such ground lease, or of any
other Person, to (1) exercise a right to terminate such ground lease,
evict the lessee or otherwise collect the sub-rents thereunder, or (2) take
any other action that would be reasonably likely to result in a termination of
such ground lease, (vii) any cashiers’, landlords’, workers’, mechanics’,
carriers’, workmen’s, repairmen’s and materialmen’s liens and other similar
liens (1) incurred in the ordinary course of business which (A) are
being challenged in good faith by appropriate proceedings and for which a
sufficient and appropriate reserve has been set aside for the full payment
thereof or (B) have been otherwise fully bonded and discharged of record
or for which a sufficient and appropriate reserve has been set aside for the
full payment thereof or (2) disclosed on Section 2.20(b)(i) of
the Company Disclosure Letter  and (viii) any
other easements, rights-of-way, restrictions (including zoning restrictions), covenants,
encroachments, protrusions and other similar charges or encumbrances, and title
limitations or title defects, if any, that (I) are customary for office,
industrial, master planned communities and retail properties or (II) individually
or in the aggregate, would not be reasonably expected to have a Material
Adverse Effect.  Other than as set forth
on Section 2.20(b)(ii) of the Company Disclosure Letter,
neither the Company nor any of its Subsidiaries has received a written notice
of a material default, beyond any applicable grace and cure periods, of or
under any Permitted Title Exceptions, except (w) as may have been caused
fully or substantially by the third party member or partner in any Joint
Venture, without the Knowledge or consent of the Company or any of its
Subsidiaries (x) as a result of the filing of the Bankruptcy Cases, (y) where
the Permitted Title Exceptions are in and of themselves evidence of default
(such as mechanics’ liens and recorded notices of default) or (z) as would
not, individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect; provided, however, that where the
Company has otherwise represented and warranted to Purchaser hereunder
(including as set forth on the Company Disclosure Letter pursuant to such
representations and warranties) with respect to the Company’s Knowledge of, the
Company’s receipt of notice of or the existence of a default in connection with
a particular category of Permitted Title Exceptions, such categories of
Permitted Title Exceptions shall not be included in the representation set
forth in this sentence (by way of illustration, but not exclusion, the
representations set forth in Section 2.20(f) with respect to
defaults under Material 

 

14

 

Leases shall be deemed to address the Company’s
representations and warranties with respect to the entire category of Permitted
Title Exceptions detailed in clause (iii) above).

 

(c)           [Intentionally omitted.]

 

(d)           With respect to each Company Ground Lease Property, except
as set forth on Section 2.20(d) of the Company Disclosure
Letter and except as may have been caused by, or disclosed in the filing of the
Bankruptcy Cases, as of March 31, 2010, to the Company’s Knowledge,
neither the Company nor any of its Subsidiaries has received notice of material
defaults (including, without limitation, payment defaults, but limited to those
circumstances where such default may grant the landlord under such ground lease
the right to terminate such ground lease, evict the lessee or otherwise collect
the sub-rents thereunder) at such Company Ground Lease Property beyond any
applicable grace and cure periods, except (x) as would not, individually
or in the aggregate, be reasonably expected to have a Material Adverse Effect, (y) as
may be caused fully or substantially by the third party member or partner in
any Joint Venture, without the Knowledge or consent of the Company or any of
its Subsidiaries and (z) with respect to any Company Ground Lease Property
which is leased by a Subsidiary of the Company which has consummated a plan of
reorganization in the Bankruptcy Cases, all such material defaults at such
Company Ground Lease Property which existed prior to the effective date of such
Person’s plan of reorganization have been or will be cured in accordance with
such plan.  As used herein the term “Company
Ground Lease Property” shall mean any Company Property having a fair market
value (in the reasonable determination of the Company) in excess of $25,000,000
which is leased by a Subsidiary of the Company as tenant pursuant to a ground
lease.  With respect to the defaults
referenced in clause (z) above, the Bankruptcy Court approved the Debtors’
assumption of the applicable ground leases and the fixed cure amounts for such
defaults which predated assumption; provided, however, nothing
contained herein precludes any Person from raising issues in the future with
respect to defaults that may have predated such assumption.

 

(e)           Except as set forth on Section 2.20(e) of
the Company Disclosure Letter, neither the Company nor any of its Subsidiaries
is a party to any agreement relating to the property management (but not
including any leasing, development, construction or brokerage agreements) of
any of the Company Properties by a party other than Company or any wholly owned
Company Subsidiaries, except (i) management agreements that may be
terminated without cause or payment of a termination fee upon no more than 60
days notice or (ii) as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

(f)            Except as set forth on Section 2.20(f) of
the Company Disclosure Letter, to the Company’s Knowledge, as of February 15,
2010, (i) each Material Lease is in full force and effect, (ii) no
tenant is in arrears in the payment of rent, additional rent or any other
material charges due under any Material Lease, and no tenant is materially in
default in the performance of any other obligations under any Material Lease, (iii) no
bankruptcy or insolvency proceeding has been commenced (and is continuing) by
or against any tenant under any Material Lease, and (iv) neither the
Company nor any of its Subsidiaries has received a written notice from a
current tenant under any Material Lease exercising a right to terminate or
otherwise cancel its Material Lease (y) as a result of or in connection
with the termination or cancellation of any other lease, sublease, license or
occupancy agreement for space at any Company Property (each, a “Company
Property Lease”), or (z) as a result of or in connection with any
other tenant that 

 

15

 

occupies, or had previously occupied, another
Company Property Lease, allowing, or having had allowed, all or any portion of
the premises leased pursuant to such other Company Property Lease to “go
dark” or otherwise be abandoned or vacated; except, (A) in the case of
each of clauses (i), (ii) (iii) and (iv) above, as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, (B) as a result of the filing of the Bankruptcy Cases or
in connection with any Bankruptcy Court approved process and (C) as may
have been caused fully or substantially by the third party member or partner in
any Joint Venture, without the Knowledge or consent of the Company or its
Subsidiaries.  “Material Lease”
means for any Company Property any lease in which the Company or its
Subsidiaries is the landlord, and all amendments, modifications, supplements,
renewals, exhibits, schedules, extensions and guarantees related thereto, (1) to
an “anchor tenant” occupying at least 80,000 square feet with respect to
such Company Property or (2) that is one of the five (5) largest
leases, in terms of gross annual minimum rent, with respect to a Company
Property that has an annual net operating income, as determined in accordance
with GAAP (provided, however, that for purposes of such
calculation, the following were reflected as expenses: (a) ground rent
payments to a third party and (b) an assumed management fee equal to 3% of
base minimum and percentage rent) with respect to the trailing twelve (12)
calendar month period, equal to at least $7,500,000.00.  For purposes of Section 6.1(c), (y) the
representations and warranties made in Section 2.20(f)(i), (iii) and
(iv), disregarding all qualifications and exceptions contained therein
relating to “materiality” or “Material Adverse Effect”, shall be
shall be true and correct at and as of the Closing Date as if made at and as of
the Closing Date, except for such failures to be true and correct that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect and (z) the representation and warranties
contained in Section 2.20(f)(ii), disregarding all qualifications
and exceptions contained therein relating to “materiality” or “Material
Adverse Effect”, shall be true and correct (A) at and as of the last
day of the calendar month that is two (2) calendar months prior to the
calendar month in which the Closing Date occurs as if made at and as of such
date, if the Closing Date occurs on or prior to the fifteenth (15th) day of a
calendar month, or (B) at and as of the fifteenth (15th) day of the
calendar month that is one (1) calendar month prior to the calendar month
in which the Closing Date occurs as if made at and as of such date, if the
Closing Date occurs on or after the sixteenth (16th) day of a calendar month,
except for such failures to be true and correct that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.

 

(g)           With respect to
each Company Property:

 

(i)            As of the date
listed thereunder, Section 2.20(g) of the Company Disclosure
Letter sets forth a true, correct and complete list in all material respects of
(i) all loans (other than the DIP Loan) and other indebtedness secured by
a mortgage, deed of trust, deed to secure debt or indemnity deed of trust in
such Company Property (each, a “Company Mortgage Loan”), (ii) the
outstanding principal balance of each such Company Mortgage Loan, (iii) the
rate of interest applicable to such Company Mortgage Loan and (iv) the
maturity date of such Company Mortgage Loan;

 

(ii)           Except as set
forth in Section 2.20(g) of the Company Disclosure Letter, neither
the Company nor any of its Subsidiaries have received a written 

 

16

 

notice of default (beyond
any applicable grace or cure periods) in the (y) payment of interest,
principal or other material amount due to the lender under any Company Mortgage
Loan, whether as the primary obligor or as a guarantor thereof or (z) performance
of any other material obligations under any Company Mortgage Loan, except (i) with
respect to (y) and (z) above, as a result of the filing of the
Bankruptcy Cases, or as is prohibited, stayed or otherwise suspended as a
result of the Company’s or any Subsidiary’s Chapter 11 filing or status as a
debtor-in-possession under Chapter 11, and (ii) with respect solely to (z) above,
which would not individually or in the aggregate, be reasonably expected to
have a Material Adverse Effect; and

 

(iii)          For purposes of
Section 6.1(c), the representations and warranties made in Section 2.20(g)(i),
disregarding all qualifications and exceptions contained therein relating to “materiality”
or “Material Adverse Effect”, shall be true and correct at and as of the
Closing Date as if made at and as of the Closing Date, except for (A) such
inaccuracies caused by sales, purchases, transfers of assets, refinancing or
other actions effected in accordance with, subject to the limitations contained
in, and not otherwise prohibited by, the terms and conditions in this
Agreement, including, without limitation, in ARTICLE VI, (B) amortization
payments made pursuant to any applicable Company Mortgage Loans and (C) such
failures to be true and correct that, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect.

 

(h)           To the
Knowledge of the Company, (i) except as set forth on Section 2.20(h) of
the Company Disclosure Letter, neither the Company nor any of its Subsidiaries
has received a written notice exercising an option, “buy-sell” right or
other similar right to purchase a Company Property or any material portion
thereof which has not previously closed, except as would not, individually or
in the aggregate, reasonably be expected to have a material adverse effect with
respect to such Company Property and (ii) no Company Property is subject
to a purchase and sale agreement or any similar legally binding agreement to
purchase such Company Property or any material portion thereof (other than (x) with
respect to condominium purchase and sale agreements and purchase and sale and
early occupancy agreements or similar agreements for the sale of condominium
units at the Natick Nouvelle, (y) with respect to builder lot purchase
agreements and other similar agreements for the sale of vacant lots of land to
builders at Bridgeland and (z) as set forth in (i) above) which has
not previously closed.

 

(i)            The Company has
conducted due inquiry with respect to the representations and warranties made
in Section 2.20(d), Section 2.20(f) and Section 2.20(h).

 

SECTION 2.21  Tax Matters.  Except as disclosed on Section 2.21(a) of
the Company Disclosure Letter:

 

(a)           Except in cases
where the failure of any of the following to be true would not result in a
Material Adverse Effect: (i) the Company and each of its Significant
Subsidiaries have filed all Tax Returns required to be filed by applicable Law
prior to March 31, 2010; (ii) all such 

 

17

 

Tax Returns were true, complete and correct in all
respects and filed on a timely basis (taking into account any applicable
extensions); (iii) the Company and each of its Significant Subsidiaries
have paid all amounts of Taxes that are due, claimed or assessed by any taxing
authority to be due for the periods covered by such Tax Returns, other than any
Taxes for which adequate reserves have been established in accordance with GAAP
or a claim has been filed in the Bankruptcy Cases; and (iv) all
adjustments of federal U.S. Tax liability of the Company and its Significant
Subsidiaries resulting from completed audits or examinations have been reported
to appropriate state and local taxing authorities and all resulting Taxes
payable to state and local taxing authorities have been paid.  “Taxes” means any U.S. federal, state,
local, or foreign income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental
(including taxes under Section 59A of the Code), customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not. 
“Tax Return” means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof, including,
where permitted or required, combined or consolidated returns for any group of
entities that include the Company or any of its Significant Subsidiaries.

 

(b)           The Company and each of its REIT Subsidiaries (x) for
all taxable years commencing with the taxable year ended December 31, 2005
through December 31, 2009, has been subject to taxation as a real estate
investment trust within the meaning of Section 856 of the Code (a “REIT”)
and has satisfied all requirements to qualify as a REIT for such years; (y) has
operated since January 1, 2010 to March 31, 2010 in a manner
consistent with the requirements for qualification and taxation as a REIT; and (z) intends
to continue to operate in such a manner as to qualify as a REIT for the current
taxable year.  None of the transactions
contemplated by this Agreement will prevent the Company or any of its REIT
Subsidiaries from so qualifying.  No
Subsidiary of the Company other than a REIT Subsidiary is a corporation for
U.S. federal income tax purposes, other than a corporation that qualifies as a “taxable
REIT subsidiary” within the meaning of Section 856(l) of the
Code.  For the purposes of this
Agreement, “REIT Subsidiary” means each of GGP Ivanhoe, Inc., GGP
Holding, Inc., GGP Holding II, Inc., Victoria Ward, Limited,
GGP-Natick Trust and GGP/Homart, Inc.

