Document:

EX-4.3.1

 

Exhibit 4.3.1

     EIGHTEENTH SUPPLEMENTAL INDENTURE, dated as of January 16, 2008, 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 Eighteenth Supplemental Indenture.

     The Company and the Guarantors, pursuant to the foregoing authority, propose in and by this
Eighteenth 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 Eighteenth 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 EIGHTEENTH 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 Eighteenth 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 Eighteenth Supplemental Indenture and, where so specified, to
the Articles and Sections of the Indenture as supplemented by this
Eighteenth Supplemental Indenture; and

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

     (b) For all purposes of the Indenture and this Eighteenth 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

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

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

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

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

     “Comparable Treasury Price” means, with respect to any Redemption
Date, (i) the average of the Reference Treasury Dealer Quotations,
after excluding the highest and lowest such Reference Treasury Dealer
Quotations for such Redemption Date, or (ii) if the Trustee obtains
fewer than three such Reference Treasury Dealer Quotations, the
average of all such Quotations.

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

     “Credit Facility” means any credit agreement, loan agreement or
credit facility, whether syndicated or not, involving the extension of
credit by banks or other credit institutions, entered into by the
Company or Fred Meyer, Inc. and outstanding on the date of this
Eighteenth 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.

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     “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) J.P. Morgan Securities Inc.
and its successors; provided, however, that if the foregoing shall
cease to be a primary U.S. Government securities dealer in New York
City (a “Primary Treasury Dealer”), the Company shall substitute
therefor another Primary Treasury Dealer, and (ii) any other Primary
Treasury Dealer selected by the Company.

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

     “Restricted Subsidiaries” means all Subsidiaries other than
Non-Restricted Subsidiaries.

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

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

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ARTICLE TWO

SECURITY FORMS

Section 201. Form of Securities of this Series.

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

Section 202. Form of Face of Security.

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

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

THE KROGER CO.

6.150% Senior Notes due 2020

	 	 	 
	CUSIP No. 501044CH2
	 	 
	ISIN No. US501044CH20

	 	$                                        

     The Kroger Co., a corporation duly organized and existing under the laws of the State of Ohio
(herein called the “Company”, which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to                      , or registered
assigns, the principal sum of $                      on January 15, 2020 and to pay interest thereon from
January 16, 2008, 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 July 15, 2008 at the rate of interest of 6.150% per annum until the principal

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

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

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

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

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     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: January 16, 2008

	 	 	 	 	 
	 	 	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

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February 11, 2000, the Ninth Supplemental Indenture dated as of August 21, 2000, the Tenth
Supplemental Indenture dated as of May 11, 2001, the Eleventh Supplemental Indenture dated as of
May 11, 2001, the Twelfth Supplemental Indenture dated as of August 16, 2001, the Thirteenth
Supplemental Indenture dated as of April 3, 2002, the Fourteenth Supplemental Indenture dated as of
June 17, 2002, the Fifteenth Supplemental Indenture dated as of January 28, 2003, the Sixteenth
Supplemental Indenture dated as of December 20, 2004, the Seventeenth Supplemental Indenture dated
as of August 15, 2007 and the Eighteenth Supplemental Indenture dated as of January 16, 2008 (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 $750,000,000.

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

     The Securities of this series will be redeemable, in whole or in part, at the option of the
Company at any time at a redemption price equal to the greater of (i) 100% of the principal amount
of such Securities or (ii) as determined by a Quotation Agent, the sum of the present values of the
remaining scheduled payments of principal and interest thereon (not including any portion of such
payments of interest accrued as of the date of redemption) discounted to the date of redemption on
a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate plus 35 basis points, plus, in each case, accrued interest thereon to the date of
redemption.

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

     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

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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

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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

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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 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.

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     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.

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

- 13 -

 

Security and Article Five of the Eighteenth 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: January 16, 2008

	 	 	 	 	 
	 	 	Each of the Guarantors Listed on Schedule I

hereto, as Guarantor of the Securities
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name: Paul W. Heldman
	 

	 	 	 	Title: President/Vice President

- 14 -

 

	 	 	 	 	 
	 	 	QUEEN CITY ASSURANCE, INC.,

as Guarantor of the Securities

RJD ASSURANCE, INC.,

as Guarantor of the Securities

VINE COURT ASSURANCE INCORPORATED,

as Guarantor of the Securities
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name: Bruce M. Gack
	 

	 	 	 	Title: Senior Vice President/Vice President
	 
	 	 	 	 
	 	 	ROCKET NEWCO, INC.,

as Guarantor of the Securities

HENPIL, INC.,

as Guarantor of the Securities
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name: Kim Storch
	 

	 	 	 	Title: Vice President

- 15 -

 

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

	 	 	 	 	 
	Attest:	 	U.S. BANK NATIONAL ASSOCIATION

as Trustee
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:

- 16 -

 

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
	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

- 17 -

 

	 	 	 
	Name of Guarantor	 	State of Organization
	Ralphs Grocery Company

	 	Ohio
	Second Story, Inc.

	 	Washington
	Smith’s Beverage of Wyoming, Inc.

	 	Wyoming
	Smith’s Food & Drug Centers, Inc.

	 	Ohio
	THGP Co., Inc.

	 	Pennsylvania
	THLP Co., Inc.

	 	Pennsylvania
	Topvalco, Inc.

	 	Ohio
	Turkey Hill, L.P.

	 	Pennsylvania

- 18 -

 

ARTICLE THREE

THE SERIES OF SECURITIES

Section 301. Title and Terms.

     There shall be a series of Securities designated as the “6.150% Senior Notes due 2020” of the
Company. Their Stated Maturity shall be January 15, 2020, and they shall bear interest at the rate
of 6.150% per annum.

     Interest on the Securities of this series will be payable semi-annually on January 15 and July
15 of each year, commencing July 15, 2008, 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 Eighteenth Supplemental Indenture is initially limited to $750,000,000, 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 $750,000,000 aggregate principal amount of the Securities of this series

- 19 -

 

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

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

     The Securities of this series are redeemable prior to maturity at the option of the Company as
provided in this Eighteenth 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 Eighteenth 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 Eighteenth Supplemental
Indenture, including the due and punctual payment of the principal of and interest
on all the Securities of the series created by the

- 20 -

 

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

     Section 802. Successor Substituted

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

Section 402. Other Modifications.

