{"id":41970,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/target-zellers-hudson-s-bay-company-transaction-agreement.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"target-zellers-hudson-s-bay-company-transaction-agreement","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/land\/target-zellers-hudson-s-bay-company-transaction-agreement.html","title":{"rendered":"Target Zellers Hudson’s Bay Company Transaction Agreement"},"content":{"rendered":"<\/p>\n

ZELLERS INC.<\/strong>,<\/p>\n

\n

\n

HUDSON153S BAY COMPANY,<\/strong><\/p>\n

\n

\n

TARGET CORPORATION,<\/strong><\/p>\n

\n

\n

and<\/p>\n

\n

\n

TARGET CANADA CO.<\/strong><\/p>\n

\n

\n

\n

\n

TRANSACTION AGREEMENT<\/strong><\/p>\n

\n

January 12, 2011<\/p>\n

\n

\n

\n

\n

<\/p>\n

\n

TABLE OF CONTENTS<\/strong><\/p>\n

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n<\/td>\n\n

\n<\/td>\n

\n

Page<\/strong><\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n

\n<\/td>\n

\n

\n<\/td>\n<\/tr>\n

\n

ARTICLE 1 INTERPRETATION<\/p>\n<\/td>\n

\n

1<\/p>\n<\/td>\n<\/tr>\n

\n

Section 1.1<\/p>\n<\/td>\n

\n

Defined Terms<\/p>\n<\/td>\n

\n

1<\/p>\n<\/td>\n<\/tr>\n

\n

Section 1.2<\/p>\n<\/td>\n

\n

Gender and Number<\/p>\n<\/td>\n

\n

9<\/p>\n<\/td>\n<\/tr>\n

\n

Section 1.3<\/p>\n<\/td>\n

\n

Headings, etc.<\/p>\n<\/td>\n

\n

9<\/p>\n<\/td>\n<\/tr>\n

\n

Section 1.4<\/p>\n<\/td>\n

\n

Currency<\/p>\n<\/td>\n

\n

9<\/p>\n<\/td>\n<\/tr>\n

\n

Section 1.5<\/p>\n<\/td>\n

\n

Certain Phrases, etc.<\/p>\n<\/td>\n

\n

9<\/p>\n<\/td>\n<\/tr>\n

\n

Section 1.6<\/p>\n<\/td>\n

\n

Knowledge<\/p>\n<\/td>\n

\n

9<\/p>\n<\/td>\n<\/tr>\n

\n

Section 1.7<\/p>\n<\/td>\n

\n

Disclosure Letter<\/p>\n<\/td>\n

\n

9<\/p>\n<\/td>\n<\/tr>\n

\n

Section 1.8<\/p>\n<\/td>\n

\n

References to Persons and Agreements<\/p>\n<\/td>\n

\n

10<\/p>\n<\/td>\n<\/tr>\n

\n

Section 1.9<\/p>\n<\/td>\n

\n

Statutes<\/p>\n<\/td>\n

\n

10<\/p>\n<\/td>\n<\/tr>\n

\n

Section 1.10<\/p>\n<\/td>\n

\n

Non-Business Days<\/p>\n<\/td>\n

\n

10<\/p>\n<\/td>\n<\/tr>\n

\n

Section 1.11<\/p>\n<\/td>\n

\n

Time Periods<\/p>\n<\/td>\n

\n

11<\/p>\n<\/td>\n<\/tr>\n

\n

Section 1.12<\/p>\n<\/td>\n

\n

Designation of Target Canada<\/p>\n<\/td>\n

\n

11<\/p>\n<\/td>\n<\/tr>\n

\n

Section 1.13<\/p>\n<\/td>\n

\n

Leasehold Interests<\/p>\n<\/td>\n

\n

11<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n

\n<\/td>\n<\/tr>\n

\n

ARTICLE 2 AGREEMENT OF PURCHASE AND SALE<\/p>\n<\/td>\n

\n

11<\/p>\n<\/td>\n<\/tr>\n

\n

Section 2.1<\/p>\n<\/td>\n

\n

First Tranche Subject Leased Properties<\/p>\n<\/td>\n

\n

11<\/p>\n<\/td>\n<\/tr>\n

\n

Section 2.2<\/p>\n<\/td>\n

\n

Second Tranche Subject Leased Properties<\/p>\n<\/td>\n

\n

12<\/p>\n<\/td>\n<\/tr>\n

\n

Section 2.3<\/p>\n<\/td>\n

\n

Right to Terminate Leases<\/p>\n<\/td>\n

\n

13<\/p>\n<\/td>\n<\/tr>\n

\n

Section 2.4<\/p>\n<\/td>\n

\n

Vacancy Date<\/p>\n<\/td>\n

\n

13<\/p>\n<\/td>\n<\/tr>\n

\n

Section 2.5<\/p>\n<\/td>\n

\n

Ordinary Course Operations<\/p>\n<\/td>\n

\n

14<\/p>\n<\/td>\n<\/tr>\n

\n

Section 2.6<\/p>\n<\/td>\n

\n

Pharmacy Records<\/p>\n<\/td>\n

\n

15<\/p>\n<\/td>\n<\/tr>\n

\n

Section 2.7<\/p>\n<\/td>\n

\n

Target Canada Assignment of Rights<\/p>\n<\/td>\n

\n

15<\/p>\n<\/td>\n<\/tr>\n

\n

Section 2.8<\/p>\n<\/td>\n

\n

Access and Additional Information Relating to Leased Properties<\/p>\n<\/td>\n

\n

18<\/p>\n<\/td>\n<\/tr>\n

\n

Section 2.9<\/p>\n<\/td>\n

\n

Winnipeg Lease Option<\/p>\n<\/td>\n

\n

19<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n

\n<\/td>\n<\/tr>\n

\n

ARTICLE 3 PURCHASE PRICE<\/p>\n<\/td>\n

\n

19<\/p>\n<\/td>\n<\/tr>\n

\n

Section 3.1<\/p>\n<\/td>\n

\n

Purchase Price<\/p>\n<\/td>\n

\n

19<\/p>\n<\/td>\n<\/tr>\n

\n

Section 3.2<\/p>\n<\/td>\n

\n

Payment of the Purchase Price<\/p>\n<\/td>\n

\n

20<\/p>\n<\/td>\n<\/tr>\n

\n

Section 3.3<\/p>\n<\/td>\n

\n

Adjustments<\/p>\n<\/td>\n

\n

20<\/p>\n<\/td>\n<\/tr>\n

\n

Section 3.4<\/p>\n<\/td>\n

\n

Sales and Transfer Taxes<\/p>\n<\/td>\n

\n

22<\/p>\n<\/td>\n<\/tr>\n

\n

Section 3.5<\/p>\n<\/td>\n

\n

Goods and Services Tax and Harmonized Sales Tax<\/p>\n<\/td>\n

\n

22<\/p>\n<\/td>\n<\/tr>\n

\n

Section 3.6<\/p>\n<\/td>\n

\n

Self-Assessment of GST and HST on Real Property<\/p>\n<\/td>\n

\n

23<\/p>\n<\/td>\n<\/tr>\n

\n

Section 3.7<\/p>\n<\/td>\n

\n

Tax Refunds<\/p>\n<\/td>\n

\n

23<\/p>\n<\/td>\n<\/tr>\n

\n

Section 3.8<\/p>\n<\/td>\n

\n

Note Purchase Facility<\/p>\n<\/td>\n

\n

24<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n

\n<\/td>\n<\/tr>\n

\n

ARTICLE 4 ASSUMED LIABILITIES<\/p>\n<\/td>\n

\n

26<\/p>\n<\/td>\n<\/tr>\n

\n

Section 4.1<\/p>\n<\/td>\n

\n

Assumed Liabilities<\/p>\n<\/td>\n

\n

26<\/p>\n<\/td>\n<\/tr>\n

\n

Section 4.2<\/p>\n<\/td>\n

\n

Excluded Liabilities<\/p>\n<\/td>\n

\n

26<\/p>\n<\/td>\n<\/tr>\n

\n

Section 4.3<\/p>\n<\/td>\n

\n

“As Is, Where Is”<\/p>\n<\/td>\n

\n

27<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n

\n<\/td>\n<\/tr>\n

\n

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF ZELLERS<\/p>\n<\/td>\n

\n

28<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\n

i<\/p>\n

\n

<\/p>\n

\n

TABLE OF CONTENTS<\/strong><\/p>\n

(continued)<\/p>\n

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n<\/td>\n\n

\n<\/td>\n

\n

Page<\/strong><\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n

\n<\/td>\n<\/tr>\n

\n

Section 5.1<\/p>\n<\/td>\n

\n

Representations and Warranties of Zellers<\/p>\n<\/td>\n

\n

28<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n

\n<\/td>\n<\/tr>\n

\n

ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF TARGET CANADA AND TARGET<\/p>\n<\/td>\n

\n

32<\/p>\n<\/td>\n<\/tr>\n

\n

Section 6.1<\/p>\n<\/td>\n

\n

Representations and Warranties of Target Canada and Target<\/p>\n<\/td>\n

\n

32<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n

\n<\/td>\n<\/tr>\n

\n

ARTICLE 7 COVENANTS OF THE PARTIES<\/p>\n<\/td>\n

\n

33<\/p>\n<\/td>\n<\/tr>\n

\n

Section 7.1<\/p>\n<\/td>\n

\n

Actions to Satisfy Closing Conditions<\/p>\n<\/td>\n

\n

33<\/p>\n<\/td>\n<\/tr>\n

\n

Section 7.2<\/p>\n<\/td>\n

\n

Request for Consents<\/p>\n<\/td>\n

\n

34<\/p>\n<\/td>\n<\/tr>\n

\n

Section 7.3<\/p>\n<\/td>\n

\n

Filings and Authorizations<\/p>\n<\/td>\n

\n

35<\/p>\n<\/td>\n<\/tr>\n

\n

Section 7.4<\/p>\n<\/td>\n

\n

Risk of Loss<\/p>\n<\/td>\n

\n

36<\/p>\n<\/td>\n<\/tr>\n

\n

Section 7.5<\/p>\n<\/td>\n

\n

Confidentiality<\/p>\n<\/td>\n

\n

36<\/p>\n<\/td>\n<\/tr>\n

\n

Section 7.6<\/p>\n<\/td>\n

\n

Lease Amendments, Renewals and Notices<\/p>\n<\/td>\n

\n

37<\/p>\n<\/td>\n<\/tr>\n

\n

Section 7.7<\/p>\n<\/td>\n

\n

Zellers Entity Cooperation<\/p>\n<\/td>\n

\n

38<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n

\n<\/td>\n<\/tr>\n

\n

ARTICLE 8 CONDITIONS OF CLOSING<\/p>\n<\/td>\n

\n

41<\/p>\n<\/td>\n<\/tr>\n

\n

Section 8.1<\/p>\n<\/td>\n

\n

Conditions for the Benefit of Target and Target Canada<\/p>\n<\/td>\n

\n

41<\/p>\n<\/td>\n<\/tr>\n

\n

Section 8.2<\/p>\n<\/td>\n

\n

Conditions for the Benefit of Zellers<\/p>\n<\/td>\n

\n

42<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n

\n<\/td>\n<\/tr>\n

\n

ARTICLE 9 CLOSING<\/p>\n<\/td>\n

\n<\/td>\n\n

43<\/p>\n<\/td>\n<\/tr>\n

\n

Section 9.1<\/p>\n<\/td>\n

\n

Date, Time and Place of Closing<\/p>\n<\/td>\n

\n

43<\/p>\n<\/td>\n<\/tr>\n

\n

Section 9.2<\/p>\n<\/td>\n

\n

Zellers153 Closing Deliveries<\/p>\n<\/td>\n

\n

43<\/p>\n<\/td>\n<\/tr>\n

\n

Section 9.3<\/p>\n<\/td>\n

\n

Target Canada153s Closing Deliveries<\/p>\n<\/td>\n

\n

44<\/p>\n<\/td>\n<\/tr>\n

\n

Section 9.4<\/p>\n<\/td>\n

\n

Closing Procedures<\/p>\n<\/td>\n

\n

45<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n

\n<\/td>\n<\/tr>\n

\n

ARTICLE 10 TERMINATION<\/p>\n<\/td>\n

\n

46<\/p>\n<\/td>\n<\/tr>\n

\n

Section 10.1<\/p>\n<\/td>\n

\n

Termination Rights<\/p>\n<\/td>\n

\n

46<\/p>\n<\/td>\n<\/tr>\n

\n

Section 10.2<\/p>\n<\/td>\n

\n

Effect of Termination<\/p>\n<\/td>\n

\n

46<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n

\n<\/td>\n<\/tr>\n

\n

ARTICLE 11 INDEMNIFICATION<\/p>\n<\/td>\n

\n

46<\/p>\n<\/td>\n<\/tr>\n

\n

Section 11.1<\/p>\n<\/td>\n

\n

Liability for Representations and Warranties<\/p>\n<\/td>\n

\n

46<\/p>\n<\/td>\n<\/tr>\n

\n

Section 11.2<\/p>\n<\/td>\n

\n

Indemnification in Favour of Target and Target Canada<\/p>\n<\/td>\n

\n

47<\/p>\n<\/td>\n<\/tr>\n

\n

Section 11.3<\/p>\n<\/td>\n

\n

Indemnification in Favour of Zellers<\/p>\n<\/td>\n

\n

48<\/p>\n<\/td>\n<\/tr>\n

\n

Section 11.4<\/p>\n<\/td>\n

\n

Bulk Sales and Retail Sales Tax Waiver<\/p>\n<\/td>\n

\n

48<\/p>\n<\/td>\n<\/tr>\n

\n

Section 11.5<\/p>\n<\/td>\n

\n

Limitations<\/p>\n<\/td>\n

\n

48<\/p>\n<\/td>\n<\/tr>\n

\n

Section 11.6<\/p>\n<\/td>\n

\n

Notification<\/p>\n<\/td>\n

\n

49<\/p>\n<\/td>\n<\/tr>\n

\n

Section 11.7<\/p>\n<\/td>\n

\n

Limitation Periods<\/p>\n<\/td>\n

\n

49<\/p>\n<\/td>\n<\/tr>\n

\n

Section 11.8<\/p>\n<\/td>\n

\n

Procedure for Direct Claims<\/p>\n<\/td>\n

\n

50<\/p>\n<\/td>\n<\/tr>\n

\n

Section 11.9<\/p>\n<\/td>\n

\n

Procedure for Third Party Claims<\/p>\n<\/td>\n

\n

50<\/p>\n<\/td>\n<\/tr>\n

\n

Section 11.10<\/p>\n<\/td>\n

\n

Remedies<\/p>\n<\/td>\n

\n

51<\/p>\n<\/td>\n<\/tr>\n

\n

Section 11.11<\/p>\n<\/td>\n

\n

One Recovery<\/p>\n<\/td>\n

\n

52<\/p>\n<\/td>\n<\/tr>\n

\n

Section 11.12<\/p>\n<\/td>\n

\n

Duty to Mitigate<\/p>\n<\/td>\n

\n

52<\/p>\n<\/td>\n<\/tr>\n

\n

Section 11.13<\/p>\n<\/td>\n

\n

Adjustment to Purchase Price<\/p>\n<\/td>\n

\n

52<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\n

ii<\/p>\n

\n

<\/p>\n

\n

TABLE OF CONTENTS<\/strong><\/p>\n

(continued)<\/p>\n

\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n<\/td>\n\n

\n<\/td>\n

\n

Page<\/strong><\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n

\n<\/td>\n<\/tr>\n

\n

ARTICLE 12 OTHER COVENANTS<\/p>\n<\/td>\n

\n

53<\/p>\n<\/td>\n<\/tr>\n

\n

Section 12.1<\/p>\n<\/td>\n

\n

Guarantee by HBC<\/p>\n<\/td>\n

\n

53<\/p>\n<\/td>\n<\/tr>\n

\n

Section 12.2<\/p>\n<\/td>\n

\n

Target Guarantee<\/p>\n<\/td>\n

\n

54<\/p>\n<\/td>\n<\/tr>\n

\n

Section 12.3<\/p>\n<\/td>\n

\n

Further Assurances<\/p>\n<\/td>\n

\n

54<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n

\n<\/td>\n<\/tr>\n

\n

ARTICLE 13 MISCELLANEOUS<\/p>\n<\/td>\n

\n

55<\/p>\n<\/td>\n<\/tr>\n

\n

Section 13.1<\/p>\n<\/td>\n

\n

Notices<\/p>\n<\/td>\n

\n

55<\/p>\n<\/td>\n<\/tr>\n

\n

Section 13.2<\/p>\n<\/td>\n

\n

Time of the Essence<\/p>\n<\/td>\n

\n

56<\/p>\n<\/td>\n<\/tr>\n

\n

Section 13.3<\/p>\n<\/td>\n

\n

Brokers<\/p>\n<\/td>\n

\n

56<\/p>\n<\/td>\n<\/tr>\n

\n

Section 13.4<\/p>\n<\/td>\n

\n

Announcements<\/p>\n<\/td>\n

\n

57<\/p>\n<\/td>\n<\/tr>\n

\n

Section 13.5<\/p>\n<\/td>\n

\n

Third Party Beneficiaries<\/p>\n<\/td>\n

\n

57<\/p>\n<\/td>\n<\/tr>\n

\n

Section 13.6<\/p>\n<\/td>\n

\n

Expenses<\/p>\n<\/td>\n

\n

57<\/p>\n<\/td>\n<\/tr>\n

\n

Section 13.7<\/p>\n<\/td>\n

\n

Amendments<\/p>\n<\/td>\n

\n

57<\/p>\n<\/td>\n<\/tr>\n

\n

Section 13.8<\/p>\n<\/td>\n

\n

Waiver<\/p>\n<\/td>\n

\n

57<\/p>\n<\/td>\n<\/tr>\n

\n

Section 13.9<\/p>\n<\/td>\n

\n

Non-Merger<\/p>\n<\/td>\n

\n

58<\/p>\n<\/td>\n<\/tr>\n

\n

Section 13.10<\/p>\n<\/td>\n

\n

Subdivision Laws<\/p>\n<\/td>\n

\n

58<\/p>\n<\/td>\n<\/tr>\n

\n

Section 13.11<\/p>\n<\/td>\n

\n

Entire Agreement<\/p>\n<\/td>\n

\n

58<\/p>\n<\/td>\n<\/tr>\n

\n

Section 13.12<\/p>\n<\/td>\n

\n

Successors and Assigns<\/p>\n<\/td>\n

\n

59<\/p>\n<\/td>\n<\/tr>\n

\n

Section 13.13<\/p>\n<\/td>\n

\n

Severability<\/p>\n<\/td>\n

\n

59<\/p>\n<\/td>\n<\/tr>\n

\n

Section 13.14<\/p>\n<\/td>\n

\n

Governing Law<\/p>\n<\/td>\n

\n

59<\/p>\n<\/td>\n<\/tr>\n

\n

Section 13.15<\/p>\n<\/td>\n

\n

Counterparts<\/p>\n<\/td>\n

\n

59<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\n

iii<\/p>\n

\n

TRANSACTION AGREEMENT<\/strong><\/p>\n

\n

Transaction Agreement dated January 12, 2011 between Zellers Inc.
\n(“Zellers”<\/strong>), Hudson153s Bay Company (“HBC<\/strong>“),
\nTarget Corporation (“Target<\/strong>“), and Target Canada Co.<\/p>\n<\/p>\n

RECITALS:<\/strong><\/p>\n<\/p>\n

A. Zellers operates a chain of retail
\ndepartment stores throughout Canada under the “Zellers” banner.<\/p>\n<\/p>\n

B. Target operates a chain of retail
\ndepartment stores throughout the United States.<\/p>\n<\/p>\n

C. Zellers wishes to assign certain of
\nthe leasehold interests that it currently uses in its operations subject to
\nsubleases back to it so as to allow it to continue to operate its business on
\nsuch leased premises for varying periods of time.<\/p>\n<\/p>\n

D. Target wishes to obtain an assignment
\nof the aforesaid leasehold interests from Zellers to use for itself or to allow
\nit to assign certain of such leasehold interests to other parties on terms that
\nit may negotiate, subject in each case to the aforesaid subleases to Zellers.\n<\/p>\n<\/p>\n

E. The Parties wish to set out their
\nagreement regarding certain matters relating to such transactions.<\/p>\n<\/p>\n

THEREFORE<\/strong>, the Parties agree as follows:<\/p>\n<\/p>\n

ARTICLE 1
\nINTERPRETATION<\/strong><\/p>\n

\n

Section 1.1<\/strong> Defined Terms.<\/strong><\/p>\n<\/p>\n

As used in this Agreement, the following terms have the following meanings:\n<\/p>\n<\/p>\n

“Accrued Interest”<\/strong> has the meaning specified in
\nSection 3.8(3).<\/p>\n<\/p>\n

“Affiliate”<\/strong> of any Person means, at the time such
\ndetermination is being made, any other Person controlling, controlled by or
\nunder common control with such first Person, in each case, whether directly or
\nindirectly, and “control<\/strong>” and any derivation of such term means
\nthe possession, directly or indirectly, of the power to direct the management
\nand policies, business or affairs of a Person whether through the ownership of
\nvoting securities or otherwise.<\/p>\n<\/p>\n

“Agreement”<\/strong> means this transaction agreement.<\/p>\n<\/p>\n

“Ancillary Agreements”<\/strong> means the Lease Assignment and
\nAssumption Agreements, the Subleases, the Designee Assignment and Assumption
\nAgreements, and the Brand Waiver.<\/p>\n<\/p>\n

“Assignee” <\/strong>has the meaning specified in Section 12.2(1).\n<\/p>\n<\/p>\n

“Assumed Liabilities”<\/strong> has the meaning specified in
\nSection 4.1.<\/p>\n

\n

\n

<\/p>\n

\n

“Authorization”<\/strong> means, with respect to any Person, any
\norder, permit, approval, consent, waiver, license, no action letter or similar
\nauthorization of any Governmental Entity having jurisdiction over the Person.\n<\/p>\n<\/p>\n

“Books and Records”<\/strong> means all books, records, files, reports
\nand documents (including all correspondence, real estate and engineering data,
\nfacilities reports, blueprints and other property records), in whatever format.\n<\/p>\n<\/p>\n

“Brand Waiver”<\/strong> has the meaning specified in Section 9.2(e).\n<\/p>\n<\/p>\n

“Business Day”<\/strong> means any day of the year, other than a
\nSaturday, Sunday or any day on which major banks are closed for business in
\nToronto, Ontario or Minneapolis, Minnesota.<\/p>\n<\/p>\n

“Closing Date” <\/strong>means, as applicable, the First Tranche
\nClosing Date or the Second Tranche Closing Date.<\/p>\n<\/p>\n

“Commissioner of Competition” <\/strong>means the Commissioner of
\nCompetition appointed pursuant to the Competition Act and includes Persons
\nauthorized by the Commissioner of Competition.<\/p>\n<\/p>\n

“Competition Act”<\/strong> means the Competition Act<\/em>
\n(Canada).<\/p>\n<\/p>\n

“Competition Act<\/strong> Approval”<\/strong> has the meaning
\nspecified in Section 7.3(4).<\/p>\n<\/p>\n

“Competition Tribunal”<\/strong> means the Competition Tribunal
\nestablished under the Competition Act.<\/p>\n<\/p>\n

“Cost Basis”<\/strong> has the meaning specified in Section 3.8(2).\n<\/p>\n<\/p>\n

“Damages”<\/strong> means any losses, liabilities, damages, out of
\npocket expenses or costs (including reasonable legal fees and expenses),
\ncontingent or otherwise, whether liquidated or unliquidated, whether resulting
\nfrom an action, suit, proceeding, arbitration, application, cause of action,
\nclaim or demand that is instituted or asserted by a third party, including a
\nGovernmental Entity, or a cause, matter, thing, act, omission or state of facts
\nnot involving a third party.<\/p>\n<\/p>\n

“Default Notice”<\/strong> means any written notice given by the
\nLandlord under any Lease claiming or alleging that Zellers (or any Affiliate of
\nZellers) is or may be in default of its obligations under such Lease and which
\ndefault or allegation of default remains uncured.<\/p>\n<\/p>\n

“Delivery Date<\/strong>” has the meaning specified in Section 2.1(4).\n<\/p>\n<\/p>\n

“Designee” <\/strong>has the meaning specified in Section 2.7(1).<\/p>\n<\/p>\n

“Designee Assignment and Assumption Agreement” <\/strong>has the
\nmeaning specified in Section 2.7(1)(a).<\/p>\n

\n

2<\/p>\n

\n

<\/p>\n

\n

“Direct Claim”<\/strong> means any cause, matter, thing, act, omission
\nor state of facts not involving a Third Party Claim which entitles an
\nIndemnified Party to make a claim for indemnification under this Agreement.<\/p>\n<\/p>\n

“Disclosure Letter” <\/strong>means the disclosure letter dated the
\nExecution Date and delivered by Zellers to Target with this Agreement.<\/p>\n<\/p>\n

“Due Diligence File”<\/strong> means the electronic files (other than
\nthose contained in the folder entitled “Bay Lease Info”) on a computer hard
\ndrive created by Zellers and provided to Target (as updated by the electronic
\nfiles on a computer hard drive created by Target and provided to Zellers on
\nJanuary 11, 2011) consisting of documents and information related to the Leases
\n(including copies of all leases, occupancy agreements and amendments thereto and
\nall other documents and correspondence in the possession or control of Zellers
\nwhich relate to the Leases and the Leased Properties) assembled and made
\navailable by Zellers to Target.<\/p>\n<\/p>\n

“Effective Time”<\/strong> means 12:01 a.m. (Toronto time) on the
\nrelevant Closing Date, Vacancy Date or Delivery Date, as the case may be.<\/p>\n<\/p>\n

“Encumbrances” <\/strong>means pledges, liens, charges, security
\ninterests, leases, title retention agreements, mortgages, hypothecs,
\nrestrictions, development or similar agreements, easements, rights-of-way, title
\ndefects, options or adverse claims or encumbrances of any kind or character
\nwhatsoever.<\/p>\n<\/p>\n

