Document:

Exhibit 4.14

 

 

RITE AID CORPORATION

 

 

   % Senior Secured Notes due
2017

 

 

 

 

INDENTURE

 

 

Dated as of February    , 2007

 

 

 

 

BNY Midwest Trust Company,

 

Trustee

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I

  	
   

  
	
   

  	
   

  
	
  Definitions and Incorporation by Reference

  	
   

  
	
   

  	
   

  
	
  SECTION 1.01. Definitions

  	
  1

  
	
  SECTION 1.02. Other Definitions

  	
  34

  
	
  SECTION 1.03. Incorporation by Reference of Trust Indenture Act

  	
  35

  
	
  SECTION 1.04. Rules of Construction

  	
  35

  
	
   

  	
   

  
	
  ARTICLE II

  	
   

  
	
   

  	
   

  
	
  The Securities

  	
   

  
	
   

  	
   

  
	
  SECTION 2.01. Amount of Securities; Issuable in Series

  	
  36

  
	
  SECTION 2.02. Form and Dating

  	
  37

  
	
  SECTION 2.03. Execution and Authentication

  	
  37

  
	
  SECTION 2.04. Registrar and Paying Agent

  	
  38

  
	
  SECTION 2.05. Paying Agent To Hold Money in Trust

  	
  38

  
	
  SECTION 2.06. Holder Lists

  	
  38

  
	
  SECTION 2.07. Replacement Securities

  	
  39

  
	
  SECTION 2.08. Outstanding Securities

  	
  39

  
	
  SECTION 2.09. Temporary Securities

  	
  39

  
	
  SECTION 2.10. Cancellation

  	
  39

  
	
  SECTION 2.11. Defaulted Interest

  	
  40

  
	
  SECTION 2.12. CUSIP Numbers

  	
  40

  
	
   

  	
   

  
	
  ARTICLE III

  	
   

  
	
   

  	
   

  
	
  Redemption

  	
   

  
	
   

  	
   

  
	
  SECTION 3.01. Notices to Trustee

  	
  40

  
	
  SECTION 3.02. Selection of Securities To Be Redeemed

  	
  40

  
	
  SECTION 3.03. Notice of Redemption

  	
  41

  
	
  SECTION 3.04. Effect of Notice of Redemption

  	
  41

  
	
  SECTION 3.05. Deposit of Redemption Price

  	
  41

  
	
  SECTION 3.06. Securities Redeemed in Part

  	
  42

  
	
   

  	
   

  
	
  ARTICLE IV

  	
   

  
	
   

  	
   

  
	
  Covenants

  	
   

  
	
   

  	
   

  
	
  SECTION 4.01. Payment of Securities

  	
  42

  
	
  SECTION 4.02. SEC Reports

  	
  42

  
	
  SECTION 4.03. Limitation on Debt

  	
  42

  

 

 

	
  SECTION 4.04. Limitation on Restricted Payments

  	
  46

  
	
  SECTION 4.05. Limitation on Liens

  	
  48

  
	
  SECTION 4.06. Limitation on Asset Sales and Specified Collateral
  Dispositions

  	
  49

  
	
  SECTION 4.07. Limitation on Restrictions on Distributions from
  Restricted Subsidiaries

  	
  52

  
	
  SECTION 4.08. Limitation on Transactions with Affiliates

  	
  54

  
	
  SECTION 4.09. Guarantees by Subsidiaries

  	
  55

  
	
  SECTION 4.10. Limitation on Sale and Leaseback Transactions

  	
  57

  
	
  SECTION 4.11. Designation of Restricted and Unrestricted Subsidiaries

  	
  57

  
	
  SECTION 4.12. Additional Security Documents

  	
  58

  
	
  SECTION 4.13. Change of Control

  	
  58

  
	
  SECTION 4.14. Further Instruments and Acts

  	
  60

  
	
  SECTION 4.15. Covenant Suspension

  	
  60

  
	
   

  	
   

  
	
  ARTICLE V

  	
   

  
	
   

  	
   

  
	
  Successor Company

  	
   

  
	
   

  	
   

  
	
  SECTION 5.01. When Company May Merge or Transfer Assets

  	
  61

  
	
   

  	
   

  
	
  ARTICLE VI

  	
   

  
	
   

  	
   

  
	
  Defaults and Remedies

  	
   

  
	
   

  	
   

  
	
  SECTION 6.01. Events of Default

  	
  63

  
	
  SECTION 6.02. Acceleration

  	
  65

  
	
  SECTION 6.03. Other Remedies

  	
  66

  
	
  SECTION 6.04. Waiver of Past Defaults

  	
  66

  
	
  SECTION 6.05. Control by Majority

  	
  66

  
	
  SECTION 6.06. Limitation on Suits

  	
  66

  
	
  SECTION 6.07. Rights of Holders to Receive Payment

  	
  67

  
	
  SECTION 6.08. Collection Suit by Trustee

  	
  67

  
	
  SECTION 6.09. Trustee May File Proofs of Claim

  	
  67

  
	
  SECTION 6.10. Priorities

  	
  67

  
	
  SECTION 6.11. Undertaking for Costs

  	
  68

  
	
  SECTION 6.12. Waiver of Stay or Extension Laws

  	
  68

  
	
  SECTION 6.13. Enforcement of Remedies

  	
  68

  
	
   

  	
   

  
	
  ARTICLE VII

  	
   

  
	
   

  	
   

  
	
  Trustee

  	
   

  
	
   

  	
   

  
	
  SECTION 7.01. Duties of Trustee

  	
  68

  
	
  SECTION 7.02. Rights of Trustee

  	
  69

  
	
  SECTION 7.03. Individual Rights of Trustee

  	
  70

  
	
  SECTION 7.04. Trustee’s Disclaimer

  	
  70

  
	
  SECTION 7.05. Notice of Defaults

  	
  70

  
	
  SECTION 7.06. Reports by Trustee to Holders

  	
  70

  

 

 

	
  SECTION 7.07. Compensation and Indemnity

  	
  71

  
	
  SECTION 7.08. Replacement of Trustee

  	
  71

  
	
  SECTION 7.09. Successor Trustee by Merger

  	
  72

  
	
  SECTION 7.10. Eligibility; Disqualification

  	
  72

  
	
  SECTION 7.11. Preferential Collection of Claims Against Company

  	
  73

  
	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  
	
   

  	
   

  
	
  Discharge of Indenture; Defeasance

  	
   

  
	
   

  	
   

  
	
  SECTION 8.01. Discharge of Liability on Securities; Defeasance

  	
  73

  
	
  SECTION 8.02. Conditions to Defeasance

  	
  74

  
	
  SECTION 8.03. Application of Trust Money

  	
  75

  
	
  SECTION 8.04. Repayment to Company

  	
  75

  
	
  SECTION 8.05. Indemnity for Government Obligations

  	
  75

  
	
  SECTION 8.06. Reinstatement

  	
  75

  
	
   

  	
   

  
	
  ARTICLE IX

  	
   

  
	
   

  	
   

  
	
  Amendments

  	
   

  
	
   

  	
   

  
	
  SECTION 9.01. Without Consent of Holders

  	
  76

  
	
  SECTION 9.02. With Consent of Holders

  	
  77

  
	
  SECTION 9.03. Compliance with Trust Indenture Act

  	
  81

  
	
  SECTION 9.04. Revocation and Effect of Consents and Waivers

  	
  81

  
	
  SECTION 9.05. Notation on or Exchange of Securities

  	
  81

  
	
  SECTION 9.06. Trustee To Sign Amendments

  	
  81

  
	
  SECTION 9.07. Payment for Consent

  	
  82

  
	
   

  	
   

  
	
  ARTICLE X

  	
   

  
	
   

  	
   

  
	
  Miscellaneous

  	
   

  
	
   

  	
   

  
	
  SECTION 10.01. Trust Indenture Act Controls

  	
  82

  
	
  SECTION 10.02. Notices

  	
  82

  
	
  SECTION 10.03. Communication by Holders with Other Holders

  	
  83

  
	
  SECTION 10.04. Certificate and Opinion as to Conditions Precedent

  	
  83

  
	
  SECTION 10.05. Statements Required in Certificate or Opinion

  	
  83

  
	
  SECTION 10.06. When Securities Disregarded

  	
  84

  
	
  SECTION 10.07. Rules by Trustee, Paying Agent and Registrar

  	
  84

  
	
  SECTION 10.08. Legal Holidays

  	
  84

  
	
  SECTION 10.09. Governing Law

  	
  84

  
	
  SECTION 10.10. No Recourse Against Others

  	
  84

  
	
  SECTION 10.11. Successors

  	
  84

  
	
  SECTION 10.12. Multiple Originals

  	
  84

  
	
  SECTION 10.13. Table of Contents; Headings

  	
  84

  

 

 

Exhibit 1 - Form of Security

 

 

CROSS-REFERENCE TABLE

 

	
  TIA

  Section

  	
   

  	
  Indenture

  Section

  
	
  310 (a)(1)

  	
   

  	
  7.10

  
	
  (a)(2)

  	
   

  	
  7.10

  
	
  (a)(3)

  	
   

  	
  N.A.

  
	
  (a)(4)

  	
   

  	
  N.A.

  
	
  (b)

  	
   

  	
  7.08;

  7.10

  
	
  (c)

  	
   

  	
  N.A.

  
	
  311 (a)

  	
   

  	
  7.11

  
	
  (b)

  	
   

  	
  7.11

  
	
  (c)

  	
   

  	
  N.A.

  
	
  312 (a)

  	
   

  	
  2.06

  
	
  (b)

  	
   

  	
  10.03

  
	
  (c)

  	
   

  	
  10.03

  
	
  313 (a)

  	
   

  	
  7.06

  
	
  (b)(1)

  	
   

  	
  7.06;

  10.02

  
	
  (b)(2)

  	
   

  	
  7.06

  
	
  (c)

  	
   

  	
  7.06;

  10.02

  
	
  (d)

  	
   

  	
  7.06

  
	
  314 (a)

  	
   

  	
  4.02;

  4.09;

  7.06;

  10.02

  
	
  (b)

  	
   

  	
  4.09;

  7.02;

  10.02

  
	
  (c)(1)

  	
   

  	
  7.02

  
	
  (c)(2)

  	
   

  	
  7.02

  
	
  (c)(3)

  	
   

  	
  N.A.

  
	
  (d)

  	
   

  	
  1.03;

  7.02

  
	
  (e)

  	
   

  	
  10.05

  
	
  (f)

  	
   

  	
  4.14

  
	
  315 (a)

  	
   

  	
  7.01

  
	
  (b)

  	
   

  	
  7.05;

  10.02

  
	
  (c)

  	
   

  	
  7.01

  
	
  (d)

  	
   

  	
  7.01

  
	
  (e)

  	
   

  	
  6.11

  
	
  316 (a)(last sentence)

  	
   

  	
  10.06

  
	
  (a)(1)(A)

  	
   

  	
  6.05

  
	
  (a)(1)(B)

  	
   

  	
  6.04

  

 

 

	
  TIA

  Section

  	
   

  	
  Indenture

  Section

  
	
  (a)(2)

  	
   

  	
  N.A.

  
	
  (b)

  	
   

  	
  6.07

  
	
  317 (a)(1)

  	
   

  	
  6.08

  
	
  (a)(2)

  	
   

  	
  6.09

  
	
  (b)

  	
   

  	
  2.05

  
	
  318 (a)

  	
   

  	
  10.01

  

 

N.A. Means Not Applicable.

 

Note:  This Cross-Reference Table shall not, for any
purposes, be deemed to be part of this Indenture.

 

 

INDENTURE dated as of February    ,
2007, among RITE AID CORPORATION, a Delaware corporation (the “Company”), each
of the SUBSIDIARY GUARANTORS named in Schedule A hereto and BNY MIDWEST TRUST
COMPANY, an Illinois trust company, as Trustee (the “Trustee”).

 

Each party
agrees as follows for the benefit of the other party and for the equal and
ratable benefit of the Holders of the Company’s    % Senior
Secured Notes due 2017, to be issued, from time to time, in one or more series
as provided in this Indenture (the “Initial Securities”):

 

ARTICLE I

Definitions and Incorporation by Reference

 

SECTION 1.01. Definitions.

 

“Additional
Assets” means:

 

(a) any Property (other than cash, cash equivalents and securities) to
be owned by the Company or any Restricted Subsidiary and used in a Related
Business; or

 

(b) Capital Stock of a Person that becomes a Restricted Subsidiary as a
result of the acquisition of such Capital Stock by the Company or another
Restricted Subsidiary from any Person other than the Company or an Affiliate of
the Company; provided, however, that, in the case of this clause
(b), such Restricted Subsidiary is primarily engaged in a Related Business.

 

“Additional
Senior Debt” means any other Debt of the Company Guaranteed by the
Subsidiary Guarantors pursuant to the Senior Subsidiary Guarantee Agreement
with such Guarantees secured by the Senior Collateral on a pari passu
basis with the Senior Bank Obligations; provided, however, that
such Debt is permitted to be incurred, secured and guaranteed on such basis by
this Indenture and the Second Priority Collateral Documents.

 

“Additional
Senior Debt Documents” means, with respect to any series, issue or class of
Additional Senior Debt, the promissory notes, indentures, Collateral Documents
or other operative agreements evidencing or governing such Debt, as the same
may be amended, restated, supplemented or otherwise modified from time to time.

 

“Additional
Senior Debt Facility” means the indenture or other governing agreement with
respect to any Additional Senior Debt, as the same may be amended, restated,
supplemented or otherwise modified from time to time.

 

“Additional
Senior Debt Obligations” means, with respect to any series, issue or class
of Additional Senior Debt, (a) all principal of and interest (including any
interest which accrues after the commencement of any case, proceeding or other
action relating to the 

 

 

bankruptcy,
insolvency or reorganization of the Company, whether or not allowed or
allowable as a claim in any such proceeding) on such Additional Senior Debt,
(b) all other amounts payable by the Company to the related Additional Senior
Debt Parties under the related Additional Senior Debt Documents and (c) any
renewals, extensions or Refinancings of the foregoing.

 

“Additional
Senior Debt Parties” means, with respect to any series, issue or class of
Additional Senior Debt, the holders of such indebtedness from time to time, any
trustee or agent therefore under any related Additional Senior Debt Documents
and the beneficiaries of each indemnification obligation undertaken by the
Company or any Obligor under any related Additional Senior Debt Documents, but
shall not include the Obligors or any controlled Affiliates thereof.

 

“Affiliate”
of any specified Person means:

 

(a) any other Person directly or indirectly controlling or controlled
by or under direct or indirect common control with such specified Person; or

 

(b) any other Person who is a director or executive officer of:

 

(1) such specified Person;

 

(2) any Subsidiary of such specified Person; or

 

(3) any Person described in clause (a) above.

 

For the
purposes of this definition, “control” when used with respect to any Person
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms “controlling” and “controlled” have meanings
correlative to the foregoing.

 

For purposes
of this definition, after the Jean Coutu Acquisition, Jean Coutu Group (PJC),
LLC and its Affiliates shall be “Affiliates” of the Company so long as Jean
Coutu Group (PJC), LLC beneficially owns more than 10% of the Voting Stock of
the Company.

 

“Asset Sale”
means any sale, lease, transfer, issuance or other disposition (or series of
related sales, leases, transfers, issuances or dispositions) by the Company or
any Restricted Subsidiary, including any disposition by means of a merger,
consolidation or similar transaction (each referred to for the purposes of this
definition as a “disposition”), of:

 

(a) any shares of Capital Stock of a Restricted Subsidiary (other than
directors’ qualifying shares); or

 

(b) any other assets of the Company or any Restricted Subsidiary
outside of the ordinary course of business of the Company or such Restricted
Subsidiary,

 

in the case of
either clause (a) or clause (b) above, whether in a single transaction or a
series of related transactions, (i) that have a Fair Market Value in excess of
$15.0 million or (ii) for 

 

2

 

aggregate
consideration in excess of $15.0 million, other than, in the case of clause (a)
or (b) above:

 

(1) any disposition by a Restricted Subsidiary to the Company or by the
Company or a Restricted Subsidiary to a Wholly Owned Restricted Subsidiary;

 

(2) any disposition that constitutes a Permitted Investment or
Restricted Payment permitted by Section 4.04;

 

(3) any disposition effected in compliance with Section 5.01(a);

 

(4) a sale of accounts receivable and related assets of the type
specified in the definition of “Qualified Receivables Transaction” to a
Receivables Entity;

 

(5) a transfer of accounts receivable and related assets of the type
specified in the definition of “Qualified Receivables Transaction” (or a
fractional undivided interest therein) by a Receivables Entity in connection
with a Qualified Receivables Transaction; or

 

(6) a sale by the Company or a Restricted Subsidiary of Property by way
of a Sale and Leaseback Transaction but only if (A) such Property was owned by
the Company or a Restricted Subsidiary on or after the Issue Date, (B) the
requirements of clause (a) of Section 4.10 are satisfied with respect to
such Sale and Leaseback Transaction, (C) the requirements of clauses (a), (b)
and (c) of the first paragraph of Section 4.06 are satisfied as though
such Sale and Leaseback Transaction constituted an Asset Sale and (D) the aggregate
Fair Market Value of such Property, when added to the Fair Market Value of all
other sales of Property pursuant to this clause (6) since the Issue Date, does
not exceed $150 million.

 

“Attributable
Debt” in respect of a Sale and Leaseback Transaction means, at any date of
determination:

 

(a) if such Sale and Leaseback Transaction is a Capital Lease
Obligation, the amount of Debt represented thereby according to the definition
of “Capital Lease Obligation,” and

 

(b) in all other instances, the greater of:

 

(1) the Fair Market Value of the Property subject to such Sale and
Leaseback Transaction; and

 

(2) the present value (discounted at the interest rate borne by the
Securities, compounded annually) of the total obligations of the lessee for
rental payments during the remaining term of the lease included in such Sale
and Leaseback Transaction (in each case including any period for which such
lease has been extended).

 

3

 

“Average
Life” means, as of any date of determination, with respect to any Debt or
Preferred Stock, the quotient obtained by dividing:

 

(a) the sum of the product of the numbers of years (rounded to the
nearest one-twelfth of one year) from the date of determination to the dates of
each successive scheduled principal payment of such Debt or redemption or
similar payment with respect to such Preferred Stock multiplied by the amount
of such payment by

 

(b) the sum of all such payments.

 

“Bankruptcy
Law” means Title 11, United States Code, or any similar Federal or state
law for the relief of debtors.

 

“Board of
Directors” means the board of directors of the Company or any duly
authorized and constituted committee thereof.

 

“Board
Resolution” means a copy of a resolution certified by the Secretary or an Assistant
Secretary of the Company to have been duly adopted by the Board of Directors
and to be in full force and effect on the date of such certification, and
delivered to the Trustee.

 

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

 

“Capital
Lease Obligations” means any obligation under a lease that is required to
be capitalized for financial reporting purposes in accordance with GAAP; and
the amount of Debt represented by such obligation shall be the capitalized
amount of such obligations determined in accordance with GAAP; and the Stated
Maturity thereof shall be the date of the last payment of rent or any other
amount due under such lease prior to the first date upon which such lease may
be terminated by the lessee without payment of a penalty. For purposes of
Section 4.05, a Capital Lease Obligation shall be deemed secured by a Lien on
the Property being leased.

 

“Capital
Stock” means, with respect to any Person, any shares or other equivalents
(however designated) of any class of corporate stock or partnership interests
or any other participations, rights, warrants, options or other interests in
the nature of an equity interest in such Person, including Preferred Stock, but
excluding any debt security convertible or exchangeable into such equity
interest.

 

“Capital
Stock Sale Proceeds” means the aggregate cash proceeds received by the
Company from the issuance or sale (other than to a Subsidiary of the Company or
an employee stock ownership plan or trust established by the Company or any
such Subsidiary for the benefit of their employees) by the Company of its
Capital Stock (other than Disqualified Stock) after the February 12, 2003,
net of attorneys’ fees, accountants’ fees, underwriters’ or placement agents’
fees, discounts or commissions and brokerage, consultant and other fees
actually incurred in connection with such issuance or sale and net of taxes
paid or payable as a result thereof.

 

4

 

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

 

(a) if any “person” or “group” (as such terms are used in Sections
13(d) and 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 (other than one or more Permitted Holders),
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of 40% or more of the total voting power of the
Voting Stock of the Company (for purposes of this clause (a), 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 Voting Stock of such parent
corporation); or

 

(b) the sale, transfer, assignment, lease, conveyance or other
disposition, directly or indirectly, of all or substantially all the assets of
the Company and the Restricted Subsidiaries, considered as a whole (other than
a disposition of such assets as an entirety or virtually as an entirety to a
Wholly Owned Restricted 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 of the Company
is reclassified into or exchanged for cash, securities or other Property, other
than any such transaction where:

 

(1) the outstanding Voting Stock of the Company is reclassified into or
exchanged for other Voting Stock of the Company or for Voting Stock of the
surviving corporation; and

 

(2) 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

 

(c) 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

 

(d) the shareholders of the Company shall have approved any plan of
liquidation or dissolution of the Company.

 

“Code”
means the Internal Revenue Code of 1986, as amended.

 

“Collateral”means all the collateral described in the
Collateral Documents.

 

5

 

“Collateral
Disposition” means (a) any sale, transfer or other disposition of
Collateral (including any property or assets that would constitute Collateral
but for the release of the Senior Lien and the Second Priority Lien with
respect thereto in connection with such sale, transfer or other disposition),
or (b) any casualty or other insured damage or Condemnation with respect to
Collateral.

 

“Collateral
Documents” means (a) the Senior Collateral Documents and (b) the Second
Priority Collateral Documents.

 

“Collateral
Subsidiary Guarantor” means any Subsidiary of the Company that is a party
to the Senior Subsidiary Guarantee Agreement or the Second Priority Subsidiary
Guarantee Agreement.

 

“Commission”
means the Securities and Exchange Commission, as from time to time constituted,
created under the Exchange Act, or, if at any time after the execution of this
Indenture such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act, then the body performing such
duties at such time.

 

“Commodity
Price Protection Agreement” means, in respect of a Person, any forward
contract, commodity swap agreement, commodity option agreement or other similar
agreement or arrangement designed to protect such Person against fluctuations
in commodity prices.

 

“Company”
means the Person named as the “Company” in the first paragraph of this
Indenture until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter “Company” shall mean
such successor Person and, for purposes of any provision contained herein and
expressly required by the TIA, each other obligor on the indenture securities.

 

“Condemnation”
means any action or proceeding for the taking of any assets of the Company or
its Subsidiaries, or any part thereof or interest therein, for public or
quasi-public use under the power of eminent domain, by reason of any similar
public improvement or condemnation proceeding.

 

“Consolidated
Interest Coverage Ratio” means, as of any date of determination, the ratio
of:

 

(a) the aggregate amount of EBITDA for the most recent four consecutive
fiscal quarters for which internal financial statements are available prior to
such determination date to

 

(b) Consolidated Interest Expense for such four fiscal quarters;

 

provided,
however, that:

 

(1) if

 

6

 

(A) since the beginning of such period the Company or any Restricted
Subsidiary has Incurred any Debt that remains outstanding or Repaid any Debt;
or

 

(B) the transaction giving rise to the need to calculate the Consolidated
Interest Coverage Ratio is an Incurrence or Repayment of Debt,

 

Consolidated
Interest Expense for such period shall be calculated after giving effect on a
pro forma basis to such Incurrence or Repayment as if such Debt was Incurred or
Repaid on the first day of such period, provided that, in the event of any such
Repayment of Debt, EBITDA for such period shall be calculated as if the Company
or such Restricted Subsidiary had not earned any interest income actually
earned during such period in respect of the funds used to Repay such Debt, and

 

(2) if

 

(A) since the beginning of such period the Company or any Restricted
Subsidiary shall have made any Asset Sale or an Investment (by merger or
otherwise) in any Restricted Subsidiary (or any Person which becomes a
Restricted Subsidiary) or an acquisition of Property which constitutes all or
substantially all of an operating unit of a business;

 

(B) the transaction giving rise to the need to calculate the
Consolidated Interest Coverage Ratio is such an Asset Sale, Investment or
acquisition; or

 

(C) since the beginning of such period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into the Company or any
Restricted Subsidiary since the beginning of such period) shall have made such
an Asset Sale, Investment or acquisition, EBITDA for such period shall be
calculated after giving pro forma effect to such Asset Sale, Investment or
acquisition as if such Asset Sale, Investment or acquisition occurred on the
first day of such period.

 

If any Debt
bears a floating rate of interest and is being given pro forma effect, the
interest expense on such Debt shall be calculated as if the base interest rate
in effect for such floating rate of interest on the date of determination had
been the applicable base interest rate for the entire period (taking into
account any Interest Rate Agreement applicable to such Debt if such Interest
Rate Agreement has a remaining term in excess of 12 months). In the event the
Capital Stock of any Restricted Subsidiary is sold during the period, the
Company shall be deemed, for purposes of clause (1) above, to have Repaid
during such period the Debt of such Restricted Subsidiary to the extent the
Company and its continuing Restricted Subsidiaries are no longer liable for
such Debt after such sale.

 

“Consolidated
Interest Expense” means, for any period, the total interest expense of the
Company and its consolidated Restricted Subsidiaries (excluding the non-cash 

 

7

 

interest
expense related to (x) litigation reserves, (y) closed store liability reserves
and (z) self-insurance reserves), plus, to the extent not included in such
total interest expense, and to the extent Incurred by the Company or its
Restricted Subsidiaries, and without duplication:

 

(a) interest expense attributable to Capital Lease Obligations;

 

(b) amortization of debt discount and debt issuance cost, including
commitment fees;

 

(c) capitalized interest;

 

(d) non-cash interest expense other than expenses under clauses (x),
(y) and (z) above;

 

(e) commissions, discounts and other fees and charges owed with respect
to letters of credit and bankers acceptance financing;

 

(f) net costs associated with Hedging Obligations (including
amortization of fees but excluding costs associated with forward contracts for
inventory in the ordinary course of business);

 

(g) Disqualified Stock Dividends;

 

(h) Preferred Stock Dividends;

 

(i) interest Incurred in connection with Investments in discontinued
operations;

 

(j) interest accruing on any Debt of any other Person to the extent
such Debt is Guaranteed by the Company or any Restricted Subsidiary; and

 

(k) the cash contributions to any employee stock ownership plan or
similar trust to the extent such contributions are used by such plan or trust
to pay interest or fees to any Person (other than the Company) in connection
with Debt Incurred by such plan or trust;

 

provided,
however, that any program fees or liquidity fees or unused amounts
related to any Qualified Receivables Transaction shall not be included in
Consolidated Interest Expense, unless otherwise required by GAAP.

 

“Consolidated
Net Income” means, for any period, the net income (loss) of the Company and
its consolidated Subsidiaries; provided, however, that there
shall not be included in such Consolidated Net Income:

 

(a) any net income (loss) of any Person (other than the Company) if
such Person is not a Restricted Subsidiary, except that:

 

(1) subject to the exclusion contained in clause (d) below, the Company’s
equity in the net income of any such Person for such period shall be included
in such Consolidated Net Income up to the aggregate amount of cash distributed
by such Person during such period to the Company or a Restricted Subsidiary as
a dividend or other distribution (subject, in the case 

 

8

 

of a dividend
or other distribution to a Restricted Subsidiary, to the limitations contained
in clause (c) below); and

 

(2) the Company’s equity in a net loss of any such Person other than an
Unrestricted Subsidiary for such period shall be included in determining such
Consolidated Net Income;

 

(b) [Intentionally omitted];

 

(c) any net income (loss) of any Restricted Subsidiary if such
Restricted Subsidiary is subject to restrictions, directly or indirectly, on
the payment of dividends or the making of distributions, directly or
indirectly, to the Company, except that:

 

(1) subject to the exclusion contained in clause (d) below, the Company’s
equity in the net income of any such Restricted Subsidiary for such period
shall be included in such Consolidated Net Income up to the aggregate amount of
cash distributed by such Restricted Subsidiary during such period to the
Company or another Restricted Subsidiary as a dividend or other distribution
(subject, in the case of a dividend or other distribution to another Restricted
Subsidiary, to the limitation contained in this clause); and

 

(2) the Company’s equity in a net loss of any such Restricted
Subsidiary for such period shall be included in determining such Consolidated
Net Income;

 

(d) any gain or loss realized upon the sale or other disposition of any
Property of the Company or any of its consolidated Subsidiaries (including
pursuant to any Sale and Leaseback Transaction) that is not sold or otherwise
disposed of in the ordinary course of business;

 

(e) any extraordinary gain or loss;

 

(f) the cumulative effect of a change in accounting principles;

 

(g) any non-cash compensation expense realized for grants of
performance shares, stock options or other rights to officers, directors and
employees of the Company or any Restricted Subsidiary, provided that such
shares, options or other rights can be redeemed at the option of the holder
only for Capital Stock of the Company (other than Disqualified Stock);

 

(h) store closing costs;

 

(i) non-cash charges or credits that relate to use of the
last-in-first-out method of accounting for inventory; and

 

(j) loss on debt modifications.