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

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

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

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

- 21 -

 

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 Eighteenth Supplemental
Indenture):

     “Section 1009. Limitations on Liens.

     After the date hereof and so long as any Securities of the series created by the
Eighteenth 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 Eighteenth
Supplemental Indenture (together with, if the Company shall so determine, any other
Indebtedness of the Company ranking equally with the Securities) shall be equally and
ratably secured by a lien on such assets ranking ratably with and equal to (or at the
Company’s option prior to) such secured Indebtedness; provided that the foregoing
restriction shall not apply to:

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

     (b) liens on any property or assets (including stock) existing at the time of
acquisition of such property or assets by the Company or a Restricted Subsidiary, or liens
to secure the payment of all or any part of the purchase price of such property or assets
(including stock) upon the acquisition of such property or assets by the Company or a
Restricted Subsidiary or to secure any indebtedness incurred, assumed or guaranteed by the
Company or a Restricted Subsidiary for the purpose of financing all or any part of the
purchase price of such property or, in the case of real property, construction or
improvements thereon or attaching to property substituted by the Company to obtain the
release of a lien on other property of the Company on which a lien then exists, which
indebtedness is incurred, assumed or guaranteed prior to, at the 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

- 22 -

 

the case of any such acquisition, construction or improvement, the lien shall not apply to
any other property or assets theretofore owned by the Company or a Restricted Subsidiary;

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

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

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

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

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

     (h) liens imposed by law, such as mechanics’, workmen’s, repairmen’s, materialmen’s,
carriers’, warehouseman’s, vendors’, or other similar liens arising in the ordinary course
of business of the Company or a Restricted Subsidiary, or governmental (federal, state or
municipal) liens arising out of contracts for the sale of products or 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,

- 23 -

 

or in connection with bids, tenders, contracts (other than for the payment of money) or leases to which the
Company or any Restricted Subsidiary is a party, or to secure the public or statutory
obligations of the Company or any Restricted Subsidiary, or in connection with obtaining or
maintaining self-insurance or to obtain the benefits of any law, regulation or arrangement
pertaining to unemployment insurance, old age pensions, social security or similar matters,
or to secure surety, appeal or customs bonds to which the Company or any Restricted
Subsidiary is a party, or in litigation or other proceedings such as, but not limited to,
interpleader proceedings, and other similar pledges, liens or deposits made or incurred in
the ordinary course of business;

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

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

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

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

     After the date hereof and so long as any Securities of the series created by the
Eighteenth 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

- 24 -

 

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 Eighteenth 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 Eighteenth 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 Eighteenth 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).

- 25 -

 

     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

- 26 -

 

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 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.

- 27 -

 

     “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.

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 Eighteenth 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.

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     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.

     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

- 29 -

 

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).

     (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.

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     (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
Eighteenth Supplemental Indenture there has been a change in the
applicable Federal income tax law, in either case to the effect that
and based thereon such opinion shall confirm that, the Holders of the
Outstanding Securities of this series will not recognize income, gain
or loss for Federal income tax purposes as a result of such Defeasance
or covenant Defeasance and will be subject to Federal income tax on
the same amounts, in the same manner and at the same times as would
have been the case if such Defeasance or covenant Defeasance had not
occurred.

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

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

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

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

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     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 at a redemption price equal to the greater of (i) 100% of the principal amount of
such Securities or (ii) as determined by a Quotation Agent, the sum of the present values of
the remaining scheduled payments of principal and interest thereon (not including any
portion of such payments of interest accrued as of the date of redemption) discounted to the
date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve
30-day months) at the Adjusted Treasury Rate plus 35 basis points plus, in each case,
accrued interest thereon to the date of redemption.”

ARTICLE FIVE

GUARANTEE

Section 501. Guarantee.

     Each Guarantor hereby jointly and severally fully and unconditionally guarantees (each a
“Guarantee”) to each Holder of a Security authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and enforceability of the
Indenture or the Securities or the obligations of the Company or any other Guarantor to the Holders
or the Trustee hereunder or thereunder, that (a) the principal of, premium, if any, and interest on
the Securities will be duly and punctually paid in full when due, whether at maturity, upon
redemption, by acceleration or otherwise, and interest on the overdue principal and (to the extent
permitted by law) interest, if any, on the Securities and all other obligations of the Company or
the Guarantor to the Holders of or the Trustee under the Indenture or the

- 32 -

 

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.

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 Eighteenth Supplemental Indenture, the obligations of each of
the Guarantors hereunder shall not be subject to any reduction,

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

Section 507. Subrogation.

     In furtherance of the foregoing and not in limitation of any other right of each of the
Guarantors by virtue hereof, upon the failure of the Company to pay any Obligation when and as the
same shall become due, whether at maturity, by acceleration, after notice of prepayment or
otherwise, each of the Guarantors hereby promises to and will, upon receipt of written demand by
the Trustee or any Holder of the Securities, forthwith pay, or cause to be
paid, to the Holders in cash the amount of such unpaid Obligations, and thereupon the Holders
shall, assign (except to the extent that such assignment would render a Guarantor a “creditor” of
the Company within the meaning of Section 547 of Title 11 of the United States Code as now in
effect or hereafter amended or any comparable provision of any successor statute) the

- 34 -

 

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 Eighteenth 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
Eighteenth 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 Eighteenth 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 Eighteenth 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

- 35 -

 

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

The Trustee shall deliver an appropriate instrument evidencing such release upon receipt of a
request of the Company accompanied by an Officers’ Certificate certifying as to the compliance with
this Section. Any Guarantor not so released will remain liable for the full amount of the
principal of, premium, if any, and interest on the Notes provided in this Eighteenth 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 Eighteenth 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 Eighteenth 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 Eighteenth Supplemental
Indenture, will result in the obligations of such Guarantor under its Guarantee not constituting
such fraudulent transfer or conveyance.

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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 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.

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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 Eighteenth Supplemental Indenture
or a Guarantee no longer holds that office at the time the Trustee authenticates such Guarantee or
at any time thereafter, such Guarantor’s Guarantee of such Security shall be valid nevertheless.