“Excluded Liabilities” <\/strong>has the meaning specified in
\nSection 4.2.<\/p>\n<\/p>\n

“Execution Date”<\/strong> means the date upon which the last of
\nZellers, HBC, Target, and Target Canada Co. executed this Agreement.<\/p>\n<\/p>\n

“Failure to Operate”<\/strong> means a reduction, change or cessation
\nin Zellers153 operations at a Leased Property which, were it to continue, would
\ngive rise to a Landlord Recapture Right and which is not caused by a force
\nmajeure.<\/p>\n<\/p>\n

“Final Adjustments”<\/strong> has the meaning specified in
\nSection 3.3.<\/p>\n<\/p>\n

“First Four Fiscal Quarters”<\/strong> means the four full Fiscal
\nQuarters ending immediately following the Execution Date.<\/p>\n<\/p>\n

“Fiscal Quarter”<\/strong> means any of the quarterly accounting
\nperiods of Zellers, ending on or about April 30, July 31, October 31 and
\nJanuary 31 of each year.<\/p>\n<\/p>\n

“First Tranche Closing Date”<\/strong> means the date that is 10
\nBusiness Days following the later of (i) the last day of the First Tranche
\nSelection Period or (ii) the date that Competition Act Approval is obtained, but
\nin either case subject to the satisfaction or waiver by the applicable Party or
\nParties of all conditions at the Effective Time on the First Tranche Closing
\nDate.<\/p>\n<\/p>\n

“First Tranche Purchase Price”<\/strong> has the meaning specified in
\nSection 3.1(1)(a).<\/p>\n<\/p>\n

“First Tranche Selection List” <\/strong>has the meaning specified in
\nSection 2.1(1).<\/p>\n

\n

3<\/p>\n

\n

<\/p>\n

\n

“First Tranche Selection Period” <\/strong>means the 120-day period
\nfollowing the Execution Date.<\/p>\n<\/p>\n

“First Tranche Subject Leases” <\/strong>means the Leases pertaining
\nto the First Tranche Subject Leased Properties, subject to Sections 2.1(4) and
\n7.2(3).<\/p>\n<\/p>\n

“First Tranche Subject Leased Properties” <\/strong>means the Leased
\nProperties listed on the First Tranche Selection List, subject to
\nSection 2.1(4).<\/p>\n<\/p>\n

“Governmental Entity”<\/strong> means (i) any international,
\nmultinational, national, federal, provincial, state, municipal, local or other
\ngovernmental or public department, central bank, court, minister,
\ngovernor-in-council, cabinet, commission, board, bureau, agency, commissioner,
\ntribunal or instrumentality, domestic or foreign, (ii) any subdivision or
\nauthority of any of the above, (iii) any stock exchange, and (iv) any
\nquasi-governmental or private body exercising any regulatory, expropriation or
\ntaxing authority under or for the account of any of the above.<\/p>\n<\/p>\n

“HBC” <\/strong>means Hudson153s Bay Company.<\/p>\n<\/p>\n

“HST Declaration and Indemnity<\/strong>” means the HST declaration
\nand indemnity in the form attached as Section 9.3(g) to the Disclosure Letter.\n<\/p>\n<\/p>\n

“Indemnified Party”<\/strong> means a Party with indemnification
\nrights or benefits under this Agreement, including pursuant to Article 11.<\/p>\n<\/p>\n

“Indemnifying Party”<\/strong> means a Party against which a claim may
\nbe made for indemnification under this Agreement, including pursuant to
\nArticle 11.<\/p>\n<\/p>\n

“Intercreditor Agreement” <\/strong>means that certain Intercreditor
\nAgreement dated as of October 2, 2006 among U.S. Bank National Association, as
\nTrustee for the benefit of the holders of Merrill Lynch Floating Trust
\nPass-Through Certificates, Series 2006-1, and the lenders under the Notes.<\/p>\n<\/p>\n

“Investment Grade Designee”<\/strong> means a Designee that, at the
\ntime of such Designee153s execution of a Designee Assignment and Assumption
\nAgreement pursuant to Section 2.7(1)(a) or other assumption document pursuant to
\nSection 2.7 with respect to the Subject Lease to be assigned and transferred to
\nsuch Designee, has outstanding senior debt rated by at least two of the
\nfollowing rating agencies with minimum ratings as follows:<\/p>\n<\/p>\n

(i) at least BBB–<\/strong> as
\ndetermined by Standard & Poors,<\/p>\n<\/p>\n

(ii) at least Baa3 as determined by Moody153s,
\nor<\/p>\n<\/p>\n

(iii) at least BBB low as determined by the
\nDominion Bond Rating Service;<\/p>\n<\/p>\n

and in each case such rating is not subject to a negative watch or other
\nsimilar notice suggesting a possible downgrade to below such level, and in each
\ncase Target Canada has provided to Zellers evidence reasonably satisfactory to
\nZellers of such ratings.<\/p>\n

\n

4<\/p>\n

\n

<\/p>\n

\n

“Landlord”<\/strong> means the Person from time to time holding the
\nlandlord153s interest under any Lease.<\/p>\n<\/p>\n

“Landlord Recapture Right”<\/strong> means the right of a Landlord
\n(through the exercise of an express right under a Lease) to terminate a Lease by
\nreason of Zellers153 Failure to Operate.<\/p>\n<\/p>\n

“Laws”<\/strong> means any and all applicable (i) laws, constitutions,
\ntreaties, statutes, codes, ordinances, orders, decrees, rules, regulations, and
\nby-laws, (ii) judgments, orders, writs, injunctions, decisions, awards and
\ndirectives of any Governmental Entity, and (iii) policies, guidelines, notices
\nand protocols, to the extent that they have the force of law.<\/p>\n<\/p>\n

“Lease Assignment and Assumption Agreement”<\/strong> has the meaning
\nspecified in Section 9.2(a).<\/p>\n<\/p>\n

“Lease Default”<\/strong> means an event which with the passage of
\ntime or the giving of notice or both would constitute a default or event of
\ndefault of the tenant under a Lease, in each case where the relevant Landlord
\nhas provided written notice of such default, provided that any default arising
\nas a result of the failure to obtain the consent of the applicable Landlords
\nunder the Subject Leases to the transactions contemplated by this Agreement
\n(inclusive of the Wind-Down Actions, the Subleases and the rights of Zellers
\ntherein) shall not constitute a Lease Default.<\/p>\n<\/p>\n

“Leased Properties” <\/strong>means the leasehold lands, premises,
\nbuildings, and leasehold improvements pertaining to the Leases, which premises
\nare listed and described in Section 5.1(i)(i) of the Disclosure Letter by
\nreference to their mall name or municipal address, as applicable, and Zellers
\nstore number.<\/p>\n<\/p>\n

“Leases” <\/strong>means all agreements of Zellers to lease or
\notherwise occupy the Leased Properties.<\/p>\n<\/p>\n

“Material Lease Default”<\/strong> means (i) a Lease Default which
\nwould result in an express termination of a Lease as a result of a Landlord
\nhaving provided a termination notice on or prior to the relevant Closing Date;
\nor (ii) a Lease Default which could reasonably be expected to give rise to the
\ntermination of a Lease by the relevant Landlord or which could reasonably be
\nexpected to give rise to Zellers153 loss of possession under the Subject Lease by
\nthe Landlord; except in the case of (i) and (ii) a Lease Default where such
\nbreach or termination could be remedied by Target Canada or its Designee within
\n12 months after the relevant Closing Date with an expenditure of money not
\nexceeding $50,000. For certainty, any default arising under the Leases as a
\nresult of the failure to obtain the consent of the applicable Landlords under
\nthe Leases to the transactions contemplated by this Agreement (inclusive of the
\nWind-Down Actions, the Subleases and the rights of Zellers therein) shall not
\nconstitute a Material Lease Default.<\/p>\n<\/p>\n

“Monetary Lien<\/strong>” means (1) any Encumbrance that secures the
\npayment of borrowed money, (2) any registered construction or mechanic153s lien,
\nany execution upon a judgment or any pre-fixture or fixture filing under
\npersonal property legislation and (3) any Encumbrance (other than an inchoate or
\nstatutory Encumbrance in favour of any Governmental Entity or public or private
\nutility for amounts not then due) that secures the payment of any cost or amount
\nwhich is Zellers153 responsibility to pay under this<\/p>\n

\n

5<\/p>\n

\n

<\/p>\n

\n

Agreement or under Laws and which is overdue or in default and, payment of
\nwhich is not subject to the allocation provisions of this Agreement (unless in
\nthe case of (3) Zellers otherwise gives Target Canada credit therefor whether or
\nnot allocation thereof is contemplated by this Agreement).<\/p>\n<\/p>\n

“Mortgages” <\/strong>means any mortgage of Zellers153 leasehold
\ninterest in the Leased Properties.<\/p>\n<\/p>\n

“Notes”<\/strong> means interests in (a) that certain Mezzanine A Loan
\nAgreement dated as of October 2, 2006, as amended, between LT Mezz A LLC, a
\nDelaware limited liability company, and Wells Fargo Bank, National Association,
\nas custodian for the Participation Holders (as defined therein), and (b) that
\ncertain Mezzanine B Loan Agreement dated as of October 2, 2006, as amended,
\nbetween LT Mezz B LLC, a Delaware limited liability company and GSRE-BS
\nII, Ltd., as lender.<\/p>\n<\/p>\n

“Notice”<\/strong> has the meaning specified in Section 13.1.<\/p>\n<\/p>\n

“Notice Date”<\/strong> means the date upon which Target, Target
\nCanada or a Designee gives Notice to Zellers of the Vacancy Date for any
\nSubleases as contemplated by Section 2.4(1).<\/p>\n<\/p>\n

“Outside Date<\/strong>” means September 30, 2011, provided that if
\nthe Competition Act Approval is not obtained by August 15, 2011, Zellers or
\nTarget may elect to extend from time to time the Outside Date by specified
\nperiods of not less than 30 days to no later than December 31, 2011.<\/p>\n<\/p>\n

“Participation Agreement<\/strong>” means that certain Mezzanine Loan
\nParticipation Agreement dated as of December 12, 2006 among Wells Fargo Bank,
\nNational Association, as custodian, and the holders of the Notes associated with
\nthe Mezzanine A Loan Agreement.<\/p>\n<\/p>\n

“Parties”<\/strong> means Zellers, HBC, Target, Target Canada and any
\nother Person who becomes a party to this Agreement.<\/p>\n<\/p>\n

“Permitted Encumbrances”<\/strong> means the Encumbrances identified
\nin Section 5.1(i)(iv) of the Disclosure Letter.<\/p>\n<\/p>\n

“Person”<\/strong> means a natural person, partnership, limited
\npartnership, limited liability partnership, corporation, limited liability
\ncompany, unlimited liability company, joint stock company, trust, unincorporated
\nassociation, joint venture or other entity or Governmental Entity, and pronouns
\nhave a similarly extended meaning.<\/p>\n<\/p>\n

“Pharmacy Notice Date”<\/strong> has the meaning specified in
\nSection 2.6.<\/p>\n<\/p>\n

“Pharmacy Records” <\/strong>means all of the prescription files and
\nprescription records, including patient profiles and refill histories, with
\nrespect to the pharmacies operated at the Subject Leased Properties.<\/p>\n<\/p>\n

“Purchase Price” <\/strong>means the aggregate of the First Tranche
\nPurchase Price and the Second Tranche Purchase Price.<\/p>\n

\n

6<\/p>\n

\n

<\/p>\n

\n

“Second Tranche Closing Date” <\/strong>means the date that is 10
\nBusiness Days following the last day of the Second Tranche Selection Period, but
\nsubject to the satisfaction or waiver by the applicable Party or Parties of all
\nconditions at the Effective Time on the Second Tranche Closing Date.<\/p>\n<\/p>\n

“Second Tranche Purchase Price”<\/strong> has the meaning specified in
\nSection 3.1(1)(a).<\/p>\n<\/p>\n

“Second Tranche Selection List”<\/strong> has the meaning specified in
\nSection 2.2(1).<\/p>\n<\/p>\n

“Second Tranche Selection Period”<\/strong> means the 240-day period
\nfollowing the Execution Date.<\/p>\n<\/p>\n

“Second Tranche Subject Leases” <\/strong>means the Leases pertaining
\nto the Second Tranche Subject Leased Properties, subject to Section 7.2(3).<\/p>\n<\/p>\n

“Second Tranche Subject Leased Properties” <\/strong>means the Leased
\nProperties listed on the Second Tranche Selection List.<\/p>\n<\/p>\n

“Subject Leases” <\/strong>means the First Tranche Subject Leases and
\nthe Second Tranche Subject Leases, subject to Section 7.2(3).<\/p>\n<\/p>\n

“Subject Leased Properties”<\/strong> means the First Tranche Subject
\nLeased Properties and the Second Tranche Subject Leased Properties.<\/p>\n<\/p>\n

“Subleases” <\/strong>means the subleases in respect of each of the
\nSubject Leased Properties by and between Zellers and Target Canada or its
\nDesignee, pursuant to which Zellers shall sublet from Target Canada or its
\nDesignee the Subject Leased Properties for a term commencing on the applicable
\nClosing Date and expiring on the earlier of (i) one day prior to the expiry or
\nearlier termination of the term of the applicable Subject Leases, and (ii) the
\napplicable Vacancy Date, and which subleases shall be in the form (and based on
\nthe terms and conditions set forth therein) attached as Section 1.1 to the
\nDisclosure Letter (or may be in the form of licenses, occupancy agreement, or
\nother agreements providing substantially all of the benefits and burdens as said
\nform of Sublease, provided such licenses, occupancy agreements or other
\nagreements are satisfactory in form to Zellers and Target Canada, each acting
\nreasonably).<\/p>\n<\/p>\n

“Target” <\/strong>means Target Corporation.<\/p>\n<\/p>\n

“Target Canada”<\/strong> means, collectively, Target Canada Co. and
\none or more other subsidiaries (within the meaning of the Business
\nCorporations Act <\/em>(Ontario)) of Target incorporated under the laws of Canada
\nor a province of Canada, as may be designated by Target in accordance with
\nSection 1.12 prior to the First Tranche Closing Date.<\/p>\n<\/p>\n

“Target Canada Liabilities” <\/strong>has the meaning specified in
\nSection 12.2(1).<\/p>\n<\/p>\n

“Target Entity”<\/strong> has the meaning specified in Section 7.7(2).\n<\/p>\n<\/p>\n

“Tax Act”<\/strong> means the Income Tax Act,<\/em> R.S.C. 1985
\n(5th Supp.) c.1.<\/p>\n<\/p>\n

“Tax Refund” <\/strong>has the meaning specified in Section 3.7.<\/p>\n

\n

7<\/p>\n

\n

<\/p>\n

\n

“Tax Returns”<\/strong> means any and all returns, reports,
\ndeclarations and elections (including any amendments, schedules and attachments
\nto them), made or filed or required to be made or filed in respect of Taxes.\n<\/p>\n<\/p>\n

“Taxes”<\/strong> means (i) any and all taxes, duties, fees, excises,
\npremiums, assessments, imposts, levies and other charges or assessments of any
\nkind whatsoever imposed by any Governmental Entity, and (ii) all interest,
\npenalties, fines, additions to tax or other additional amounts imposed by any
\nGovernmental Entity on or in respect of amounts of the type described in clause
\n(i) above or this clause (ii).<\/p>\n<\/p>\n

“Third Party Claim”<\/strong> means any action, suit, proceeding,
\narbitration, application, cause of action, claim or demand that is instituted or
\nasserted by a third party, including a Governmental Entity, against an
\nIndemnified Party which entitles the Indemnified Party to make a claim for
\nindemnification under this Agreement.<\/p>\n<\/p>\n

“Vacancy Date” <\/strong>means, with respect to a particular Sublease,
\nthe date that is 270 days following the Notice Date with respect to such
\nSublease; provided, Target or Target Canada may designate up to 20 particular
\nSubleases in each of the First Four Fiscal Quarters for which the Vacancy Date
\nwould mean the date that is 180 days following the Notice Date with respect to
\neach such Sublease; and provided further that:<\/p>\n<\/p>\n

(i) no Vacancy Date shall be earlier than
\nJanuary 31, 2012; and<\/p>\n<\/p>\n

(ii) no Vacancy Date shall be later than
\nMarch 31, 2013.<\/p>\n<\/p>\n

“Wind-Down Actions” <\/strong>means the (i) conduct of liquidation
\nsales at a Subject Leased Property the period for which shall not exceed, in the
\naggregate, 12 weeks and (ii) winding-down and closure of Zellers153 business and
\noperations (including any action reasonably taken in connection therewith) so as
\nto satisfy the provisions of Section 2.4(2), the period for which shall not
\nexceed, in the aggregate, two weeks; provided however, that if a Landlord
\nrefuses to allow the conduct of a liquidation sale pursuant to clause (i) above
\nand Target Canada has provided Notice at least 120 days prior to the applicable
\nVacancy Date, then (a) with respect to up to 10 Subject Leased Properties
\ndesignated by Target Canada in such Notice from time to time, Zellers shall
\ncomplete such activities at such Subject Leased Properties within eight weeks
\nand (b) with respect to up to an additional 10 Subject Leased Properties
\ndesignated by Target Canada in such Notice from time to time, Zellers shall not
\nbe permitted to conduct any liquidation sales at such Subject Leased Properties.\n<\/p>\n<\/p>\n

“Winnipeg Premises<\/strong>” means the portion of the premises known
\nmunicipally as 450 Portage Avenue, Winnipeg, Manitoba and more particularly
\ndescribed in Section 2.9 of the Disclosure Letter.<\/p>\n<\/p>\n

“Zellers”<\/strong> means Zellers Inc.<\/p>\n<\/p>\n

“Zellers Entity”<\/strong> has the meaning specified in
\nSection 7.7(1).<\/p>\n<\/p>\n

“Zellers Entity Location”<\/strong> has the meaning specified in
\nSection 7.7(1).<\/p>\n

\n

8<\/p>\n

\n

<\/p>\n

\n

“Zellers Liabilities” <\/strong>has the meaning specified in
\nSection 12.1(1).<\/p>\n<\/p>\n

Section 1.2<\/strong> Gender and Number.<\/strong><\/p>\n<\/p>\n

Any reference in this Agreement or any Ancillary Agreement to gender includes
\nall genders. Words importing the singular number only include the plural and
\nvice versa.<\/p>\n<\/p>\n

Section 1.3<\/strong> Headings, etc.<\/strong><\/p>\n<\/p>\n

The provision of a Table of Contents, the division of this Agreement into
\nArticles and Sections and the insertion of headings are for convenient reference
\nonly and do not affect the interpretation of this Agreement.<\/p>\n<\/p>\n

Section 1.4<\/strong> Currency.<\/strong><\/p>\n<\/p>\n

All references in this Agreement or any Ancillary Agreement to dollars, or to
\n$ are expressed in Canadian currency unless otherwise specifically indicated.\n<\/p>\n<\/p>\n

Section 1.5<\/strong> Certain Phrases, etc.<\/strong><\/p>\n<\/p>\n

In this Agreement and any Ancillary Agreement (i) the words
\n“including<\/strong>“, “includes<\/strong>” and
\n“include<\/strong>” mean “including (or includes or include)
\nwithout limitation<\/strong>“, and (ii) the phrase “the aggregate
\nof<\/strong>“, “the total of<\/strong>“, “the sum of<\/strong>“, or
\na phrase of similar meaning means “the aggregate (or total or sum),
\nwithout duplication, of<\/strong>“. Unless otherwise specified, the words
\n“Article<\/strong>” and “Section<\/strong>” followed by a number
\nmean and refer to the specified Article or Section of this Agreement.<\/p>\n<\/p>\n

Section 1.6<\/strong> Knowledge.<\/strong><\/p>\n<\/p>\n

Where any representation or warranty contained in this Agreement or any
\nAncillary Agreement is qualified by reference to the knowledge of:<\/p>\n<\/p>\n

(1) Zellers, it refers to the actual
\nknowledge (without further inquiry) of Mark Foote, as Chief Executive Officer of
\nZellers, Michael Culhane, as Senior Vice-President and Chief Financial Officer
\nof Zellers, David Mock, as Senior Vice-President, Merchandise Hardlines of
\nZellers, and Bruce Moore, as Senior Vice-President, Real Estate of HBC;<\/p>\n<\/p>\n

(2) Target, it refers to the actual
\nknowledge (without further inquiry) of Douglas Scovanner, as Executive
\nVice-President and Chief Financial Officer of Target, and Timothy Baer, as
\nExecutive Vice-President and General Counsel of Target;<\/p>\n<\/p>\n

in each case, without personal liability on the part of any of them.<\/p>\n<\/p>\n

Section 1.7<\/strong> Disclosure Letter.<\/strong><\/p>\n<\/p>\n

(1) The Disclosure Letter forms an integral
\npart of this Agreement for all purposes of it.<\/p>\n<\/p>\n

(2) The purpose of the Disclosure Letter is
\nto set out the qualifications, exceptions and other information called for in
\nthis Agreement. The Parties acknowledge and agree that the<\/p>\n

\n

9<\/p>\n

\n

<\/p>\n

\n

Disclosure Letter and the information and disclosures contained in it do not
\nconstitute or imply, and will not be construed as:<\/p>\n<\/p>\n

(a) any representation, warranty, covenant
\nor agreement which is not expressly set out in this Agreement;<\/p>\n<\/p>\n

(b) an admission of any liability or
\nobligation of any Party;<\/p>\n<\/p>\n

(c) an admission that the information is
\nmaterial;<\/p>\n<\/p>\n

(d) a standard of materiality, a standard for
\nwhat is or is not in the ordinary course of business, or any other standard
\ncontrary to the standards contained in the Agreement; or<\/p>\n<\/p>\n

(e) an expansion of the scope of effect of
\nany of the representations, warranties and covenants set out in the Agreement.\n<\/p>\n<\/p>\n

(3) Disclosure of any information in the
\nDisclosure Letter that is not strictly required under this Agreement has been
\nmade for informational purposes only and does not imply disclosure of all
\nmatters of a similar nature. Inclusion of an item in any section of the
\nDisclosure Letter is deemed to be disclosure for all purposes for which
\ndisclosure is required under this Agreement to the extent that the relevance of
\nsuch disclosure to such other purposes is reasonably apparent.<\/p>\n<\/p>\n

(4) The Disclosure Letter itself is
\nconfidential information and may not be disclosed unless (i) it is required to
\nbe disclosed pursuant to applicable Law, unless such Law permits the Parties to
\nrefrain from disclosing the information for confidentiality or other purposes or
\n(ii) a Party needs to disclose it in order to enforce or exercise its rights
\nunder this Agreement.<\/p>\n<\/p>\n

Section 1.8<\/strong> References to Persons and
\nAgreements.<\/strong><\/p>\n<\/p>\n

Any reference in this Agreement to a Person includes its successors and
\npermitted assigns. The term “Agreement” and any reference to this Agreement or
\nany other agreement or document includes, and is a reference to, this Agreement
\nor such other agreement or document as it may have been, or may from time to
\ntime be amended, restated, replaced, supplemented or novated and includes all
\nschedules to it.<\/p>\n<\/p>\n

Section 1.9<\/strong> Statutes.<\/strong><\/p>\n<\/p>\n

Except as otherwise provided in this Agreement, any reference in this
\nAgreement to a statute refers to such statute and all rules and regulations made
\nunder it, as it or they may have been or may from time to time be amended or
\nre-enacted.<\/p>\n<\/p>\n

Section 1.10<\/strong> Non-Business Days.<\/strong><\/p>\n<\/p>\n

Whenever payments are to be made or an action is to be taken on a day which
\nis not a Business Day, such payment shall be made or such action shall be taken
\non or not later than the next succeeding Business Day.<\/p>\n

\n

10<\/p>\n

\n

Section 1.11<\/strong> Time Periods.<\/strong><\/p>\n<\/p>\n

Unless otherwise specified, time periods within or following which any
\npayment is to be made or act is to be done shall be calculated by excluding the
\nday on which the period commences and including the day on which the period ends
\nand by extending the period to the next Business Day following if the last day
\nof the period is not a Business Day.<\/p>\n<\/p>\n

Section 1.12<\/strong> Designation of Target Canada.<\/strong>\n<\/p>\n<\/p>\n

Target may, by Notice to Zellers given at least 10 Business Days prior to the
\nFirst Tranche Closing Date, designate one or more other subsidiaries of Target
\nas Target Canada and shall cause such subsidiaries to enter into and become
\nbound by this Agreement as Target Canada on or prior to the First Tranche
\nClosing Date. Upon such designation, such entities together with Target Canada
\nCo. shall be deemed for purposes of this Agreement and all Ancillary Agreements
\nto be “Target Canada”.<\/p>\n<\/p>\n

Section 1.13<\/strong> Leasehold Interests.<\/strong><\/p>\n<\/p>\n

Notwithstanding any provision of this Agreement or Ancillary Agreements to
\nthe contrary, for purposes of this Agreement and each Ancillary Agreement,
\n(i) all references to “Lease” include any sublease or agreement to sublease by
\nwhich Zellers (as subtenant) holds its interest in the related Leased Property,
\n(ii) for the Leased Properties which are subject to a sublease or agreement to
\nsublease (rather than a lease) in favour of Zellers, all references to Zellers153
\n“leasehold” interest in such Leased Property shall mean Zellers153 “subleasehold”
\ninterest (rather than a leasehold interest) in such Leased Property, any
\nreference to “Landlord” shall mean the sublandlord under the applicable
\nsublease or agreement to sublease pursuant to which Zellers (as subtenant) holds
\nits interest in such Leased Property, and any reference to “Sublease” shall mean
\na sub-sublease in such Leased Property in favour of Zellers, and (iii) all other
\nsimilar references relating to the Leases and Leased Properties shall be
\ninterpreted and construed in a similar manner.<\/p>\n<\/p>\n