 

9

 

Notwithstanding
the foregoing, for purposes of Section 4.04 only, there shall be excluded
from Consolidated Net Income any dividends, repayments of loans or advances or
other transfers of assets from Unrestricted Subsidiaries to the Company or a
Restricted Subsidiary to the extent such dividends, repayments or transfers
increase the amount of Restricted Payments permitted by Section 4.04
pursuant to clause (c)(4) thereof.

 

“Corporate
Trust Office” means the office of the Trustee at which at any particular
time its corporate trust business shall be principally administered (which at
the date of this Indenture is located in the City of Chicago, State of
Illinois).

 

“corporation”
means a corporation, association, company, limited liability company, joint-stock
company, partnership or business trust.

 

“Credit
Facilities” means, with respect to the Company or any Restricted
Subsidiary, one or more debt or commercial paper facilities with banks or other
institutional lenders (including the Senior Credit Facilities), providing for
revolving credit loans, term loans, receivables or inventory financing
(including through the sale of receivables or inventory to such lenders or to
special purpose, bankruptcy remote entities formed to borrow from such lenders
against such receivables or inventory), or trade letters of credit, in each
case together with Refinancings thereof on any basis so long as such
Refinancing constitutes Debt.

 

“Currency
Exchange Protection Agreement” means, in respect of a Person, any foreign
exchange contract, currency swap agreement, currency option or other similar
agreement or arrangement designed to protect such Person against fluctuations
in currency exchange rates.

 

“Custodian”
means any receiver, trustee, assignee, liquidator, custodian or similar
official under any Bankruptcy Law.

 

“Debt”
means, with respect to any Person on any date of determination (without
duplication):

 

(a) the principal of and premium (if any) in respect of:

 

(1) debt of such Person for money borrowed; and

 

(2) debt evidenced by notes, debentures, bonds or other similar
instruments for the payment of which such Person is responsible or liable;

 

(b) all Capital Lease Obligations of such Person and all Attributable
Debt in respect of Sale and Leaseback Transactions entered into by such Person;

 

(c) all obligations of such Person issued or assumed as the deferred
purchase price of Property, all conditional sale obligations of such Person and
all obligations of such Person under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of business);

 

10

 

(d) all obligations of such Person for the reimbursement of any obligor
on any letter of credit, banker’s acceptance or similar credit transaction
(other than obligations with respect to letters of credit securing obligations
(other than obligations described in (a) through (c) above) entered into in the
ordinary course of business of such Person to the extent such letters of credit
are not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the third Business Day following receipt by such
Person of a demand for reimbursement following payment on the letter of
credit);

 

(e) the amount of all obligations of such Person with respect to the
Repayment of any Disqualified Stock or, with respect to any Subsidiary of such
Person, any Preferred Stock (but excluding, in each case, any accrued
dividends);

 

(f) all obligations of the type referred to in clauses (a) through (e)
of other Persons and all dividends of other Persons for the payment of which,
in either case, such Person is responsible or liable, directly or indirectly,
as obligor, guarantor or otherwise, including by means of any Guarantee;

 

(g) all obligations of the type referred to in clauses (a) through (f)
of other Persons secured by any Lien on any Property of such Person (whether or
not such obligation is assumed by such Person), the amount of such obligation
being deemed to be the lesser of the value of such Property or the amount of
the obligation so secured; and

 

(h) to the extent not otherwise included in this definition, Hedging
Obligations of such Person.

 

The amount of
Debt of any Person at any date shall be the outstanding balance at such date of
all unconditional obligations as described above and the maximum liability,
upon the occurrence of the contingency giving rise to the obligation, of any
contingent obligations at such date. The amount of Debt represented by a
Hedging Obligation shall be equal to:

 

(1) zero if such Hedging Obligation has been Incurred pursuant to
clause (g) or (h) of the second paragraph of Section 4.03; or

 

(2) the notional amount of such Hedging Obligation if not Incurred
pursuant to such clauses.

 

“Debt
Issuances” means, with respect to the Company or any Restricted Subsidiary,
one or more issuances of Debt evidenced by notes, debentures, bonds or other
similar securities or instruments.

 

“Default”
means any event which is, or after notice or passage of time or both would be,
an Event of Default.

 

“Depositary”
means, with respect to any Securities, a clearing agency that is registered as
such under the Exchange Act and is designated by the Company to act as
Depositary for such Securities (or any successor securities clearing agency so
registered).

 

11

 

“Disqualified
Stock” means, with respect to any Person, any Capital Stock that by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable, in either case at the option of the holder thereof)
or otherwise:

 

(a) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise;

 

(b) is or may become redeemable or repurchaseable at the option of the
holder thereof, in whole or in part; or

 

(c) is convertible or exchangeable at the option of the holder thereof
for Debt or Disqualified Stock;

 

on or prior
to, in the case of clause (a), (b) or (c), the first anniversary of the Stated
Maturity of the Securities.

 

“Disqualified
Stock Dividends” means all dividends with respect to Disqualified Stock of
the Company held by Persons other than a Wholly Owned Restricted Subsidiary.
The amount of any such dividend shall be equal to the quotient of such dividend
divided by the difference between one and the maximum statutory federal income
tax rate (expressed as a decimal number between 1 and 0) then applicable to the
Company.

 

“EBITDA”
means, for any period, an amount equal to, for the Company and its consolidated
Restricted Subsidiaries:

 

(a) the sum of Consolidated Net Income for such period, plus the
following to the extent reducing Consolidated Net Income for such period:

 

(1) the provision for taxes based on income or profits or utilized in
computing net loss;

 

(2) Consolidated Interest Expense and non-cash interest expense related
to litigation reserves, closed store liability reserves and self-insurance
reserves, to the extent excluded from Consolidated Interest Expense;

 

(3) depreciation;

 

(4) amortization of intangibles;

 

(5) non-cash impairment charges;

 

(6) any expenses or charges (other than depreciation or amortization
expense) related to any Equity Offering, Permitted Investment, acquisition,
disposition, recapitalization or the Incurrence of Debt permitted to be Incurred
by the Indenture (including a refinancing thereof) (whether or not successful),
including (i) such fees, expenses or changes related to the offering of Credit
Facilities, Qualified Receivables Transactions or Debt Issuances and other Debt
and (ii) any amendment or other modification of Credit Facilities, 

 

12

 

Qualified
Receivables Transactions or Debt Issuances and, in each case, deducted (and not
added back) in computing Consolidated Net Income;

 

(7) the amount of any restructuring charges, integration costs or other
business optimization expenses or reserves deducted (and not added back) in
such period in computing Consolidated Net Income, including any one-time costs
(including costs related to the closure and/or consolidation of stores)
incurred in connection with acquisitions after the Issue Date;

 

(8) the amount of net cost savings projected by the Company in good
faith to be realized as a result of specified actions taken or initiated during
or prior to such period (calculated on a pro forma
basis as though such cost savings had been realized on the first day of such
period), net of the amount of actual benefits realized during such period from
such actions; provided that (x) such cost savings are reasonably
identifiable and factually supportable, (y) such actions are taken no later
than 36 months after the Issue Date and (z) the aggregate amount of cost
savings added pursuant to this clause (8) shall not exceed $150.0 million for
any four consecutive quarter period (which adjustments may be incremental to pro forma cost savings adjustments
made pursuant to the definition of “Consolidated Interest Coverage Ratio”); and

 

(9) any other non-cash items (other than any such non-cash item to the
extent that it represents an accrual of or reserve for cash expenditures in any
future period), minus

 

(b) all non-cash items increasing Consolidated Net Income for such
period (other than any such non-cash item to the extent that it will result in
the receipt of cash payments in any future period).

 

Notwithstanding
the foregoing clause (a), the provision for taxes and the depreciation,
amortization and non-cash items of a Restricted Subsidiary shall be added to
Consolidated Net Income to compute EBITDA only to the extent (and in the same
proportion) that the net income of such Restricted Subsidiary was included in
calculating Consolidated Net Income and only if a corresponding amount would be
permitted at the date of determination to be dividended to the Company by such
Restricted Subsidiary without prior approval (that has not been obtained),
pursuant to the terms of its charter and all agreements, instruments,
judgments, decrees, orders, statutes, rules and governmental regulations
applicable to such Restricted Subsidiary or its shareholders.

 

“8.125%
Notes” means the Company’s 8.125% Senior Secured Notes due 2010 issued
under the Indenture dated as of April 22, 2003, among the Company, the
Subsidiary Guarantors and BNY Midwest Trust Company, as trustee, and outstanding
on the Issue Date.

 

“Equipment
Financing Transaction” means any arrangement (together with any Refinancing
thereof) with any Person pursuant to which the Company or any Restricted
Subsidiary Incurs Debt secured by a Lien on equipment or equipment related
property of the Company or any Restricted Subsidiary.

 

13

 

“Equity
Offering” means (a) an underwritten offering of common stock of the Company
by the Company pursuant to an effective registration statement under the
Securities Act or (b) so long as the Company’s common stock is, at the
time, listed or quoted on a national securities exchange (as such term is
defined in the Exchange Act), an offering of common stock by the Company in a
transaction exempt from or not subject to the registration requirements of the
Securities Act.

 

“Event of
Default” has the meaning set forth under Section 6.01.

 

“Exchange
Act” means the Securities Exchange Act of 1934.

 

“Expansion
Capital Expenditure” means any capital expenditure incurred by the Company
or any Restricted Subsidiary in developing, relocating, integrating, remodeling
and refurbishing a warehouse, distribution center, store or other facility
(other than ordinary course maintenance) for carrying on the business of the
Company and its Restricted Subsidiaries that the Board of Directors determines
in good faith will enhance the income generating ability of the warehouse,
distribution center, store or other facility.

 

“Fair
Market Value” means, with respect to any Property, the price that could be
negotiated in an arm’s-length free market transaction, for cash, between a
willing seller and a willing buyer, neither of whom is under undue pressure or
compulsion to complete the transaction. Pressure or compulsion shall not
include sales of Property conducted in compliance with the requirements of a
regulatory authority in connection with an acquisition or merger permitted by
the Indenture. Fair Market Value shall be determined, except as otherwise
provided:

 

(a) if such Property has a Fair Market Value equal to or less than $25.0
million, by any Officer of the Company; or

 

(b) if such Property has a Fair Market Value in excess of $25.0
million, by a majority of the Board of Directors and evidenced by a Board
Resolution, dated within 30 days of the relevant transaction, delivered to the
Trustee.

 

“Foreign
Subsidiary” means any Subsidiary of the Company which (a) is organized
under the laws of any jurisdiction outside of the United States, (b) is
organized under the laws of Puerto Rico or the U.S. Virgin Islands, (c) has
substantially all its operations outside of the United States, (d) has
substantially all its operations in Puerto Rico or the U.S. Virgin Islands, or
(e) does not own any material assets other than Capital Stock of one or more
Subsidiaries of the type described in (a) through (d) above.

 

“GAAP”
means United States generally accepted accounting principles as in effect on
February 12, 2003, including those set forth:

 

(a) in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants;

 

(b) in the statements and pronouncements of the Financial Accounting
Standards Board;

 

14

 

(c) in such other statements by such other entity as approved by a
significant segment of the accounting profession; and

 

(d) the rules and regulations of the Commission governing the inclusion
of financial statements (including pro forma financial statements) in periodic
reports required to be filed pursuant to Section 13 of the Exchange Act,
including opinions and pronouncements in staff accounting bulletins and similar
written statements from the accounting staff of the Commission.

 

“Guarantee”
means any obligation, contingent or otherwise, of any Person directly or
indirectly guaranteeing any Debt of any other Person and any obligation, direct
or indirect, contingent or otherwise, of such Person:

 

(a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt of such other Person (whether arising by virtue of
partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take-or-pay or to maintain financial
statement conditions or otherwise); or

 

(b) entered into for the purpose of assuring in any other manner the
obligee against loss in respect thereof (in whole or in part);

 

provided,
however, that the term “Guarantee” shall not include:

 

(1) endorsements for collection or deposit in the ordinary course of
business; or

 

(2) a contractual commitment by one Person to invest in another Person
for so long as such Investment is reasonably expected to constitute a Permitted
Investment under clause (b) of the definition of “Permitted Investment.”

 

The term “Guarantee”
used as a verb has a corresponding meaning. The term “Guarantor” shall
mean any Person Guaranteeing any obligation.

 

“Hedging
Obligation” of any Person means any obligation of such Person pursuant to
any Interest Rate Agreement, Currency Exchange Protection Agreement, Commodity
Price Protection Agreement or any other similar agreement or arrangement.

 

“Holder”
means a Person in whose name a Security is registered in the Security Register.

 

“Incur”
means, with respect to any Debt or other obligation of any Person, to create,
issue, incur (by merger, conversion, exchange or otherwise), extend, assume,
Guarantee or become liable in respect of such Debt or other obligation or the
recording, as required pursuant to GAAP or otherwise, of any such Debt or obligation
on the balance sheet of such Person (and “Incurrence” and “Incurred”
shall have meanings correlative to the foregoing); provided, however,
that a change in GAAP that results in an obligation of such Person that exists
at such time, and is not theretofore classified as Debt, becoming Debt shall
not be deemed an Incurrence of such Debt; provided further, however,
that any Debt or other obligations of a Person existing at the time such Person
becomes a Subsidiary (whether by 

 

15

 

merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary; and provided further,
however, that solely for purposes of determining compliance with Section
4.03, amortization of debt discount shall not be deemed to be the Incurrence of
Debt, provided that in the case of Debt sold at a discount, the amount
of such Debt Incurred shall at all times be the aggregate principal amount at
Stated Maturity.

 

“Indenture”
means this instrument as originally executed or as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof including, for all purposes
of this instrument and any such supplemental indenture, the provisions of the
Trust Indenture Act that are deemed to be a part of and govern this instrument
and any such supplemental indenture, respectively.

 

“Independent
Financial Advisor” means an investment banking firm of national standing or
any third party appraiser of national standing, provided that such firm
or appraiser is not an Affiliate of the Company.

 

“Intercreditor
Agreement” means the Amended and Restated Collateral Trust and
Intercreditor Agreement, dated as of May 28, 2003, as amended as of
September 22, 2004, among the Company, the Subsidiary Guarantors, the
Second Priority Collateral Trustee, the Senior Collateral Agent and each Second
Priority Representative, as the same may be amended, restated, supplemented or
otherwise modified from time to time.

 

“Interest
Rate Agreement” means, for any Person, any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement designed to protect against fluctuations in interest rates.

 

“Investment”
by any Person means any direct or indirect loan (other than advances to
customers in the ordinary course of business that are recorded as accounts
receivable on the balance sheet of such Person), advance or other extension of
credit or capital contribution (by means of transfers of cash or other Property
to others or payments for Property or services for the account or use of
others, or otherwise) to, or Incurrence of a Guarantee of any obligation of, or
purchase or acquisition of Capital Stock, bonds, notes, debentures or other
securities or evidence of Debt issued by, any other Person. For purposes of
Sections 4.04 and 4.11, and the definition of “Restricted Payment”, “Investment”
shall include the portion (proportionate to the Company’s equity interest in
such Subsidiary) of the Fair Market Value of the net assets of any Subsidiary
of the Company at the time that such Subsidiary is designated an Unrestricted
Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue
to have a permanent “Investment” in an Unrestricted Subsidiary of an amount (if
positive) equal to:

 

(a) the Company’s “Investment” in such Subsidiary at the time of such
redesignation; less

 

16

 

(b) the portion (proportionate to the Company’s equity interest in such
Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at
the time of such redesignation.

 

In determining
the amount of any Investment made by transfer of any Property other than cash,
such Property shall be valued at its Fair Market Value at the time of such
Investment.

 

“Investment
Grade Rating” means a rating equal to or higher than Baa3 (or the
equivalent) by Moody’s and BBB- (or the equivalent) by S&P, without regard
to outlook.

 

“Issue Date”
means the date on which the Original Securities are initially issued.

 

“Jean Coutu
Acquisition” means the acquisition of Jean Coutu by the Company and the
other transactions contemplated by the Acquisition Agreement.

 

“Jean Coutu
Acquisition Agreement” means the Stock Purchase Agreement, dated as of
August 23, 2006, by and between the Company and The Jean Coutu Group (PJC)
Inc., a Québec corporation, as it may be amended from time to time.

 

“Lien”
means, with respect to any Property of any Person, any mortgage or deed of
trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien, charge, easement (other than any easement not materially
impairing usefulness or marketability), encumbrance, preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever on or with respect to such Property (including any Capital Lease
Obligation, conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing or any Sale and
Leaseback Transaction).

 

“Moody’s”
means Moody’s Investors Service, Inc. or any successor to the rating agency
business thereof.

 

“Net
Available Cash” from any Asset Sale means cash payments received therefrom
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Debt or other obligations relating to the
Property that is the subject of such Asset Sale or received in any other
non-cash form), in each case net of:

 

(a) all legal, title and recording tax expenses, commissions and other
fees and expenses incurred, and all Federal, state, provincial, foreign and
local taxes required to be accrued as a liability under GAAP, as a consequence
of such Asset Sale;

 

(b) all payments made on any Debt that is secured by any Property
subject to such Asset Sale, in accordance with the terms of any Lien upon or
other security agreement of any kind with respect to such Property, or which
must by its terms, or in order to obtain a necessary consent to such Asset
Sale, or by applicable law, be repaid out of the proceeds from such Asset Sale;

 

17

 

(c) all distributions and other payments required to be made to
minority interest holders in Subsidiaries or joint ventures as a result of such
Asset Sale; and

 

(d) the deduction of appropriate amounts provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated with the
Property disposed in such Asset Sale and retained by the Company or any
Restricted Subsidiary after such Asset Sale.

 

“9.5% Notes”
means the Company’s 9.5% Senior Secured Notes Due 2011 issued under the
indenture dated as of February 12, 2003, among the Company, the Subsidiary
Guarantors and BNY Midwest Trust Company, as trustee, and outstanding on the
Issue Date.

 

“Obligors”
means the Company, the Subsidiary Guarantors and any other Person who is liable
for any of the Secured Obligations.

 

“Officer”
means the Chief Executive Officer, the President, the Chief Financial Officer,
Chief Accounting Officer, Treasurer, Vice President of Financial Accounting or
any Executive Vice President of the Company.

 

“Officers’
Certificate” means a certificate signed by two Officers of the Company, at
least one of whom shall be the principal executive officer or principal financial
officer of the Company, and delivered to the Trustee.

 

“Opinion of
Counsel” means a written opinion from legal counsel who is acceptable to
the Trustee. The counsel may be an employee of or counsel to the Company or the
Trustee.

 

“Original
Securities” has the meaning specified in Section 2.01.

 

“Permitted
Holder” means (a) Leonard Green & Partners L.P. or any of its
Affiliates and (b), if the Jean Coutu Acquisition occurs, The Jean Coutu Group
(PJC) Inc. or any of its Affiliates.

 

“Permitted
Investment” means any Investment by the Company or a Restricted Subsidiary
in:

 

(a) (1) the Company, (2) any Restricted Subsidiary or (3) any Person
that will, upon the making of such Investment, become a Restricted Subsidiary;

 

(b) any Person if as a result of such Investment such Person is merged
or consolidated with or into, or transfers or conveys all or substantially all
its Property to, the Company or a Restricted Subsidiary;

 

(c) cash and Temporary Cash Investments;

 

18

 

(d) receivables owing to the Company or a Restricted Subsidiary, if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; provided, however,
that such trade terms may include such concessionary trade terms as the Company
or such Restricted Subsidiary deems reasonable under the circumstances;

 

(e) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses for
accounting purposes and that are made in the ordinary course of business;

 

(f) loans and advances to employees made in the ordinary course of
business consistent with past practices of the Company or such Restricted
Subsidiary, as the case may be, provided that such loans and advances do
not exceed $25.0 million at any one time outstanding;

 

(g) stock, obligations or other securities received in settlement of
debts created in the ordinary course of business and owing to the Company or a
Restricted Subsidiary or in satisfaction of judgments;

 

(h) any Person to the extent such Investment represents the non-cash
portion of the consideration received in connection with an Asset Sale
consummated in compliance with Section 4.06;

 

(i) Hedging Obligations permitted under clause (g), (h) or (i) of
Section 4.03;

 

(j) any Person if the Investments are outstanding on the Issue Date and
not otherwise described in clauses (a) through (i) above;

 

(k) Investments in Unrestricted Subsidiaries or joint venture entities
(including purchasing cooperatives) that do not exceed $15.0 million
outstanding at any one time in the aggregate;

 

(l) other Investments that do not exceed $10.0 million outstanding at
any one time in the aggregate;

 

(m) Investments in any entity, formed by the Company or a Restricted
Subsidiary, organized under Section 501(c)(3) of the Code, that do not exceed
an aggregate amount of $10.0 million in any fiscal year; and

 

(n) any assets, Capital Stock or other securities to the extent
acquired in exchange for shares of Capital Stock of the Company (other than
Disqualified Stock).

 

“Permitted
Liens” means:

 

(a) Liens to secure Debt permitted to be Incurred under clause
(a), (b), (d), (l) or (s) (with respect to clause d)) of the second paragraph
of Section 4.03 provided, however, that:

 

19

 

(1) if such Debt is Incurred pursuant to such clause (b) (other than
pursuant to a Sale and Leaseback Transaction, a Capital Lease Obligation or by
a Receivables Entity in a Qualified Receivables Transaction) or clause (l), a
second priority Lien (subject to Permitted Liens) upon the Property (if such
Property does not otherwise constitute Second Priority Collateral at such time)
subject to such Lien is concurrently granted as security for the Securities
such that such Property also constitutes Second Priority Collateral subject to
the Second Priority Collateral Documents, except to the extent such Property
constitutes cash or cash equivalents securing only letter of credit obligations
under Credit Facilities following a default under such Credit Facilities; and

 

(2) if such Debt is Incurred pursuant to such clause (d) or (s) (with
respect to clause (d)), a second priority Lien (subject to Permitted Liens)
upon the Property subject to such Lien is concurrently granted as security for
the Securities such that such Property constitutes Second Priority Collateral
subject to the Second Priority Lien and the Securities are secured by such Lien
equally and ratably (or prior to) such Debt pursuant to the Second Priority
Collateral Documents;

 

(b) Liens to secure Debt permitted to be Incurred under clause (e), (q)
or (r) of the second paragraph of Section 4.03, provided that any such
Lien may not extend to any Property of the Company or any Restricted
Subsidiary, other than the Property acquired, developed, constructed or leased
with the proceeds of such Debt and any improvements or additions to such
Property;

 

(c) Liens for taxes, assessments or governmental charges or levies on
the Property of the Company or any Restricted Subsidiary if the same shall not
at the time be delinquent or thereafter can be paid without penalty, or are
being contested in good faith and by appropriate proceedings promptly
instituted and diligently concluded, provided that any reserve or other
appropriate provision that shall be required in conformity with GAAP shall have
been made therefor;

 

(d) Liens imposed by law, such as carriers’, warehousemen’s and
mechanics’ Liens and other similar Liens, on the Property of the Company or any
Restricted Subsidiary arising in the ordinary course of business and securing
payment of obligations that are not more than 60 days past due or are being
contested in good faith and by appropriate proceedings;

 

(e) Liens on the Property of the Company or any Restricted Subsidiary
Incurred in the ordinary course of business to secure performance of
obligations with respect to statutory or regulatory requirements, performance
or return-of-money bonds, surety bonds or other obligations of a like nature
and Incurred in a manner consistent with industry practice, in each case which
are not Incurred in connection with the borrowing of money, the obtaining of
advances or credit or the payment of the deferred purchase price of Property
and which do not in the aggregate impair in any material respect the use of
Property in the operation of the business of the Company and the Restricted
Subsidiaries taken as a whole;

 

20

 

(f) Liens on Property at the time the Company or any Restricted
Subsidiary acquired such Property, including any acquisition by means of a
merger or consolidation with or into the Company or any Restricted Subsidiary; provided,
however, that any such Lien may not extend to any other Property of the
Company or any Restricted Subsidiary; provided further, however,
that such Liens shall not have been Incurred in anticipation of or in
connection with the transaction or series of transactions pursuant to which
such Property was acquired by the Company or any Restricted Subsidiary;

 

(g) Liens on the Property of a Person at the time such Person becomes a
Restricted Subsidiary; provided, however, that any such Lien may
not extend to any other Property of the Company or any other Restricted
Subsidiary that is not a direct Subsidiary of such Person; provided further,
however, that any such Lien was not Incurred in anticipation of or in
connection with the transaction or series of transactions pursuant to which
such Person became a Restricted Subsidiary;

 

(h) pledges or deposits by the Company or any Restricted Subsidiary under
workmen’s compensation laws, unemployment insurance laws or similar
legislation, or good faith deposits in connection with bids, tenders, contracts
(other than for the payment of Debt) or leases to which the Company or any
Restricted Subsidiary is party, or deposits to secure public or statutory
obligations of the Company or any Restricted Subsidiary, or deposits for the
payment of rent, in each case Incurred in the ordinary course of business;

 

(i) utility easements, building restrictions and such other
encumbrances or charges against real Property as are of a nature generally
existing with respect to properties of a similar character;

 

(j) Liens arising out of judgments or awards against the Company or a
Restricted Subsidiary with respect to which the Company or the Restricted
Subsidiary shall then be proceeding with an appeal or other proceeding for
review and which do not give rise to an Event of Default;

 

(k) leases or subleases of real property granted by the Company or a
Restricted Subsidiary to any other Person in the ordinary course of business
and not materially impairing the use of the real property in the operation of
the business of the Company or the Restricted Subsidiary;

 

(l) licenses of intellectual property in the ordinary course of business;

 

(m) Liens existing on the Issue Date not otherwise described in clauses
(a) through (l) above;

 

(n) Liens on the Property of the Company or any Restricted Subsidiary
to secure any Refinancing, in whole or in part, of any Debt secured by Liens
referred to in clause (a) (but only to the extent it relates to clause (a) or
(d) referred to therein), (b) (other than Liens securing Debt Incurred pursuant
to clause (r) referred to therein), (f), (g), or (m) above; provided,
however, that (1) in the case of clause (a) or (b) above, the proviso to
such clause remains satisfied and (2) any such Lien shall be 

 

21

 

limited to all
or part of the same Property that secured the original Lien (together with
improvements and accessions to such Property) and the aggregate principal
amount of Debt that is secured by such Lien shall not be increased to an amount
greater than the sum of:

 

(A) the outstanding principal amount, or, if greater, the committed
amount, of the Debt secured by Liens described under clause (b) (except as
referred to above), (f), (g), or (m) above, as the case may be, at the time the
original Lien became a Permitted Lien under this Indenture; and

 

(B) an amount necessary to pay any fees and expenses, including
premiums and defeasance costs, incurred by the Company or such Restricted
Subsidiary in connection with such Refinancing; and

 

(o) Liens not otherwise permitted by clauses (a) through (n) above
encumbering assets that have an aggregate Fair Market Value not in excess of $5.0
million.

 

“Permitted
Refinancing Debt” means any Debt that Refinances any other Debt, including
any successive Refinancings, so long as:

 

(a) such Debt is in an aggregate principal amount (or if Incurred with
original issue discount, an aggregate issue price) not in excess of the sum of:

 

(1) the aggregate principal amount (or if Incurred with original issue
discount, the aggregate accreted value) then outstanding of the Debt being
Refinanced; and

 

(2) an amount necessary to pay any fees and expenses, including
premiums and defeasance costs, related to such Refinancing;

 

(b) the Average Life of such Debt is equal to or greater than the
Average Life of the Debt being Refinanced;

 

(c) the Stated Maturity of such Debt is no earlier than the Stated
Maturity of the Debt being Refinanced; and

 

(d) the new Debt shall not be senior in right of payment to the Debt
that is being Refinanced;

 

provided,
however, that Permitted Refinancing Debt shall not include: (x) Debt of
a Subsidiary that is not a Subsidiary Guarantor that Refinances Debt of the
Company or a Subsidiary Guarantor, or (y) Debt of the Company or a Restricted
Subsidiary that Refinances Debt of an Unrestricted Subsidiary.

 

“Person”
means any individual, corporation, company (including any limited liability
company), association, partnership, joint venture, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.

 

22

 

“Preferred
Stock” means any Capital Stock of a Person, however designated, which
entitles the holder thereof to a preference with respect to the payment of
dividends, or as to the distribution of assets upon any voluntary or
involuntary liquidation or dissolution of such Person, over shares of any other
class of Capital Stock issued by such Person.

 

“Preferred
Stock Dividends” means all dividends with respect to Preferred Stock of
Restricted Subsidiaries held by Persons other than the Company or a Wholly
Owned Restricted Subsidiary. The amount of any such dividend shall be equal to
the quotient of such dividend divided by the difference between one and the
maximum statutory federal income rate (expressed as a decimal number between 1
and 0) then applicable to the issuer of such Preferred Stock.

 

“pro forma”
means, unless the context otherwise requires, with respect to any calculation
made or required to be made pursuant to the terms hereof, a calculation
performed in accordance with Article 11 of Regulation S-X promulgated
under the Securities Act, as interpreted in good faith by the Board of
Directors after consultation with the independent certified public accountants
of the Company, or otherwise a calculation made in good faith by the Board of
Directors after consultation with the independent certified public accountants
of the Company, as the case may be.

 

“Property”
means, with respect to any Person, any interest of such Person in any kind of
property or asset, whether real, personal or mixed, or tangible or intangible,
including Capital Stock in, and other securities of, any other Person. For
purposes of any calculation required pursuant to this Indenture, the value of
any Property shall be its Fair Market Value.