 

(c)           Each Company Subsidiary other than its REIT Subsidiaries
that is a partnership, joint venture, or limited liability company and which
has not elected to be a “taxable REIT subsidiary” within the meaning of
Section 856(l) of the Code has been since its formation treated for
U.S. federal income tax purposes as a partnership or disregarded entity, as the
case may be, and not as a corporation or an association taxable as a
corporation, except where failure to do so would not have a Material Adverse
Effect.

 

(d)           Except where the failure to be true would not have a
Material Adverse Effect, the Company and each of its Significant Subsidiaries
have (i) complied in all respects with all applicable Laws, rules, and
regulations relating to the payment and withholding of Taxes (including
withholding and reporting requirements under sections 1441 through 1464, 3401
through 3406, 6041 and 6049 of the Code and similar provisions under any other
Laws) and (ii) 

 

18

 

within the time and in the manner prescribed by Law,
withheld from employee wages and paid to the proper Governmental Entities all
amounts required to be withheld and paid over.

 

(e)           Except where the failure to be true would not have a
Material Adverse Effect, no audits or other administrative proceedings or court
proceedings are presently pending or to the Knowledge of the Company threatened
with regard to any Taxes or Tax Returns of the Company or any of its
Significant Subsidiaries, other than any audit or administrative proceeding
relating to Taxes for which a claim has been filed in a Debtor’s Chapter 11
case or any other audit or administrative or court proceeding that is not
reasonably expected to result in a material Tax liability to the Company or any
of its Significant Subsidiaries.

 

(f)            [Intentionally omitted.]

 

(g)           There are no Tax Protection Agreements except for those
the breach of which would not reasonably be expected to have a Material Adverse
Effect.  Neither the Company nor any
Significant Subsidiary has any liability for Taxes of any Person under Treasury
Regulation Section 1.1502-6 (or any similar provision of any state, local
or foreign Law), or as a transferee or successor (by contract or otherwise),
other than (i) to a Subsidiary of the Company or (ii) where any such
liability would not reasonably be expected to have a Material Adverse Effect.

 

SECTION 2.22  Material Contracts.  Except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, each
Material Contract that shall survive the Bankruptcy Cases is valid and binding
on the Company or any of its Subsidiaries, as applicable, and, to the Knowledge
of the Company, on each other Person party thereto, and is in full force and
effect.  Other than as a result of the
commencement of the Bankruptcy Cases, each of the Company and its Subsidiaries
has performed, in all material respects, all obligations required to be
performed by it under each Material Contract that shall survive the Bankruptcy
Cases, except, in each case, as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.  Other than those caused as a result of the
filing of the Bankruptcy Cases, neither the Company nor any of its Significant
Subsidiaries is in breach or default of any Material Contract to which it is a
party and which shall survive the Bankruptcy Cases, except, in each case, as
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.  The Company has
made available to Purchaser true, accurate and complete copies of the Material
Contracts as of March 31, 2010, except for those Material Contracts
available to the public on the website maintained by the SEC.  To the Knowledge of the Company, no party to
any Material Contract that shall survive the Bankruptcy Cases has given written
notice of any action to terminate, cancel, rescind or procure a judicial
reformation of such Material Contract or any material provision thereof, which
termination, cancellation, rescission or reformation would reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect.  For the avoidance of doubt,
Material Contracts do not include intercompany contracts.

 

SECTION 2.23  No Other Representations or Warranties.  Except for the representations and warranties
made by the Company in this ARTICLE II, neither the Company nor any
other Person makes any representation or warranty with respect to the Company
or its Subsidiaries or their respective business, operations, assets, liabilities,
condition (financial or otherwise) or prospects, notwithstanding the delivery
or disclosure to Purchaser or any of its Affiliates or their

 

19

 

respective representatives of any documentation,
forecasts or other information with respect to any one or more of the
foregoing.

 

ARTICLE III

 

REPRESENTATIONS AND
WARRANTIES OF PURCHASER

 

Purchaser represents and warrants to the
Company as set forth below:

 

SECTION 3.1  Organization.  Purchaser is a public pension plan and entity
of the State of Texas, with the requisite power and authority under the Laws of
the State of Texas to undertake and effectuate the transactions contemplated by
this Agreement.

 

SECTION 3.2  Power and Authority.  Purchaser has the requisite power and
authority under the Laws of the State of Texas to enter into, execute and
deliver this Agreement and to perform its obligations hereunder and has taken
all necessary action required for the due authorization, execution, delivery
and performance by it of this Agreement.

 

SECTION 3.3  Execution and Delivery.  This Agreement has been duly and validly
executed and delivered by Purchaser and constitutes its valid and binding
obligation, enforceable against Purchaser in accordance with its terms, except
as such enforceability may be limited by (i) applicable bankruptcy,
insolvency, fraudulent conveyance or similar laws affecting the enforcement of
creditors’ rights generally and subject to general principles of equity,
including principles of commercial reasonableness, good faith and  fair dealing (regardless of whether
enforcement is sought in a proceeding of law or in equity), and (ii) Texas
Law applicable to Purchaser as an entity of the State of Texas.

 

SECTION 3.4  No Conflict.  The execution and delivery of this Agreement
and the performance by Purchaser of its obligations hereunder and compliance by
Purchaser with all of the provisions hereof and the consummation of the
transactions contemplated herein (i) shall not conflict with, or result in
a breach or violation of, any of the terms or provisions of, or constitute a
default under, or result in the acceleration of, or the creation of any lien
under, or give rise to any termination right under, any material contract to
which Purchaser is a party, (ii) shall not result in any violation or
breach of any provisions of the organizational documents of Purchaser and (iii) shall
not conflict with or result in any violation of, or any termination or material
impairment of any rights under, any statute or any license, authorization,
injunction, judgment, order, decree, rule or regulation of any court or
governmental agency or body having jurisdiction over Purchaser or Purchaser’s
properties or assets, except with respect to each of (i), (ii) and (iii),
such conflicts, violations or defaults as would not be reasonably expected to
have a material adverse effect on the ability of Purchaser to consummate the
transactions contemplated hereunder.

 

SECTION 3.5  Consents and Approvals.  No consent, approval, order, authorization,
registration or qualification of or with any Governmental Entity having
jurisdiction over Purchaser is required in connection with the execution and
delivery by Purchaser of this Agreement or the consummation of the transactions
contemplated hereby, except such consents, approvals, orders, authorizations,
registration or qualification as would not reasonably be 

 

20

 

expected to materially and adversely affect the
ability of Purchaser to perform its obligations under this Agreement or which
have already been obtained.

 

SECTION 3.6  Compliance with Laws.  Since the date of its formation, Purchaser
has been in compliance with all Laws applicable to Purchaser, except, in each
case, for such non-compliance as would not reasonably be expected to materially
and adversely affect the ability of Purchaser to perform its obligations under
this Agreement.

 

SECTION 3.7  Legal Proceedings.  There are no legal, governmental or
regulatory investigations, actions, suits or proceedings pending or, to the
knowledge of Purchaser, threatened against Purchaser which, individually or in
the aggregate, if determined adversely to Purchaser, would materially and
adversely affect the ability of Purchaser to perform its obligations under this
Agreement.

 

SECTION 3.8  No Broker’s Fees.  Purchaser is not party to any contract,
agreement or understanding with any Person that would give rise to a valid
claim against the Company for an investment banking fee, commission, finder’s
fee or like payment in connection with the transactions contemplated by this
Agreement.

 

SECTION 3.9  Sophistication.  Purchaser is, as of the date hereof and shall
be as of the Effective Date, an “accredited investor” within the meaning of Rule 501(a) under
the Securities Act.  Purchaser
understands and is able to bear any economic risks associated with the
investments contemplated by this Agreement (including, without limitation, the
necessity of holding the Shares for an indefinite period of time).

 

SECTION 3.10  Purchaser Intent.  Purchaser is acquiring the Shares for
investment purposes only and not with a view to or for distributing or
reselling such Shares or any part thereof, without prejudice, however, to
Purchaser’s right, subject to the provisions of this Agreement, at all times to
sell or otherwise dispose of all or any part of such Shares pursuant to an
effective registration statement under the Securities Act or under an exemption
from such registration and in compliance with applicable federal and state
securities Laws.  Purchaser understands
that Purchaser must bear the economic risk of its investment indefinitely.

 

SECTION 3.11  Reliance on Exemptions.  Purchaser understands that the Shares are
being offered and sold to Purchaser in reliance upon specific exemptions from
the registration requirements of United States federal and state securities
Laws.

 

SECTION 3.12  Financial Capability.  Purchaser has sufficient available funds to satisfy
its obligations under this Agreement, including without limitation the payment
of the Purchase Price.

 

SECTION 3.13  No Other Representations or Warranties.  Except for the representations and warranties
made by Purchaser in this ARTICLE III, neither Purchaser nor any
other Person on behalf of Purchaser makes any representation or warranty with
respect to Purchaser or its assets, liabilities, condition (financial or
otherwise) or prospects.

 

SECTION 3.14  Acknowledgement.  Purchaser acknowledges that (a) neither
the Company nor any Person on behalf of the Company is making any
representations or warranties 

 

21

 

whatsoever, express or implied, beyond those
expressly given by the Company in ARTICLE II of this Agreement and (b) Purchaser
has not been induced by, or relied upon, any representations, warranties or
statements (written or oral), whether express or implied, made by any Person,
that are not expressly set forth in ARTICLE II of this
Agreement.  Without limiting the
generality of the foregoing, except with respect to the representations and
warranties contained in ARTICLE II, Purchaser acknowledges that no
representations or warranties are made with respect to any projections,
forecasts, estimates, budgets, plans or prospect information that may have been
made available to Purchaser or any of its representatives.

 

ARTICLE IV

 

COVENANTS OF THE COMPANY
AND PURCHASER

 

SECTION 4.1  Bankruptcy Court Motions and Orders.

 

(a)           Promptly following the date of this Agreement, the Company
shall file with the Bankruptcy Court a motion in form and substance reasonably
satisfactory to Purchaser (the “Approval Motion”) seeking to obtain
entry of an order which in final form if approved by the Bankruptcy Court (the “Approval
Order”) shall approve, among other things, the Termination Payment and
Expense Reimbursement contemplated by Section 9.3(a); provided,
however, that the Company may delay filing the Approval Motion if it
determines such delay is reasonably necessary in order to file the Approval
Motion in conjunction with any other filing with the Bankruptcy Court.

 

(b)           The Approval Motion, including any exhibits thereto and
any notices or other materials in connection therewith, and any modifications
or amendments to the foregoing, must be in form and substance reasonably
satisfactory to Purchaser.

 

(c)           If the Approval Order shall be appealed by any Person (or
a petition for certiorari or motion for reconsideration, amendment,
clarification, modification, vacation, stay, rehearing or reargument shall be
filed with respect to such order), the Company shall diligently defend against
any such appeal, petition or motion and shall use its reasonable best efforts
to obtain an expedited resolution of any such appeal, petition or motion.  The Company shall keep Purchaser reasonably
informed and updated regarding the status of any such appeal, petition or
motion.

 

(d)           The Company shall provide draft copies of all motions,
notices, statements, schedules, applications, reports and other papers the
Company intends to file with the Bankruptcy Court in connection with the
Approval Order to Purchaser within a reasonable period of time prior to the
date the Company intends to file any of the foregoing, and shall consult in
advance in good faith with Purchaser regarding the form and substance of any
such proposed filing with the Bankruptcy Court.

 

SECTION 4.2  Listing.  The Company shall use its reasonable best
efforts to cause the Shares to be listed on the New York Stock Exchange (the “NYSE”).

 

22

 

SECTION 4.3  Use of Proceeds.  The Plan shall provide that the Company and
its Subsidiaries shall apply the net proceeds from the sale of the Shares and
the Capital Raising Activities, as applicable, as provided in the Plan Summary
Term Sheet and the Plan.

 

SECTION 4.4  Access to Information.  Subject to applicable Law and the Company’s
receipt of customary assurances of confidentiality by Purchaser, upon
reasonable notice, the Company shall afford Purchaser and its directors,
officers, employees, investment bankers, attorneys, accountants and other
advisors or representatives, reasonable access during normal business hours,
throughout the period prior to the Effective Date, to its employees, books,
contracts and records and, during such period, the Company shall (and shall
cause its Subsidiaries to) furnish promptly to Purchaser such information
concerning its business, properties and personnel as may reasonably be
requested by Purchaser.

 

SECTION 4.5  Notification of Certain Matters.

 

(a)           The Company shall (i) give prompt written notice to
Purchaser of any written notice or other written communication from any Person
alleging that the consent of such Person which is or may be required in connection
with the transactions contemplated by this Agreement is not likely to be
obtained prior to Closing, if the failure to obtain such consent would
reasonably be expected to be adverse and material to the Company and its
Subsidiaries taken as a whole or would materially impair the ability of the
Company to consummate the transactions contemplated hereby or perform its
obligations hereunder, and (ii) facilitate adding such individuals as
designated by Purchaser to the electronic notification system such that the
designated individuals will receive electronic notice of the entry of any
Bankruptcy Court Order.

 

(b)           To the extent permitted by applicable Law, (i) the
Company shall give prompt notice to Purchaser of the commencement of any
investigation, inquiry or review by any Governmental Entity with respect to the
Company or its Subsidiaries which would reasonably be expected to be adverse
and material to the Company and its Subsidiaries taken as a whole or would
materially impair the ability of the Company to consummate the transactions
contemplated hereby or perform its obligations hereunder, and (ii) the
Company shall give prompt notice to Purchaser, and Purchaser shall give written
prompt notice to the Company, of any event or circumstance that would result in
any representation or warranty of the Company or Purchaser, as applicable,
being untrue or any covenant or agreement of the Company or Purchaser, as
applicable, not being performed or complied with such that, in each such case,
the conditions set forth in ARTICLE VI or ARTICLE VII,
as applicable, would not be satisfied if such event or circumstance existed on
the Closing Date.