ARTICLE 2
\nAGREEMENT OF PURCHASE AND SALE<\/strong><\/p>\n

\n

Section 2.1<\/strong> First Tranche Subject Leased
\nProperties.<\/strong><\/p>\n<\/p>\n

(1) From time to time during the First
\nTranche Selection Period, Target or Target Canada shall deliver to Zellers a
\nNotice designating up to 110 Leases that shall be assigned and transferred on
\nthe First Tranche Closing Date (such list, as updated from time to time,
\nincluding in accordance with Section 2.1(4), the “First Tranche
\nSelection List<\/strong>“).<\/p>\n<\/p>\n

(2) Subject to the terms and conditions of
\nthis Agreement, Zellers agrees to assign and transfer to Target Canada or at the
\ndirection of Target Canada to a Designee and Target Canada agrees to acquire and
\nassume or cause to be acquired and assumed by a Designee on the First Tranche
\nClosing Date in accordance with the terms of this Agreement, effective as of the
\nEffective Time of the First Tranche Closing Date, the First Tranche Subject
\nLeases, including all rights of Zellers relating thereto or arising thereunder\n<\/p>\n

\n

11<\/p>\n

\n

<\/p>\n

\n

(inclusive of any options of Zellers therein). On or before the First
\nTranche Closing Date:<\/p>\n<\/p>\n

(i) each of Zellers and Target Canada
\nshall enter into a Lease Assignment and Assumption Agreement with respect to
\nthose First Tranche Subject Leases to be assigned to Target Canada; and<\/p>\n<\/p>\n

(ii) Zellers shall, and Target Canada shall
\ncause its Designees to, enter into a Designee Assignment and Assumption
\nAgreement with respect to those First Tranche Subject Leases to be assigned to a
\nDesignee;<\/p>\n<\/p>\n

in respect of each of the First Tranche Subject Leases to effect the
\naforesaid assignment, transfer and assumption thereof.<\/p>\n<\/p>\n

(3) Contemporaneous with the assignment and
\ntransfer of the First Tranche Subject Leases, each of Zellers and Target Canada
\nshall enter into (or Target Canada shall cause its Designee to enter into)
\nSubleases in respect of each of the First Tranche Subject Leased Properties the
\nterms of which will commence as of the Effective Time of the First Tranche
\nClosing Date.<\/p>\n<\/p>\n

(4) If at the end of the First Tranche
\nSelection Period the First Tranche Selection List includes fewer than 110
\nSubject Leases, Target Canada shall have the right to continue to designate
\nadditional Leases as First Tranche Subject Leases (and the relevant Leased
\nProperties shall be First Tranche Subject Leased Properties), provided that the
\nnumber of Leases designated on the First Tranche Selection List plus the number
\nof additional Leases designated as First Tranche Subject Leases pursuant to this
\nSection 2.1(4) may not exceed 110. Target Canada shall have the right to take
\nassignments of one or more First Tranche Subject Leases on one or more dates
\n(each, a “Delivery Date”<\/strong>) after the First Tranche Closing Date,
\nprovided (i) Zellers and Target Canada shall reasonably cooperate in executing,
\non the applicable Delivery Date, all documents and instruments contemplated
\nunder this Agreement to be delivered on a Closing Date, (ii) all such documents,
\nwhen delivered, shall provide the Parties with all rights and obligations with
\nrespect to each Subject Leased Property that the Parties would have had if such
\ndocuments and instruments had been delivered on the First Tranche Closing Date,
\n(iii) such documents shall in all events be executed and delivered by the
\nParties on the earlier of (a) a date selected by Target Canada on at least 10
\ndays advance written notice from Target Canada, and (b) the Second Tranche
\nClosing Date, and (iv) no Delivery Date shall be within 10 Business Days of the
\nSecond Tranche Closing Date.<\/p>\n<\/p>\n

Section 2.2<\/strong> Second Tranche Subject Leased
\nProperties.<\/strong><\/p>\n<\/p>\n

(1) From time to time during the Second
\nTranche Selection Period, Target or Target Canada shall deliver to Zellers a
\nwritten notice designating additional Leases that shall be assigned and
\ntransferred on the Second Tranche Closing Date (such list, as updated from time
\nto time, the “Second Tranche Selection List<\/strong>“), provided that
\nthe number of Leases designated on the Second Tranche Selection List when added
\nto the number of Leases designated on the First Tranche Selection List shall not
\nbe more than 220.<\/p>\n

\n

12<\/p>\n

\n

<\/p>\n

\n

(2) Subject to the terms and conditions of
\nthis Agreement, Zellers agrees to assign and transfer to Target Canada or at the
\ndirection of Target Canada to a Designee and Target Canada agrees to acquire and
\nassume or cause to be acquired and assumed by a Designee on the Second Tranche
\nClosing Date in accordance with the terms of this Agreement, effective as of the
\nEffective Time of the Second Tranche Closing Date, the Second Tranche Subject
\nLeases, including all rights of Zellers relating thereto or arising thereunder
\n(inclusive of any options of Zellers therein). On or before the Second Tranche
\nClosing Date:<\/p>\n<\/p>\n

(i) each of Zellers and Target Canada
\nshall enter into a Lease Assignment and Assumption Agreement with respect to
\nthose Second Tranche Subject Leases to be assigned to Target Canada; and<\/p>\n<\/p>\n

(ii) Zellers shall, and Target Canada shall
\ncause its Designees to, enter into a Designee Assignment and Assumption
\nAgreement with respect to those Second Tranche Subject Leases to be assigned to
\na Designee;<\/p>\n<\/p>\n

in respect of each of the Second Tranche Subject Leases to effect the
\naforesaid assignment, transfer and assumption thereof.<\/p>\n<\/p>\n

(3) Contemporaneous with the assignment and
\ntransfer of the Second Tranche Subject Leases, each of Zellers and Target Canada
\nshall enter into (or Target Canada shall cause its Designee to enter into)
\nSubleases in respect of each of the Second Tranche Subject Leased Properties the
\nterms of which will commence as of the Effective Time of the Second Tranche
\nClosing Date.<\/p>\n<\/p>\n

Section 2.3<\/strong> Right to Terminate Leases.<\/strong><\/p>\n<\/p>\n

Instead of taking an assignment of any Subject Lease (or directing the
\nassignment of such Subject Lease to a Designee) on the applicable Closing Date,
\nTarget Canada may negotiate with the applicable Landlord for the termination of
\nsuch Subject Lease, provided that (i) no such termination shall be effective
\nprior to the applicable Closing Date with respect to such Subject Lease;
\n(ii) from and after the applicable Closing Date to and including the applicable
\nVacancy Date, Zellers shall have the same right to use and occupy the Subject
\nLeased Property relating to such Subject Lease under a Sublease (or other
\nagreement providing substantially similar rights) on all the same terms and
\nconditions that would have applied had such Subject Lease been assigned to
\nTarget Canada (instead of terminated) and subleased to Zellers under a Sublease,
\nexcept that all amounts that would have been paid as rent under such Sublease
\nshall be paid to the Landlord, or as Target Canada may direct; (iii) such
\nSubject Lease shall count as one of the Leases that Target Canada is entitled to
\ndesignate under Section 2.1(1) or 2.2(1), notwithstanding Target Canada153s
\nelection to arrange for the termination (rather than assignment) of such Subject
\nLease; and (iv) the Vacancy Date for such Subject Leased Property shall be
\nestablished by Target Canada giving a Notice in accordance with Section 2.4.\n<\/p>\n<\/p>\n

Section 2.4<\/strong> Vacancy Date.<\/strong><\/p>\n<\/p>\n

(1) Target Canada, Target or a Designee may
\nfrom time to time provide Notice to Zellers establishing the Vacancy Date for
\none or more Subleases.<\/p>\n

\n

13<\/p>\n

\n

<\/p>\n

\n

(2) On each Vacancy Date, effective as of the
\napplicable Effective Time, the Sublease(s) identified in the Notice shall be
\nterminated and Target Canada or a Designee shall accept and take possession of
\nthe relevant Subject Leased Properties, which Subject Leased Properties shall be
\n(i) empty of all inventory, trade fixtures (including all store shelving, racks,
\ndisplay cases and stockroom shelving systems), personal property and debris, and
\n(ii) free from any subtenants, licensees or other Persons in possession of all
\nor any portion of the relevant Subject Leased Properties. Notwithstanding the
\nforegoing or any other provision of this Agreement, the Subject Leases or any
\nAncillary Agreement, Zellers shall have no obligation (a) to restore the Subject
\nLeased Properties to a base building condition or standard, (b) to remove any
\nleasehold improvements from the Subject Leased Properties, or (c) to repair,
\npatch or replace any walls, ceilings or flooring damaged by the removal of trade
\nfixtures, provided such removal is accomplished in a commercially reasonable
\nmanner.<\/p>\n<\/p>\n

Section 2.5<\/strong> Ordinary Course Operations.<\/strong>\n<\/p>\n<\/p>\n

From the Execution Date until the expiration of the Second Tranche Selection
\nPeriod, Zellers shall operate and cause to be operated the operations currently
\nconducted by it and its Affiliates, and use commercially reasonable efforts to
\ncause its licensees and subtenants to operate the operations currently operated
\nby each of them, in and on the Leased Properties in the ordinary course of
\nZellers153 business and consistent with Zellers153 and Zellers153 Affiliates153,
\nlicensees153 and subtenants153 past practices (including maintaining and updating
\nall Pharmacy Records in accordance with customary practices of the applicable
\npharmacy operator or required by Laws), Laws and in accordance with and subject
\nto the terms of the Leases (including, with respect to any Lease as to which
\nthere exists a dispute or default that is disclosed in Section 5.1(i)(iii),
\n5.1(i)(vii) or 5.1(i)(viii) of the Disclosure Letter, using commercially
\nreasonable efforts to resolve or cure such dispute or default), in each case in
\nall material respects. As to the Subject Leases and the Subject Leased
\nProperties only, from the expiration of the Second Tranche Selection Period
\nuntil the applicable Vacancy Date, Zellers shall operate and cause to be
\noperated the operations currently conducted by it and its Affiliates, and use
\ncommercially reasonable efforts to cause its pharmacy licensees and subtenants
\nto operate the operations currently operated by each of them, in and on the
\nSubject Leased Properties in the ordinary course of Zellers153 business and
\nconsistent with Zellers153 and Zellers153 Affiliates153, pharmacy licensees153 and
\nsubtenants153 past practices (including maintaining and updating all Pharmacy
\nRecords in accordance with customary practices of the applicable pharmacy
\noperator or required by Laws), Laws and in accordance with and subject to the
\nterms of the Subleases, in each case in all material respects. Notwithstanding
\nthe foregoing, (i) nothing in this Section 2.5 will derogate from Zellers153
\nrights contained in the Subleases or in Section 2.4 during the applicable
\nportion of the time period during the conduct of the Wind-Down Actions, nor
\nshall the exercise of such rights constitute a breach of this Section 2.5,
\n(ii) the Wind-Down Actions shall not constitute a breach of this Section 2.5,
\nprovided such actions are taken in accordance with the terms of the respective
\nSublease and all Laws, (iii) the period during which liquidation sales may be
\nconducted (as established pursuant to the definition of Wind-Down Actions) shall
\nnot be limited as described in such definition with respect to any Subject
\nLeased Property as to which the conduct of a liquidation sale for such extended
\nperiod will not and does not (a) give rise to a Landlord Recapture Right,
\n(b) give rise to a Lease Default; or (c) diminish or limit any right or
\nprivilege of the tenant under the applicable Subject Lease, and (iv) Zellers has
\nthe right to terminate any sublease, license, concession or other occupancy
\nagreement relating to the Leased<\/p>\n

\n

14<\/p>\n

\n

<\/p>\n

\n

Property at any time following the applicable Closing Date, excluding any
\npharmacy sublease, license, concession or other occupancy agreement.<\/p>\n<\/p>\n

Section 2.6<\/strong> Pharmacy Records.<\/strong><\/p>\n<\/p>\n

At the option of Target Canada, which may be exercised by Notice given by
\nTarget Canada to Zellers from time to time no later than 90 days prior to the
\napplicable Vacancy Date (the “Pharmacy Notice Date<\/strong>“), but
\nsubject to Laws, Zellers shall and shall cause its Affiliates and shall use
\ncommercially reasonable efforts to cause any third-party operator of the
\npharmacy in the applicable Subject Leased Property to transfer to or upon the
\ndirection of Target Canada all or any portion of the Pharmacy Records specified
\nin such Notice (to the extent a pharmacy is operating in the applicable Subject
\nLeased Property), including paper file backup and a backup tape for all
\nprescriptions (to the extent such exist), without retaining any copies of such
\nPharmacy Records other than such copies as Zellers or applicable pharmacy
\noperator is required to retain by Laws (and, in such case, only to the extent
\nand for so long as required by Laws). No additional consideration shall be
\npayable by Target or Target Canada in connection with such transfer of Pharmacy
\nRecords. Zellers shall, and shall cause its Affiliates to and use commercially
\nreasonable efforts to cause the applicable pharmacy operator to, make such
\ntransfer in respect of each applicable Subject Leased Property (i) in a format
\nreasonably requested by Target Canada, (ii) free and clear of all Encumbrances,
\n(iii) on the applicable Vacancy Date (or such earlier date as is specified in
\nsuch Notice, which date shall not be less than 30 days after the date such
\nNotice is given) in respect of such Subject Leased Property provided Target
\nCanada has provided appropriate notice by the applicable Pharmacy Notice Date,
\nand (iv) if requested by Target Canada, pursuant to a mutually agreed upon file
\ntransfer agreement with terms consistent with those set forth in this
\nSection 2.6. The Parties shall cooperate to effect any such transfers in
\naccordance with Laws. Neither Zellers nor any of its Affiliates will directly
\nor indirectly solicit the transfer of any of the Pharmacy Records that may be
\ntransferred to or upon the direction of Target Canada pursuant to this Agreement
\nto any stores or pharmacies operated by Zellers or any of its Affiliates or,
\nsubject to Laws, provide to any other Person any of the Pharmacy Records that
\nare to be transferred to or upon the direction of Target Canada pursuant to this
\nAgreement. Zellers shall use commercially reasonable efforts to enforce any
\ncontractual rights it may have with the third-party operator of a pharmacy in
\neach applicable Subject Leased Property restricting the solicitation or transfer
\nof any of the Pharmacy Records that are to be transferred to or upon the
\ndirection of Target Canada pursuant to this Agreement where Zellers has
\nknowledge of any actual or threatened breach of such provisions. For purposes of
\nthis Section 2.6 only, knowledge of Zellers shall include the actual knowledge
\nof the General Merchandise Manager, Pharmacy of Zellers.<\/p>\n<\/p>\n

Section 2.7<\/strong> Target Canada Assignment of
\nRights.<\/strong><\/p>\n<\/p>\n

(1) Target Canada may from time to time
\ndesignate one or more Persons (each, a “Designee<\/strong>“) to be an
\nimmediate or subsequent assignee(s) of the Subject Leases, as follows:<\/p>\n<\/p>\n

(a) If Target Canada wishes to have one or
\nmore Subject Leases assigned directly by Zellers to one or more Designee(s),
\nTarget Canada may upon at least 10 Business Days153 written notice in advance of a
\nDelivery Date or a Closing Date, as the case may be, identify the
\nDesignee(s) that is or are to be the assignee(s) of the Subject<\/p>\n

\n

15<\/p>\n

\n

<\/p>\n

\n

Leases to be assigned and transferred by Zellers on the applicable Closing
\nDate or Delivery Date, in which case, on such date, with respect to the Subject
\nLease(s) so identified:<\/p>\n<\/p>\n

(i) the Designee(s) will execute and
\ndeliver an Assignment and Assumption of Lease Agreement in substantially the
\nform specified in Section 2.7(1) of the Disclosure Letter (as such form may be
\nmodified in accordance with Section 2.7(5) of this Agreement, a
\n“Designee Assignment and Assumption Agreement<\/strong>“) (and Zellers
\nand Target Canada will not execute a Lease Assignment and Assumption Agreement)
\nwith respect to such Subject Leases(s), and<\/p>\n<\/p>\n

(ii) such Designee(s) (and not Target
\nCanada) will execute and deliver the Sublease(s) in favour of Zellers with
\nrespect to the applicable Subject Leased Properties.<\/p>\n<\/p>\n

Zellers need not make any assignment directly to a Designee unless such
\nDesignee executes and delivers a Designee Assignment and Assumption Agreement on
\nthe applicable Closing Date or Delivery Date. If any Designee shall fail or
\nrefuse to execute and deliver a Designee Assignment and Assumption Agreement and
\nSublease with respect to any Subject Lease, Target Canada and Zellers shall,
\nupon Target Canada153s request, enter into a Lease Assignment and Assumption
\nAgreement and a corresponding Sublease in respect of the applicable Subject
\nLease on the Closing Date or Delivery Date.<\/p>\n<\/p>\n

(b) If Target Canada wishes to assign to one
\nor more Designee(s) one or more Subject Lease(s) previously assigned to Target
\nCanada, Target Canada may at any time and from time to time do so without limit
\nor qualification of any kind, except that any such assignment by Target Canada
\nshall be subject to the rights of Zellers under any applicable Sublease then in
\neffect.<\/p>\n<\/p>\n

(2) In connection with the assignment of any
\nSubject Lease(s) to any Designee(s) pursuant to Section 2.7(1), Target Canada
\nand\/or Target may by separate agreement with such Designee(s) provide
\nrepresentations and warranties in such form and content as Target Canada and\/or
\nTarget may elect. Zellers shall have no direct liability or obligation to any
\nDesignee on account of any such representations or warranties. The assignment
\nof a Subject Lease(s) to Designee(s) does not relieve Zellers of liability for a
\nbreach of any of the representations or warranties contained in Section 5.1 to
\nthe extent that such breach results in Damages to Target Canada or Target,
\nsubject, in all events, to the limitations contained in this Agreement,
\nincluding Section 11.5.<\/p>\n<\/p>\n

(3) Upon assignment of a Subject Lease
\n(whether by Zellers pursuant to Section 2.7(1)(a) or by Target Canada pursuant
\nto Section 2.7(1)(b)) to an Investment Grade Designee at any time up to the
\nsecond anniversary of the applicable Vacancy Date for such Subject Lease, Target
\nCanada and Target shall be released from all Subject Lease
\nObligations relating to such Subject Lease, to the extent, and only to the
\nextent, (i) assumed by such Investment Grade Designee and (ii) an indemnity has
\nbeen provided by such Designee with respect to such Subject Lease Obligation
\nassumed by such Designee, in each case, in writing. Such assumption and
\nindemnity by an Investment Grade Designee may be accomplished:<\/p>\n

\n

16<\/p>\n

\n

<\/p>\n

\n

(a) in the case of an assignment pursuant to
\nSection 2.7(1)(a), pursuant to a Designee Assignment and Assumption Agreement,
\nor pursuant to an assumption and indemnity agreement by the Investment Grade
\nDesignee in favour of Zellers in a form which is acceptable to Zellers, acting
\nreasonably; or<\/p>\n<\/p>\n

(b) in the case of an assignment by Target
\nCanada pursuant to Section 2.7(1)(b), pursuant to an assumption and indemnity
\nagreement by the Investment Grade Designee in favour of Zellers in a form which
\nis acceptable to Zellers, acting reasonably. If pursuant to an instrument of
\nassignment between Target Canada and a Designee, such Designee (i) assumes some
\nor all Subject Lease Obligations with respect to a Subject Lease, and
\n(ii) confirms in writing with Zellers that such assumption and indemnity runs in
\nfavour of Zellers, then Zellers shall join in (by attached joinder or otherwise)
\nsuch instrument in order to (x) accept such assumption and (y) confirm the
\nrelease of Target and Target Canada to the extent of the Subject Lease
\nObligations so assumed and indemnified.<\/p>\n<\/p>\n

Any release provided for in this Section 2.7(a)(3) shall be effective upon
\nthe execution by the Investment Grade Designee and receipt by Zellers of the
\naforesaid Designee Assignment and Assumption Agreement or other assumption and
\nindemnity agreement, and shall require no further act, deed or writing. Zellers
\nagrees from time to time upon request of Target or Target Canada to confirm such
\nreleases, but the failure of Target or Target Canada to request any such
\nconfirmation, and the failure of Zellers to provide any such confirmation, shall
\nnot affect the automatic release provided in the preceding sentence. For
\npurposes hereof, “Subject Lease Obligations<\/strong>” means all
\nobligations arising under (i) a Subject Lease assigned to a Designee, (ii) the
\nLease Assignment and Assumption Agreement or Designee Assignment and Assumption
\nAgreement, as applicable, pursuant to which such Subject Lease was assigned,
\n(iii) the Sublease entered into or to be entered into with respect to such
\nSubject Lease, and (iv) Sections 11.3(d) and 11.3(e) with respect to such
\nSubject Lease.<\/p>\n<\/p>\n

(4) No assignment of a Subject Lease to a
\nDesignee that is not an Investment Grade Designee at the time of assignment
\nshall release Target Canada or Target from any Subject Lease Obligations.<\/p>\n<\/p>\n

(5) The form of Designee Assignment and
\nAssumption Agreement may be varied and modified by Target Canada in its
\ndiscretion from time to time so long as such variations and modifications do not
\n(a) expand upon any representations, warranties, covenants, obligations, or
\nliabilities of Zellers beyond those contained in the form of Designee Assignment
\nand Assumption Agreement specified in Section 2.7(1) of the Disclosure Letter,
\nor (b) alter in any material respect the provisions of Section 5 of the form of
\nDesignee Assignment and Assumption Agreement specified in Section 2.7(1) of the
\nDisclosure Letter.<\/p>\n<\/p>\n

(6) Target and Target Canada shall remain
\nresponsible for and shall not, in any event, be released from any of their
\ncovenants and obligations under this Agreement in relation to the payment of the
\nentire Purchase Price by reason of any assignments made pursuant to this
\nSection 2.7.<\/p>\n

\n

17<\/p>\n

\n

<\/p>\n

\n

Section 2.8<\/strong> Access and Additional Information
\nRelating to Leased Properties.<\/strong><\/p>\n<\/p>\n

(1) Subject to Target Canada complying with
\nLaws, prior to the final Vacancy Date, Zellers shall, upon reasonable prior
\nNotice, permit Target Canada and its representatives and advisers reasonable
\naccess to the Leased Properties during the period commencing two hours prior to
\nthe Leased Property opening for business to the public and ending two hours
\nafter the close of business, subject to the rights of all subtenants, licensees
\nand concessionaires in the Leased Property (excluding, however, such subtenants,
\nlicensees and concessionaires that are Affiliates of Zellers) in order to make
\nsuch reasonable investigations as Target Canada shall reasonably determine are
\nnecessary or advisable. Target Canada shall perform such investigations in
\ncompliance with Laws. Subject to Laws, and at the sole cost and expense of
\nTarget Canada, Zellers shall give Target Canada153s representatives and agents
\nreasonable means necessary to effect such investigations and shall cause its
\nagents, employees, officers and directors to aid such representatives and agents
\nin such investigations. Zellers is not required to disclose any information to
\nTarget Canada where such disclosure is prohibited by Laws or by the terms of any
\nagreement. Any investigations or tests which require drilling or other invasive
\nactions shall be performed outside of the hours when the Leased Property is open
\nfor business to the public and shall be done only with the prior written consent
\nof Zellers, acting reasonably, and all such inspections and tests contemplated
\nby this Agreement shall not unduly interfere (and Target Canada and Target shall
\nuse their reasonable commercial efforts not to so interfere) with the use,
\naccess, operation and enjoyment by Zellers and its subtenants, licensees,
\nconcessionaries, customers and suppliers of the Leased Properties.<\/p>\n<\/p>\n

(2) Except as necessary to perform the
\ninvestigations contemplated by this Section 2.8, Target Canada and Target shall
\nnot make contact with any store employees of Zellers without the prior written
\nconsent of Zellers, such consent not to be unreasonably withheld.<\/p>\n<\/p>\n

(3) Prior to entry onto the Leased
\nProperties, Target Canada or Target, as applicable, shall have in effect a
\npolicy of general liability insurance with a reputable national insurance
\ncompany and with coverages in accordance with normal commercial practices in
\nToronto, Ontario; provided, however, that such insurance may be carried under a
\nblanket policy or pursuant to Target153s self-insurance program. At Zellers153
\nrequest, Target Canada or Target Canada153s representatives and agents, as the
\ncase may be, shall provide evidence of such insurance or self-insurance prior to
\nany entry onto any of the Leased Properties. Target Canada and Target each
\nagree in favour of Zellers to repair forthwith any damage to the Leased
\nProperties arising from such access or investigations (including by any Designee
\nor potential Designee pursuant to Section 2.8(6)) at Target Canada and Target153s
\nexpense and shall jointly and severally indemnify and hold Zellers harmless from
\nand against any and all losses, Damages (including, for greater certainty, lost
\nprofits), claims, costs (including costs on a solicitor and client basis) or
\nliabilities in respect of physical injury or property damage that may be
\ndirectly or indirectly suffered or incurred by Zellers directly arising from or
\nin respect of the access or investigations by Target Canada, Target and\/or any
\nDesignee, potential Designee and each of their representatives and advisors.\n<\/p>\n

\n

18<\/p>\n

\n

<\/p>\n

\n

(4) Zellers shall, within five days after
\nreceipt of a request from Target Canada or Target Canada153s counsel, execute and
\ndeliver to Target Canada all consents reasonably necessary to permit Target
\nCanada to have inspections made by and to have existing records released to
\nTarget Canada by the municipal building and zoning departments, fire
\ndepartments, public works departments, environmental agencies, elevator
\ninspections branch of the provincial or territorial departments of labour and
\nother appropriate authorities as Target Canada may consider advisable, acting
\nreasonably, between the Execution Date and the Vacancy Date, respectively, for
\neach Subject Lease.<\/p>\n<\/p>\n

(5) From the Execution Date until the
\napplicable Closing Date or Delivery Date, Zellers shall afford Target, Target
\nCanada, and their respective representatives and advisers reasonable access to
\nall Books and Records in Zellers153 possession or control relating to the Leased
\nProperties or the Leases.<\/p>\n<\/p>\n