 

“Public
Debt” means obligations of the Company or of a Subsidiary Guarantor
evidenced by bonds, debentures, notes and similar instruments issued in a
manner and pursuant to documentation customary in the market for obligations
publicly traded or traded in the high yield bond or other private placement or
similar market primarily among financial institutions (other than any such
obligations that are traded primarily among commercial banks).

 

“Purchase
Money Debt” means Debt Incurred to finance the acquisition, development,
construction or lease by the Company or a Restricted Subsidiary of Property,
including additions and improvements thereto, where the maturity of such Debt
does not exceed the anticipated useful life of the Property being financed; provided,
however, that such Debt is Incurred within 24 months after the
completion of the acquisition, development, construction or lease of such
Property by the Company or such Restricted Subsidiary.

 

“Qualified
Consideration” means, with respect to any Asset Sale (or any other
transaction or series of related transactions required to comply with clause
(b) of the first paragraph of Section 4.06), any one or more of (a) cash
or cash equivalents, (b) notes or obligations that are converted into cash (to
the extent of the cash received) within 180 days of such Asset Sale, (c) equity
securities listed on a national securities exchange (as such term is defined in
the Exchange Act) and converted into cash (to the extent of the cash received)
within 180 days of such Asset Sale, (d) the assumption by the purchaser of liabilities
of the Company or any Restricted Subsidiary (other than liabilities that are by
their terms 

 

23

 

subordinated
to the Securities) as a result of which the Company and the Restricted
Subsidiaries are no longer obligated with respect to such liabilities, (e)
Additional Assets or (f) other Property, provided that the aggregate Fair
Market Value of all Property received since the Issue Date by the Company and
its Restricted Subsidiaries pursuant to Asset Sales (or such other
transactions) that is used to determine Qualified Consideration pursuant to
this clause (f) does not exceed the greater of $100.0 million and 5% of Total
Assets.

 

“Qualified
Receivables Transaction” means any transaction or series of transactions
that may be entered into by the Company or any of its Subsidiaries pursuant to
which the Company or any of its Subsidiaries may sell, convey or otherwise
transfer to:

 

(a) a Receivables Entity (in the case of a transfer by the Company or
any of its Subsidiaries); and

 

(b) any other Person (in the case of a transfer by a Receivables
Entity),

 

or may grant a security interest in, any accounts receivable (whether
now existing or arising in the future) of the Company or any of its
Subsidiaries, and any assets related thereto including all collateral securing
those accounts receivable, all contracts and all Guarantees or other
obligations in respect of those accounts receivable, proceeds of those accounts
receivable and other assets which are customarily transferred or in respect of
which security interests are customarily granted in connection with asset
securitization transactions involving accounts receivable; provided
that:

 

(1) if the transaction involves a transfer of accounts receivable with
Fair Market Value equal to or greater than $25.0 million, the Board of
Directors shall have determined in good faith that the Qualified Receivables
Transaction is economically fair and reasonable to the Company and the
Receivables Entity;

 

(2) all sales of accounts receivable
and related assets to or by the Receivables Entity are made at Fair Market
Value; and

 

(3) the financing terms, covenants, termination events and other
provisions thereof shall be market terms (as determined in good faith by the
Board of Directors).

 

“Real
Estate Financing Transaction” means any arrangement with any Person
pursuant to which the Company or any Restricted Subsidiary Incurs Debt secured
by a Lien on real property of the Company or any Restricted Subsidiary and
related personal property together with any Refinancings thereof.

 

“Receivables
Entity” means a Wholly Owned Subsidiary of the Company (or another Person
formed for the purposes of engaging in a Qualified Receivables Transaction with
the Company in which the Company or any Subsidiary of the Company makes an
Investment and to which the Company or any Subsidiary of the Company transfers
accounts receivable and related assets) which engages in no activities other
than in connection with the financing of accounts receivable of the Company and
its Subsidiaries, all proceeds thereof and all rights (contractual or other),
collateral and other assets relating thereto, and any 

 

24

 

business or
activities incidental or related to that business, and (with respect to any
Receivables Entity formed after the Issue Date) which is designated by the
Board of Directors (as provided below) as a Receivables Entity and:

 

(a) no portion of the Debt or any other obligations (contingent or
otherwise) of which:

 

(1) is Guaranteed by the Company or any Subsidiary of the Company
(excluding Guarantees of obligations (other than the principal of, and interest
on, Debt) pursuant to Standard Securitization Undertakings);

 

(2) is recourse to or obligates the Company or any Subsidiary of the
Company in any way other than pursuant to Standard Securitization Undertakings;
or

 

(3) subjects any property or asset of the Company or any Subsidiary of
the Company, directly or indirectly, contingently or otherwise, to the
satisfaction thereof, other than pursuant to Standard Securitization
Undertakings;

 

(b) with which neither the Company nor any Subsidiary of the Company
has any material contract, agreement, arrangement
or understanding other than on terms which the Company reasonably believes to
be no less favorable to the Company or the Subsidiary than those that might be
obtained at the time from Persons that are not Affiliates of the Company; and

 

(c) to which neither the Company nor any Subsidiary of the Company has
any obligation to maintain or preserve the entity’s financial condition or
cause the entity to achieve certain levels of operating results other than
pursuant to Standard Securitization Undertakings.

 

Any
designation of this kind by the Board of Directors shall be evidenced to the
Trustee by filing with the Trustee a certified copy of the Board Resolution
giving effect to the designation and an Officers’ Certificate certifying that
the designation complied with the foregoing conditions. For the avoidance of
doubt, Rite Aid Funding I and Rite Aid Funding II are designated
Receivables Entities without any further action on the part of the Company.

 

“Receivables
Facility” means the Receivables Financing Agreement dated as of
September 21, 2004 (as such may be further amended, modified, supplemented
or Refinanced from time to time),  among
Rite Aid Funding II, the Investors named therein, the Banks named therein,
Citicorp North America Inc., as Program Agent, Rite Aid Headquarters Funding
Inc., as Collection Agent, the Originators named therein and JPMorgan Chase
Bank, as trustee.

 

“Refinance”
means, in respect of any Debt, to refinance, extend, renew, refund, repay,
prepay, repurchase, redeem, defease or retire, or to issue other Debt, in
exchange or replacement for, such Debt. “Refinanced” and “Refinancing”
shall have correlative meanings.

 

25

 

“Related
Business” means any business that is related, ancillary or complementary to
the businesses of the Company and the Restricted Subsidiaries on the Issue Date.

 

“Repay”
means, in respect of any Debt, to repay, prepay, repurchase, redeem, legally
defease or otherwise retire such Debt. “Repayment” and “Repaid”
shall have correlative meanings. For purposes of Section 4.06 and the
definition of “Consolidated Interest Coverage Ratio,” Debt shall be considered
to have been Repaid only to the extent the related loan commitment, if any,
shall have been permanently reduced in connection therewith.

 

“Representatives”
means each of the Senior Collateral Agent and the Second Priority
Representatives.

 

“Restricted
Payment” means:

 

(a) any dividend or distribution (whether made in cash, securities or
other Property) declared or paid on or with respect to any shares of Capital
Stock of the Company or any Restricted Subsidiary (including any payment in
connection with any merger or consolidation with or into the Company or any
Restricted Subsidiary), except for any dividend or distribution that is made
solely to the Company or a Restricted Subsidiary (and, if such Restricted
Subsidiary is not a Wholly Owned Restricted Subsidiary, to the other
shareholders of such Restricted Subsidiary on a pro rata basis or on a basis
that results in the receipt by the Company or a Restricted Subsidiary of
dividends or distributions of greater value than it would receive on a pro rata
basis) or any dividend or distribution payable solely in shares of Capital
Stock (other than Disqualified Stock) of the Company;

 

(b) the purchase, repurchase, redemption, acquisition or retirement for
value of any Capital Stock of the Company or any Restricted Subsidiary (other
than from the Company or a Restricted Subsidiary);

 

(c) the purchase, repurchase, redemption, acquisition or retirement for
value, prior to the date for any scheduled maturity, sinking fund or
amortization or other installment payment, of any Subordinated Obligation
(other than the purchase, repurchase or other acquisition of any Subordinated
Obligation purchased in anticipation of satisfying a scheduled maturity,
sinking fund or amortization or other installment obligation, in each case due
within one year of the date of acquisition);

 

(d) any Investment (other than Permitted Investments) in any Person; or

 

(e) the issuance, sale or other disposition of Capital Stock of any
Restricted Subsidiary to a Person other than the Company or another Restricted
Subsidiary if the result thereof is that such Restricted Subsidiary shall cease
to be a Restricted Subsidiary, in which event the amount of such “Restricted
Payment” shall be the Fair Market Value of the remaining interest, if any, in
such former Restricted Subsidiary held by the Company and the other Restricted
Subsidiaries.

 

26

 

Notwithstanding
the foregoing, no payment or other transaction permitted by clause (c) or (f)
of the second paragraph of Section 4.08 will be considered a Restricted
Payment.

 

“Restricted
Subsidiary” means any Subsidiary of the Company other than an Unrestricted
Subsidiary.

 

“S&P”
means Standard & Poor’s Ratings Service or any successor to the rating
agency business thereof.

 

“Sale and
Leaseback Transaction” means any direct or indirect arrangement relating to
Property now owned or hereafter acquired whereby the Company or a Restricted Subsidiary
transfers such Property to another Person and the Company or a Restricted
Subsidiary leases it from such Person.

 

“Second
Priority Collateral” means all the “Second Priority Collateral” as defined
in any Second Priority Collateral Documents and shall also include the
mortgaged properties described in the Senior Credit Facility and the proceeds
thereof.

 

“Second
Priority Collateral Documents” means the Second Priority Subsidiary
Security Agreement, the Second Priority Subsidiary Guarantee Agreement, the
Second Priority Indemnity, Subrogation and Contribution Agreement, the
Intercreditor Agreement and each of the mortgages, security agreements and
other instruments and documents executed and delivered by any Subsidiary
Guarantor pursuant to any of the foregoing for purposes of providing collateral
security or credit support for any Second Priority Debt Obligation or
obligation under the Second Priority Subsidiary Guarantee Agreement (including,
in each case, any schedules, exhibits or annexes thereto), in each case as the
same may be amended, restated, supplemented or otherwise modified from time to
time.

 

“Second
Priority Collateral Trustee” means Wilmington Trust Company, in its
capacity as collateral trustee under the Intercreditor Agreement and the Second
Priority Collateral Documents, and its successors.

 

“Second
Priority Debt” means the Securities, the 9.5% Notes, the 7.5% Notes, the
8.125% Notes and any other Debt of the Company Guaranteed by the Subsidiary
Guarantors pursuant to the Second Priority Subsidiary Guarantee Agreement with
such Guarantee secured on a pari passu basis by the Second
Priority Collateral; provided, however, that such Debt is
permitted to be incurred, secured and guaranteed on such basis by each Senior
Debt Document and each Second Priority Debt Document.

 

“Second
Priority Debt Documents” means (a) with respect to the Securities, this
Indenture and the Securities and (b) with respect to any other series, issue or
class of Second Priority Debt, the promissory notes, indentures, Collateral
Documents or other operative agreements evidencing or governing such Debt, in
each case as the same may be amended, restated, supplemented or otherwise
modified from time to time.

 

“Second
Priority Debt Facility” means the indenture or other governing agreement
with respect to any Second Priority Debt.

 

27

 

“Second
Priority Debt Obligations” means, with respect to any series, issue or
class of Second Priority Debt, (a) all principal of and interest (including any
interest which accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency or reorganization of the Company,
whether or not allowed or allowable as a claim in any such proceeding) on such Second
Priority Debt, (b) all other amounts payable by the Company to the related
Second Priority Debt Parties under the related Second Priority Debt Documents
and (c) any renewals, extensions or Refinancings thereof of the foregoing.

 

“Second
Priority Debt Parties” means, with respect to any series, issue or class of
Second Priority Debt, the holders of such indebtedness from time to time, any
trustee or agent therefor under any related Second Priority Debt Documents and
the beneficiaries of each indemnification obligation undertaken by the Company
or any Obligor under any related Second Priority Debt Documents, but shall not
include the Obligors or any controlled Affiliates thereof.

 

“Second
Priority Indemnity, Subrogation and Contribution Agreement” means the
Second Priority Indemnity, Subrogation and Contribution Agreement, dated as of
June 27, 2001, as amended and restated as of May 28, 2003, among the
Company, the Subsidiary Guarantors and the Second Priority Collateral Trustee,
as the same may be amended, restated, supplemented or otherwise modified from
time to time.

 

“Second
Priority Instructing Group” means Second Priority Representatives with
respect to Second Priority Debt Facilities under which at least a majority of
the then aggregate amount of Second Priority Debt Obligations are outstanding.

 

“Second
Priority Lien” means the liens on the Second Priority Collateral in favor
of the Second Priority Debt Parties under the Second Priority Collateral
Documents.

 

“Second
Priority Representative” means, in respect of a Second Priority Debt
Facility, the Trustee and the trustee, administrative agent, security agent or
similar agent under each other Second Priority Debt Facility, as the case may
be, and each of their successors in such capacities.

 

“Second
Priority Subsidiary Guarantee Agreement” means the Second Priority
Subsidiary Guarantee Agreement, dated as of June 27, 2001, as amended and
restated as of May 28, 2003, made by the Subsidiary Guarantors (including
any additional Subsidiary Guarantor becoming party thereto after May 28,
2003) in favor of the Second Priority Collateral Trustee for the benefit of the
Second Priority Debt Parties, as the same may be amended, restated,
supplemented or otherwise modified from time to time.

 

“Second
Priority Subsidiary Security Agreement” means the Second Priority
Subsidiary Security Agreement, dated as of June 27, 2001, as amended and
restated as of May 28, 2003, made by the Subsidiary Guarantors (including
any additional Subsidiary Guarantor becoming party thereto after May 28,
2003) in favor of the Second Priority Collateral Trustee for the benefit of the
Second Priority Debt Parties, as the same may be amended, restated,
supplemented or otherwise modified from time to time.

 

28

 

“Secured
Debt” means indebtedness for money borrowed which is secured by a mortgage,
pledge, lien, security interest or encumbrance on property of the Company or
any Restricted Subsidiary, but shall not include guarantees arising in connection
with the sale, discount, guarantee or pledge of notes, chattel mortgages,
leases, accounts receivable, trade acceptances and other paper arising, in the
ordinary course of business, out of installment or conditional sales to or by,
or transactions involving title retention with, distributors, dealers or other
customers, of merchandise, equipment or services.

 

“Secured
Obligations” means the Senior Obligations, the Second Priority Debt
Obligations and any other Debt or obligations related to such Debt that is
secured by a Lien on any Collateral.

 

“Securities”
means Initial Securities designated in the first paragraph of this Indenture.

 

“Securities
Act” means the Securities Act of 1933, as it may be amended and any
successor act thereto.

 

“Senior
Bank” means a “Bank” as defined in the Senior Credit Facility.

 

“Senior
Bank Obligations” means (a) the principal of each loan made under the
Senior Credit Facility, (b) all reimbursement and cash collateralization
obligations in respect of letters of credit issued under the Senior Credit
Facility, (c) all monetary obligations of the Company or any Subsidiary under
each Senior Hedging Agreement (as defined in the Senior Credit Facility)
entered into (1) prior to September 30, 2005 with any counterparty that
was a Senior Bank (or an Affiliate thereof) on September 30, 2005 or (2)
on or after September 30, 2005 with any counterparty that was a Senior
Bank (or an Affiliate thereof) at the time such Senior Hedging Agreement was
entered into, (d) all interest on the loans, letter of credit reimbursement and
other obligations under the Senior Credit Facility or such Senior Hedging
Agreements (including, without limitation, any interest which accrues after the
commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of the Company or any Subsidiary
Guarantor, whether or not allowed or allowable as a claim in such proceeding),
(e) all other amounts payable by the Company under the Senior Debt Documents
and (f) all increases, renewals, extensions and Refinancings of the foregoing; provided
that, prior to the Borrowing Base Date (as defined in the Senior Credit
Facility), the Senior Bank Obligations shall not include any amount included in
the definition of the term Interim Obligations (as defined in the Senior Credit
Facility).

 

“Senior
Bank Parties” means each party to the Senior Credit Facility from time to
time other than any Obligor, each counterparty to a Senior Interest Rate
Agreement, the beneficiaries of each indemnification obligation undertaken by
the Company or any other Obligor under any Senior Debt Document, and the
successors and permitted assigns of each of the foregoing.

 

“Senior
Collateral” means all the “Senior Collateral” as defined in any Senior
Collateral Document and shall also include the mortgaged properties described
in the Senior Credit Facility and the proceeds thereof.

 

29

 

“Senior
Collateral Agent” means Citicorp North America, Inc., in its capacity as senior
collateral processing agent under the Senior Collateral Documents, and its successors.

 

“Senior
Collateral Documents” means the Senior Mortgages, the Senior Subsidiary
Security Agreement, the Senior Subsidiary Guarantee Agreement, the Senior
Indemnity, Subrogation and Contribution Agreement, the Intercreditor Agreement
and each of the mortgages, security agreements and other instruments and
documents executed and delivered by any Subsidiary Guarantor pursuant to any of
the foregoing or pursuant to the Senior Credit Facility or any Additional
Senior Debt Facility or for purposes of providing collateral security or credit
support for any Senior Bank Obligation or Additional Senior Debt Obligation or
obligation under the Senior Subsidiary Guarantee Agreement (including, in each
case, any schedules, exhibits or annexes thereto), as the same may be amended,
restated, supplemented or otherwise modified from time to time.

 

“Senior
Credit Facility” means the Senior Credit Agreement dated as of June 27,
2001, as amended and restated as of August 4, 2003, as further amended and
restated as of September 22, 2004, as further amended and restated as of
November 8, 2006, (as may be further amended, modified, supplemented or
Refinanced from time to time), among the Company, the Banks as defined therein,
Citicorp North America, Inc., as administrative agent and collateral processing
co-agent, JPMorgan Chase Bank, as syndication agent and collateral processing
co-agent, Fleet Retail Group, Inc., as co-documentation agent and collateral
agent and The CIT Group/Business Credit, Inc. and General Electric Capital
Corporation, as co-documentation agents. Following effectiveness of the “Second
Restated Credit Agreement” included as Exhibit B to the Amendment and
Restatement Agreement dated as of November 8, 2006 among the Company, the Banks
as defined therein, Citicorp North America Inc., as administrative agent and collateral
processing agent and Bank of America, N.A., as syndication agent, as it may be
amended, modified, supplemented, or amended from time to time, the “Second
Restated Credit Agreement,” as it may be further amended, modified,
supplemented or Refinanced from time to time, shall be the Senior Credit
Facility.

 

“Senior
Debt Documents” means (a) the Senior Credit Facility, each “Loan Document”
as defined in the Senior Credit Facility, each Senior Interest Rate Agreement
and the Senior Collateral Documents and (b) any Additional Senior Debt
Documents.

 

“Senior
Facilities” means the Senior Credit Facility and any Additional Senior Debt
Facilities.

 

“Senior
Indemnity, Subrogation and Contribution Agreement” means the Senior
Indemnity, Subrogation and Contribution Agreement, dated as of June 27, 2001,
as amended and restated as of May 28, 2003, as further amended and restated
as of September 22, 2004, among the Company, the Subsidiary Guarantors
(including Subsidiary Guarantors becoming party thereto after June 27, 2001)
and the Senior Collateral Agent, as the same may be amended, restated,
supplemented or otherwise modified from time to time.

 

“Senior
Lien” means the liens on the Senior Collateral in favor of the Senior Bank
Parties under the Senior Collateral Documents.

 

30

 

“Senior
Mortgages” means the mortgages, deeds of trust, leasehold mortgages,
assignments of leases and rents, modifications and other security documents
delivered pursuant to the Senior Credit Facility.

 

“Senior
Obligations” means the Senior Bank Obligations and any Additional Senior
Debt Obligations.

 

“Senior
Secured Parties” means the Senior Bank Parties and any Additional Senior
Debt Parties.

 

“Senior
Subsidiary Guarantee Agreement” means the Senior Subsidiary Guarantee
Agreement, made by the Subsidiary Guarantors (including Subsidiary Guarantors
that become parties thereto after June 27, 2001) in favor of the Senior
Collateral Agent for the benefit of the Senior Secured Parties, as the same may
be amended, restated, supplemented or otherwise modified from time to time.

 

“Senior
Subsidiary Security Agreement” means the Senior Subsidiary Security
Agreement, made by the Subsidiary Guarantors (including Subsidiary Guarantors
that become parties thereto after June 27, 2001) in favor of the Senior
Collateral Agent for the benefit of the Senior Secured Parties, as the same may
be amended, restated, supplemented or otherwise modified from time to time.

 

“7.5% Notes”
means the Company’s 7.5% Senior Secured Notes due 2015, issued under the
indenture dated as of January 11, 2005, among the Company, the Subsidiary Guarantors,
BNY Midwest Trust Company, as trustee, and outstanding on the Issue Date.

 

“Significant
Subsidiary” means any Subsidiary that would be a “Significant Subsidiary”
of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated
by the Commission.

 

“Specified
Collateral Disposition” means any Collateral Disposition (other than a
Collateral Disposition occurring following the occurrence of a Triggering
Event) in respect of which all or a portion of the resulting proceeds are
required by the terms of any Second Priority Debt Obligations to be used or
allocated to Repay such Second Priority Debt Obligations.

 

“Standard
Securitization Undertakings” means representations, warranties, covenants
and indemnities entered into by the Company or any Subsidiary of the Company
which are customary in an accounts receivable securitization transaction
involving a comparable company.

 

“Stated
Maturity” means, with respect to any security, the date specified in such
security as the fixed date on which the payment of principal of such security
is due and payable, including pursuant to any mandatory redemption provision
(but excluding any provision providing for the repurchase of such security at
the option of the holder thereof upon the happening of any contingency beyond
the control of the issuer unless such contingency has occurred).

 

31

 

“Subordinated
Obligation” means any Debt of the Company or any Subsidiary Guarantor
(whether outstanding on the Issue Date or thereafter Incurred) that is
subordinate or junior in right of payment to the Securities or the applicable
Subsidiary Guarantee pursuant to a written agreement to that effect.

 

“Subsidiary”
means, in respect of any Person, any corporation, company (including any
limited liability company), association, partnership, joint venture or other
business entity of which a majority of the total voting power of the Voting
Stock is at the time owned or controlled, directly or indirectly, by:

 

(a) such Person;

 

(b) such Person and one or more Subsidiaries of such Person; or

 

(c) one or more Subsidiaries of such Person.

 

“Subsidiary
Guarantee” means a Guarantee by a Subsidiary Guarantor of the Company’s
obligations with respect to the Securities pursuant to the Second Priority
Subsidiary Guarantee Agreement or otherwise on the terms set forth in this
Indenture.

 

“Subsidiary
Guarantor” means each Subsidiary that is a party to the Second Priority
Subsidiary Guarantee Agreement as of the Issue Date and any other Person that
Guarantees the Securities pursuant to Section 4.09.

 

“Temporary
Cash Investments” means any of the following:

 

(a) Investments in U.S. Government Obligations maturing within 365 days
of the date of acquisition thereof;

 

(b) Investments in time deposit accounts, certificates of deposit,
money market deposits maturing within 90 days of the date of acquisition
thereof issued by a bank or trust company organized under the laws of the
United States of America or any state thereof having capital, surplus and
undivided profits aggregating in excess of $500 million and whose long-term
debt is rated “A-3” or “A-” or higher according to Moody’s or S&P (or such
similar equivalent rating by at least one “nationally recognized statistical
rating organization” (as defined in Rule 436 under the Securities Act));

 

(c) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (a) entered into with:

 

(1) a bank meeting the qualifications described in clause (b) above; or

 

(2) any primary government securities dealer reporting to the Market
Reports Division of the Federal Reserve Bank of New York;

 

(d) Investments in commercial paper, maturing not more than 90 days
after the date of acquisition, issued by a corporation (other than an Affiliate
of the Company) organized and in existence under the laws of the United States
of America 

 

32

 

with a rating
at the time as of which any Investment therein is made of “P-1” (or higher)
according to Moody’s or “A-1” (or higher) according to S&P (or such similar
equivalent rating by at least one “nationally recognized statistical rating
organization” (as defined in Rule 436 under the Securities Act));

 

(e) direct obligations (or certificates representing an ownership
interest in such obligations) of any state of the United States of America
(including any agency or instrumentality thereof) for the payment of which the
full faith and credit of such state is pledged and which are not callable or
redeemable at the issuer’s option, provided that:

 

(1) the long-term debt of such state is rated “A-3” or “A-” or higher
according to Moody’s or S&P (or such similar equivalent rating by at least
one “nationally recognized statistical rating organization” (as defined in Rule
436 under the Securities Act)); and

 

(2) such obligations mature within 180 days of the date of
acquisition thereof; and

 

(f) money market funds at least 95% of the assets of which constitute
Temporary Cash Equivalents of the kinds described in clauses (a) through (e) of
this definition.

 

“Total
Assets” means the total assets of the Company and the Restricted
Subsidiaries on a consolidated basis determined in accordance with GAAP as
shown on the most recent consolidated balance sheet of the Company.

 

“Triggering
Event” at any time has the meaning set forth in the Intercreditor
Agreement.

 

“Trust
Indenture Act” or “TIA” means the Trust Indenture Act of 1939 as in
force at the date as of which this Indenture was executed, except as provided
in Section 9.03; provided, however, that in the event the Trust
Indenture Act of 1939 is amended after such date, “Trust Indenture Act” means,
to the extent required by any such amendment, the Trust Indenture Act of 1939
as so amended.

 

“Trustee”
means the Person named as the “Trustee” in the first paragraph of this
Indenture until a successor Trustee shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter “Trustee” shall mean such
successor Trustee.

 

“Trust
Officer” means any officer within the Corporate Trust department of the
Trustee (or any successor group of the Trustee) with direct responsibility for
the administration of this Indenture and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.

 

“Uniform
Commercial Code” means the New York Uniform Commercial Code as in effect
from time to time.

 

33

 

“Unrestricted
Subsidiary” means:

 

(a) any Subsidiary of the Company that is designated after the Issue
Date as an Unrestricted Subsidiary as permitted or required pursuant to
Section 4.11 and is not thereafter redesignated as a Restricted Subsidiary
as permitted pursuant thereto; and

 

(b) any Subsidiary of an Unrestricted Subsidiary.

 

“U.S.
Government Obligations” means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer’s option.

 

“Voting
Stock” of any Person means all classes of Capital Stock or other interests
(including partnership interests) of such Person then outstanding and normally
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof.

 

“Wholly
Owned Restricted Subsidiary” means, at any time, a Restricted Subsidiary
all the Voting Stock of which (except directors’ qualifying shares) is at such
time owned, directly or indirectly, by the Company and its other Wholly Owned
Subsidiaries.

 

SECTION 1.02. Other
Definitions.

 

	
  Term

  	
   

  	
  Defined in

  Section

  
	
  “Affiliate Transaction”

  	
   

  	
  4.08

  
	
  “Asset Sales Prepayment Offer”

  	
   

  	
  4.06

  
	
  “Bankruptcy Law”

  	
   

  	
  6.01

  
	
  “Change of Control Offer”

  	
   

  	
  4.13

  
	
  “Change of Control Payment Date”

  	
   

  	
  4.13

  
	
  “Change of Control Purchase Price”

  	
   

  	
  4.13

  
	
  “covenant defeasance option”

  	
   

  	
  8.01

  
	
  “Custodian”

  	
   

  	
  6.01

  
	
  “Global Security”

  	
   

  	
  Appendix A

  
	
  “legal defeasance option”

  	
   

  	
  8.01

  
	
  “Legal Holiday”

  	
   

  	
  10.08

  
	
  “Offer Amount”

  	
   

  	
  4.06

  
	
  “Offer Period”

  	
   

  	
  4.06

  
	
  “OID”

  	
   

  	
  2.01

  

 

34

 

	
  “Original Securities”

  	
   

  	
  2.01

  
	
  “Paying Agent”

  	
   

  	
  2.04

  
	
  “Registrar”

  	
   

  	
  2.04

  
	
  “Reversion Date”

  	
   

  	
  4.15(b)

  
	
  “Securities Custodian”

  	
   

  	
  Appendix A

  
	
  “Shelf Registration statement

  	
   

  	
  Appendix A

  
	
  “Surviving Person”

  	
   

  	
  5.01

  
	
  “Suspension Period”

  	
   

  	
  4.15(b)

  

 

SECTION 1.03. Incorporation
by Reference of Trust Indenture Act. This Indenture is subject to the
mandatory provisions of the TIA, which are incorporated by reference in and
made a part of this Indenture. The following TIA terms have the following
meanings:

 

“Commission”
means the SEC.

 

“indenture
securities” means the Securities.

 

“indenture
security holder” means a Holder.

 

“indenture to
be qualified” means this Indenture.

 

“indenture
trustee” or “institutional trustee” means the Trustee.

 

“obligor” on
the indenture securities means the Company and any other obligor on the
indenture securities.

 

All other TIA
terms used in this Indenture that are defined by the TIA, defined by TIA
reference to another statute or defined by SEC rule have the meanings assigned
to them by such definitions.