     (d) The delivery of any Security by the Trustee, after the authentication thereof hereunder,
shall constitute due delivery of any Guarantee set forth in this Eighteenth 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
Eighteenth Supplemental Indenture, and agrees to perform the same upon the terms and conditions of
the Indenture, as supplemented by this Eighteenth 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 Eighteenth 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 Eighteenth Supplemental Indenture all of its respective representations, covenants and
agreements set forth in the Indenture.

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     (e) All covenants and agreements in this Eighteenth 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 Eighteenth 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 Eighteenth 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 Eighteenth 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 Eighteenth Supplemental Indenture
as so modified or excluded, as the case may be.

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

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

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

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

	 	 	 	 	 
	 	 	THE KROGER CO.

Each of the Guarantors Listed on Schedule I

hereto, as Guarantor of the Securities
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Paul W. Heldman
	 

	 	 	 	 
	 

	 	 	 	Name: Paul W. Heldman
	 

	 	 	 	Title: President/Vice President
	 
	 	 	 	 
	 	 	QUEEN CITY ASSURANCE, INC.,

as Guarantor of the Securities

RJD ASSURANCE, INC.,

as Guarantor of the Securities

VINE COURT ASSURANCE INCORPORATED,

as Guarantor of the Securities
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Bruce M. Gack
	 

	 	 	 	 
	 

	 	 	 	Name: Bruce M. Gack
	 

	 	 	 	Title: Senior Vice President/Vice President
	 
	 	 	 	 
	 	 	ROCKET NEWCO, INC.,

as Guarantor of the Securities

HENPIL, INC.,

as Guarantor of the Securities
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Kim Storch
	 

	 	 	 	 
	 

	 	 	 	Name: Kim Storch
	 

	 	 	 	Title: Vice President
	 
	 	 	 	 
	 	 	U.S. BANK NATIONAL ASSOCIATION,

as Trustee
	 
	 	 	 	 
	 

	 	By:
	 	/s/ William E. Sicking
	 

	 	 	 	 
	 

	 	 	 	Name: William E. Sicking
	 

	 	 	 	Title: Vice President & Trust Officer

	 	 	 
	Attest:

	 	 
	 
	 	 
	/s/ Margaret A. Gerbus
	 	 
	  
	 	 
	Margaret A. Gerbus
	 	 

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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
	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

- 41 -

 

	 	 	 
	Name of Guarantor	 	State of Organization
	Ralphs Grocery Company

	 	Ohio
	Second Story, Inc.

	 	Washington
	Smith’s Beverage of Wyoming, Inc.

	 	Wyoming
	Smith’s Food & Drug Centers, Inc.

	 	Ohio
	THGP Co., Inc.

	 	Pennsylvania
	THLP Co., Inc.

	 	Pennsylvania
	Topvalco, Inc.

	 	Ohio
	Turkey Hill, L.P.

	 	Pennsylvania

- 42 -

 

	 	 	 
	STATE OF OHIO

	 	 )
	 

	 	 ) ss.:
	COUNTY OF HAMILTON

	 	 )

     On the 16th day of January, 2008, before me personally came Paul W. Heldman, to me
known, who, being by me duly sworn, did depose and say that he is Executive Vice President 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; that he knows the seals of
said corporations; that the seals affixed to said instrument are such corporate seals; that they
were so affixed by authority of the Board of Directors of such corporations, and that he signed his
name thereto by like authority.

	 	 	 	 	 
	 

	 	 	 	/s/ Carrie A. Cortolillo
	 

	 	 	 	 
	 

	 	 	 	Carrie A. Cortolillo

	 	 	 
	STATE OF OHIO

	 	 )
	 

	 	 ) ss.:
	COUNTY OF HAMILTON

	 	 )

     On the 16th day of January, 2008, 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/Vice
President of Queen City Assurance, Inc., RJD Assurance, Inc. and Vine Court Assurance Incorporated,
corporations described in and which executed the foregoing instrument; that he knows the seal of
said corporation; that the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Boards of Directors of said corporation, and that he signed his name
thereto by like authority.

	 	 	 	 	 
	 

	 	 	 	/s/ Carrie A. Cortolillo
	 

	 	 	 	 
	 

	 	 	 	Carrie A. Cortolillo

 

 

	 	 	 
	STATE OF TEXAS

	 	 )
	 

	 	 ) ss.:
	COUNTY OF MONTGOMERY

	 	 )

     On the 16th day of January, 2008, before me personally came Kim Storch, to me
known, who, being by me duly sworn, did depose and say that she is Vice President of Rocket Newco,
Inc. and Henpil, Inc., corporations described in and which executed the foregoing instrument; that
she knows the seal of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Boards of Directors of said corporation, and that
she signed her name thereto by like authority.

	 	 	 	 	 
	 

	 	 	 	/s/ Barbara Edwards
	 

	 	 	 	 
	 

	 	 	 	Barbara Edwards

	 	 	 
	STATE OF OHIO

	 	 )
	 

	 	 ) ss.:
	COUNTY OF HAMILTON

	 	 )

     On the 16th day of January, 2008, 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 of U.S. Bank
National Association, one of the corporations described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.

	 	 	 	 	 
	 

	 	 	 	/s/ Carrie A. Cortolillo
	 

	 	 	 	 
	 

	 	 	 	Carrie A. CortolilloG2 Ventures Inc.: Exhibit 10.2

       

Exhibit 10.2

 

Exclusive Recording Artist Agreement

 

This Agreement is made as of the 9th day of Dec., 2007 by and between G2 VENTURES, INC. (hereinafter “G2”) and Nick Brisco, individually p/k/a “Nick Brisco” (hereinafter “Artist”).

 

1. ARTIST’S WARRANTIES AND REPRESENTATIONS

 

1.01. Artist represents and warrants that: (a) it is authorized, empowered and able to enter into and fully perform its obligations under this Agreement; (b) neither this Agreement nor the fulfillment thereof by any party infringes upon the rights of any other person or entity; (c) it has not and will not do anything that impairs G2’s rights under this Agreement, nor will it permit any other person or entity to do so; and (d) Artist is resident in the United States of America for income tax purposes.