(6) Each Designee and each Person identified
\nby Target Canada as a potential Designee shall have the same access and
\ninspection rights afforded to Target Canada under this Section 2.8, on and
\nsubject to the terms, conditions and requirements of this Section 2.8, provided
\nthat such potential Designee executes and delivers in favour of Zellers an
\naccess, confidentiality and indemnification agreement in the form attached as
\nSection 2.8(6) to the Disclosure Letter and that the covenants and indemnity of
\nTarget and Target Canada in favour of Zellers and set out in
\nSection 2.8(3) shall equally apply in respect of the examinations,
\ninvestigations and testing undertaken by any Designee or any Person designated
\nas a potential Designee. For greater certainty, nothing in this Section will in
\nany way limit the indemnification obligations of Target and Target Canada in
\nfavour of Zellers under Section 2.8(3).<\/p>\n<\/p>\n

Section 2.9<\/strong> Winnipeg Lease Option.<\/strong><\/p>\n<\/p>\n

Target Canada has the option to enter into an agreement with HBC to lease the
\nWinnipeg Premises, which agreement will be based on the terms and conditions set
\nforth in Section 2.9 to the Disclosure Letter. If Target Canada and HBC have
\nnot executed such lease by the Second Tranche Closing Date, the Purchase Price
\nshall increase by $12,500,000, which additional $12,500,000 shall be payable on
\nthe Second Tranche Closing Date.<\/p>\n<\/p>\n

ARTICLE 3
\nPURCHASE PRICE<\/strong><\/p>\n

\n

Section 3.1<\/strong> Purchase Price.<\/strong><\/p>\n<\/p>\n

(1) The Purchase Price for the Subject Leases
\nis $1,825,000,000, payable as follows:<\/p>\n<\/p>\n

(a) the consideration payable by Target
\nCanada to Zellers for the First Tranche Subject Leases on the First Tranche
\nClosing Date is $912,500,000 (the “First Tranche Purchase
\nPrice”<\/strong>), subject to adjustment in accordance with Section 3.3; and<\/p>\n<\/p>\n

(b) the consideration payable by Target
\nCanada to Zellers for the Second Tranche Subject Leases on the Second Tranche
\nClosing Date is $912,500,000 (the<\/p>\n

\n

19<\/p>\n

\n

<\/p>\n

\n

“Second Tranche Purchase Price”<\/strong>), subject to adjustment
\npursuant to Section 2.9 and in accordance with Section 3.3.<\/p>\n<\/p>\n

(2) Zellers and Target Canada agree to
\nallocate the entire amount of the Purchase Price to the leasehold interests. The
\nParties agree to (and agree to cause each of their Affiliates to) execute and
\nfile all Tax Returns and prepare all of their own financial statements and other
\ninstruments on the basis of this allocation.<\/p>\n<\/p>\n

Section 3.2<\/strong> Payment of the Purchase Price.<\/strong>\n<\/p>\n<\/p>\n

(1) On the First Tranche Closing Date, the
\nFirst Tranche Purchase Price will be paid and satisfied, subject to adjustment
\nin accordance with Section 3.3, as follows:<\/p>\n<\/p>\n

(a) as to the Cost Basis of the Notes
\ntransferred and assigned to or on the direction of Zellers on the First Tranche
\nClosing Date pursuant to Section 3.8(4), if any, plus any Accrued Interest on
\nsuch Notes that has not been paid to Target Canada, by such transfer of such
\nNotes; and<\/p>\n<\/p>\n

(b) as to the balance, by Target Canada
\npaying to or to the order of Zellers such amount by wire transfer of immediately
\navailable funds in accordance with a direction delivered by Zellers to Target
\nCanada prior to the First Tranche Closing Date.<\/p>\n<\/p>\n

(2) On the Second Tranche Closing Date, the
\nSecond Tranche Purchase Price will be paid and satisfied, subject to adjustment
\nin accordance with Section 3.3, as follows:<\/p>\n<\/p>\n

(a) as to the Cost Basis of the Notes
\ntransferred and assigned to or on the direction of Zellers on the Second Tranche
\nClosing Date pursuant to Section 3.8(5), if any, plus any Accrued Interest on
\nsuch Notes that has not been paid to Target Canada, by such transfer of such
\nNotes; and<\/p>\n<\/p>\n

(b) as to the balance, by Target Canada
\npaying to or to the order of Zellers such amount by wire transfer of immediately
\navailable funds in accordance with a direction delivered by Zellers to Target
\nCanada prior to the Second Tranche Closing Date.<\/p>\n<\/p>\n

(3) For purposes of this Section 3.2, the
\nconversion of the Cost Basis of any Note to be transferred and assigned,
\ntogether with the Accrued Interest thereon, from United States dollars to
\nCanadian dollars shall be determined by reference to the applicable exchange
\nrate, as reported by Bloomberg as of noon (Eastern Time) on the Business Day
\nimmediately preceding the date on which such Note was acquired by Target or
\nTarget Canada.<\/p>\n<\/p>\n

Section 3.3<\/strong> Adjustments.<\/strong><\/p>\n<\/p>\n

(1) Except as otherwise provided in this
\nSection 3.3 and subject to the rights and obligations of Zellers and Target
\nCanada under the Subleases, all adjustments for basic rent, additional rents,
\ndamage\/security deposits paid or payable to Landlords and interest thereon, if
\nany, prepaid rents and interest thereon, if any, and operating expenses,
\nutilities<\/p>\n

\n

20<\/p>\n

\n

\n

and realty taxes, payable or receivable under the Subject Leases, shall be
\nmade as of the relevant Vacancy Date (with all expenses, liabilities and
\nrevenues for the Vacancy Date being allocated to Zellers) and shall be paid on
\nthe relevant Vacancy Date pursuant to a statement of adjustments in respect of
\nthe relevant Leased Property to be prepared by Zellers and approved by Target
\nCanada, each acting reasonably, at least 10 days prior to the relevant Vacancy
\nDate (a “Statement of Adjustments<\/strong>“).<\/p>\n<\/p>\n

(2) If the final cost or amount of any item
\nwhich is to be adjusted cannot be determined at the relevant Vacancy Date, then
\n(unless otherwise provided in this Section 3.3) an initial adjustment for such
\nitem shall be made at the relevant Vacancy Date, such amount to be estimated by
\nZellers, acting reasonably, as of the relevant Vacancy Date on the basis of the
\nbest evidence available at such Vacancy Date as to what the final cost or amount
\nof such item will be. Additional rents and operating cost adjustments to be
\ndetermined by a Landlord following a fiscal or calendar year end shall not be
\nadjusted until such determination. All amounts which have been estimated
\nbecause they have not been finally determined by the relevant Vacancy Date shall
\nbe finally adjusted in accordance with this Section 3.3(2) (such final
\nadjustments being the “Post-Vacancy Adjustments<\/strong>“). In each
\ncase when such cost or amount is determined, Zellers or Target Canada, as the
\ncase may be, shall within 30 days thereafter provide a complete statement of
\nsuch final determination to the other and within 30 days after such 30-day
\nperiod (or if there is a dispute over such amount, after the matter is
\ndetermined by the Auditor pursuant to this Section) the necessary Post-Vacancy
\nAdjustment shall be made. In the case of any dispute between the Parties with
\nrespect to any Post-Vacancy Adjustments, the final cost or amount of an item
\nshall be determined by a national audit firm (the “Auditor<\/strong>“)
\nappointed jointly by Zellers and Target Canada within 10 Business Days after the
\nissue is referred by one of the Parties to the Auditor for such determination.
\nThe cost of such determination shall be shared equally between the relevant
\nParties. Zellers and Target Canada agree to execute and deliver on the relevant
\nVacancy Date an undertaking to re-adjust and pay the amount of any Post-Vacancy
\nAdjustments as may be owing pursuant to the provisions of this Agreement.
\nNotwithstanding any other provision of this Section 3.3, save and except for
\nthose Post-Vacancy Adjustments being determined by the Auditor in the manner set
\nout herein (the “Audited Claim<\/strong>“), all adjustments and
\nPost-Vacancy Adjustments to be made pursuant to this Section 3.3 shall, in any
\nevent, be completed on or before the date which is no later than the second
\nanniversary of the relevant Vacancy Date (the “Final Adjustment
\nDate<\/strong>“) and no claim for any re-adjustment may be made by either party
\nthereafter, unless and only to the extent such claim is an Audited Claim or is
\nan adjustment pursuant to Section 3.3(3) or Section 3.5. Subject to the terms
\nof the applicable Sublease, Zellers shall, without delay, be responsible to
\nconclude all final reconciliations of all sums payable or receivable by the
\ntenant under the Subject Leases in accordance with the terms of each Subject
\nLease and Target Canada shall provide such assistance as may be reasonably
\nrequired. Subject to the terms of the applicable Sublease, Zellers and Target
\nCanada agree that Target Canada shall not be responsible for any percentage
\nrents attributable to Zellers153 sales, special service costs (such as additional
\njanitorial services, additional HVAC supplied) and other costs for special
\nservices provided at the request of Zellers to a standard higher than the norm
\ncalled for by the terms of the relevant Lease, or penalties and interest charged
\nby the Landlord in respect of amounts owing which are attributable to the period
\nprior to the Vacancy Date.<\/p>\n

\n

21<\/p>\n

\n

<\/p>\n

\n

(3) Zellers shall be entitled after the
\nVacancy Date to any amounts payable to Zellers and responsible for any amounts
\nowing by Zellers, pursuant to, or in respect of any agreements with Governmental
\nEntities or any owners of property adjoining the Leased Properties or under or
\nin respect of the Subject Leases or the Leased Properties whereby any other
\nPerson is required to pay, reimburse, refund or otherwise contribute any amount
\nto Zellers in respect of any improvements, work, services or costs that have
\nbeen supplied, constructed, installed, performed or paid by Zellers prior to the
\nrelevant Vacancy Date (in each case, a “Prepaid Cost Refund<\/strong>“)
\nor whereby any other Person is entitled to be paid any such similar amount by
\nZellers. This obligation survives the relevant Vacancy Date and the Final
\nAdjustment Date, notwithstanding any other provision of this Agreement or any
\nAncillary Agreement. To the extent Target Canada receives any Prepaid Cost
\nRefund, Target Canada shall hold such Prepaid Cost Refund in trust for Zellers
\nand shall endorse in favour of Zellers and deliver to Zellers the Prepaid Cost
\nRefund forthwith upon receipt. Nothing in this Agreement, the Subject Leases or
\nthe Ancillary Agreements, shall preclude Zellers from commencing or maintaining
\nan action against a third party from whom Zellers is entitled to receive a
\nPrepaid Cost Refund. Any such amount payable by Zellers shall be paid within 10
\ndays following a request for payment from Target Canada or the applicable
\nrecipient. Notwithstanding the foregoing, Zellers may, upon prior consultation
\nwith Target Canada, deal directly with a Landlord following the applicable
\nClosing Date in connection with all claims and disputes (including
\nreconciliation of all payments and charges thereunder) between the Landlord and
\nZellers with respect to the Leased Property arising prior to the applicable
\nClosing Date; provided, however, such actions shall in no event adversely impact
\nTarget Canada153s rights or obligations under the Subject Lease.<\/p>\n<\/p>\n

Section 3.4<\/strong> Sales and Transfer Taxes.<\/strong><\/p>\n<\/p>\n

Target Canada or the applicable Designee or Designees shall be liable for and
\npay all sales and transfer taxes (including land transfer taxes), registration
\ncharges and transfer fees payable (i) by the assignee in respect of the
\nassignment of the Subject Leases from Zellers to Target Canada or a Designee or
\nDesignees and (ii) in connection with any transfer of Pharmacy Records. Zellers
\nand Target Canada shall each be liable for and shall pay 50% of any sales and
\ntransfer taxes (including land transfer taxes), registration charges and
\ntransfer fees payable in connection with the registration of any of the Subject
\nLeases and any transfer thereof occurring prior to the applicable Closing Date
\n(to the extent that Target Canada or Target has requested such registration by
\nreason of such registration being reasonably required in order for Target Canada
\nor a Designee to register the assignment to Target Canada or such Designee or
\nobtain title insurance or a title opinion reasonably satisfactory to Target
\nCanada or such Designee). Zellers shall provide such assistance and execute
\nsuch documents as Target Canada may reasonably require to complete such
\nregistrations.<\/p>\n<\/p>\n

Section 3.5<\/strong> Goods and Services Tax and Harmonized
\nSales Tax.<\/strong><\/p>\n<\/p>\n

Subject to Section 3.6, Target Canada shall be liable for and shall pay, or
\nshall cause the applicable Designee or Designees to be liable for and pay, to
\nZellers an amount equal to any goods and services tax and harmonized sales tax
\npayable by Target Canada and collectible by Zellers under the Excise Tax
\nAct<\/em> (Canada), plus an amount equal to any similar value added or
\nmulti-staged tax imposed (including, for greater certainty, any applicable
\nQuebec Sales Tax) by any applicable provincial or territorial legislation, in
\nrespect of the assignment of the Subject<\/p>\n

\n

22<\/p>\n

\n

<\/p>\n

\n

Leases to Target Canada or the Designee or Designees. Any such taxes shall
\nbe paid to Zellers no later than three Business Days before such taxes, if any,
\nare due to be remitted by Zellers.<\/p>\n<\/p>\n

Section 3.6<\/strong> Self-Assessment of GST and HST on Real
\nProperty.<\/strong><\/p>\n<\/p>\n

To the extent permitted under subsection 221(2) of the Excise Tax
\nAct<\/em> (Canada) and any equivalent or corresponding provision under any
\napplicable provincial or territorial legislation and provided that Target Canada
\ndelivers or causes to be delivered by the applicable Designee or Designees on
\nthe Closing Date to Zellers the HST Declaration and Indemnity, Target Canada or
\nthe applicable Designee or Designees shall self-assess and remit, where
\napplicable, directly to the appropriate Governmental Entity any goods and
\nservices tax and harmonized sales tax imposed under the Excise Tax Act<\/em>
\n(Canada) and any similar value added or multi-staged tax imposed by any
\napplicable provincial or territorial legislation payable in connection with the
\nassignment of the Subject Leases under this Agreement. Target Canada or the
\napplicable Designee or Designees shall make and file any returns in accordance
\nwith the requirements of subsection 228(4) of the Excise Tax Act<\/em>
\n(Canada) and any equivalent or corresponding provision under any applicable
\nprovincial or territorial legislation.<\/p>\n<\/p>\n

Section 3.7<\/strong> Tax Refunds.<\/strong><\/p>\n<\/p>\n

In the event that there are any realty tax appeals in respect of any Subject
\nLeased Property for any tax year prior to and including the year in which the
\napplicable Vacancy Date for such Subject Leased Property occurs (but not any
\nsubsequent tax year), Zellers may, at its option, at no cost to Target Canada,
\nand provided that it does not and will not materially and adversely affect
\nfuture assessments, continue such appeals (or, at Zellers153 election, require
\nTarget Canada to pursue such appeals in good faith at Zellers153 expense, and
\nwithout Target Canada being required to incur any liabilities or obligations)
\nand shall be entitled to receive any rebate, refund, credit, reassessment,
\nreadjustment, payment and\/or the like from time to time (the full amounts of
\neach being a “Tax Refund<\/strong>“) resulting therefrom to the extent
\nrelating to the period prior to the applicable Vacancy Date; provided that
\nZellers shall consult with Target Canada (or Target Canada with Zellers as the
\ncase may be) with respect to, and Target Canada (or Zellers as the case may be)
\nacting reasonably shall have the right to approve, any final settlement or
\ndisposition of any such appeal (such approval shall be deemed to have been given
\nby Target Canada (or Zellers as the case may be) if Target Canada (or Zellers as
\nthe case may be) has not responded within 15 Business Days of a request by
\nZellers (or Target Canada as the case may be) for such approval). Each of Target
\nCanada and Zellers agrees to co-operate with the other with respect to all such
\nappeals or reassessments and to provide the other with access to any necessary
\ndocuments or materials required to continue any such appeals or reassessments.
\nTarget Canada shall cooperate with Zellers as to any tax appeals and shall, if
\nrequested to do so, execute such applications, authorizations or other documents
\nas may be necessary for Zellers to undertake and pursue the appeal. To the
\nextent Target Canada receives any Tax Refund in respect of the period prior to
\nthe applicable Vacancy Date, Target Canada shall hold such Tax Refund in trust
\nfor Zellers and shall endorse in favour of Zellers and deliver to Zellers the
\nTax Refund promptly upon receipt; provided that, in all cases, readjustments
\nwith the Landlords under the Subject Leases as the result of any Tax Refund may
\nbe effected by Target Canada prior to the payment of any Tax Refund to Zellers
\nand the amount otherwise owing to Zellers in accordance with the foregoing shall
\nbe reduced by any amount payable to any Landlord as a result of any such
\nadjustments (it being agreed that Target Canada shall provide Zellers with
\ncopies of any written communication with the Landlord in respect of the
\nforegoing). Similarly, to the extent Zellers<\/p>\n

\n

23<\/p>\n

\n

<\/p>\n

\n

receives any Tax Refund for the period following the relevant Vacancy Date,
\nZellers shall hold such Tax Refund in trust for Target Canada and shall endorse
\nin favour of Target Canada and deliver to Target Canada the Tax Refund forthwith
\nupon receipt. If Target Canada sells or otherwise disposes of its interest in
\nthe Subject Lease to any Person (including to any Designee), it shall obtain a
\ncovenant from such Person in favour of Zellers in which such Person agrees to
\nobserve and be bound by the terms of this Section.<\/p>\n<\/p>\n

Section 3.8<\/strong> Note Purchase Facility.<\/strong><\/p>\n<\/p>\n

(1) Target shall, or shall cause Target
\nCanada or one or more other Affiliates of Target to, acquire Notes for an
\nacquisition cost of up to $200,000,000 subject to and in accordance with the
\nterms set out in this Section 3.8 and procedures to be agreed upon by the
\nParties.<\/p>\n<\/p>\n

(2) The acquisition cost to Target, Target
\nCanada or such Affiliate of any Notes (the “Cost Basis<\/strong>” of such
\nNotes) shall not exceed the principal amount of such Notes plus any interest
\nthat has accrued and is unpaid on such Notes at the time of such acquisition.\n<\/p>\n<\/p>\n

(3) Any interest accruing on any Notes from
\nthe time of acquisition of such Notes pursuant to this Section 3.8 to the
\napplicable Closing Date upon which such Notes are transferred in accordance with
\nSection 3.2 (the “Accrued Interest<\/strong>“) shall accrue to the
\nbenefit of Target, Target Canada or the applicable Affiliates, as the case may
\nbe. Any interest that is paid to Target, Target Canada or any such Affiliate on
\nthe Notes shall be retained by them.<\/p>\n<\/p>\n

(4) Subject to the terms and conditions of
\nthis Agreement, on the First Tranche Closing Date Target Canada shall transfer
\nand assign or cause to be transferred and assigned to or at the direction of
\nZellers all right, title and interest of Target, Target Canada and such
\nAffiliates, as the case may be, in and to any and all Notes acquired pursuant to
\nthis Section 3.8 prior to such time.<\/p>\n<\/p>\n

(5) Subject to the terms and conditions of
\nthis Agreement, on the Second Tranche Closing Date Target Canada shall transfer
\nand assign or cause to be transferred and assigned to or at the direction of
\nZellers all right, title and interest of Target, Target Canada and such
\nAffiliates, as the case may be, in and to any and all Notes acquired pursuant to
\nthis Section 3.8 that have not been transferred and assigned pursuant to
\nSection 3.8(4).<\/p>\n<\/p>\n

(6) All Notes transferred and assigned
\npursuant to Section 3.8(4) and Section 3.8(5) shall be free and clear of any
\nEncumbrances other than any such Encumbrances that existed when such Notes were
\nacquired by Target, Target Canada or such Affiliates, as the case may be.<\/p>\n<\/p>\n

(7) Target and Target Canada shall not be
\nrequired to acquire any Notes pursuant to this Section 3.8 prior to the date
\nthat is 14 days after the conditions set forth in Section 3.8(8)(d) and (e) have
\nbeen satisfied or after the date that is 14 days before the Second Tranche
\nClosing Date.<\/p>\n<\/p>\n

(8) The obligations pursuant to this
\nSection 3.8 shall be subject to the following:<\/p>\n

\n

24<\/p>\n

\n

<\/p>\n

\n

(a) the availability of Notes for purchase
\nin the market at prices and on other terms and conditions consistent with this
\nSection 3.8;<\/p>\n<\/p>\n

(b) compliance by the Parties with Laws;<\/p>\n<\/p>\n

(c) each of the Parties being satisfied, in
\nits own discretion, with respect to any proposed purchase of Notes contemplated
\nby this Section 3.8:<\/p>\n<\/p>\n

(i) that such purchase is in the best
\ninterests of such Party in the context of the transactions contemplated by this
\nAgreement;<\/p>\n<\/p>\n

(ii) that such Notes may be acquired and
\ntransferred as contemplated by this Section 3.8;<\/p>\n<\/p>\n

(iii) with the assets, liabilities,
\nobligations, collateral, conditions, obligors and guarantors associated with
\nsuch Notes and any acquisition or transfer of such Notes; and<\/p>\n<\/p>\n

(iv) with the tax treatment of the transactions
\ncontemplated by this Section 3.8;<\/p>\n<\/p>\n

(d) in connection with each purchase of
\nNotes, Zellers has obtained and delivered to Target Canada a Rating Agency
\nConfirmation (as defined in the Intercreditor Agreement and in the Participation
\nAgreement) with respect to the transfer of such Notes to Target Canada; and<\/p>\n<\/p>\n

(e) in connection with each purchase of
\nNotes, Zellers has obtained the consent of all of the holders of such Notes, and
\nif required, the consent of the Senior Lender (as defined in the Intercreditor
\nAgreement) and any other consents as may be required, to allow the transfer of
\nsuch Notes from Target Canada to Zellers or its designee without any conditions
\n(except as may be acceptable to each Party in its own discretion) and has caused
\nto be amended all agreements that restrict the transfer of such Notes to Zellers
\nor its designee (including the Intercreditor Agreement and Participation
\nAgreement) to allow such transfer without any conditions (except as may be
\nacceptable to each Party in its own discretion), and if required, has delivered
\na Rating Agency Confirmation with respect to such amendments; provided that
\nTarget Canada agrees to consent to elimination of any restrictions on transfer
\nof the Notes to Zellers or its designee.<\/p>\n<\/p>\n

(9) If, for any reason, Target Canada is not
\nable to transfer and assign any Notes acquired as contemplated by this
\nSection 3.8 in satisfaction of a portion of the Purchase Price as contemplated
\nby Section 3.2, HBC will indemnify and save Target, Target Canada and Target153s
\nother Affiliates harmless from and against, and shall reimburse them for, the
\namount, if any, by which the Cost Basis of such Notes and any Accrued Interest
\nin respect of such Notes exceeds the amount realized by them upon disposition of
\nsuch Notes.<\/p>\n

\n

25<\/p>\n

\n

<\/p>\n

\n

ARTICLE 4
\nASSUMED LIABILITIES<\/strong><\/p>\n

\n

Section 4.1<\/strong> Assumed Liabilities.<\/strong><\/p>\n<\/p>\n

Target Canada agrees to discharge, perform and fulfil the following, except
\nfor the Excluded Liabilities (collectively, the “Assumed
\nLiabilities<\/strong>“):<\/p>\n<\/p>\n

(a) all obligations and liabilities incurred
\nor accruing after the Effective Time on the applicable Closing Date relating to
\nor arising under the Subject Leases, except obligations and liabilities related
\nto any Lease Default existing prior to the relevant Closing Date;<\/p>\n<\/p>\n

(b) any defaults, obligations or claims
\narising solely as a result of the failure to obtain the consent of the
\napplicable Landlords under the Subject Leases to: (i) the transactions
\ncontemplated by this Agreement, (ii) the assignment of the Subject Leases as
\ncontemplated by this Agreement, (iii) the entering into the Subleases, and\/or
\n(iv) the Wind-Down Actions; and<\/p>\n<\/p>\n

(c) all obligations and liabilities for
\nTaxes allocated to Target Canada under Sections 3.5, 3.6, and 3.7.<\/p>\n<\/p>\n

Section 4.2<\/strong> Excluded Liabilities.<\/strong><\/p>\n<\/p>\n

Target Canada shall not assume, and shall have no obligation to discharge,
\nperform or fulfil, the following liabilities and obligations (the
\n“Excluded Liabilities<\/strong>“):<\/p>\n<\/p>\n

(a) except as otherwise expressly provided
\nin Section 4.1(b), liabilities incurred or accruing prior to the Effective Time
\non the applicable Closing Date relating to or arising under the Subject Leases,
\nunless otherwise agreed to by the Parties;<\/p>\n<\/p>\n

(b) any Taxes, other than (i) Taxes incurred
\nor accruing after the Effective Time on the applicable Closing Date relating to
\nor arising under the Subject Leases, and (ii) Taxes allocated to Target Canada
\nunder Sections 3.5, 3.6, and 3.7; and<\/p>\n<\/p>\n

(c) any other obligation or liability which
\nTarget Canada has not expressly agreed to discharge, perform or fulfil under
\nthis Agreement.<\/p>\n<\/p>\n

For the avoidance of doubt:<\/p>\n<\/p>\n

(d) any liabilities and obligations of
\nZellers under the Subleases shall be deemed to be Excluded Liabilities; and<\/p>\n<\/p>\n

(e) Target Canada shall not assume, and
\nshall have no obligation to discharge, perform or fulfil, any liabilities or
\nobligations relating to:<\/p>\n<\/p>\n

(i) contracts or agreements entered into
\nby Zellers or its Affiliates (other than the Subject Leases); or<\/p>\n

\n

26<\/p>\n

\n

<\/p>\n

\n

(ii) employees of Zellers or its Affiliates
\nor benefits relating to those employees.<\/p>\n<\/p>\n