 

(c)           No information received by a party pursuant to this Section 4.5
nor any information received or learned by a party or any of its
representatives pursuant to an investigation made under this Section 4.5
shall be deemed to (A) qualify, modify, amend or otherwise affect any
representations, warranties, conditions, covenants or other agreements of the
other party set forth in this Agreement, (B) amend or otherwise supplement
the information set forth in the Company Disclosure Letter, (C) limit or
restrict the remedies available to such party 
under this Agreement, applicable Law or otherwise arising out of a
breach of this Agreement, or (D) limit or restrict the ability of such
party to invoke or rely on, or effect the satisfaction of, the 

 

23

 

conditions to the obligations of such party to
consummate the transactions contemplated by this Agreement set forth in ARTICLE VI
or ARTICLE VII, as applicable.

 

SECTION 4.6  Further Assurances.  From and after the Closing, the Company shall
(and shall cause each of its Subsidiaries to) execute and deliver, or cause to
be executed and delivered, such further instruments or documents or take such
other action and cause entities controlled by them to take such action as may
be reasonably necessary (or as reasonably requested by Purchaser) to carry out
the transactions contemplated by this Agreement.

 

SECTION 4.7  Plan and Disclosure Statement.  Subject to the Company’s receipt of customary
assurances of confidentiality by Purchaser as may be reasonably requested by
the Company, the Company shall provide Purchaser with copies of the Plan and
Disclosure Statement, and any amendments or supplements thereto, prior to
filing such documents with the Bankruptcy Court.

 

ARTICLE V

 

ADDITIONAL COVENANTS OF
PURCHASER

 

SECTION 5.1  Information.  From and after the date of this Agreement
until the earlier to occur of the Closing Date and the termination of this
Agreement, Purchaser agrees to provide the Debtors with such information as the
Debtors reasonably request regarding Purchaser for inclusion in the Disclosure
Statement as necessary for the Disclosure Statement to contain adequate
information for purposes of Section 1125 of the Bankruptcy Code.

 

SECTION 5.2  Purchaser Efforts.  Purchaser shall use its reasonable best
efforts to obtain all material permits, consents, orders, approvals, waivers,
authorizations or other permissions or actions required for the consummation of
the transactions contemplated by this Agreement from, and shall have given all
necessary notices to, all Governmental Entities necessary to satisfy the
condition in Section 7.1(b) (provided, however,
that Purchaser shall not be required to pay or cause payment of any fees or
make any financial accommodations to obtain any such consent, approval, waiver
or other permission, except filing fees as required), and provide to such
Governmental Entities all such information as may be necessary or reasonably
requested relating to the transactions contemplated hereby.

 

SECTION 5.3  Plan Support.  From and after the date of the Approval Order
until the earliest to occur of (i) the Effective Date and (ii) the
termination of this Agreement, Purchaser agrees (unless otherwise consented to
by the Company) (provided that (x) the Company is not in material
breach of this Agreement and (y) the terms of the Plan are and remain
consistent with the Plan Summary Term Sheet and this Agreement) to (and shall
use reasonable best efforts to cause its Affiliates to):

 

(a)           Not pursue, propose, support, vote to accept or encourage
the pursuit, proposal or support of, any Chapter 11 plan, or other
restructuring or reorganization for the Company, or any Subsidiary of the
Company, that is not consistent with the Plan;

 

24

 

(b)           Not, nor encourage any other Person to, interfere with,
delay, impede, appeal or take any other negative action, directly or
indirectly, in any respect regarding acceptance or implementation of the Plan;
and

 

(c)           Not commence any proceeding, or prosecute any objection to
oppose or object to the Plan or to the Disclosure Statement and not to take any
action that would delay approval or confirmation, as applicable, of the
Disclosure Statement and the Plan, in each case (i) except as intended to
ensure the consistency of the Disclosure Statement and the Plan with the terms
of this Agreement and the rights and obligations of the parties thereto and (ii) without
limiting any rights Purchaser may have to terminate this Agreement pursuant to Section 9.1(c).

 

SECTION 5.4  Transfer Restrictions.  Purchaser covenants and agrees that the
Shares shall be disposed of only pursuant to an effective registration
statement under the Securities Act or pursuant to an available exemption from
the registration requirements of the Securities Act, and in compliance with any
applicable state securities Laws. 
Purchaser agrees to the imprinting, so long as is required by this Section 5.4,
of the following legend on any certificate evidencing the Shares:

 

THE SHARES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AS AMENDED (THE “ACT”) OR UNDER ANY STATE
SECURITIES LAWS (“BLUE SKY”) OR THE SECURITIES LAWS OF ANY OTHER
RELEVANT JURISDICTION.  THE SHARES HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR
RESALE.  THE SHARES MAY NOT BE SOLD,
ASSIGNED, MORTGAGED, PLEDGED, ENCUMBERED, HYPOTHECATED, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS EITHER (I) A REGISTRATION STATEMENT WITH
RESPECT TO THE SHARES IS EFFECTIVE UNDER THE ACT AND APPLICABLE BLUE SKY LAWS
AND THE SECURITIES LAWS OF ANY OTHER RELEVANT JURISDICTION ARE COMPLIED WITH OR
(II) UNLESS WAIVED BY THE ISSUER, THE ISSUER RECEIVES AN OPINION OF LEGAL
COUNSEL SATISFACTORY TO THE ISSUER THAT NO VIOLATION OF THE ACT OR OTHER
APPLICABLE LAWS WILL BE INVOLVED IN SUCH TRANSACTION.

 

Certificates evidencing the Shares shall
not be required to contain such legend (A) while a registration statement
covering the resale of the Shares is effective under the Securities Act, or (B) following
any sale of any such Shares pursuant to Rule 144 of the Exchange Act (“Rule 144”),
or (C) following receipt of a legal opinion of counsel to Purchaser that
the remaining Shares held by Purchaser are eligible for resale without volume
limitations or other limitations under Rule 144.  In addition, the Company will agree to the
removal of all legends with respect to shares of New Common Stock deposited
with DTC from time to time in anticipation of sale in accordance with the
volume limitations and other limitations under Rule 144, subject to the
Company’s approval of appropriate procedures, such approval not to be
unreasonably withheld, conditioned or delayed.

 

Following the time at which such legend is
no longer required (as provided above) for certain Shares, the Company shall
promptly, following the delivery by Purchaser to the Company of a legended
certificate representing such Shares, deliver or cause to be delivered to
Purchaser a certificate representing such Shares that is free from such
legend.  In the event the 

 

25

 

above legend is removed from any of the
Shares, and thereafter the effectiveness of a registration statement covering
such Shares is suspended or the Company determines that a supplement or
amendment thereto is required by applicable securities Laws, then the Company
may require that the above legend be placed on any such Shares that cannot then
be sold pursuant to an effective registration statement or under Rule 144
and Purchaser shall cooperate in the replacement of such legend.  Such legend shall thereafter be removed when
such Shares may again be sold pursuant to an effective registration statement
or under Rule 144.

 

The Plan shall provide that, at the time
of an underwritten offering of equity or convertible securities by the Company
on or prior to the 30th day after the Effective Date, Purchaser and
its applicable Affiliates, subject to any rights the Purchaser or its
Affiliates have to participate in such offering, will enter into a customary ‘lock-up’
agreement with respect to third party sales of New Common Stock for a period of
time not to exceed 120 days to the extent reasonably requested by the managing
underwriter in connection with such offering; provided, however,
in no event will Purchaser or its Affiliates be required to enter into a ‘lock-up’
agreement (i) if it beneficially owns 3% or less of the New Common Stock
or (ii) for a period longer than is applicable to any executive officer,
director or Affiliate of the Company (for the avoidance of doubt, Purchaser
agrees that Fairholme is not an Affiliate of the Company).

 

ARTICLE VI

 

CONDITIONS TO THE
OBLIGATIONS OF PURCHASER

 

SECTION 6.1  Conditions to the Obligations of Purchaser.  The obligation of Purchaser to purchase the
Shares pursuant to this Agreement on the Closing Date is subject to the
satisfaction (or waiver (to the extent permitted by applicable Law) by
Purchaser) of the following conditions as of the Closing Date:

 

(a)           No Injunction. 
No judgment, injunction, decree or other legal restraint shall prohibit
the consummation of the Plan or the transactions contemplated by this
Agreement.

 

(b)           Regulatory Approvals; Consents.  All permits, consents, orders, approvals,
waivers, authorizations or other permissions or actions of third parties and
Governmental Entities required for the consummation of the transactions
contemplated by this Agreement and the Plan shall have been made or received,
as the case may be, and shall be in full force and effect, except for those
permits, consents, orders, approvals, waivers, authorizations or other
permissions or actions the failure of which to make or receive would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect (it being agreed that any permit, consent, order, approval,
waiver, authorization or other permission or action in respect of any
Identified Asset (as defined in the Brookfield Agreement) for which any of the
alternatives in Section 2.1(a) of the Brookfield Agreement
shall have been employed shall be deemed hereunder to have been made or
received, as the case may be, and in full force and effect).

 

(c)           Representations and Warranties and Covenants.  Except for changes permitted or contemplated
by this Agreement or the Plan Summary Term Sheet, each of (i) the
representations and warranties of the Company contained in Section 2.1,
Section 2.2, Section 2.3, Section 2.5, the
last sentence of Section 2.18 and Section 2.20(a) (except
for such 

 

26

 

inaccuracies in Section 2.20(a) caused
by sales, purchases or transfers of assets which have been effected in
accordance with, subject to the limitations contained in, and not otherwise
prohibited by, the terms and conditions in this Agreement, including, without
limitation, this ARTICLE VI or the Investment Agreements,
including, without limitation, ARTICLE VII thereof) shall be true
and correct at and as of the Closing Date as if made at and as of the Closing
Date (except for representations and warranties made as of a specific date,
which shall be true and correct only as of such specific date), (ii) the
representations and warranties of the Company contained in Section 2.4
shall be true and correct (except for de minimis
inaccuracies) at and as of the Closing Date as if made at and as of the Closing
Date (except for representations and warranties made as of a specific date,
which shall be true and correct (except for de minimis
inaccuracies) only as of such specific date) and (iii) the other
representations and warranties of the Company contained in this Agreement,
disregarding all qualifications and exceptions contained therein relating to “materiality”
or “Material Adverse Effect”, shall be true and correct at and as of the
Closing Date as if made at and as of the Closing Date (except for
representations and warranties made as of a specified date, which shall be true
and correct only as of the specified date), except for such failures to be true
and correct that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect (it being agreed that the condition
in this subclause (iii) as it relates to undisclosed liabilities of the
Company and its Subsidiaries comprised of indebtedness shall be deemed to be
satisfied if the condition in Section 7.1(p) of the Brookfield
Agreement is satisfied).  The Company
shall have complied in all material respects with all of its obligations under
this Agreement.  The Company shall have
provided to Purchaser a certificate delivered by an executive officer of the
Company, acting in his or her official capacity on behalf of the Company, to
the effect that the conditions in this clause (c), the immediately following
clause (d) and clause (n) of this Section 6.1 have been
satisfied as of the Closing Date and Purchaser shall have received such other
evidence of the conditions set forth in this Section 6.1 as it
shall reasonably request.

 

(d)           No Material Adverse Effect.  Since the date of this Agreement, there shall
not have occurred any event, fact or circumstance, that has had or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

 

(e)           Plan and Confirmation Order.  The Plan shall have been confirmed by the
Bankruptcy Court by order (the “Confirmation Order”), which Confirmation
Order shall be in full force and effect (without waiver of the 14-day period
set forth in Bankruptcy Rule 3020(e)) as of the Effective Date and shall
not be subject to a stay of effectiveness.

 

(f)            Disclosure Statement.  The Disclosure Statement shall have been
approved by order of the Bankruptcy Court.

 

(g)           Conditions to Confirmation.  The conditions to confirmation and the
conditions to the Effective Date of the Plan shall have been satisfied or
waived in accordance with the Plan.

 

(h)           Valid Issuance. 
The Shares shall be validly issued to Purchaser against payment
therefor.

 

(i)            No Legal Impediment to Issuance.  No action shall have been taken and no
statute, rule, regulation or order shall have been enacted, adopted or issued
by any federal, state 

 

27

 

or foreign governmental or regulatory authority that
prohibits the issuance or sale of the Shares pursuant to this Agreement, and no
injunction or order of any federal, state or foreign court shall have been
issued that prohibits the issuance or sale of the Shares pursuant to this
Agreement

 

(j)            Registration Statement; Registration Rights.  The Company shall have filed with the SEC and
the SEC shall have declared effective, as of Closing, to the extent permitted
by applicable SEC rules, a shelf registration statement on Form S-1 or Form S-11,
as applicable, covering the resale by Purchaser of the Shares, containing a
plan of distribution reasonably satisfactory to Purchaser.  In addition, the Company shall have entered
into a registration rights agreement with Purchaser with respect to all Shares
held by Purchaser and its Affiliates, which provides for (i) customary
piggyback registration rights with customary cutbacks, including cutbacks
giving priority to the Company and to any Person to whom the Company has
provided demand registration rights (including in connection with the
Investment Agreements); (ii) customary “black out” periods; (iii) to
the extent that Purchaser is an Affiliate of the Company at the time of an
underwritten public offering by the Company, Purchaser will agree to a 60-day
customary lock up to the extent requested by the managing underwriter; and (iv) other
terms and conditions customary for such rights. 
The registration rights agreement shall be in full force and effect and
the Company shall not be in breach of any representation, warranty, covenant or
agreement thereunder in any material respect.