 

1.02. Artist further represents and warrants that: (a) there now exist no prior recorded performances by Artist other than those listed on the attached Exhibit A and that no recordings from those Masters will be released during the term hereof; (c) none of the Masters delivered to G2 by Artist, nor the performances embodied thereon, nor any other Materials, nor any use thereof by G2 or its grantees, licensees or assigns, will violate or infringe upon the rights of any third party. “Materials,” as used in this Paragraph, means all Controlled Compositions, each name used by Artist, any logo used by Artist, and all other musical, artistic, literary and other materials, ideas and other intellectual properties furnished by Artist or any other producer engaged by Artist and contained or used in connection with any Masters made hereunder, or the packaging, sale, advertising or other exploitation thereof.

 

2.  TERM AND RECORDING COMMITMENT

 

2.01. The Term of this Agreement shall be for an Initial Period commencing on the date hereof and expiring nine months thereafter.

 

2.02. Artist hereby grants to G2 three (3) separate and irrevocable options to extend the Term of this Agreement for further periods (the “Option Periods”) commencing immediately upon the expirations of the Initial Period and expiring one year after delivery to G2 of the Minimum Recording Commitment for said Option Period. Each option shall be exercised by written notice from G2 to Artist postmarked or delivered before upon the expiration of the prior terms; provided that, G2 shall have a thirty day right to cure any inadvertent failure to exercise such option.
 

 

2.03. During the Term of this Agreement (as the same may be extended) Artist agrees to produce and Artist shall deliver to G2 Masters comprising sound alone sufficient to comprise the following (the “Minimum Recording Commitment”):

 

 

(a)

during the Initial Period- - one (1) Album (the “First Album”)

 

(b)

during the First Option Period- - one (1) Album (the “Second Album”)

 

(c)

during the Second Option Period- - one (1) Album (the “Third Album”)

 

(d)

during the Third Option Period- - one (1) Album (the “Fourth Album”)

 

2.04. Notwithstanding anything else herein to the contrary:
 

 

(a)

Each Album shall be delivered to G2 within four (4) months after the commencement of the applicable Initial Period of Option Period. The Album currently being recorded by the Artist shall, when delivered, count as the Minimum Recording Commitment for the Initial Period.

 

(b)

Artist shall not commence the recording of any Album hereunder earlier than three (3) months following the delivery to G2 of the prior album.

 

(c)

G2 shall not be obliged to accept delivery of any Album hereunder earlier than one year following the date of delivery to G2 of the prior album. If any such premature delivery is tendered, the contractual date of deliver hereunder of such Album shall be deemed to be the date one year following the date of delivery of the prior album, provided that the prior album has been recorded and delivered in all respects in accordance with the provisions of this Agreement and comprises acceptable Masters as herein provided.

 

(d)

In the event that, during the Initial Period of the Option Periods, Artist produces more than the Minimum Recording Commitment, G2 shall as its sole option be entitled to treat such additional material (or some of it) as counting towards the Minimum Recording Commitment (or not) but said additional material shall be and remain the sole and exclusive property of G2 subject to the provisions of this Agreement.

 

(e)

Each Album delivered shall consist of not less than ten (10) Masters and not less than forty-five (45) nor more than seventy-four (74) minutes of Artist’s performances. Each Master shall consist of not less than two minutes and thirty seconds of Artist’s performances. No Album consisting of Artist’s “live” performances shall be deemed to be in fulfillment of any of Artist’s obligations hereunder except that upon mutual consent, in writing, a live recording may be accepted in fulfillment of Artist’s Minimum Recording Commitment. If any such performances are recorded during the Term hereof, G2 shall be the owner thereof and shall have the right to exploit same under the same terms as contained herein for the First Album, except that no advance will be paid to Artist. No Multiple Albums shall be delivered hereunder without G2’s prior written consent; any such Multiple Album delivered to and accepted by G2 shall be deemed a single Album for all purposes hereof. No Mini-Album shall form part of the Minimum Recording Commitment unless expressly agreed in writing by G2 at its absolute discretion.

 

 

(f)

Artist shall deliver to G2 each Master hereunder in the form of a digital two-track stereo tape master, as well as reference discs which are representative of such tape masters. Artist shall also deliver at the same time any multi-track master tapes recorded in connection with the same project. The two-track stereo master tape shall be fully edited, mixed, equalized and leadered for the production of parts from which satisfactory Phonograph Records can be manufactured.

 

(g)

As used in this Agreement, “delivery” shall mean the receipt of all tape masters as provided herein, as well as Artist’s submission to G2 in written form of all necessary information, consents, licenses and permissions that G2 requires to manufacture, distribute and release the Masters as Phonograph Records, including, but not limited to, mechanical licenses, credits, musician and producer releases, and any information required to be delivered to unions or other third parties. Payment of funds due at delivery by G2 shall not be deemed a waiver of information or documents required hereunder.

 

(h)

Artist shall be available to G2 and shall perform for the purposes of making such music videos at such time and places as G2 shall reasonably agree with Artist. The cost of making such music videos shall be deemed advances hereunder and shall be fifty percent (50%) recoupable from all sources, excluding Mechanical Royalties, payable to Artist hereunder.

 

3. GRANT OF RIGHTS

 

3.01. During the Term of this Agreement, Artist shall furnish to G2 its exclusive recording services throughout the Universe. Any contract entered into by Artist or on Artist’s behalf during the Term hereof or any extensions thereof for Artist’s performances in television or radio broadcasts or motion pictures or stage productions shall specifically exclude the right to use any recording of such performance for the manufacture and sale of Phonograph Records or music videos unless previously authorized in writing by G2. Artist shall promptly deliver to G2 copies of the pertinent provisions of each such contract and Artist will cooperate fully with G2 in any controversy dispute or litigation which may arise in relation to the rights of G2 under this Paragraph.

 

3.02. Artist hereby grants and assigns to G2 all rights of every kind and the complete, unconditional, exclusive, perpetual, unencumbered title throughout the Universe in and all results and products of Artist’s services and performances hereunder, any and all Masters, records, tapes, sound recordings, music videos, long form videos, and other material of every kind made or authorized by G2 hereunder or otherwise produced during the Option Terms and which include the voice, instrumental or other sound and/or visual effects, services, or performances of  Artist, including without limitation the right to record, reproduce, broadcast, transmit, publish, sell, exhibit, distribute, advertise, exploit, perform, and use the same separately or in combination with any other material for any purpose in any manner, under any label, trademark, or other identification and by any means or method, whether known or not now known, invented, used or contemplated, and to refrain from all or any part thereof.