Section 4.3<\/strong> “As Is, Where Is”.<\/strong><\/p>\n<\/p>\n

Except for the representations, warranties, covenants and certifications of
\nZellers and HBC expressly set out in (i) this Agreement, (ii) the Ancillary
\nAgreements and (iii) any closing documents delivered by Zellers on any Closing
\nDate or Delivery Date, Target Canada irrevocably acknowledges and agrees,
\nwithout condition, reservation or qualification of any kind whatsoever, that:\n<\/p>\n<\/p>\n

(a) in entering into this Agreement and
\ncompleting the purchase of the Subject Leases by Target Canada contemplated
\nhereby, Target Canada and Target have relied and will continue to rely solely
\nand exclusively upon their own inspections, investigations and due diligence
\nwith respect to the Subject Leases and the Subject Leased Properties;<\/p>\n<\/p>\n

(b) the Subject Leases are being purchased by
\nTarget Canada and the Subject Leased Properties are being delivered strictly on
\nan “as is, where is” basis, at Target and Target Canada153s sole risk and peril,
\nwithout any express or implied agreement or representation and warranty or
\ncertification of any kind whatsoever or any liability or obligation by or on
\nbehalf of Zellers as to any matter concerning or relating to the Subject Leases
\nor the Subject Leased Properties, including its or their physical or financial
\ncondition, suitability for development, fitness for a particular purpose,
\nmarketability, title, title liens and Encumbrances (registered or otherwise),
\nphysical condition or characteristics, profitability, use or zoning,
\nenvironmental condition, existence of latent defects, quality, or any other
\ncondition or characteristic thereof, or availability or non-availability of any
\nLandlord consent required for any assignment of the Subject Leases unless such
\nnon-availability is due to a Lease Default; and<\/p>\n<\/p>\n

(c) as part of Target Canada153s agreement to
\npurchase the Subject Leases and accept the Subject Leases and the Leased
\nProperties “as-is, where-is”, and not as a limitation on such agreement, Target
\nCanada and Target hereby unconditionally and irrevocably waive any and all
\nactual or potential rights or Damages Target Canada or Target might have against
\nZellers pursuant to any warranty, express or implied, of any kind or type, other
\nthan those representations, warranties, covenants and certifications expressly
\nset forth in this Agreement, the Ancillary Agreements and any closing documents
\ndelivered by Zellers or HBC on any Closing Date or Delivery Date. Such waiver
\nincludes waiver of express warranties, implied warranties, warranties of fitness
\nfor a particular use, warranties of merchantability, warranties of occupancy,
\nstrict liability and claims of every kind and type, including claims regarding
\ndefects, whether or not discoverable, product liability claims, or similar
\nclaims, and to all other extent or later created or conceived of strict
\nliability or strict liability type claims and rights.<\/p>\n

\n

27<\/p>\n

\n

<\/p>\n

\n

ARTICLE 5
\nREPRESENTATIONS AND WARRANTIES OF ZELLERS<\/strong><\/p>\n

\n

Section 5.1<\/strong> Representations and Warranties of
\nZellers.<\/strong><\/p>\n<\/p>\n

Zellers represents and warrants as follows to Target and Target Canada and
\nacknowledges that Target and Target Canada are relying upon the representations
\nand warranties in connection with Target Canada153s purchase of the Subject Leases
\nand the assumption by Target Canada of the Assumed Liabilities:<\/p>\n<\/p>\n

Corporate Matters<\/strong><\/p>\n<\/p>\n

(a) Incorporation and
\nQualification<\/strong>. Zellers is a corporation incorporated and existing
\nunder the Laws of its jurisdiction of incorporation and has the corporate power
\nto own and operate its property, carry on its business and enter into and
\nperform its obligations under this Agreement.<\/p>\n<\/p>\n

(b) Corporate
\nAuthorization<\/strong>. The execution and delivery of, and performance by
\nZellers of, this Agreement and the Ancillary Agreements have been authorized by
\nall necessary corporate action on the part of Zellers.<\/p>\n<\/p>\n

(c) No Conflict<\/strong>. The
\nexecution and delivery of this Agreement and the Ancillary Agreements, and the
\nperformance by Zellers of the transactions contemplated by this Agreement and
\nthe Ancillary Agreements, do not constitute or result in a violation or breach
\nof, or conflict with, or default under, or give rise to or create an Encumbrance
\n(other than any Permitted Encumbrance) on any Lease under, or allow any Person
\nto exercise any rights under, any of the terms or provisions of:<\/p>\n<\/p>\n

(i) its constating documents or by-laws,
\nor<\/p>\n<\/p>\n

(ii) any Law applicable to Zellers.<\/p>\n<\/p>\n

(d) Required
\nAuthorizations<\/strong>. Except for the Competition Act Approval and as
\ndisclosed in Section 5.1(d) of the Disclosure Letter, no material filing with,
\nnotice to, or Authorization of, any Governmental Entity is required on the part
\nof Zellers, as a condition to the lawful completion of the transactions
\ncontemplated by this Agreement, except with respect to any filing related to the
\ntransfer of the Pharmacy Records or except for filings or Authorizations
\nrequired as a result of the status or identity of Target Canada.<\/p>\n<\/p>\n

(e) Execution and Binding
\nObligation<\/strong>. This Agreement has been duly executed and delivered by
\nZellers and constitutes legal, valid and binding agreements of it enforceable
\nagainst it in accordance with its terms, subject to any limitation under
\napplicable laws relating to (i) bankruptcy, winding-up, insolvency, arrangement,
\nfraudulent preference and conveyance, assignment and preference and other
\nsimilar Laws of general application affecting the enforcement of creditors153
\nrights, and (ii) the discretion that a court may exercise in the granting of
\nequitable remedies such as specific performance and injunction.<\/p>\n

\n

28<\/p>\n

\n

<\/p>\n

\n

(f) Residence of
\nZellers<\/strong>. Zellers is not a non-resident of Canada within the meaning of
\nthe Tax Act.<\/p>\n<\/p>\n

General Matters<\/strong><\/p>\n<\/p>\n

(g) Compliance with Laws<\/strong>.
\nOther than as disclosed in the Due Diligence File or Section 5.1(g) of the
\nDisclosure Letter, Zellers is operating the stores on the Leased Properties in
\ncompliance with all Laws in all material respects; provided, nothing in this
\nSection 5.1(g) shall expand the scope of any representation or warranty
\ncontained in Section 5.1(i).<\/p>\n<\/p>\n

(h) No Options, etc. to Purchase
\nAssets.<\/strong> Except for Target Canada153s right under this Agreement, and
\nexcept as disclosed in the Due Diligence File and in Section 5.1(h) of the
\nDisclosure Letter, no Person has any contractual right or privilege for the
\npurchase or other acquisition from Zellers or any of its Affiliates of any of
\nthe Subject Leases or to Zellers153 knowledge, as of the Execution Date, any of
\nthe Pharmacy Records.<\/p>\n<\/p>\n

(i) Leases and Leased
\nProperties<\/strong><\/p>\n<\/p>\n

(i) Section 5.1(i)(i) of the Disclosure
\nLetter sets forth a true, accurate and complete list of each Lease by reference
\nto its municipal address or the name of the shopping centre at which the Leased
\nProperties are located.<\/p>\n<\/p>\n

(ii) Except as disclosed in
\nSection 5.1(i)(ii) of the Disclosure Letter, the Due Diligence File contains
\ntrue, accurate and complete copies of the Leases and all Default Notices, in
\neach case in all material respects. Except as disclosed in
\nSection 5.1(i)(ii) of the Disclosure Letter or in the Due Diligence File, and
\nexcept for any amendment or other instrument entered into after the Execution
\nDate with Target Canada153s consent pursuant to Section 7.6, the Leases have not
\nbeen altered or amended in any material respect.<\/p>\n<\/p>\n

(iii) Except as disclosed in
\nSection 5.1(i)(iii) of the Disclosure Letter, each of the Leases creates a valid
\nand binding leasehold interest which interest is in full force and effect,
\nexcluding any failure of title arising from non-compliance with the
\nPlanning Act<\/em> (Ontario) or any similar Laws governing subdivision or
\nseverance of real property in other provinces.<\/p>\n<\/p>\n

(iv) Zellers is the sole legal and beneficial
\nowner of the leasehold interest in the Leased Properties pursuant to the Leases
\nand has leasehold title under each of the Leases subject only to the Permitted
\nEncumbrances, excluding any failure of title arising from non-compliance with
\nthe Planning Act<\/em> (Ontario) or any similar Laws governing subdivision or
\nseverance of real property in other provinces.<\/p>\n<\/p>\n

(v) Except as set forth in the Due Diligence
\nFile or Section 5.1(i)(v) of the Disclosure Letter, to Zellers153 knowledge as of
\nthe Execution Date, there are no prohibitions or material restrictions that have
\nimpaired the use of a<\/p>\n

\n

29<\/p>\n

\n

<\/p>\n

\n

Leased Property for a department store or junior department store including
\npharmacy and food sales operations, to the extent that such uses and operations
\nexist on such Leased Property as of the Execution Date as currently operated by
\nZellers, but excluding operations which are not typically conducted in a
\n“Target” store.<\/p>\n<\/p>\n

(vi) Zellers has not entered into any agreement
\nto sell, transfer, mortgage, or otherwise dispose of the leasehold right, title
\nand interest of Zellers in and to any Leased Property or the air or density
\nrights relating to any Leased Property other than as set out in the Due
\nDiligence File or in Section 5.1(i)(vi) of the Disclosure Letter.<\/p>\n<\/p>\n

(vii) To Zellers153 knowledge, all Material Lease
\nDefaults are listed in Section 5.1(i)(vii) of the Disclosure Letter.<\/p>\n<\/p>\n

(viii) Except as disclosed in Section 5.1(i)(viii) of
\nthe Disclosure Letter or in the Due Diligence File:<\/p>\n<\/p>\n

(1) all payments owed by Zellers under each
\nof the Leases are not overdue and will not be overdue as of the applicable
\nClosing Date or will be adjusted in accordance with Section 3.3;<\/p>\n<\/p>\n

(2) there is no Material Lease Default under
\nany Lease;<\/p>\n<\/p>\n

(3) except in respect of any Failure to
\nOperate caused by force majeure (to Zellers153 knowledge no such force majeure
\nexists as of the Execution Date), at each of the Leased Properties with respect
\nto which the Landlord has a Landlord Recapture Right under the applicable Lease,
\nthere is no Failure to Operate; and<\/p>\n<\/p>\n

(4) as of the Execution Date, Zellers has
\nnot given notice to the Landlord of a material default by the Landlord under any
\nLease.<\/p>\n<\/p>\n

(ix) Except as disclosed in the Due Diligence
\nFile or in Section 5.1(i)(ix) of the Disclosure Letter, Zellers has not
\nexercised any option to terminate or right to terminate any Lease.<\/p>\n<\/p>\n

(x) Except as disclosed in
\nSection 5.1(i)(x) of the Disclosure Letter neither Zellers nor any of Zellers153
\nAffiliates has any option to purchase, right of first refusal or other similar
\nright to acquire any Leased Property, other than as set out in the Due Diligence
\nFile.<\/p>\n<\/p>\n

(xi) Except as disclosed in the Due Diligence
\nFile or Section 5.1(i)(xi) of the Disclosure Letter, Zellers has not expressly
\nwaived any material rights under any Lease (i) relating to the use of the Leased
\nProperty or (ii) impairing the visibility, signage, parking or access to the
\nLeased Property<\/p>\n

\n

30<\/p>\n

\n

in any material respect, which remain uncompleted as of the Execution Date.\n<\/p>\n<\/p>\n

(xii) Except as disclosed in the Due Diligence File
\nor in Section 5.1(i)(xii) of the Disclosure Letter, to the knowledge of Zellers,
\nno written order or directive (that has not been satisfied) has been received by
\nZellers from any Governmental Entity (a) prohibiting the operation of any Leased
\nProperty or (b) requiring the cure or rectification of any material defects in
\nthe construction of the building or improvements on or forming a part of any of
\nthe Leased Properties or relating to any work, in order to comply with any
\nbuilding codes, land use, zoning by-laws, fire codes, environmental protection
\nregistration or any other Laws which, if not cured or rectified, would have a
\nmaterial adverse effect on any of the Leased Properties.<\/p>\n<\/p>\n

(xiii) Except as disclosed in Section 5.1(i)(xiii) of
\nthe Disclosure Letter, no Person has any right to purchase, option to purchase,
\nright of first offer, right of first refusal or other similar right to acquire
\nthe Leased Properties in favour of any Person which will prevent Target Canada153s
\nacquisition of Zellers153 leasehold interest of any Leased Property other than
\nTarget Canada pursuant to this Agreement, and subject to generally applicable
\nstatutory rights of a Governmental Entity, no Person other than Zellers and its
\nsubtenants, licensees and concessionaires whose occupancies will be terminated
\nby Zellers by the applicable Vacancy Date is using or has any right to use, or
\nis in possession or occupancy of, any part of such Leased Property.<\/p>\n<\/p>\n

(xiv) Except as disclosed in the Due Diligence File,
\nthere is not presently outstanding in respect of any Leased Property any
\njudgment, decree, injunction or order of any Governmental Entity or in favour of
\nany Person which would have a material adverse effect on such Leased Property.\n<\/p>\n<\/p>\n

(xv) Except as disclosed in the Due Diligence File
\nor in Section 5.1(i)(xv) of the Disclosure Letter, Zellers has no knowledge of
\nany expropriation or condemnation or similar proceeding pending or threatened
\nagainst any of the Leased Properties.<\/p>\n<\/p>\n

Other Matters<\/strong><\/p>\n<\/p>\n

(j) Litigation. <\/strong>There
\nare no actions, suits, appeals, claims, applications, investigations, orders,
\nproceedings, grievances, arbitrations or alternative dispute resolution
\nprocesses in progress, pending, or to Zellers153 knowledge, threatened against
\nZellers, which, to the extent outstanding or if determined adversely to Zellers,
\nwould prohibit a material portion of the transactions contemplated by this
\nAgreement.<\/p>\n<\/p>\n

(k) Taxes<\/strong>. No failure, if
\nany, of Zellers to duly and timely withhold, collect, report, remit or pay any
\nTaxes as required by Laws will result in an Encumbrance of any nature on the
\nSubject Leases or the Pharmacy Records. There are no proceedings,<\/p>\n

\n

31<\/p>\n

\n

<\/p>\n

investigations, audits or claims now pending or threatened against Zellers in
\nrespect of any Taxes, and there are no matters under discussion, audit or appeal
\nwith any Governmental Entity relating to Taxes, that may result in an
\nEncumbrance of any nature on the Subject Leases or the Pharmacy Records.
\nZellers is duly registered under Subdivision (d) of Division V of Part IX of the
\nExcise Tax Act<\/em> (Canada) with respect to the goods and services tax and
\nharmonized sales tax and under Division I of Chapter VIII of Title I of An
\nAct Respecting the Quebec Sales Tax <\/em>with respect to the Quebec sales tax,
\nand its registration numbers are: 12196 8549 RT0001 and 101049 4016 TQ1002,
\nrespectively.<\/p>\n<\/p>\n

(l) Brokers<\/strong>. No broker,
\nagent or other intermediary is entitled to any fee, commission or other
\nremuneration in connection with the transactions contemplated by this Agreement
\nbased upon arrangements made by or on behalf of Zellers or any of its
\nAffiliates.<\/p>\n<\/p>\n

ARTICLE 6
\nREPRESENTATIONS AND WARRANTIES OF TARGET CANADA AND TARGET<\/strong><\/p>\n

\n

Section 6.1<\/strong> Representations and Warranties of Target
\nCanada and Target.<\/strong><\/p>\n<\/p>\n

Target Canada and Target represent and warrant as follows to Zellers and
\nacknowledge and confirm that Zellers is relying on such representations and
\nwarranties in connection with the sale by Zellers of the Subject Leases and the
\nPharmacy Records:<\/p>\n<\/p>\n

(a) Incorporation and Corporate
\nPower<\/strong>. Target is and Target Canada is or will be a corporation
\nincorporated and existing under the laws of its jurisdiction of incorporation
\nand it has or will have the corporate power to enter into and perform its
\nobligations under this Agreement and the Ancillary Agreements.<\/p>\n<\/p>\n

(b) Corporate
\nAuthorization<\/strong>. The execution and delivery of and performance by Target
\nand Target Canada of this Agreement and the Ancillary Agreements have been or
\nwill be at or prior to the First Tranche Closing Date authorized by all
\nnecessary corporate action on the part of Target and each Target Canada.<\/p>\n<\/p>\n

(c) No Conflict<\/strong>. The
\nexecution and delivery of this Agreement and the Ancillary Agreements, and the
\nperformance by Target and Target Canada of the transactions contemplated by this
\nAgreement and the Ancillary Agreements, do not constitute or result in a
\nviolation or breach of, or conflict with, or default under, or allow any Person
\nto exercise any rights under, any of the terms or provisions of:<\/p>\n<\/p>\n

(i) its constating documents or by-laws;
\nor<\/p>\n<\/p>\n

(ii) any Laws applicable to Target or a
\nTarget Canada, as applicable.<\/p>\n<\/p>\n

(d) Required
\nAuthorizations<\/strong>. Except for the Competition Act Approval, no material
\nfiling with, notice to or Authorization of, any Governmental Entity is required
\non the part of Target or Target Canada as a condition to the lawful<\/p>\n

\n

32<\/p>\n

\n

<\/p>\n

completion of the transactions contemplated by this Agreement, except with
\nrespect to any filing related to the transfer of the Pharmacy Records.<\/p>\n<\/p>\n

(e) Execution and Binding
\nObligation<\/strong>. This Agreement has been duly executed and delivered by
\nTarget and constitutes legal, valid and binding agreements of it, enforceable
\nagainst it in accordance with its terms, subject to any limitation under
\napplicable Laws relating to (i) bankruptcy, winding-up insolvency, arrangement,
\nfraudulent preference and conveyance, assignment and preference and other
\nsimilar Laws of general application affecting the enforcement of creditors153
\nrights, and (ii) the discretion that a court may exercise in the granting of
\nequitable remedies including specific performance and injunction.<\/p>\n<\/p>\n

(f) Financing. <\/strong>Target
\nhas, and will have at the relevant Closing Date, sufficient funds on hand or
\navailable to fund the payment of the Purchase Price by Target Canada.<\/p>\n<\/p>\n

(g) Litigation. <\/strong>There are no
\nactions, suits, appeals, claims, applications, investigations, orders,
\nproceedings, grievances, arbitrations or alternative dispute resolution
\nprocesses in progress, pending, or to Target153s knowledge, threatened against
\nTarget or Target Canada, which, to the extent outstanding or if determined
\nadversely to Target or Target Canada, would prohibit any of the transactions
\ncontemplated by this Agreement.<\/p>\n<\/p>\n

(h) Brokers.<\/strong> No broker,
\nagent or other intermediary is entitled to any fee, commission or other
\nremuneration in connection with the transactions contemplated by this Agreement
\nbased upon arrangements made by or on behalf of Target or Target Canada.<\/p>\n<\/p>\n

(i) Due Diligence.
\n<\/strong>Target and Target Canada have conducted to their satisfaction an
\nindependent investigation of the Subject Leases and Subject Leased Properties
\n(including all matters relating to the leasehold and underlying freehold title
\nthereto), and, in making the determination to proceed with the transactions
\ncontemplated by the Agreement, has relied solely on the results of their own
\nindependent investigation, the representations and warranties of Zellers in this
\nAgreement and the covenants of Zellers pursuant to this Agreement and the
\nAncillary Agreements; provided that nothing in this Section 6.1(i) shall be
\nconstrued as limiting the scope of Zellers153 representations, warranties, and
\ncovenants pursuant to this Agreement and the Ancillary Agreements or the ability
\nof Target or Target Canada to rely upon them.<\/p>\n<\/p>\n

ARTICLE 7
\nCOVENANTS OF THE PARTIES<\/strong><\/p>\n

\n

Section 7.1<\/strong> Actions to Satisfy Closing
\nConditions.<\/strong><\/p>\n<\/p>\n

Subject to this Article 7, Zellers will use its commercially reasonable
\nefforts to ensure compliance with all of the conditions set forth in Section 8.1
\n(provided that, solely for purposes of this Section 7.1, the condition set forth
\nin Section 8.1(a)(ii) shall be deemed to require the representations and
\nwarranties contained in Section 5.1(i) to be true and correct in all material\n<\/p>\n

\n

33<\/p>\n

\n

<\/p>\n

respects as of the relevant Closing Date with respect to each of the First
\nTranche Subject Leases or the Second Tranche Subject Leases, as the case may be)
\nand Target will use its commercially reasonable efforts to ensure compliance
\nwith all of the conditions set forth in Section 8.2.<\/p>\n<\/p>\n

Section 7.2<\/strong> Request for Consents.<\/strong><\/p>\n<\/p>\n

(1) From and after the Execution Date, Target
\nand Target Canada shall request such consents, approvals, licenses and
\nagreements (including amendments to Leases) from such Landlords and other
\nPersons as Target may determine to be necessary or desirable. Subject to
\nSection 7.2(4), Zellers agrees to reasonably cooperate with Target and Target
\nCanada in such efforts, as Target may from time to time request.<\/p>\n<\/p>\n

(2) Target agrees that, if it elects to
\napproach a Landlord with a request for a consent or approval, Target will
\ninclude among its requests to such Landlord a request that Zellers be released
\nfrom all Lease obligations accruing after the relevant Closing Date (provided
\nthat nothing in this Section 7.2(2) shall limit the obligations of Zellers as
\nsubtenant under the Subleases). Obtaining the agreement of any Landlord to any
\nsuch request shall not be a condition to Closing and in no event will Target
\nhave any liability to Zellers if any request for such release is not granted.\n<\/p>\n<\/p>\n

(3) If Target or Target Canada has designated
\na Lease as a Subject Lease for assignment on a Closing Date but has not obtained
\nall consents and approvals determined by Target or Target Canada to be necessary
\nor desirable, Target shall have the option to exclude such Lease from the
\nSubject Leases to be assigned at the Closing and such excluded Lease shall no
\nlonger be a Subject Lease, but there shall be no reduction in the Purchase Price
\non account of such exclusion.<\/p>\n<\/p>\n

(4) In no event shall Zellers or HBC be
\nobligated to bear any expense or pay any fee or grant any concession in
\nconnection with Target or Target Canada seeking to obtain consents,
\nauthorizations or approvals to the assignment of Subject Leases. All fees,
\ncosts and expenses payable to third parties in connection with obtaining
\nconsents, including increased rents, landlord administration and consent fees
\nand landlord counsel fees shall be paid by Target Canada.<\/p>\n<\/p>\n

(5) If any Landlord fails or refuses to
\nprovide any consent requested by Target or Target Canada (or requested by
\nZellers, at the request of Target or Target Canada), Zellers shall assign to
\nTarget Canada with respect to Subject Leases that are assigned to Target Canada
\nor its Designee any rights, claims or Damages that may be available by reason of
\nsuch failure or refusal (including any right to commence and prosecute any legal
\naction against such Landlord on account of such failure or refusal), and Zellers
\nwill cooperate with Target Canada153s efforts in connection with any such action.\n<\/p>\n<\/p>\n

(6) Target and Target Canada acknowledge and
\nagree as follows:<\/p>\n<\/p>\n

(a) Target Canada and Target shall be solely
\nresponsible for any costs, fees, Damages, Lease Defaults, any increase in any
\nbase rent, operating costs, additional rents, percentage rents, and other
\ncharges payable under any of the Subject Leases and any other consequences as a
\nresult of the failure to request or to obtain any consents, authorizations or
\napprovals to the assignment of the<\/p>\n

\n

34<\/p>\n

\n

<\/p>\n

\n

Subject Leases to Target Canada or a Designee or Designees (whether on or any
\ntime after the relevant Closing Date) or to the Subleases or to the Wind-Down
\nActions of Zellers and furthermore that such failure to request or obtain said
\nconsents, authorizations or approvals does not in any way limit or otherwise
\nimpact the obligations of Target or Target Canada under this Agreement,
\nincluding Target Canada153s obligation to complete the transactions contemplated
\nherein on the relevant Closing Date; and<\/p>\n<\/p>\n

(b) that it shall indemnify and hold harmless
\nZellers and HBC of and from any costs, fees and Damages resulting from the
\nactions of Target or Target Canada or any Designee or those acting by or on
\nbehalf of Target or Target Canada or any Designees in seeking consents and
\napprovals to assign the Subject Leases to Target Canada or its Designee or
\nDesignees (whether on or anytime after the relevant Closing Dates), the
\nSubleases and the Wind-Down Actions (including under Section 7.2(6)(a) and
\nSection 7.2(4)).<\/p>\n<\/p>\n

Section 7.3<\/strong> Filings and Authorizations.<\/strong>\n<\/p>\n<\/p>\n

(1) Each of Zellers and Target Canada, as
\npromptly as practicable after the execution of this Agreement, will use its
\ncommercially reasonable efforts to make, or cause to be made, all filings with,
\ngive all notices to, and obtain all Authorizations from, Governmental Entities
\nthat are necessary and desirable for the lawful completion of the assignment of
\nthe Subject Leases to Target Canada or applicable Designee or Designees and
\nwhere the failure to do so would have a material adverse effect on the business
\nof Target Canada, after the First Tranche Closing Date, taken as a whole.
\nTarget Canada will pay all filing fees incurred in connection with any such
\nrequired Authorization, including Competition Act Approval.<\/p>\n<\/p>\n

(2) Notwithstanding any other provision in
\nthis Agreement, Target will take and will cause Target Canada to take all
\nactions necessary to obtain as expeditiously as possible (and in any event so as
\nto permit the First Tranche Closing Date to occur as soon as possible), at its
\nown expense, all Authorizations (including Competition Act Approval) required in
\nconnection with the lawful assignment of the Subject Leases to Target Canada or
\napplicable Designee or Designees, including negotiating and effecting by consent
\nagreement or order, hold separate arrangement, undertakings or any form of
\nbehavioural remedy or commitment.<\/p>\n<\/p>\n

