Exhibit 4.2


 




 





FIRST SUPPLEMENTAL INDENTURE


 


dated as of May 29, 2008


 


between


 


RITE AID CORPORATION


 


and


 


THE BANK OF NEW YORK TRUST
COMPANY, N.A.


 


as Trustee


 


to the


 


SENIOR DEBT SECURITIES
INDENTURE


 


dated as of May 29, 2008


 


between


 


RITE AID CORPORATION


 


and


 


THE BANK OF NEW YORK TRUST
COMPANY, N.A.


 


as Trustee




 





 


8.5% CONVERTIBLE NOTES DUE 2015




 




















 


THIS FIRST SUPPLEMENTAL
INDENTURE (the “First Supplemental Indenture”), is dated as of May 29,
2008, between Rite Aid Corporation, a Delaware corporation (the “Company”), and
The Bank of New York Trust Company, N.A. (the “Trustee”), as trustee.


 


WHEREAS the Company and the
Trustee have, as of the date hereof, entered into a senior debt securities
indenture (the “Original Indenture”) providing for the issuance by the Company
from time to time of its Securities (as defined in the Original Indenture);


 


WHEREAS Sections 3.01 and 9.01
of the Original Indenture provide that the Company, when authorized by a Board
Resolution, and the Trustee may, without the consent of the Holders of
Securities, enter into one or more supplemental indentures, in form
satisfactory to the Trustee, to establish the form or terms of Securities of
any series permitted by the Indenture;


 


WHEREAS the Company desires to
issue a series of Securities under the Original Indenture, and has duly
authorized the creation and issuance of such Securities under the Original
Indenture, and has duly authorized the execution and delivery of this First
Supplemental Indenture to modify the Original Indenture and to provide certain
additional provisions as hereinafter described;


 


WHEREAS the Company has
requested the Trustee to enter into this First Supplemental Indenture for the
purposes of establishing the terms of the Securities of such series; and


 


WHEREAS all conditions and
requirements of the Original Indenture necessary to make this First
Supplemental Indenture (the Original Indenture, as supplemented by this First
Supplemental Indenture, being hereinafter called the “Indenture”) a valid,
binding and legal instrument in accordance with its terms have been performed
and fulfilled by the parties hereto, and the execution and delivery thereof
have been in all respects duly authorized by the parties hereto.


 


NOW, THEREFORE, THIS FIRST
SUPPLEMENTAL INDENTURE WITNESSETH:


 


That, in order to establish the designation, form, terms and conditions
of, and to authorize the authentication and delivery of, the Notes (as defined
herein), and in consideration of the acceptance of the Notes by the Holders (as
defined in the Original Indenture) thereof and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:


 


1

















 


ARTICLE I


 


Definitions


 


SECTION 1.01. (a) Capitalized
terms used herein and not otherwise defined shall have the respective meanings
assigned to them in the Original Indenture.


 


(b) The rules of
interpretation set forth in the Original Indenture shall be applied hereto as
if set forth in full herein.


 


(c) For all purposes of
this First Supplemental Indenture, except as otherwise expressly provided or
unless the context otherwise requires, the following terms shall have the
following respective meanings (such meanings shall apply equally to both the
singular and plural forms of the respective terms):


 


 “Agent” means any Security Registrar, Paying
Agent or Conversion Agent.


 


“Applicable Procedures” means,
with respect to any transfer or exchange of beneficial ownership interests in a
Global Security, the rules and procedures of the Depositary, in each case
to the extent applicable to such transfer or exchange.


 


“Close of Business” means 5:00 p.m.,
New York City time.


 


“Common Stock” means the common
stock of the Company, par value $1.00 per share, as it exists on the date of
this First Supplemental Indenture, and any shares of any class or classes of
capital stock of the Company resulting from any reclassification or
reclassifications thereof and which have no preference in respect of dividends
or of amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Company and which are not subject to
redemption by the Company; provided, however, that if at any time
there shall be more than one such resulting class, the shares of each such
class then so issuable on conversion of the Notes shall be substantially in the
proportion which the total number of shares of such class resulting from all
such reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.


 


“Current Market Price” of the
Common Stock on any day means the average Sales Prices of a share of Common
Stock over the 10 consecutive Trading Days ending on and including the earlier of
the day in question and the day before the Ex Date with respect to an issuance,
dividend or distribution requiring such computation.


 


“Dollars” means the lawful
currency of the United States of America.


 


“EDGAR” means the Commission’s
Electronic Data Gathering, Analysis and Retrieval system.


 


2

















 


“Ex Date” means the first date
on which shares of Common Stock trade on the applicable exchange or in the
applicable market, regular way, without the right to receive an issuance,
dividend or distribution.


 


“Fundamental Change” means the
occurrence of any of the following events:


 


(1)        any “person” or “group” (as
such terms are used in Sections 13(d) or 14(d) of the Exchange Act or
any successor provisions to either of the foregoing), including any group
acting for the purpose of acquiring, holding, voting or disposing of securities
within the meaning of Rule 13d-5(b)(1) under the Exchange Act,
becomes a “beneficial holder” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of shares of the Company’s capital stock
entitling the person to exercise 50% or more of the total voting power of all
shares of the Company’s capital stock that are entitled to vote generally in
elections of the Company’s directors (for the purposes of this clause (1), such
person or group shall be deemed to beneficially own any voting stock of a
corporation held by any other corporation (the “parent corporation”) so long as
such person or group beneficially owns, directly or indirectly, in the
aggregate a majority of the total voting power of the capital stock entitled to
vote in the election of directors of such other corporation);


 


(2)          the sale, transfer,
assignment, lease, conveyance or other disposition, directly or indirectly, of
all or substantially all the assets of the Company and its Subsidiaries,
considered as a whole (other than a disposition of such assets as an entirety
or virtually as an entirety to a wholly owned Subsidiary) shall have occurred,
or the Company merges, consolidates or amalgamates with or into any other
Person or any other person merges, consolidates or amalgamates with or into the
Company, in any such event pursuant to a transaction in which the outstanding
voting stock is reclassified into or exchanged for cash, securities or other
property, other than any such transaction where:


 


(a)   the outstanding voting stock is reclassified into or exchanged for
other voting stock of the Company or for voting stock of the surviving
corporation; and


 


(b)   the holders of the voting stock of the Company immediately prior
to such transaction own, directly or indirectly, not less than a majority of
the voting stock of the Company or the surviving corporation immediately after
such transaction and in substantially the same proportion as before the
transaction; or


 


(3)        during any period of two
consecutive years commencing after the Issue Date, individuals who at the
beginning of such period constituted 


 


3

















 


                        the
Board of Directors (together with any new directors whose election or
appointment by such Board of Directors or whose nomination for election by the
shareholders of the Company was approved by a vote of not less than
three-fourths of the directors then still in office who were either directors
at the beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a majority of
the Board of Directors then in office; or


 


(4)        the shareholders of the
Company shall have approved any plan of liquidation or dissolution of the
Company; or


 


(5)          if the Common Stock (or
other common stock into which the Notes are then convertible) is (i) not
listed or approved for trading on the New York Stock Exchange, the NASDAQ
Global Select Market, the NASDAQ Global Market or any of their respective
successors or (ii) other than as a result of New York Stock Exchange Rule 123D(3),
suspended from trading for 20 consecutive business days;


 


provided,
however, that a Fundamental Change shall not be deemed to have occurred
pursuant to clause (2) above if at least 90% of the consideration
(excluding cash payments for fractional shares) in the transaction or
transactions constituting the Fundamental Change consists of Publicly Traded
Securities, and as a result of such transaction or transactions the Notes
become convertible into such Publicly Traded Securities.


 


For the avoidance of doubt, any
transaction or event that would constitute a Fundamental Change under both
clauses (1) and (2) in this definition of Fundamental Change shall be
deemed to be governed solely by clause (2) of this definition, including
the provisos thereto.


 


“Issue Date” means May 29,
2008.


 


“Prospectus Supplement” means
the prospectus supplement dated May 22, 2008 to the prospectus dated February 9,
2007, relating to offering and sale of the Notes.


 


“Publicly Traded Securities”
means any common stock traded on the New York Stock Exchange, the Nasdaq Global
Select Market, the Nasdaq Global Market or any of their respective successors.


 


“record date” shall mean, for
the purposes of Section 16.05, with respect to any dividend, distribution
or other transaction or event in which the holders of Common Stock have the
right to receive any cash, securities or other property or in which the Common
Stock (or other applicable security) is exchanged for or converted into any
combination of cash, securities or other property, the date fixed for
determination of holders of Common Stock entitled to receive such cash, 


 


4

















 


securities or
other property (whether such date is fixed by the Board of Directors or by
statute, contract or otherwise).


 


“Sale Price” of the Common
Stock on any date means the closing sale price (or if no closing sale price is
reported, the average of the bid and asked prices or, if more than one such
price in either case, the average of the average bid and the average asked
prices) on that date as reported by the New York Stock Exchange or, if the
Common Stock is not listed on the New York Stock Exchange, on the other
principal U.S. national or regional securities exchange on which the Common
Stock is then traded. The Sale Price will be determined without reference to
after-hours or extended market trading. 
If the Common Stock is not reported by the New York Stock Exchange or a
principal U.S. national or regional securities exchange, the “Sale Price” will
be the last quoted bid price for the Common Stock in the over-the-counter
market on the relevant date as reported by the National Quotation Bureau or
similar organization.  If the Common
Stock is not so quoted, the “Sale Price” will be the average of the mid-point
of the last bid and asked prices for the Common Stock on the relevant date from
each of at least three nationally recognized independent investment banking
firms selected by the Company for this purpose.


 


“Significant Subsidiary” means,
in respect of any Person, a Subsidiary of such Person that would constitute a “significant
subsidiary”, as such term is defined under Rule 1-02 of Regulation S-X
under the Securities Act and the Exchange Act.


 


“Trading Day” means a day
during which the New York Stock Exchange 
or, if the Common Stock is not listed on the New York Stock Exchange, on
the principal U.S. national or regional securities exchange on which the Common
Stock is then listed, opens for trading during its regular trading session or,
if the Common Stock is not so listed, admitted for trading or quoted, any
Business Day.  A “Trading Day” only
includes those days that have a scheduled closing time of 4:00 p.m. (New
York City time) or the then standard closing time for regular trading on the
relevant exchange or trading system.


 


(d) Other definitions:


 


5

















 


	
  Term

  	
   

  	
  Defined in Section of the 

  Supplemental Indenture

  	
   

  	
  Defined in Section of 

  the Original Indenture

  	
   

  
	
  Additional Shares

  	
   

  	
  7.01

  	
   

  	
  16.06

  	
   

  
	
  Conversion Agent

  	
   

  	
  2.05

  	
   

  	
  n/a

  	
   

  
	
  Conversion Date

  	
   

  	
  7.01

  	
   

  	
  16.02

  	
   

  
	
  Conversion Notice

  	
   

  	
  7.01

  	
   

  	
  16.02

  	
   

  
	
  Conversion Rate

  	
   

  	
  7.01

  	
   

  	
  16.01

  	
   

  
	
  Distributed Property

  	
   

  	
  7.01

  	
   

  	
  16.05

  	
   

  
	
  Effective Date

  	
   

  	
  7.01

  	
   

  	
  16.06

  	
   

  
	
  Fundamental Change Repurchase Date

  	
   

  	
  8.01

  	
   

  	
  17.01

  	
   

  
	
  Fundamental Change Repurchase Notice

  	
   

  	
  8.01

  	
   

  	
  17.01

  	
   

  
	
  Fundamental Change Repurchase Price

  	
   

  	
  8.01

  	
   

  	
  17.01

  	
   

  
	
  Make Whole Fundamental Change

  	
   

  	
  7.01

  	
   

  	
  16.06

  	
   

  
	
  Offer Expiration Date

  	
   

  	
  7.01

  	
   

  	
  16.05

  	
   

  
	
  Reference Property

  	
   

  	
  7.01

  	
   

  	
  16.08

  	
   

  
	
  Repurchase Exercise Notice

  	
   

  	
  8.01

  	
   

  	
  17.01

  	
   

  
	
  Spin-Off

  	
   

  	
  7.01

  	
   

  	
  16.05

  	
   

  
	
  Spin-Off Securities

  	
   

  	
  7.01

  	
   

  	
  16.05

  	
   

  
	
  Stock Price

  	
   

  	
  7.01

  	
   

  	
  16.06

  	
   

  
	
  Trigger Event

  	
   

  	
  7.01

  	
   

  	
  16.05

  	
   

  
	
  Triggering Distribution

  	
   

  	
  7.01

  	
   

  	
  16.05

  	
   

  



 


ARTICLE II


 


Designation, Form and Terms of the
Securities


 


SECTION 2.01. Designation
of Series.  Pursuant to the terms
hereof and Section 3.01 of the Original Indenture, the Company hereby creates
a series of its Securities designated as the “8.5% Convertible Notes due 2015”
(the “Notes”), which Notes shall be deemed “Securities” for all purposes under
the Original Indenture.