 

 

3.03. Without in any way limiting the generality of the foregoing, Artist hereby grants to G2 the following rights throughout the Universe which G2 may use or refrain from using as it elects in G2’s sole discretion:

 

(a)

the exclusive right during the Term hereof to manufacture, distribute, and sell anywhere in the Universe Phonograph Records and music videos reproducing Artist’s performances;

 

(b)

the exclusive right for the full periods of copyright to manufacture, distribute, and sell throughout the Universe Phonograph Records and music videos produced from Masters made during the Option Terms hereunder;

 

(c)

the exclusive right for the full periods of copyright to manufacture, distribute, and sell throughout the Universe Phonograph Records and music videos produced from masters made during the Option Terms hereunder;

 

(d)

the exclusive right to authorize public performances in the Universe of Phonograph Records and music videos produced during the Option Terms hereunder;

 

(e)

the right to permit and authorize others to exercise, directly or through persons designated by them, any and all G2’s rights hereunder.

 

3.04.  (a) Each Master (including all sound recordings embodied thereon) produced hereunder or embodying Artist’s performances and recorded during the Initial Term shall belong to Artist. Artist grants G2 a security interest in and to its copyright in the First Album to secure recoupment of all sums expended by G2 in the recording and promotion of all Albums recorded under this Agreement. Artist further agrees to execute any document reasonably necessary to perfect such security interest. In the event Artist fails to execute any such documents or instruments Artist hereby irrevocably grants G2 power of attorney, coupled with any interest, to execute all such security agreements.

 

(b) Each Master (including all sound recordings embodied thereon) produced hereunder or embodying Artist’s performances and recorded during the Option Terms shall, from the inception of its creation, be considered a “work made for hire” for G2 within the meaning of the U.S. Copyright Law. If it is determined that a Master does not so qualify then such Master, together with all rights in it (including the sound recording copyright), shall be deemed, and hereby transferred and assigned to G2 by this Agreement. Artist agrees to execute and deliver to G2 any and all documents or instruments which G2 may request in order to confirm G2’s acquisition and/or title to the Masters (including the copyright) as described herein. In the event Artist fails to execute any such documents or instruments Artist hereby irrevocably grants to G2 power of attorney, coupled with an interest, to execute all such documents of conveyance. All Masters recorded by Artist from the inception of the recording thereof and all reproductions derived therefrom, together with the performances embodied thereon, shall be entirely the property of G2 in perpetuity, throughout the Universe, free of any claim whatsoever by Artist or any persons deriving any rights or interests therefrom.

 

 

3.05. Artist shall not authorize or permit Artist’s performances to be recorded for any purpose without obtaining an express written approval of G2, and Artist shall take reasonable measures to prevent the manufacture, distribution and sale of Phonograph Records or music videos containing its performances (and the use of Artist’s name and likeness in connection therewith) by any person or entity other than G2, its successors, licensees and assigns.

 

3.06. Artist grants G2 the right to include any Master produced and delivered hereunder in a soundtrack or compilation album, at any time, and without any further advance, except that royalties shall be payable as provided herein.

 

3.07. As used in this Agreement, “Phonograph Records” shall include any and all mechanical reproductions of the Masters produced and delivered hereunder, in any format, whether now known or unknown, including but not limited to compact discs, cassette tapes, vinyl records, DAT tapes or any future format.
 

 

4. RECORDING COSTS AND PROCEDURES

 

4.01. Advances payable to Artist pursuant to this Agreement are and shall be inclusive of all costs incurred in the course of producing and recording Masters hereunder (including without limitation, the costs of studio time, musician fees, union payments, instrument hire, producer’s fees, and the cost of tape editing, mixing, remixing and masters, advances, and other similar costs customarily regarded in the industry as being recording costs.) All such costs are sometimes herein referred to as “recording costs” and shall constitute advances recoupable from royalties payable hereunder. G2 shall, in accordance with the provisions of this Agreement, deduct and retain out of said advances such sums as may be necessary to pay the said recording coasts. In the event that, as a result of an event within the control of the Artist but unapproved by G2, any recording costs shall exceed the amount of the recording fund specifically referred to in Paragraph 5.01. below, then the excess costs shall (if paid by G2) constitute a loan to Artist payable on demand and without prejudice to G2’s other rights and the same shall, at G2’s election, be recoverable by G2 out of any monies payable by G2 to Artist or on Artist’s behalf hereunder. Any recording cost that exceeds the amount of the recording fund specifically referred to in Paragraph 5.01 below, but which has been approved by G2, shall be treated as an increase in said recording fund.

 

4.02. G2 and Artist shall, prior to the commencement of any recording: (a) mutually designate the producer(s) of all Masters hereunder; and (b) agree on a budget for recording costs. G2 shall not unreasonably withhold its consent to any budget for recording costs that is less than ninety percent (90%) of the recording fund for that album as specified in Paragraph 5.01. G2 has previously approved the budgets for the First and Second Albums.

 

 

4.03. Artist shall be properly rehearsed and shall appear at the times and places designated by G2 after consultation with and reasonable notice to Artist from time to time for all recording sessions required hereunder and at each session Artist shall tender their professional services to the best of their ability. G2 and Artist shall mutually designate the material to be recorded and each Master shall be subject to G2’s approval as technically and commercially satisfactory. Upon G2’s request, Artist shall re-record any material until a Master, which in G2’s sole judgment is satisfactory, shall be obtained.

 

4.04. The Masters delivered to G2 by Artist under this Agreement and the performances embodied therein shall be produced in accordance with the rules and the regulations of the American Federation of Musicians, the American Federation of Television and Radio Artists and all other unions having jurisdiction. Artist is or will become and remain, to the extent necessary to fulfill this Agreement, a member in good standing of all labor unions or guilds in which membership may be required for the performance of Artist’s services hereunder.

 

4.05. Artist shall not perform for or in connection with (and shall not permit any other person or entity to use Artist’s name or likeness in connection with) the recording or exploitation of any Phonograph Record embodying any Composition recorded by Artist under this Agreement prior to a date five (5) years subsequent to the expiration or termination of the term of this Agreement, or any extensions thereof.