(3) The Parties will coordinate and cooperate
\nin exchanging information and supplying assistance that is reasonably requested
\nin connection with this Section 7.3(3) and Section 7.3(2) including providing
\neach other with advance copies and reasonable opportunity to comment on all
\nnotices and information supplied to or filed with any Governmental Entity
\n(including notices and information which Zellers or Target Canada, in each case
\nacting reasonably, consider highly confidential and sensitive, which notices and
\ninformation may be provided on a confidential and privileged basis to outside
\ncounsel of the other Party), and all notices and correspondences received from
\nany Governmental Entity. Each of Zellers and Target Canada shall keep the other
\napprised of the status of any such communications with, and any such inquiries
\nor requests for additional information from, any Governmental Entities, and each
\nParty shall comply promptly with such inquiry or request. No Party shall
\nindependently participate in any meeting,<\/p>\n

\n

35<\/p>\n

\n

<\/p>\n

negotiation or material discussion with any Governmental Entity in respect of
\nany such filings, inquiries, or requests, without giving the other prior notice
\nof the meeting and, to the extent permitted by such Governmental Entity, the
\nopportunity to attend and participate.<\/p>\n<\/p>\n

(4) As used in this Agreement,
\n“Competition Act Approval<\/strong>” means the earlier of:<\/p>\n<\/p>\n

(a) either (A) the issuance to Target Canada
\nof an advance ruling certificate by the Commissioner of Competition under
\nSubsection 102(1) of the Competition Act to the effect that the Commissioner of
\nCompetition is satisfied that she would not have sufficient grounds upon which
\nto apply to the Competition Tribunal for an order under Section 92 of the
\nCompetition Act with respect to the transactions contemplated by this Agreement,
\nor (B) Target Canada shall have been advised in writing by the Commissioner of
\nCompetition that she is of the view that grounds do not exist as of the date of
\nthe advice to initiate proceedings under the merger provisions of the
\nCompetition Act in respect of the transactions contemplated by this Agreement;
\nand<\/p>\n<\/p>\n

(b) the waiting period, including any
\nextension thereof, under Section 123 of the Competition Act shall have expired
\nor been terminated or the obligation to provide a pre-merger notification in
\naccordance with Part IX of the Competition Act shall have been waived in
\naccordance with paragraph 113(c) of the Competition Act.<\/p>\n<\/p>\n

Section 7.4<\/strong> Risk of Loss.<\/strong><\/p>\n<\/p>\n

If, prior to the relevant Closing Date, all or any part of the Subject Leased
\nProperties are destroyed or damaged by fire or any other casualty or are
\nappropriated, expropriated or seized by any Governmental Entity, the
\nrepresentations and warranties of Zellers that are not true and correct in all
\nmaterial respects as of the relevant Closing Date solely as a result of such
\ndestruction, damage, appropriation, expropriation or seizure will be deemed to
\nbe true and correct in all material respects as of the relevant Closing Date for
\nall purposes of this Agreement, and Target Canada will complete the transactions
\ncontemplated by this Agreement without reduction of the Purchase Price, in which
\nevent all proceeds of any insurance (or which would have been available except
\nfor Zellers153 election of deductibles or self-insurance, which amounts Zellers
\nshall be responsible to contribute) or compensation will be payable to Target
\nCanada and all right and claim of Zellers to any such amounts not paid by the
\nrelevant Closing Date will be assigned to Target Canada.<\/p>\n<\/p>\n

Section 7.5<\/strong> Confidentiality.<\/strong><\/p>\n<\/p>\n

Target acknowledges having signed a confidentiality agreement between Target
\nand Zellers. Subject to Section 7.2, Target Canada agrees that except as
\nprovided in this Agreement and the Ancillary Agreements, the confidentiality
\nagreement continues to apply and Target Canada is bound by its terms. The
\nconfidentiality agreement will cease to apply with respect to each Subject Lease
\nand Subject Leased Property upon the assignment of such Subject Lease in
\naccordance with this Agreement, and following the Second Tranche Closing Date
\nthe confidentiality agreement will terminate except as to Leases that are not
\nSubject Leases. Zellers<\/p>\n

\n

36<\/p>\n

\n

<\/p>\n

acknowledges that Target will be filing a copy of this Agreement with the
\nUnited States Securities and Exchange Commission in accordance with Laws.<\/p>\n<\/p>\n

Section 7.6<\/strong> Lease Amendments, Renewals and
\nNotices.<\/strong><\/p>\n<\/p>\n

(1) From and after the Execution Date to and
\nincluding the Second Tranche Closing Date Zellers will not amend, modify,
\nconsent to, grant any approval or take any action, or omit to take any action,
\nunder or with respect to any Lease (other than the enforcement of rights under
\nor with respect to any Lease), without the prior written consent of Target
\nCanada, provided (i) if the action taken with respect to the Lease in question
\nis required to allow the continued operation of the Zellers store, then Target
\nCanada153s consent may not be unreasonably conditioned or withheld, and (ii) if
\nthe immediately preceding clause (i) does not apply, then Target Canada may
\nprovide, condition or withhold such consent in its sole and absolute discretion.
\nFor the purposes of each of the foregoing matters referred to in this
\nSection 7.6(1) in respect of any Lease and\/or any other matter relating to the
\noperation and administration of any Leased Property prior to the Second Tranche
\nClosing Date that require Target Canada153s consent or approval (each a
\n“Consent Matter<\/strong>“), Zellers, through Brian Pall or Bruce Moore
\n(each an “Authorized Zellers Representative<\/strong>“), may make
\nrequests from time to time for Target Canada153s consent or approval with respect
\nto any Consent Matter directly to Joan Ahrens (the “Authorized Target
\nRepresentative<\/strong>“). For the purposes of this Agreement, any consent or
\napproval with respect to any Consent Matter given by the Authorized Target
\nRepresentative to an Authorized Zellers Representative from time to time, by
\nemail or other form of written communication (which email or other communication
\nshall clearly reference this Section 7.6), shall constitute written consent of
\nTarget Canada for all purposes with respect to such Consent Matter.<\/p>\n<\/p>\n

(2) Section 7.6(2) of the Disclosure Letter
\nlists each Lease (if any) that requires Zellers to deliver notice or otherwise
\ntake steps in order to extend or renew the term of such Lease after the
\nExecution Date and prior to December 31, 2011, and the last date (the
\n“Renewal Notice Expiration Date<\/strong>“) by which such notice must be
\ngiven or such steps taken. Target Canada shall elect by Notice given to Zellers
\nno later than 30 days (or 14 days, with respect to Leases with a Renewal Notice
\nExpiration Date prior to February 28, 2011) prior to the Renewal Notice
\nExpiration Date as to whether the Lease is a Subject Lease and if so, whether
\nTarget Canada wishes to have the term extended or renewed. Failing delivery of
\nTarget Canada153s Notice as aforesaid, Zellers may elect whether or not to renew
\nor extend such Lease in its discretion, and in no event will Zellers have any
\nliability to Target or Target Canada if such Notice is not delivered.<\/p>\n<\/p>\n

(3) From and after the Execution Date, to and
\nincluding the Second Tranche Closing Date, Zellers will use its commercially
\nreasonable efforts to provide to Target Canada (a) a copy of each Default Notice
\nrelating to the Leased Properties within two Business Days of receipt by Zellers
\nor any Affiliate of Zellers of such Default Notice, and (b) a copy of each
\nnotice of default or claimed default sent by Zellers to any Landlord within two
\nBusiness Days of the date any such notice is sent.<\/p>\n<\/p>\n

(4) The terms of this Section 7.6 do not
\napply in respect of any Lease which Target Canada or Target notifies Zellers
\nwill not be a Subject Lease.<\/p>\n

\n

37<\/p>\n

\n

<\/p>\n

Section 7.7<\/strong> Zellers Entity Cooperation.<\/strong>\n<\/p>\n<\/p>\n

(1) Zellers, HBC and their Affiliates (each,
\na “Zellers Entity<\/strong>“) currently own, lease, ground lease or hold
\nother similar interests in one or more of the developments in which a Subject
\nLeased Property was or is located (each, a “Subject
\nDevelopment<\/strong>“).<\/p>\n<\/p>\n

(2) Zellers and HBC, on behalf of each
\nZellers Entity, agree to fully cooperate, subject to the
\nallocation of costs set out in Section 7.7(2)(h), in order to allow Target
\nCanada, Target, any Designee permitted under Section 2.7 and any of their
\nrespective Affiliates (each, a “Target Entity<\/strong>“), to enter,
\noperate, develop, remodel and\/or redevelop each Subject Development for any uses
\nwhich are consistent with a first class retail shopping centre in Canada,
\nincluding a Target discount department store (which store may include, pharmacy,
\nrestaurant and food sales operations without restriction as to product types or
\nsize of areas devoted to such items) as is typically operated, from time to
\ntime, in the United States or Canada (the “Permitted Use<\/strong>“).
\nZellers and HBC will cause each Zellers Entity on its own behalf and on behalf
\nof those claiming, by, through and under such Zellers Entity, with respect to a
\nSubject Development only:<\/p>\n<\/p>\n

(a) to modify, waive, release and terminate
\nall use restrictions and use exclusives benefiting or enforceable by the Zellers
\nEntity that would limit or prohibit the operation of any Permitted Use by a
\nTarget Entity.<\/p>\n<\/p>\n

(b) to consent to the temporary reduction,
\ncessation or reasonable modification of operations of the Target Entity at any
\nSubject Leased Property so as to allow for the remodelling, development or
\nredevelopment of such Subject Leased Property which consent shall be given
\nwithout such Zellers Entity availing itself of any rights in connection with
\nsuch consent, including a reduction of rent, right to cease operations, right of
\ntermination or any other similar provision, if such consent relates to any
\nSubject Development;<\/p>\n<\/p>\n

(c) to grant all consents and approvals for
\nthe remodelling, developing or redeveloping the interior of any building
\n(provided that any change to the location or size of such building shall be
\nsubject to the provisions of Section 7.7(2)(e)) located or to be located on or
\nwithin a Subject Development;<\/p>\n<\/p>\n

(d) to grant all consents and approvals for
\nthe remodelling, developing or redeveloping the exterior elevations of any
\nbuilding (including building signage, branding, architectural details and
\nclosure of entrances to the Target Entity153s building) located or to be located
\non or within a Subject Development (provided that any change to the location or
\nsize of such building shall be subject to the provisions of Section 7.7(2)(e)),
\nas well as any appurtenances immediately adjacent to the Target Entity153s
\nbuilding (e.g., sidewalks, landscaping and loading docks), but not other common
\nareas;<\/p>\n<\/p>\n

(e) to grant all consents and approvals for
\nremodelling, developing or redeveloping any Subject Development (including the
\nrelocation or any change in the size of any building) and any freestanding
\nsignage; provided however, that notwithstanding the foregoing, the Zellers
\nEntities shall have no obligation under this Section 7.7(2)(e) to (i) incur any
\nDamages, liability, costs or expenses from a<\/p>\n

\n

38<\/p>\n

\n

<\/p>\n

third party claim (other than those contemplated to be incurred by a Zellers
\nEntity pursuant to Section 7.7(2)(h)); (ii) take or to refrain from taking any
\naction, or to consent, approve, support or withhold objection to any matter or
\nthing, which would or could reasonably be expected to result in Damages,
\nliability, costs or expenses to any Zellers Entity from a third party claim
\n(other than those contemplated to be incurred by a Zellers Entity pursuant to
\nSection 7.7(2)(h)), in connection with the breach of any Laws or any
\nEncumbrances existing as of the Execution Date by or to which a Zellers Entity
\nis a party or to which it is subject, or which affects a Subject Development; or
\n(iii) take or to refrain from taking any action, or to consent, approve, support
\nor withhold objection to any matter or thing which would, or could reasonably be
\nexpected to, materially adversely affect the use, operation, signage, parking
\nrights in any “primary parking field”, access to common areas, full pedestrian
\nand vehicular access to all existing internal and external roadways and walkways
\nof any Bay store or the business conducted therein (clauses (i), (ii) and
\n(iii) are collectively, the “Approval Restrictions<\/strong>“). If any
\nApproval Restrictions do exist under item (ii) above, each Zellers Entity will
\nuse its commercially reasonable efforts (without payment of consideration or
\nrepayment of debt) to (a) obtain the consent from any Person benefiting from
\nsuch Approval Restriction and\/or (b) allow for the requested co-operation of the
\nZellers Entity to be given in accordance with this Section 7.7;<\/p>\n<\/p>\n

(f) to join in applications for all
\npermits, variances, special uses, licenses or authorizations deemed necessary or
\ndesirable by the Target Entity in connection with remodelling, development or
\nredevelopment of the Subject Leased Property for the foregoing purposes, and to
\nthe extent such request is in compliance with Section 7.7(2)(e), the balance of
\nany Subject Development; provided however, that no Zellers Entity shall have any
\nobligation to join in any of the foregoing to the extent that such item would
\nexpose such Zellers Entity to Damages, liability, costs or expenses except to
\nthe extent the foregoing relate to the Zellers Entity153s authority to issue such
\nauthorization or the Target Entity agrees to protect the Zellers Entity with
\nrespect to risks through an indemnity or other arrangement satisfactory to
\nZellers;<\/p>\n<\/p>\n

(g) not to seek, request or demand any charge
\nor concession from any Target Entity or any other third party in connection with
\nfulfilling its obligations under this Section 7.7, except as set forth in
\nSection 7.7(2)(h); and<\/p>\n<\/p>\n

(h) for each of the first 10 locations
\nselected by any Target Entity (on an aggregate basis for all Target Entities)
\nfor cooperation by any Zellers Entity under this Section 7.7, such Zellers
\nEntity shall be responsible and pay for all of the out of pocket costs incurred
\nby such Zellers Entity in connection with any requests for cooperation made by
\nsuch Target Entity relating to the initial redevelopment of such location by the
\nTarget Entity. Thereafter, all requests for cooperation by any Target Entity
\nrelating to (i) each additional location, or (ii) to the extent unrelated to the
\ninitial redevelopment, each of the initial 10 locations, the related Zellers
\nEntity and the Target Entity shall each be responsible for paying 50% of the out
\nof pocket costs incurred by such Zellers Entity with respect to any such
\nrequests, and the Target Entity shall reimburse the Zellers Entity for its share
\nof such costs<\/p>\n

\n

39<\/p>\n

\n

<\/p>\n

in accordance with arrangements to be made between the related Target Entity
\nand the Zellers Entity each acting reasonably.<\/p>\n<\/p>\n

(3) Target Canada acknowledges that five
\nSubject Developments (which are the following: Devonshire Mall, Windsor; Square
\nOne, Mississauga; Centrepoint Mall, North York; Les Promenades, St Bruno; and
\ndowntown Winnipeg, Manitoba) held by Zellers Entity Affiliates are subject to an
\nexisting Mortgage in favour of GE Capital Canada Finance Inc. which may be
\nbreached by the actions contemplated under Sections 7.7(2)(a) through
\n(d) above. The remaining Subject Developments are not subject to any other
\nmaterial restrictions relating to such actions under any Mortgage known to
\nZellers relating to the Subject Development as of the Execution Date. If the
\nZellers Entity reasonably determines that such a breach will occur, then the
\nZellers Entity will use its commercially reasonable efforts (without payment of
\nconsideration or repayment of debt) to (i) obtain the consent from the Mortgage
\nholder benefiting from the Approval Restriction in Section 7.7(2)(e)(ii) and\/or
\n(ii) allow for the requested co-operation of the Zellers Entity to be given in
\naccordance with this Section 7.7.<\/p>\n<\/p>\n

(4) So as to allow each Target Entity to
\nconfirm a Zellers Entity153s compliance with the provisions of this Section 7.7
\nprior to commencing any of the above activities, each Zellers Entity will, upon
\na request of a Target Entity, enter into reasonable written documentation
\nevidencing its agreement with respect to all approvals, consents and other
\nrequests of such Target Entity with respect to such contemplated location prior
\nto the acquisition by such party.<\/p>\n<\/p>\n

(5) Zellers and HBC, on behalf of each
\nZellers Entity, each agree that no Zellers Entity will subordinate its interest
\n(or further restrict its rights to comply with the provisions of this
\nSection 7.7) in any Subject Development to any future encumbrance unless such
\nZellers Entity receives a written non-disturbance agreement from the holder of
\nsuch encumbrance with respect to the provisions of this Section 7.7.<\/p>\n<\/p>\n

(6) The obligations of Zellers, HBC and each
\nZellers Entity pursuant to this Section 7.7 shall be binding upon the successors
\nand assigns of each such Zellers Entity, including each successor owner of the
\nZellers Entity153s interest in the Subject Development to which such obligations
\nmay now or in the future relate. Such obligations shall bind and benefit, as
\nthe case may require, the heirs, legal representatives, assigns and successors
\nof the respective parties, and all covenants, conditions and agreements
\ncontained in this Section 7.7 shall be construed (to the extent permitted by
\nLaws) as covenants running with the land with respect to each Subject
\nDevelopment. Without limiting the generality of the foregoing, each Zellers
\nEntity shall, at its sole cost and expense (a) inform in writing each successor,
\nassign and purchaser of each Subject Development of the provisions of this
\nSection 7.7, and (b) cause each such successor, assign and purchaser to assume
\nin writing the obligations of this Section 7.7.<\/p>\n<\/p>\n

(7) Zellers and HBC, on behalf of each
\nZellers Entity, each agree that upon the request of any Target Entity, it shall
\nexecute, or cause the relevant Zellers Entity to execute, to the extent
\npermitted by Laws (with such recordation being at the sole cost of such Target
\nEntity), a recordable memorandum evidencing (i) the agreements contained in this
\nSection 7.7 which may (at the Target Entity153s option and cost) be registered on
\ntitle in the<\/p>\n

\n

40<\/p>\n

\n

applicable real estate records and (ii) all actions taken by such Zellers
\nEntity pursuant to this Section 7.7.<\/p>\n<\/p>\n

(8) Notwithstanding anything to the contrary
\nin this Agreement, the obligations of each Zellers Entity and Target Entity
\nunder this Section 7.7 shall commence on the Execution Date and expire on that
\ndate that is 10 years after the Second Tranche Closing Date.<\/p>\n<\/p>\n

ARTICLE 8
\nCONDITIONS OF CLOSING<\/strong><\/p>\n

\n

Section 8.1<\/strong> Conditions for the Benefit of Target and
\nTarget Canada.<\/strong><\/p>\n<\/p>\n

The assignment and transfer of the Subject Leases and the payment of the
\napplicable portion of the Purchase Price are subject to the following conditions
\nbeing satisfied on or prior to the relevant Closing Date, which conditions are
\nfor the exclusive benefit of Target Canada and Target and may be waived, in
\nwhole or in part, by Target in its sole discretion:<\/p>\n<\/p>\n

(a) Truth of Representations and
\nWarranties<\/strong>.<\/p>\n<\/p>\n

(i) The representations and warranties of
\nZellers contained in this Agreement other than the representations and
\nwarranties contained in Sections 5.1(g), 5.1(h) and 5.1(i) must be true and
\ncorrect in all material respects as of the relevant Closing Date with the same
\nforce and effect as if such representations and warranties were made on and as
\nof such date. However, (A) any such representations or warranties relating to
\nSubject Leases as of the First Tranche Closing Date need only be true and
\ncorrect in all material respects as they relate to the First Tranche Subject
\nLeases, (B) any such representations or warranties relating to Subject Leases as
\nof the Second Tranche Closing Date need only be true and correct in all material
\nrespects as they relate to the Second Tranche Subject Leases, (C) if any such
\nrepresentation and warranty is qualified by materiality, it must be true and
\ncorrect in all respects after giving effect to such qualification and (D) if any
\nsuch representation and warranty speaks only as of a specific date it only needs
\nto be true and correct as of that date.<\/p>\n<\/p>\n

(ii) The failure of the representations and
\nwarranties of Zellers contained in Sections 5.1(g), 5.1(h) and 5.1(i) (without
\nregard, in the case of the representations and warranties contained in Sections
\n5.1(i)(iii), 5.1(i)(vii), and 5.1(i)(viii), to any qualification to such
\nrepresentations and warranties made in the Disclosure Letter) to be true and
\ncorrect in all material respects as of the relevant Closing Date shall not
\naffect 100 or more Leases designated at any time on (even if later removed from)
\nthe First Tranche Selection List or the Second Tranche Selection List in the
\naggregate for all Closing Dates. However, (A) any such representations or
\nwarranties relating to Subject Leases as of the First Tranche Closing Date need
\nonly be true and correct in all material respects as they relate to the First
\nTranche Subject Leases, (B) any such representations or warranties relating to
\nSubject Leases as of the Second Tranche Closing Date need only be true and
\ncorrect in all material respects as they relate to the Second<\/p>\n

\n

41<\/p>\n

\n

<\/p>\n

Tranche Subject Leases, (C) if any such representation and warranty is
\nqualified by materiality, it must be true and correct in all respects after
\ngiving effect to such qualification, and (D) if any such representation and
\nwarranty speaks only as of a specific date it only needs to be true and correct
\nas of that date.<\/p>\n<\/p>\n

(iii) Target Canada must receive a certificate
\nof a senior officer of Zellers as to the matters in this Section 8.1(a).<\/p>\n<\/p>\n

(b) Performance of
\nCovenants<\/strong>. Zellers must have fulfilled, or complied with, in all
\nmaterial respects, all covenants contained in this Agreement to be fulfilled or
\ncomplied with by it at or prior to the relevant Closing Date (except for any
\nsuch covenants requiring Zellers to use commercially reasonable or similar
\nefforts), and Target Canada must receive a certificate of a senior officer of
\nZellers to that effect.<\/p>\n<\/p>\n

(c) Competition Act
\nApproval<\/strong>. The Competition Act Approval must have been obtained.<\/p>\n<\/p>\n

(d) No Legal Action.<\/strong> No
\naction, proceeding, order or notice will have been made, issued or delivered by
\nany Governmental Entity prohibiting a material portion of the transactions
\ncontemplated by this Agreement.<\/p>\n<\/p>\n

(e) Release of Monetary
\nLiens<\/strong>. Target shall have received evidence reasonably satisfactory to
\nit of the release of any Monetary Liens on Zellers153 leasehold interest in any of
\nthe First Tranche Subject Leased Properties (as of the First Tranche Closing
\nDate) or the Second Tranche Subject Leased Properties (as of the Second Tranche
\nClosing Date), except that, with respect to any Monetary Lien under clause
\n(3) of the definition of Monetary Lien, Target shall have received evidence
\nreasonably satisfactory to it of the payment of the obligation underlying such
\nMonetary Lien or such underlying obligation shall be the subject of an
\nadjustment under Section 3.3.<\/p>\n<\/p>\n

Section 8.2<\/strong> Conditions for the Benefit of
\nZellers.<\/strong><\/p>\n<\/p>\n

The assignment and transfer of the Subject Leases and the payment of the
\napplicable portion of the Purchase Price are subject to the following conditions
\nbeing satisfied on or prior to the relevant Closing Date, which conditions are
\nfor the exclusive benefit of Zellers and may be waived, in whole or in part, by
\nZellers in its sole discretion:<\/p>\n<\/p>\n

(a) Truth of Representations and
\nWarranties<\/strong>. The representations and warranties of each of Target
\nCanada and Target contained in this Agreement must be true and correct in all
\nmaterial respects as of the relevant Closing Date with the same force and effect
\nas if such representations and warranties had been made on and as of such date.
\nHowever, if a representation and warranty is qualified by materiality, it must
\nbe true and correct in all respects after giving effect to such qualification.
\nZellers must receive a certificate of a senior officer of each of Target Canada
\nand Target to the matters in this paragraph.<\/p>\n

\n

42<\/p>\n

\n

<\/p>\n

(b) Performance of
\nCovenants<\/strong>. Each of Target Canada and Target must have fulfilled or
\ncomplied with all covenants contained in this Agreement to be fulfilled or
\ncomplied with by it at or prior to the relevant Closing Date (except for any
\nsuch covenants requiring Target or Target Canada to use commercially reasonable
\nor similar efforts), and Zellers must receive a certificate of a senior officer
\nof each of Target Canada and Target to that effect.<\/p>\n<\/p>\n

(c) Competition Act
\nApproval.<\/strong> The Competition Act Approval must have been obtained.<\/p>\n<\/p>\n

(d) No Legal Action<\/strong>. No
\naction, proceeding, order or notice will have been made, issued or delivered by
\nany Governmental Entity prohibiting a material portion of the transactions
\ncontemplated by this Agreement.<\/p>\n<\/p>\n

(e) Tax Registration.<\/strong>
\nTarget Canada will be duly registered under subdivision (d) of Division V of
\nPart IX of the Excise Tax Act<\/em> (Canada) with respect to goods and
\nservice tax and harmonized sales tax and, where applicable, under Division I of
\nChapter VIII of Title I of An Act Respecting the Quebec Sales Tax<\/em>, and
\nits registration numbers will have been provided to Zellers prior to the First
\nTranche Closing Date.<\/p>\n<\/p>\n

ARTICLE 9
\nCLOSING<\/strong><\/p>\n

\n

Section 9.1<\/strong> Date, Time and Place of
\nClosing.<\/strong><\/p>\n<\/p>\n

The completion of the transaction of purchase and sale contemplated by this
\nAgreement will take place at the offices of Stikeman Elliott LLP, Suite 5300,
\nCommerce Court West, Toronto, Ontario, at 10:00 a.m. (Toronto time) on each
\nClosing Date or at such other place, on such other date and at such other time
\nas Zellers and Target Canada may agree to in writing.<\/p>\n<\/p>\n

Section 9.2<\/strong> Zellers153 Closing Deliveries.<\/strong>\n<\/p>\n<\/p>\n

On each Closing Date Zellers shall deliver or cause to be delivered to Target
\nCanada the following documents (other than the Brand Waiver, which shall only be
\ndelivered on the First Tranche Closing Date), executed by Zellers or such other
\nnecessary Persons where applicable:<\/p>\n<\/p>\n