 

(k)           Listing.  The
Shares shall be authorized for listing on the NYSE, subject to official notice
of issuance.

 

(l)            REIT Opinion. 
Purchaser shall have received an opinion of Arnold & Porter
LLP, dated as of the Closing Date, substantially in the form attached hereto as
Exhibit A, that the Company (x) for all taxable years
commencing with the taxable year ended December 31, 2005 through December 31,
2009, has been subject to taxation as a REIT and (y) has
operated since January 1, 2010 to the Closing Date in a manner consistent
with the requirements for qualification and taxation as a REIT.

 

(m)          Issuance or Sale of Common Stock.  Neither the Company nor any of its
Subsidiaries shall have issued or sold any shares of Common Stock (or
securities, warrants or options that are convertible into or exchangeable or
exercisable for, or linked to the performance of, Common Stock) (other than (A) pursuant
to the Equity Exchange, (B) the issuance of shares pursuant to the
exercise of employee stock options issued pursuant to the Company Option Plans,
(C) as set forth on Section 6.1(m) of the Company
Disclosure Letter or (D) pursuant to the Investment Agreements as in
effect as of the date hereof (including, without limitation, Section 6.9
thereof)), unless the purchase price (or, in the case of securities that are
convertible into or exchangeable or exercisable for, or linked to the
performance of, Common Stock, the conversion, exchange or exercise price) shall
not be less than $10.00 per share (net of all underwriting and other discounts,
fees and any other compensation).

 

(n)           Other Conditions.   
(i) The Brookfield Agreement shall be in full force and effect
without amendments or modifications after the date hereof (other than those
that are not materially adverse taken as a whole to the Company), the
conditions to the consummation of the transactions under the Brookfield
Agreement to be performed on the Closing Date shall have been satisfied or
waived, and the Brookfield Investor shall have subscribed and paid for such 

 

28

 

shares of New Common Stock that the Brookfield
Investor is obligated to purchase thereunder and (ii) with respect to each
Initial Investor other than the Brookfield Investor, either (A) its
Investment Agreement shall be in full force and effect without amendments or
modifications after the date hereof (other than those that are not materially
adverse taken as a whole to the Company), the conditions to the consummation of
the transactions under such Investment Agreement to be performed on the Closing
Date shall have been satisfied or waived, and such Initial Investor shall have
subscribed and paid for such shares of New Common Stock that such Initial
Investor is obligated to purchase thereunder or (B) the funding to be
provided by such Initial Investor under its Investment Agreement shall have
been provided by one or more other investors or purchasers on terms and
conditions that are materially no less favorable to the Company than the terms
and conditions of the applicable Investment Agreement; provided, however,
that in no event shall, in each case without the prior written consent of
Purchaser, (1) the aggregate outstanding Proportionally Consolidated Debt
of the Company immediately following the Closing (disregarding any short term
debt issued to Fairholme or Pershing in connection with Section 1.4 of the
Fairholme Agreement or the Pershing Agreement) exceed more than $23,782,500,000
in the aggregate and (2) the aggregate amount of Proportionally
Consolidated Unrestricted Cash, after giving effect to all proceeds received on
the Effective Date, be less than $332,500,000; and, provided, further,
that none of the Investment Agreements shall have been amended to reduce the
per share purchase price of New Common Stock sold to any Initial Investor, or
the exercise price of warrants to purchase shares of New Common Stock,  pursuant to the Investment Agreements as in
effect as of the date hereof.

 

ARTICLE VII

 

CONDITIONS TO THE
OBLIGATIONS OF THE COMPANY

 

SECTION 7.1  Conditions to the Obligations of the
Company.  The obligation of the
Company to issue the Shares pursuant to this Agreement on the Closing Date are
subject to the satisfaction (or waiver by the Company) of the following
conditions as of the Closing Date:

 

(a)           No Injunction. 
No judgment, injunction, decree or other legal restraint shall prohibit
the consummation of the Plan or the transactions contemplated by this
Agreement.

 

(b)           Regulatory Approvals; Consents.  All permits, consents, orders, approvals,
waivers, authorizations or other permissions or actions of third parties and
Governmental Entities required for the consummation of the transactions
contemplated by this Agreement and the Plan shall have been made or received,
as the case may be, and shall be in full force and effect, except for those
permits, consents, orders, approvals, waivers, authorizations or other
permissions or actions the failure of which to make or receive would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

 

(c)           Representations and Warranties and Covenants.  Each of (i) the representations and
warranties of Purchaser contained in Section 3.1, Section 3.2
and Section 3.3 in this Agreement shall be true and correct at and
as of the Closing Date as if made at and as of the Closing Date (except for
representations and warranties made as of a specific date, which shall be true
and correct only as of such specific date), and (ii) the other
representations and warranties of Purchaser contained in this Agreement,
disregarding all qualifications and exceptions

 

29

 

contained therein relating to “materiality”, shall
be true and correct at and as of the date of this Agreement and at and as of
the Closing Date as if made at and as of the Closing Date (except for
representations and warranties made as of a specified date, which shall be true
and correct only as of the specified date), except for such failures to be true
and correct that, individually or in the aggregate, would not reasonably be
expected to have a material adverse effect on the ability of Purchaser to consummate
the transactions contemplated by this Agreement.  Purchaser shall have complied in all material
respects with all of its obligations under this Agreement.  Purchaser shall have provided to the Company
a certificate delivered by an executive officer of the managing member of
Purchaser, acting in his or her official capacity on behalf of Purchaser, to
the effect that the conditions in this clause (c) have been satisfied as
of the Closing Date.

 

(d)           Plan and Confirmation Order.  The Plan shall have been confirmed by the
Bankruptcy Court by order, which order shall be in full force and effect and
not subject to a stay of effectiveness.

 

(e)           Conditions to Confirmation.  The conditions to confirmation and the
conditions to the Effective Date of the Plan shall have been satisfied or
waived in accordance with the Plan.

 

(f)            GGO.  The
GGO Share Distribution (as defined in the Brookfield Agreement) shall have
occurred.

 

(g)           No Legal Impediment to Issuance.  No action shall have been taken and no
statute, rule, regulation or order shall have been enacted, adopted or issued
by any federal, state or foreign governmental or regulatory authority that
prohibits the issuance or sale of the Shares 
pursuant to this Agreement; and no injunction or order of any federal, state
or foreign court shall have been issued that prohibits the issuance or sale of
the Shares pursuant to this Agreement.

 

(h)           Funding. 
Purchaser shall have paid to the Company all amounts payable by
Purchaser under ARTICLE I of this Agreement, by wire transfer of
immediately available funds to such account or accounts as shall have been
designated in writing by the Company at least three (3) Business Days
prior to the Closing Date.

 

(i)            Other Conditions. 
The conditions to the consummation of the transactions under the
Brookfield Agreement to be performed on the Closing Date shall have been
satisfied or waived.

 

ARTICLE VIII

 

SURVIVAL OF
REPRESENTATIONS AND WARRANTIES

 

SECTION 8.1  Survival of Representations and Warranties.  The representations and warranties made in
this Agreement shall survive the 
execution and delivery of this Agreement but shall terminate and be of
no further force and effect following the earlier of (i) the termination
of this Agreement in accordance with ARTICLE IX and (ii) the
Closing.

 

30

 

ARTICLE IX

 

TERMINATION

 

SECTION 9.1  Termination.  This Agreement and the obligations of the
parties hereunder shall terminate automatically without any action by any party
if (i) the Approval Order, in form and substance reasonably satisfactory
to Purchaser, approving, among other things, the Termination Payment and
Expense Reimbursement contemplated by Section 9.3(a), is not
entered by the Bankruptcy Court on or prior August 23, 2010, or (ii) if
the Debtors withdraw the Approval Motion, in each of cases (i) and (ii) unless
Purchaser and the Company otherwise agree in writing.  In addition, this Agreement may be
terminated and the transactions contemplated hereby may be abandoned at any
time prior to the Closing Date:

 

(a)           by mutual written consent of Purchaser and the Company;

 

(b)           by either Purchaser or the Company by written notice to
the other party upon termination of the Brookfield Agreement in accordance with
its terms;

 

(c)           by Purchaser by written notice to the Company upon the
occurrence of any of the following events (which notice shall specify the event
upon which such termination is based):

 

(i)            if the Effective Date and the
purchase and sale contemplated by ARTICLE I have not occurred by
the Termination Date; provided, however, that the right to
terminate this Agreement under this Section 9.1(c)(i) shall
not be available to Purchaser if Purchaser has breached in any material respect
its obligations under this Agreement in any manner that shall have proximately
caused the Closing Date not to occur on or before the Termination Date;

 

(ii)           if any Bankruptcy Cases of the
Company or any Debtor which is a Significant Subsidiary shall have been
dismissed or converted to cases under chapter 7 of the Bankruptcy Code or if an
interim or permanent trustee or an examiner shall be appointed to oversee or
operate any of the Debtors in their Bankruptcy Cases, in each case, except (x) as
would not reasonably be expected to have a Material Adverse Effect or (y) with
respect to the Bankruptcy Cases for Phase II Mall Subsidiary, LLC, Oakwood
Shopping Center Limited Partnership and Rouse Oakwood Shopping Center, LLC;

 

(iii)          if there has been a breach by the
Company of any representation, warranty, covenant or agreement of the Company
contained in this Agreement or the Company shall have taken any action which,
in each case, (A) would result in a failure of a condition set forth in ARTICLE VI
and (B) cannot be cured prior to the Termination Date, after written
notice to the Company of such breach and the intention to terminate this
Agreement pursuant to this Section; provided, however, that the
right to terminate this Agreement under this Section shall not be
available to Purchaser if Purchaser has breached in any material respect its
obligations under this Agreement;

 

(iv)          if the Company or any Subsidiary of
the Company issues any shares of Common Stock or New Common Stock (or
securities convertible into or exchangeable or exercisable for Common Stock or
New Common Stock) at a purchase price (or in the 

 

31

 

case of securities that are
convertible into or exchangeable or exercisable for, or linked to the
performance of, Common Stock or New Common Stock, the conversion, exchange,
exercise or comparable price) of less than $10.00 per share (net of all
underwriting and other discounts, fees and any other compensation and related
expenses) of Common Stock or New Common Stock or converts any claim against any
of the Debtors into New Common Stock at a conversion price less than $10.00 per
share of Common Stock or New Common Stock (in each case, other than pursuant to
(A) the exercise, exchange or conversion of Share Equivalents of the
Company existing on the date of this Agreement in accordance with the terms
thereof as of the date of this Agreement, (B) the Equity Exchange, (C) the
issuance of shares upon the exercise of employee stock options issued pursuant
to the Company Option Plans, (D) the issuance of shares as set forth on Section 6.1(m) of
the Company Disclosure Letter, or (E) the issuance of shares pursuant to
the Investment Agreements (including, without limitation, Section 6.9
thereof));

 

(v)           if the Bankruptcy Court shall have
entered a final and non-appealable order denying confirmation of the Plan;

 

(vi)          if this Agreement, the Plan Summary
Term Sheet or the Plan is revised or modified (except as otherwise permitted
pursuant to this Agreement) by the Company or an order of the Bankruptcy Court
or other court of competent jurisdiction in a manner that is materially adverse
to Purchaser;

 

(vii)         if any Governmental Entity of competent
jurisdiction shall have issued a final and nonappealable order permanently
enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement (the “Closing Restraint”); or

 

(d)           by the Company upon the occurrence of any of the following
events:

 

(i)            if the Effective Date and the
purchase and sale contemplated by  ARTICLE I
have not occurred by the Termination Date; provided, however,
that the right to terminate this Agreement under this Section 9.1(d)(i) shall
not be available to the Company to the extent that it has breached in any
material respect its obligations under this Agreement in any manner that shall
have proximately caused the Closing Date not to occur on or before the
Termination Date (it being agreed that this proviso shall not limit the Company’s
ability to terminate this Agreement pursuant to any other clause of this Section 9.1(d));

 

(ii)           if prior to the entry of the
Confirmation Order, upon notice by the Company to Purchaser that the Company
has entered into a binding commitment after the date hereof to sell, on or
prior to the Effective Date, Permitted Replacement Shares for an aggregate
purchase price of at least Five Hundred Million Dollars ($500,000,000);

 

(iii)          if all conditions to the obligations
of Purchaser to consummate the transactions contemplated by this Agreement set
forth in ARTICLE VI shall have been satisfied (other than those
conditions that are to be satisfied (and capable of being satisfied) by action
taken at the Closing if Purchaser had complied with its obligations 

 

32

 

under this Agreement) and the
transactions contemplated by this Agreement fail to be consummated as a result
of the breach by Purchaser of its obligation to pay to the Company all amounts
payable by Purchaser under ARTICLE I of this Agreement, by wire
transfer of immediately available funds in accordance with the terms of this
Agreement;

 

(iv)          if there has been a breach by
Purchaser of any representation, warranty, covenant or agreement of Purchaser
contained in this Agreement or Purchaser shall have taken any action which, in
each case, (A) would result in a failure of a condition set forth in ARTICLE VII
and (B) cannot be cured prior to the Termination Date, after written
notice to Purchaser of such breach and the intention to terminate this
Agreement pursuant to this Section;

 

(v)           if the Bankruptcy Court shall have
entered a final and non-appealable order denying confirmation of the Plan; or

 

(vi)          if a Closing Restraint is in effect.