 

4.06. Without limiting the foregoing, G2 shall not be required to make any payments of any kind for, or in connection with, the acquisition, exercise or exploitation of rights by G2 except as specifically provided in this Agreement. Artist shall be solely responsible for all sums due to labor unions or guilds, individual musicians, producers and all other persons or entities entitled to received royalties or other payments in connection with the sale of Phonograph Records derived from Masters hereunder, although G2 will undertake to make all such payments to the extent of the recording fund specified in Paragraph 5.01, and Artist’s liability to producers for royalties shall be limited to two percent of retail. None of the persons whose performances are embodied in the Masters or whose services are used in recording the Masters shall be bound by any otherwise bound or restricted, Artist shall obtain all necessary clearances in writing.
 

 

5. ADVANCES AND RECORDING FUND

 

5.01. As advances against and recoupable from royalties payable hereunder, G2 agrees to pay with respect to each Album constituting the Minimum Recording Commitment hereunder a sum equal to the amount by which the applicable sum set forth below (“Album Recording Fund”) exceeds the sum of the documented receipts for the recording costs concerned and any other advances made to Artist prior to delivery of the applicable Album:

 

Album Recording Fund:

First Album

$25,000

Second Album

$30,000

Third Album

$40,000

Fourth Album

$75,000

 

 

5.02. If net sales through normal retail channels in the United States for which royalties are payable pursuant to Paragraph 6.01(a) below, net of applicable reserves of any album shall exceed seventy-five thousand (75,000) units as of the date nine (9) months after the initial release of that album in the United States, then the Album Recording Fund on the next subsequent album shall be increases by Ten Thousand Dollars ($10,000).

 

5.03. The advances due under Paragraph 5.01 shall be payable promptly following the deliver to G2 of (a) the Minimum Recording Commitment; (b) the documents required under Paragraph 2.4(g); and (c) all invoices pertaining to the recording of the Minimum Recording Commitment. With respect to payments to be made following delivery, G2 shall have the right to withhold ten percent (10%) for ninety (90) days to provide for anticipated costs which have not yet been paid.
 

 

5.04. All advances paid to Artist or on Artist’s behalf shall be recoupable against the royalties payable under this Agreement, from whatever the source, except that advances shall not be recoupable against Mechanical Royalties except as provided for in Paragraph 8.01.

 

6. ROYALTIES

 

6.01. Subject to Artist’s compliance with all obligations required of Artist hereunder and subject as otherwise granted herein, G2 will pay to Artist for the rights granted herein and for the services performed hereunder the royalties set out below, being percentages of one hundred percent (100%) of G2’s published wholesale price, exclusive of taxes and duties actually paid by G2, and the container cost deductions specified below for all records and music videos manufactured, sold and not returned, and for which G2 is paid reproducing exclusively Masters recorded hereunder, namely:

 

(a)

With respect to the sales for distribution in the United States of Albums reproducing exclusively Masters hereunder: Twenty Percent (20%).

 

(a)

The royalty rate with respect to 12-inch singles shall be fifteen percent (15%).

 

(c)

The royalty rate with respect of 7-inch singles and other records shall be twelve percent (12%).

 

(d)

The royalty rate with respect to the following is thirteen percent (13%): records sold to any government body, PX  sales, sales to educational institutions, record clubs, soundtrack records, compilation records, budget records (defined as a record which is sold as wholesale price of at least fifty percent but less than eighty percent of G2’s published wholesale price), and EP records (defined as records containing between three and nine Masters): except that the royalty rate for compilations releases exclusively on the G2 label shall be twenty percent (20%). Royalties for soundtracks and compilations on which Artist appears with other performers shall be pro-rated in the same proportion that Artist’s Master bear to the entire album.

 

 

(e)

Foreign royalty rate: The rate for the records manufactured by G2 or G2’s affiliates and sold outside the United States will be sixty-six and two-thirds percent (66 2/3%) of the applicable royalty except that the royalty rate for masters licensed by G2 outside the United States shall be fifty percent (50%) of the net income therefrom. Net income shall mean all income received less third party out of pocket expenses to establish the license, third party out of pocket collection costs, foreign currency exchange, wire transfer fees and applicable taxes.
 

 

(f) Royalty rate for music videos sold and not returned shall be ten percent (10%) of G2’s published wholesale price.

 

7. ROYALTY PAYMENTS

 

7.01. Royalties earned hereunder will be accrued semi-annually and paid, less all advances, taxes, and any other charges, within sixty (60) days following each June 30th and December 31st for the preceding six (6) month period, in accordance with G2’s regular accounting practices. G2 shall, however, have the right to establish reasonable reserves for returns and exchanges, said reserves not to exceed thirty percent (30%). Each reserve established hereunder shall be liquidated at the end of the following semi-annual period. If G2 makes any overpayment of royalties (e.g., by reason of an accounting error or paying royalties on Records returned later), G2 shall have the right to offset such overpayment against any subsequent payment due to Artist from G2.
 

 

7.02. Each royalty payment hereunder shall be accompanied by a statement in accordance with G2’s regular accounting practices. Said statements shall be provided to Artist within sixty (60) days of the end of each calendar quarter, even though royalty payments are semi-annual. Each statement shall become binding upon Artist and Artist shall neither have nor make any claim against G2 with respect to such statement, unless Artist shall advise G2, in writing, of the specific basis of such claim within one (1) year after the date G2 mails such statement. G2’s accounting books and records will be kept and maintained in accordance with generally accepted accounting principles, consistently applied.
 

 

7.03. Artist shall not be entitled to recover damages or to terminate this Agreement for any reason because of a claimed breach by G2 of its material obligations hereunder, unless G2 has failed to remedy such breach within sixty (60) days following receipt of written notice thereof. Artist will not have the right to sue G2 in connection with any royalty accounting, or sue G2 for royalties accrued by Artist during the period a royalty accounting covers, unless Artist commences the suit within two (2) years after the date when the statement in question is rendered to Artist. If Artist commences suit on any controversy or claim concerning royalty accountings rendered to Artist under this Agreement, the scope of the proceeding will be limited to determination of the amount of royalties due for the accounting periods covered and reasonable attorney fees, and the court will have no authority to consider any other issues or award any relief except recovery of any royalties found owing. Artist’s recovery of any such royalties and attorney’s fees will be the sole remedy available to Artist by reason of G2’s royalty accountings. Without limiting the generality of the preceding sentence, Artist will not have any right to seek termination of this Agreement or avoid the performance of their obligations under it by reason of any such claim. Artist’s remedy for G2’s willful refusal to permit it to record its Minimum Recording Commitment shall be limited to termination of this Agreement.
 