 

SECTION 1.04. Rules
of Construction. Unless the context otherwise requires:

 

(1) a term has the meaning assigned to it;

 

(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;

 

(3) “or” is not exclusive;

 

(4) “including” means including without limitation;

 

35

 

(5) words in the singular include the plural and words in the plural
include the singular;

 

(6) unsecured Debt shall not be deemed to be subordinate or junior to
secured Debt merely by virtue of its nature as unsecured Debt;

 

(7) the principal amount of any noninterest bearing or other discount
security at any date shall be the principal amount thereof that would be shown
on a balance sheet of the issuer dated such date prepared in accordance with
GAAP; and

 

(8) the principal amount of any Preferred Stock shall be the greater of
(i) the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock.

 

ARTICLE II

The Securities

 

SECTION 2.01. Amount
of Securities; Issuable in Series. The aggregate principal amount of
Securities which may be authenticated and delivered under this Indenture is
unlimited. All Securities shall be identical in all respects other than issue
prices and issuance dates. The Securities may be issued in one or more series; provided,
however, that any Securities issued with original issue discount (“OID”)
for Federal income tax purposes shall not be issued as part of the same series
as any Securities that are issued with a different amount of OID or are not
issued with OID. All Securities of any one series shall be substantially
identical except as to denomination.

 

Subject to Section 2.03,
the Trustee shall authenticate Securities for original issue on the Issue Date
in the aggregate principal amount of $300,000,000 (the “Original Securities”). With
respect to any Securities issued after the Issue Date (except for Securities authenticated
and delivered upon registration of transfer of, or in exchange for, or in lieu
of, Original Securities pursuant to Section 2.07, 2.08, 2.09 or 3.06),
there shall be established in or pursuant to a Board Resolution, and subject to
Section 2.03, set forth, or determined in the manner provided in an
Officers’ Certificate, or established in one or more indentures supplemental
hereto, prior to the issuance of such Securities:

 

(1) whether such Securities shall be issued as part of a new or
existing series of Securities and, if issued as part of a new series, the title
of such Securities (which shall distinguish the Securities of the series from
Securities of any other series);

 

(2) the aggregate principal amount of such Securities to be
authenticated and delivered under this Indenture, which may be issued for an
unlimited aggregate principal amount (except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu of,
other Securities of the same series pursuant to Section 2.07, 2.08, 2.09
or 3.06 and except for Securities which, pursuant to Section 2.03, are
deemed never to have been authenticated and delivered hereunder);

 

36

 

(3) the issue price and issuance date of such Securities, including the
date from which interest on such Securities shall accrue; and

 

(4) if applicable, that such Securities shall be issuable in whole or
in part in the form of one or more Global Securities and, in such case, the
respective depositories for such Global Securities; the form of any legend or
legends that shall be borne by any such Global Security in addition to or in
lieu of that set forth in Exhibit 1 and any circumstances in which any
such Global Security may be exchanged in whole or in part for Securities
registered; and any transfer of such Global Security in whole or in part may be
registered in the name or names of Persons other than the depository for such
Global Security or a nominee thereof.

 

SECTION 2.02. Form
and Dating. The Initial Securities of each series and the Trustee’s
certificate of authentication shall be substantially in the form of
Exhibit 1 which is hereby incorporated in and expressly made a part of
this Indenture. The Securities of each series may have notations, legends or
endorsements required by law, stock exchange rule, agreements to which the
Company is subject, if any, or usage, provided that any such notation, legend
or endorsement is in a form reasonably acceptable to the Company. Each Security
shall be dated the date of its authentication. The terms of the Securities of
each series set forth in Exhibit 1 are part of the terms of this
Indenture.

 

SECTION 2.03. Execution
and Authentication. An Officer (and for purposes of this Section 2.03, the
term Officer shall include any Vice President of the Company authorized by the
Board of Directors) shall sign the Securities for the Company by manual or
facsimile signature.

 

If an Officer
whose signature is on a Security no longer holds that office at the time the
Trustee authenticates the Security, the Security shall be valid nevertheless.

 

At any time
and from time to time after the execution and delivery of this Indenture, the
Company may deliver Securities of any series executed by the Company to the
Trustee for authentication, together with a written order of the Company in the
form of an Officers’ Certificate for the authentication and delivery of such
Securities, and the Trustee in accordance with such written order of the
Company shall authenticate and deliver such Securities.

 

37

 

A Security
shall not be valid until an authorized signatory of the Trustee manually signs
the certificate of authentication on the Security. The signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.

 

The Trustee
may appoint an authenticating agent reasonably acceptable to the Company to
authenticate the Securities. Unless limited by the terms of such appointment,
an authenticating agent may authenticate Securities whenever the Trustee may do
so. Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as
any Registrar, Paying Agent or agent for service of notices and demands.

 

SECTION 2.04. Registrar
and Paying Agent. The Company shall maintain an office or agency in the
city of New York where Securities may be presented for registration of transfer
or for exchange (the “Registrar”) and an office or agency in the city of New
York where Securities may be presented for payment (the “Paying Agent”). The
Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may have one or more co-registrars and one or more
additional paying agents. The term “Paying Agent” includes any additional
paying agent.

 

The Company
shall enter into an appropriate agency agreement with any Registrar, Paying
Agent or co-registrar not a party to this Indenture, which shall incorporate
the terms of the TIA. The agreement shall implement the provisions of this
Indenture that relate to such agent. The Company shall notify the Trustee of
the name and address of any such agent. If the Company fails to maintain a
Registrar or Paying Agent, the Trustee shall act as such and shall be entitled
to appropriate compensation therefor pursuant to Section 7.07. The Company
or any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar, co-registrar or transfer agent.

 

The Company
initially appoints the Trustee as Registrar and Paying Agent in connection with
the Securities.

 

SECTION 2.05. Paying
Agent To Hold Money in Trust. Prior to each due date of the principal and
interest on any Security, the Company shall deposit with the Paying Agent a sum
sufficient to pay such principal and interest when so becoming due. The Company
shall require each Paying Agent (other than the Trustee) to agree in writing
that the Paying Agent shall hold in trust for the benefit of Holders or the
Trustee all money held by the Paying Agent for the payment of principal of or
interest on the Securities and shall notify the Trustee of any default by the
Company in making any such payment. If the Company or a Wholly Owned Subsidiary
acts as Paying Agent, it shall segregate the money held by it as Paying Agent
and hold it as a separate trust fund. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee and to account for any
funds disbursed by the Paying Agent. Upon complying with this Section 2.05, the
Paying Agent shall have no further liability for the money delivered to the
Trustee.

 

SECTION 2.06. Holder
Lists. The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee, in writing at least five Business Days before each interest payment
date and at such other times 

 

38

 

as the Trustee may request in writing, a list
in such form and as of such date as the Trustee may reasonably require of the
names and addresses of Holders.

 

SECTION 2.07. Replacement
Securities. If a mutilated Security is surrendered to the Registrar or if
the Holder of a Security claims that such Security has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Security if the requirements of Section 8-405 of the Uniform
Commercial Code are met and the Holder satisfies any other reasonable
requirements of the Trustee. If required by the Trustee or the Company, such
Holder shall furnish an indemnity bond sufficient in the judgment of the
Company and the Trustee to protect the Company, the Trustee, the Paying Agent,
the Registrar and any co-registrar from any loss which any of them may suffer
if a Security is replaced. The Company and the Trustee may charge the Holder
for their expenses in replacing a Security.

 

Every
replacement Security is an additional obligation of the Company.

 

SECTION 2.08. Outstanding
Securities. Securities outstanding at any time are all Securities
authenticated by the Trustee except for those canceled by it, those delivered
to it for cancellation and those described in this Section 2.08 as not
outstanding. A Security does not cease to be outstanding because the Company or
an Affiliate of the Company holds the Security.

 

If a Security
is replaced pursuant to Section 2.07, it ceases to be outstanding unless
the Trustee and the Company receive proof satisfactory to them that the
replaced Security is held by a bona fide purchaser.

 

If the Paying
Agent segregates and holds in trust, in accordance with this Indenture, on a
redemption date or maturity date money sufficient to pay all principal and
interest payable on that date with respect to the Securities (or portions
thereof) to be redeemed or maturing, as the case may be, then on and after that
date such Securities (or portions thereof) cease to be outstanding and interest
on them ceases to accrue.

 

SECTION 2.09. Temporary
Securities. Until definitive Securities are ready for delivery, the Company
may prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities but may
have variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities and deliver them in exchange for temporary
Securities.

 

SECTION 2.10. Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee and no one else shall cancel and destroy (subject to the
record retention requirements of the Exchange Act) all Securities surrendered
for registration of transfer, exchange, payment or cancellation and deliver a
certificate of such destruction to the Company unless the Company directs the
Trustee to deliver canceled Securities to the Company. The Company may not
issue new Securities to replace Securities it has redeemed, paid or delivered
to the Trustee for cancellation.

 

39

 

SECTION 2.11. Defaulted
Interest. If the Company defaults in a payment of interest on the
Securities, the Company shall pay the defaulted interest (plus interest on such
defaulted interest to the extent lawful) in any lawful manner. The Company may
pay the defaulted interest to the persons who are Holders on a subsequent
special record date. The Company shall fix or cause to be fixed any such
special record date and payment date to the reasonable satisfaction of the
Trustee and shall promptly mail to each Holder a notice that states the special
record date, the payment date and the amount of defaulted interest to be paid.

 

SECTION 2.12. CUSIP
Numbers. The Company in issuing the Securities may use “CUSIP” numbers (if
then generally in use) and, if so, the Trustee shall use “CUSIP” numbers in
notices of redemption as a convenience to Holders; provided, however,
that neither the Company nor the Trustee shall have any responsibility for any
defect in the “CUSIP” number that appears on any Security, check, advice of
payment or redemption notice, and any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.

 

ARTICLE III

Redemption

 

SECTION 3.01. Notices
to Trustee. If the Company elects to redeem Securities pursuant to
paragraph 5 of the Securities, it shall notify the Trustee in writing of
the redemption date, the principal amount of Securities to be redeemed and that
such redemption is being made pursuant to such paragraph 5 of the
Securities.

 

The Company
shall give each notice to the Trustee provided for in this Section 3.01 at
least 45 days before the redemption date unless the Trustee consents to a
shorter period. Such notice shall be accompanied by an Officers’ Certificate
from the Company to the effect that such redemption will comply with the
conditions herein.

 

SECTION 3.02. Selection
of Securities To Be Redeemed. If fewer than all the Securities are to be
redeemed pursuant to paragraph 5 of the Securities, the Trustee shall select
the Securities to be redeemed pro rata or by lot or by a method that complies
with applicable legal and securities exchange requirements, if any, and that
the Trustee considers fair and appropriate and in accordance with methods
generally used at the time of selection by fiduciaries in similar circumstances.
The Trustee shall make the selection from outstanding Securities not previously
called for redemption. The Trustee may select for redemption portions of the
principal of Securities that have denominations larger than $1,000. Securities
and portions of them the Trustee selects shall be in amounts of $1,000 or a
whole multiple of $1,000. Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Company promptly of the Securities or
portions of Securities to be redeemed.

 

40

 

SECTION 3.03. Notice
of Redemption. At least 30 days but not more than 60 days before a
date for redemption of Securities, the Company shall mail a notice of
redemption by first-class mail to each Holder of Securities to be redeemed at
such Holder’s registered address.

 

The notice
shall identify the Securities to be redeemed and shall state:

 

(1) the redemption date;

 

(2) the redemption price;

 

(3) the name and address of the Paying Agent;

 

(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;

 

(5) if fewer than all the outstanding Securities are to be redeemed,
the identification and principal amounts of the particular Securities to be
redeemed;

 

(6) that, unless the Company defaults in making such redemption payment,
interest on Securities (or portion thereof) called for redemption ceases to
accrue on and after the redemption date, and the only remaining right of the
Holders is to receive payment of the redemption price upon surrender to the
Paying Agent; and

 

(7) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Securities.

 

At the Company’s
request, the Trustee shall give the notice of redemption in the Company’s name
and at the Company’s expense. In such event, the Company shall provide the
Trustee with the information required by this Section 3.03 at least
45 days before the redemption date.

 

SECTION 3.04. Effect
of Notice of Redemption. Once notice of redemption is mailed, Securities
called for redemption become due and payable on the redemption date and at the
redemption price stated in the notice. Upon surrender to the Paying Agent, such
Securities shall be paid at the redemption price stated in the notice, plus
accrued interest, if any, to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
related interest payment date that is on or prior to the date of redemption). Failure
to give notice or any defect in the notice to any Holder shall not affect the
validity of the notice to any other Holder.

 

SECTION 3.05. Deposit
of Redemption Price. Prior to or on the redemption date, the Company shall
deposit with the Paying Agent (or, if the Company or a Wholly Owned Subsidiary
is the Paying Agent, shall segregate and hold in trust) money sufficient to pay
the redemption price of and accrued interest, if any (subject to the right of
Holders of record on the relevant record date to receive interest due on the
related interest payment date that is on or prior to the date of redemption),
on all Securities to be redeemed on that date other than Securities or portions
of Securities called for redemption that have been delivered by the Company to
the Trustee for cancellation.

 

41

 

SECTION 3.06.
Securities Redeemed in Part. Upon surrender of a Security that is
redeemed in part, the Company shall execute and the Trustee shall authenticate
for the Holder (at the Company’s expense) a new Security equal in principal
amount to the unredeemed portion of the Security surrendered.

 

ARTICLE IV

Covenants

 

SECTION 4.01.
Payment of Securities. The Company shall promptly pay the principal of
and interest on the Securities on the dates and in the manner provided in the
Securities and in this Indenture. Principal and interest shall be considered
paid on the date due if on such date the Trustee or the Paying Agent holds in
accordance with this Indenture money sufficient to pay all principal and
interest then due.

 

The Company
shall pay interest on overdue principal at the rate per annum specified
therefor in the Securities, and it shall pay interest on overdue installments
of interest at the rate borne by the Securities, to the extent lawful.

 

SECTION 4.02.
SEC Reports. Notwithstanding that the Company may not be subject to
the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall file with the Commission and provide the Trustee with
such annual and quarterly reports and such information, documents and other
reports as are specified in Sections 13 and 15(d) of the Exchange Act and
applicable to a U.S. corporation subject to such Sections, such information,
documents and reports to be so filed and provided at the times specified for
the filing of such information, documents and reports under such Sections; provided,
however, that the Company shall not be so obligated to file such
information, documents and reports with the Commission if the Commission does
not permit such filings; provided further, however, that
the Company shall be required also to provide to Holders any such information,
documents or reports that are not so filed. The Company shall also comply with
the other provisions of TIA § 314(a). Notwithstanding anything herein to
the contrary, the Company will not be deemed to have failed to comply with any
of its obligations hereunder for purposes of clause (d) of Section 6.01
until 120 days after the date any report hereunder is due.

 

SECTION 4.03.
Limitation on Debt. The Company shall not, and shall not permit any
Restricted Subsidiary to, Incur, directly or indirectly, any Debt unless, after
giving effect to the application of the proceeds thereof, no Default or Event
of Default would occur as a consequence of such Incurrence and no Default or
Event of Default would be continuing following such Incurrence and application
of proceeds and either:

 

(1) such Debt is Debt of the Company or
a Subsidiary Guarantor and after giving effect to the Incurrence of such Debt
and the application of the proceeds thereof, the Consolidated Interest Coverage
Ratio would be greater than 2.00 to 1.00; or

 

(2) such Debt is Permitted Debt.

 

The term “Permitted
Debt” is defined to include the following:

 

42

 

(a) the Offered Secured Notes issued on
the Issue Date and Debt of Subsidiary Guarantors, including any future
Guarantor, evidenced by guarantees relating to the Offered Secured Notes issued
on the Issue Date;

 

(b) Debt of the Company or a Subsidiary
Guarantor (including Guarantees thereof) (1) under any Credit Facilities, (2) Incurred
pursuant to a Real Estate Financing Transaction, a Sale and Leaseback
Transaction or an Equipment Financing Transaction, (3) Incurred in respect
of Capital Lease Obligations, (4) Incurred pursuant to Debt Issuances or (5) Incurred
by a Receivables Entity, whether or not a Subsidiary Guarantor, in a Qualified
Receivables Transaction that is not recourse to the Company or any other
Restricted Subsidiary (except for Standard Securitization Undertakings), provided
that the aggregate principal amount of all such Debt in clauses (1) through
(5) hereof at any one time outstanding shall not exceed the greater of (A) $2,500
million (or following the Jean Coutu Acquisition, $3,500 million), which amount
shall be permanently reduced by the amount of Net Available Cash used to Repay
Debt under the Credit Facilities, and not subsequently reinvested in Additional
Assets or used to purchase Securities or Repay other Debt, pursuant to Section 4.06
and (B) the sum of the amount equal to (i) 60% of the book value of
the inventory (determined using the first-in-first-out method of accounting) of
the Company and the Restricted Subsidiaries and (ii) 85% of the book value
of the accounts receivables of the Company and the Restricted Subsidiaries,
including any Receivables Entity that is a Restricted Subsidiary;

 

(c) [Intentionally omitted];

 

(d) Debt of the Company outstanding on
the Issue Date and evidenced by the 7.5% Notes and of Subsidiary Guarantors,
including any future Guarantor, evidenced by guarantees relating to the 7.5%
Notes;

 

(e) Debt Incurred after the Issue Date
in respect of Purchase Money Debt, provided that the aggregate principal
amount of such Debt does not exceed 80% of the Fair Market Value (on the date
of the Incurrence thereof) of the Property acquired, constructed, developed or
leased, including additions and improvements thereto;

 

(f) Debt of the Company owing to and
held by any consolidated Restricted Subsidiary and Debt of a Restricted
Subsidiary owing to and held by the Company or any consolidated Restricted
Subsidiary; provided, however, that any subsequent issue or
transfer of Capital Stock or other event that results in any such consolidated
Restricted Subsidiary ceasing to be a consolidated Restricted Subsidiary or any
subsequent transfer of any such Debt (except to the Company or a consolidated
Restricted Subsidiary) shall be deemed, in each case, to constitute the
Incurrence of such Debt by the issuer thereof;

 

(g) Debt under Interest Rate Agreements entered
into by the Company or a Restricted Subsidiary for the purpose of limiting
interest rate risk of the financial management of the Company or such
Restricted Subsidiary and not for speculative 

 

43

 

purposes, provided that the obligations under such agreements
are directly related to payment obligations on Debt otherwise permitted by the
terms of this Section 4.03;

 

(h) Debt under Currency Exchange Protection Agreements entered into by the
Company or a Restricted Subsidiary for the purpose of limiting currency
exchange rate risks directly related to transactions entered into by the
Company or such Restricted Subsidiary and not for speculative purposes;

 

(i) Debt under Commodity Price
Protection Agreements entered into by the Company or a Restricted Subsidiary in
the financial management of the Company or that Restricted Subsidiary and not
for speculative purposes;

 

(j) Debt in connection with one or more
standby letters of credit, banker’s acceptance, performance or surety bonds or
completion guarantees issued by the Company or a Restricted Subsidiary or
pursuant to self-insurance obligations and not in connection with the borrowing
of money or the obtaining of advances or credit;

 

(k) Debt outstanding on the Issue Date not
otherwise described in clauses (a) through (j) above or clauses (p)
through (q) below;

 

(l) other Debt of the Company or a Subsidiary
Guarantor (including Guarantees thereof) in an aggregate principal amount
outstanding at any one time not to exceed $600 million;

 

(m) Debt of a Restricted Subsidiary
outstanding on the date on which that Restricted Subsidiary was acquired by the
Company or otherwise became a Restricted Subsidiary (other than Debt Incurred
as consideration in, or to provide all or any portion of the funds or credit
support utilized to consummate, the transaction or series of transactions
pursuant to which that Restricted Subsidiary became a Subsidiary of the Company
or was otherwise acquired by the Company), provided that at the time
that Restricted Subsidiary was acquired by the Company or otherwise became a
Restricted Subsidiary and after giving effect to the Incurrence of that Debt,
the Company would have been able to Incur $1.00 of additional Debt pursuant to
clause (1) of the first paragraph of this Section 4.03;

 

(n) Debt arising from the honoring by a bank
or other financial institution of a check or draft or other similar instrument
inadvertently drawn against insufficient funds, provided that such Debt
is extinguished within five Business Days of its Incurrence;

 

(o) endorsements of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
business;

 

(p) [Intentionally omitted];

 

(q) Debt in respect of Sale and Leaseback
Transactions or Real Estate Financing Transactions involving only real property
(and the related personal property) owned by the Company or a Subsidiary
Guarantor on or after the Issue Date in an aggregate principal amount
outstanding at any one time not to exceed 

 

44

 

$150.0 million, provided that such Sale and Leaseback
Transactions or Real Estate Financing Transactions may involve Property
other than real property (and the related personal property) owned on or after the
Issue Date to the extent the portion of the Debt related to such Property is
permitted by another provision of this Section 4.03 at the time of
Incurrence;

 

(r) Debt in respect of Sale and Leaseback
Transactions that are not Capital Lease Obligations Incurred to finance the
acquisition, construction and development of Property after the Issue Date,
including additions and improvements thereto, provided that any
reclassification of such Debt as a Capital Lease Obligation shall be deemed an
Incurrence of such Debt;

 

(s) Permitted Refinancing Debt Incurred in
respect of Debt Incurred pursuant to clause (1) of the first
paragraph of this Section 4.03 and clauses (a), (d), (e), (k), (m)
and (q) above; and

 

(t) Debt arising from agreements of the
Company or any Restricted Subsidiary providing for indemnification, adjustment
of purchase price or similar obligations, in each case, Incurred or assumed in
connection with the disposition of any business, assets or a Subsidiary, other
than Guarantees of Debt incurred by any Person acquiring all or any portion of
such business, assets or Restricted Subsidiary for the purpose of financing
such acquisition; provided, however, that (1) such Debt is
not reflected on the balance sheet of the Company or any Restricted Subsidiary
(contingent obligations referred to in a footnote or footnotes to financial
statements and not otherwise reflected on the balance sheet will not be deemed
to be reflected on such balance sheet for purposes of this clause (1)) and
(2) the maximum assumable liability in respect of such Debt will at no
time exceed the gross proceeds including non-cash proceeds (the fair market
value of such non-cash proceeds being measured at the time received and without
giving effect to any subsequent changes in value) actually received by the
Company or such Restricted Subsidiary in connection with such disposition.

 

Notwithstanding
anything to the contrary contained in this Section 4.03, the Company shall
not permit any Restricted Subsidiary that is not a Subsidiary Guarantor to
Incur any Debt pursuant to this Section 4.03 if the proceeds thereof are
used, directly or indirectly, to Refinance any Debt of the Company or any
Subsidiary Guarantor. In addition, the Company shall not, and shall not permit
any Subsidiary Guarantor to, Incur, directly or indirectly, any Senior
Obligation that is subordinate or junior in right of payment (without regard to
any security interest) to any other Debt of the Company or any Subsidiary
Guarantor.

 

For purposes
of determining compliance with this Section 4.03, (1) in the event
that an item of Debt meets the criteria of more than one of the types of Debt
described herein, the Company, in its sole discretion, will classify such item
of Debt at the time of Incurrence and only be required to include the amount
and type of such Debt in one of the above clauses, (2) the Company will be
entitled at the time of such Incurrence to divide and classify an item of Debt
in more than one of the types of Debt described herein and (3) with
respect to Debt permitted under clause (k) of this Section 4.03 in respect
of Sale and 

 

45

 

Leaseback Transactions that are not Capital Lease Obligations on the
Issue Date, any reclassification of such Debt as a Capital Lease Obligation
shall not be deemed an Incurrence of such Debt; provided, however,
that (A) all outstanding Debt evidenced by the 8.125% Notes will be deemed
to have been Incurred pursuant to clause (b) of this Section 4.03, (B) all
outstanding Debt evidenced by the Receivables Facility will be deemed to have
been Incurred pursuant to clause (b) of this Section 4.03, (C) [intentionally
omitted], (D) all outstanding Debt under the Senior Credit Facility
immediately following the Issue Date will be deemed to have been Incurred
pursuant to clause (b) of this Section 4.03, (E) any Permitted
Debt that is not Secured Debt may later be reclassified as having been
Incurred pursuant to clause (1) of the first paragraph of this Section 4.03,
to the extent such Debt could be Incurred pursuant to such clause at the time
of such reclassification, and (F) any Permitted Debt may later be
reclassified as having been Incurred pursuant to any other clause in the
definition of Permitted Debt to the extent such Debt could be Incurred pursuant
to such clause at the time of such reclassification.

 

SECTION 4.04.
Limitation on Restricted Payments. The Company shall not make, and shall
not permit any Restricted Subsidiary to make, directly or indirectly, any
Restricted Payment if at the time of, and after giving effect to, such proposed
Restricted Payment:

 

(a) a Default or Event of Default shall
have occurred and be continuing;

 

(b) the Company could not Incur at least
$1.00 of additional Debt pursuant to clause (1) of the first paragraph of Section 4.03;
or

 

(c) the aggregate amount of such
Restricted Payment and all other Restricted Payments declared or made since February 12,
2003 (the amount of any Restricted Payment, if made other than in cash, to be
based upon Fair Market Value) would exceed an amount equal to the sum of:

 

(1) 50% of the aggregate amount of
Consolidated Net Income accrued during the period (treated as one accounting
period) from the beginning of the first fiscal quarter that commences after February 12,
2003 occurs to the end of the most recent fiscal quarter for which financial
statements have been filed with the Commission (or if the aggregate amount of
Consolidated Net Income for such period shall be a deficit, minus 100% of such
deficit); plus

 

(2) 100% of Capital Stock Sale Proceeds;
plus

 

(3) the sum of:

 

(A)  the aggregate net cash proceeds
received by the Company or any Restricted Subsidiary from the issuance or sale
after February 12, 2003 of convertible or exchangeable Debt that has been
converted into or exchanged for Capital Stock (other than Disqualified Stock)
of the Company; and

 

(B) the aggregate amount by which Debt
(other than Subordinated Obligations) of the Company or any Restricted
Subsidiary is reduced on 

 

46

 

 

the Company’s consolidated balance sheet after February 12, 2003
upon the conversion or exchange of any Debt (other than convertible or
exchangeable debt issued or sold after February 12, 2003) for Capital
Stock (other than Disqualified Stock) of the Company;

 

excluding, in
the case of clause (A) or (B):

 

(x) any such
Debt issued or sold to the Company or a Subsidiary of the Company or an
employee stock ownership plan or trust established by the Company or any such
Subsidiary for the benefit of their employees; and

 

(y) the
aggregate amount of any cash or other Property distributed by the Company or
any Restricted Subsidiary upon any such conversion or exchange;

 

plus

 

(4) an amount equal to the sum of:

 

(A) the net reduction in Investments in
any Person other than the Company or a Restricted Subsidiary resulting from
dividends, repayments of loans or advances or other transfers of Property made
after February 12, 2003, in each case to the Company or any Restricted
Subsidiary from such Person less the cost of the disposition of such
Investments; and

 

(B) the portion (proportionate to the
Company’s equity interest in such Unrestricted Subsidiary) of the Fair Market
Value of the net assets of an Unrestricted Subsidiary at the time such Unrestricted
Subsidiary is designated a Restricted Subsidiary (provided that such
designation occurs after February 12, 2003);

 

provided,
however, that the foregoing sum shall not exceed, in the case of any
Person, the amount of Investments previously made (and treated as a Restricted
Payment) by the Company or any Restricted Subsidiary in such Person.

 

Notwithstanding
the foregoing limitation, the Company may:

 

(a) pay dividends on its Capital Stock
within 60 days of the declaration thereof if, on said declaration date, such
dividends could have been paid in compliance with this Indenture; provided,
however, that at the time of such payment of such dividend, no other
Default or Event of Default shall have occurred and be continuing (or result
therefrom); provided further, however, that, if declared on or
after February 12, 2003, such dividend shall be included in the
calculation of the amount of Restricted Payments;

 

(b) purchase, repurchase, redeem,
legally defease, acquire or retire for value Capital Stock of the Company or
Subordinated Obligations on or after February 12, 2003 

 

47

 

in exchange for, or out of the proceeds of the substantially concurrent
sale of, Capital Stock of the Company (other than Disqualified Stock and other
than Capital Stock issued or sold to a Subsidiary of the Company or an employee
stock ownership plan or trust established by the Company or any such Subsidiary
for the benefit of their employees); provided, however, that:

 

(1) such purchase, repurchase,
redemption, legal defeasance, acquisition or retirement shall be excluded in
the calculation of the amount of Restricted Payments; and

 

(2) the Capital Stock Sale Proceeds from
such exchange or sale shall be excluded from the calculation pursuant to clause
(c)(2) above;

 

(c) purchase, repurchase, redeem,
legally defease, acquire or retire for value any Subordinated Obligations on or
after February 12, 2003 in exchange for, or out of the proceeds of the
substantially concurrent sale of, Permitted Refinancing Debt; provided, however,
that such purchase, repurchase, redemption, legal defeasance, acquisition or
retirement shall be excluded in the calculation of the amount of Restricted
Payments;

 

(d) [intentionally omitted];

 

(e) so long as no Default or Event of
Default has occurred and is continuing the repurchase or other acquisition on
or after February 12, 2003 of shares of, or options to purchase shares of,
Capital Stock of the Company or any of its Subsidiaries from employees, former
employees, directors or former directors of the Company or any of its
Subsidiaries (or permitted transferees of such employees, former employees,
directors or former directors), pursuant to the terms of the agreements
(including employment agreements) or plans (or amendments thereto) approved by
the Board of Directors under which such individuals purchase or sell or are
granted the option to purchase or sell, shares of such Capital Stock; provided,
however, that the aggregate amount of such repurchases and other acquisitions
shall not exceed $15.0 million; provided further, however,
that such repurchases and other acquisitions shall be included in the
calculation of the amount of Restricted Payments;

 

(f) make payments not to exceed $2.5
million in the aggregate to enable the Company to make payments to holders of
its Capital Stock in lieu of the issuance of fractional shares of its Capital
Stock on or after February 12, 2003; provided, however, that
such payments shall be included in the calculation of the amount of Restricted
Payments; and

 

(g) make any other Restricted Payments
on or after February 12, 2003 not to exceed an aggregate amount of $40.0
million; provided, however, that such payments shall be included
in the calculation of the amount of Restricted Payments.

