Karstadt: Publication of Key Terms of the Master Lease Agreement

On 23 June 2010, the majority of Highstreet's shareholders and lenders agreed in principle to a term sheet relating to an amendment to their lease agreement with Karstadt Warenhaus GmbH. This agreement is subject to final consent by Highstreet and all of its lenders. To date the steering committees of the Senior B, Mezzanine A and Mezzanine B lenders have all publicly endorsed such term sheet. It remains however subject to both a formal vote of the Senior B bondholders at an EGM to be held with three weeks notice as well as consent from the Senior A lenders and Highstreet. Berggruen Holdings has asked the insolvency administrator to extend the termination date of the SPA until 30 July 2010 with the condition that the notice is extended to the bondholders no later than Tuesday, 06 July 2010. Berggruen is hopeful that such notice will be given prior to such time to vote on the approval of the term sheet, a copy of which is attached hereto. As representatives of both the Senior A lenders and Highstreet were present in the meeting of 23 June 2010, Berggruen Holdings is hopeful that they will also ultimately grant their consent.

About Berggruen Holdings

Berggruen Holdings is active worldwide in private investment, real estate and renewable energy. The firm takes a long-term, value-oriented, often contrarian view. It prefers to build organically and through acquisitions, partnering with management, as opposed to quick, opportunistic exits. Over the last 20 years, Berggruen Holdings and related entities have made well over 100 direct investments using its proprietary capital, which allows for longer investment horizons.

KWH Holding GmbH
30 June 2010
Subject to contract

Termsheet for
18th Amendment Agreement to the Master Lease Agreement ("MLA")

between

1.Highstreet Seven B.V. as Lessor,

2.Highstreet A Portfolio GbR as Main Lessor A,

3.Highstreet B Portfolio GbR as Main Lessor B

- Lessor, Main Lessor A and Main Lessor B jointly "Highstreet" -

and

4.Karstadt Warenhaus GmbH

- "KWH"-

1.Competitive Structure of Business Areas

Split of MLA into three agreements (one for sports stores, one for KaDeWe and remainder of MLA for remaining core stores including Oberpollinger) and transfer of agreements for sports stores and premium stores to two entities ("NewCos") which are owned by KWH Holding GmbH, the Purchaser of shares in KWH ("Purchaser"). With regard to Oberpollinger/Munich, option to the benefit of NewCo for a later transfer of Oberpollinger/Munich from agreement on core stores to agreement on KaDeWe.

2.Rent Reduction

Agreement on new aggregate rent, which shall be the greater of (i) minimum rent, or (ii) prior year's minimum rent plus indexation.

2.1Minimum rent

Period

Â

10/2010 to 9/2011

Â

10/2011 to 9/2012

Â

10/2012 to 9/2013

Â

10/2013 to 9/2014

Â

10/2014 to 9/2015

Â

10/2015 to 9/2016

Â

10/2016 to 9/2017

Â

10/2017 to 9/2018

EUR MM

210

212

213

220

225

230

235

240

After 30 September 2018, the minimum rent will be EUR 240 MM (plus indexation, below 2.2, starting at October 2019 on the basis of EUR 240MM pa).

For the period from closing of the Berggruen SPA (as defined below) until the end of the financial year ending September 30, 2010, the minimum rent shall be EUR 210 million p.a.

2.2Indexation

Indexation to remain at 60% of the CPI as laid down in sec. 4 of the 10^th amendment.

2.3 Should a tenant be in default with payment of rent in the amount equal to at least one month's rent under the MLA and such default continues for a period of at least a month, then (subject to a cure period of ten business days after notification by landlord) the landlord shall have the right to terminate the respective lease agreement for good cause and to require the rent for the properties rented under such lease agreement to step up back to the amount laid down in the 15th amendment. Thereby, sec. 2.9 10th amendment is replaced.

3.Reallocation of rent

3.1 The rent shall be allocated in accordance with ANNEX 1 hereto.

3.2 In case of a change of control in respective NewCo (to an entity not affiliated with Purchaser or KWH) within 3 years after effectiveness of 18th amendment to the MLA, rent for sports and / or premium stores of such NewCo listed in table below will step back to rent payable for those stores under 15th amendment with effect as of the change of control. Rent for remaining stores as laid down in no. 2 above will remain unchanged.