 


SECTION 2.02. Limit on
Amount of Securities.  Except as set
forth in Section 3.01(2) of the Original Indenture, the aggregate
principal amount of Notes that may be issued and authenticated is limited to
$158,000,000.


 


SECTION 2.03. Form of
Securities. (a)  The Notes will be issued initially as Global
Securities substantially in the form set forth in Exhibit A attached
hereto, which is incorporated herein and made part hereof.


 


(b) The Global Securities
shall be deposited on behalf of the purchasers of the Notes represented thereby
with the Trustee, as custodian for the Depositary and registered in the name of
a nominee of the Depositary.


 


(c) Section 3.05 of
the Original Indenture is hereby amended with respect to the Notes by deleting
the ninth paragraph of Section 3.05 of the Original Indenture in its
entirety and substituting the following:


 


6

















 


“If the Depositary (i) is unwilling or unable to continue as
depository for the Global Security, (ii) is closed for business for 14
continuous days, (iii) ceases to be a “clearing agency” registered under
the Exchange Act or (iv) announces its intention to permanently cease
business or does in fact do so, or an Event of Default has occurred and is
continuing with respect to the Global Security, the Company will issue
certificates for the Notes in definitive, fully registered, non-global form
without interest coupons in exchange for the Global Securities.”


 


SECTION 2.04. Interest
and Principal. (a)  The Notes will mature on May 15, 2015, and
will bear interest at the rate of 8.50% per annum.  The Company will pay interest on the Notes on
each May 15 and November 15, beginning on November 15, 2008, to
Holders of record on the immediately preceding May 1 or November 1,
respectively.  Interest on the Notes
shall accrue from the most recent date to which interest has been paid or, if
no interest has been paid, from the date of issuance.  Interest on the Notes will be calculated on
the basis of a 360-day year comprised of twelve 30-day months.


 


(b) Payments of the
principal of and interest on the Notes shall be made in Dollars at the office
of the Paying Agent.  However, the
Company may make any payments in respect of the Notes by check or wire payable
in Dollars; provided, however, that a Holder holding Notes with
an aggregate principal amount equal to or greater than $1,000,000 will be paid
by wire transfer in immediately available funds at the election of such
Holder.  The Company may mail an interest
check to the Holder’s last address appearing on the Security Register.  Notwithstanding the foregoing, so long as a
Note is registered in the name of a Depositary or its nominee, all payments
thereon shall be made by wire transfer of immediately available funds to the
account of the Depositary or its nominee.


 


SECTION 2.05. Paying
Agent; Conversion Agent. (a)  The place of payment where the Notes may
be presented or surrendered for payment, where the principal of and interest
and any other payments due on the Notes are payable, where the Notes may be
surrendered for registration of transfer or exchange and where notices and
demands to and upon the Company in respect of the Notes and the Indenture may
be served shall be in the Borough of Manhattan, The City of New York, and the
office or agency maintained by the Company for such purpose shall initially be
the Corporate Trust Office of the Trustee, who shall act as Paying Agent.


 


(b) The Company shall
maintain an office or agency where Securities may be presented for conversion
(the “Conversion Agent”), which shall initially be the Corporate Trust Office
of the Trustee, who shall act as Conversion Agent.


 


SECTION 2.06. No
Sinking Fund.  No sinking fund will
be provided with respect to the Notes (notwithstanding any provisions of the
Indenture with respect to sinking fund obligations).


 


7

















 


SECTION 2.07. No
Redemption of Securities.  The
Company may not redeem the Notes before the Stated Maturity Date
(notwithstanding any provisions of the Indenture with respect to redemption of
Securities).


 


SECTION 2.08. No Satisfaction
and Discharge or Defeasance.  The
provisions of Articles IV and XIII of the Original Indenture shall not be
applicable to the Notes.


 


ARTICLE III


 


Security Forms


 


SECTION 3.01. Amendments
to Section 2.02.  Section 2.02
of the Original Indenture is amended and restated in its entirety with the
respect to the Notes as follows:


 


“SECTION 2.02.  FORM OF LEGEND FOR GLOBAL SECURITIES.


 


Every Global Security
authenticated and delivered hereunder for which The Depository Trust Company is
to be the Depositary shall bear a legend in substantially the following form:


 


UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE &
CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.


 


UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR
IN PART FOR REGISTERED SECURITIES IN DEFINITIVE REGISTERED FORM IN
THE LIMITED CIRCUMSTANCES REFERRED TO IN THE INDENTURE, THIS GLOBAL SECURITY MAY NOT
BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE
DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OR SUCH SUCCESSOR
DEPOSITORY.”


 


8
















 


ARTICLE IV


 


Events of Default


 


SECTION 4.01. Amendments
to Article V. (a)  Section 5.01 of the Original Indenture is
amended and restated in its entirety with the respect to the Notes as follows:


 


“SECTION 5.01.  EVENTS OF DEFAULT.


 


“Event of Default”, wherever
used herein with respect to the Notes, means any one of the following events
(whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):


 


(1)  default in the
payment of any interest upon any Note when it becomes due and payable, and
continuance of such default for a period of 30 days; or


 


(2)  default in the
payment of the principal of or any premium on any Note at its Maturity, upon
repurchase, acceleration or otherwise; or


 


(3)  default in the
performance, or breach, of any covenant or warranty of the Company in this
Indenture (other than a covenant or warranty a default in whose performance or
whose breach is elsewhere in this Section specifically dealt with), and
continuance of such default or breach for a period of 30 days after there has
been given, by registered or certified mail, to the Company by the Trustee or
to the Company and the Trustee by the Holders of at least 25% in principal
amount of the Outstanding Notes a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a “Notice
of Default” hereunder; or


 


(4)  the commencement by
the Company or any Significant Subsidiary of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by the Company or any Significant
Subsidiary to the entry of a decree or order for relief in respect of the
Company or any Significant Subsidiary in an involuntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or to the commencement of any bankruptcy or insolvency case
or proceeding against the Company or any Significant Subsidiary, or the filing
by the Company or any Significant Subsidiary of a petition or answer or consent
seeking reorganization or relief under any applicable Federal or State law, or
the consent by the Company or any Significant Subsidiary to the filing of such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar official
of the Company or any Significant Subsidiary or of any substantial part of the
Company’s or any Significant Subsidiary’s property, or the making by the Company
or any Significant Subsidiary of an assignment for the benefit of creditors, or
the admission by the Company or any Significant Subsidiary in writing of its
inability to pay its debts 


 


9

















 


generally as
they become due, or the taking of corporate action by the Company or any
Significant Subsidiary in furtherance of any such action; or


 


(5) failure of the Company
to comply with Article VIII of this Indenture; or


 


(6)  failure of the
Company to deliver, when due upon conversion, shares of Common Stock together
with cash in lieu of fractional shares and such failure continues for a period
of five Business Days after receipt of the Conversion Notice as specified in Section 16.02;
or


 


(7)  a default under any
bond, debenture, note or other evidence of indebtedness of the Company or any
Subsidiary or under any mortgage, indenture or instrument under which there may
be issued or by which there may be secured or evidenced any indebtedness of the
Company or any Subsidiary (including the Notes), whether such indebtedness
exists at the time of this Indenture or afterward, that results in the
acceleration of the final maturity of such indebtedness, or failure to pay such
indebtedness at its final maturity (giving effect to applicable grace periods),
in an aggregate amount of $35,000,000; or


 


(8)           any judgment or judgments for the
payment of money in an aggregate amount in excess of $35,000,000 that shall be
rendered against the Company or any Subsidiary and that shall not be waived,
satisfied or discharged for any period of 30 consecutive days during which a
stay of enforcement shall not be in effect.”


 


  The Company shall deliver to the Trustee,
within 30 days after it has knowledge of the occurrence of any Event of Default
or any event which, with notice or the lapse of time or both, would constitute
an Event of Default, an Officers’ Certificate setting forth the details of such
Event of Default or event, its status and what action the Company is taking or
proposes to take with respect thereto.


 


(b) Section 5.02 of
the Original Indenture is hereby amended and restated in its entirety with
respect to the Notes as follows:


 


“SECTION 5.02.  ACCELERATION OF MATURITY; RESCISSION AND
ANNULMENT.


 


If an Event of Default (other
than an Event of Default specified in Section 5.01(4)) with respect to the
Notes at the time Outstanding occurs and is continuing, then in every such case
the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Notes may declare the principal amount of all the Notes to be due
and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders), and upon any such declaration such principal
amount shall become immediately due and payable. If an Event of Default
specified in Section 5.01(4) with respect to the Notes at the time
Outstanding occurs, the principal amount of all the Notes shall automatically,
and without any declaration or other action on the part of the Trustee or any
Holder, become immediately due and payable.


 


10

















 


At any time after such a
declaration of acceleration with respect to the Notes has been made and before
a judgment or decree for payment of the money due has been obtained by the
Trustee as hereinafter in this Article provided, an Event of Default will
be deemed waived if:


 


(1)  the Company has paid
or deposited with the Trustee a sum sufficient to pay


 


(A) all overdue interest
on all Notes,


 


(B) the principal of (and
premium, if any, on) any Notes which have become due otherwise than by such
declaration of acceleration and any interest thereon at the rate or rates
prescribed therefor in such Notes,


 


(C) to the extent that
payment of such interest is lawful, interest upon overdue interest at the rate
or rates prescribed therefor in such Notes  and


 


(D) all sums paid or
advanced by the Trustee hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel; and


 


(2)  all Events of Default
with respect to the Notes, other than the non-payment of the principal of the
Notes which have become due solely by such declaration of acceleration, have
been cured or waived as provided in Section 5.13.


 


No such rescission shall affect
any subsequent default or impair any right consequent thereon.”


 


ARTICLE IV


 


The Trustee


 


SECTION 4.02. Amendments
to Section 7.04.  Section 7.04
of the Original Indenture is hereby amended and restated in its entirety as
follows:


 


“SECTION 7.04. REPORTS BY COMPANY.


 


The Company shall deliver to
the Trustee (unless such reports have been filed within the time period set
forth below on EDGAR), within 15 days after the Company would have been
required to file with the Commission, copies of its annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may by rules and regulations prescribe)
which the Company is required to file with the Commission pursuant to Section 13
or 15(d) of the Exchange Act.  In
the event the Company is at any time no longer subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company
shall 


 


11

















 


continue to
provide the Trustee with reports containing substantially the same information
as would have been required to be filed with the Commission had the Company
continued to have been subject to such reporting requirements.  In such event, such reports shall be provided
within 15 days after the dates, applicable to a registrant that is not an
accelerated filer or a large accelerated filer, on which the Company would have
been required to provide reports had the Company continued to have been subject
to such reporting requirements.  Notwithstanding
anything herein to the contrary, the Company will not be deemed to have failed
to comply with any of its obligations under this Indenture for purposes of
clause (3) of Section 5.01 until 120 days after any report is due
under this Indenture.  The Company shall
also comply with the other provisions of Section 314(a) of the Trust
Indenture Act.


 


Delivery of such reports,
information and documents to the Trustee is for informational purposes only and
the Trustee’s receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Company’s compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).”


 


ARTICLE V


 


Consolidation, Merger, Assignment,
Conveyance, Transfer or Lease


 


SECTION 5.01. Amendments
to Section 8.01.  Section 8.01
of the Original Indenture is hereby amended and restated in its entirety with
respect to the Notes as follows:


 


“SECTION 8.01.  COMPANY MAY CONSOLIDATE, ETC., ONLY ON
CERTAIN TERMS.


 


The Company shall not
consolidate with or merge into any other Person or assign, convey, transfer or
lease its properties and assets substantially as an entirety to any Person
(other than a direct or indirect wholly-owned subsidiary of the Company),
unless:


 


(1)  the Company is the surviving
corporation or, in case the Company shall consolidate with or merge into
another person or convey, transfer or lease its properties and assets substantially
as an entirety to any person, the person formed by such consolidation or into
which the Company is merged or the person which acquires by conveyance or
transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a corporation, partnership or trust,
organized and validly existing under the laws of the United States of America,
any State thereof or the District of Columbia and shall expressly assume, by a
supplemental indenture, executed and delivered to the trustee, in form
reasonably satisfactory to the Trustee, the due and punctual payment of the
principal of and any premium and interest on all 


 


12

















 


the Notes and the performance or observance of every covenant of the
Indenture on the part of the Company to be performed or observed;


 


                (2)           immediately
after giving effect to such transaction, no Event of Default, and no event
which, after notice or lapse of time or both, would become an Event of Default,
shall have happened and be continuing; and


 


                (3)           the Company has delivered to the
Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that
such consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture comply with this Article and that all conditions
precedent herein provided for relating to such transaction have been complied
with.”