 

SECTION 4.05.
Limitation on Liens. The Company shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, Incur or suffer to exist, any
Lien (other than Permitted Liens) upon any of its Property (including Capital
Stock of a Restricted Subsidiary), whether owned on the Issue Date or
thereafter acquired, or any interest therein 

 

48

 

or any income or profits
therefrom. If the Company or any Subsidiary Guarantor creates any additional
Lien upon any Property to secure any Secured Obligations, it must concurrently
grant a second priority Lien (subject to Permitted Liens) upon such Property as
security for the Securities or Subsidiary Guarantees of the Securities such
that the Property subject to such Lien becomes Second Priority Collateral
subject to the Second Priority Liens, except to the extent such Property
constitutes cash or cash equivalents required to secure only letter of credit
obligations under Credit Facilities following a default under such Credit
Facilities.

 

Notwithstanding
anything in the preceding paragraph, (1) the aggregate principal amount of
Senior Obligations constituting Debt and any other Debt secured by a Lien on
the Collateral that shares in the distribution of proceeds of Collateral prior
to the Securities, at any one time outstanding shall not exceed the sum of the
aggregate amount of Debt that at such time may be outstanding at any one
time under clause (b) of Section 4.03 and $200 million; and (2) the
Company shall not, and shall not permit any of its Subsidiaries to, create or
suffer to exist any Lien upon any of the Collateral (including Collateral
consisting of Capital Stock or Debt of any Subsidiary of the Company) now owned
or hereafter acquired by it securing any Public Debt unless the holders of such
Public Debt share in the distribution of proceeds from the foreclosure on
Collateral either (A) on an equal and ratable basis with the holders of
the Senior Obligations or (B) on an equal and ratable basis with the
Holders (and any other obligations that share on an equal and ratable basis
with the Holders).

 

SECTION 4.06.
Limitation on Asset Sales and Specified Collateral Dispositions. The
Company shall not, and shall not permit any Restricted Subsidiary to, directly
or indirectly, consummate any Asset Sale unless:

 

(a) the Company or such Restricted
Subsidiary receives consideration at the time of such Asset Sale at least equal
to the Fair Market Value of the Property subject to such Asset Sale;

 

(b) at least 75% of the consideration
paid to the Company or such Restricted Subsidiary in connection with such Asset
Sale is in the form of Qualified Consideration; and

 

(c) the Company delivers an Officers’
Certificate to the Trustee certifying that such Asset Sale complies with the
foregoing clauses (a) and (b).

 

The Net
Available Cash (or any portion thereof) from Asset Sales and Specified
Collateral Dispositions may be applied by the Company or a Restricted
Subsidiary, to the extent the Company or such Restricted Subsidiary elects (or
is required by the terms of any Debt):

 

(a) to Repay the Secured Obligations or
any other Debt of the Company or any Restricted Subsidiary secured by a Lien on
Property of the Company or any Restricted Subsidiary of the Company (excluding,
in any such case, any Debt owed to the Company or an Affiliate of the Company);
provided, however, that to the extent the proceeds from a
Specified Collateral Disposition will be allocated pursuant to the terms of any
other Second Priority Debt Obligations to Repay or provide for the Repayment of
such Second Priority Debt Obligations, a pro rata portion of such 

 

49

 

proceeds must, to the extent not inconsistent with the terms of such
other Second Priority Debt Obligations, be allocated to Repay the Securities
pursuant to an Asset Sales Prepayment Offer and the full amount of such
allocated portion (1) will be deemed Excess Proceeds and (2) will,
upon such Asset Sales Prepayment Offer, be deemed Allocable Excess Proceeds; or

 

(b) to reinvest in Additional Assets or
Expansion Capital Expenditures (including by means of an Investment in
Additional Assets or Expansion Capital Expenditures by a Restricted Subsidiary
with Net Available Cash received by the Company or another Restricted
Subsidiary); provided, however, that (1) the Net Available
Cash (or any portion thereof) from Asset Sales from the Company to any
Subsidiary must be reinvested in Additional Assets or Expansion Capital
Expenditures of the Company and (2) if the assets that were the subject of
such Asset Disposition constituted Collateral, then such Net Available Cash
must be reinvested in Additional Assets that are pledged at the time as
Collateral to secure the Securities or Subsidiary Guarantees of the Securities,
subject to the Collateral Documents, or in Expansion Capital Expenditures to
improve assets that constitute Collateral securing the Securities or Subsidiary
Guarantees of the Securities at the time.

 

Pending
application of Net Available Cash pursuant to this Section 4.06, which
shall not be required in respect of an Asset Sale that is not a Specified
Collateral Disposition if the Net Available Cash from such Asset Sale is less
than $1 million, such Net Available Cash shall be invested in Temporary Cash
Investments or applied to temporarily reduce revolving credit indebtedness. If
the Net Available Cash from an Asset Sale that is not a Specified Collateral
Disposition equals or exceeds $1 million, any Net Available Cash from such
Asset Sale not applied in accordance with the preceding paragraph within 270
days from the date of the receipt of such Net Available Cash or that is not
segregated from the general funds of the Company for investment in identified
Additional Assets in respect of a project that shall have been commenced, and
for which binding contractual commitments have been entered into, prior to the
end of such 270-day period and that shall not have been completed or abandoned
shall constitute “Excess Proceeds”; provided, however, that
the amount of any Net Available Cash that ceases to be so segregated as
contemplated above and any Net Available Cash that is segregated in respect of
a project that is abandoned or completed shall also constitute “Excess Proceeds”
at the time any such Net Available Cash ceases to be so segregated or at the
time the relevant project is so abandoned or completed, as applicable; provided
further, however, that the amount of any Net Available Cash that
continues to be segregated for investment and that is not actually reinvested
within 24 months from the date of the receipt of such Net Available Cash shall
also constitute “Excess Proceeds”.

 

When the
aggregate amount of Excess Proceeds exceeds $50.0 million (taking into account
income earned on such Excess Proceeds, if any), the Company will be required to
make an offer to purchase (the “Asset Sales Prepayment Offer”) the Securities
which offer shall be in the amount of the Allocable Excess Proceeds, on a pro
rata basis according to principal amount at maturity, at a purchase price equal
to 100% of the principal amount thereof, plus accrued and unpaid interest, if
any, to the purchase date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date), in accordance with the procedures (including prorating in the event of 

 

50

 

oversubscription) set forth herein. To the extent that any portion of
the amount of Net Available Cash remains after compliance with the preceding
sentence and provided that all Holders have been given the opportunity to
tender their Securities for purchase in accordance with this Indenture, the
Company or such Restricted Subsidiary may use such remaining amount for
any purpose permitted by this Indenture and the amount of Excess Proceeds will
be reset to zero.

 

The term “Allocable
Excess Proceeds” will mean the product of:

 

(a) the Excess Proceeds; and

 

(b) a fraction,

 

(1) the numerator of which is the
aggregate principal amount of the Securities outstanding on the date of the
Asset Sales Prepayment Offer; and

 

(2) the denominator of which is the sum
of the aggregate principal amount of the Securities outstanding on the date of
the Asset Sales Prepayment Offer and the aggregate principal amount of other
Debt of the Company outstanding on the date of the Asset Sales Prepayment Offer
that is pari passu in right of payment with the Securities and
subject to terms and conditions in respect of Asset Sales similar in all material
respects to this covenant and requiring the Company to make an offer to
purchase such Debt or otherwise repay such Debt at substantially the same time
as the Asset Sales Prepayment Offer.

 

Within five
Business Days after the Company is obligated to make an Asset Sales Prepayment
Offer as described in the preceding paragraph, the Company shall send a written
notice, by first-class mail, to the Holders, accompanied by such
information regarding the Company and its Subsidiaries as the Company in good faith
believes will enable such Holders to make an informed decision with respect to
such Asset Sales Prepayment Offer. Such notice shall state, among other things,
the purchase price and the purchase date (the “Purchase Date”), which shall be,
subject to any contrary requirements of applicable law, a Business Day no
earlier than 30 days nor later than 60 days from the date such notice is
mailed.

 

Not later than
the date upon which written notice of an Asset Sales Prepayment Offer is
delivered to the Trustee as provided above, the Company shall deliver to the
Trustee an Officers’ Certificate as to (a) the amount of the Asset Sales
Prepayment Offer (the “Offer Amount”), (b) the allocation of the Net
Available Cash from the Asset Sales pursuant to which such Prepayment Offer is
being made and (c) the compliance of such allocation with the provisions
of clause (b) of the second paragraph of this Section 4.06. On or
before the Purchase Date, the Company shall also irrevocably deposit with the
Trustee or with the Paying Agent (or, if the Company or a Wholly Owned
Subsidiary is the Paying Agent, shall segregate and hold in trust) in Temporary
Cash Investments (other than in those enumerated in such clause (b) of the
definition of Temporary Cash Investments), maturing on the last day prior to
the Purchase Date or on the Purchase Date if funds are immediately available by
open of business, an amount equal to the Offer Amount to be held for payment 

 

51

 

in accordance with the provisions of this Section 4.06. Upon the
expiration of the period for which the Prepayment Offer remains open (the “Offer
Period”), the Company shall deliver to the Trustee for cancellation the
Securities or portions thereof that have been properly tendered to and are to
be accepted by the Company. The Trustee or the Paying Agent shall, on the
Purchase Date, mail or deliver payment to each tendering Holder in the amount
of the purchase price. In the event that the aggregate purchase price of the
Securities delivered by the Company to the Trustee is less than the Offer
Amount, the Trustee or the Paying Agent shall deliver the excess to the Company
immediately after the expiration of the Offer Period for application in
accordance with this Section 4.06.

 

Holders
electing to have a Security purchased shall be required to surrender the
Security, with an appropriate form duly completed, to the Company or its
agent at the address specified in the notice at least three Business Days prior
to the Purchase Date. Holders shall be entitled to withdraw their election if
the Trustee or the Company receives not later than one Business Day prior to
the Purchase Date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Security that was
delivered for purchase by the Holder and a statement that such Holder is
withdrawing its election to have such Security purchased. If at the expiration
of the Offer Period the aggregate principal amount of Securities surrendered by
Holders exceeds the Offer Amount, the Company shall select the Securities to be
purchased on a pro rata basis for all Securities (with such adjustments as may be
deemed appropriate by the Company so that only Securities in denominations of
$1,000, or integral multiples thereof, shall be purchased). Holders whose
Securities are purchased only in part shall be issued new Securities equal
in principal amount to the unpurchased portion of the Securities surrendered.

 

At the time
the Company delivers Securities to the Trustee that are to be accepted for
purchase, the Company shall also deliver an Officers’ Certificate stating that
such Securities are to be accepted by the Company pursuant to and in accordance
with the terms of this Section 4.06. A Security shall be deemed to have
been accepted for purchase at the time the Trustee or the Paying Agent mails or
delivers payment therefor to the surrendering Holder.

 

The Company
will comply, to the extent applicable, with the requirements of Section 14(e) of
the Exchange Act and any other securities laws or regulations in connection
with the repurchase of Securities pursuant to this Section 4.06. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of this Section 4.06, the Company will comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations under this Section 4.06 by virtue thereof.

 

SECTION 4.07.
Limitation on Restrictions on Distributions from Restricted Subsidiaries.
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, create or otherwise cause or suffer to exist any
consensual restriction on the right of any Restricted Subsidiary to:

 

(a) pay dividends, in cash or otherwise,
or make any other distributions on or in respect of its Capital Stock, or pay
any Debt or other obligation owed, to the Company or any other Restricted
Subsidiary;

 

52

 

(b) make any loans or advances to the
Company or any other Restricted Subsidiary; or

 

(c) transfer any of its Property to the
Company or any other Restricted Subsidiary.

 

The foregoing
limitations will not apply:

 

(1) with respect to clauses (a), (b) and
(c), to restrictions:

 

(A) in effect on the Issue Date;

 

(B) relating to Debt of a Restricted
Subsidiary and existing at the time it became a Restricted Subsidiary if such
restriction was not created in connection with or in anticipation of the
transaction or series of transactions pursuant to which such Restricted
Subsidiary became a Restricted Subsidiary or was acquired by the Company;

 

(C) that result from the Refinancing of
Debt Incurred pursuant to an agreement referred to in clause (1)(A) or (B) above
or in clause (2)(A) or (B) below, provided such restriction is
no less favorable to the Holders in any material respect, as reasonably
determined by the Board of Directors (as evidenced by a Board Resolution), than
those under the agreement evidencing the Debt so Refinanced;

 

(D) resulting from the Incurrence of any
Debt permitted pursuant to Section 4.03, provided that (i) the
restriction is no less favorable to the Holders in any material respect, as
reasonably determined by the Board of Directors (as evidenced by a Board
Resolution), than the restrictions of the same type contained in this Indenture
and (ii) the Board of Directors determines (as evidenced by a Board
Resolution) in good faith that such restrictions will not impair the ability of
the Company to make payments of principal and interest on the Securities when
due;

 

(E) existing by reason of applicable
law; or

 

(F) any contractual requirements
incurred with respect to Qualified Receivables Transactions relating
exclusively to a Receivables Entity that, in the good faith determination of
the Board of Directors, are customary for Qualified Receivables Transactions;
and

 

(2) with respect to clause (c) only,
to restrictions:

 

(A) relating to Debt that is permitted
to be Incurred and secured pursuant to Sections 4.03 and 4.05 that limit
the right of the debtor to dispose of the Property securing such Debt;

 

(B) encumbering Property at the time
such Property was acquired by the Company or any Restricted Subsidiary, so long
as such restriction 

 

53

 

relates solely to the Property so acquired and was not created in
connection with or in anticipation of such acquisition;

 

(C) resulting from customary provisions
restricting subletting or assignment of leases or customary provisions in other
agreements that restrict assignment of such agreements or rights thereunder; or

 

(D) customary restrictions contained in
agreements relating to the sale or other disposition of Property limiting the
transfer of such Property pending the closing of such sale.

 

SECTION 4.08.
Limitation on Transactions with Affiliates. The Company shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, conduct
any business or enter into or suffer to exist any transaction or series of
transactions (including the purchase, sale, transfer, assignment, lease,
conveyance or exchange of any Property or the rendering of any service) with,
or for the benefit of, any Affiliate of the Company (an “Affiliate Transaction”),
unless:

 

(a) the terms of such Affiliate
Transaction are:

 

(1) set forth in writing;

 

(2) in the best interest of the Company
or such Restricted Subsidiary, as the case may be; and

 

(3) no less favorable to the Company or
such Restricted Subsidiary, as the case may be, than those that could be
obtained in a comparable arm’s-length transaction with a Person that is not an
Affiliate of the Company;

 

(b) if such Affiliate Transaction
involves aggregate payments or value to the Affiliate in excess of $25.0
million in any 12-month period, the Board of Directors (including a majority of
the disinterested members of the Board of Directors) approves such Affiliate
Transaction and, in its good faith judgment, believes that such Affiliate
Transaction complies with clauses (a)(2) and (3) of this Section 4.08
as evidenced by a Board Resolution promptly delivered to the Trustee; and

 

(c) if such Affiliate Transaction
involves aggregate payments or value to the Affiliate in excess of $75.0
million in any 12-month period, the Company obtains a written opinion from an
Independent Financial Advisor to the effect that the consideration to be paid
or received in connection with such Affiliate Transaction is fair, from a
financial point of view, to the Company and the Restricted Subsidiaries, taken
as a whole.

 

Notwithstanding
the foregoing limitation, the Company or any Restricted Subsidiary may enter
into or suffer to exist the following:

 

(a) any transaction or series of
transactions between the Company and one or more Restricted Subsidiaries or
between two or more Restricted Subsidiaries, provided that no more than
5% of the total voting power of the Voting Stock (on a 

 

54

 

fully diluted basis) of any such Restricted Subsidiary is owned by an
Affiliate of the Company (other than a Restricted Subsidiary);

 

(b) any Restricted Payment permitted to
be made pursuant to Section 4.04 or any Permitted Investment (other than
pursuant to clauses (a)(3), (b), (g), (h), (i), (k) or (l) of the definition of
“Permitted Investment”);

 

(c) the payment of compensation
(including amounts paid pursuant to employee benefit plans) for the personal
services of and related indemnities provided to officers, directors,
consultants and employees of the Company or any of the Restricted Subsidiaries,
so long as the Board of Directors in good faith shall have approved the terms
thereof and deemed the services theretofore or thereafter to be performed for
such compensation to be fair consideration therefor;

 

(d) loans and advances to employees made
in the ordinary course of business and consistent with the past practices of
the Company or such Restricted Subsidiary, as the case may be, provided
that such loans and advances do not exceed $25.0 million in the aggregate at
any one time outstanding;

 

(e) any transaction effected as part of
a Qualified Receivables Transaction or any transaction involving the transfer
of accounts receivable of the type specified in the definition of “Credit
Facilities” and permitted under clause (b) of Section 4.03;

 

(f) payments of customary fees by the
Company or any of its Restricted Subsidiaries to Leonard Green &
Partners L.P. or any of its Affiliates made for any corporate advisory services
or financial advisory, financing, underwriting or placement services or in
respect of other investment banking activities including in connection with
acquisitions or divestitures, which are approved by a majority of the Board of
Directors in good faith;

 

(g) if such Affiliate Transaction is
with any Person solely in its capacity as a holder of Debt or Capital Stock of
the Company or any of its Restricted Subsidiaries, where such Person is treated
no more favorably than any other holder of such Debt or Capital Stock of the
Company or any of its Restricted Subsidiaries; and

 

(h) any agreement as in effect on the
Issue Date or any amendment thereto (so long as such amendment is not
disadvantageous to the Holders in any material respect) or any transaction
contemplated thereby.

 

SECTION 4.09.
Guarantees by Subsidiaries. (a) The Company shall cause each
Subsidiary that becomes or is a Collateral Subsidiary Guarantor or an obligor
with respect to any of the Secured Obligations (except a Foreign Subsidiary
that becomes an obligor solely in respect of Debt or other obligations of itself
or another Foreign Subsidiary), in each case, to become a Subsidiary Guarantor
by becoming a party to this Indenture, the Second Priority Subsidiary Guarantee
Agreement and the Intercreditor Agreement, if such Subsidiary is not already a
Subsidiary Guarantor party thereto, and delivering evidence thereof to the
Trustee at the time such Person becomes a Collateral Subsidiary Guarantor or
such an obligor.

 

55

 

(b) The
Company shall not permit any Restricted Subsidiary that is not a Subsidiary
Guarantor to Guarantee the payment of any Debt or Capital Stock of the Company
(other than Guarantees permitted pursuant to clauses (j) or (o) of Section 4.03),
except that a Restricted Subsidiary that is not a Subsidiary Guarantor may Guarantee
Debt of the Company, provided that:

 

(1) such Debt and the Debt represented
by such Guarantee is permitted by Section 4.03;

 

(2) such Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture to this Indenture
providing for a Guarantee of payment of the Securities by such Restricted
Subsidiary and such Guarantee of Debt of the Company:

 

(A) unless such Debt is a Subordinated
Obligation, shall be paripassu
(or subordinate) in right of payment to and on substantially the same terms as
(or less favorable to such Debt than) such Restricted Subsidiary’s Guarantee
with respect to the Securities; and

 

(B) if such Debt is a Subordinated
Obligation, shall be subordinated in right of payment to such Restricted
Subsidiary’s Guarantee with respect to the Securities to at least the same
extent as such Debt is subordinated to the Securities.

 

(c) Upon
any Subsidiary becoming a Subsidiary Guarantor as described above, such
Subsidiary shall deliver to the Trustee an Opinion of Counsel to the effect
that:

 

(1) such Guarantee of the Securities has
been duly executed and authorized; and

 

(2) such Guarantee of the Securities
constitutes a valid, binding and enforceable obligation of such Subsidiary,
except insofar as enforcement thereof may be limited by bankruptcy,
insolvency or similar laws (including all laws relating to fraudulent
transfers) and except insofar as enforcement thereof is subject to general
principles of equity.

 

The failure of
any entity that becomes a Restricted Subsidiary pursuant to the Jean Coutu
Acquisition to provide a Guarantee if then prohibited to do so by any Debt of
the Company or a Restricted Subsidiary outstanding on the Issue Date shall not constitute
a violation of clauses (a), (b) or (c) of this covenant; provided,
however, that at the time such prohibition no longer exists if a
Guarantee would then be required to comply with such clauses, such Restricted
Subsidiary provides such Guarantee. In addition, no Subsidiary Guarantor shall
Guarantee, directly or indirectly, (1) any Debt of the Company that is
subordinate or junior in right of payment (without regard to any security
interest) to any other Debt of the Company unless such Guarantee is expressly
subordinate in right of payment to the Subsidiary Guarantee of such Subsidiary
Guarantor or (2) any Debt of the Company other than Senior Obligations
unless such Guarantee is expressly subordinate in right of payment (without
regard to any security interest) to or ranks paripassu with, the Subsidiary Guarantee of such Subsidiary
Guarantor.

 

56

 

SECTION 4.10.
Limitation on Sale and Leaseback Transactions. The Company shall not,
and shall not permit any Restricted Subsidiary to, enter into any Sale and
Leaseback Transaction with respect to any Property unless:

 

(a) the Company or such Restricted
Subsidiary would be entitled to:

 

(1) Incur Debt in an amount equal to the
Attributable Debt with respect to such Sale and Leaseback Transaction pursuant
to Section 4.03; and

 

(2) create a Lien on such Property
securing such Attributable Debt without also securing the Securities or the
applicable Subsidiary Guarantee pursuant to Section 4.05; and

 

(b) such Sale and Leaseback Transaction
is effected in compliance with Section 4.06, provided that such
Sale and Leaseback Transaction constitutes an Asset Sale.

 

SECTION 4.11.
Designation of Restricted and Unrestricted Subsidiaries. The Board of
Directors may designate any Subsidiary of the Company to be an
Unrestricted Subsidiary if:

 

(a) the Subsidiary to be so designated
does not own any Capital Stock or Debt of, or own or hold any Lien on any
Property of, the Company or any other Restricted Subsidiary and is not required
to be a Subsidiary Guarantor pursuant to this Indenture; and

 

(b) either:

 

(1) the Subsidiary to be so designated
has total assets of $1,000 or less; or

 

(2) such designation is effective
immediately upon such entity becoming a Subsidiary of the Company.

 

Unless so designated as an Unrestricted Subsidiary, any Person that
becomes a Subsidiary of the Company will be classified as a Restricted
Subsidiary; provided, however, that such Subsidiary shall not be
designated a Restricted Subsidiary and shall be automatically classified as an
Unrestricted Subsidiary if either of the requirements set forth in clauses (x)
and (y) of the second immediately following paragraph will not be satisfied
after giving pro forma effect to such classification as a Restricted Subsidiary
or if such Person is a Subsidiary of an Unrestricted Subsidiary.

 

Except as
provided in the first sentence of the preceding paragraph, no Restricted
Subsidiary may be redesignated as an Unrestricted Subsidiary. In addition,
neither the Company nor any Restricted Subsidiary shall at any time be directly
or indirectly liable for any Debt that provides that the holder thereof may (with
the passage of time or notice or both) declare a default thereon or cause the
payment thereof to be accelerated or payable prior to its Stated Maturity upon
the occurrence of a default with respect to any Debt, Lien or 

 

57

 

other obligation of any Unrestricted Subsidiary (including any right to
take enforcement action against such Unrestricted Subsidiary).

 

The Board of
Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary if, immediately after giving pro forma effect to such designation,
(x) the Company could Incur at least $1.00 of additional Debt pursuant to
clause (1) of the first paragraph of Section 4.03 and (y) no Default
or Event of Default shall have occurred and be continuing or would result
therefrom.

 

Any such
designation or redesignation by the Board of Directors will be evidenced to the
Trustee by filing with the Trustee a Board Resolution giving effect to such
designation or redesignation and an Officers’ Certificate that:

 

(a) certifies that such designation or
redesignation complies with the foregoing provisions; and

 

(b) gives the effective date of such
designation or redesignation,

 

such filing
with the Trustee to occur within 45 days after the end of the fiscal quarter of
the Company in which such designation or redesignation is made (or, in the case
of a designation or redesignation made during the last fiscal quarter of the
Company’s fiscal year, within 90 days after the end of such fiscal year).

 

SECTION 4.12.
Additional Security Documents. From and after the Issue Date, if the
Company or any Subsidiary of the Company executes and delivers in respect of
any Property of such Person any mortgages, deeds of trust, security agreements,
pledge agreements or similar instruments to secure Debt or other obligations
that at the time constitute Secured Obligations (except for a Foreign
Subsidiary that does so solely in respect of Debt or other obligations of
itself or another Foreign Subsidiary), then the Company shall, or shall cause
such Subsidiary to, execute and deliver substantially identical mortgages,
deeds of trust, security agreements, pledge agreements or similar instruments
in order to vest in the Second Priority Collateral Trustee a perfected second
priority security interest, subject only to Permitted Liens and the
Intercreditor Agreement, in such Property for the benefit of the Second
Priority Collateral Trustee on behalf of the holders of the Securities, among
others, and thereupon all provisions of this Indenture relating to the
Collateral will be deemed to relate to such Property to the same extent and
with the same force and effect.

 

SECTION 4.13.
Change of Control. (a)  Upon the occurrence of a Change of Control,
each Holder shall have the right to require the Company to repurchase all or
any part of such Holder’s Securities pursuant to the offer described below
(the “Change of Control Offer”) at a purchase price (the “Change of Control
Purchase Price”) equal to 101.0% of the principal amount thereof, plus accrued
and unpaid interest, if any, to, but not including, the purchase date (subject
to the right of holders of record on the relevant record date to receive
interest due on the relevant interest payment date). If the purchase date is on
or after a record date and on or before the relevant interest payment date, the
accrued and unpaid interest, if any, will be paid to the person or entity in
whose name the Security is registered at the close of business on that record
date, and no additional interest will be payable to Holders whose Securities
shall be subject to redemption.

 

58

 

(b) Within 30 days following any Change
of Control, the Company shall (1) cause a notice of the Change of Control
Offer to be sent at least once to the Dow Jones News Service or similar
business news service in the United States and (2) send, by first-class mail,
with a copy to the Trustee, to each Holder, at such Holder’s address appearing
in the Security Register, a notice stating: 
(A) that a Change of Control Offer is being made pursuant to this Section 4.13
and that all Securities timely tendered will be accepted for payment; (B) the
Change of Control Purchase Price and the purchase date, which shall be, subject
to any contrary requirements of applicable law, a Business Day no earlier than
30 days nor later than 60 days from the date such notice is mailed (the “Change
of Control Payment Date”); (C) the circumstances and relevant facts
regarding the Change of Control (including, to the extent reasonably
practicable, information with respect to pro forma historical income, cash flow
and capitalization after giving effect to the Change of Control); and (D) the
procedures that Holders must follow in order to tender their Securities (or
portions thereof) for payment and the procedures that Holders must follow in
order to withdraw an election to tender Securities (or portions thereof) for
payment.

 

(c) Holders electing to have a Security
purchased shall be required to surrender the Security, with an appropriate form duly
completed, to the Company or its agent at the address specified in the notice
at least three Business Days prior to the Change of Control Payment Date. Holders
shall be entitled to withdraw their election if the Trustee or the Company
receives not later than one Business Day prior to the Change of Control Payment
Date, a telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Security that was delivered for
purchase by the Holder and a statement that such Holder is withdrawing its
election to have such Security purchased.

 

(d) On or prior to the Change of Control
Payment Date, the Company shall irrevocably deposit with the Trustee or with
the Paying Agent (or, if the Company or any of its Wholly Owned Subsidiaries is
acting as the Paying Agent, segregate and hold in trust) in cash an amount
equal to the Change of Control Purchase Price payable to the Holders entitled
thereto, to be held for payment in accordance with the provisions of this Section 4.13.
On the Change of Control Payment Date, the Company shall deliver to the Trustee
the Securities or portions thereof that have been properly tendered to and are
to be accepted by the Company for payment. The Trustee or the Paying Agent
shall, on the Change of Control Payment Date, mail or deliver payment to each
tendering Holder of the Change of Control Purchase Price. In the event that the
aggregate Change of Control Purchase Price is less than the amount delivered by
the Company to the Trustee or the Paying Agent, the Trustee or the Paying
Agent, as the case may be, shall deliver the excess to the Company
immediately after the Change of Control Payment Date.