 

SECTION 9.2  Effects of Termination.  In the event of the termination of this
Agreement pursuant to ARTICLE IX, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of any
party hereto except the covenants and agreements made by the parties herein
under ARTICLE XI shall survive indefinitely in accordance with
their terms; provided, however, that termination shall not relieve the Company
(subject to Section 9.3(b)) or Purchaser from liability for any
willful and material breach by such party of its covenants under this Agreement
to be performed prior to Closing.

 

SECTION 9.3  Termination Payment.

 

(a)           In the event of the termination of this Agreement pursuant
to Section 9.1(b) or Section 9.1(d)(ii), then the
Company shall pay to Purchaser, no later than the fifth (5th) Business Day
following such termination, by wire transfer of immediately available funds, an
amount equal to the sum of (i) Fifteen Million Dollars ($15,000,000) (the “Termination
Payment”) and (ii) Purchaser’s reasonable and documented out-of-pocket
expenses (including expenses of outside counsel) incurred in connection with
Purchaser’s negotiation of this Agreement, up to a maximum amount of $1,000,000
(“Expense Reimbursement”).

 

(b)           The parties agree that the Termination Fee and Expense
Reimbursement shall be the sole and exclusive remedy of any nature available to
Purchaser with respect to this Agreement and the transactions contemplated
hereby in the event the Termination Fee and Expense Reimbursement become
payable.

 

ARTICLE X

 

DEFINITIONS

 

SECTION 10.1  Defined Terms.  For purposes of this Agreement, the following
terms, when used in this Agreement with initial capital letters, shall have the
respective meanings set forth in this Agreement:

 

33

 

(a)           “Affiliate” of any particular Person means any
other Person controlling, controlled by or under common control with such
particular Person.  For the purposes of
this definition, “control” means the possession, directly or indirectly, of the
power to direct the management and policies of a Person whether through the
ownership of voting securities, contract or otherwise.

 

(b)           “Brazilian Entities” means those certain Persons in
which the Company indirectly owns an interest which own real property assets or
have operations located in Brazil.

 

(c)           “Business Day” means any day other than (a) a
Saturday, (b) a Sunday, (c) any day on which commercial banks in New
York, New York are required or authorized to close by Law or executive order.

 

(d)           “Capital Raising Activities” means the Company’s
efforts to consummate equity and debt financings for the Company, and sales of
properties and other assets of the Company and its Subsidiaries for cash.

 

(e)           “Cash Equivalents” means as to any Person, (a) securities
issued or directly and fully guaranteed or insured by the United States or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States is pledged in support thereof) having maturities of not more
than 90 days from the date of acquisition by such Person, (b) time
deposits and certificates of deposit of any commercial bank having, or which is
the principal banking subsidiary of a bank holding company organized under the
Laws of the United States, any State thereof or the District of Columbia having
capital, surplus and undivided profits aggregating in excess of $500,000,000,
having maturities of not more than 90 days from the date of acquisition by such
Person, (c) repurchase obligations with a term of not more than 90 days
for underlying securities of the types described in subsection (a) above
entered into with any bank meeting the qualifications specified in
subsection (b) above, (d) commercial paper issued by any issuer
rated at least A-1 by S&P or at least P-1 by Moody’s or carrying an
equivalent rating by a nationally recognized rating agency, if both of the two
named rating agencies cease publishing ratings of commercial paper issuers
generally, and in each case maturing not more than one year after the date of
acquisition by such Person or (e) investments in money market funds
substantially all of whose assets are comprised of securities of the types
described in subsections (a) through (d) above.

 

(f)            “Company Benefit Plan” means each “employee
benefit plan” within the meaning of Section 3(3) of ERISA and
each other stock purchase, stock option, restricted stock, severance,
retention, employment, consulting, change-of-control, collective bargaining,
bonus, incentive, deferred compensation, employee loan, fringe benefit and
other benefit plan, agreement, program, policy, commitment or other arrangement,
whether or not subject to ERISA (including any related funding mechanism now in
effect or required in the future), whether formal or informal, oral or written,
in each case sponsored or maintained by the Company or any of its Significant
Subsidiaries for the benefit of any past or present director, officer,
employee, consultant or independent contractor of the Company or any of its
Significant Subsidiaries has any present or future right to benefits.

 

34

 

(g)           “Contract” means any agreement, lease, license,
evidence of indebtedness, mortgage, indenture, security agreement or other
contract.

 

(h)           “DIP Loan” means that certain Senior Secured Debtor
in Possession Credit, Security and Guaranty Agreement, dated as of May 15,
2009, by and among the lenders named therein, UBS AG, Stamford Branch, as
administrative agent for the lenders, the Company and the Operating
Partnership, as borrowers, and the certain subsidiaries of the Company named
therein, as guarantors, or any successor agreement.

 

(i)            “Disclosure Statement” means the disclosure
statement to accompany the Plan as amended, modified or supplemented.

 

(j)            “Debt” means all obligations of the Company, its
Subsidiaries and other Persons in which the Company, directly or indirectly,
holds a minority interest (a) evidenced by (i) notes, bonds,
debentures or other similar instruments (including, for avoidance of doubt,
mezzanine debt), or (ii) trust preferred shares, trust preferred units and
other preferred instruments, and/or (b) secured by a lien, mortgage or
other encumbrance; provided, however, that Debt shall exclude
(x) any form of municipal financing including, but not limited to, special
improvement district bonds or tax increment financing, (y) an agreement
for the use or possession of property creating obligations that do not appear
on the balance sheet of such Person but which, upon the insolvency or
bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment), and (z) intercompany
notes or preferred interests between and among the Company and its wholly owned
Subsidiaries.

 

(k)           “ERISA” means the Employee Retirement Income
Security Act of 1974, as amended.

 

(l)            “Exchange Act” 
means the Securities Exchange Act of 1934, as amended.

 

(m)          “Fairholme Agreement” means that certain Stock
Purchase Agreement, dated as of March 31, 2010, as amended, between GGP
and The Fairholme Fund and Fairholme Focused Income Fund (together, “Fairholme”).

 

(n)           “GAAP” means generally accepted accounting
principles in the United States.

 

(o)           “Governmental Entity” means any (a) nation,
region, state, province, county, city, town, village, district or other
jurisdiction, (b) federal, state, local, municipal, foreign or other
government, (c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, court or tribunal, or
other entity), (d) multinational organization or body or (e) body
entitled to exercise any administrative, executive, judicial, legislative,
police, regulatory or taxing authority or power of any nature or any other
self-regulatory organizations.

 

(p)           “Identified Assets” 
shall have the meaning ascribed to such term in the Brookfield
Agreement.

 

(q)           “Initial Investors” 
means the purchasers under the Investment Agreements.

 

35

 

(r)            “Investment Agreements” means the Brookfield
Agreement, the Fairholme Agreement, the Pershing Agreement and the Warrant Agreement.

 

(s)           “Joint Venture” means a Subsidiary of the Company
which is owned partly by another Subsidiary of the Company and partly by a
third party.

 

(t)            “Knowledge” of the Company means the actual
knowledge, as of the date of this Agreement, of the individuals listed on Section 10.1(t) of
the Company Disclosure Letter.

 

(u)           “Law” means any statutes, laws (including common
law), rules, ordinances, regulations, codes, orders, judgments, decisions,
injunctions, writs, decrees, applicable to the Company or any of its
Subsidiaries or Purchaser, as applicable, or their respective properties or
assets.

 

(v)           “Material Adverse Effect” means any change, event
or occurrence which (x) has a material adverse effect on the results of
operations or financial condition of the Company and its direct and indirect
Subsidiaries taken as a whole, other than changes, events or occurrences (i) generally
affecting (A) the retail mall industry in the United States or in a
specific geographic area in which the Company operates, or (B) the
economy, or financial or capital markets, in the United States or elsewhere in
the world, including changes in interest or exchange rates or the availability
of capital, or (ii) arising out of, resulting from or attributable to (A) changes
in Law or regulation or in generally accepted accounting principles or in
accounting standards, or changes in general legal, regulatory or political
conditions, (B) the negotiation, execution, announcement or performance of
any agreement between the Company and/or its Affiliates, on the one hand, and
Purchaser and/or its Affiliates, on the other hand, or the consummation of the
transactions contemplated hereby or operating performance or reputational
issues arising out of or associated with the Bankruptcy Cases, including the
impact thereof on relationships, contractual or otherwise, with tenants,
customers, suppliers, distributors, partners or employees, or any litigation or
claims arising from allegations of breach of fiduciary duty or violation of Law
or otherwise, related to the execution or performance of this Agreement or the
transactions contemplated hereby, including, without limitation, any
developments in the Bankruptcy Cases, (C) acts of war, sabotage or
terrorism, or any escalation or worsening of any such acts of war, sabotage or
terrorism threatened or underway as of the date of the this Agreement, (D) earthquakes,
hurricanes, tornadoes or other natural disasters, (E) any action taken by
the Company or its Subsidiaries as contemplated or permitted by any agreement
between the Company and/or its Affiliates, on the one hand, and Purchaser
and/or its Affiliates, on the other hand, or with Purchaser’s consent, or any
failure by the Company to take any action as a result of any restriction
contained in any agreement between the Company and/or its Affiliates, on the
one hand, and Purchaser and/or its Affiliates, on the other hand, or (F) in
each case in and of itself, any decline in the market price, or change in
trading volume, of the capital stock or debt securities of the Company or any
direct or indirect subsidiary thereof, or any failure to meet publicly
announced or internal revenue or earnings projections, forecasts, estimates or
guidance for any period, whether relating to financial performance or business
metrics, including, without limitation, revenues, net operating incomes, cash
flows or cash positions, it being further understood that any event, change,
development, effect or occurrence giving rise to such decline in the trading
price or trading volume of the capital stock or debt securities of the Company
or such failure to meet internal projections or forecasts as described in the
preceding clause (F), as 

 

36

 

the case may be, may be the cause of a Material
Adverse Effect; so long as, in the case of clauses (i)(A) and (i)(B), such
changes or events do not have a materially disproportionate adverse effect on
the Company and its Subsidiaries, taken as a whole, as compared to other
entities that own and manage retail malls throughout the United States, or (y) materially
impairs the ability of the Company to consummate the transactions contemplated
by this Agreement or perform its obligations hereunder or under the other
agreements executed in connection with the transactions contemplated hereby.

 

(w)          “Material Contract” means, with respect to the
Company and its Subsidiaries, any:

 

(i)                                     Contract that
would be considered a material contract pursuant to Item 601(b)(10) of
Regulation S-K promulgated by the SEC, had the Company been the registrant
referred to in such regulation; or

 

(ii)                                  Contract for
capital expenditures, the future acquisition or construction of fixed assets or
the future purchase of materials, supplies or equipment that provides for the
payment by the Company or its Subsidiaries of more than $5,000,000 and is not
terminable by the Company or any of its Subsidiaries by notice of not more than
sixty (60) days for a cost of less than $1,000,000.

 

(x)            “Non-Controlling Properties” means the Company Properties
listed on Section 10.1(x) of the Company Disclosure
Letter.  Each of the Non-Controlling
Properties is owned by a Joint Venture in which neither the Company nor any of
its Subsidiaries is a controlling entity. 
For purposes of this Section 10.1(x), the term “control”
shall mean, possession, directly or indirectly, of the power to direct the
management and policies of a Person whether through the ownership of voting
securities, contract or otherwise; provided, however, that the
rights of any Person to exercise Major Decision Rights under a Joint Venture
shall not constitute or be deemed to constitute “control” for the
purposes hereof.  “Controlling”
and “controlled” shall have meanings correlative thereto.  For purposes of this Section 10.1(x),
the term “Major Decision Rights” shall mean, the right to, directly or
indirectly, approve, consent to, veto or exercise a vote in connection with a
Person’s voting or other decision-making authority in respect of the collective
rights, options, elections or obligations of such Person under a Joint Venture.

 

(y)           “Permitted Replacement Shares” means shares of New
Common Stock, or notes mandatorily convertible into or exchangeable for shares
of New Common Stock, that are sold for cash proceeds payable to the Company
(net of all underwriting and other discounts, fees, and related consideration)
of not less than $10.50 per share of New Common Stock (or in the case of notes,
convertible or exchangeable at not less than $10.50 per share of New Common
Stock).

 

(z)            “Pershing Agreement”  means that certain Stock Purchase Agreement,
dated as of March 31, 2010, as amended, between GGP and Pershing Square
Capital Management, L.P. on behalf of Pershing Square, L.P., Pershing Square
II, L.P., Pershing Square International, Ltd. and Pershing Square
International V, Ltd. (together, “Pershing”).