 


ARTICLE VI




Supplemental Indentures


 


SECTION 6.01. Amendments
to Section 9.01.  Section 9.01
of the Original Indenture is hereby amended and restated in its entirety with
respect to the Notes as follows:


 


“SECTION 9.01.  SUPPLEMENTAL INDENTURES WITHOUT THE CONSENT
OF HOLDERS.


 


Without the consent of any Holders,
the Company, when authorized by a Board Resolution, and the Trustee, at any
time and from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following purposes:


 


(1) to evidence the succession of another Person to the Company
and the assumption by any such successor of the covenants, agreements and
obligations of the Company herein and in the Notes; or


 


(2) to add to the covenants of the Company for the benefit of the
Holders of all or any Notes or to surrender any right or power herein conferred
upon the Company in this Indenture; or


 


(3) to add any additional Events of Default for the benefit of the
Holders; or


 


(4) to convey, transfer, assign, mortgage or pledge any property to
or with the Trustee; or


 


(5) to provide for uncertificated Notes in addition to or in place
of certificated Notes; or


 


13

















 


(6) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes and to add to or
change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more than one
Trustee, pursuant to the requirements of Section 6.11; or


 


(7) to cure any ambiguity omission, defect or inconsistency; or


 


(8) to comply with the rules or regulations of any securities
exchange or automated quotation system on which any Notes are listed or traded;
or


 


(9) to secure the Notes or add any subsidiary guarantees; or


 


(10) to make provisions with respect to the conversion rights of
Holders; or


 


(11) to make any change that does not adversely affect the rights of
any Holder; or


 


(12) to make any change to comply with the requirements of the
Commission in connection with the qualification of this Indenture under the
Trust Indenture Act; or


 


(13) to conform the text of this Indenture or the Notes to any
provision of the “Description of Notes” contained in the Prospectus Supplement.”


 


SECTION 6.02. Amendment
of Section 9.02.  Section 9.02
of the Original Indenture is hereby amended and restated in its entirety with
respect to the Notes as follows:


 


“With the consent of the
Holders of not less than 50% in aggregate principal amount of the Outstanding
Notes affected by such supplemental indenture, by act of said Holders delivered
to the Company and the Trustee, the Company, when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures
supplemental thereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that no such supplemental indenture
shall, without the consent of the Holder of each Outstanding Note affected
thereby,


 


(1)           change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Note, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable upon the
repurchase thereof, or change the coin or currency in which, any Note or any
premium or interest thereon is payable, or impair the right to institute suit
for the enforcement of any such payment on or after the Stated Maturity thereof
(or, in the case of repurchase, on or after the repurchase date),


 


14

















 


(2)           reduce the percentage in principal amount of the
Outstanding Notes the consent of whose Holders is required for any such
supplemental indenture or the consent of whose Holders is required for any
waiver,


 


(3)           make any change that adversely affects (i) the right
to convert or exchange any Note or decreases the conversion or exchange rate or
increases the conversion price of any Note or (ii) the right to require
repurchase of any Note,


 


(4)           make any changes to this Section, Section 5.13
or Section 10.08, except as to increase the percentage of Notes
Outstanding needed to effect a modification or waiver under such sections or to
provide that certain other provisions of this Indenture cannot be modified or
waived without the consent of each Holder of the Outstanding Notes affected, or


 


(5)           reduce the percentage in aggregate
principal amount of Notes Outstanding required for the adoption of a resolution
or the quorum required at any meeting of Holders of Notes at which a resolution
is adopted.”


 


ARTICLE VII




Conversion of Securities


 


SECTION 7.01. Addition
of Article XVI.  The Original
Indenture is hereby amended with respect to the Notes by adding a new Article XVI
following Section 15.06 as follows:


 


“ARTICLE XVI


 


CONVERSION RIGHTS


 


SECTION 16.01  RIGHT TO CONVERT.


 


Subject to and upon compliance
with the provisions of this Indenture, at any time prior to the Close of
Business on the Business Day immediately preceding the Final Maturity Date, a
Holder of any Note shall have the right, at such Holder’s option, to convert
any portion of the principal amount of a Note that is an integral multiple of
$1,000 into 386.3614 shares of Common Stock per $1,000 principal amount of
Notes (the “Conversion Rate”); provided, however, that, if such
Note is submitted or presented for repurchase pursuant to Article XVII,
such conversion right shall terminate at the Close of Business on the Business
Day immediately preceding the Fundamental Change Repurchase Date for such Note
(unless the Company shall default in making the Fundamental Change Repurchase
Price payment when due, in which case the conversion right shall terminate at
the close of business on the date such default is cured and such Note is
repurchased). Upon receipt by the Conversion Agent of a Conversion Notice from
a Holder of Notes pursuant to Section 16.02, the Conversion Agent shall
inform the Company of such request (and, if the Conversion Agent is other than
the Trustee, inform 


 


15

















 


the
Trustee).  The Conversion Rate shall be
subject to adjustment as set forth in this Article XVI.


 


A Note in respect of which a
Holder is electing to exercise its option to require repurchase upon a
Fundamental Change pursuant to Section 17.01 may be converted only if such
Holder withdraws its election in accordance with Section 17.01. A Holder
of Notes is not entitled to any rights of a holder of Common Stock until such
Holder has converted such Notes for Common Stock, and only to the extent such
Notes are deemed to have been converted for Common Stock under this Article XVI.


 


SECTION 16.02.  CONVERSION PROCEDURES.


 


To convert a Note, a Holder
must (i) complete and manually sign a conversion notice in substantially
the form set forth in Exhibit I of the Global Security (“Conversion Notice”)
or a facsimile of the Conversion Notice and deliver such notice to a Conversion
Agent, (ii) surrender the Note to a Conversion Agent, (iii) furnish
appropriate endorsements and transfer documents if required by the Security
Registrar or the Conversion Agent, (iv) pay any transfer or similar tax,
if required and (v) pay funds equal to interest payable on the next
Interest Payment Date, if required pursuant to this Section 16.02.  The date on which the Holder satisfies all of
those requirements is the “Conversion Date”. 
A Conversion Notice is irrevocable upon delivery to the Conversion
Agent.  Anything herein to the contrary
notwithstanding, in the case of Global Securities, Conversion Notices may be
delivered and such Notes may be surrendered for conversion in accordance with
the Applicable Procedures as in effect from time to time.


 


The Person in whose name the
Common Stock certificate is registered shall be deemed to be a stockholder of
record at the Close of Business on the applicable Conversion Date; provided,
however, that if the Conversion Date is a date when the stock transfer
books of the Company are closed, such Person shall be deemed a stockholder of
record on the next date on which the stock transfer books of the Company are
open; provided further that such conversion shall be at the Conversion
Rate as if the stock transfer books of the Company had not been closed on the
Conversion Date.


 


Upon conversion of a Note, a
Holder will not receive any cash payment of interest (unless such conversion
occurs between a Regular Record Date and the related Interest Payment Date),
and the Company will not adjust the Conversion Rate to account for accrued and
unpaid interest on the Note being converted. 
Delivery to the Holder of the full number of shares of Common Stock into
which the Note is convertible, together with any cash payment for fractional
shares pursuant to Section 16.04, will be deemed to satisfy the Company’s
obligation with respect to such Note. Any accrued but unpaid interest will be
deemed to be paid in full upon conversion rather than canceled, extinguished or
forfeited.


 


Holders of Notes at the Close
of Business on a Regular Record Date will receive payment of interest payable
on the related Interest Payment Date notwithstanding the conversion of such
Notes at any time after the Close of Business on the Regular Record Date and
prior to the related Interest Payment Date. Notes or portions thereof 


 


16

















 


surrendered
for conversion during the period from the Close of Business on a Regular Record
Date to 9:00 a.m. New York City time on the related Interest Payment Date
shall be accompanied by payment to the Company or its order, in immediately
available funds or other funds acceptable to the Company, of an amount equal to
the interest payable on such Interest Payment Date with respect to the principal
amount of Notes or portions thereof being surrendered for conversion; provided
that no such payment need be made (1) following the Close of Business on
the Regular Record Date immediately preceding the final Interest Payment Date, (2) if
the Company has specified a Fundamental Change Repurchase Date that occurs
during the period from the Close of Business on a Regular Record Date to the
Close of Business on the related Interest Payment Date or (3) to the
extent any overdue interest exists on the Conversion Date with respect to the
Notes converted, but only to the extent of such overdue interest.


 


If a Holder converts more than
one Note at the same time, the number of shares of Common Stock issuable upon
the conversion shall be based on the aggregate principal amount of Notes
converted.


 


Upon surrender of a Note that
is converted in part, the Company shall execute, and the Trustee shall
authenticate and deliver to the holder, a new Note equal in principal amount to
the principal amount of the unconverted portion of the Note surrendered.


 


SECTION 16.03.  PAYMENT UPON CONVERSION.


 


Upon the conversion of a Note,
subject to Section 16.02, the Company shall deliver shares of Common
Stock, together with cash in lieu of any fractional shares, to the Holder
through the Conversion Agent. No payment or adjustment shall be made for
dividends on, or other distributions with respect to, any Common Stock except
as provided in this Article XVI.


 


The Conversion Agent shall, on
behalf of the Holders, convert the Notes into shares of Common Stock, together
with any cash in lieu of fractional shares as provided in Section 16.04
below.


 


Settlement of the Company’s
obligation to deliver shares of Common Stock and cash in lieu of fractional
shares will occur no later than the third Business Day immediately following
the Conversion Date. Delivery of shares of Common Stock shall be accomplished
by delivery to the Conversion Agent of certificates for the relevant number of
shares of Common Stock, other than in the case of Holders of Notes in
book-entry form with the Depositary, in which case, shares of Common Stock
shall be delivered in accordance with the Applicable Procedures.


 


SECTION 16.04.  CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES.


 


No fractional shares of Common
Stock or scrip certificates representing fractional shares shall be issued upon
conversion of Notes.  Instead, the
Company will pay cash for all fractional shares of Common Stock in an amount
based on the Sale Price of the Common Stock on the Trading Day immediately
preceding the Conversion Date.  


 


17

















 


If more than
one Note shall be surrendered for conversion at one time by the same Holder,
the number of full shares of Common Stock that shall be issuable upon
conversion shall be computed on the basis of the aggregate principal amount of
the Notes (or specified portions thereof to the extent permitted hereby) so
surrendered.


 


SECTION 16.05.  ADJUSTMENT OF CONVERSION RATE.


 


The Conversion Rate shall be
adjusted from time to time by the Company as follows:


 


(1) In case the Company shall issue
shares of Common Stock as a dividend or distribution to all Holders of its
Common Stock or subdivide or combine its outstanding Common Stock, the
Conversion Rate shall be adjusted based on the following formula:


 


	
   

  	
  CR1 = CR0 x

  	
  OS1

  	
   

  
	
   

  	
   

  	
  OS0

  	
   

  



 


where,


 


	
  CR0 =

  	
   

  	
  the Conversion Rate in
  effect immediately prior to the Ex Date for such dividend or distribution or
  the effective date of such subdivision or combination, as the case may be;

  
	
   

  	
   

  	
   

  
	
  CR1 =

  	
   

  	
  the Conversion Rate in
  effect immediately on and after the Ex Date for such dividend or distribution
  or the effective date of such subdivision or combination, as the case may be;

  
	
   

  	
   

  	
   

  
	
  OS0 =

  	
   

  	
  the number of shares of
  Common Stock outstanding immediately prior to the Ex Date for such dividend
  or distribution or the effective date of such subdivision or combination, as
  the case may be; and

  
	
   

  	
   

  	
   

  
	
  OS1 =

  	
   

  	
  the number of shares of
  Common Stock outstanding immediately on and after the Ex Date for such
  dividend or distribution or the effective date of such subdivision or
  combination, as the case may be.