 

(e) The Company will comply, to the
extent applicable, with the requirements of Section 14(e) of the
Exchange Act and any other securities laws or regulations in connection with
the purchase of Securities pursuant to this Section 4.13. To the extent
that the provisions of any securities laws or regulations conflict with the
provisions of this Section 4.13, the Company will comply with the
applicable 

 

59

 

securities laws and regulations and will not be deemed to have breached
its obligations under this Section 4.13 by virtue thereof.

 

SECTION 4.14.
Further Instruments and Acts. Upon request of the Trustee, the Company
shall execute and deliver such further instruments and do such further acts as may be
reasonably necessary or proper to carry out more effectively the purpose of
this Indenture.

 

SECTION 4.15.
Covenant Suspension. (a)  During any period of time that:

 

(1) the Securities have Investment Grade
Ratings from both Rating Agencies and

 

(2) no Default or Event of Default has
occurred and is continuing,

 

the Company and the Restricted
Subsidiaries will not be subject to the following Sections of this Indenture: Section 4.03,
Section 4.04, Section 4.06, Section 4.07, Section 4.08,
clauses (a)(1) and (b) of Section 4.10, clause (x) of the fourth
paragraph (and such clause (x) as referred to in the second paragraph) of Section 4.11,
and clause (a)(5) of Section 5.01 (collectively, the “Suspended
Covenants”).

 

(b)                                 Solely for the purpose
of determining the amount of permitted Liens under Section 4.05 during any
Suspension Period (as defined below) and without limiting the Company’s or any
Restricted Subsidiary’s ability to Incur Indebtedness during any Suspension
Period, to the extent that calculations in Section 4.05 refer to Section 4.03,
such calculations shall be made as though Section 4.03 remains in effect
during the Suspension Period. In the event that the Company and the Restricted
Subsidiaries are not subject to the Suspended Covenants for any period of time
as a result of paragraph (a) of this Section 4.15 and, on any
subsequent date (the “Reversion Date”), one or both of the Rating Agencies
withdraws its ratings or downgrades the ratings assigned to the Securities
below the required Investment Grade Ratings or a Default or Event of Default
occurs and is continuing, then the Company and the Restricted Subsidiaries will
thereafter again be subject to the Suspended Covenants. The period of time
between the Suspension Date and the Reversion Date is referred to as the “Suspension
Period.” Notwithstanding that the Suspended Covenants may be reinstated,
no Default will be deemed to have occurred as a result of a failure to comply
with the Suspended Covenants during the Suspension Period. On the Reversion
Date, all Debt Incurred during the Suspension Period will be classified to have
been Incurred pursuant to clause (1) of the first paragraph or one of the
clauses set forth in the second paragraph of Section 4.03 (to the extent
such Debt would be permitted to be Incurred thereunder as of the Reversion Date
and after giving effect to Debt Incurred prior to the Suspension Period and
outstanding on the Reversion Date). To the extent such Debt would not be
permitted to be Incurred pursuant to clause (1) of the first paragraph or
one of the clauses set forth in the second paragraph of Section 4.03, such
Debt will be deemed to have been outstanding on the Issue Date, so that it is
classified as permitted under clause (k) of the second paragraph of Section 4.03.
Calculations made after the Reversion Date of the amount available to be made
as Restricted Payments under 

 

60

 

Section 4.04 will be made as though Section 4.04 had been in
effect during the entire period of time from the February 12, 2003. Accordingly,
Restricted Payments made during the Suspension Period will reduce the amount
available to be made as Restricted Payments under the first paragraph of Section 4.04
following any Reversion Date, and the items specified in clauses (c)(1) through
(c)(4) of the first paragraph of Section 4.04 will increase the
amount available to be made under the first paragraph thereof following any
Reversion Date. For purposes of determining compliance with the first five paragraphs
of Section 4.06, on the Reversion Date, the Net Available Cash from all
Asset Sales not applied in accordance with the covenant will be deemed to be
reset to zero.

 

ARTICLE V

Successor Company

 

SECTION 5.01.
When Company May Merge or Transfer Assets. (a)  The Company
shall not merge, consolidate or amalgamate with or into any other Person (other
than a merger of a Wholly Owned Restricted Subsidiary into the Company) or
sell, transfer, assign, lease, convey or otherwise dispose of all or
substantially all its Property in any one transaction or series of
transactions unless:

 

(1) the Company will be the surviving
Person (the “Surviving Person”) or the Surviving Person (if other than the
Company) formed by such merger, consolidation or amalgamation or to which such
sale, transfer, assignment, lease, conveyance or disposition is made will be a
corporation organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia;

 

(2) the Surviving Person (if other than
the Company) expressly assumes, by supplemental indenture in form satisfactory
to the Trustee, executed and delivered to the Trustee by such Surviving Person,
the due and punctual payment of the principal of, and premium, if any, and
interest on, all the Securities and the due and punctual performance and
observance of all the covenants and conditions of this Indenture to be
performed by the Company;

 

(3) in the case of a sale, transfer,
assignment, lease, conveyance or other disposition of all or substantially all
the Property of the Company, such Property shall have been transferred as an
entirety or virtually as an entirety to one Person;

 

(4) immediately before and after giving
effect to such transaction or series of transactions on a pro forma basis
(and treating, for purposes of this clause (4) and clause (5) below,
any Debt that becomes, or is anticipated to become, an obligation of the
Surviving Person or any Restricted Subsidiary as a result of such transaction
or series of transactions as having been Incurred by the Surviving Person
or such Restricted Subsidiary at the time of such

 

61

 

transaction or series of transactions), no Default or Event of
Default shall have occurred and be continuing;

 

(5) immediately after giving effect to
such transaction or series of transactions on a pro forma basis, either (A) the
Company or the Surviving Person, as the case may be, would be able to
Incur at least $1.00 of additional Debt under clause (1) of the first
paragraph of Section 4.03 or (B) the Surviving Person would have a
Consolidated Interest Coverage Ratio which is not less than the Consolidated
Interest Coverage Ratio of the Company immediately prior to such transaction or
series of transactions; and

 

(6) the Company shall deliver, or cause
to be delivered, to the Trustee, in form and substance reasonably
satisfactory to the Trustee, an Officers’ Certificate and an Opinion of
Counsel, each stating that such transaction and the supplemental indenture, if
any, in respect thereto comply with this covenant and that all conditions
precedent herein provided for relating to such transaction have been satisfied.

 

(b) The Company shall not permit any
Subsidiary Guarantor to merge, consolidate or amalgamate with or into any other
Person (other than a merger of a Wholly Owned Restricted Subsidiary into such
Subsidiary Guarantor, or a merger of a Subsidiary Guarantor into the Company or
another Subsidiary Guarantor) or sell, transfer, assign, lease, convey or otherwise
dispose of all or substantially all its Property in any one transaction or series of
transactions unless:

 

(1) such Subsidiary Guarantor will be
the Surviving Person or the Surviving Person (if other than such Subsidiary
Guarantor) formed by such merger, consolidation or amalgamation or to which
such sale, transfer, assignment, lease, conveyance or disposition is made will
be a corporation organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia;

 

(2) the Surviving Person (if other than
such Subsidiary Guarantor) expressly assumes, by a Subsidiary Guarantee or a
supplement to the Second Priority Subsidiary Guarantee Agreement or a
supplemental indenture in form satisfactory to the Trustee, executed and
delivered to the Trustee by such Surviving Person, the due and punctual
performance and observance of all the obligations of such Subsidiary Guarantor
under its Subsidiary Guarantee;

 

(3) immediately before and after giving
effect to such transaction or series of transactions on a pro forma basis
(and treating, for purposes of this clause (3), any Debt that becomes, or is
anticipated to become, an obligation of the Surviving Person, the Company or
any Restricted Subsidiary as a result of such transaction or series of
transactions as having been Incurred by the Surviving Person, the Company or
such Restricted Subsidiary at the time of such transaction or series of
transactions), no Default or Event of Default shall have occurred and be
continuing; and

 

62

 

(4) the Company shall deliver, or cause
to be delivered, to the Trustee, in form and substance reasonably
satisfactory to the Trustee, an Officers’ Certificate and an Opinion of
Counsel, each stating that such transaction and such Subsidiary Guarantee, if
any, in respect thereto comply with this covenant and that all conditions
precedent herein provided for relating to such transaction have been satisfied.

 

The foregoing
provisions (other than clause (3)) shall not apply to (A) any transactions
which do not constitute an Asset Sale if the Subsidiary Guarantor is otherwise
being released from its Subsidiary Guarantee at the time of such transaction in
accordance with this Indenture and the Second Priority Collateral Documents or (B) any
transactions which constitute an Asset Sale if the Company has complied with Section 4.06
and the Subsidiary Guarantor is released from its Subsidiary Guarantee at the
time of such transaction in accordance with this Indenture and the Second
Priority Collateral Documents.

 

The Surviving
Person shall succeed to, and be substituted for, and may exercise every
right and power of the Company under this Indenture (or of the Subsidiary
Guarantor under the Subsidiary Guarantee, as the case may be), but the
predecessor Company in the case of:

 

(a) a sale, transfer, assignment,
conveyance or other disposition (unless such sale, transfer, assignment,
conveyance or other disposition is of all the assets of the Company as an
entirety or virtually as an entirety); or

 

(b) a lease,

 

shall not be
released from any obligation to pay the principal of, premium, if any, and
interest on, the Securities.

 

ARTICLE VI

Defaults and Remedies

 

SECTION 6.01.
Events of Default. The following events shall be “Events of Default”:

 

(a) the Company fails to make the
payment of any interest on any of the Securities when the same becomes due and
payable, and such failure continues for a period of 30 days;

 

(b) the Company fails to make the
payment of any principal of, or premium, if any, on any of the Securities when
the same becomes due and payable at its Stated Maturity, upon acceleration,
redemption, optional redemption, required repurchase or otherwise;

 

(c) the Company fails to comply with Article V;

 

(d) the Company fails to comply with any
covenant or agreement in the Securities or in this Indenture (other than a
failure that is the subject of the foregoing 

 

63

 

clauses (a), (b) or (c)) and such failure continues for 30 days
after written notice is given to the Company as provided below;

 

(e) a default under any Debt by the
Company or any Restricted Subsidiary that results in acceleration of the final
maturity of such Debt, or the failure to pay any such Debt at final maturity
(giving effect to applicable grace periods), in an aggregate amount in excess
of $35.0 million or its foreign currency equivalent at the time (the “cross
acceleration provisions”);

 

(f) the Company or any Significant
Subsidiary pursuant to or within the meaning of any Bankruptcy Law:

 

(1) commences a voluntary case;

 

(2) consents to the entry of an order
for relief against it in an involuntary case;

 

(3) consents to the appointment of a
Custodian of it or for any substantial part of its property; or

 

(4) makes a general assignment for the
benefit of its creditors;

 

or takes any comparable action under any
foreign laws relating to insolvency;

 

(g) a court of competent jurisdiction
enters an order or decree under any Bankruptcy Law that:

 

(1) is for relief against the Company or
any Significant Subsidiary in an involuntary case;

 

(2) appoints a Custodian of the Company
or any Significant Subsidiary or for any substantial part of its property;
or

 

(3) orders the winding up or liquidation
of the Company or any Significant Subsidiary;

 

and in each such case the order or decree
remains unstayed and in effect for 45 days; or

 

(h) any judgment or judgments for the
payment of money in an aggregate amount in excess of $35.0 million or its
foreign currency equivalent at the time is rendered against the Company or any
Restricted Subsidiary and 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;

 

(i) any Subsidiary Guarantee ceases to
be in full force and effect (other than in accordance with the terms of such
Subsidiary Guarantee and this Indenture) and such default continues for 20 days
after notice or any Subsidiary Guarantor denies or disaffirms its obligations
under its Subsidiary Guarantee (the “guarantee provisions”); and

 

64

 

(j) the material impairment of the security
interests under the Second Priority Collateral Documents (other than in
accordance with the terms of the Second Priority Collateral Documents and this
Indenture as each may be amended from time to time) for any reason other
than the satisfaction in full of all obligations under this Indenture and
discharge of the Second Priority Collateral Documents and this Indenture or any
security interest created thereunder shall be declared invalid or unenforceable
or the Company or any of its Subsidiaries asserting, in any pleading in any
court of competent jurisdiction, that any such security interest is invalid or
unenforceable (the “security default provisions”).

 

The foregoing
will constitute Events of Default whatever the reason for any such Event of
Default and whether it is voluntary or involuntary or is 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.

 

The term “Bankruptcy
Law” means Title 11, United States Code, or any similar Federal or state
law for the relief of debtors. The term “Custodian” means any receiver,
trustee, assignee, liquidator, custodian or similar official under any
Bankruptcy Law.

 

A Default
under clause (d), (i) or (j) is not an Event of Default until the Trustee
or the Holders of not less than 25% in aggregate principal amount of the
Securities then outstanding notify the Company (and in the case of such notice
by Holders, the Trustee) of the Default and the Company does not cure such
Default within the time specified after receipt of such notice. Such notice
must specify the Default, demand that it be remedied and state that such notice
is a “Notice of Default”.

 

The Company
shall deliver to the Trustee, within 30 days after the occurrence thereof,
written notice in the form of an Officers’ Certificate of any event that
with the giving of notice or the lapse of time would become an Event of
Default, its status and what action the Company is taking or proposes to take
with respect thereto.

 

SECTION 6.02.
Acceleration. If an Event of Default with respect to the Securities (other
than an Event of Default specified in Section 6.01(f) or 6.01(g) with
respect to the Company) shall have occurred and be continuing, the Trustee by
notice to the Company, or the Holders of not less than 25% in aggregate
principal amount of the Securities then outstanding by notice to the Company
and the Trustee, may declare to be immediately due and payable the
principal amount at maturity of all the Securities then outstanding, plus
accrued but unpaid interest to the date of acceleration on all the Securities
to be due and payable. Upon such a declaration, such principal and interest
shall be due and payable immediately. If an Event of Default specified in Section 6.01(f) or
6.01(g) with respect to the Company occurs, the principal of and accrued
and unpaid interest on all the Securities shall, automatically and without any
action by the Trustee or any Holder, become and be immediately due and payable.
The Holders of a majority in aggregate principal amount of the outstanding
Securities by notice to the Trustee and the Company may rescind and annul
such declaration of acceleration if the rescission would not conflict with any
judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of 

 

65

 

principal, premium or interest
that has become due solely because of the acceleration. No such rescission
shall affect any subsequent Default or impair any right consequent thereto.

 

SECTION 6.03.
Other Remedies. If an Event of Default occurs and is continuing, the
Trustee may pursue any available remedy to collect the payment of
principal of or interest on the Securities or to enforce the performance of any
provision of the Securities or this Indenture.

 

The Trustee may maintain
a proceeding even if it does not possess any of the Securities or does not
produce any of them in the proceeding. A delay or omission by the Trustee or
any Holder in exercising any right or remedy accruing upon an Event of Default
shall not impair the right or remedy or constitute a waiver of or acquiescence
in the Event of Default. No remedy is exclusive of any other remedy. All
available remedies are cumulative.

 

SECTION 6.04.
Waiver of Past Defaults. The Holders of a majority in aggregate
principal amount of the Securities then outstanding by notice to the Trustee may waive
an existing Default and its consequences except (i) a Default in the
payment of the principal of, premium, if any, or interest on a Security or (ii) a
Default in respect of a provision that under Section 9.02 cannot be
amended without the consent of each Holder affected. When a Default is waived,
it is deemed cured, but no such waiver shall extend to any subsequent or other
Default or impair any consequent right.

 

SECTION 6.05.
Control by Majority. The Holders of a majority in aggregate principal
amount of the Securities then outstanding may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
of exercising any trust or power conferred on the Trustee with respect to the
Securities. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture or, subject to Section 7.01, that the
Trustee determines is unduly prejudicial to the rights of other Holders or
would involve the Trustee in personal liability; provided, however,
that the Trustee may take any other action deemed proper by the Trustee
that is not inconsistent with such direction. Prior to taking any action or
following any direction hereunder, the Trustee shall be entitled to reasonable
indemnification against all losses and expenses caused by taking or not taking
such action.

 

SECTION 6.06.
Limitation on Suits. A Holder may not pursue any remedy with
respect to this Indenture or the Securities unless:

 

(1) such Holder shall have previously
given to the Trustee written notice of a continuing Event of Default;

 

(2) the Holders of at least 25% in
aggregate principal amount of the Securities then outstanding shall have made a
written request, and such Holder of or Holders shall have offered reasonable
indemnity, to the Trustee to pursue a remedy; and

 

(3) the Trustee has failed to institute
such proceeding and has not received from the Holders of at least a
majority in aggregate principal amount 

 

66

 

of the Securities outstanding a direction inconsistent with such
request, within 60 days after such notice, request and offer.

 

The foregoing
limitations on the pursuit of remedies by a Holder shall not apply to a suit
instituted by a Holder for the enforcement of payment of the principal of and
premium, if any, or interest on such Security on or after the applicable due
date specified in such Security. A Holder may not use this Indenture to
prejudice the rights of another Holder or to obtain a preference or priority
over another Holder.

 

SECTION 6.07.
Rights of Holders to Receive Payment. Notwithstanding any other
provision of this Indenture, the right of any Holder to receive payment of
principal of and interest on the Securities held by such Holder, on or after
the respective due dates expressed in the Securities, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.

 

SECTION 6.08.
Collection Suit by Trustee. If an Event of Default specified in Section 6.01(a) or
(b) occurs and is continuing, the Trustee may recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount then due and owing (together with interest on any unpaid interest to the
extent lawful) and the amounts provided for in Section 7.07.

 

SECTION 6.09.
Trustee May File Proofs of Claim. The Trustee may file such
proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Holders allowed in
any judicial proceedings relative to the Company, its creditors or its property
and, unless prohibited by law or applicable regulations, may vote on
behalf of the Holders in any election of a trustee in bankruptcy or other
Person performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and its counsel, and any other amounts due the Trustee under Section 7.07.

 

SECTION 6.10.
Priorities. If the Trustee collects any money or property pursuant to
this Article VI, it shall pay out the money or property in the following
order:

 

FIRST:  to the Trustee for amounts due under Section 7.07;

 

SECOND:  to Holders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Securities for
principal and interest, respectively; and

 

THIRD:  to the Company.

 

The Trustee may fix
a record date and payment date for any payment to Holders pursuant to this Section 6.10.
At least 15 days before such record date, the Company 

 

67

 

shall mail to each Holder and the Trustee a notice that states the
record date, the payment date and amount to be paid.

 

SECTION 6.11.
Undertaking for Costs. In any suit for the enforcement of any right or
remedy under this Indenture or in any suit against the Trustee for any action
taken or omitted by it as Trustee, a court in its discretion may require
the filing by any party litigant in the suit of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys’ fees, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made
by the party litigant. This Section 6.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders
of more than 10% in aggregate principal amount of the Securities.

 

SECTION 6.12.
Waiver of Stay or Extension Laws. The Company (to the extent it may lawfully
do so) shall not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, that may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and shall not hinder, delay or impede the execution
of any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law had been enacted.

 

SECTION 6.13.
Enforcement of Remedies. Notwithstanding any of the foregoing, any
enforcement of the Guarantees under the Second Priority Guarantee Agreement or
any remedies with respect to the Second Priority Collateral under the Second
Priority Collateral Documents is subject to the provisions of the Intercreditor
Agreement.

 

ARTICLE VII

Trustee

 

SECTION 7.01.
Duties of Trustee. (a)  If an Event of Default has occurred and is
continuing, the Trustee shall exercise the rights and powers vested in it by
this Indenture and use the same degree of care and skill in their exercise as a
prudent Person would exercise or use under the circumstances in the conduct of
such Person’s own affairs.

 

(b) Except
during the continuance of an Event of Default:

 

(1) the Trustee undertakes to perform such
duties and only such duties as are specifically set forth in this Indenture,
and no implied covenants or obligations shall be read into this Indenture
against the Trustee; and

 

(2) in the absence of bad faith on its
part, the Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of this
Indenture. However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.

 

68

 

(c) The
Trustee may not be relieved from liability for its own negligent action,
its own negligent failure to act or its own willful misconduct, except that:

 

(1) this paragraph does not limit the
effect of paragraph (b) of this Section 7.01;

 

(2) the Trustee shall not be liable for
any error of judgment made in good faith by a Trust Officer unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts; and

 

(3) the Trustee shall not be liable with
respect to any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 6.05.

 

(d) Every
provision of this Indenture that in any way relates to the Trustee is subject
to paragraphs (a), (b) and (c) of this Section 7.01.

 

(e) The
Trustee shall not be liable for interest on any money received by it except as
the Trustee may agree in writing with the Company.

 

(f) Money
held in trust by the Trustee need not be segregated from other funds except to
the extent required by law.

 

(g) No
provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties hereunder or in the exercise of any of its rights or powers.

 

(h) Every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section and to the provisions of the TIA, and the provisions of this Article VII
shall apply to the Trustee in its role as Registrar, Paying Agent and Security
Custodian.

 

(i) The
Trustee shall not be deemed to have notice of a Default or an Event of Default
unless (a) the Trustee has received written notice thereof from the
Company or any Holder or (b) a Trust Officer shall have actual knowledge
thereof.

 

SECTION 7.02.
Rights of Trustee. (a)  The Trustee may rely on any document
believed by it to be genuine and to have been signed or presented by the proper
person. The Trustee need not investigate any fact or matter stated in the
document. The Trustee may, however, in its discretion make such further inquiry
or investigation into such facts or matters as it may see fit and, if the
Trustee shall determine to make such further inquiry or investigation, it shall
be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney.

 

(b) Before
the Trustee acts or refrains from acting, it may require an Officers’
Certificate or an Opinion of Counsel. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on the Officers’
Certificate or Opinion of Counsel.

 

69

 

(c) The
Trustee may act through agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care and with the consent
of the Company.

 

(d) The
Trustee shall not be liable for any action it takes or omits to take in good
faith that it believes to be authorized or within its rights or powers; provided,
however, that, subject to paragraph (b) of Section 7.01, the
Trustee’s conduct does not constitute willful misconduct or negligence.

 

(e) The
Trustee may consult with counsel, and the advice or opinion of counsel
with respect to legal matters relating to this Indenture and the Securities
shall be full and complete authorization and protection from liability in
respect to any action taken, omitted or suffered by it hereunder in good faith
and in accordance with the advice or opinion of such counsel.

 

(f) The
permissive rights of the Trustee to do things enumerated in this Indenture
shall not be construed as a duty unless so specified herein.

 

SECTION 7.03.
Individual Rights of Trustee. The Trustee in its individual or any other
capacity may become the owner or pledgee of Securities and may otherwise
deal with the Company or its Affiliates with the same rights it would have if
it were not Trustee. Any Paying Agent, Registrar or co-registrar may do
the same with like rights. However, the Trustee must comply with Sections 7.10
and 7.11.

 

SECTION 7.04.
Trustee’s Disclaimer. The Trustee shall not be responsible for and makes
no representation as to the validity, priority or adequacy of this Indenture or
the Securities, it shall not be accountable for the Company’s use of the
proceeds from the Securities, and it shall not be responsible for any statement
of the Company in this Indenture or in any document issued in connection with
the sale of the Securities or in the Securities other than the Trustee’s
certificate of authentication.

 

SECTION 7.05.
Notice of Defaults. If a Default or Event of Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Holder notice of the Default or Event of Default within 30 days after it is
known to a Trust Officer or written notice of it is received by the Trustee. Except
in the case of a Default or Event of Default in payment of principal of or
interest on any Security, the Trustee may withhold the notice if and so
long as a committee of its Trust Officers in good faith determines that
withholding the notice is in the interests of Holders.

 

SECTION 7.06.
Reports by Trustee to Holders. Within 60 days after February 1 each
year beginning with February 1, 2005, the Trustee shall mail to each
Holder a brief report dated as of such February 1 that complies with TIA § 313(a),
if and to the extent required by such subsection. The Trustee shall also comply
with TIA § 313(b).

 

A copy of each
report at the time of its mailing to Holders shall be filed with the Commission
and each stock exchange (if any) on which the Securities are listed. The
Company agrees to notify promptly the Trustee whenever the Securities become
listed on any stock exchange and of any delisting thereof.

 

70

 

SECTION 7.07.
Compensation and Indemnity. The Company shall pay to the Trustee from
time to time reasonable compensation for its services. The Trustee’s
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company shall reimburse the Trustee upon request for all
reasonable out-of-pocket expenses incurred or made by it, including costs of
collection, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Trustee’s agents, counsel, accountants and experts. The Company
shall indemnify the Trustee against any and all loss, liability or expense
(including reasonable attorneys’ fees) incurred by it in connection with the
acceptance and administration of this trust and the performance of its duties
hereunder. The Trustee shall notify the Company promptly of any claim for which
it may seek indemnity. Failure by the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder unless the Company
has been prejudiced thereby. The Company shall defend the claim, and the
Trustee may have separate counsel and the Company shall pay the reasonable
fees and expenses of such counsel. The Company need not reimburse any expense
or indemnify against any loss, liability or expense incurred by the Trustee
through the Trustee’s own willful misconduct, negligence or bad faith. The
Company need not pay for any settlement made by the Trustee without the Company’s
consent, such consent not to be unreasonably withheld. All indemnifications and
releases from liability granted hereunder to the Trustee shall extend to its
officers, directors, employees, agents, successors and assigns.

 

To secure the
Company’s payment obligations in this Section 7.07, the Trustee shall have
a lien prior to the Securities on all money or property held or collected by
the Trustee other than money or property held in trust to pay principal of and
interest on particular Securities.

 

The Company’s
payment obligations pursuant to this Section 7.07 shall survive the
resignation or removal of the Trustee and the discharge of this Indenture. When
the Trustee incurs expenses after the occurrence of a Default specified in Section 6.01(f) or
(g) with respect to the Company, the expenses are intended to constitute
expenses of administration under the Bankruptcy Law.

 

SECTION 7.08.
Replacement of Trustee. The Trustee may resign at any time by so
notifying the Company. The Holders of a majority in aggregate principal amount
of the Securities the outstanding may remove the Trustee by so notifying
the Trustee and may appoint a successor Trustee, provided that so
long as no Default or Event of Default has occurred and is continuing, the
Company shall have the right to consent to the successor Trustee, such consent
not to be unreasonably withheld. The Company shall remove the Trustee if:

 

(1) the Trustee fails to comply with Section 7.10;

 

(2) the Trustee is adjudged bankrupt or
insolvent;

 

(3) a receiver or other public officer
takes charge of the Trustee or its property; or

 

71

 

 

(4) the Trustee otherwise becomes
incapable of acting.

 

If the Trustee
resigns or is removed by the Company or by the Holders of a majority in
aggregate principal amount of the Securities then outstanding, and such Holders
do not reasonably promptly appoint a successor Trustee, or if a vacancy exists
in the office of Trustee for any reason (the Trustee in such event being
referred to herein as the retiring Trustee), the Company shall promptly appoint
a successor Trustee.

 

A successor
Trustee shall deliver a written acceptance of its appointment to the retiring
Trustee and to the Company. Thereupon the resignation or removal of the
retiring Trustee shall become effective, and the successor Trustee shall have
all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Holders. The
retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee, subject to the lien provided for in Section 7.07.

 

If a successor
Trustee does not take office within 60 days after the retiring Trustee resigns
or is removed, the retiring Trustee or the Holders of 10% in aggregate
principal amount of the Securities then outstanding may petition any court
of competent jurisdiction for the appointment of a successor Trustee.

 

If the Trustee
fails to comply with Section 7.10, any Holder who has been a bona fide
Holder of a Security for at least six months may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.

 

Notwithstanding
the replacement of the Trustee pursuant to this Section 7.08, the Company’s
obligations under Section 7.07 shall continue for the benefit of the
retiring Trustee.

 

SECTION 7.09.
Successor Trustee by Merger. If the Trustee consolidates with, merges or
converts into, or transfers all or substantially all its corporate trust
business or assets to, another corporation or banking association, the
resulting, surviving or transferee corporation or banking association without
any further act shall be the successor Trustee.

 

In case at the
time such successor or successors by merger, conversion or consolidation to the
Trustee shall succeed to the trusts created by this Indenture any of the
Securities shall have been authenticated but not delivered, any such successor
to the Trustee may adopt the certificate of authentication of any
predecessor trustee, and deliver such Securities so authenticated; and in case
at that time any of the Securities shall not have been authenticated, any such
successor to the Trustee may authenticate such Securities either in the
name of any predecessor hereunder or in the name of the successor to the
Trustee; and in all such cases such certificates shall have the full force which
it is anywhere in the Securities or in this Indenture provided that the
certificate of the Trustee shall have.

 

SECTION 7.10.
Eligibility; Disqualification. The Trustee shall at all times satisfy
the requirements of TIA § 310(a). The Trustee shall have (or, in the case
of a corporation included in a bank holding company system, the related bank
holding company shall have) a combined capital and surplus of at least
$50,000,000 as set forth in its (or its related bank holding company’s) most
recent published annual report of condition. The Trustee shall comply with TIA § 310(b),
subject to the penultimate paragraph thereof; 

 

72

 

provided,
however, that there shall be excluded from the operation of TIA § 310(b)(1) any
indenture or indentures under which other securities or certificates of
interest or participation in other securities of the Company are outstanding if
the requirements for such exclusion set forth in TIA § 310(b)(1) are
met.