 

37

 

(aa)         “Person” means an individual, a group (including a “group”
under Section 13(d) of the Exchange Act), a partnership, a
corporation, a limited liability company, an association, a joint stock
company, a trust, a joint venture, an unincorporated organization and a
Governmental Entity or any department, agency or political subdivision thereof.

 

(bb)         “Proportionally Consolidated Debt”  means consolidated Debt of the Company less (1) all
Debt of Subsidiaries of the Company that are not wholly-owned and other Persons
in which the Company, directly or indirectly, holds a minority interest, to the
extent such Debt is included in consolidated Debt, plus (2) the Company’s
share of Debt for each non-wholly owned Subsidiary of the Company and each
other Persons in which the Company, directly or indirectly, holds a minority
interest based on the company’s pro-rata economic interest in each such Subsidiary
or Person or, to the extent to which the Company is directly or indirectly
(through one or more Subsidiaries or Persons) liable for a percent of such Debt
that is greater than such pro-rata economic interest in such Subsidiary or
Person, such larger amount; provided, however, for purposes of calculating
Proportionally Consolidated Debt, the Debt of the Brazilian Entities shall be
deemed to be $110,437,781.

 

(cc)         “Proportionally Consolidated Unrestricted Cash” means
the consolidated Unrestricted Cash of the Company less (1) all
Unrestricted Cash of Subsidiaries of the Company that are not wholly-owned and
Persons in which the Company, directly or indirectly, owns a minority interest,
to the extent such Unrestricted Cash is included in consolidated Unrestricted
Cash of the Company, plus (2) the Company’s share of Unrestricted Cash for
each non-wholly owned Subsidiary of the Company and Persons in which the
Company, directly or indirectly, owns a minority interest based on the Company’s
pro rata economic interest in each such Subsidiary or Person; provided,
however, for purposes of calculating Proportionally Consolidated Unrestricted
Cash, the Unrestricted Cash of the Brazilian Entities shall be deemed to be
$82,000,000, provided, further, that any distributions of
Unrestricted Cash made from the date of this Agreement to the Closing by
Brazilian Entities to the Company or any of its Subsidiaries shall be
disregarded for purposes of calculating Proportionally Consolidated
Unrestricted Cash.

 

(dd)         “Share Equivalent” means any stock, warrants, rights,
calls, options or other securities exchangeable or exercisable for, or
convertible into, shares of Common Stock or New Common Stock, as applicable.

 

(ee)         “Significant Subsidiaries” means the operating
Subsidiaries of the Company that generated revenues in excess of $30,000,000
for the year ended December 31, 2009.

 

(ff)           “Subsidiary” means, with respect to a Person
(including the Company), (a) a company a majority of whose capital stock
with voting power, under ordinary circumstances, to elect a majority of the
directors is at the time, directly or indirectly, owned by such Person, by a
subsidiary of such Person, or by such Person and one or more subsidiaries of
such Person, (b) a partnership in which such Person or a subsidiary of
such Person is, at the date of determination, a general partner of such
partnership, (c) a limited liability company of which such Person, or a
Subsidiary of such Person, is a managing member or (d) any other Person
(other than a company) in which such Person, a subsidiary of such Person or
such Person and one or more subsidiaries of such Person, directly or
indirectly, at the date of determination thereof, has (i) at

 

38

 

least a majority ownership interest or (ii) the
power to elect or direct the election of a majority of the directors or other
governing body of such Person.

 

(gg)         “Tax Protection Agreements” means any written
agreement to which the Company, its Operating Partnership or any other
Subsidiary is a party pursuant to which: (i) in connection with the
deferral of income Taxes of a holder of interests in the Operating Partnership,
the Company, the Operating Partnership or the other Subsidiaries have agreed to
(A) maintain a minimum level of Indebtedness or continue any particular
Indebtedness, (B) retain or not dispose of assets for a period of time
that has not since expired, (C) make or refrain from making Tax elections,
and/or (D) only dispose of assets in a particular manner; and/or (ii) limited
partners of the Operating Partnership have guaranteed Indebtedness of the
Operating Partnership.

 

(hh)         “Termination Date” means December 31, 2010; provided,
that if the Confirmation Order shall have been entered on or prior to December 15,
2010 but the Company, despite its commercially reasonable efforts, is unable to
consummate the Closing on or prior to December 31, 2010, the Company may
extend the Termination Date for so long as Closing by January 31, 2011 is
feasible and the Company continues to diligently pursue Closing; provided,
further, that the Termination Date shall not be extended beyond January 31,
2011.

 

(ii)           “Transactions” means the purchase of the Shares and
the other transactions contemplated by this Agreement.

 

(jj)           “Unrestricted Cash” means all cash and Cash
Equivalents of the Company and of the Subsidiaries of the Company, but
excluding any cash or Cash Equivalents that are controlled by or subject to any
lien, security interest or control agreement, other preferential arrangement in
favor of any creditor or otherwise encumbered or restricted in any way.

 

(kk)         “Warrant Agreement” means that certain Warrant and
Registration Rights Agreement, dated as of May 10, 2010, between General
Growth Properties, Inc. and Mellon Investor Services LLC, as warrant agent
(as the same may be amended from time to time).

 

ARTICLE XI

 

MISCELLANEOUS

 

SECTION 11.1  Notices.  All notices and other communications in
connection with this Agreement shall be in writing and shall be considered
given if given in the manner, and be deemed given at times, as follows: (x) on
the date delivered, if personally delivered; (y) on the day of
transmission if sent via facsimile transmission to the facsimile number given
below, and telephonic confirmation of receipt is obtained promptly after
completion of transmission; or (z) on the next Business Day after being
sent by recognized overnight mail service specifying next business day
delivery, in each case with delivery charges pre-paid and addressed to the
following addresses:

 

(a)           If to Purchaser, to:

 

Teacher Retirement System of Texas

 

39

 

1000 Red River Street

Austin, Texas  78701-2698

Attention:        Eric L. Lang and
Richard Hall

Facsimile:        (512) 370-5103

 

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

 

Fulbright & Jaworski L.L.P.

2200 Ross Avenue, Suite 2800

Dallas, Texas 75201

Attention:        D.
Forrest Brumbaugh, Esq.

Facsimile:        (214) 855-8200

 

(b)           If to the Company, to:

 

General Growth Properties, Inc.

110 N. Wacker Drive

Chicago, Illinois  60606

Attention:        Ronald L. Gern, Esq.

Facsimile:        (312) 960-5485

 

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

 

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, New York  10153

Attention:        Marcia L. Goldstein, Esq.

                        Frederick S. Green, Esq.

                        Gary T. Holtzer, Esq.

                        Malcolm
E. Landau, Esq.

Facsimile:       (212) 310-8007

 

SECTION 11.2  Assignment; Third Party Beneficiaries.  Neither this Agreement nor any of the rights,
interests or obligations under this Agreement may be assigned by any party
without the prior written consent of the other party.  Notwithstanding the previous sentence, this
Agreement, or Purchaser’s rights, interests or obligations hereunder
(including, without limitation, the right to receive any securities pursuant to
the Transactions), may be assigned or transferred, in whole or in part, by
Purchaser to one or more Affiliates of Purchaser; provided, that no such
assignment shall release Purchaser from its obligations hereunder to be
performed by Purchaser on or prior to the Closing Date.  This Agreement (including the documents and
instruments referred to in this Agreement) is not intended to and does not
confer upon any person other than the parties hereto any rights or remedies
under this Agreement.  Notwithstanding
the foregoing, or any other provisions herein to the contrary, no Purchaser may
assign any of its rights, interests or obligations under this Agreement to the
extent such assignment would preclude the applicable securities Laws exemptions
from being available or such assignment would cause a failure of the closing
condition in Section 7.1(u) of the Brookfield Agreement.

 

40

 

SECTION 11.3  Prior Negotiations; Entire Agreement.  This Agreement (including the exhibits hereto
and the documents and instruments referred to in this Agreement) constitutes
the entire agreement of the parties and supersedes all prior agreements,
arrangements or understandings, whether written or oral, between the parties
with respect to the subject matter of this Agreement.

 

SECTION 11.4  Governing Law; Venue.  THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS.  EACH PARTY HERETO, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF, AND VENUE
IN, THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
AND EACH PARTY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS.

 

SECTION 11.5  Company Disclosure Letter.  The Company Disclosure Letter shall be
arranged to correspond to the Articles and Sections of this Agreement, and the
disclosure in any portion of the Company Disclosure Letter shall qualify the
corresponding provision in ARTICLE II and any other provision of ARTICLE II
to which it is reasonably apparent on the face of the disclosure that such
disclosure relates.  No disclosure in the
Company Disclosure Letter relating to any possible non-compliance, breach or
violation of any Contract or Law shall be construed as an admission that any
such non-compliance, breach or violation exists or has actually occurred.  In the Company Disclosure Letter, (a) all
capitalized terms used but not defined therein shall have the meanings assigned
to them in this Agreement and (b) the Section numbers correspond to
the Section numbers in this Agreement.

 

SECTION 11.6  Counterparts.  This Agreement may be executed in any number
of counterparts, all of which shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each of the
parties; and delivered to the other party (including via facsimile or other
electronic transmission), it being understood that each party need not sign the
same counterpart.

 

SECTION 11.7  Expenses.  Each party shall bear its own expenses
incurred or to be incurred in connection with the negotiation and execution of
this Agreement and each other agreement, document and instrument contemplated
by this Agreement and the consummation of the transactions contemplated hereby
and thereby.

 

SECTION 11.8  Waivers and Amendments.  This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions of
this Agreement may be waived, only by a written instrument signed by the
parties or, in the case of a waiver, by the party waiving compliance, and
subject, to the extent required, to the approval of the Bankruptcy Court.  No delay on the part of any party in
exercising any right, power or privilege pursuant to this Agreement shall
operate as a waiver thereof, nor shall any waiver on the part of any party of
any right, power or privilege pursuant to this Agreement, nor shall any single
or partial exercise of any right, power or privilege pursuant to this
Agreement, preclude any other or further exercise thereof or the exercise of
any other right, power or privilege pursuant to this Agreement.  The rights and remedies provided pursuant to
this Agreement are cumulative and are not exclusive of any rights or remedies
which any party otherwise may have at law or in equity.

 

41

 

SECTION 11.9  Construction.

 

(a)           The headings in this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.

 

(b)           Unless the context otherwise requires, as used in this
Agreement:  (i) an accounting term
not otherwise defined in this Agreement has the meaning ascribed to it in
accordance with GAAP; (ii) “or” is not exclusive; (iii) “including”
and its variants mean “including, without limitation” and its variants; (iv) words
defined in the singular have the parallel meaning in the plural and vice versa;
(v) references to “written” or “in writing” include in visual electronic
form; (vi) words of one gender shall be construed to apply to each gender;
(vii) the terms “Article,” “Section,” and “Schedule” refer to the specified
Article, Section, or Schedule of or to this Agreement; and (viii) the term
“beneficially own” shall have the meaning determined pursuant to Rule 13d-3
under the Exchange Act as in effect on the date hereof; provided, however, that
a Person will be deemed to beneficially own (and have beneficial ownership of)
all securities that such Person has the right to acquire, whether such right is
exercisable immediately or with the passage of time or the satisfaction of
conditions. The terms “beneficial ownership” and “beneficial owner” have
correlative meanings.

 

SECTION 11.10  Adjustment of Share Numbers and Prices.  The number of Shares to be purchased by
Purchaser at the Closing pursuant to ARTICLE I, the Per Share
Purchase Price and any other number or amount contained in this Agreement which
is based upon the number or price of shares of GGP shall be proportionately
adjusted for any subdivision or combination (by stock split, reverse stock
split, dividend, reorganization, recapitalization or otherwise) of the Common
Stock or New Common Stock that occurs during the period between the date of
this Agreement and the Closing.  In
addition, if at any time prior to the Closing, the Company shall declare or
make a dividend or other distribution whether in cash or property (other than a
dividend or distribution payable in common stock of the Company, as applicable,
the GGO Share Distribution (as defined in the Brookfield Agreement) or a
distribution of rights contemplated by the Investment Agreements), the Per Share
Purchase Price, shall be proportionally adjusted thereafter by the Fair Market
Value (as defined in the Warrant Agreement) per share of the dividend or
distribution.

 

SECTION 11.11  Certain Remedies.

 

(a)           The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement or of any other
agreement between them with respect to the Transaction were not performed in
accordance with their specific terms or were otherwise breached.  It is accordingly agreed that, in addition to
any other applicable remedies at law or equity, the parties shall be entitled
to an injunction or injunctions, without proof of damages, to prevent breaches
of this Agreement or of any other agreement between them with respect to the
Transaction and to enforce specifically the terms and provisions of this
Agreement.

 

(b)           To the fullest extent permitted by applicable law, the
parties shall not assert, and hereby waive, any claim or any such damages,
whether or not accrued and whether or not known or suspect to exist in its
favor, against any other party and its respective Affiliates, members, members’
affiliates, officers, directors, partners, trustees, employees, attorneys and
agents on any 

 

42

 

theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
(whether or not the claim therefor is based on contract, tort or duty imposed
by any applicable legal requirement) arising out of, in connection with, or as
a result of, this Agreement or of any other agreement between them with respect
to the Transaction or the transactions contemplated hereby or thereby.