  



 


Such adjustment shall become effective
immediately after 9:00 a.m., New York City time, on the Business Day
following the Ex Date for such dividend, distribution, subdivision or
combination. The Company will not pay any dividend or make any distribution on
shares of Common Stock held in treasury by the Company. If any dividend or
distribution of the type described in this Section 16.05(1) is
declared but not so paid or made, or the outstanding shares of Common Stock are
not subdivided or combined, as the case may be, the Conversion Rate shall again
be adjusted to the Conversion Rate which would then be in effect if such
dividend, distribution, subdivision or combination had not been declared.


 


(2)  In case the Company shall issue
rights or warrants to all holders of Common Stock entitling them (for a period
expiring within 45 days from the date of issuance of such rights or warrants)
to subscribe for or purchase shares of 


 


18

















 


Common Stock at a price per share that is less than the average Sale
Prices of a share of Common Stock over the ten consecutive Trading Day period
ending on and including the Trading Day immediately preceding the date of
announcement of such issuance, the Conversion Rate will be adjusted based on
the following formula:


 


	
   

  	
  CR1 = CR0 x

  	
  OS0 + X

  	
   

  
	
   

  	
   

  	
  OS0 + Y

  	
   

  



 


where,


 


	
  CR0 =

  	
   

  	
  the Conversion Rate in
  effect immediately prior to the Ex Date for such event;

  
	
   

  	
   

  	
   

  
	
  CR1 =

  	
   

  	
  the Conversion Rate in
  effect immediately on and after the Ex Date for such event;

  
	
   

  	
   

  	
   

  
	
  OS0 =

  	
   

  	
  the number of shares of
  Common Stock outstanding immediately prior to the Ex Date for such event;

  
	
   

  	
   

  	
   

  
	
  X =

  	
   

  	
  the total number of shares
  of Common Stock issuable pursuant to such rights or warrants; and

  
	
   

  	
   

  	
   

  
	
  Y =

  	
   

  	
  the number of shares of
  Common Stock equal to the aggregate price payable to exercise such rights or
  warrants divided by the average Sale Prices of the Common Stock over the 10
  consecutive Trading Day period ending on and including the Trading Day
  immediately preceding the announcement of such issuance.

  



 


Such adjustment shall be successively made
whenever any such rights or warrants are issued and shall become effective
immediately after 9:00 a.m., New York City time, on the Business Day
following the Ex Date of such issuance. To the extent that shares of Common
Stock are not delivered pursuant to such rights or warrants upon the expiration
or termination of such rights or warrants, the Conversion Rate shall be
readjusted to the Conversion Rate which would then be in effect had the
adjustments made upon the issuance of such rights or warrants been made on the
basis of the delivery of only the number of shares of Common Stock actually
delivered. In the event that such rights or warrants are not so issued, the
Conversion Rate shall again be adjusted to be the Conversion Rate which would
then be in effect if the announcement with respect to such rights, warrants or
convertible securities had not been made.


 


In determining whether any rights or warrants
entitle the holders to subscribe for or purchase shares of Common Stock at less
than the average Sale Prices per share of Common Stock over the 10 consecutive
Trading Day period ending on and including the Trading Day immediately
preceding the date of announcement of such issuance, and in determining the
aggregate price payable to exercise such rights or warrants of such shares of
Common Stock, there shall be taken into account any consideration received by
the Company for such rights or warrants and any amount payable on exercise
thereof, the value of such consideration, if other than cash, to be determined
in good faith by the Board of Directors.


 


19
















 


(3)  In case the Company shall dividend
or distribute to all holders of its Common Stock any securities (other than
Common Stock), evidences of indebtedness, assets or properties (excluding (x) any
dividend, distribution or issuance covered by clause (1) or (2) of
this Section 16.05 and (y) any dividend or distribution paid
exclusively in cash) (any of such shares of capital stock, evidence of
indebtedness or assets hereinafter called the “Distributed Property”), then in
each such case the Conversion Rate shall be adjusted based on the following
formula:


 


	
   

  	
  CR1 = CR0 x 

  	
  SP0

  	
   

  
	
   

  	
  SP0 – FMV

  	
   

  



 


where,


 


	
  CR0 =

  	
   

  	
  the Conversion Rate in
  effect immediately prior to the Ex Date for such distribution;

  
	
   

  	
   

  	
   

  
	
  CR1 =

  	
   

  	
  the Conversion Rate in
  effect immediately after the open of business on the Ex Date for such
  distribution;

  
	
   

  	
   

  	
   

  
	
  SP0 =

  	
   

  	
  the Current Market Price
  of the Common Stock; and

  
	
   

  	
   

  	
   

  
	
  FMV =

  	
   

  	
  the fair market value (as
  determined in good faith by the Board of Directors) of the securities,
  evidences of indebtedness, assets or property dividended or distributed with
  respect to each outstanding share of Common Stock on the Ex Date for such
  dividend or distribution.

  



 


Such adjustment shall become effective
immediately prior to 9:00 a.m., New York City time, on the Business Day following
the Ex Date; provided that if the then fair market value (as so
determined) of the portion of the Distributed Property so distributed
applicable to one share of Common Stock is equal to or greater than SP0 as set forth
above, in lieu of the foregoing adjustment, adequate provision shall be made so
that each Holder shall have the right to receive, for each $1,000 principal
amount of Notes upon conversion, the amount of Distributed Property such Holder
would have received had such Holder owned a number of shares of Common Stock
equal to the Conversion Rate on the record date for such dividend or
distribution. If such dividend or distribution is not so paid or made, the
Conversion Rate shall again be adjusted to be the Conversion Rate that would
then be in effect if such record date had not been fixed. If the Board of
Directors determines the fair market value of any distribution for purposes of
this Section 16.05(3) by reference to the actual or when issued
trading market for any securities, it shall in doing so consider the prices in
such market over the same period used in computing the Current Market Price.


 


With respect to an adjustment pursuant to
this clause (3) where there has been a payment of a dividend or other
distribution on the Common Stock or shares of capital stock of, or similar
equity interests of, a Subsidiary or other business unit of the Company (a “Spin-Off”,
and any such dividend or distribution of Common Stock, shares of capital stock
or equity interests being 


 


20

















 


“Spin-Off Securities”), in which event the Conversion Rate will be
adjusted based on the following formula:


 


	
   

  	
  CR1 = CR0 x

  	
  FMV0 + MP0

  	
   

  
	
   

  	
   

  	
  MP0

  	
   

  



 


where,


 


	
  CR0 =

  	
   

  	
  the Conversion Rate in
  effect immediately prior to the Close of Business on the 10th Trading Day
  immediately following, and including, the effective date of the Spin-Off;

  
	
   

  	
   

  	
   

  
	
  CR1 =

  	
   

  	
  the Conversion Rate in
  effect immediately from and after the Close of Business on the 10th Trading
  Day immediately following, and including, the effective date of the Spin-Off;

  
	
   

  	
   

  	
   

  
	
  FMV0=

  	
   

  	
  the average of the Sale
  Prices of the capital stock or similar equity interest distributed to holders
  of Common Stock applicable to one share of Common Stock over the 10
  consecutive Trading Days commencing on and including the effective date of
  the Spin-Off; and

  
	
   

  	
   

  	
   

  
	
  MP0 =

  	
   

  	
  the average of the Sale
  Prices of the Common Stock over the 10 consecutive Trading Days commencing on
  and including the effective date of the Spin-Off.

  



 


Such adjustment shall occur at the Close of
Business on the 10th Trading Day from, and including, the effective date of the
Spin-Off; provided, however, that the Company may in lieu of the
foregoing adjustment elect to make adequate provision so that each Holder of
Notes shall have the right to receive upon conversion thereof the amount of
such Spin-Off Securities that such Holder of Notes would have received if such
Notes had been converted on the record date with respect to such distribution.


 


If the Company has in effect a rights plan
upon a conversion of the Notes into Common Stock and the rights have not
separated from the Common Stock, Holders will receive, upon a conversion of the
Notes in respect of which the Company is required to deliver shares of Common
Stock, in addition to such shares of Common Stock and in lieu of any adjustment
to the Conversion Rate, rights under the Company’s rights plan. If prior to any
conversion, the rights have separated from the Common Stock, the Conversion
Rate will be adjusted at the time of separation as if the Company had
distributed to all holders of Common Stock, capital stock, evidences of
indebtedness or other assets or property pursuant to this Section 16.05(3),
subject to readjustment in the event of the expiration, termination or redemption
of such rights.


 


Rights or warrants distributed by the Company
to all holders of Common Stock entitling the holders thereof to subscribe for
or purchase shares of capital stock (either initially or under certain
circumstances), which rights or warrants, until the occurrence of a specified
event or events (“Trigger Event”), (i) are deemed to be transferred with
such shares of Common Stock, (ii) are not exercisable and (iii) are
also issued in respect of future issuances of Common 


 


21

















 


Stock, shall be deemed not to have been distributed for purposes of
this Section 16.05 (and no adjustment to the Conversion Rate under this Section 16.05
will be required) until the occurrence of the earliest Trigger Event, whereupon
such rights and warrants shall be deemed to have been distributed and an
appropriate adjustment (if any is required) to the Conversion Rate shall be
made under this Section 16.05(3). 
If any such right or warrant, including any such existing rights or
warrants distributed prior to the date of this Indenture, are subject to
events, upon the occurrence of which such rights or warrants become exercisable
to purchase different securities, evidences of indebtedness or other assets,
then the date of the occurrence of any and each such event shall be deemed to
be the date of distribution and record date with respect to new rights or
warrants with such rights (and a termination or expiration of the existing
rights or warrants without exercise by any of the holders thereof).  In addition, in the event of any distribution
(or deemed distribution) of rights or warrants, or any Trigger Event or other
event (of the type described in the preceding sentence) with respect thereto
that was counted for purposes of calculating a distribution amount for which an
adjustment to the Conversion Rate under this Section 16.05 was made, (A) in
the case of any such rights or warrants which shall all have been repurchased
without exercise by any holders thereof, the Conversion Rate shall be
readjusted upon such repurchase to give effect to such distribution or Trigger
Event, as the case may be, as though it were a cash distribution, equal to the
per share repurchase price received by a holder or holders of Common Stock with
respect to such rights or warrants (assuming such holder had retained such
rights or warrants), made to all holders of Common Stock as of the date of such
repurchase, and (B) in the case of such rights or warrants which shall
have expired or been terminated without exercise by any holders thereof, the
Conversion Rate shall be readjusted as if such rights and warrants had not been
issued.


 


(4)  In case the Company shall, by
dividend or otherwise, at any time distribute cash (a “Triggering Distribution”)
to all holders of its Common Stock, the Conversion Rate shall be adjusted based
on the following formula:


 


	
   

  	
  CR1 = CR0 x

  	
  SP0

  	
   

  
	
   

  	
   

  	
  SP0 – C

  	
   

  



 


where,


 


	
  CR0 =

  	
   

  	
  the Conversion Rate in
  effect immediately prior to the Ex Date for such distribution;

  
	
   

  	
   

  	
   

  
	
  CR1 =

  	
   

  	
  the Conversion Rate in
  effect immediately on and after the Ex Date for such distribution;

  
	
   

  	
   

  	
   

  
	
  SP0 =

  	
   

  	
  the Current Market Price
  of the Common Stock; and

  
	
   

  	
   

  	
   

  
	
  C =

  	
   

  	
  the amount in cash per
  share distributed by the Company to holders of the Common Stock.

  



 


22

















 


Such adjustment shall become effective
immediately after the Close of Business on the Ex Date for such Triggering
Distribution; provided that if the portion of the cash so distributed
applicable to one share of Common Stock is equal to or greater than SP0 as set forth
above, in lieu of the foregoing adjustment, adequate provision shall be made so
that each Holder shall have the right to receive, for each $1,000 principal
amount upon conversion, the amount of cash such Holder would have received had
such Holder owned a number of shares of Common Stock equal to the Conversion
Rate on the record date.  If such
Triggering Distribution is not so paid or made, the Conversion Rate shall again
be adjusted to be the Conversion Rate that would then be in effect if such
dividend or distribution had not been declared.


 


For the avoidance of doubt, for purposes of
this Section 16.05(4), in the event of any reclassification of the Common
Stock, as a result of which the Notes become convertible into more than one
class of Common Stock, if an adjustment to the Conversion Rate is required
pursuant to this Section 16.05(4), references in this Section to one
share of Common Stock or Current Market Price of one share of Common Stock
shall be deemed to refer to a unit or to the price of a unit consisting of the
number of shares of each class of Common Stock into which the Notes are then
convertible equal to the numbers of shares of such class issued in respect of
one share of Common Stock in such reclassification.  The above provisions of this paragraph shall
similarly apply to successive reclassifications.