 

 

7.04. G2 agrees that Artist may, not more than once during any calendar year, but only once with respect to any statement rendered hereunder, audit its books and records for the purpose of determining the accuracy of G2’s statements to Artist. If Artist wishes to perform any such audit, Artist will be required to notify G2 at least thirty (30) days before the date when Artist plans to begin the audit. If Artist’s audit has not been completed within one (1) month from the time Artist begins it, G2 may require Artist to terminate it on seven (7) days notice to Artist and G2 will not be required to permit Artist to continue the examination after the end of that seven (7) day period. Artist shall not be entitled to examine any manufacturing records or any other records which do not specifically report sales of Records or calculation of net receipts on which royalties are accruable hereunder. All audits shall be made during regular business hours, and shall be conducted on Artist’s behalf by an independent Certified Public Accountant. Each examination shall be made at Artist’s sole expense at G2’s regular place of business in the United States, where the books and records are maintained.
 

 

8. MECHANICAL LICENSES AND ROYALTIES

 

8.01. All Controlled Compositions (defined as musical compositions composed in whole or in part by any individual member of Artist) are hereby licensed to G2 and its licenses for reproduction on Phonograph Records anywhere in the Universe. Royalties for the mechanical license herein granted shall be at a rate equal to seventy-five percent (75%) of the current minimum U.S. statutory rate (including the “long work” rate, if applicable) for royalty-bearing records sold and not returned and for which G2 is paid, excluding any instance where G2 and Artist are sharing income under Paragraph 6.01(e) above. In no event shall the mechanical royalties payable hereunder for any Album exceed ten (10) times the rate set forth above. The foregoing also applies to music videos, as well as to any instance where such a license must be executed in favor of G2, G2 shall not recoup from mechanical royalties due to Artist any advances payable to Artist except: (a) excess recording costs under Paragraph 4.01; (b) overpayments under Paragraph 701; and (c) any advances or cash or consigned materials (or the like) to Artist.

 

8.02. If any record contains one or more compositions which are not Controlled Compositions, then G2 will have the right to reduce the amount of Mechanical Royalties payable on the Controlled Compositions by an amount equal to the amount of mechanical royalties payable on non-Controlled Compositions.
 

 

 

9. TRADEMARKS

 

9.01. Artist shall perform under the professional name, “Nick Brisco”. Artist warrants and represents that it is the sole owner of such name in connections with Phonograph Records during the term hereof. Artist shall not use a different name in connection with Phonograph Records unless Artist and G2 mutually agree in writing. Artist agrees that G2 may cause a search to be instituted for the purpose of determining whether any professional name used by Artist has been or is being used by another person in connection with Phonograph Records. G2 may cause one or more federal applications for trademark protection to be made in favor of Artist for Phonograph Records and/or entertainment purposes. Any amounts up to One Thousand Seven Hundred Dollars ($1,700.00) expended by G2 pursuant to this Paragraph shall be deemed Advances hereunder. If the trademark search indicates that such name should not be used, G2 and Artist shall mutually agree on a substitute name for Artist. Nothing contained herein shall release Artist from its indemnification of G2 with respect to Artist’s use of such name.
 

 

10. FREE GOODS

 

10.01. No royalties shall be payable with respect to records given away or furnished on a “no charge” basis to one-stops, rack jobbers, distributors, dealers, radio stations, television stations or film companies, theatrical hooking agencies, print media, music publishers or the like, provided that such records do not exceed one hundred (100) non-royalty bearing Singles out of every one thousand (1,000) Singles distributed and one hundred (100) non-royalty bearing Albums out of every one thousand (1,000) Albums. Any record sold for less than fifty percent (50%) of G2’s published wholesale price will be a non-royalty bearing record.

 

10.02. During each applicable contract period, G2 shall provide Artist with fifteen (15) non-royalty bearing copies of Artist’s then current Album at no charge to the Artist.
 

 

11. CONTAINER COSTS

 

11.01. G2’s container deduction shall be a sum equal to: one dollar ($1.00) for singles, one dollar and fifty cents ($1.50) for LPs and cassettes, two dollars ($2.00) for double LP sets and compact discs, three dollars ($3.00) for double cassettes, and four dollars ($4.00) for other formats, including double compact disks, and all video formats.

 

12. INDEMNIFICATIONS

 

12.01. Artist agrees to and does hereby indemnify, save and hold G2 and its licensees harmless of and from any and all liability, loss, damage, cost, or expense (including all legal expenses and reasonable attorney fees) arising out of or connected with any breach of this Agreement or any claim which is inconsistent with any of the warranties or representations made by Artist in this Agreement, and Artist agrees to reimburse G2 on demand for any payment made or incurred by G2 with respect to the foregoing if the claim concerned is settled or has resulted in a final judgment against G2 or its licensees. Pending the determination of any claim with respect to which G2 is entitled to indemnity, G2 may withhold monies which would be otherwise payable to Artist up to the amount of its potential liability.

 

 

13. DEFAULT AND TERMINATION

 

13.01. In the event of any default or breach by Artist in the performance of any of Artist’s obligations hereunder, G2 may, without prejudice to its other rights, claims or remedies, suspend its obligations hereunder for the duration of such default or breach and until the same has been cured and may, at its option, extend the Term for a period equal to all or any part of the period of such default or breach, and in such event the dates for the exercise by G2 of the Option Periods hereunder and the dates of commencement of each subsequent Option Period shall be extended accordingly.
 

 

14. FORCE MAJEAUR

 

14.01. If G2’s material performance hereunder is delayed or becomes impossible or impractical because of any act of God, fire, earthquake, strike, act of government or any order, regulation, ruling, or action of any labor union or association of artist affecting G2 or Artist or the phonograph record industry, G2, upon notice to Artist may suspend its obligations under this Agreement for a period not to exceed one (1) year, and in such event the number of days equal to the number of days of such suspension shall be added to the then-current period of the Term thereof. In the event that G2’s material performance hereunder is delayed or becomes impossible or impractical because of any civil strife, G2, upon notice to Artist, may suspend its obligations under this Agreement for the duration of such delay, impossibility or impracticability and in such event the number of days equal to the number of days of such suspension shall be added to the then-current period of the Term thereof.