(a) (i) an assignment and assumption agreement
\nwith respect to each of the relevant Subject Leases which Target Canada has not
\nidentified for assignment to a Designee, substantially in the form attached as
\nSection 9.2(a) of the Disclosure Letter (the “Lease Assignment and
\nAssumption Agreement<\/strong>“), and (ii) a Designee Assignment and Assumption
\nAgreement with respect to each of the relevant Subject Leases which Target
\nCanada has identified for assignment to a Designee;<\/p>\n<\/p>\n

(b) the Subleases with respect to the relevant
\nSubject Leased Properties;<\/p>\n<\/p>\n

(c) a certificate of a duly authorized
\nofficer of Zellers certifying: (i) the constating documents and by-laws of
\nZellers; (ii) resolutions of the directors of Zellers<\/p>\n

\n

43<\/p>\n

\n

<\/p>\n

authorizing this Agreement and the consummation of the transactions
\ncontemplated by this Agreement; (iii) the incumbency and signatures of the
\nofficers of Zellers executing this Agreement; and (iv) the matters set forth in
\nSection 8.1(a) and Section 8.1(b);<\/p>\n<\/p>\n

(d) a certificate of a duly authorized officer
\nof HBC certifying: (i) the constating documents and by-laws of HBC;
\n(ii) resolutions of the directors of HBC authorizing this Agreement and its
\nobligations under this Agreement; (iii) the incumbency and signatures of the
\nofficers of HBC executing this Agreement;<\/p>\n<\/p>\n

(e) an agreement waiving exclusivity by
\nZellers and HBC, on their own behalf and on behalf of their Affiliates, with
\nrespect to brands licensed to or controlled by Zellers and agreeing not to
\nenforce by any means any of their current trademarks against any trademarks used
\nby, applied for, or registered to Target, in the form attached as
\nSection 9.2(e) of the Disclosure Letter (the “Brand Waiver<\/strong>“);\n<\/p>\n<\/p>\n

(f) such documentation, including
\ndeclarations and certificates, as may be customarily required by any title
\ninsurer (provided Zellers and any officer thereof shall not be required to
\nprovide any such documentation to the extent same expands the scope of any
\nrepresentation or covenant furnished to Target Canada in this Agreement or which
\ncreates personal liability to the title insurer) and shall execute the
\nstatements required of a vendor in s. 50(22) of the Planning Act<\/em>
\n(Ontario) and similar legislation in other provinces (to the extent Zellers does
\nnot have knowledge contrary to such statements);<\/p>\n<\/p>\n

(g) an undertaking by Zellers to re-adjust
\nthe Final Adjustments in accordance with Section 3.3;<\/p>\n<\/p>\n

(h) all Books and Records of Zellers and its
\nAffiliates in their possession or control relating to the relevant Subject
\nLeased Properties or the relevant Subject Leases; provided that, subject to
\nZellers153 execution of a confidentiality agreement in a form reasonably
\nacceptable to Zellers and Target Canada with respect to such Books and Records,
\nZellers shall have the right to retain a copy of any Books and Records for use
\nin compliance with Laws or in connection with investigations or litigation; and\n<\/p>\n<\/p>\n

(i) all other documents which Target
\nCanada reasonably requests to give effect to the transactions contemplated by
\nthis Agreement.<\/p>\n<\/p>\n

Section 9.3<\/strong> Target Canada153s Closing
\nDeliveries.<\/strong><\/p>\n<\/p>\n

On each Closing Date Target Canada shall deliver or cause to be delivered to
\nZellers the following documents (other than the Brand Waiver, which shall only
\nbe delivered on the First Tranche Closing Date), executed by Target Canada or
\nsuch other necessary Persons (other than Zellers or Affiliate of Zellers that is
\ntransferring Pharmacy Records hereunder) where applicable:<\/p>\n<\/p>\n

(a) a wire transfer in satisfaction of the
\nFirst Tranche Purchase Price or the Second Tranche Purchase Price, as
\napplicable, in accordance with Section 3.2;<\/p>\n

\n

44<\/p>\n

\n

<\/p>\n

(b) (i) a Lease Assignment and Assumption
\nAgreement with respect to each of the relevant Subject Leases which Target
\nCanada has not identified for assignment to a Designee, and (ii) a Designee
\nAssignment and Assumption Agreement, duly executed by the applicable Designee
\n(and not by Target Canada), with respect to each of the relevant Subject Leases
\nwhich Target Canada has identified for assignment to a Designee;<\/p>\n<\/p>\n

(c) the Subleases with respect to the
\nrelevant Subject Leased Properties duly executed by Target Canada, or if
\napplicable, its Designees;<\/p>\n<\/p>\n

(d) a certificate of a duly authorized
\nofficer of Target Canada certifying: (i) the constating documents and by-laws of
\nTarget Canada; (ii) resolutions of the directors of Target Canada authorizing
\nthis Agreement and the consummation of the transactions contemplated by Target
\nCanada; (iii) the incumbency and signatures of the officers of Target Canada
\nexecuting this Agreement; and (iv) the matters set forth in Section 8.2(a) and
\nSection 8.2(b);<\/p>\n<\/p>\n

(e) a certificate of a duly authorized
\nofficer of Target certifying: (i) the constating documents and by-laws of
\nTarget; (ii) resolutions of the directors of Target authorizing this Agreement
\nand its obligations under this Agreement; (iii) the incumbency and signatures of
\nthe officers of Target executing this Agreement; and (iv) the matters set forth
\nin Section 8.2(a) and Section 8.2(b);<\/p>\n<\/p>\n

(f) an undertaking by Target Canada to
\nre-adjust the Final Adjustments in accordance with Section 3.3;<\/p>\n<\/p>\n

(g) a Goods and Services Tax, Harmonized
\nSales Tax and Quebec Sales Tax Declaration and Indemnity in the form specified
\nin Section 9.3(g) of the Disclosure Letter; and<\/p>\n<\/p>\n

(h) all other documents which Zellers
\nreasonably requests to give effect to the transactions contemplated by this
\nAgreement.<\/p>\n<\/p>\n

Section 9.4<\/strong> Closing Procedures.<\/strong><\/p>\n<\/p>\n

(1) Subject to satisfaction or waiver by the
\nrelevant Party of the conditions of closing, on each Closing Date, Zellers will
\ndeliver the instruments of conveyance described in Section 9.2 to Target Canada
\nand upon such delivery Target Canada will pay or satisfy the Purchase Price in
\naccordance with Section 3.2. The assignment of a Subject Lease will take effect
\nat the Effective Time on the applicable Closing Date or Delivery Date.<\/p>\n<\/p>\n

(2) Zellers and Target Canada covenant and
\nagree to enter into and to cause their respective solicitors to enter into a
\nclosing arrangement as is customary for each province providing for the delivery
\nof closing documents, the electronic submission or physical submission of
\ndocuments for registration, as applicable, and other details relating to closing
\nand registration.<\/p>\n

\n

45<\/p>\n

\n

<\/p>\n

\n

ARTICLE 10
\nTERMINATION<\/strong><\/p>\n

\n

Section 10.1<\/strong> Termination Rights.<\/strong><\/p>\n<\/p>\n

This Agreement may, by notice in writing, be terminated on the Outside Date:\n<\/p>\n<\/p>\n

(a) by Target Canada if any of the conditions
\nin Section 8.1 have not been satisfied in respect of the First Tranche Subject
\nLeased Properties as of the Outside Date and Target Canada has not waived such
\nconditions at or prior to the First Tranche Closing Date, provided that Target
\nCanada may not terminate this Agreement under this Section 10.1(a) to the extent
\nthat such conditions have not been satisfied as a result of the failure of
\nTarget or Target Canada to perform any one or more of its obligations or
\ncovenants under this Agreement to be performed at or prior to the First Tranche
\nClosing Date; or<\/p>\n<\/p>\n

(b) by Zellers if any of the conditions in
\nSection 8.2 have not been satisfied as in respect of the First Tranche Subject
\nLeased Properties as of the Outside Date and Zellers has not waived such
\ncondition at or prior to the First Tranche Closing Date, provided that Zellers
\nmay not terminate this Agreement under this Section 10.1(b) to the extent that
\nsuch conditions have not been satisfied as a result of a failure of Zellers or
\nHBC to perform any one or more of its obligations or covenants under this
\nAgreement to be performed at or prior to the First Tranche Closing
\nDate.<\/strong><\/p>\n<\/p>\n

Section 10.2<\/strong> Effect of Termination.<\/strong><\/p>\n<\/p>\n

If a Party waives compliance with any of the conditions, obligations or
\ncovenants contained in this Agreement, the waiver will be without prejudice to
\nany of its rights in the event of non-fulfilment, non-observance or
\nnon-performance of any other representation, warranty, condition, obligation or
\ncovenant in whole or in part or to its rights to recover Damages for any
\nincorrectness in or breach of any representation, warranty, condition,
\nobligation or covenant in whole or in part.<\/p>\n<\/p>\n

ARTICLE 11
\nINDEMNIFICATION<\/strong><\/p>\n

\n

Section 11.1<\/strong> Liability for Representations and
\nWarranties.<\/strong><\/p>\n<\/p>\n

The representations and warranties contained in this Agreement and the
\ncertificates delivered pursuant to Section 8.1(a) and Section 8.2(a) continue in
\nfull force and effect for a period of one year after the relevant Closing Date,
\nexcept that:<\/p>\n<\/p>\n

(a) the representations and warranties set
\nout in Section 5.1(a), Section 5.1(b), Section 5.1(e), Section 5.1(f),
\nSection 6.1(a), Section 6.1(b), and Section 6.1(e) and the corresponding
\nrepresentations and warranties set out in the certificates delivered pursuant to
\nSection 8.1(a) and Section 8.2(a) survive and continue in full force and effect
\nwithout limitation of time;<\/p>\n

\n

46<\/p>\n

\n

<\/p>\n

(b) the representations and warranties set
\nout in Section 5.1(k) (and the corresponding representations and warranties set
\nout in the certificates to be delivered pursuant to Section 8.1(a)), will
\nsurvive and continue in full force and effect until 6 months after the
\nexpiration of the period during which any tax assessment may be issued by a
\nGovernmental Entity in respect of any taxation year to which such
\nrepresentations and warranties extend. Such period will be determined without
\nregard to any consent, waiver, agreement or other document, made or filed after
\nthe Closing Date that extends the period during which a Governmental Entity may
\nissue a tax assessment. A tax assessment includes any assessment, reassessment
\nor other form of recognized document assessing liability for Taxes under Laws;\n<\/p>\n<\/p>\n

(c) the representations and warranties set
\nout in Section 5.1(h) and Section 5.1(i) (and the corresponding representations
\nand warranties set out in the certificates to be delivered pursuant to
\nSection 8.1(a)) as they relate to a Subject Lease will survive and continue in
\nfull force and effect until the date that is one year after the relevant Vacancy
\nDate for such Subject Lease; and<\/p>\n<\/p>\n

(d) there is no limitation as to time for
\nclaims against a Party based on fraudulent misrepresentation by that Party.<\/p>\n<\/p>\n

Section 11.2<\/strong> Indemnification in Favour of Target and
\nTarget Canada.<\/strong><\/p>\n<\/p>\n

Subject to Section 11.5, Zellers will indemnify and save Target and Target
\nCanada and their respective directors, officers, employees, agents and
\nshareholders harmless from and against, and will pay for, all Damages suffered
\nby, imposed upon or asserted against any of them as a result of, in respect of,
\nconnected with, or arising out of, under, or pursuant to:<\/p>\n<\/p>\n

(a) any failure of any representation or
\nwarranty in Article 5 to be true and correct as of the Execution Date or to be
\ntrue and correct in all material respects as of the relevant Closing Date (or,
\nwith respect to any such representation or warranty that speaks only as of a
\nspecific date, any failure of such representation or warranty to be true and
\ncorrect as of such date), in each case for which a notice of claim under
\nSection 11.6 has been provided to Zellers within the applicable time period
\nspecified in Section 11.1;<\/p>\n<\/p>\n

(b) any failure of Zellers to perform or
\nfulfil any of its covenants or obligations under this Agreement;<\/p>\n<\/p>\n

(c) the use or occupancy of any Subject
\nLeased Property on or prior to the applicable Closing Date;<\/p>\n<\/p>\n

(d) the ownership, management or control of
\nthe operations conducted on any Subject Leased Property on or prior to the
\nrelevant Closing Date by Zellers (or any of its Affiliates, subtenants or
\nlicensees) where such ownership, management or control results in the release of
\ncontaminants for which Target or Target Canada is found liable by a Governmental
\nEntity; and<\/p>\n<\/p>\n

(e) any Excluded Liabilities.<\/p>\n

\n

47<\/p>\n

\n

<\/p>\n

Section 11.3<\/strong> Indemnification in Favour of
\nZellers.<\/strong><\/p>\n<\/p>\n

Subject to Section 11.5, Target Canada will indemnify and save Zellers and
\nits directors, officers, employees, agents and shareholders harmless from and
\nagainst, and will pay for, all Damages suffered by, imposed upon or asserted
\nagainst any of them as a result of, in respect of, connected with, or arising
\nout of, under, or pursuant to:<\/p>\n<\/p>\n

(a) any failure of any representation or
\nwarranty in Article 6 to be true and correct as of the Execution Date or to be
\ntrue and correct in all material respects as of the relevant Closing Date (or,
\nwith respect to any such representation or warranty that speaks only as of a
\nspecific date, any failure of such representation or warranty to be true and
\ncorrect as of such date), in each case for which a notice of claim under
\nSection 11.6 has been provided to Target Canada within the applicable time
\nperiod specified in Section 11.1;<\/p>\n<\/p>\n

(b) any failure of Target Canada to perform
\nor fulfil any of its covenants or obligations under this Agreement;<\/p>\n<\/p>\n

(c) the Assumed Liabilities;<\/p>\n<\/p>\n

(d) the use or occupancy of any Subject
\nLeased Property after the applicable Closing Date, subject to the obligations of
\nZellers under the applicable Sublease; and<\/p>\n<\/p>\n

(e) the ownership, management or control of
\nthe operations conducted on any of the Subject Leased Properties after the
\nrelevant Closing Date by Target Canada (or any of its Affiliates, subtenants or
\nlicensees) where such ownership, management or control results in the release of
\ncontaminants for which Zellers is found liable by a Governmental Entity, subject
\nto the obligations of Zellers under the applicable Sublease.<\/p>\n<\/p>\n

Section 11.4<\/strong> Bulk Sales and Retail Sales Tax
\nWaiver.<\/strong><\/p>\n<\/p>\n

In respect of the transactions contemplated by this Agreement, Target Canada
\nand the applicable Designee or Designees shall not require Zellers to comply, or
\nto assist Target Canada or the applicable Designee or Designees to comply, with
\nthe requirements of (a) the Bulk Sales Act<\/em> (Ontario), if applicable, or
\n(b) section 6 of the Retail Sales Tax Act<\/em> (Ontario) or any equivalent
\nor corresponding provisions under any other applicable legislation.
\nNotwithstanding the foregoing, Zellers shall indemnify and save harmless Target,
\nTarget Canada and the applicable Designee or Designees and their respective
\ndirectors, officers, employees, agents and shareholders, on an after-Tax basis,
\nfrom and against, and will pay for, all Damages suffered by, imposed upon or
\nasserted against any of them as a result of, in respect of, connected with, or
\narising out of, under or pursuant to such non-compliance.<\/p>\n<\/p>\n

Section 11.5<\/strong> Limitations.<\/strong><\/p>\n<\/p>\n

(1) A Party has no obligation or liability
\nfor indemnification or otherwise with respect to any representation or warranty
\nmade by such Party in this Agreement, or the certificates delivered pursuant to
\nSection 8.1(a) and Section 8.2(a), after the end of the applicable<\/p>\n

\n

48<\/p>\n

\n

<\/p>\n

time period specified in Section 11.1, except for claims relating to the
\nrepresentations and warranties that the Party has been notified of prior to the
\nend of the applicable time period.<\/p>\n<\/p>\n

(2) A Party has no liability for, or
\nobligation with respect to, any punitive or aggravated damages, except to the
\nextent awarded to a third party in a Third Party Claim.<\/p>\n<\/p>\n

(3) A Party has no obligation to make any
\npayment for Damages for indemnification or otherwise with respect to the matters
\ndescribed in Section 11.2 or Section 11.3, as applicable:<\/p>\n<\/p>\n

(a) until the total of all Damages with
\nrespect to such matters exceeds $18 million, after which such Party shall be
\nliable to make payment for all such Damages including such $18 million; and<\/p>\n<\/p>\n

(b) to the extent such Damages exceed a
\nmaximum of $450 million;<\/p>\n<\/p>\n

provided that the forgoing limitations shall not apply to Damages with
\nrespect to any breach of covenant, Excluded Liabilities, Assumed Liabilities or
\nany of the matters referred to in Section 11.1(a), Section 11.1(b),
\nSection 11.1(d), Section 11.2(c), Section 11.2(d), Section 11.3(d) or
\nSection 11.3(e).<\/p>\n<\/p>\n

(4) A Party has no obligation to make any
\npayment for Damages for indemnification or otherwise to the extent such Damages
\nexceed a maximum of $1,825,000,000.<\/p>\n<\/p>\n

Section 11.6<\/strong> Notification.<\/strong><\/p>\n<\/p>\n

(1) If a Third Party Claim is instituted or
\nasserted against an Indemnified Party, the Indemnified Party will promptly
\nnotify the Indemnifying Party in writing of the Third Party Claim. The notice
\nmust specify in reasonable detail, the identity of the Person making the Third
\nParty Claim and, to the extent known, the nature of the Damages and the
\nestimated amount needed to investigate, defend, remedy or address the Third
\nParty Claim.<\/p>\n<\/p>\n

(2) If an Indemnified Party becomes aware of
\na Direct Claim, the Indemnified Party will promptly notify the Indemnifying
\nParty in writing of the Direct Claim.<\/p>\n<\/p>\n

(3) Notice to an Indemnifying Party under
\nthis Section 11.6 of a Direct Claim or a Third Party Claim is assertion of a
\nclaim for indemnification against the Indemnifying Party under this Agreement.
\nUpon receipt of such notice, the provisions of Section 11.9 will apply to any
\nThird Party Claim and the provisions of Section 11.8 will apply to any Direct
\nClaim.<\/p>\n<\/p>\n

Section 11.7<\/strong> Limitation Periods.<\/strong><\/p>\n<\/p>\n

Notwithstanding the provisions of the Limitations Act, 2002<\/em>
\n(Ontario) or any other statute, a proceeding in respect of a claim for
\nindemnification or otherwise arising from any breach or inaccuracy of any
\nrepresentation or warranty in this Agreement may be commenced in accordance with
\nthis Agreement. Any applicable limitation period is extended or varied to the
\nfull extent permitted by law to give effect to this Section 11.7.<\/p>\n

\n

49<\/p>\n

\n

<\/p>\n

Section 11.8<\/strong> Procedure for Direct Claims.<\/strong>\n<\/p>\n<\/p>\n

(1) Following receipt of notice of a Direct
\nClaim, the Indemnifying Party has 60 days to investigate the Direct Claim and
\nrespond in writing. For purposes of the investigation, the Indemnified Party
\nshall make available to the Indemnifying Party the information relied upon by
\nthe Indemnified Party to substantiate the Direct Claim, together with such other
\ninformation as the Indemnifying Party may reasonably request.<\/p>\n<\/p>\n

(2) If the Indemnifying Party disputes the
\nvalidity or amount of the Direct Claim, the Indemnifying Party shall provide
\nwritten notice of the dispute to the Indemnified Party within the 60-day period
\nspecified in Section 11.8(1). The dispute notice must describe in reasonable
\ndetail the nature of the Indemnifying Party153s dispute. During the 30-day period
\nimmediately following receipt of a dispute notice by the Indemnified Party, the
\nIndemnifying Party and the Indemnified Party shall attempt in good faith to
\nresolve the dispute. If the Indemnifying Party and the Indemnified Party fail to
\nresolve the dispute within that 30-day time period, the Indemnified Party is
\nfree to pursue all rights and remedies available to it, subject to this
\nAgreement. If the Indemnifying Party fails to respond in writing to the Direct
\nClaim within the 60-day period specified in Section 11.8(1), the Indemnifying
\nParty is deemed to have rejected the Direct Claim, in which event the
\nIndemnified Party is free to pursue all rights remedies available to it, subject
\nto this Agreement.<\/p>\n<\/p>\n

Section 11.9<\/strong> Procedure for Third Party
\nClaims.<\/strong><\/p>\n<\/p>\n

(1) Upon receiving notice of a Third Party
\nClaim, the Indemnifying Party may participate in the investigation and defence
\nof the Third Party Claim and may also elect to assume the investigation and
\ndefence of the Third Party Claim.<\/p>\n<\/p>\n

(2) In order to assume the investigation and
\ndefence of a Third Party Claim, the Indemnifying Party must give the Indemnified
\nParty written notice of its election within 30 days of Indemnifying Party153s
\nreceipt of notice of the Third Party Claim and acknowledge that the Third Party
\nClaim is within the scope of its obligation to indemnify the Indemnified Party
\nin accordance with and subject to the terms of this Article 11.<\/p>\n<\/p>\n

(3) If the Indemnifying Party assumes the
\ninvestigation and defence of a Third Party Claim:<\/p>\n<\/p>\n

(a) the Indemnifying Party will pay for all
\ncosts and expenses of the investigation and defence of the Third Party Claim
\nexcept that the Indemnifying Party will not, so long as it diligently conducts
\nsuch defence, be liable to the Indemnified Party for any fees of other counsel
\nor any other expenses with respect to the defence of the Third Party Claim,
\nincurred by the Indemnified Party after the date the Indemnifying Party validly
\nexercised its right to assume the investigation and defence of the Third Party
\nClaim; provided, however, that if the defendants named in the Third Party Claim
\ninclude both the Indemnified Party and the Indemnifying Party, and the
\nIndemnified Party shall have reasonably concluded that there are legal defences
\nor rights available to it that are in actual or potential conflict with those
\navailable to the Indemnifying Party, then the Indemnified Party shall have the
\nright to select one law firm to act, at the Indemnifying Party153s expense, as
\nseparate counsel on behalf of the Indemnified Party; and<\/p>\n

\n

50<\/p>\n

\n

(b) the Indemnifying Party will reimburse the
\nIndemnified Party for all costs and expenses incurred by the Indemnified Party
\nin connection with the investigation and defence of the Third Party Claim prior
\nto the date the Indemnifying Party validly exercised its right to assume the
\ninvestigation and defence of the Third Party Claim.<\/p>\n<\/p>\n

(4) If the Indemnified Party undertakes the
\ndefence of the Third Party Claim, the Indemnifying Party will not be bound by
\nany compromise or settlement of the Third Party Claim effected without the
\nconsent of the Indemnifying Party (which consent may not be unreasonably
\nwithheld or delayed).<\/p>\n<\/p>\n

(5) The Indemnifying Party will not be
\npermitted to compromise and settle or to cause a compromise and settlement of a
\nThird Party Claim without the prior written consent of the Indemnified Party,
\nwhich consent may not be unreasonably withheld or delayed, unless:<\/p>\n<\/p>\n

(a) the terms of the compromise and
\nsettlement require only the payment of money for which the Indemnified Party is
\nentitled to full indemnification under this Agreement; and<\/p>\n<\/p>\n

(b) the Indemnified Party is not required to
\nadmit any wrongdoing, take or refrain from taking any action, acknowledge any
\nrights of the Person making the Third Party Claim or waive any rights that the
\nIndemnified Party may have against the Person making the Third Party Claim.<\/p>\n<\/p>\n

(6) The Indemnified Party and the
\nIndemnifying Party agree to keep the other fully informed of the status of any
\nThird Party Claim and any related proceedings. If the Indemnifying Party
\nassumes the investigation and defence of a Third Party Claim, the Indemnified
\nParty will, at the request and expense of the Indemnifying Party, use its
\nreasonable efforts to make available to the Indemnifying Party, on a timely
\nbasis, those employees whose assistance, testimony or presence is necessary to
\nassist the Indemnifying Party in investigating and defending the Third Party
\nClaim. The Indemnified Party shall, at the request and expense of the
\nIndemnifying Party, make available to the Indemnifying Party, or its
\nrepresentatives, on a timely basis all documents, records and other materials in
\nthe possession, control or power of the Indemnified Party, reasonably required
\nby the Indemnifying Party for its use solely in defending any Third Party Claim
\nwhich it has elected to assume the investigation and defence of. The
\nIndemnified Party shall cooperate on a timely basis with the Indemnifying Party
\nin the defence of any Third Party Claim.<\/p>\n<\/p>\n

Section 11.10<\/strong> Remedies.<\/strong><\/p>\n<\/p>\n

(1) Except as provided in this Section 11.10,
\nthe indemnities provided in this Agreement constitute the only remedy of a Party
\nagainst another Party in the event of any breach of a representation, warranty,
\ncovenant or agreement of such Party contained in this Agreement.<\/p>\n<\/p>\n

(2) The Parties may exercise their rights of
\ntermination in Section 10.1 and their rights of indemnity in Section 13.3.<\/p>\n

\n

51<\/p>\n

\n

<\/p>\n

\n

(3) Target and Target Canada may set off
\nagainst any amounts payable by either or both of them to Zellers or HBC under
\nthis Agreement, any amounts owing to either or both of them by Zellers, HBC or
\nany of their Affiliates under this Agreement or any Ancillary Agreement,
\nincluding any amounts so owing under any indemnification obligations, up to a
\nmaximum aggregate amount to be so set off of $90 million.<\/p>\n<\/p>\n

(4) The Parties acknowledge that the failure
\nto comply with a covenant or obligation contained in this Agreement may give
\nrise to irreparable injury to a Party inadequately compensable in damages.
\nAccordingly, a Party may seek to enforce the performance of this Agreement by
\ninjunction or specific performance upon application to a court of competent
\njurisdiction without proof of actual damage (and without requirement of posting
\na bond or other security).<\/p>\n<\/p>\n