 


It is expressly understood that a stock
buyback, repurchase or similar transaction or program shall in no event be
considered a distribution for purposes of clauses (3) and (4) of this
Section 16.05.


 


(5) In case the Company or one or more
of its Subsidiaries shall purchase any shares of Common Stock by means of a
tender offer or exchange offer by the Company or any Subsidiaries for the
Common Stock, to the extent that the cash and value of any other consideration
included in the payment per share of Common Stock exceeds the average Sale
Prices of a share of Common Stock over the 10 consecutive Trading Days
commencing on and including the Trading Day immediately succeeding the last
date on which tenders or exchanges may be made pursuant to such tender or
exchange offer (the “Offer Expiration Date”), the Conversion Rate shall be
adjusted based on the following formula:


 


	
   

  	
  CR1 =  CR0 x

  	
  FMV + (SP1  x OS1)

  	
   

  
	
   

  	
   

  	
  OS0  x SP1

  	
   

  



 


where,


 


	
  CR0 =

  	
   

  	
  the Conversion Rate in
  effect at the Close of Business on the Offer Expiration Date;

  
	
   

  	
   

  	
   

  
	
  CR1 =

  	
   

  	
  the Conversion Rate in
  effect immediately after the Offer Expiration Date;

  
	
   

  	
   

  	
   

  
	
  FMV =

  	
   

  	
  the fair market value (as
  determined in good faith by the Board of Directors) of the aggregate value of
  

  



 


23

















 


	
   

  	
   

  	
  all cash and any other
  consideration paid or payable for shares validly tendered or exchanged and
  not withdrawn as of the Offer Expiration Date;

  
	
   

  	
   

  	
   

  
	
  OS1 =

  	
   

  	
  the number of shares of
  the Common Stock outstanding immediately after the Offer Expiration Date
  (after giving effect to the purchase or exchange of shares pursuant to such
  tender or exchange offer);

  
	
   

  	
   

  	
   

  
	
  OS0 =

  	
   

  	
  the number of shares of
  Common Stock outstanding immediately after the Offer Expiration Date (without
  giving effect to the purchase or exchange of shares pursuant to such tender
  or exchange offer); and

  
	
   

  	
   

  	
   

  
	
  SP1 =

  	
   

  	
  the average of the Sale
  Prices of a share of Common Stock for the 10 consecutive Trading Days
  commencing on and including the Trading Day immediately succeeding the Offer
  Expiration Date.

  



 


The adjustment to the Conversion Rate under
this Section 16.05(5) shall occur on the 10th Trading Day from, and
including, the Trading Day next succeeding the date such tender or exchange
offer expires.


 


In the event that the Company is obligated to
purchase shares pursuant to any such tender offer, but the Company is
permanently prevented by applicable law from effecting any or all such
purchases or any or all such purchases are rescinded, the Conversion Rate shall
again be adjusted to be the Conversion Rate which would have been in effect
based upon the number of shares actually purchased.  If the application of this clause (5) of
Section 16.05 to any tender or exchange offer would result in a decrease
in the Conversion Rate, no adjustment shall be made for such tender or exchange
offer under this Section 16.05(5).


 


No adjustment in the Conversion
Rate shall be made:


 


(i) unless such adjustment would require
a change of at least 1.0% in the Conversion Rate; provided, however,
the Company shall carry forward any adjustments that are less than 1.0% of the
Conversion Rate and take them into account in any subsequent adjustment of the
Conversion Rate or in connection with any conversion of the Notes;


 


(ii)  for any issuance of Common Stock
or convertible or exchangeable securities or rights to purchase Common Stock or
convertible of exchangeable securities, except in accordance with this Section 16.05;
or


 


(iii) if the Holders are permitted to
participate, without converting their Notes, in the transactions described in
clauses (1) through (5) of Section 16.05 that would otherwise
require adjustment of the Conversion Rate.


 


The Company may, from time to
time, and to the extent permitted by law and subject to applicable rules of
the New York Stock Exchange, increase the Conversion Rate by any amount for any
period of at least 20 days. Whenever the Conversion Rate is increased pursuant
to the preceding sentence, the Company shall give notice of the increase to the
Holders in the manner provided in Section 16.07, with a copy to the
Trustee and Conversion Agent, at least 15 days prior to the date the increased
Conversion Rate takes effect, and such notice shall state the increased
Conversion Rate and the 


 


24

















 


period during
which it will be in effect. The Company may also, in its discretion, increase
the Conversion Rate, to avoid or diminish any income tax to any holders of
shares of Common Stock resulting from any dividend or distribution of stock (or
rights to acquire stock) or from any event treated as such for income tax
purposes.


 


SECTION 16.06.  MAKE-WHOLE ADJUSTMENT.


 


If a transaction described in
clause (1), (2) or (5) of the definition of Fundamental Change
without giving effect to any exclusions in such clauses, excluding a
Fundamental Change in clause (2) where the exception relating to a
transaction involving consideration of at least 90% Publicly Traded Securities
(a “Make-Whole Fundamental Change”), occurs, and a Holder elects to convert its
Notes in connection with such transaction, the Company shall increase the
Conversion Rate for the Notes surrendered for conversion by a number of additional
shares of Common Stock (the “Additional Shares”) in accordance with this Section 16.06.


 


Any conversion of a Note by a
Holder occurring from and after the Effective Date of the Make-Whole
Fundamental Change through and including the Business Day immediately preceding
the related Fundamental Change Repurchase Date shall be deemed to be in
connection with such Make-Whole Fundamental Change.


 


The Company shall give notice
of a Make-Whole Fundamental Change to all record Holders of the Notes as
promptly as practicable following the date the Company makes a public
announcement of such Make-Whole Fundamental Change (but in no event after the
Effective Date of such Make-Whole Fundamental Change).


 


The number of Additional Shares
shall be determined by reference to the table below, based on the date the
Make-Whole Fundamental Change occurs or becomes effective (the “Effective Date”)
and the price (the “Stock Price”) paid per share of Common Stock in such
transaction. If the holders of Common Stock receive only cash in the Make-Whole
Fundamental Change, the Stock Price shall be the cash amount paid per share of
Common Stock. Otherwise, the Stock Price shall be the average of the Sale
Prices of a share of Common Stock over the 10 consecutive Trading Day period ending
on and including the Trading Day immediately preceding the Effective Date.


 


The following table sets forth
the Stock Price and number of Additional Shares to be received per $1,000
principal amount of Notes:


 


25

















 


	
   

  	
   

  	
  Stock Price

  	
   

  	 

	
  Effective Date

  	
   

  	
  $2.03

  	
   

  	
  $2.25

  	
   

  	
  $2.50

  	
   

  	
  $2.75

  	
   

  	
  $3.00

  	
   

  	
  $3.25

  	
   

  	
  $3.50

  	
   

  	
  $3.75

  	
   

  	
  $4.00

  	
   

  	
  $5.00

  	
   

  	
  $6.00

  	
   

  	
  $7.00

  	
   

  	
  $8.00

  	
   

  	
  $10.00

  	
   

  
	
  May 29, 2008

  	
   

  	
  106.2493

  	
   

  	
  103.9488

  	
   

  	
  85.7266

  	
   

  	
  71.4222

  	
   

  	
  59.9772

  	
   

  	
  50.6746

  	
   

  	
  43.0134

  	
   

  	
  36.6351

  	
   

  	
  31.2753

  	
   

  	
  16.6940

  	
   

  	
  8.5991

  	
   

  	
  3.9193

  	
   

  	
  1.2409

  	
   

  	
  0.0000

  	
   

  
	
  May 15, 2009

  	
   

  	
  106.2493

  	
   

  	
  103.7066

  	
   

  	
  85.2054

  	
   

  	
  70.7604

  	
   

  	
  59.2582

  	
   

  	
  49.9503

  	
   

  	
  42.3151

  	
   

  	
  35.9807

  	
   

  	
  30.6746

  	
   

  	
  16.3252

  	
   

  	
  8.4216

  	
   

  	
  3.8744

  	
   

  	
  1.2531

  	
   

  	
  0.0000

  	
   

  
	
  May 15, 2010

  	
   

  	
  106.2493

  	
   

  	
  102.1626

  	
   

  	
  83.3710

  	
   

  	
  68.8171

  	
   

  	
  57.3156

  	
   

  	
  48.0712

  	
   

  	
  40.5357

  	
   

  	
  34.3196

  	
   

  	
  29.1396

  	
   

  	
  15.2722

  	
   

  	
  7.7411

  	
   

  	
  3.4557

  	
   

  	
  1.0174

  	
   

  	
  0.0000

  	
   

  
	
  May 15, 2011

  	
   

  	
  106.2493

  	
   

  	
  99.6346

  	
   

  	
  80.4362

  	
   

  	
  65.7484

  	
   

  	
  54.2746

  	
   

  	
  45.1521

  	
   

  	
  37.7906

  	
   

  	
  31.7735

  	
   

  	
  26.8016

  	
   

  	
  13.7076

  	
   

  	
  6.7562

  	
   

  	
  2.8687

  	
   

  	
  0.7088

  	
   

  	
  0.0000

  	
   

  
	
  May 15, 2012

  	
   

  	
  106.2493

  	
   

  	
  95.3532

  	
   

  	
  75.5526

  	
   

  	
  60.6971

  	
   

  	
  49.3149

  	
   

  	
  40.4327

  	
   

  	
  33.3906

  	
   

  	
  27.7290

  	
   

  	
  23.1216

  	
   

  	
  11.3390

  	
   

  	
  5.3256

  	
   

  	
  2.0511

  	
   

  	
  0.3167

  	
   

  	
  0.0000

  	
   

  
	
  May 15, 2013

  	
   

  	
  106.2493

  	
   

  	
  87.8617

  	
   

  	
  67.0202

  	
   

  	
  51.9073

  	
   

  	
  40.7402

  	
   

  	
  32.3429

  	
   

  	
  25.9240

  	
   

  	
  20.9420

  	
   

  	
  17.0198

  	
   

  	
  7.6070

  	
   

  	
  3.1754

  	
   

  	
  0.8710

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  
	
  May 15, 2014

  	
   

  	
  106.2493

  	
   

  	
  75.0323

  	
   

  	
  51.6754

  	
   

  	
  35.8706

  	
   

  	
  25.1606

  	
   

  	
  17.8795

  	
   

  	
  12.8968

  	
   

  	
  9.4572

  	
   

  	
  7.0481

  	
   

  	
  2.4308

  	
   

  	
  0.6831

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  
	
  May 15, 2015

  	
   

  	
  106.2493

  	
   

  	
  58.0830

  	
   

  	
  13.6386

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  	
  0.0000

  	
   

  
																																



 


The exact Stock Price and
Effective Dates may not be set forth on the table, in which case:


 


(1)  if the Stock Price is between two
Stock Price amounts on the table or the effective date is between two dates on
the table, the number of Additional Shares will be determined by straight-line
interpolation between the number of Additional Shares set forth for the higher
and lower stock prices and the earlier and later effective dates, as
applicable, based on a 365-day year;


 


(2)  if the Stock Price is greater than
$10 per share (subject to adjustment pursuant to the following paragraph), no
increase will be made to the Conversion Rate; and


 


(3) if the Stock Price is less than
$2.03 per share (subject to adjustment pursuant to the following paragraph), no
increase will be made to the Conversion Rate.


 


The Stock Prices in the first
row of the table above shall be adjusted as of any date on which the Conversion
Rate of the Notes is adjusted in accordance with Section 16.05. The
adjusted Stock Prices shall equal the Stock Prices applicable immediately prior
to such adjustment, multiplied by a fraction, the numerator of which is the
Conversion Rate immediately prior to the adjustment giving rise to the Stock
Price adjustment and the denominator of which is the Conversion Rate as so
adjusted. The number of Additional Shares shall be adjusted in the same manner
and for the same events as the Conversion Rate as set forth in Section 16.05.


 


Notwithstanding the foregoing,
in no event shall the total number of Additional Shares added to the Conversion
Rate exceed 106.2493 per $1,000 principal amount of Notes, subject to
adjustments in the same manner as the Conversion Rate as set forth in Section 16.05.


 


If, pursuant to this Section 16.06,
the Company is required to increase the Conversion Rate by the Additional
Shares, the Company shall settle such conversion (based on the Conversion Rate
as increased by the Additional Shares to be added to the Conversion Rate
pursuant to this Section 16.06) no later than the third Business Day 


 


26

















 


immediately
following the Conversion Date, by delivering the number of shares of Common
Stock (based on the Conversion Rate without regard to the number of Additional
Shares to be added to the Conversion Rate pursuant to this Section 16.06)
plus the number of Additional Shares to be added to the Conversion Rate as set
forth in this Section 16.06, if any, or the equivalent of such shares in
Reference Property, as applicable.