 

SECTION 11.12  Bankruptcy Matters.  For the avoidance of doubt, all obligations
of the Company and its Subsidiaries in this Agreement are subject to and
conditioned upon (a) with respect to obligations contained in the Approval
Order, entry of the Approval Order, and (b) with respect to the remainder
of the provisions hereof, entry of the Confirmation Order.

 

SECTION 11.13  Purchaser’s Status as an Entity of the
State of Texas.  Purchaser has
advised the Company that some of Purchaser’s contractual obligations under this
Agreements may be limited by, and the Company agrees that, the Purchaser’s
obligations hereunder are made subject to Texas Law applicable to Purchaser as
an entity of the State of Texas, including, without limitation, principles of
sovereign immunity.

 

[Signature Page Follows]

 

43

 

IN WITNESS WHEREOF, the undersigned have
caused this Agreement to be executed and delivered by each of them or their
respective officers thereunto duly authorized, all as of the date first written
above.

 

	
   

  	
  TEACHER RETIREMENT SYSTEM OF TEXAS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Richard Hall

  
	
   

  	
  Name:

  	
  Richard
  Hall

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
  GENERAL GROWTH PROPERTIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Adam S. Metz

  
	
   

  	
  Name

  	
  Adam
  S. Metz

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  

 

[SIGNATURE PAGE OF STOCK PURCHASE AGREEMENT]EXHIBIT 4.3.1

 

 

THE
KROGER CO.

AND
THE GUARANTORS NAMED HEREIN

TO

U.S.
BANK NATIONAL ASSOCIATION

(formerly
known as Firstar Bank, N.A.)

Trustee

 

 

TWENTY-THIRD
SUPPLEMENTAL INDENTURE

Dated
as of July 13, 2010

TO

INDENTURE

Dated
as of June 25, 1999

 

 

5.40%
SENIOR NOTES DUE 2040

 

 

 

TABLE OF CONTENTS

	
  ARTICLE ONE
  DEFINITIONS

  	
  2

  
	
   

  	
   

  
	
  Section 101. 

  	
  Definitions

  	
  2

  
	
   

  	
   

  	
   

  
	
  ARTICLE TWO
  SECURITY FORMS

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 201.

  	
  Form of Securities of this Series

  	
  5

  
	
  Section 202.

  	
  Form of Face of Security

  	
  5

  
	
  Section 203.

  	
  Form of Reverse of Security

  	
  7

  
	
  Section 204.

  	
  Form of Guarantee

  	
  12

  
	
   

  	
   

  
	
  ARTICLE THREE
  THE SERIES OF SECURITIES

  	
  16

  
	
   

  	
   

  
	
  Section 301. 

  	
  Title and Terms

  	
  16

  
	
   

  	
   

  
	
  ARTICLE FOUR
  MODIFICATIONS AND ADDITIONS TO THE INDENTURE

  	
  17

  
	
   

  	
   

  	
   

  
	
  Section 401.

  	
  Modifications to the Consolidation, Merger,
  Conveyance, Transfer or Lease Provisions

  	
  17

  
	
  Section 402.

  	
  Other Modifications

  	
  18

  
	
  Section 403.

  	
  Additional Covenants; Defeasance and Covenant
  Defeasance

  	
  18

  
	
  Section 404.

  	
  Redemption of Securities

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE FIVE
  GUARANTEE

  	
  28

  
	
   

  	
   

  
	
  Section 501.

  	
  Guarantee

  	
  28

  
	
  Section 502.

  	
  Waiver of Demand

  	
  28

  
	
  Section 503.

  	
  Guarantee of Payment

  	
  29

  
	
  Section 504.

  	
  No Discharge or Diminishment of Guarantee

  	
  29

  
	
  Section 505.

  	
  Defenses of Company Waived

  	
  29

  
	
  Section 506.

  	
  Continued Effectiveness

  	
  29

  
	
  Section 507.

  	
  Subrogation

  	
  29

  
	
  Section 508.

  	
  Information

  	
  30

  
	
  Section 509.

  	
  Subordination

  	
  30

  
	
  Section 510.

  	
  Termination

  	
  30

  
	
  Section 511.

  	
  Guarantees of other Indebtedness

  	
  31

  
	
  Section 512.

  	
  Additional Guarantors

  	
  31

  
	
  Section 513.

  	
  Limitation of Guarantor’s Liability

  	
  31

  
	
  Section 514.

  	
  Contribution from Other Guarantors

  	
  31

  
	
  Section 515.

  	
  No Obligation to Take Action Against the Company

  	
  31

  
	
  Section 516.

  	
  Dealing with the Company and Others

  	
  32

  
	
  Section 517.

  	
  Execution and Delivery of the Guarantee

  	
  32

  
	
   

  	
   

  	
   

  
	
  ARTICLE SIX
  MISCELLANEOUS

  	
  33

  
	
   

  	
   

  	
   

  
	
  Section 601.

  	
  Miscellaneous

  	
  33

  

 

 

TWENTY-THIRD SUPPLEMENTAL
INDENTURE, dated as of July 13, 2010, 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 National Association
(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 Twenty-Third Supplemental Indenture.

 

The Company and the
Guarantors, pursuant to the foregoing authority, propose in and by this
Twenty-Third 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.

 

 

All things necessary to make
this Twenty-Third 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
TWENTY-THIRD 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 Twenty-Third
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 Twenty-Third Supplemental Indenture
and, where so specified, to the Articles and Sections of the Indenture as
supplemented by this Twenty-Third Supplemental Indenture; and

 

(3)  The terms “hereof”,
“herein”, “hereby”, “hereto”, “hereunder” and “herewith” refer to this
Twenty-Third Supplemental Indenture.

 

(b)      For all purposes of the
Indenture and this Twenty-Third 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 present values (discounted at a rate per
annum equal to the interest rate borne by the Securities of the series created
by this Twenty- Third 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 

 

2

 

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 (the maturity date of the Securities will be deemed to be January 15,
2040 for this purpose).

 

“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 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) 

 

3

 

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 and outstanding on the date of
this Twenty-Third 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.

 

“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) Banc of America Securities LLC, U.S. Bancorp
Investments, Inc. and

 

4

 

Wells Fargo Securities, LLC
and their successors; provided, however, that if any of the foregoing is not or
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 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

 

5

 

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.

 

5.40%
Senior Notes due 2040

 

	
  CUSIP No. 501044CN9

  	
   

  	
   

  
	
  ISIN No. US501044CN97

  	
   

  	
  $

  

 

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 July 15, 2040 and to
pay interest thereon from July 13, 2010, 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, commencing January 15,
2011 at the rate of interest of 5.40% 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
and 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.

 

6

 

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.

 

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:  July 13, 2010

 

	
   

  	
  THE KROGER CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

	
  Attest:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  

 

 

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

 

	
   

  	
  U.S. BANK NATIONAL ASSOCIATION,

  
	
   

  	
  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 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 

 

7

 

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, the Sixteenth Supplemental Indenture dated as of December 20,
2004, the Seventeenth Supplemental Indenture dated as of August 15, 2007,
the Eighteenth Supplemental Indenture dated as of January 16, 2008, the
Nineteenth Supplemental Indenture dated as of March 27, 2008, the
Twentieth Supplemental Indenture dated as of March 27, 2008, the
Twenty-First Supplemental Indenture dated as of November 25, 2008, the
Twenty-Second Supplemental Indenture dated as of October 1, 2009, and the
Twenty-Third Supplemental Indenture dated as of July 13, 2010 (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
National Association), 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 will be redeemable, in whole or in part, at the option
of the Company at any time. If the securities are redeemed prior to January 15,
2040, the redemption price will be 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 (1) the principal amount of the
notes being redeemed and (2) the remaining scheduled payments of interest
thereon (not including any portion of such payments of interest accrued as of
the date of redemption) from the redemption date to January 15, 2040,
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 25
basis points plus, in each case, accrued interest thereon to the date of
redemption. If the Securities are redeemed on or after January 15, 2040,
the redemption price will be equal to 100% of the principal amount of such Securities,
plus 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.

 

If a Change of Control
Triggering Event occurs, unless the Company has exercised its right to redeem
the Securities, Holders of Securities will have the right to require the
Company to repurchase all or any part (equal to $2,000 or an integral multiple
of $1,000 in excess thereof) of their Securities pursuant to the offer
described below (the “Change of Control Offer”).  In the Change of Control Offer, the Company
shall offer payment in cash equal to 101% of the aggregate principal amount of
Securities repurchased plus accrued and unpaid interest, if any, on the
Securities

 

8

 

repurchased, to the date of purchase (the “Change of Control Payment”).  Within 30 days following any Change of
Control Triggering Event, or, at the Company’s option, prior to any Change of
Control, but after the public announcement of the Change of Control, the
Company shall mail a notice to Holders of Securities describing the transaction
or transactions that constitute or may constitute the Change of Control
Triggering Event and offering to repurchase the Securities on the date
specified in the notice, which date will be no earlier than 30 days and no
later than 60 days from the date such notice is mailed (the “Change of Control
Payment Date”), pursuant to the procedures described herein and in such
notice.  The notice shall, if mailed
prior to the date of consummation of the Change of Control, state that the
offer to purchase is conditioned on the Change of Control Triggering Event
occurring on or prior to the payment date specified in the notice.  The Company shall comply with the
requirements of Rule 14e-1 under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and any other securities laws and regulations
thereunder to the extent those laws and regulations are applicable in
connection with the repurchase of the Securities as a result of a Change of
Control Triggering Event.  To the extent
that the provisions of any securities laws or regulations conflict with the
Change of Control provisions herein, the Company shall be required to comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under the Change of Control provisions herein by
virtue of such conflicts.

 

On the Change of Control
Payment Date, the Company shall, to the extent lawful, (i) accept for
payment all Securities or portions of Securities properly tendered pursuant to
the Change of Control Offer; (ii) deposit with the paying agent an amount
equal to the Change of Control Payment in respect of all Securities or portions
of Securities properly tendered; and (iii) deliver or cause to be
delivered to the Trustee the Securities properly accepted, together with an
officers’ certificate stating the aggregate principal amount of Securities or
portions of Securities being purchased.

 

“Below Investment Grade
Rating Event” means the Securities are rated below an Investment Grade Rating
by any two of the three Rating Agencies (as defined below) on any date from the
date of the public notice of an arrangement that could result in a Change of
Control until the end of the 60-day period following public notice of the
occurrence of the Change of Control (which 60-day period shall be extended so
long as the rating of the Securities is under publicly announced consideration
for possible downgrade below investment grade by any of the Rating Agencies);
provided that a Below Investment Grade Rating Event otherwise arising by virtue
of a particular reduction in rating shall not be deemed to have occurred in
respect of a particular Change of Control (and thus shall not be deemed a Below
Investment Grade Rating Event for purposes of the definition of Change of
Control Triggering Event) if the Rating Agencies making the reduction in rating
to which this definition would otherwise apply do not announce or publicly
confirm or inform the Trustee in writing at the Company’s request that the
reduction was the result, in whole or in part, of any event or circumstance
comprised of or arising as a result of, or in respect of, the applicable Change
of Control (whether or not the applicable Change of Control shall have occurred
at the time of the Below Investment Grade Rating Event).

 

“Change of Control” means the occurrence of any of the following:  (1) the direct or indirect sale,
transfer, conveyance or other disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of all or
substantially all of the properties or assets of the Company and its
subsidiaries taken as a whole to any “person” (as that term is used in Section 13(d)(3) of
the Exchange Act) other than the Company or one of its subsidiaries; (2) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any “person” (as that term is used
in Section 13(d)(3) of the Exchange Act) becomes the beneficial
owner, directly or indirectly, of more than 50% of the then outstanding number
of shares of the Company’s

 

9

 

voting stock; or (3) the first day on which a majority of the
members of the Company’s Board of Directors are not Continuing Directors.  Notwithstanding the foregoing, a transaction
will not be deemed to involve a Change of Control if (1) the Company
becomes a wholly owned subsidiary of a holding company that has agreed to be
bound by the terms of the Securities and (2) the Holders of the voting
stock of such holding company immediately following that transaction are
substantially the same as the Holders of the Company’s voting stock immediately
prior to that transaction.

 

“Change of Control
Triggering Event” means the occurrence of both a Change of Control and a Below
Investment Grade Rating Event.

 

“Continuing Directors” means, as of any date of determination, members
of the Board of Directors of the Company who (1) were members of such
Board of Directors on the date of original issuance of the Securities; or (2) were
nominated for election or elected to such Board of Directors with the approval
of a majority of the continuing directors under clause (1) or (2) of
this definition who were members of such Board of Directors at the time of such
nomination or election (either by a specific vote or by approval of the Company’s
proxy statement in which such member was named as a nominee for election as a
director, without objection to such nomination).

 

“Fitch” means Fitch, Inc.

 

“Investment Grade Rating”
means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and
BBB- (or the equivalent) by S&P and Fitch, and the equivalent investment
grade credit rating from any replacement rating agency or rating agencies
selected by the Company.

 

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

 

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

 

“Rating Agencies” means (1) each
of Fitch, Moody’s and S&P; and (2) if Fitch, Moody’s or S&P ceases
to rate the Securities or fails to make a rating of the Securities publicly
available for reasons outside of the Company’s control, a “nationally
recognized statistical rating organization” within the meaning of Rule 15c3-1(c)(2)(vi)(F) under
the Exchange Act, selected by the Company (as certified by a Board Resolution)
as a replacement agency for Fitch, Moody’s or S&P, or any of them, as the
case may be.