(5) Each of the Parties expressly waives and
\nrenounces any other remedies whatsoever, whether at law or in equity, which it
\nwould otherwise be entitled to as against any other Party.<\/p>\n<\/p>\n

Section 11.11<\/strong> One Recovery.<\/strong><\/p>\n<\/p>\n

An Indemnified Party is not entitled to double recovery for any claims even
\nthough they may have resulted from the breach, inaccuracy or failure to perform
\nof more than one of the representations, warranties, covenants and obligations
\nof the Indemnifying Party in this Agreement.<\/p>\n<\/p>\n

Section 11.12<\/strong> Duty to Mitigate.<\/strong><\/p>\n<\/p>\n

Nothing in this Agreement in any way restricts or limits the general
\nobligation at Law of an Indemnified Party to mitigate any loss which it may
\nsuffer or incur by reason of the breach, inaccuracy or failure to perform of any
\nrepresentation, warranty, covenant or obligation of the Indemnifying Party under
\nthis Agreement. If any claim can be reduced by any recovery, settlement or
\notherwise under or pursuant to any insurance coverage, or pursuant to any claim,
\nrecovery, settlement or payment by or against any other Person, the Indemnified
\nParty shall take all appropriate steps to enforce such recovery, settlement or
\npayment and the amount of any Damages of the Indemnified Party will be reduced
\nby the amount of insurance proceeds actually recovered by the Indemnified Party,
\nnet of any out-of-pocket costs incurred in obtaining such recovery and net of
\nthe present value of any increase in insurance premiums reasonably attributable
\nto such recovery.<\/p>\n<\/p>\n

Section 11.13<\/strong> Adjustment to Purchase Price.<\/strong>\n<\/p>\n<\/p>\n

Any payment made by Zellers or HBC to Target Canada under this Article 11
\nshall be deemed to be a dollar-for-dollar decrease in the Purchase Price. A
\npayment made by Target Canada or Target under this Article 11 shall be deemed to
\nbe a dollar-for-dollar increase in the Purchase Price.<\/p>\n

\n

52<\/p>\n

\n

<\/p>\n

\n

ARTICLE 12
\nOTHER COVENANTS<\/strong><\/p>\n

\n

Section 12.1<\/strong> Guarantee by HBC.<\/strong><\/p>\n<\/p>\n

(1) HBC hereby unconditionally, absolutely,
\ncontinuingly and irrevocably guarantees to Target Canada and the Indemnified
\nParties listed in Section 11.2 the timely payment, if any, and performance by
\nZellers (and its permitted assignees) of its obligations and liabilities arising
\nunder or pursuant to this Agreement and the Ancillary Agreements whether direct
\nor indirect, absolute or contingent, now or hereafter existing, or due or to
\nbecome due (collectively, the “Zellers Liabilities”<\/strong>).<\/p>\n<\/p>\n

(2) Target Canada shall not be required to
\nprosecute collection or seek to enforce or resort to any remedies against
\nZellers or any other Person liable to Target Canada or any such Indemnified
\nParties on account of Zellers Liabilities or any guaranty thereof. HBC153s
\nliabilities shall in no way be impaired, affected, reduced or released by reason
\nof (i) the failure or delay by Target Canada or any of such Indemnified Parties
\nto do or take any of the actions or things described in this Agreement, (ii) the
\nvoluntary or involuntary liquidation, dissolution, sale or other disposition of
\nall or substantially all the assets of Zellers (or its permitted assignees) or
\nthe marshalling of assets and liabilities, receivership, insolvency, bankruptcy,
\nassignment for the benefit of creditors, reorganization, arrangement,
\ncomposition with creditors or readjustment of, or other similar proceedings or
\nany other inability to pay or perform affecting, Zellers (or its permitted
\nassignees) or any of its respective assets, or (iii) any allegation concerning,
\nor contest of the legality or validity of, the indemnification obligations under
\nthis Agreement.<\/p>\n<\/p>\n

(3) HBC hereby expressly waives the right to
\ninterpose all substantive and procedural defences of the law of guaranty,
\nindemnification and suretyship, except the defences of prior payment or prior
\nperformance.<\/p>\n<\/p>\n

(4) Without limiting the generality of
\nSection 12.1(1), Section 12.1(2) or Section 12.1(3), the liability of HBC under
\nthis Section 12.1 shall not be deemed to have been waived, released, discharged,
\nimpaired or affected by (a) the granting of any indulgence or extension of time
\nto Zellers as subtenant under any Sublease, (b) the assignment of any Sublease,
\nor the subletting of the premises under any Sublease by Zellers as subtenant
\nunder any Sublease, with or without Target Canada153s consent, (c) the expiration
\nof the term of any Sublease, (d) if Zellers, as subtenant under any Sublease,
\nholds over beyond the term of the Sublease, (e) the rejection, disaffirmance or
\ndisclaimer of any Sublease by any party in any action or proceeding, (f) any
\ndefect or invalidity of any Sublease, or (g) any amendment, supplement or
\nreplacement of any Sublease. The liability of HBC shall not be affected by any
\nrepossession, re-entry or re-letting of any Subject Leased Property by Target
\nCanada as sublandlord under any Sublease.<\/p>\n<\/p>\n

(5) In addition to the guarantee specified in
\nSection 12.1(1), HBC shall indemnify and save Target Canada and the Indemnified
\nParties listed in Section 11.2 harmless from and against all Damages it or they
\nmay suffer as a result or consequence of any inability by Target Canada or such
\nIndemnified Parties to recover the ultimate balance due or<\/p>\n

\n

53<\/p>\n

\n

<\/p>\n

\n

remaining due or remaining unpaid to Target Canada and such Indemnified
\nParties in respect of Zellers Liabilities.<\/p>\n<\/p>\n

Section 12.2<\/strong> Target Guarantee.<\/strong><\/p>\n<\/p>\n

(1) Target hereby unconditionally,
\nabsolutely, continuingly and irrevocably guarantees to Zellers, HBC, and the
\nIndemnified Parties listed in Section 11.3 the timely payment, if any, and
\nperformance by Target Canada (and its permitted assignees, including any
\nDesignee pursuant to Section 2.7, but excluding each Investment Grade Designee
\nwho enters into a Designee Assignment and Assumption Agreement or other
\nassumption document pursuant to Section 2.7 (the
\n“Assignees<\/strong>“)), of its obligations and liabilities arising under
\nor pursuant to this Agreement and the Ancillary Agreements, whether direct or
\nindirect, absolute or contingent, now or hereafter existing, or due or to become
\ndue (collectively, the “Target Canada Liabilities”<\/strong>).<\/p>\n<\/p>\n

(2) Zellers shall not be required to
\nprosecute collection or seek to enforce or resort to any remedies against Target
\nCanada, any Assignee or any other Person liable to Zellers or any such
\nIndemnified Parties on account of Target Canada Liabilities or any guaranty
\nthereof. Target153s liabilities shall in no way be impaired, affected, reduced or
\nreleased by reason of (i) the failure or delay by Zellers or any of such
\nIndemnified Parties to do or take any of the actions or things described in this
\nAgreement, (ii) the voluntary or involuntary liquidation, dissolution, sale or
\nother disposition of all or substantially all the assets of Target Canada (or
\nAssignees153) or the marshalling of assets and liabilities, receivership,
\ninsolvency, bankruptcy, assignment for the benefit of creditors, reorganization,
\narrangement, composition with creditors or readjustment of, or other similar
\nproceedings or any other inability to pay or perform affecting, Target Canada
\n(or its Assignees) or any of its respective assets, or (iii) any allegation
\nconcerning, or contest of the legality or validity of, the indemnification
\nobligations under this Agreement.<\/p>\n<\/p>\n

(3) Target hereby expressly waives the right
\nto interpose all substantive and procedural defences of the law of guaranty,
\nindemnification and suretyship, except the defences of prior payment or prior
\nperformance.<\/p>\n<\/p>\n

(4) In addition to the guarantee specified in
\nSection 12.2(1), Target shall indemnify and save Zellers, HBC and the
\nIndemnified Parties listed in Section 11.3 harmless from and against all Damages
\nit or they may suffer as a result or consequence of any inability by Zellers,
\nHBC or such Indemnified Parties to recover the ultimate balance due or remaining
\ndue or remaining unpaid to Zellers, HBC and such Indemnified Parties in respect
\nof Target Canada Liabilities.<\/p>\n<\/p>\n

Section 12.3<\/strong> Further Assurances.<\/strong><\/p>\n<\/p>\n

From time to time before and after the relevant Closing Date, each Party
\nwill, at the request of any other Party, execute and deliver such additional
\nconveyances, transfers, documents, instruments and other assurances as may be
\nreasonably required to effectively consummate the transactions contemplated by
\nthis Agreement and carry out the intent of this Agreement.<\/p>\n

\n

54<\/p>\n

\n

<\/p>\n

\n

ARTICLE 13
\nMISCELLANEOUS<\/strong><\/p>\n

\n

Section 13.1<\/strong> Notices.<\/strong><\/p>\n<\/p>\n

Any notice, direction or other communication given regarding the matters
\ncontemplated by this Agreement or any Ancillary Agreement (each a
\n“Notice”<\/strong>) must be in writing, sent by personal delivery,
\ncourier or facsimile (but not by electronic mail) and addressed:<\/p>\n<\/p>\n

(a) to Zellers and HBC at:<\/p>\n<\/p>\n

401 Bay Street
\nSuite 500
\nToronto, Ontario M5H 2Y4<\/p>\n<\/p>\n\n\n\n\n\n
\n

Attention:<\/p>\n<\/td>\n

\n<\/td>\n\n

General Manager, Legal Services<\/p>\n<\/td>\n<\/tr>\n

\n

Telephone:<\/p>\n<\/td>\n

\n<\/td>\n\n

(416) 861-6932<\/p>\n<\/td>\n<\/tr>\n

\n

Facsimile:<\/p>\n<\/td>\n

\n<\/td>\n\n

(416) 861-4200<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

with a copy (which shall not constitute notice) to:<\/p>\n<\/p>\n

Hudson153s Bay Trading Company, LP
\n3 Manhattanville Road, 2nd Floor
\nPurchase, New York 10577<\/p>\n<\/p>\n\n\n\n\n\n
\n

Attention:<\/p>\n<\/td>\n

\n<\/td>\n\n

Vice President and Secretary<\/p>\n<\/td>\n<\/tr>\n

\n

Telephone:<\/p>\n<\/td>\n

\n<\/td>\n\n

(914) 272-8067<\/p>\n<\/td>\n<\/tr>\n

\n

Facsimile:<\/p>\n<\/td>\n

\n<\/td>\n\n

(914) 272-8088<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

with a copy (which shall not constitute notice) to:<\/p>\n<\/p>\n

Stikeman Elliott LLP
\n5300 Commerce Court West
\n199 Bay Street
\nToronto, Ontario M5L 1B9<\/p>\n<\/p>\n\n\n\n\n\n
\n

Attention:<\/p>\n<\/td>\n

\n<\/td>\n\n

Ian Putnam<\/p>\n<\/td>\n<\/tr>\n

\n

Telephone:<\/p>\n<\/td>\n

\n<\/td>\n\n

(416) 869-5506<\/p>\n<\/td>\n<\/tr>\n

\n

Facsimile:<\/p>\n<\/td>\n

\n<\/td>\n\n

(416) 947-0866<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(b) to Target Canada and Target at:<\/p>\n<\/p>\n

Target Corporation<\/p>\n

1000 Nicollet Mall, TPS-2670<\/p>\n

Minneapolis, MN 55403<\/p>\n<\/p>\n\n\n\n
\n

Attention:<\/p>\n<\/td>\n

\n<\/td>\n\n

Timothy R. Baer, Executive Vice-President, General Counsel,<\/p>\n

Sean D. Kelly, Senior Group Counsel, and<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\n

55<\/p>\n

\n

<\/p>\n

\n\n\n\n\n\n
\n<\/td>\n\n<\/td>\n\n

Alexander G. Tselos, Senior Counsel, Real Estate<\/p>\n<\/td>\n<\/tr>\n

\n

Telephone:<\/p>\n<\/td>\n

\n<\/td>\n\n

(612) 696-6908<\/p>\n<\/td>\n<\/tr>\n

\n

Facsimile:<\/p>\n<\/td>\n

\n<\/td>\n\n

(612) 696-6909<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

with a copy (which shall not constitute notice) to:<\/p>\n<\/p>\n

Osler, Hoskin & Harcourt LLP
\nBox 50, Suite 6100
\n1 First Canadian Place
\nToronto, Ontario M5X 1B8<\/p>\n<\/p>\n\n\n\n\n\n
\n

Attention:<\/p>\n<\/td>\n

\n<\/td>\n\n

Terry Burgoyne and Heather McKean<\/p>\n<\/td>\n<\/tr>\n

\n

Telephone:<\/p>\n<\/td>\n

\n<\/td>\n\n

(416) 362-2111<\/p>\n<\/td>\n<\/tr>\n

\n

Facsimile:<\/p>\n<\/td>\n

\n<\/td>\n\n

(416) 862-6666<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

with a further copy (which shall not constitute notice) to:<\/p>\n<\/p>\n

Faegre & Benson LLP
\n2200 Wells Fargo Center
\n90 South Seventh Street
\nMinneapolis, Minnesota 55402<\/p>\n<\/p>\n

Attention: Michael A. Stanchfield and John R. Wheaton
\nTelephone: (612) 766-7000
\nFacsimile: (612) 766-1600<\/p>\n<\/p>\n

A Notice is deemed to be given and received (i) if sent by personal delivery
\nor same-day courier, on the date of delivery if it is a Business Day and the
\ndelivery was made prior to 4:00 p.m. (local time in place of receipt) and
\notherwise on the next Business Day, (ii) if sent by overnight courier, on the
\nnext Business Day, or (iii) if sent by facsimile, on the Business Day following
\nthe date of confirmation of transmission by the originating facsimile. A Party
\nmay change its address for service from time to time by providing a Notice in
\naccordance with the foregoing. Any subsequent Notice must be sent to the Party
\nat its changed address. Any element of a Party153s address that is not
\nspecifically changed in a Notice will be assumed not to be changed.<\/p>\n<\/p>\n

Section 13.2<\/strong> Time of the Essence.<\/strong><\/p>\n<\/p>\n

Time is of the essence in this Agreement.<\/p>\n<\/p>\n

Section 13.3<\/strong> Brokers.<\/strong><\/p>\n<\/p>\n

Zellers shall indemnify and save harmless Target Canada and Target from and
\nagainst any and all Damages and Third Party Claims whatsoever for any fee,
\ncommission or other remuneration payable or alleged to be payable to any broker,
\nagent or other intermediary who purports to act or have acted for Zellers or any
\nof its Affiliates. Target Canada shall indemnify and save harmless Zellers and
\nHBC from and against any and all Damages and Third Party Claims whatsoever for
\nany fee, commission or other remuneration payable or alleged to be payable to
\nany broker, agent or other intermediary who purports to act or have acted for
\nTarget Canada or any of its Affiliates. These indemnities are not subject to
\nany of the limitations set out in Article 11.<\/p>\n

\n

56<\/p>\n

\n

<\/p>\n

\n

Section 13.4<\/strong> Announcements.<\/strong><\/p>\n<\/p>\n

No press release, public statement or announcement or other public disclosure
\nwith respect to this Agreement or the transactions contemplated in this
\nAgreement may be made except with the prior written consent and approval of
\nTarget, or except if required by Law or a Governmental Entity. Where the public
\ndisclosure is required by Law or a Governmental Entity, the Party required to
\nmake the public disclosure (if not Target) will use its commercially reasonable
\nefforts to obtain the approval of Target as to the form, nature and extent of
\nthe disclosure. The initial announcements of the transactions contemplated by
\nthis Agreement will be made in the form of attached as Section 13.4 of the
\nDisclosure Letter.<\/p>\n<\/p>\n

Section 13.5<\/strong> Third Party Beneficiaries.<\/strong>\n<\/p>\n<\/p>\n

Except as provided in Section 7.7, Zellers, HBC, Target and Target Canada
\nintend that this Agreement will not benefit or create any right or cause of
\naction directly in favour of any Person, other than the Parties; provided
\nhowever, that the foregoing shall not limit or prohibit (i) Target or Target
\nCanada from pursuing any and all claims, damages, remedies and rights provided
\nhereunder on behalf of itself or for the benefit of any Designee or other
\nassignee of Target Canada or (ii) any Designee from directly pursuing any rights
\nunder any Ancillary Agreements to which such Designee is a party. Except for
\nthe Indemnified Parties, no Person, other than the Parties, shall be entitled to
\ndirectly rely on the provisions of this Agreement in any action, suit,
\nproceeding, hearing or other forum. To the extent required by law to give full
\neffect to these direct rights, Target Canada agrees and acknowledges that it is
\nacting as agent and\/or as trustee of its Indemnified Parties. The Parties
\nreserve their right, subject to unanimous agreement among the Parties, to vary
\nor rescind the rights, granted by or under this Agreement to any Person who is
\nnot a Party, at any time and in any way whatsoever, without notice to or consent
\nof that Person, including any Indemnified Party.<\/p>\n<\/p>\n

Section 13.6<\/strong> Expenses.<\/strong><\/p>\n<\/p>\n

Except as otherwise expressly provided in this Agreement, each Party will pay
\nfor its own costs and expenses incurred in connection with this Agreement and
\nthe transactions contemplated by this Agreement. The fees and expenses referred
\nto in this Section are those which are incurred in connection with the
\nnegotiation, preparation, execution and performance of this Agreement and the
\nAncillary Agreements, and the transactions contemplated by this Agreement and
\nthe Ancillary Agreements, including the fees and expenses of legal counsel,
\ninvestment advisers and accountants.<\/p>\n<\/p>\n

Section 13.7<\/strong> Amendments.<\/strong><\/p>\n<\/p>\n

This Agreement may only be amended, supplemented or otherwise modified by
\nwritten agreement signed by Zellers and Target.<\/p>\n<\/p>\n

Section 13.8<\/strong> Waiver.<\/strong><\/p>\n<\/p>\n

No waiver of any of the provisions of this Agreement will constitute a waiver
\nof any other provision (whether or not similar). No waiver will be binding
\nunless executed in writing by the Party to be bound by the waiver. A Party153s
\nfailure or delay in exercising any right under this Agreement will not operate
\nas a waiver of that right. A single or partial exercise of any right will<\/p>\n

\n

57<\/p>\n

\n

<\/p>\n

\n

not preclude a Party from any other or further exercise of that right or the
\nexercise of any other right.<\/p>\n<\/p>\n

Section 13.9<\/strong> Non-Merger.<\/strong><\/p>\n<\/p>\n

Except as otherwise expressly provided in this Agreement, the covenants,
\nrepresentations and warranties shall not merge on and shall survive each of the
\nrelevant Closing Dates.<\/p>\n<\/p>\n

Section 13.10<\/strong> Subdivision Laws.<\/strong><\/p>\n<\/p>\n

This Agreement shall only be effective to create an interest in the Subject
\nLeased Properties if the subdivision control provisions of the Planning
\nAct<\/em> (Ontario) and similar Laws governing the subdivision or severance of
\nreal property in other provinces are complied with on or before the relevant
\nClosing Date in respect of such Subject Leased Properties. If necessary at any
\ntime and from time to time, Zellers shall forthwith apply for and use reasonable
\ncommercial efforts to obtain all necessary consents under such Laws as required
\nin order to carry out the transactions contemplated by this Agreement in respect
\nof the Subject Leased Properties including, without limitation:<\/p>\n<\/p>\n

(i) any necessary consents that were or
\nare required in respect of any Subject Lease and any transfer occurring prior to
\nthe Execution Date; and<\/p>\n<\/p>\n

(ii) any necessary consents that were or are
\nrequired to allow Target Canada to obtain the benefit of the full term
\n(including renewal rights) in excess of any reduced term that is deemed to be
\nincorporated in the Subject Lease in the event a required consent was not
\nobtained;<\/p>\n<\/p>\n

on or before the relevant Closing, and comply with any and all conditions
\nimposed in respect of such consent, at its sole cost and expense. Nothing in
\nthis Section 13.10, including non-compliance with the Planning Act<\/em>
\n(Ontario) and similar Laws governing subdivision or severance of real property
\nin other provinces, will in any way affect Target Canada153s obligation to
\ncomplete the transactions contemplated by this Agreement, including paying the
\nentire Purchase Price as contemplated by Section 3.1 without deduction or
\nabatement of any kind; provided, however, that if such a consent will not
\nreasonably be obtained by the relevant Closing Date, Target or Target Canada may
\ntake such interest, subject to such consent being obtained by Target or Target
\nCanada at its expense following the relevant Closing Date or select another
\nSubject Lease by notice given to Zellers.<\/p>\n<\/p>\n

Section 13.11<\/strong> Entire Agreement.<\/strong><\/p>\n<\/p>\n

This Agreement, together with Ancillary Agreements, constitutes the entire
\nagreement between the Parties with respect to the transactions contemplated by
\nthis Agreement and supersedes all prior agreements, understandings, negotiations
\nand discussions, whether oral or written, of the Parties. There are no
\nrepresentations, warranties, covenants, conditions or other agreements, express
\nor implied, collateral, statutory or otherwise, between the Parties in
\nconnection with the subject matter of this Agreement, except as specifically set
\nforth in this Agreement or the Ancillary Agreements. The Parties have not
\nrelied and are not relying on any other information, discussion or understanding
\nin entering into and completing the transactions contemplated by this Agreement.\n<\/p>\n

\n

58<\/p>\n

\n

<\/p>\n

\n

Section 13.12<\/strong> Successors and Assigns.<\/strong><\/p>\n<\/p>\n

(1) This Agreement becomes effective only
\nwhen executed by Zellers, HBC and Target. After that time, it is binding on and
\nenures to the benefit of Zellers, HBC and Target, and Target Canada upon
\ncompliance with Section 1.12, and their respective successors and permitted
\nassigns.<\/p>\n<\/p>\n

(2) Other than as contemplated in
\nSection 13.12 and Section 2.7, neither this Agreement nor any of the rights or
\nobligations under this Agreement are assignable or transferable by any Party
\nwithout the prior written consent of the other Parties.<\/p>\n<\/p>\n

Section 13.13<\/strong> Severability.<\/strong><\/p>\n<\/p>\n

If, in any jurisdiction, any provision of this Agreement or its application
\nto any Party or circumstance is restricted, prohibited or unenforceable, such
\nprovision shall, as to such jurisdiction, be ineffective only to the extent of
\nsuch restriction, prohibition or unenforceability without invalidating the
\nremaining provisions of this Agreement and without affecting the validity or
\nenforceability of such provision in any other jurisdiction or without affecting
\nits application to other Parties or circumstances.<\/p>\n<\/p>\n

Section 13.14<\/strong> Governing Law.<\/strong><\/p>\n<\/p>\n

(1) This Agreement is governed by and
\ninterpreted and enforced in accordance with the laws of the Province of Ontario
\nand the federal laws of Canada applicable therein.<\/p>\n<\/p>\n

(2) Each Party irrevocably attorns and
\nsubmits to the exclusive jurisdiction of the Ontario courts situated in the City
\nof Toronto and waives objection to the venue of any proceeding in such court or
\nthat such court provides an inconvenient forum.<\/p>\n<\/p>\n

Section 13.15<\/strong> Counterparts.<\/strong><\/p>\n<\/p>\n

This Agreement may be executed in any number of counterparts (including
\ncounterparts by facsimile) and all such counterparts taken together shall be
\ndeemed to constitute one and the same instrument.<\/p>\n<\/p>\n

[Remainder of page intentionally left blank.
\nSignature page follows.]<\/em><\/strong><\/p>\n

\n

59<\/p>\n

\n

<\/p>\n

\n

IN WITNESS WHEREOF<\/strong> the Parties have executed this
\nTransaction Agreement.<\/p>\n<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n<\/td>\n\n

ZELLERS INC.<\/strong><\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n<\/td>\n<\/tr>\n
\n<\/td>\n\n

By:<\/p>\n<\/td>\n

\n

\/s\/ Richard Baker<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n

Authorized Signing Officer<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n<\/td>\n<\/tr>\n
\n<\/td>\n\n

By:<\/p>\n<\/td>\n

\n

\/s\/ Francis Casale<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n

Authorized Signing Officer<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n<\/td>\n<\/tr>\n
\n<\/td>\n\n

Dated:<\/p>\n<\/td>\n

\n

1\/12\/2011<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n<\/td>\n<\/tr>\n
\n<\/td>\n\n

HUDSON153S BAY COMPANY<\/strong><\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n<\/tr>\n
\n<\/td>\n\n

By:<\/p>\n<\/td>\n

\n

\/s\/ Richard Baker<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n

Authorized Signing Officer<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n<\/td>\n<\/tr>\n
\n<\/td>\n\n

By:<\/p>\n<\/td>\n

\n

\/s\/ Francis Casale<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n

Authorized Signing Officer<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n<\/td>\n<\/tr>\n
\n<\/td>\n\n

Dated:<\/p>\n<\/td>\n

\n

1\/12\/2011<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n<\/td>\n<\/tr>\n
\n<\/td>\n\n

TARGET CORPORATION<\/strong><\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n<\/td>\n<\/tr>\n
\n<\/td>\n\n

By:<\/p>\n<\/td>\n

\n

\/s\/ Gregg Steinhafel<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n

Authorized Signing Officer<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n<\/td>\n<\/tr>\n
\n<\/td>\n\n

Dated:<\/p>\n<\/td>\n

\n

1\/12\/2011<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n<\/tr>\n
\n<\/td>\n\n

TARGET CANADA CO.<\/strong><\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n<\/td>\n<\/tr>\n
\n<\/td>\n\n

By:<\/p>\n<\/td>\n

\n

\/s\/ John Griffith<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n

Authorized Signing Officer<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n<\/td>\n\n<\/td>\n<\/tr>\n
\n<\/td>\n\n

Dated:<\/p>\n<\/td>\n

\n

1\/12\/2011<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\n

\n

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