 


For the avoidance of doubt, if
Notes are surrendered for conversion in connection with an anticipated
Make-Whole Fundamental Change and such Make-Whole Fundamental Change does not
in fact occur, no Additional Shares will be added to the Conversion Rate and no
additional cash or Reference Property will be paid as a result of the related
anticipated Make-Whole Fundamental Change.


 


SECTION 16.07.  NOTICE OF ADJUSTMENT IN CONVERSION RATE.


 


Whenever the Conversion Rate is
adjusted pursuant to Section 16.05:


 


(1)  the Company shall compute the
adjusted Conversion Rate in accordance with Section 16.05 and shall
prepare an Officers’ Certificate setting forth (i) the adjusted Conversion
Rate, (ii) the clause of Section 16.05 pursuant to which such
adjustment has been made, showing in reasonable detail the facts upon which
such adjustment is based, (iii) the calculation of such adjustment and (iv) the
date as of which such adjustment is effective, and such certificate shall
promptly be filed with the Trustee and with each Conversion Agent; and


 


(2) upon each such adjustment, a notice
stating that the Conversion Rate has been adjusted and setting forth the
adjusted Conversion Rate shall be required, and as soon as practicable after it
is required, such notice shall be provided by the Company to all Holders of
record of the Notes in accordance with Section 1.05 of the Indenture.


 


Unless and until a Responsible
Officer of the Trustee shall have received an Officers’ Certificate in
accordance with this Section 16.07, the Trustee shall not be deemed to
have knowledge of any adjustment of the Conversion Rate and may assume that the
last Conversion Rate of which it has knowledge is still in effect.


 


Neither the Trustee nor any
Conversion Agent shall be under any duty or responsibility with respect to any
such certificate or the information and calculations contained therein, except
to exhibit the same to any Holder of Notes desiring inspection thereof at its
office during normal business hours.


 


SECTION 16.08.  EFFECT OF RECLASSIFICATION, CONSOLIDATION,
MERGER OR SALE.


 


If any of the following events
occur, namely (i) any recapitalization, reclassification or other similar
change in the outstanding shares of Common Stock (other than changes resulting from
a subdivision or combination), (ii) any consolidation, merger or
combination of the Company with another Person, (iii) the Company is a
party to a 


 


27

















 


statutory
share exchange or (iv) any sale, lease or other transfer of all or
substantially all of the assets of the Company to any other Person, in each
case, as a result of which holders of Common Stock shall be entitled to receive
stock, other securities, other property or assets (including cash or any combination
thereof) with respect to or in exchange for such Common Stock, the Holders of
the Notes then Outstanding will be entitled thereafter to convert such Notes
into the kind and amount of shares of stock, other securities or other property
or assets (including cash or any combination thereof) that they would have
owned or been entitled to receive (the “Reference Property”) upon such
recapitalization, reclassification, change, consolidation, merger, combination,
sale, lease, transfer or statutory share exchange had such Notes not been
converted into Common Stock immediately prior to such transaction.


 


In the event the holders of
Common Stock have the opportunity to elect the form of consideration to be
received in such transaction, the Company shall make adequate provision whereby
the Notes shall be convertible from and after the effective date of such
transaction into the form of consideration elected by a majority of the Company’s
stockholders in such transaction. The Company hereby agrees not to become a
party to any such transaction unless its terms are consistent with the
foregoing.


 


The above provisions of this Section 16.08
shall similarly apply to successive recapitalizations, reclassifications,
changes, consolidations, mergers, combinations, sales and conveyances.


 


SECTION 16.09.  TAXES ON SHARES ISSUED.


 


The issue of stock certificates
on convert for Notes shall be made without charge to the Holder thereof for any
documentary, stamp or similar issue or transfer tax in respect of the issue
thereof. The Company shall not, however, be required to pay any such tax which
may be payable in respect of any transfer involved in the issue and delivery of
stock in any name other than that of the Holder of any Note converted, and the
Company shall not be required to issue or deliver any such stock certificate
unless and until the Person or Persons requesting the issue thereof shall have
paid to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.


 


SECTION 16.10.  RESERVATION OF SHARES, SHARES; LISTING AND
COMPLIANCE.


 


The Company shall reserve and
keep available, free from preemptive rights, out of its authorized but unissued
shares or shares held in treasury, sufficient shares of Common Stock to provide
for the conversion of Notes from time to time as such Notes are presented for
conversion.


 


Before taking any action which
would cause an adjustment increasing the Conversion Rate to an amount that
would cause the conversion price to be reduced below the then par value, if
any, of the shares of Common Stock issuable upon conversion of the Notes, the
Company shall take all corporate action which may, in the opinion of its 


 


28

















 


counsel, be
necessary in order that the Company may validly and legally issue shares of
such Common Stock at the Conversion Rate.


 


The Company covenants that all
shares of Common Stock which may be issued upon conversion of Notes will upon
issue be fully paid and non-assessable by the Company and free from all taxes,
liens and charges with respect to the issue by the Company thereof, except as
set forth in Section 16.09.


 


The Company covenants that, if
any shares of Common Stock to be provided for the purpose of conversion of
Notes hereunder require registration with or approval of any governmental
authority under any federal or state law before such shares may be validly
issued upon conversion, the Company will in good faith and as expeditiously as
possible, to the extent then permitted by the rules and interpretations of
the Commission (or any successor thereto), endeavor to secure such registration
or approval, as the case may be.


 


The Company further covenants
that, if at any time the Common Stock shall be listed on the New York Stock
Exchange or any other national securities exchange or automated quotation
system, the Company shall, if permitted by the rules of such exchange or
automated quotation system, list and keep listed, so long as the Common Stock
shall be so listed on such exchange or automated quotation system, all Common
Stock issued upon conversion of the Notes.


 


SECTION 16.11.  RESPONSIBILITY OF TRUSTEE.


 


The Trustee and any other
Conversion Agent shall not at any time be under any duty or responsibility to
any Holder of Notes to determine the Conversion Rate or whether any facts exist
which may require any adjustment of the Conversion Rate, or with respect to the
nature or extent or calculation of any such adjustment when made, or with
respect to the method employed, or herein or in any supplemental indenture
provided to be employed, in making the same. The Trustee and any other
Conversion Agent shall not be accountable with respect to the validity or value
(or the kind or amount) of any shares of Common Stock, or of any securities or
property, which may at any time be issued or delivered upon the conversion of
any Note; and the Trustee and any other Conversion Agent make no
representations with respect thereto. Neither the Trustee nor any Conversion
Agent shall be responsible for any failure of the Company to issue, transfer or
deliver any shares of Common Stock or stock certificates or other securities or
property or cash upon the surrender of any Note for the purpose of conversion
or to comply with any of the duties, responsibilities or covenants of the
Company contained in this Article XVI.”


 


29
















 


ARTICLE VIII




Repurchases


 


SECTION 8.01. Addition
of Article XVII.  The Original
Indenture is hereby amended with respect to the Notes by adding a new Article XVII
following Section 16.11 as follows:


 


“ARTICLE XVII


 


REPURCHASES


 


SECTION 17.01.  REPURCHASE
AT THE OPTION OF THE HOLDER UPON A FUNDAMENTAL CHANGE.


 


Subject to the satisfaction of
the requirements of this Section 17.01, if a Fundamental Change occurs,
each Holder will, upon receipt of the Fundamental Change Repurchase Notice,
have the right to require the Company to repurchase for cash any or all of such
Holder’s Notes, or any portion of those Notes that is equal to $1,000 or an
integral multiple of $1,000, on the date (the “Fundamental Change Repurchase
Date”) that is no earlier than 30 days and no later than 60 days after the date
the Company gives the Fundamental Change Repurchase Notice at a price equal to
100% of the principal amount of the Notes to be repurchased plus accrued and
unpaid interest, if any, to (but excluding) the Fundamental Change Repurchase
Date (the “Fundamental Change Repurchase Price”).


 


Within 30 days after the
occurrence of a Fundamental Change, the Company shall provide to all Holders of
the Notes, the Trustee and the Paying Agent a notice of the occurrence of the
Fundamental Change and of the resulting repurchase right (the “Fundamental
Change Repurchase Notice”).


 


To exercise the repurchase
right in connection with a Fundamental Change, a Holder must, prior to the
Close of Business, on or before the Business Day immediately preceding the
Fundamental Change Repurchase Date, deliver the Notes to be repurchased to the
Paying Agent, duly endorsed for transfer, or effect book-entry transfer of the
Notes to the Paying Agent, and must deliver a written notice of repurchase (a “Repurchase
Exercise Notice”), substantially in the form set forth in Exhibit II of
the Global Security, duly completed to the Paying Agent. The Repurchase
Exercise Notice must state:


 


(1)  
if the Notes are certificated, the certificate numbers of the Notes to
be delivered for repurchase;


 


(2)  
the portion of the principal amount of the Notes to be repurchased,
which must be equal to $1,000 or an integral multiple thereof; and


 


30

















 


(3)  that the Notes are to be
repurchased by the Company as of the Fundamental Change Repurchase Date
pursuant to the applicable provisions of the Notes and this Indenture.


 


If the Notes are not in
certificated form, the Repurchase Exercise Notice must comply with the
Applicable Procedures.


 


A Holder may withdraw any
Repurchase Exercise Notice (in whole or in part) by a written notice of
withdrawal delivered to the Paying Agent prior to the Close of Business on the
Business Day immediately preceding the Fundamental Change Repurchase Date. The
notice of withdrawal must state:


 


(1)  
the principal amount of the Notes for which the Repurchase Exercise
Notice has been withdrawn;


 


(2) if certificated Notes have been
issued, the certificate numbers of the withdrawn Notes; and


 


(3) the principal amount, if any, that
remains subject to the Repurchase Notice.


 


If the Notes are not in
certificated form, the withdrawal notice must comply with the Applicable
Procedures.


 


The Company shall promptly pay
the Fundamental Change Repurchase Price for Notes surrendered for repurchase
following the Fundamental Change Repurchase Date.


 


Notwithstanding the foregoing,
the Company will be under no obligation to repurchase any Notes upon a
Fundamental Change if there has occurred and is continuing an Event of Default,
other than an Event of Default that is cured by the payment of the Fundamental
Change Repurchase Price; provided that, for the avoidance of doubt,
failure of the Company to pay the Fundamental Change Repurchase Price when
required would result in an Event of Default under this Indenture.


 


SECTION 17.02.  COMPLIANCE WITH SECURITIES LAWS UPON
REPURCHASE OF NOTES.


 


In connection with any offer to
purchase or purchase of Notes under Section 17.01, the Company shall
comply with all tender offer rules applicable to the Company under the
Exchange Act. The Company shall (a) comply with Rule 13e-4 and Rule 14e-l
(or any successor to either such Rule), if applicable, under the Exchange Act, (b) file
the related Schedule TO (or any successor or similar schedule, form or report)
if required under the Exchange Act and (c) otherwise comply with all
federal and state securities laws in connection with such offer to purchase or
purchase of Notes, all so as to permit the rights of the Holders and
obligations of the Company under Section 17.01 and Section 16.06 to
be exercised in the time and in the manner specified therein. To the extent
that the provisions of any securities laws or regulations conflict with the
provisions 


 


31

















 


of this Section 17.02,
the Company will comply with the applicable securities laws and regulations and
will not be deemed to have breached its obligations under this Section 17.02
by virtue of such conflict.


 


SECTION 17.03.  REPAYMENT TO THE COMPANY.


 


To the extent that the
aggregate amount of cash deposited by the Company pursuant to Section 17.01
exceeds the aggregate Fundamental Change Repurchase Price together with
interest, if any, thereon of the Notes or portions thereof that the Company is
obligated to purchase, then promptly after the Fundamental Change Repurchase
Date, the Trustee or a Paying Agent, as the case may be, shall return any such
excess cash to the Company.”


 


ARTICLE IX




Miscellaneous


 


SECTION 9.01. Ratification
of Original Indenture; Supplemental Indentures Part of Original Indenture.  Except as expressly amended hereby, the
Original Indenture is in all respects ratified and confirmed and all the terms,
conditions and provisions thereof shall remain in full force and effect.  This First Supplemental Indenture shall form
a part of the Original Indenture for all purposes, and every Holder heretofore
or heareafter authenticated and delivered shall be bound hereby.