 

SECTION 7.11.
Preferential Collection of Claims Against Company. The Trustee
shall comply with TIA § 311(a), excluding any creditor relationship listed
in TIA § 311(b). A Trustee who has resigned or been removed shall be
subject to TIA § 311(a) to the extent indicated.

 

ARTICLE VIII

Discharge of Indenture; Defeasance

 

SECTION 8.01.
Discharge of Liability on Securities; Defeasance. (a)  When (i) the
Company delivers to the Trustee all outstanding Securities (other than
Securities replaced pursuant to Section 2.07) for cancellation or (ii) all
outstanding Securities have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article III
and the Company irrevocably deposits with the Trustee funds sufficient to pay
at maturity or upon redemption all outstanding Securities, including interest
thereon to maturity or such redemption date (other than Securities replaced
pursuant to Section 2.07), and if in either case the Company pays all
other sums payable hereunder by the Company, then this Indenture shall, subject
to Section 8.01(c), cease to be of further effect. The Trustee shall
acknowledge satisfaction and discharge of this Indenture on demand of the
Company accompanied by an Officers’ Certificate and an Opinion of Counsel and
at the cost and expense of the Company.

 

(b) 
Subject to Sections 8.01(c) and 8.02, the Company at any time may terminate
(i) all of its obligations under the Securities and this Indenture (“legal
defeasance option”) or (ii) its obligations under Sections 4.02,
4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13 and 4.14 and
the operation of Sections 6.01(e), 6.01(f), 6.01(g), 6.01(h), 6.01(i),
6.01(j) and 6.01(k) (but, in the case of Sections 6.01(f) and (g),
with respect only to Significant Subsidiaries) and the limitations contained in
Section 5.01(a)(5) (“covenant defeasance option”). The Company may exercise
its legal defeasance option notwithstanding its prior exercise of its covenant
defeasance option.

 

If the Company
exercises its legal defeasance option, payment of the Securities may not
be accelerated because of an Event of Default. If the Company exercises its
covenant defeasance option, payment of the Securities may not be
accelerated because of an Event of Default specified in Sections 6.01(d) (with
respect to the covenants of Article IV identified in the immediately
preceding paragraph), 6.01(e), 6.01(f), 6.01(g), 6.01(h), 6.01(i), 6.01(j) or
6.01(k) (with respect only to Significant Subsidiaries in the case of Sections
6.01(f) and 6.01(g)) or because of the failure of the Company to comply
with the limitations contained in Section 5.01(a)(5). If the Company
exercises its legal defeasance option or its covenant defeasance option, the
Second Priority Lien, as it pertains to the Securities, will be released and
each Subsidiary Guarantor will be released from all its obligations under its
Subsidiary Guarantee, as it pertains to the Securities.

 

73

 

Upon
satisfaction of the conditions set forth herein and upon request of the
Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.

 

(c) 
Notwithstanding clauses (a) and (b) above, the Company’s
obligations in Sections 2.04, 2.05, 2.06, 2.07, 7.07, 7.08, 8.05 and 8.06 shall
survive until the Securities have been paid in full. Thereafter, the Company’s
obligations in Sections 7.07 and 8.05 shall survive.

 

SECTION 8.02.
Conditions to Defeasance. The Company may exercise its legal defeasance
option or its covenant defeasance option only if:

 

(a) the Company irrevocably deposits in
trust with the Trustee money or U.S. Government Obligations for the payment of
principal of and interest on the Securities to maturity or redemption, as the case
may be;

 

(b) the Company delivers to the Trustee
a certificate from a nationally recognized firm of independent certified public
accountants expressing their opinion that the payments of principal and
interest when due and without reinvestment on the deposited U.S. Government
Obligations plus any deposited money without investment will provide cash at
such times and in such amounts as will be sufficient to pay principal and
interest when due on all the Securities to maturity or redemption, as the case may be;

 

(c) 123 days pass after the deposit is
made and during the 123-day period no Default specified in Section 6.01(f) or
6.01(g) occurs with respect to the Company or any other Person making such
deposit which is continuing at the end of the period;

 

(d) no Default or Event of Default has
occurred and is continuing on the date of such deposit and after giving effect
thereto;

 

(e) such deposit does not constitute a
default under any other agreement or instrument binding on the Company;

 

(f) the Company delivers to the Trustee
an Opinion of Counsel to the effect that the trust resulting from the deposit
does not constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;

 

(g) in the case of the legal defeasance option,
the Company shall have delivered to the Trustee an Opinion of Counsel stating
that

 

(1) the Company has received from the
Internal Revenue Service a ruling; or

 

(2) since the date of this Indenture
there has been a change in the applicable Federal income tax law, to the
effect, in either case, that, and based thereon such Opinion of Counsel shall
confirm that, the Holders will not recognize income, gain or loss for Federal
income tax purposes as a result of such defeasance and will be subject to Federal
income tax on the same 

 

74

 

amounts, in the same manner and at the same times as would have been
the case if such defeasance had not occurred;

 

(h) in the case of the covenant
defeasance option, the Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that the Holders will not recognize income, gain or
loss for Federal income tax purposes as a result of such covenant defeasance
and will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such covenant
defeasance had not occurred; and

 

(i) the Company delivers to the Trustee
an Officers’ Certificate and an Opinion of Counsel, each stating that all
conditions precedent to the defeasance and discharge of the Securities as
contemplated by this Article VIII have been complied with.

 

Before or
after a deposit, the Company may make arrangements satisfactory to the
Trustee for the redemption of Securities at a future date in accordance with Article III.

 

SECTION 8.03.
Application of Trust Money. The Trustee shall hold in trust money
or U.S. Government Obligations deposited with it pursuant to this Article VIII.
It shall apply the deposited money and the money from U.S. Government
Obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal of and interest on the Securities.

 

SECTION 8.04.
Repayment to Company. The Trustee and the Paying Agent shall promptly
turn over to the Company upon request any excess money or securities held by
them at any time.

 

Subject to any
applicable abandoned property law, the Trustee and the Paying Agent shall pay
to the Company upon request any money held by them for the payment of principal
or interest that remains unclaimed for two years, and, thereafter, Holders
entitled to the money must look to the Company for payment as general
creditors.

 

SECTION 8.05.
Indemnity for Government Obligations. The Company shall pay and shall
indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against deposited U.S. Government Obligations or the principal
and interest received on such U.S. Government Obligations.

 

SECTION 8.06.
Reinstatement. If the Trustee or Paying Agent is unable to apply any
money or U.S. Government Obligations in accordance with this Article VIII
by reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company’s obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article VIII until such time as the Trustee or Paying
Agent is permitted to apply all such money or U.S. Government Obligations
in accordance with this Article VIII;  provided, however, that, if the
Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Securities 

 

75

 

to receive such payment from
the money or U.S. Government Obligations held by the Trustee or Paying Agent.

 

ARTICLE IX

Amendments

 

SECTION 9.01.
Without Consent of Holders. Without the consent of any Holders, the
Company, when authorized by a Board Resolution, the Subsidiary Guarantors and
the Trustee may amend this Indenture or the Securities and, subject to any
other consent required under the terms of the applicable Second Priority
Collateral Documents, the Second Priority Collateral Documents, in each case
without notice to:

 

(a) cure any ambiguity, omission, defect
or inconsistency;

 

(b) provide for the assumption by a
successor corporation of the obligations of the Company or any Subsidiary
Guarantor under this Indenture or any Second Priority Collateral Documents;

 

(c) provide for uncertificated
Securities in addition to or in place of certificated Securities; provided,
however, that the uncertificated Securities are issued in registered form for
purposes of Section 163(f) of the Code, or in a manner such that the
uncertificated Securities are described in Section 163(f)(2)(B) of
the Code;

 

(d) add additional Guarantees with respect to the Securities or release
Subsidiary Guarantors from Subsidiary Guarantees as provided by the terms of
this Indenture or the Subsidiary Guarantees;

 

(e) further secure the Securities (and
if such security interest includes Liens on Property of the Company, provide
for releases of such Property on terms comparable to the terms on which
Collateral constituting Property of Subsidiary Guarantors may be
released), release all or any portion of the Collateral pursuant to the terms
of the Second Priority Collateral Documents, add to the covenants of the
Company or the Subsidiary Guarantors for the benefit of the Holders or
surrender any right or power herein conferred upon the Company;

 

(f) in the case of this Indenture, make
any change that does not adversely affect the rights of any Holder;

 

(g) make any change to the subordination
provisions of a Subsidiary Guarantee or any Second Priority Collateral
Documents that would limit or terminate the benefits available to any holder of
Senior Obligations under such provisions; or

 

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

 

After an
amendment under this Section 9.01 becomes effective, the Company shall
mail to Holders a notice briefly describing such amendment. The failure to give
such 

 

76

 

notice to all Holders, or any defect therein, shall not impair or
affect the validity of an amendment under this Section 9.01.

 

SECTION 9.02.
With Consent of Holders. (a)  The Company, when authorized by a
Board Resolution, the Subsidiary Guarantors and the Trustee may amend this
Indenture or the Securities and, subject to any other consent required under
the terms of the applicable Second Priority Collateral Documents, the Second
Priority Collateral Documents, and (subject as aforesaid) waive any past
default or compliance with any provisions (except, in the case of this
Indenture, as provided in Section 6.04), with the consent of the Holders of
at least a majority in aggregate principal amount of the Securities then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for the Securities). However, without the consent of each Holder
affected thereby, an amendment may not:

 

(1) amend this Indenture to reduce the
amount of Securities whose Holders are required to consent to an amendment or
waiver;

 

(2) amend this Indenture to reduce the
rate of or extend the time for payment of interest on any Security;

 

(3) amend this Indenture to reduce the
principal of or extend the Stated Maturity of any Security;

 

(4) amend this Indenture to make any
Security payable in money other than that stated in the Security;

 

(5) amend this Indenture or any
Subsidiary Guarantee to impair the right of any Holder to receive payment of
principal of and interest on such Holder’s Securities on or after the due dates
therefor or to institute suit for the enforcement of any payment on or with
respect to such Holder’s Securities or any Subsidiary Guarantee;

 

(6) amend this Indenture or any
Subsidiary Guarantee to subordinate the Securities or any Subsidiary Guarantee
to any other obligation of the Company or the applicable Subsidiary Guarantor
(except in the case of the Second Priority Subsidiary Guarantee Agreement, as
permitted by paragraph (b) below);

 

(7) amend this Indenture to reduce the
premium payable upon the redemption of any Security or change the time at which
any Security may be redeemed in accordance with Article III;

 

(8) amend this Indenture to reduce the
premium payable upon a Change of Control or, at any time after a Change of
Control has occurred, amend the definition of “Change of Control” or change the
time at which any Change of Control Offer relating thereto must be made or at
which the Securities must be repurchased pursuant to such Change of Control
Offer; or

 

(9) at any time after the Company is
obligated to make a Prepayment Offer with the Excess Proceeds from Asset Sales,
amend this Indenture to change the time at which such Prepayment Offer must be
made or at which the Securities must be repurchased pursuant thereto.

 

77

 

(b)  Without limiting the
foregoing, the Holders will be deemed to have consented for purposes of the
Second Priority Collateral Documents (including for purposes of determining
actions of the Second Priority Instructing Group) to (i) any amendment,
waiver or other modification (including any consent thereunder) of the Second
Priority Collateral Documents (including any annexes, exhibits or schedules
thereto) that would not be adverse to the Holders in any material respect, as
reasonably determined by the Board of Directors (as evidenced by a Board
Resolution), and (ii) to any of the following amendments, waivers and
other modifications to the Second Priority Collateral Documents (the “Second
Priority Collateral Documents Amendments”):

 

(1) an
amendment to the Intercreditor Agreement to modify the restriction on changes
to Second Priority Collateral Documents and Second Priority Debt Documents
without the consent of holders of Senior Obligations or their representatives
(but without modifying any provisions relating to consent of Holders or other
Second Priority Debt to various actions);

 

(2) to the
extent such amendment, waiver or modification relates to the amount (including
amounts of Senior Obligations and Second Priority Debt) or the terms of Debt
(including as reflected in related definitions such as “Replacement Second
Priority Debt”) that may be secured by Liens on the Collateral, as may be
consented to by the Senior Collateral Agent or the Senior Banks in accordance
with the terms of the Intercreditor Agreement or the applicable Second Priority
Collateral Document (but without limiting any of the restrictive covenants and
related definitions contained in this Indenture);

 

(3) an
amendment to the Second Priority Subsidiary Guarantee Agreement to subordinate,
on comparable terms to those provided therein with respect to Senior Bank
Obligations, the obligations of the Subsidiary Guarantors under the Second
Priority Subsidiary Guarantee Agreement to the prior payment when due of the
guarantees by such Subsidiary Guarantor of any Additional Senior Debt, provided
that such amendment applies equally with respect to all Second Priority Debt;

 

(4) an
amendment to the Second Priority Collateral Documents to provide for a class of
Secured Obligations having rights in respect of the Collateral that are
subordinated to the Second Priority Debt Obligations to at least the same
extent that the Second Priority Debt Obligations are subordinated to the Senior
Obligations, as reasonably determined by the Board of Directors (as evidenced
by a Board Resolution), provided that (A) such Debt is not secured
by Liens on any assets other than Collateral and (B) to the extent such
Secured Obligations represent Debt of a Subsidiary of the Company, such
Subsidiary is a Subsidiary Guarantor and such Debt is subordinated to the prior
payment of the Second Priority Debt Obligation to at least the same extent as
the Subsidiary Guarantees are subordinated to the Senior Obligations
(determined as aforesaid);

 

(5) an
amendment to the Intercreditor Agreement to provide, on comparable terms to
those provided therein with respect to Senior Bank Obligations, the lenders
under any Senior Obligations (including Additional Senior Debt Obligations)
with rights and remedies with respect to the Collateral, including the rights
to distributions 

 

78

 

of proceeds of
Collateral and rights to control all remedies or other activities related to
the Collateral so long as any Senior Obligations remain outstanding, comparable
to those provided therein with respect to the Senior Bank Obligations, provided
that (A) the holders of Senior Obligations and their representatives have
obligations to holders of Second Priority Debt and their representatives
comparable to the obligation of holders of Senior Bank Obligations and their
representatives provided therein and (B) such amendment applies equally
with respect to all Second Priority Debt;

 

(6) an
amendment to the Intercreditor Agreement to change the conditions that must be
satisfied in order for a representative of additional Debt to become a party to
the Intercreditor Agreement, provided that (A) such amendment is
consented to by the Senior Collateral Agent in accordance with the terms of the
Intercreditor Agreement, (B) the conditions continue to require a
representative of such holders on behalf of such holders to become a party to
the Intercreditor Agreement, (C) such amendment applies equally with
respect to all Second Priority Debt, (D) the ability of the Second
Priority Collateral Trustee and the holders of Second Priority Debt and their
representatives to enforce their rights under the Intercreditor Agreement are
not adversely affected in any material respect by such amendment and (E) the
Lien on the Collateral securing the Subsidiary Guarantees of the Securities
will not be impaired (other than the addition of new Secured Obligations that
will be secured by the Collateral) as a result of implementation of such
amendment;

 

(7) an
amendment, waiver or modification to the Second Priority Collateral Documents
to effectuate (A) (i) the release of assets included in the
Collateral from the Liens securing the Securities (I) if all other Liens on
those assets securing the Senior Obligations (including all commitments
thereunder) are released, (II) if the Company or a Subsidiary of the Company
provides substitute Collateral for all or a portion of those assets with at
least an equivalent fair value, as determined in good faith by the Board of
Directors (as evidenced by a Board Resolution) or (III) if those assets are
owned by a Subsidiary that is a Subsidiary Guarantor and that Subsidiary
Guarantor is released from its Subsidiary Guarantee, provided that in
the case of each of clauses (I)-(III) after giving effect to the release there
remains no Lien on such assets securing any Secured Obligations, or (ii) the
release of the Subsidiary Guarantee of a Subsidiary Guarantor of the Securities
upon such Subsidiary Guarantor ceasing to Guarantee or be an obligor in respect
of, or to pledge any of its assets to secure, any Senior Obligations, provided
that after giving effect to the release the Subsidiary Guarantor ceases to
Guarantee or be an obligor in respect of, or to pledge its assets to secure,
any Secured Obligations and provided, in the case of both (i) and
(ii), that after giving effect to the release, at least $300 million in
aggregate principal amount of Senior Obligations under Credit Facilities will
remain outstanding or (B) a release of Collateral or a Subsidiary
Guarantee of a Subsidiary Guarantor otherwise in accordance with the terms of
this Indenture and the Second Priority Collateral Documents;

 

(8) with
respect to any amendment, waiver or modification agreed to by the Senior
Collateral Agent or the holders of the Senior Obligations under any provision
of any Senior Collateral Documents, a comparable amendment, waiver or
modification to the comparable provision of the comparable Second Priority 

 

79

 

Collateral
Document, provided that such amendment, waiver or modification applies
equally with respect to all Second Priority Debt;

 

(9) upon
request of the Company without consent of any Holders unless, within 20
Business Days after written notice of the proposed amendment, waiver or
modification is mailed to the Trustee and Holders, 25% in interest of the
Holders delivers to the Trustee written objection thereto;

 

(10) with the
written consent of the Holders of at least a majority of the aggregate
principal amount of the Securities then outstanding pursuant to Section 9.02(a);
or

 

(11) an amendment,
waiver or modification permitted pursuant to Section 9.01.

 

At the request of the Company, the Trustee
shall execute and deliver any documents, instructions or instruments evidencing
such deemed consent of the Holders. The Trustee, in its capacity as Second
Priority Representative to Holders, shall take such action under the Second
Priority Collateral Documents as may be requested by the Company to give
effect to any such amendment, waiver or modification. Notwithstanding the
foregoing, no such consent or deemed consent shall be deemed or construed to
represent an amendment or waiver, in whole or in part, of any provision of this
Indenture or the Securities.

 

The foregoing shall not limit the right of
the Company to amend, waive or otherwise modify the Second Priority Collateral
Documents in accordance with their terms.

 

(c)  In addition and without
limiting the foregoing, (x) Collateral securing a Subsidiary Guarantee of
the Securities or (y) a Subsidiary Guarantee of the Securities provided by a
Subsidiary Guarantor may be released only in respect of the Securities:

 

(i) upon request of the Company without consent of any Holder
unless, within 20 Business Days after written notice of the proposed release of
such (1) Collateral from the Liens securing Subsidiary Guarantees of the
Securities or (2) Subsidiary Guarantor, as the case may be, is mailed
to the Trustee and the Holders, Holders of 25% of the outstanding principal
amount of Securities deliver to the Company a written objection to such
release; or

 

(ii) with the written consent of the Holders of at least a
majority of the aggregate principal amount of the Securities then outstanding.

 

Under the circumstances described in clauses (i) and
(ii) above, Holders shall also be deemed to have consented to such release
for purposes of any consent required under the Second Priority Collateral
Documents (including for purposes of determining actions of the Second Priority
Instructing Group), subject to any other consent required under the Second
Priority Collateral Documents.

 

At the request of the Company, the Trustee
shall execute and deliver any documents, instructions or instruments evidencing
the consent of the Holders to such release. The Trustee, in its capacity as
Second Priority Representative for Holders, shall take such 

 

80

 

action under the
Second Priority Collateral Documents or otherwise as may be requested by
the Company to give effect to any such release.

 

(d)  It
shall not be necessary for the consent of the Holders under this Section to
approve the particular form of any proposed amendment, but it shall be
sufficient if such consent approves the substance thereof.

 

After an
amendment under this Section becomes effective, the Company shall mail to
each Holder at such Holder’s address appearing in the Security Register a
notice briefly describing such amendment. The failure to give such notice to
all Holders, or any defect therein, shall not impair or affect the validity of
an amendment under this Section.

 

SECTION 9.03.
Compliance with Trust Indenture Act. Every amendment to this Indenture
or the Securities shall comply with the TIA as then in effect.

 

SECTION 9.04.
Revocation and Effect of Consents and Waivers. A consent to an amendment
or a waiver by a Holder of a Security shall bind the Holder and every
subsequent Holder of that Security or portion of the Security that evidences
the same debt as the consenting Holder’s Security, even if notation of the
consent or waiver is not made on the Security. However, any such Holder or subsequent
Holder may revoke the consent or waiver as to such Holder’s Security or
portion of the Security if the Trustee receives the notice of revocation before
the date the amendment or waiver becomes effective. After an amendment or
waiver becomes effective, it shall bind every Holder. An amendment or waiver
becomes effective upon the execution of such amendment or waiver by the
Trustee.

 

The Company
may, but shall not be obligated to, fix a record date for the purpose of
determining the Holders entitled to give their consent or take any other action
described above or required or permitted to be taken pursuant to this Indenture.
If a record date is fixed, then notwithstanding the immediately preceding
paragraph, those Persons who were Holders at such record date (or their duly
designated proxies), and only those Persons, shall be entitled to give such
consent or to revoke any consent previously given or to take any such action,
whether or not such Persons continue to be Holders after such record date. No such
consent shall be valid or effective for more than 120 days after such record
date.

 

SECTION 9.05.
Notation on or Exchange of Securities. If an amendment changes the terms
of a Security, the Trustee may require the Holder of the Security to
deliver such Security to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return such Security
to the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Failure to make
the appropriate notation or to issue a new Security shall not affect the
validity of such amendment.

 

SECTION 9.06.
Trustee To Sign Amendments. The Trustee shall sign any amendment or
release authorized pursuant to this Article IX if the amendment or release
does not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If such amendment or release does adversely affect the rights, duties,
liabilities or immunities of the Trustee, the Trustee may but need not
sign it. In signing such amendment or release the 

 

81

 

Trustee shall be entitled to
receive indemnity reasonably satisfactory to it and to receive, and (subject to
Section 7.01) shall be fully protected in relying upon, an Officers’
Certificate and an Opinion of Counsel stating that such amendment or release is
authorized or permitted by this Indenture.

 

SECTION 9.07.
Payment for Consent. Neither the Company nor any Affiliate of the
Company shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder for
or as an inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.

 

ARTICLE X

Miscellaneous

 

SECTION 10.01.
Trust Indenture Act Controls. If any provision of this Indenture limits,
qualifies or conflicts with another provision that is required to be included
in this Indenture by the TIA, the required provision shall control.

 

SECTION 10.02.
Notices. Any notice or communication shall be in writing and delivered
in person or mailed by first-class mail or sent by facsimile (with a hard
copy delivered in person or by mail promptly thereafter) and addressed as
follows:

 

if to the Company:

 

Rite Aid Corporation

30 Hunter Lane

Camp Hill, Pennsylvania 17011

facsimile: 717-760-7867

 

Attention of: 
Robert B. Sari, Esq.

 

if to the Trustee:

 

BNY Midwest Trust Company

2 North LaSalle Street, Suite 1020

Chicago, IL 60602

facsimile: 312-827-8542

 

Attention of: 
Corporate Trust

 

The Company or
the Trustee by notice to the other may designate additional or different
addresses for subsequent notices or communications.

 

82

 

Any notice or
communication mailed to a Holder shall be mailed to the Holder at the Holder’s
address as it appears on the registration books of the Registrar and shall be
sufficiently given if so mailed within the time prescribed.

 

Failure to
mail a notice or communication to a Holder or any defect in it shall not affect
its sufficiency with respect to other Holders. If a notice or communication is
mailed in the manner provided above, it is duly given, whether or not the
addressee receives it.

 

SECTION 10.03.
Communication by Holders with Other Holders. Holders may communicate
pursuant to TIA § 312(b) with other Holders with respect to their
rights under this Indenture or the Securities. The Company, the Trustee, the
Registrar and anyone else shall have the protection of TIA § 312(c).

 

SECTION 10.04.
Certificate and Opinion as to Conditions Precedent. Upon any request or
application by the Company to the Trustee to take or refrain from taking any
action under this Indenture, the Company shall furnish to the Trustee:

 

(1) an Officers’ Certificate in form and
substance reasonably satisfactory to the Trustee stating that, in the opinion
of the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and

 

(2) except in the case of Section 3.01
under which an opinion will not be required, an Opinion of Counsel in form and
substance reasonably satisfactory to the Trustee stating that, in the opinion
of such counsel, all such conditions precedent have been complied with; provided,
however, that with respect to matters of fact an Opinion of Counsel may rely
on an Officers’ Certificate or certificates of public officials.

 

SECTION 10.05.
Statements Required in Certificate or Opinion. Each certificate with
respect to compliance with a covenant or condition provided for in this
Indenture shall include:

 

(1) a statement that the individual
making such certificate has read such covenant or condition;

 

(2) a brief statement as to the nature
and scope of the examination or investigation upon which the statements
contained in such certificate are based;

 

(3) a statement that, in the opinion of
such individual, he has made such examination or investigation as is necessary
to enable him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and

 

(4) a statement as to whether or not, in
the opinion of such individual, such covenant or condition has been complied
with,

 

83

 

Each opinion
with respect to compliance with a covenant or condition provided for in this
Indenture shall be in form and substance reasonably satisfactory to the
party requesting such opinion and the party giving such opinion.

 

SECTION 10.06.
When Securities Disregarded. In determining whether the Holders of the
required principal amount of Securities have concurred in any direction, waiver
or consent, Securities owned by the Company or by any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company shall be disregarded and deemed not to be outstanding,
except that, for the purpose of determining whether the Trustee shall be
protected in relying on any such direction, waiver or consent, only Securities
that the Trustee knows are so owned shall be so disregarded. Also, subject to
the foregoing, only Securities outstanding at the time shall be considered in
any such determination.

 

SECTION 10.07.
Rules by Trustee, Paying Agent and Registrar. The Trustee may make
reasonable rules for action by or a meeting of Holders. The Registrar and
the Paying Agent or co-registrar may make reasonable rules for their
functions.

 

SECTION 10.08.
Legal Holidays. A “Legal Holiday” is a Saturday, a Sunday or a day on
which banking institutions are not required to be open in the State of New York.
If a payment date is a Legal Holiday, payment shall be made on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for
the intervening period. If a regular record date is a Legal Holiday, the record
date shall not be affected.

 

SECTION 10.09.
Governing Law. THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT
WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW.

 

SECTION 10.10.
No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Holder shall waive and release all such
liability. The waiver and release shall be part of the consideration for
the issue of the Securities.

 

SECTION 10.11.
Successors. All agreements of the Company in this Indenture and the
Securities shall bind its successors. All agreements of the Trustee in this
Indenture shall bind its successors.

 

SECTION 10.12.
Multiple Originals. The parties may sign any number of copies of
this Indenture. Each signed copy shall be an original, but all of them together
represent the same agreement. One signed copy is enough to prove this
Indenture.

 

SECTION 10.13.
Table of Contents; Headings. The table of contents, cross-reference
sheet and headings of the Articles and Sections of this Indenture have been
inserted for convenience of reference only, are not intended to be considered a
part hereof and shall not modify or restrict any of the terms or
provisions hereof.

 

84

 

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

 

	
   

  	
  RITE AID CORPORATION,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
    Name:

  
	
   

  	
    Title

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EACH OF THE SUBSIDIARY

  GUARANTORS LISTED ON SCHEDULE A

  HERETO,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
    Name:

  
	
   

  	
    Title

  
	
   

  	
   

  

 

 

	
   

  	
  BNY MIDWEST TRUST COMPANY,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
    Name:

  
	
   

  	
    Title

  

 

2

 

SCHEDULE A

 

SUBSIDIARY
GUARANTORS

 

Corporations

 

Thrifty PayLess, Inc.

Rite Aid of Vermont, Inc.

Rite Aid of Ohio, Inc.

Rite Aid of Maine, Inc.

Rite Aid of West Virginia, Inc.

The Lane Drug Company

3581 Carter Hill Road - Montgomery Corp.

4042 Warrensville Center Road - Warrensville Ohio, Inc.

5277 Associates, Inc.

537 Elm Street Corp.

5600 Superior Properties, Inc.

657-659 Broad St. Corp.

Apex Drug Stores, Inc.

Broadview and Wallings - Broadview Heights Ohio, Inc.

Dominion Drug Stores Corp.

Eagle Managed Care Corp.

England Street-Asheland Corporation

GDF, Inc.

Harco, Inc.

K&B Alabama Corporation

K&B Louisiana Corporation

K&B Mississippi Corporation

K&B Services, Incorporated

K&B Tennessee Corporation

K&B Texas Corporation

K&B, Incorporated

Keystone Centers, Inc.

Lakehurst and Broadway Corporation

P.L.D. Enterprises, Inc.

Patton Drive and Navy Boulevard Property Corporation

PDS-1 Michigan, Inc.

Perry Distributors, Inc.

Perry Drug Stores, Inc.

PL Xpress, Inc.

Ram-Utica, Inc.

RDS Detroit, Inc.

Read’s Inc.

Rite Aid Drug Palace, Inc.

Rite Aid Hdqtrs. Corp

Rite Aid Hdqtrs. Funding, Inc.

Rite Aid of Alabama, Inc.