4.Tenant Improvements / CapEx

Highstreet will grant a loan, subordinated to third-party debt-financing, interest free, and in the amount of EUR 30 million into Purchaser. Purchaser to represent that the EUR 30 million loan will be exclusively used for tenant improvements and/or CapEx measures.

5.Unconditional Validity of MLA

5.118^th Amendment of MLA shall reflect the binding and unconditional agreement between the parties involved. Amendment shall therefore clarify that (i) all conditions precedents (aufschiebende Bedingungen) for the effectiveness of the MLA and its previous amendments have been fulfilled and (ii) there are no conditions subsequent (auflösende Bedingungen) which may terminate the MLA or parts thereof.

5.2 As an exception to 5.1, rent concessions to stores leased by KWH or any of the NewCos respectively shall be subject to the condition subsequent (i.e. those rent concessions for those tenants shall lapse ex nunc) if and from the time that (new) insolvency proceedings will be opened on the respective entity.

6.Tenant's Easements / Usufruct

Only with regard to new lease agreements on sports stores and premium stores as laid down in the table above under no. 3 and Oberpollinger / Munich and subject to not triggering the waiver of BaFin to Valovis Bank AG with regard to regulatory provisions to be withdrawn or BaFin requiring changes adversely affecting the financing of Highstreet Portfolio A:

6.1 A tenant easement ranking prior to any charges in Section III to be registered.

6.2 Waiver of provision pursuant to which KWH shall grant prior rank to lender whose debt is re-financed by Pfandbriefe (sec. 6.2 and 6.3 15^th amendment).

6.3 Best effort to transfer easements to NewCo, if not newly registered to the benefit of NewCo.

7.Value Preservation Covenant

7.1 No distribution from KWH of assets / value (except for the separation of the sports business and the premium business into the NewCos) that existed as of the closing date of the share purchase agreement, by which the Purchaser acquires shares in KWH ("Berggruen SPA").

7.2 Value preservation covenants that are imposed on Purchaser by Berggruen SPA shall also be granted to Highstreet, in particular

7.2.1 certain restrictions on withdrawing of liquidity or principal assets from KWH until 31 December 2012;

7.2.2 no dividend distributions and withdrawals unless relating to positive equity effects occurring after the closing of the Berggruen SPA (i.e. emergence of insolvency);

7.2.3 no return of injected liquidity (i.e. EUR 65 million) unless insolvency liabilities are fulfilled. Liquidity shall bear PIK-interest of not more than 8% p.a., such PIK not being payable before the loan provided by Highstreet in the amount of EUR 30 million being repaid.

7.3 Within 3 years after effectiveness of 18^th amendment, the following restrictions apply:

7.3.1 Proceeds of Purchaser generated by disposing of shares or other interests in NewCo will be put by Purchaser in escrow as a rent reserve. The escrow will be released at the later of (i) 3 years after effectiveness of the 18^th amendment or (ii) consolidated EBITDA of KWH to be at or above EUR 200 million; in each case unless being used as a security or contributed to KWH for rental payments beforehand. Escrow to be pledged to Lessor.

7.3.2 Dividends of NewCos distributed to Purchaser will be injected into KWH and must not be used to repay initially injected liquidity of EUR 65 million (see no. 7.2.3 above) and not to be distributed within 3 years after closing of Berggruen SPA. It is clarified that such restriction shall not restrict the ability of the KWH to pay dividends from and distribute own profits (provided that no such distribution of dividends or profits shall come from dividends or profits received from the NewCos).

7.4 Loan of Highstreet in the amount of EUR 30 million shall rank in priority to the EUR 65 million (i.e. will rank prior in case of insolvency, without affecting the possibility to have EUR 65 million being repaid absent an insolvency) and be repaid within 17.5 months after funding, unless the obligation in connection with the liquidity in the amount of EUR 65 million of Purchaser is extended by Purchaser in its sole discretion, in which case the obligation in connection with the liquidity in the amount of EUR 65 million shall remain outstanding until the loan of Highstreet has been repaid. If the loan of Highstreet is not repaid within 17.5 months though being due, the guarantee of Berggruen Holdings (see no. 13.4) is to be drawn, which can be triggered by Lessor. To the extent the loan in the amount of EUR 30 million is forwarded from Purchaser to KWH and / or any of the NewCos, such entity shall become a co-borrower under the loan of Highstreet (it being understood that KWH and / or NewCo may repay the loan to Highstreet).