 

15.  MERCHANDISING

 

15.01. Artist hereby grants G2 the exclusive right to manufacture, sell, license, distribute and exploit, through the Universe and by mail-order and through retail sources of, without limitation, all merchandise or every kind featuring the Artist (name/logo/likeness), during the term of this Agreement.

 

15.02. It is expressly agreed and understood that any contract for the purpose of merchandising Artist entered into by G2 during the Term shall continue in full force and effect in accordance with the provisions thereof for a period not to exceed one (1) year following the expiration of the term of this Agreement.

 

15.03. In the case of such products or property manufactured and sole by G2 or by any associated company, Artist shall be entitled to a royalty of twenty percent (20%) of the adjusted gross receipts therefrom. As used in this paragraph, the term “adjusted gross” shall mean gross revenues from the sale of applicable merchandise, less venue commissions and state sales tax where collected and actually paid. In the event that G2 licenses to other any of its rights under this clause then Artist shall received fifty percent (50%) of the net receipts therefrom. As used in this paragraph, the term “net receipts” shall be calculated as gross revenues from the sale of the applicable merchandise, less the cost actually incurred and paid by G2 or its licensing company for manufacturing; sales personnel salaries and/or commissions, venue commissions and state sales tax where collected and actually paid.

 

 

15.04. Artist has the right of approval of all merchandising artwork, so long as said approval is that unreasonably withheld. During the Term of this Agreement, Artist shall cause the inclusion of G2’s logo and proper name at a reasonable size and position on all merchandise.

 

15.05.

No royalties shall be payable with respect to merchandise given away or furnished on a no-charge basis. Upon Artist’s request, G2 shall provide Artist with twenty (20) non-royalty-bearing samples of each item of merchandise at no charge.

 

16.  ARTWORK

 

16.01. Artist agrees that G2 is the owner of any and all artwork, LP jacket art, and promotional artistic renderings undertaken or completed within the Option Terms of this Agreement. Artist shall have the right to use artwork which has been mutually approved by G2 and Artist for the purpose of Merchandising.

 

17.  NOTICES

 

17.01. All notices, demands or the like which are required to be
given hereunder shall be in writing and may be served upon the other party
personally by Registered Mail, Return Receipt Requested or by telecopy
(facsimile). Notice to Artist will be received by: 

	 
	 

 and notice to G2 will be received by: Gust Kepler, G2 Ventures, Inc., 14110 N. Dallas Parkway, Suite 365, Dallas, TX 75254.

 

18.  PROMOTIONS AND ADVERTISING CAMPAIGNS

 

18.01. Any promotional monies spent by G2 on behalf of Artist are fifty percent (50%) recoupable from monies otherwise due to Artist from G2, excluding Mechanical Royalties, notwithstanding the source. Any promotional monies spent on behalf of Artist in combination with other G2 Artist shall be recoupable from Artist on a pro-rata basis.

 

18.02. G2 is not obligated to produce a promotional video for Artist, but if G2 undertakes to produce said video, the cost is fifty percent (50%) recoupable from royalties, excluding Mechanical Royalties, notwithstanding the source. The cost of producing nonpromotional videos intended for resale are fully recoupable.

 

 

19. CONTROLLING LAW

 

19.01. This Agreement is entered into and performable in Dallas County, Texas and the validity, interpretation and legal effect of this agreement shall be governed by Texas law. Venue for any legal action shall be in Dallas County, Texas.
 

 

20.  REMEDIES

 

20.01. Artist acknowledges, recognizes and agrees that his services hereunder are of a special, unique, unusual, extraordinary and intellectual character which gives them a peculiar value, the loss of which cannot be reasonably or adequately compensated for by damages in an action of law. Inasmuch as a breach of such services will cause G2 irreparable damages, G2 shall be entitled to injunctive and other equitable relief, in addition to whatever legal remedies are available, to prevent or cure any such breach or threatened breach.

 

21.  HEADINGS

 

21.02. The headings of the clauses herein are intended for convenience only, and shall not be of any effect in construing the contents of this Agreement.

 

22. RELATIONSHIP

 

22.01. Artist has the status of an independent contractor and nothing herein contained shall contemplate or constitute Artist of its members as G2’s agents or employees. This Agreement does not and shall not be construed to create a partnership or joint venture between the parties to this Agreement.

 

23. VALIDITY AND MODIFICATIONS

 

23.01. The invalidity or unenforceability of any provision shall not affect the validity or enforceability of any other provision. This Agreement contains the entire understanding of the parties relating to its subject matter. No change of this Agreement will be binding unless signed by all parties hereto or their duly authorized representatives. A waiver by either party of any provision of this Agreement in any instance shall not be deemed to waive it for the future. All remedies, rights, undertakings and obligations contained in this Agreement shall be cumulative and none of them shall limit any other remedy, right, undertaking or obligation.

 

24. ASSIGNMENT

 

24.01. G2 may assign its rights under this Agreement in whole or in part.

 

 

25.  LEGAL REPRESENTATION

 

25.01. Artist, by their signature hereto, confirms that G2 has advised Artist to take independent legal counsel, from a lawyer specializing generally in the music business and specifically in the negotiation of recording agreements, on the terms and conditions of this Agreement and on the obligations being undertaken by Artist in executing the Agreement.

 

26. COOPERATION

 

26.01. Artist shall execute such other documentation and shall give further assurances as may reasonably be necessary or desirable for the purpose of vesting, confirming, protecting or further assuring any of the rights granted herein.

 

27. DISCLAIMER

 

27.01. G2 has not made and does not hereby make any representation or warranty with respect to the extent of the sales of records or the exploitation of the music videos hereunder.

 

SIGNED THIS 9th  DAY OF December, 2007.

 

G2 VENTURES, INC.

 

By: /s/ Gust Kepler     

     Gust Kepler, President

 

14110 North Dallas Parkway

Suite 365

Dallas, TX 75254

 

ARTIST:

 

P/k/a:  NICK OR NIKOS BRISCO

 

By: /s/ Nick Brisco     

Printed Name: Nick Brisco

SSN: ###-##-####

 

Artist Address:_____________________

_________________________________

_________________________________

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