 


SECTION 9.02. Application
of First Supplemental Indenture. 
Each and every term and condition contained in this First Supplemental
Indenture that modifies, amends or supplements the terms and conditions of the
Indenture shall apply only to the Notes created hereby and not to any future
series of Notes established under the Indenture.


 


SECTION 9.03. Governing
Law.  This First Supplemental
Indenture and the Notes shall be governed by and construed in accordance with
the laws of the State of New York.


 


SECTION 9.04. Counterparts.  This First Supplemental Indenture may be executed
in any number of counterparts, including by facsimile or electronic
transmission, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same
instrument.


 


32

















 


IN WITNESS WHEREOF, the parties
hereto have caused this Supplemental Indenture to be duly executed as of the
date written above.


 


 


	
   

  	
  RITE AID CORPORATION,

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
  /s/ Robert B. Sari

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Robert B. Sari

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  	
   

  	
  and General Counsel

  



 


	
   

  	
  THE BANK OF NEW YORK TRUST 

  COMPANY, N.A.,

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
  /s/ D.G. Donovan

  
	
   

  	
   

  	
   

  	
  Name:

  	
  D.G. Donovan

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  



 


33

















 


Exhibit A - Form of Security


 


[Face of Security]


 


UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A
NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.


 


UNLESS AND UNTIL IT IS
EXCHANGED IN WHOLE OR IN PART FOR REGISTERED SECURITIES IN DEFINITIVE
REGISTERED FORM IN THE LIMITED CIRCUMSTANCES REFERRED TO IN THE INDENTURE,
THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY
OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE
OR SUCH SUCCESSOR DEPOSITORY.


 


A-1

















 


RITE AID CORPORATION


 


8.5% CONVERTIBLE NOTE DUE 2015


 


No.:                    


CUSIP No. 767754 BU7


ISIN No. US767754BU70


 


RITE AID CORPORATION, a
Delaware corporation, promises to pay to [     
] or registered assigns, the principal sum of [                               ]
Dollars on May 15, 2015.


 


	
  Interest
  Payment Dates:

  	
   

  	
  May 15
  and November 15, commencing November 15, 2008.

  
	
   

  	
   

  	
   

  
	
  Regular
  Record Dates:

  	
   

  	
  May 1
  and November 1

  



 


A-2

















 


IN THE WITNESS WHEREOF, the
Company has caused this Security to be duly executed.


 


 


	
   

  	
  RITE AID CORPORATION,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
				



 


A-3

















 


TRUSTEE’S
CERTIFICATE OF AUTHENTICATION


 


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


 


	
  Dated:

  	
   

  	
   

  	
   

  



 


	
   

  	
  THE BANK OF NEW YORK TRUST 

  COMPANY, N.A., AS TRUSTEE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  by

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  



 


A-4
















 


[Form of Reverse of Security]


 


This Security is one of a duly
authorized issue of securities of the Company (herein called the “Securities”),
issued and to be issued in one or more series under the Original Indenture,
dated as of May 29, 2008 (as supplemented by the First Supplemental
Indenture dated as of May 29, 2008, the “Indenture”), between the Company
and The Bank of New York Trust Company, N.A., as Trustee (herein called the “Trustee”,
which term includes any successor trustee under the Indenture), and reference
is hereby made to the Indenture for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered.  This Security is one of the series designated
on the face hereof, limited in aggregate principal amount to $158,000,000.


 


The Securities of this series
will mature on May 15, 2015, and will bear interest at the rate of 8.50%
per annum.  The Company will pay interest
on the Securities of this series on each May 15 and November 15,
beginning on November 15, 2008, to Holders of record on the immediately
preceding May 1 or November 1, respectively.  Interest on the Securities of this series
shall accrue from the most recent date to which interest has been paid or, if
no interest has been paid, from the date of issuance.  Interest on the Securities of this series
will be calculated on the basis of a 360-day year comprised of twelve 30-day
months.


 


Payments of the principal of
and interest on the Securities of this series shall be made in Dollars at the
office of the Paying Agent.  However, the
Company may make any payments in respect of the Securities by check or wire payable
in Dollars; provided, however, that a Holder holding Securities
with an aggregate principal amount equal to or greater than $1,000,000 will be
paid by wire transfer in immediately available funds at the election of such
Holder.  The Company may mail an interest
check to the Holder’s last address appearing on the Security Register.  Notwithstanding the foregoing, so long as a
Security is registered in the name of a Depositary or its nominee, all payments
thereon shall be made by wire transfer of immediately available funds to the
account of the Depositary or its nominee.


 


No sinking fund is provided for
the Securities of this series.  The
Securities of this series may not be redeemed at any time prior to May 15,
2015.  These Securities may not be
satisfied and discharged by the Company and these Securities are not subject to
any defeasance provisions of the Indenture.


 


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


 


The Indenture permits, with
certain exceptions as therein provided, the amendment thereof and the
modification of the rights and obligations of the Company and the rights of the
Holders of the Securities of this series to be affected under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of 


 


A-5

















 


50% in
principal amount of the Securities of this series Outstanding to be affected.
The Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of this series Outstanding,
on behalf of the Holders of all Securities of such series, to waive compliance
by the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or waiver
by the Holder of this Security shall be conclusive and binding upon such Holder
and upon all future Holders of this Security and of any Security issued upon
the registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.


 


As provided in and subject to
the provisions of the Indenture, the Holder of this Security shall not have the
right to institute any proceeding with respect to the Indenture or for the
appointment of a receiver or trustee or for any other remedy thereunder, unless
such Holder shall have previously given the Trustee written notice of a
continuing Event of Default with respect to the Securities of this series, the
Holders of not less than 25% in principal amount of the Securities of this
series at the time Outstanding shall have made written request to the Trustee
to institute proceedings in respect of such Event of Default as Trustee and
offered the Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such written request, for 60 days
after its receipt of such notice, request and offer of indemnity, the Trustee
shall have failed to institute such proceeding and the Trustee shall not have
received from the Holders of a majority in principal amount of Securities of this
series at the time Outstanding a direction inconsistent with such request for
60 days after receipt of such notice, request and offer of indemnity.
Notwithstanding the foregoing, no Holder or Holders shall have any right in any
manner whatever by virtue of, or by availing of, any provision of the Indenture
to affect, disturb or prejudice the rights of any other such Holders, or to
obtain or to seek to obtain priority or preference over any other of such
Holders or to enforce any right under the Indenture, except in the manner
provided in the Indenture and for the equal and ratable benefit of all of such
Holders.


 


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


 


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


 


Securities of this series are
issuable only in registered form without coupons in denominations of $1,000 and
any integral multiple thereof. As provided in the 


 


A-6

















 


Indenture and
subject to certain limitations therein set forth, Securities of this series are
exchangeable for a like aggregate principal amount of Securities of this series
and of like tenor of a different authorized denomination, as requested by the
Holder surrendering the same.


 


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


 


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


 


Subject to and upon compliance
with the provisions of the Indenture, at any time prior to the Close of
Business on the Business Day immediately preceding the Final Maturity Date, a
Holder of any Security shall have the right, at such Holder’s option, to
convert any portion of the principal amount of a Security that is an integral
multiple of $1,000 at an initial Conversion Rate of 386.3614 shares of Common
Stock per $1,000 principal amount of Securities (or at the current adjusted
Conversion Rate if an adjustment has been made as provided for in the
Indenture; provided, however, that, if such Security is submitted
or presented for repurchase pursuant to Article XVII of the Indenture,
such conversion right shall terminate at the Close of Business on the Business
Day immediately preceding the Fundamental Change Repurchase Date for such
Security (unless the Company shall default in making the Fundamental Change
Repurchase Price payment when due, in which case the conversion right shall
terminate at the close of business on the date such default is cured and such
Security is repurchased).


 


A Security of this series in
respect of which a Holder is electing to exercise its option to require
repurchase upon a Fundamental Change pursuant to the Indenture may be converted
only if such Holder withdraws its election in accordance with the Indenture. A
Holder of Securities is not entitled to any rights of a holder of Common Stock
until such Holder has converted such Securities for Common Stock, and only to
the extent such Securities are deemed to have been converted for Common Stock
under the Indenture.


 


To convert a Security of this
series, a Holder must (i) complete and manually sign a Conversion Notice
in substantially the form set forth in Exhibit I hereto or a facsimile of
a Conversion Notice and deliver such notice to a Conversion Agent, (ii) surrender
the Security to a Conversion Agent, (iii) furnish appropriate endorsements
and transfer documents if required by the Security Registrar or the Conversion
Agent, (iv) pay any transfer or similar tax, if required and (v) pay
funds equal to interest payable on the next Interest Payment Date, if
required.  A Conversion Notice is
irrevocable upon delivery to the Conversion Agent.


 


A-7

















 


Upon conversion of a Security
of this series, a Holder will not receive any cash payment of interest (unless
such conversion occurs between a Regular Record Date and the related Interest
Payment Date), and the Company will not adjust the Conversion Rate to account
for accrued and unpaid interest on the Security being converted.  Delivery to the Holder of the full number of
shares of Common Stock into which the Security is convertible, together with any
cash payment for fractional shares as provided in the Indenture, will be deemed
to satisfy the Company’s obligation with respect to such Security. Any accrued
but unpaid interest will be deemed to be paid in full upon conversion rather
than canceled, extinguished or forfeited.


 


Holders of Securities of this
series at the Close of Business on a Regular Record Date will receive payment
of interest payable on the related Interest Payment Date notwithstanding the
conversion of such Securities at any time after the Close of Business on the
Regular Record Date and prior to the related Interest Payment Date. Securities
or portions thereof surrendered for conversion during the period from the Close
of Business on a Regular Record Date to 9:00 a.m. New York City time on
the related Interest Payment Date shall be accompanied by payment to the
Company or its order, in immediately available funds or other funds acceptable
to the Company, of an amount equal to the interest payable on such Interest
Payment Date with respect to the principal amount of Securities or portions
thereof being surrendered for conversion; provided that no such payment need be
made (1) following the Close of Business on the Regular Record Date
immediately preceding the final Interest Payment Date, (2) if the Company
has specified a Fundamental Change Repurchase Date that occurs during the
period from the Close of Business on a Regular Record Date to the Close of
Business on the related Interest Payment Date or (3) to the extent any
overdue interest exists on the Conversion Date with respect to the Securities
converted, but only to the extent of such overdue interest.


 


Upon the conversion of a
Security of this series as provided in the Indenture, the Company shall deliver
shares of Common Stock, together with cash in lieu of any fractional shares, to
the Holder through the Conversion Agent. No payment or adjustment shall be made
for dividends on, or other distributions with respect to, any Common Stock
except as provided in the Indenture. The Conversion Agent shall, on behalf of
the Holders, convert the Securities of this series into shares of Common Stock,
together with any cash in lieu of fractional shares as provided in the
Indenture.


 


No fractional shares of Common
Stock or scrip certificates representing fractional shares shall be issued upon
conversion of Securities of this series. 
Instead, the Company will pay cash for all fractional shares of Common
Stock in an amount based on the Sale Price of the Common Stock on the Trading
Day immediately preceding the Conversion Date. 
If more than one Security of this series shall be surrendered for
conversion at one time by the same Holder, the number of full shares of Common
Stock that shall be issuable upon conversion shall be computed on the basis of
the aggregate principal amount of the Securities (or specified portions thereof
to the extent permitted hereby) so surrendered.


 


A-8

















 


Subject to the satisfaction of
the requirements of the Indenture, if a Fundamental Change occurs, each Holder
will, upon receipt of the Fundamental Change Repurchase Notice, have the right
to require the Company to repurchase for cash any or all of such Holder’s
Securities, or any portion of those Securities that is equal to $1,000 or an
integral multiple of $1,000, on Fundamental Change Repurchase Date (which shall
be no earlier than 30 days and no later than 60 days after the date the Company
gives the Fundamental Change Repurchase Notice) at a price equal to 100% of the
principal amount of the Securities to be repurchased plus accrued and unpaid
interest, if any, to (but excluding) the Fundamental Change Repurchase Date.