 

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

 

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.

 

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

 

10

 

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.

 

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.

 

11

 

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 Twenty-Third 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:  July 13, 2010

 

	
   

  	
  Each of the Guarantors Listed on Schedule I 

  
	
   

  	
  hereto, as Guarantor of the Securities

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
   

  	
  Name:  Scott M. Henderson

  
	
   

  	
   

  	
  Title:     Vice President and
  Treasurer

  
	
   

  	
   

  

 

	
   

  	
  QUEEN CITY 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

  

 

12

 

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

 

	
  Attest:

  	
   

  	
  U.S. BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  	
  as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name: 

  
	
   

  	
   

  	
   

  	
  Title:

  

 

13

 

SCHEDULE
I

 

Guarantors

 

	
  Name of Guarantor

  	
   

  	
  State of Organization

  
	
   

  	
   

  	
   

  
	
  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

  
	
  Henpil, Inc.

  	
   

  	
  Texas

  
	
  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

  
	
  Ralphs Grocery Company

  	
   

  	
  Ohio

  
	
  Rocket Newco, Inc.

  	
   

  	
  Texas

  
	
  Second Story, Inc.

  	
   

  	
  Washington

  

 

14

 

	
  Name of Guarantor

  	
   

  	
  State of Organization

  
	
   

  	
   

  	
   

  
	
  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

  

 

15

 

ARTICLE THREE

 

THE SERIES OF SECURITIES

 

Section 301.           Title and Terms.

 

There shall be a series of
Securities designated as the “5.40% Senior Notes due 2040” of the Company.  Their Stated Maturity shall be July 15,
2040, and they shall bear interest at the rate of 5.40% per annum.

 

Interest on the Securities
of this series will be payable semi-annually on January 15 and July 15
of each year, commencing January 15, 2011, 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 1 or July 1
(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 Twenty-Third 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
(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 

 

16

 

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 Twenty-Third 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 Twenty-Third 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 Twenty-Third
Supplemental Indenture, including the due and punctual payment of the principal
of and interest on all the Securities of the series created by the Twenty-Third
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.

 

17

 

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, 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, 1010 and 1011 and as Article Thirteen (Section references
contained in these additional provisions are to the Indenture as supplemented
by this Twenty-Third Supplemental Indenture):

 

“Section 1009.  Limitations on
Liens.

 

 After the date
hereof and so long as any Securities of the series created by the Twenty-Third
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 Twenty-Third Supplemental Indenture

 

18

 

(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 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;

 

19

 

(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 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

 

20

 

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.

 

After
the date hereof and so long as any Securities of the series created by the
Twenty-Third 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 Twenty-Third 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 Twenty-Third 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 Twenty-Third 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 Operating Property (which in the case
of a retail store is the opening of the store for business to the public).

 

21

 

Section 1011.  Change of Control.

 

If a Change of Control
Triggering Event occurs, unless the Company has exercised its right to redeem
the Securities, Holders of Securities will have the right to require the
Company to repurchase all or any part (equal to $2,000 or an integral multiple
of $1,000 in excess thereof) of their Securities pursuant to the offer
described below (the “Change of Control Offer”).  In the Change of Control Offer, the Company
shall offer payment in cash equal to 101% of the aggregate principal amount of
Securities repurchased plus accrued and unpaid interest, if any, on the
Securities repurchased, to the date of purchase (the “Change of Control Payment”).  Within 30 days following any Change of
Control Triggering Event, or, at the Company’s option, prior to any Change of
Control, but after the public announcement of the Change of Control, the
Company shall mail a notice to Holders of Securities describing the transaction
or transactions that constitute or may constitute the Change of Control
Triggering Event and offering to repurchase the Securities on the date
specified in the notice, which date will be no earlier than 30 days and no
later than 60 days from the date such notice is mailed (the “Change of Control
Payment Date”), pursuant to the procedures described herein and in such
notice.  The notice shall, if mailed
prior to the date of consummation of the Change of Control, state that the
offer to purchase is conditioned on the Change of Control Triggering Event
occurring on or prior to the payment date specified in the notice.  The Company shall comply with the
requirements of Rule 14e-1 under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and any other securities laws and regulations
thereunder to the extent those laws and regulations are applicable in
connection with the repurchase of the Securities as a result of a Change of
Control Triggering Event.  To the extent
that the provisions of any securities laws or regulations conflict with the
Change of Control provisions herein, the Company shall be required to comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under the Change of Control provisions herein by
virtue of such conflicts.

 

On
the Change of Control Payment Date, the Company shall, to the extent lawful, (i) accept
for payment all Securities or portions of Securities properly tendered pursuant
to the Change of Control Offer; (ii) deposit with the paying agent an
amount equal to the Change of Control Payment in respect of all Securities or
portions of Securities properly tendered; and (iii) deliver or cause to be
delivered to the Trustee the Securities properly accepted, together with an
officers’ certificate stating the aggregate principal amount of Securities or
portions of Securities being purchased.

 

“Below Investment Grade
Rating Event” means the Securities are rated below an Investment Grade Rating
by any two of the three Rating Agencies (as defined below) on any date from the
date of the public notice of an arrangement that could result in a Change of
Control until the end of the 60-day period following public notice of the
occurrence of the Change of Control (which 60-day period shall be extended so
long as the rating of the Securities is under publicly announced consideration
for possible downgrade below investment grade by any of the Rating Agencies);
provided that a Below Investment Grade Rating Event otherwise arising by virtue
of a particular reduction in rating shall not be deemed to have occurred in
respect of a particular Change of Control (and thus shall not be deemed a Below
Investment Grade Rating Event for purposes of the definition of Change of
Control Triggering Event) if the Rating Agencies making the reduction in rating
to which this definition would otherwise apply do not announce or publicly
confirm or inform the Trustee in writing at the Company’s request that the
reduction was the result, in whole or in part, of any event or circumstance
comprised of or arising as a result of, or in respect of, the applicable Change
of

 

22

 

Control (whether or not the
applicable Change of Control shall have occurred at the time of the Below
Investment Grade Rating Event).

 

“Change of Control” means
the occurrence of any of the following:  (1) the
direct or indirect sale, transfer, conveyance or other disposition (other than
by way of merger or consolidation), in one or a series of related transactions,
of all or substantially all of the properties or assets of the Company and its
subsidiaries taken as a whole to any “person” (as that term is used in Section 13(d)(3) of
the Exchange Act) other than the Company or one of its subsidiaries; (2) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any “person” (as that term is used
in Section 13(d)(3) of the Exchange Act) becomes the beneficial
owner, directly or indirectly, of more than 50% of the then outstanding number
of shares of the Company’s voting stock; or (3) the first day on which a
majority of the members of the Company’s Board of Directors are not Continuing
Directors.  Notwithstanding the
foregoing, a transaction will not be deemed to involve a Change of Control if (1) the
Company becomes a wholly owned subsidiary of a holding company that has agreed
to be bound by the terms of the Securities and (2) the Holders of the
voting stock of such holding company immediately following that transaction are
substantially the same as the Holders of the Company’s voting stock immediately
prior to that transaction.

 

“Change of Control
Triggering Event” means the occurrence of both a Change of Control and a Below
Investment Grade Rating Event.

 

“Continuing Directors”
means, as of any date of determination, members of the Board of Directors of
the Company who (1) were members of such Board of Directors on the date of
original issuance of the Securities; or (2) were nominated for election or
elected to such Board of Directors with the approval of a majority of the
continuing directors under clause (1) or (2) of this definition who
were members of such Board of Directors at the time of such nomination or
election (either by a specific vote or by approval of the Company’s proxy statement
in which such member was named as a nominee for election as a director, without
objection to such nomination).

 

“Fitch” means Fitch, Inc.

 

“Investment Grade Rating”
means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and
BBB- (or the equivalent) by S&P and Fitch, and the equivalent investment
grade credit rating from any replacement rating agency or rating agencies
selected by the Company.

 

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

 

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

 

“Rating Agencies” means (1) each
of Fitch, Moody’s and S&P; and (2) if Fitch, Moody’s or S&P ceases
to rate the Securities or fails to make a rating of the Securities publicly
available for reasons outside of the Company’s control, a “nationally
recognized statistical rating organization” within the meaning of Rule 15c3-1(c)(2)(vi)(F) under
the Exchange Act, selected by the Company (as certified by a Board Resolution)
as a replacement agency for Fitch, Moody’s or S&P, or any of them, as the
case may be.

 

23

 

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

 

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 Twenty-Third
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 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.

 

24

 

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 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).

 

25

 

(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 Twenty-Third 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, and in the case of an election under Section 1303 the Company shall
have delivered to the Trustee an Opinion of Counsel stating 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.

 

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

 

26

 

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.”

 

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. If
the securities are redeemed prior to January 15, 2040, the redemption
price will be 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 (1) the principal amount of the notes being redeemed and
(2) the remaining scheduled payments of interest thereon (not including
any portion of such payments of interest accrued as of the date of redemption)
from the redemption date to January 15, 2040,  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 25 basis points plus, in each case, accrued
interest thereon to the date of redemption. If the Securities are redeemed on
or after January 15, 2040, the redemption price will be equal to 100% of
the principal amount of such Securities, plus accrued interest thereon to the
date of redemption.”

 

27

 

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.

 

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.

 

28

 

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 Twenty-Third 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, 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 Twenty-Third 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

 

29

 

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
Twenty-Third 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 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 Twenty-Third
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 Twenty-Third
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 Twenty-Third 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.

 

30

 

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 amount of the principal of, premium, if any, and interest
on the Notes provided in this Twenty-Third 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 Twenty-Third
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 Twenty-Third
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 Twenty-Third 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.

 

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

 

31

 

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.

 

(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 Twenty-Third 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.

 

32

 

(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 Twenty-Third
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 Twenty-Third Supplemental Indenture, and
agrees to perform the same upon the terms and conditions of the Indenture, as
supplemented by this Twenty-Third 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 Twenty-Third
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 Twenty-Third Supplemental
Indenture all of its respective representations, covenants and agreements set
forth in the Indenture.

 

(e)  All covenants and agreements in this
Twenty-Third 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 Twenty-Third
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 Twenty-Third Supplemental
Indenture, express or implied, shall give to any Person, other than the parties
hereto and their successors under the Indenture and 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 Twenty-Third 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 Twenty-Third Supplemental
Indenture as so modified or excluded, as the case may be.

 

(i)  This Twenty-Third 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.

 

33

 

(k) All provisions of this
Twenty-Third Supplemental Indenture shall be deemed to be incorporated in, and
made a part of, the Indenture; and the Indenture, as supplemented by this
Twenty-Third 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.

 

34

 

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/ Scott M. Henderson

  
	
   

  	
   

  	
  Name:

  	
  Scott M. Henderson

  
	
   

  	
   

  	
  Title:

  	
  Vice President and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  QUEEN CITY 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

  
	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL ASSOCIATION, 

  as Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William E. Sicking

  
	
   

  	
   

  	
  Name:

  	
  William E. Sicking

  
	
   

  	
   

  	
  Title:

  	
  Vice President and Trust Officer

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Carla D. Bostic

  	
   

  	
   

  	
   

  
					

 

35

 

SCHEDULE I

 

Guarantors

 

	
  Name of Guarantor

  	
   

  	
  State of Organization

  
	
   

  	
   

  	
   

  
	
  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

  
	
  Henpil, Inc.

  	
   

  	
  Texas

  
	
  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

  

 

36

 

	
  Name of Guarantor

  	
   

  	
  State of Organization

  
	
   

  	
   

  	
   

  
	
  Quik Stop Markets, Inc.

  	
   

  	
  California

  
	
  Ralphs Grocery Company

  	
   

  	
  Ohio

  
	
  Rocket Newco, Inc.

  	
   

  	
  Texas

  
	
  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

  

 

37

 

	
  STATE OF OHIO

  	
  )

  	
   

  
	
   

  	
   

  	
  ) ss.:

  
	
  COUNTY OF HAMILTON

  	
  )

  	
   

  

 

On the 13th day of July, 2010, before me personally came
Scott M. Henderson, to me known, who, being by me duly sworn, did depose and
say that he is Vice President and Treasurer of The Kroger Co., and
President/Vice President of each of the Guarantors Listed on Schedule I
hereto, corporations described in and which executed the foregoing instrument,
and that he signed his name thereto by like authority.

 

	
   

  	
  /s/ Dorothy Roberts

  

 

	
  STATE OF OHIO

  	
  )

  	
   

  
	
   

  	
   

  	
  ) ss.:

  
	
  COUNTY OF HAMILTON

  	
  )

  	
   

  

 

On the 13th day of July, 2010, 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 Vine Court
Assurance Incorporated, corporations described in and which executed the
foregoing instrument, and that he signed his name thereto by like authority.

 

	
   

  	
  /s/ Dorothy Roberts

  

 

	
  STATE OF OHIO

  	
  )

  	
   

  
	
   

  	
   

  	
  ) ss.:

  
	
  COUNTY OF HAMILTON

  	
  )

  	
   

  

 

On the 13th day of July, 2010, before me personally came
William E. Sicking, to me known, who, being by me duly sworn, did depose and
say that he is a Vice President and Trust Officer of of U.S. Bank National
Association, one of the corporations described in and which executed the
foregoing instrument, and that he signed his name thereto by like authority.

 

	
   

  	
  /s/ Dorothy Roberts

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