8.No Change of Control

Within 3 years after effectiveness of 18^th amendment, change of control in NewCos only with prior consent of Highstreet and its lenders, not to be unreasonably withheld. Thereafter change of control additionally permissible without consent if purchaser is a qualified buyer, i.e. creditworthy and with sound retail-experience.

9.IP Rights

9.1 Affiliate of Purchaser ("IPCo") will acquire trademark, domain names and similar rights relevant to operate the department store business ("IP Rights"). IPCo shall grant a non-exclusive license to Valovis Bank AG to use the IP Rights in case of a further insolvency and liquidation of KWH and acceleration of the loan granted by Valovis Bank AG to the Master Lessor A (the "Valovis Loan") [and the loan granted by Fleet Street Finance Two p.l.c. to the Master Lessor B (the "FS2 Loan")] for the purpose of securing the continuation of the operation of the properties owned by the Master Lessor A/Master Lessor B also in case of a subsequent insolvency and liquidation of KWH ("IP License"). Such IP License may in any case not restrict NewCos in running the sports and premium stores. The license fee shall be 2.5% of the purchase price paid by IPCo for the IP Rights and be payable upon acceleration of the Valovis Loan/FS2 Loan 9as applicable); the license shall expire two years after the acceleration, unless terminated earlier by Valovis Bank AG/the senior agent under the FS2 Loan.

9.2 In case of any sale, pledge or the like of the IP Rights by IPCo, the acquirer or pledgee shall assume the obligation to honour such sublicense.

9.3 IPCo shall be obliged to grant an IP License to the lenders of the Master Lessor B at the same terms and conditions upon their request with respect to the properties owned by the Master Lessor B.

10.Clarification re. Assignment of Claims

Assignment of claims against sub-lessees / concessionaires from KWH to Lessor remains in place, however clarification that, unless in case of a payment default, (i) potential margin on sub-leasing will remain with KWH, (ii) in due course of business, debit authorization towards sub-lessees remains with KWH.

11.Transfer of Ancillary Rights

Inclusion of those ancillary rights (so-called 6.9-rights deriving from acquisition of properties from Arcandor) into the MLA, which have been (or will be) transferred to Highstreet.

12.Effective Date of 18th Amendment to MLA

18^th Amendment to the MLA shall become effective upon closing of the Berggruen SPA, subject to satisfaction of certain conditions precedent (below no. 13).

13.Conditions Precedents

13.1 Written notification by Lessor to Purchaser that approval of the 18th Amendment of the MLA by the creditors of Highstreet (including approval by supermajority of the Fleet Street Finance Two bondholders regarding the loan provided to the Master Lessor B, Valovis Bank AG regarding the loan provided to the Master Lessor A and unanimous consent of the lenders under the mezzanine facility provided to the parent of the Master Lessors) has been obtained.

13.2 Transfer of all the shares in KWH to Purchaser¹;

13.3 Acquisition of the IP Rights by an affiliate of the Purchaser and grant of an IP License to Valovis.

13.4 Berggruen Holdings to provide a back–to-back guarantee to Purchaser in the amount of EUR 65 million, covering the terms of the Purchaser's commitment under no. 7.4 above, such commitment providing that it may only been withdrawn with the consent of Highstreet;

13.5 confirmation by a professional advisor that Berggruen Holdings is the main investment vehicle of Mr. Nicolas Berggruen.

13.6 EUR 65 million being funded to KWH by Purchaser.

NOTE:Purchaser accepts that agreement on this term sheet is subject to Purchaser disclosing those provisions of the Berggruen SPA to which this term sheet makes reference to.

         Summary of Annex A

Â	Â	Â	Year	Â	Portfolio A	Portfolio B	Total
							Â
			2011		112.7	97.3	210
			2012		113.8	98.2	212
			2013		114.4	98.6	213
			2014		118.1	101.9	220
			2015		120.8	104.2	225
			2016		123.5	106.5	230
			2017		126.2	108.8	235
			2018		128.9	111.1	240
			2019		As above + indexation

¹Note FBD: Closing of the Berggruen SPA may only occur upon unappealable sanctioning of the insolvency plan regarding KWH by the insolvency court and termination of the insolvency proceedings of KWH by the insolvency court.

Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=6349843&lang=en

Contacts:

Contact Information:
Wolfgang Weber-Thedy
WEBER-THEDY Corporate & Financial Communications
[phone]
[e-mail]
Alternative contact: Ute K. Kiehn [e-mail];