 


A “Fundamental Change” means
the occurrence of any of the following events: (1) any “person” or “group”
(as such terms are used in Sections 13(d) or 14(d) of the Exchange
Act or any successor provisions to either of the foregoing), including any
group acting for the purpose of acquiring, holding, voting or disposing of
securities within the meaning of Rule 13d-5(b)(1) under the Exchange
Act, becomes a “beneficial holder” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of shares of the Company’s capital stock
entitling the person to exercise 50% or more of the total voting power of all
shares of the Company’s capital stock that are entitled to vote generally in
elections of the Company’s directors (for the purposes of this clause (1), such
person or group shall be deemed to beneficially own any voting stock of a
corporation held by any other corporation (the “parent corporation”) so long as
such person or group beneficially owns, directly or indirectly, in the
aggregate a majority of the total voting power of the capital stock entitled to
vote in the election of directors of such other corporation); (2) the
sale, transfer, assignment, lease, conveyance or other disposition, directly or
indirectly, of all or substantially all the assets of the Company and its
Subsidiaries, considered as a whole (other than a disposition of such assets as
an entirety or virtually as an entirety to a wholly owned Subsidiary) shall
have occurred, or the Company merges, consolidates or amalgamates with or into
any other Person or any other person merges, consolidates or amalgamates with
or into the Company, in any such event pursuant to a transaction in which the
outstanding voting stock is reclassified into or exchanged for cash, securities
or other property, other than any such transaction where:           (a) the outstanding voting stock
is reclassified into or exchanged for other voting stock of the Company or for
voting stock of the surviving corporation; and (b) the holders of the
voting stock of the Company immediately prior to such transaction own, directly
or indirectly, not less than a majority of the voting stock of the Company or
the surviving corporation immediately after such transaction and in
substantially the same proportion as before the transaction; or (3) during
any period of two consecutive years commencing after the Issue Date,
individuals who at the beginning of such period constituted the Board of
Directors (together with any new directors whose election or appointment by
such Board of Directors or whose nomination for election by the shareholders of
the Company was approved by a vote of not less than three-fourths of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors then in office; or (4) the shareholders of the Company shall
have approved any plan of liquidation or dissolution of the Company; or (5) if
the Common Stock (or other common stock into which the Securities are then
convertible) is (i) not listed or approved for trading on the New York
Stock Exchange, the NASDAQ 


 


A-9

















 


Global Select
Market, the NASDAQ Global Market or any of their respective successors or (ii) other
than as a result of New York Stock Exchange Rule 123D(3), suspended from
trading for 20 consecutive business days; provided, however, that
a Fundamental Change shall not be deemed to have occurred pursuant to clause (2) above
if at least 90% of the consideration (excluding cash payments for fractional
shares) in the transaction or transactions constituting the Fundamental Change
consists of Publicly Traded Securities, and as a result of such transaction or
transactions the Securities become convertible into such Publicly Traded
Securities; provided further that for the avoidance of doubt, any
transaction or event that would constitute a Fundamental Change under both
clauses (1) and (2) in the definition of Fundamental Change shall be
deemed to be governed solely by clause (2) of the definition, including
the provisos thereto.


 


Within 30 days after the
occurrence of a Fundamental Change, the Company shall provide to all Holders of
the Securities of this series, the Trustee and the Paying Agent Fundamental
Change Repurchase Notice.


 


To exercise the repurchase
right in connection with a Fundamental Change, a Holder must, prior to the
Close of Business, on or before the Business Day immediately preceding the date
of the Fundamental Change Repurchase Notice, deliver the Securities to be
repurchased to the Paying Agent, duly endorsed for transfer, or effect
book-entry transfer of the Securities to the Paying Agent, and must deliver a
Repurchase Exercise Notice, substantially in the form set forth in Exhibit II
hereto, duly completed to the Paying Agent. 
A Holder may withdraw any Repurchase Exercise Notice (in whole or in
part) by a written notice of withdrawal delivered to the Paying Agent prior to
the Close of Business on the Business Day immediately preceding the Fundamental
Change Repurchase Date as provided in the Indenture.


 


The Company shall promptly pay
the Fundamental Change Repurchase Price for Securities of this series
surrendered for repurchase following the Fundamental Change Repurchase Date.


 


Notwithstanding the foregoing,
the Company will be under no obligation to repurchase any Securities of this
series upon a Fundamental Change if there has occurred and is continuing an
Event of Default, other than an Event of Default that is cured by the payment
of the Fundamental Change Repurchase Price; provided that, for the
avoidance of doubt, failure of the Company to pay the Fundamental Change
Repurchase Price when required would result in an Event of Default under this
Indenture.


 


If any of the following events
occur, namely (i) any recapitalization, reclassification or other similar
change in the outstanding shares of Common Stock (other than changes resulting
from a subdivision or combination), (ii) any consolidation, merger or
combination of the Company with another Person, (iii) the Company is a
party to a statutory share exchange or (iv) any sale, lease or other
transfer of all or substantially all of the assets of the Company to any other
Person, in each case, as a result of which holders of Common Stock shall be
entitled to receive stock, other securities, other property or assets (including
cash or any combination thereof) with respect to or in exchange for such Common
Stock, the Holders of the Securities of this series then 


 


A-10

















 


Outstanding
will be entitled thereafter to convert such Securities into the kind and amount
of shares of stock, other securities or other property or assets (including
cash or any combination thereof) that they would have owned or been entitled to
receive upon such recapitalization, reclassification, change, consolidation,
merger, combination, sale, lease, transfer or statutory share exchange had such
Securities not been converted into Common Stock immediately prior to such
transaction.


 


In the event the holders of
Common Stock have the opportunity to elect the form of consideration to be
received in such transaction, the Company shall make adequate provision whereby
the Securities of this series shall be convertible from and after the effective
date of such transaction into the form of consideration elected by a majority
of the Company’s stockholders in such transaction. The Company hereby agrees
not to become a party to any such transaction unless its terms are consistent
with the foregoing.


 


If a transaction described in
clause (1), (2) or (5) of the definition of Fundamental Change
without giving effect to any exclusions in such clauses, excluding a
Fundamental Change in clause (2) where the exception relating to a
transaction involving consideration of at least 90% Publicly Traded Securities
(a “Make-Whole Fundamental Change”), occurs, and a Holder elects to convert
Securities in connection with a Make-Whole Fundamental Change, the Company
shall increase the Conversion Rate for the Securities surrendered for
conversion by a number of Additional Shares to be determined based on Effective
Date of the Make-Whole Fundamental Change and Stock Price paid per share of
Common Stock in such transaction by reference to the table in the Indenture, as
adjusted in accordance with the Indenture. 
If the holders of Common Stock receive only cash in the Make-Whole
Fundamental Change, the Stock Price shall be the cash amount paid per share of
Common Stock. Otherwise, the Stock Price shall be the average of the Sale
Prices of a share of Common Stock over the 10 consecutive Trading Day period
ending on and including the Trading Day immediately preceding the Effective
Date.


 


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


 


A-11

















 


Exhibit I - Form of Conversion
Notice


 


The Bank of New York Trust Company, N.A., as


Conversion Agent


 


Re:                               Rite
Aid Corporation


8.5% Convertible Notes


due May 15, 2015 (the “Notes”)


 


Reference is hereby made to the
Indenture, dated as of May 29, 2008 (the “Base Indenture”) as supplemented
by the First Supplemental Indenture dated as of May 29, 2008 (the “Supplemental
Indenture”, together with the Base Indenture, the “Indenture”), between Rite
Aid Corporation and The Bank of New York Trust Company, as Trustee.  Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.


 


This notice of conversion
relates to the Notes specified above, which are registered in the name of the
undersigned (the “Holder”).  The Holder
hereby irrevocably exercises its right to convert such Notes, or the portion
thereof, if any, specified below, into Common Stock and, except to the
extent specified or required as described below, directs that certificates
representing such Common Stock, together with any check in payment for a
fractional share and any Note representing any unconverted principal amount, be
issued and delivered through the facilities of the Depositary, for credit to
the account(s) of the Person(s) indicated below.


 


The Holder acknowledges and
agrees that no Common Stock will be delivered on conversion until (i) any
amount payable by the Holder on account of interest is paid, (ii) any
certificates evidencing specified Notes not held in book-entry form are duly
endorsed or assigned to the Company or in blank and surrendered and (iii) any
taxes or other charges or documents required in connection with a transfer on
conversion, and any other required items, are delivered to the Conversion
Agent.


 


The Holder acknowledges and
agrees that, notwithstanding this request for conversion, the Company may
require that the Common Stock delivered on conversion of the specified
Notes be delivered in certificated form subject to a restrictive legend, or
that additional certifications be delivered on behalf of the relevant
beneficial owner(s), if it determines that doing so is necessary to comply with
the requirements of the Notes Act or otherwise, as provided in the Indenture.


 


Conversion of the specified
Notes is subject to the requirements established by the Company in the
Indenture as well as to the procedures of the Depositary, all as in effect from
time to time.  The specified Notes will
be deemed to have been converted as of the close of business on the first day
on which this conversion notice and all other required items have been
delivered to the Conversion Agent as 


 


I-1

















 


provided above
and, upon such conversion, shall cease to accrue interest or be Outstanding
(subject to the Holder’s right to receive the Conversion Notes as provided in
the Indenture).  Prior to such
conversion, the Holder will have no rights in the Common Stock.


 


Please provide the information
requested below, as applicable.


 


1.                                       PLEASE SPECIFY
THE SECURITIES HELD AND THE PORTION THEREOF TO BE CONVERTED:


 


Principal amount held:  U.S.$                                                                                                                         


CUSIP number(s):                                                                                                                                           


Depositary (DTC) account where held:
                                                                                                         


Principal amount being converted (if less
than all): U.S.$
                                                                            


 


2.                                       UNLESS AND TO
THE EXTENT OTHERWISE SPECIFIED BELOW, all Notes (together with any unconverted
Notes) will be delivered in book-entry form to the DTC account specified in
Item 1 above.


 


3.                                       IF OTHER
ARRANGEMENTS ARE DESIRED, please (a) specify the type, number and form of
securities to be delivered on conversion and the name(s) of the account
holder(s) or registered owner(s), by checking the appropriate boxes and
providing the information requested and (b) complete Item (4) below:


 


o                                    Book-Entry


 


Number of
shares of Common Stock:                                                                                           


 


DTC Account:
                                                                                           


 


o                                    Certificates


 


Number of shares of Common Stock:                                                                                           


 


Registered Owner:                                                                                           


 


I-2

















 


Please sign and date this notice in the space provided below.


 


	
  DATE::

  	
   

  	
   

  



 


 


	
   

  	
   

  
	
   

  	
  Name of Holder

  



 


 


	
   

  	
   

  
	
   

  	
  Signature(s) of Holder 

  Title:

  
	
   

  	
   

  
	
   

  	
   (If the Holder is a
  corporation, partnership or fiduciary, the title of the Person signing on
  behalf of the Holder must be stated.)

  



 


 


Notice:  Signature(s) must be guaranteed by an “eligible
guarantor institution” meeting the requirements of the Trustee, which
requirements will include membership or participation in the Securities
Transfer Agents Medallion Program (STAMP), the Stock Exchange Medallion Program
(SEMP) and the New York Stock Exchange Medallion Signature Program (MSP) or
such other “signature guarantee program” as may be determined by the Trustee in
addition to, or in substitution for, STAMP, SEMP or MSP, all in accordance with
the Securities Exchange Act of 1934.


 


 


	
   

  	
   

  
	
  Signature Guarantee

  	
   

  



 


I-3

















 


Exhibit II - Form of Repurchase
Exercise Notice


 


REPURCHASE EXERCISE NOTICE


 


1.  Pursuant to Section 17.01 of the
Indenture, as supplemented by the First Supplemental Indenture, the undersigned
hereby elects to have this Note repurchased by the Company.


 


2.  The undersigned hereby directs the Trustee or
the Company to pay it or                                     
an amount in cash equal to 100% of the principal amount hereof, plus accrued
and unpaid interest, if any, to (but excluding) the Fundamental Change
Repurchase Date, as provided in the Indenture.


 


 


	
  Dated:

  	
   

  	
   

  



 


 


	
   

  	
   

  
	
   

  	
  Signature

  



 


 


	
   

  	
   

  
	
   

  	
  Signature Guarantee

  



 


 


NOTICE: 
Signature(s) must be guaranteed by an “eligible guarantor
institution” meeting the requirements of the Trustee, which requirements will
include membership or participation in the Securities Transfer Agents Medallion
Program (STAMP), the Stock Exchange Medallion Program (SEMP) and the New York
Stock Exchange Medallion Signature Program (MSP) or such other “signature
guarantee program” as may be determined by the Trustee in addition to, or in
substitution for, STAMP, SEMP or MSP, all in accordance with the Securities
Exchange Act of 1934.


 


	
  Principal amount to be repurchased:

  	
   

  	
  $                              

  
	
  Remaining principal amount following such repurchase:

  	
   

  	
  $                               

  



 


NOTICE: 
The signature to the foregoing Repurchase Exercise Notice must
correspond to the Name as written upon the fact of this Note in every
particular way, without alteration or any change whatsoever.


 


II-4