Rite Aid of Connecticut, Inc.

 

 

Rite Aid of Delaware, Inc.

Rite Aid of Florida, Inc.

Rite Aid of Georgia, Inc.

Rite Aid of Illinois, Inc.

Rite Aid of Indiana, Inc.

Rite Aid of Kentucky, Inc.

Rite Aid of Maryland, Inc.

Rite Aid of Massachusetts, Inc.

Rite Aid of Michigan, Inc.

Rite Aid of New Hampshire, Inc.

Rite Aid of New Jersey, Inc.

Rite Aid of New York, Inc.

Rite Aid of North Carolina, Inc.

Rite Aid of Pennsylvania, Inc.

Rite Aid of South Carolina, Inc.

Rite Aid of Tennessee, Inc.

Rite Aid of Virginia, Inc.

Rite Aid of Washington, D.C., Inc.

Rite Aid Realty Corp.

Rite Aid Rome Distribution Center, Inc.

Rite Aid Transport, Inc.

Rite Fund, Inc.

Rite Investments Corp.

Rx Choice, Inc.

The Muir Company

Thrifty Corporation

Virginia Corporation

 

Limited Liability Companies

 

764 South Broadway - Geneva, Ohio, LLC

Eighth and Water Streets - Urichsville, Ohio, LLC

Gettysburg and Hoover-Dayton, Ohio, LLC

Mayfield & Chillicothe Roads - Chesterland, LLC

Munson & Andrews, LLC

Silver Springs Road - Baltimore, Maryland/One, LLC

Silver Springs Road - Baltimore, Maryland/Two, LLC

State Street and Hill Road-Gerard, Ohio, LLC

112 Burleigh Avenue Norfolk, LLC

1515 West State Street Boise, Idaho, LLC

1740 Associates, L.L.C.

Ann & Government Streets - Mobile, Alabama, LLC

Central Avenue and Main Street - Petal, MS, LLC

Fairground, L.L.C.

Name Rite, L.L.C.

Northline & Dix - Toledo - Southgate, LLC

 

2

 

Paw Paw Lake Road & Paw Paw Avenue - Coloma, Michigan, LLC

Seven Mile and Evergreen - Detroit, LLC

State & Fortification Streets - Jackson, Mississippi, LLC

Tyler and Sanders Roads, Birmingham - Alabama, LLC

Rite Aid Services, L.L.C.

 

3

 

EXHIBIT A

 

[FORM OF FACE OF SECURITY]

 

[Global Securities Legend]

 

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.

 

TRANSFERS OF
THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART,
TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO
ON THE REVERSE HEREOF.

 

 [Definitive Securities Legend]

 

IN CONNECTION
WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT
SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY
REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

 

 

[FORM OF FACE OF SECURITY]

 

	
  No.:

  	
   

  	
  [up to]**$

  	
   

  

 

   %
Senior Secured Note due 2017

 

CUSIP No.    

 

ISIN No.    

 

RITE AID
CORPORATION, a Delaware corporation, promises to pay to [Cede &
Co.]**, or registered assigns, the principal sum [of [    ]
Dollars]* [as set forth on the Schedule of Increases or Decreases annexed
hereto]** on February    , 2017.

 

Interest
Payment Dates: February     and August    ,
commencing on August    , 2007.

 

Record
Dates:  February    
and August    .

 

 

*  Insert for Definitive
Securities.

** Insert for Global Securities. If the Security is to be issued in
global form, add the Global Securities Legend from Exhibit 1 and the
attachment from such Exhibit 1 captioned “TO BE ATTACHED TO GLOBAL
SECURITIES - SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY”.

 

2

 

Additional provisions of this Security are
set forth on the other side of this Security.

 

IN WITNESS
WHEREOF, the parties have caused this instrument to be duly executed.

 

	
   

  	
  RITE AID CORPORATION,

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
    Name:

  
	
   

  	
    Title:

  

 

TRUSTEE’S CERTIFICATE OF

AUTHENTICATION

 

Dated:

 

BNY MIDWEST TRUST COMPANY,

 

as Trustee, certifies

that this is one of

the Securities referred

to in the Indenture.

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Signatory

  	
   

  

 

3

 

[FORM OF
REVERSE SIDE OF SECURITY]

 

   %
Senior Secured Note due 2017

 

1. Interest

 

RITE AID
CORPORATION, a Delaware corporation (such corporation, and its successors
and assigns under the Indenture hereinafter referred to, being herein called
the “Company”), promises to pay interest on the principal amount of this
Security at the rate per annum shown above. The Company will pay interest
semiannually on February     and August    
of each year, commencing August    , 2007. Interest on the
Securities will accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from February    ,
2007. Interest shall be computed on the basis of a 360-day year of twelve 30-day
months. The Company shall pay interest on overdue principal at the rate per
annum borne by the Securities plus 1% per annum, and it shall pay interest on
overdue installments of interest at the rate per annum borne by the Securities
to the extent lawful.

 

 

4

 

2. Method
of Payment

 

The Company
will pay interest on the Securities (except defaulted interest) to the Persons
who are registered Holders at the close of business on the February    
or August     next preceding the interest payment date even
if Securities are canceled after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States of America that at the time of payment is legal tender for
payment of public and private debts. Payments in respect of the Securities
represented by a Global Security (including principal and interest) will be
made by wire transfer of immediately available funds to the accounts specified
by the Depository. The Company will make all payments in respect of a
Definitive Security (including principal and interest), by mailing a check to
the registered address of each Holder thereof; provided, however,
that payments on the Securities may also be made, in the case of a Holder
of at least $1,000,000 aggregate principal amount of Securities, by wire
transfer to a U.S. dollar account maintained by the payee with a bank in the
United States if such Holder elects payment by wire transfer by giving
written notice to the Trustee or the Paying Agent to such effect designating such
account no later than 30 days immediately preceding the relevant due date
for payment (or such other date as the Trustee may accept in its
discretion).

 

3. Paying
Agent and Registrar

 

Initially, BNY
Midwest Trust Company, an Illinois trust company (the “Trustee”), will act as
Paying Agent and Registrar. The Company may appoint and change any Paying
Agent, Registrar or co-registrar without notice. The Company or any of its
domestically incorporated Wholly Owned Subsidiaries may act as Paying
Agent, Registrar or co-registrar.

 

4. Indenture

 

The Company
issued the Securities under an Indenture dated as of February    ,
2007 (the “Indenture”), among the Company, the Subsidiary Guarantors named
therein and the Trustee. The terms of the Securities include those stated in
the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in
effect on the date of the Indenture (the “TIA”). Terms defined in the Indenture
and not defined in the Securities have the meanings ascribed thereto in the
Indenture. The Securities are subject to all such terms, and Holders are
referred to the Indenture and the TIA for a statement of those terms.

 

The Securities
are unsecured, unsubordinated obligations of the Company. The Company’s
obligations under the Securities are Guaranteed, subject to certain
limitations, by the Subsidiary Guarantors pursuant to Subsidiary Guarantees,
subject to release of the Subsidiary Guarantees as provided in the Indenture or
such Subsidiary Guarantee. This Security is one of the Original Securities
referred to in the Indenture issued in an aggregate principal amount of $300,000,000.
The Securities include the Original Securities and an unlimited aggregate
principal amount of additional Initial Securities that may be issued under
the Indenture. The Original Securities and such additional Initial Securities
are treated as a single class of securities under the Indenture. The
Indenture imposes certain limitations on the ability of the Company and its
Restricted Subsidiaries to, among other things, make certain Investments and
other Restricted Payments, pay dividends 

 

5

 

and other distributions, incur Debt, enter into consensual restrictions
upon the payment of certain dividends and distributions by such Restricted
Subsidiaries, enter into or permit certain transactions with Affiliates, create
or incur Liens and make Asset Sales. The Indenture also imposes limitations on
the ability of the Company and each Subsidiary Guarantor to consolidate or
merge with or into any other Person or sell, transfer, assign, lease, convey or
otherwise dispose of all or substantially all of the Property of the Company or
such Subsidiary Guarantor.

 

5. Optional
Redemption

 

The Company may choose
to redeem the Securities at any time. If it does so, it may redeem all or
any portion of the Securities, at once or over time, after giving the required
notice under the Indenture.

 

To redeem the
Securities prior to February    , 2012, the Company must
pay a redemption price equal to 100% of the principal amount of the Securities
to be redeemed plus the Applicable Premium as of, and accrued and unpaid
interest, if any, to, the Redemption Date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
Interest Payment Date that is on or prior to the Redemption Date). Any notice
to Holders of such a redemption shall include the appropriate calculation of
the Redemption Price, but need not include the Redemption Price itself. The
actual redemption price must be set forth in an Officers’ Certificate delivered
to the Trustee no later than two Business Days prior to the Redemption Date.

 

“Applicable
Premium” means, with respect to any Security on any Redemption Date, the
greater of (i) 1.0% of the principal amount of such Security and (ii) the
excess of (A) the present value at such Redemption Date of (1) the
Redemption Price of such Security at February    , 2012
(such Redemption Price being set forth in the table below) plus (2) all
required interest payments due on such Security through February    ,
2012 (excluding accrued but unpaid interest), computed using a discount rate
equal to the Treasury Rate on such Redemption Date plus 75 basis points over (B) the
principal amount of such Security.

 

“Treasury Rate”
means, as of any Redemption Date, the yield to maturity as of such Redemption
Date of United States Treasury securities with a constant maturity (as compiled
and published in the most recent Federal Reserve Statistical Release H.15 (519)
that has become publicly available at least two Business Days prior to the
Redemption Date (or, if such statistical release is no longer published, any
publicly available source of similar market data)) most nearly equal to the
period from the Redemption Date to February    , 2012; provided,
however, that if the period from the Redemption Date to February    ,
2012 is less than one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one year shall be
used.

 

On and after February    ,
2012, the Company may redeem the Securities in whole at any time or in part from
time to time at the following Redemption Prices (expressed in percentages of principal
amount), plus accrued and unpaid interest, if any, to, but not including, the
Redemption Date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant Interest Payment Date that
is on or prior to the Redemption Date), if redeemed during the 12-month period
beginning on February     of the years set forth below:

 

6

 

	
  Redemption Period

  	
   

  	
  Price

  	
   

  
	
  2012

  	
   

  	
     

  	
  %

  
	
  2013

  	
   

  	
     

  	
  %

  
	
  2014

  	
   

  	
     

  	
  %

  
	
  2015 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

Notwithstanding
the foregoing, at any time and from time to time prior to February    ,
2010, the Company may redeem up to 35% of the original aggregate principal
amount of the Securities (including Securities issued after February    ,
2007, if any) with the proceeds from one or more Equity Offerings by the
Company, at a Redemption Price equal to    % of the principal
amount thereof, plus accrued and unpaid interest thereon, if any, to, but not
including, the Redemption Date (subject to the right of Holders of record on
the relevant record date to receive interest due on the relevant Interest
Payment Date that is on or prior to the Redemption Date); provided, however,
that after giving effect to any such redemption, at least 65% of the original
aggregate principal amount of the Securities (including Securities issued after
February    , 2007, if any) remains outstanding. Any such
redemption shall be made within 75 days of such Equity Offering upon not less
than 30 nor more than 60 days’ prior notice.

 

If the
optional Redemption Date is on or after a record date and on or before the
relevant Interest Payment Date, the accrued and unpaid interest, if any, will
be paid to the person or entity in whose name the Security is registered at the
close of business on that record date, and no additional interest will be
payable to Holders whose Securities shall be subject to repurchase.

 

6. Sinking
Fund

 

The Securities are not subject to any sinking
fund.

 

7. Notice
of Redemption

 

Notice of
redemption will be mailed by first-class mail at least 30 days but
not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at his or her registered address. Securities in
denominations larger than $1,000 may be redeemed in part but only in
whole multiples of $1,000. If money sufficient to pay the redemption price of
and accrued interest on all Securities (or portions thereof) to be redeemed on
the redemption date is deposited with the Paying Agent on or before the
redemption date and certain other conditions are satisfied, on and after such
date interest ceases to accrue on such Securities (or such portions thereof)
called for redemption.

 

8. (a)                      Repurchase
of Securities at the Option of Holders upon Change of Control

 

Upon a Change
of Control, any Holder will have the right, subject to certain conditions
specified in the Indenture, to cause the Company to repurchase all or any part of
the Securities of such Holder at a purchase price equal to 101% of the
principal amount of the Securities to be repurchased plus accrued and unpaid
interest, if any, to, but not including, the date of purchase (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date that is on or prior to the date of
purchase) as provided in, and subject to the terms of, the Indenture.

 

7

 

8. (b)                     Prepayment
Offer Upon Asset Sale

 

When the
aggregate amount of Excess Proceeds exceeds $50.0 million (taking into account
income earned on such Excess Proceeds, if any), the Company will be required to
make an offer to purchase (the “Asset Sales Prepayment Offer”) the Securities,
which offer shall be in the amount of the Allocable Excess Proceeds, on a pro
rata basis according to principal amount at maturity, at a purchase price equal
to 100% of the principal amount thereof, plus accrued and unpaid interest, if
any, to, but not including, the purchase date (subject to the right of Holders
of record on the relevant record date to receive interest due on the relevant
Interest Payment Date), in accordance with the procedures (including prorating
in the event of oversubscription) set forth in the Indenture. To the extent
that any portion of the amount of Net Available Cash remains after compliance
with the preceding sentence and provided that all Holders have been given the
opportunity to tender their Securities for purchase in accordance with the
Indenture, the Company or such Restricted Subsidiary may use such remaining
amount for any purpose permitted by the Indenture and the amount of Excess
Proceeds will be reset to zero.

 

9. Guarantees;
Security

 

The Indenture
provides that, under certain circumstances, the Securities will be guaranteed
pursuant to Subsidiary Guarantees. Subsidiary Guarantees may be released
in various circumstances, including in certain circumstances without the
consent of Holders.

 

The Indenture
provides that, under certain circumstances, the Securities or Subsidiary
Guarantees must be secured by Liens on certain Property of the Company or
Subsidiary Guarantors. Liens securing the Securities or Subsidiary Guarantees may be
released in various circumstances, including in certain circumstances without
the consent of Holders.

 

10. Denominations;
Transfer; Exchange

 

The Securities
are in registered form without coupons in denominations of $1,000 and
whole multiples of $2,000. A Holder may transfer or exchange Securities in
accordance with the Indenture. Upon any transfer or exchange, the Registrar and
the Trustee may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be
redeemed) or to transfer or exchange any Securities for a period of
15 days prior to a selection of Securities to be redeemed or 15 days before
an interest payment date.

 

11. Persons
Deemed Owners

 

The registered
Holder of this Security may be treated as the owner of it for all
purposes.

 

8

 

12. Unclaimed
Money

 

If money for
the payment of principal or interest remains unclaimed for two years, the
Trustee or Paying Agent shall pay the money back to the Company at its written
request unless an abandoned property law designates another Person. After any
such payment, Holders entitled to the money must look only to the Company and
not to the Trustee for payment.

 

13. Discharge
and Defeasance

 

Subject to
certain conditions, the Company at any time may terminate some of or all
its obligations under the Securities and the Indenture if the Company deposits
with the Trustee money or U.S. Government Obligations for the payment of
principal and interest on the Securities to redemption or maturity, as the case
may be.

 

14. Amendment,
Waiver, Deemed Consents, Releases

 

Subject to
certain exceptions set forth in the Indenture, (i) the Indenture, the
Second Priority Collateral Documents or the Securities may be amended
without prior notice to any Holder but with the written consent of the Holders
of at least a majority in aggregate principal amount of the outstanding
Securities and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of at least a majority in
principal amount of the outstanding Securities. Subject to certain exceptions
set forth in the Indenture, without the consent of any Holders, the Company,
when authorized by a Board Resolution, the Subsidiary Guarantors and the
Trustee may amend the Indenture or the Securities and, subject to any
other consent required under the terms of the applicable Second Priority
Collateral Documents, the Second Priority Collateral Documents to: (i) cure
any ambiguity, omission, defect or inconsistency; (ii) provide for the
assumption by a successor corporation of the obligations of the Company or any
Subsidiary Guarantor under the Indenture or any Second Priority Collateral
Documents; (iii) provide for uncertificated Securities in addition to or
in place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of Section 163(f) of
the Code, or in a manner such that the uncertificated Securities are described
in Section 163(f)(2)(B) of the Code; (iv) add additional
Guarantees with respect to the Securities or release Subsidiary Guarantors from
Subsidiary Guarantees as provided by the terms of the Indenture or the
Subsidiary Guarantees; (v) further secure the Securities (and if such
security interest includes Liens on Property of the Company, provide for
releases of such Property on terms comparable to the terms on which Collateral
constituting Property of Subsidiary Guarantors may be released), release
all or any portion of the Collateral pursuant to the terms of the Second
Priority Collateral Documents, add to the covenants of the Company or the
Subsidiary Guarantors for the benefit of the Holders or surrender any right or
power conferred upon the Company under the Indenture; (vi) in the case of
the Indenture, make any change that does not adversely affect the rights of any
Holder; (vii) make any change to the subordination provisions of a
Subsidiary Guarantee or any Second Priority Collateral Documents that would
limit or terminate the benefits available to any holder of Senior Obligations
under such provisions; or (viii) make any change to comply with any
requirements of the Commission in connection with the qualification of the
Indenture under the Trust Indenture Act.

 

9

 

Without
limiting the foregoing, the Holders will be deemed to have consented for purposes
of the Second Priority Collateral Documents (including for purposes of
determining actions of the Second Priority Instructing Group) to (i) any
amendment, waiver or other modification (including any consent thereunder) of
the Second Priority Collateral Documents (including any annexes, exhibits or
schedules thereto) that would not be adverse to the Holders in any material
respect, as reasonably determined by the Board of Directors (as evidenced by a
Board Resolution), and (ii) to specified Second Priority Collateral
Documents Amendments.

 

At the request of the Company, the Trustee
shall execute and deliver any documents, instructions or instruments evidencing
such deemed consent of the Holders. The Trustee, in its capacity as Second
Priority Representative to Holders, shall take such action under the Second
Priority Collateral Documents as may be requested by the Company to give
effect to any such amendment, waiver or modification.

 

In addition and without limiting the
foregoing, (x) Collateral securing a Subsidiary Guarantee of the Securities or
(y) a Subsidiary Guarantee of the Securities provided by a Subsidiary Guarantor
may be released only in respect of the Securities (i) upon request of
the Company without consent of any Holder unless, within 20 Business Days after
written notice of the proposed release of such (1) Collateral from the
Liens securing Subsidiary Guarantees of the Securities or (2) Subsidiary
Guarantor, as the case may be, is mailed to the Trustee and the Holders,
Holders of 25% of the outstanding principal amount of Securities deliver to the
Company a written objection to such release; or (ii) with the written
consent of the Holders of at least a majority of the aggregate principal amount
of the Securities then outstanding.

 

Under the circumstances described in clauses (i) and
(ii) above, Holders shall also be deemed to have consented to such release
for purposes of any consent required under the Second Priority Collateral
Documents (including for purposes of determining actions of the Second Priority
Instructing Group), subject to any other consent required under the Second
Priority Collateral Documents.

 

At the request of the Company, the Trustee
shall execute and deliver any documents, instructions or instruments evidencing
the consent of the Holders to such release. The Trustee, in its capacity as
Second Priority Representative for Holders, shall take such action under the
Second Priority Collateral Documents or otherwise as may be requested by
the Company to give effect to any such release.

 

15. Defaults
and Remedies

 

If an Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
aggregate principal amount of the Securities then outstanding, subject to
certain limitations, may declare all the Securities to be immediately due
and payable. Certain events of bankruptcy or insolvency are Events of Default
and shall result in the Securities being immediately due and payable upon the
occurrence of such Events of Default without any further act of the Trustee or
any Holder.

 

Holders of
Securities may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture
or the Securities 

 

10

 

unless it receives reasonable indemnity or security. Subject to certain
limitations, Holders of a majority in aggregate principal amount of the
Securities then outstanding may direct the Trustee in its exercise of any
trust or power under the Indenture. The Holders of a majority in aggregate
principal amount of the Securities then outstanding, by written notice to the
Company and the Trustee, may rescind any declaration of acceleration and
its consequences if the rescission would not conflict with any judgment or
decree, and if all existing Events of Default have been cured or waived except
nonpayment of principal, premium or interest that has become due solely because
of the acceleration.

 

16. Trustee
Dealings with the Company

 

Subject to
certain limitations imposed by the TIA, 
the Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise
deal with and collect obligations owed to it by the Company or its Affiliates
and may otherwise deal with the Company or its Affiliates with the same
rights it would have if it were not Trustee.

 

17. No
Recourse Against Others

 

A director,
officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release are part of
the consideration for the issue of the Securities.

 

18. Successors

 

Subject to
certain exceptions set forth in the Indenture, when a successor assumes all the
obligations of its predecessor under the Securities and the Indenture in
accordance with the terms of the Indenture, the predecessor will be released
from those obligations.

 

19. Authentication

 

This Security
shall not be valid until an authorized signatory of the Trustee (or an
authenticating agent) manually signs the certificate of authentication on the
other side of this Security.

 

20. Abbreviations

 

Customary
abbreviations may be used in the name of a Securityholder or an assignee,
such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT
TEN (=joint tenants with rights of survivorship and not as tenants in common),
CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).

 

21. Governing
Law

 

THIS SECURITY SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK BUT 

 

11

 

WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW.

 

22. CUSIP
Numbers

 

Pursuant to a
recommendation promulgated by the Committee on Uniform Security
Identification Procedures, the Company has caused CUSIP numbers to be printed
on the Securities and has directed the Trustee to use CUSIP numbers in notices
of redemption as a convenience to Securityholders. No representation is made as
to the accuracy of such numbers either as printed on the Securities or as
contained in any notice of redemption and reliance may be placed only on
the other identification numbers placed thereon.

 

The Company will furnish to any Holder upon
written request and without charge to the Holder a copy of the Indenture which
has in it the text of this Security.

 

12

 

ASSIGNMENT FORM

 

To assign this
Security, fill in the form below:

 

I or we assign
and transfer this Security to

 

(Print or type
assignee’s name, address and zip code)

 

(Insert
assignee’s soc. sec. or tax I.D. No.)

 

and
irrevocably
appoint                          as
agent to transfer this Security on the books of the Company. The agent may substitute
another to act for him.

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
    Your Signature:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Sign exactly as your name appears on the
  other side of this Security.

  
	
   

  	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature must be guaranteed by a
  participant in a recognized signature guaranty medallion program or other
  signature guarantor acceptable to the Trustee

  	
   

  	
  Signature of Signature Guarantee

  
										

 

 

[TO BE ATTACHED TO GLOBAL
SECURITIES]

 

SCHEDULE OF
INCREASES OR DECREASES IN GLOBAL SECURITY

 

The initial
principal amount of this Global Security is
$[        ]. The following increases or
decreases in this Global Security have been made:

 

	
  Date of

  Exchange

  	
   

  	
  Amount of decrease in

  Principal Amount of this

  Global Security

  	
   

  	
  Amount of increase in

  Principal Amount of this

  Global Security

  	
   

  	
  Principal amount of this

  Global Security following

  such decrease or increase

  	
   

  	
  Signature of authorized

  signatory of Trustee or

  Securities Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

2

 

OPTION
OF HOLDER TO ELECT PURCHASE

 

If you
want to elect to have this Security purchased by the Company pursuant to Section 4.06
(Asset Sale) or 4.13 (Change of Control) of the Indenture, check the box:

 

o

 

If you
want to elect to have only part of this Security purchased by the Company
pursuant to Section 4.06 or 4.13 of the Indenture, state the amount:

 

$

 

	
  Date:

  	
   

  	
    Your Signature:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Sign exactly as your name appears on the
  other side of the Security)

  
	
   

  	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature must be guaranteed by a
  participant in a recognized signature guaranty medallion program or other
  signature guarantor acceptable to the Trustee.

  
									

 

3Exhibit 4.15

 

RITE AID CORPORATION

 

   % Senior Notes due 2015

 

 

INDENTURE

 

Dated as of February    , 2007

 

 

BNY Midwest Trust Company,

 

Trustee

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE I

  	
   

  
	
   

  	
   

  
	
  Definitions and Incorporation
  by Reference

  	
   

  
	
   

  	
   

  
	
  SECTION 1.01. Definitions.

  	
  1

  
	
  SECTION 1.02. Other
  Definitions.

  	
  29

  
	
  SECTION 1.03. Incorporation
  by Reference of Trust Indenture Act

  	
  30

  
	
  SECTION 1.04. Rules of
  Construction

  	
  30

  
	
   

  	
   

  
	
  ARTICLE II

  	
   

  
	
   

  	
   

  
	
  The Securities

  	
   

  
	
   

  	
   

  
	
  SECTION 2.01. Amount of
  Securities; Issuable in Series

  	
  31

  
	
  SECTION 2.02. Form and Dating

  	
  32

  
	
  SECTION 2.03. Execution and
  Authentication

  	
  32

  
	
  SECTION 2.04. Registrar and
  Paying Agent

  	
  33

  
	
  SECTION 2.05. Paying Agent To
  Hold Money in Trust

  	
  33

  
	
  SECTION 2.06. Holder Lists

  	
  34

  
	
  SECTION 2.07. Replacement
  Securities

  	
  34

  
	
  SECTION 2.08. Outstanding
  Securities

  	
  34

  
	
  SECTION 2.09. Temporary
  Securities

  	
  34

  
	
  SECTION 2.10. Cancellation

  	
  35

  
	
  SECTION 2.11. Defaulted
  Interest

  	
  35

  
	
  SECTION 2.12. CUSIP Numbers

  	
  35

  
	
   

  	
   

  
	
  ARTICLE III

  	
   

  
	
   

  	
   

  
	
  Redemption

  	
   

  
	
   

  	
   

  
	
  SECTION 3.01. Notices to
  Trustee

  	
  35

  
	
  SECTION 3.02. Selection of
  Securities To Be Redeemed

  	
  36

  
	
  SECTION 3.03. Notice of
  Redemption

  	
  36

  
	
  SECTION 3.04. Effect of
  Notice of Redemption

  	
  36

  
	
  SECTION 3.05. Deposit of
  Redemption Price

  	
  36

  
	
  SECTION 3.06. Securities
  Redeemed in Part

  	
  36

  
	
   

  	
   

  
	
  ARTICLE IV

  	
   

  
	
   

  	
   

  
	
  Covenants

  	
   

  
	
   

  	
   

  
	
  SECTION 4.01. Payment of
  Securities

  	
  36

  
	
  SECTION 4.02. SEC Reports

  	
  36

  
	
  SECTION 4.03. Limitation on
  Debt

  	
  36

  
	
  SECTION 4.04. Limitation on
  Restricted Payments

  	
  36

  

 

2

 

	
  SECTION 4.05. Limitation on Liens

  	
  36

  
	
  SECTION 4.06. Limitation on
  Asset Sales

  	
  36

  
	
  SECTION 4.07. Limitation on
  Restrictions on Distributions from Restricted Subsidiaries

  	
  36

  
	
  SECTION 4.08. Limitation on
  Transactions with Affiliates

  	
  36

  
	
  SECTION 4.09. Limitation on
  Guarantees by Restricted Subsidiaries

  	
  36

  
	
  SECTION 4.10. Limitation on
  Sale and Leaseback Transactions

  	
  36

  
	
  SECTION 4.11. Designation of
  Restricted and Unrestricted Subsidiaries

  	
  36

  
	
  SECTION 4.12. Change of
  Control

  	
  36

  
	
  SECTION 4.13. Further
  Instruments and Acts

  	
  36

  
	
  SECTION 4.14. Covenant
  Suspension

  	
  36

  
	
   

  	
   

  
	
  ARTICLE V

  	
   

  
	
   

  	
   

  
	
  Successor Company

  	
   

  
	
   

  	
   

  
	
  SECTION 5.01. When Company
  May Merge or Transfer Assets

  	
  36

  
	
   

  	
   

  
	
  ARTICLE VI

  	
   

  
	
   

  	
   

  
	
  Defaults and Remedies

  	
   

  
	
   

  	
   

  
	
  SECTION 6.01. Events of
  Default

  	
  36

  
	
  SECTION 6.02. Acceleration

  	
  36

  
	
  SECTION 6.03. Other Remedies

  	
  36

  
	
  SECTION 6.04. Waiver of Past
  Defaults

  	
  36

  
	
  SECTION 6.05. Control by
  Majority

  	
  36

  
	
  SECTION 6.06. Limitation on
  Suits

  	
  36

  
	
  SECTION 6.07. Rights of
  Holders to Receive Payment

  	
  36

  
	
  SECTION 6.08. Collection Suit
  by Trustee

  	
  36

  
	
  SECTION 6.09. Trustee May
  File Proofs of Claim

  	
  36

  
	
  SECTION 6.10. Priorities

  	
  36

  
	
  SECTION 6.11. Undertaking for
  Costs

  	
  36

  
	
  SECTION 6.12. Waiver of Stay
  or Extension Laws

  	
  36

  
	
   

  	
   

  
	
  ARTICLE VII

  	
   

  
	
   

  	
   

  
	
  Trustee

  	
   

  
	
   

  	
   

  
	
  SECTION 7.01. Duties of
  Trustee

  	
  36

  
	
  SECTION 7.02. Rights of
  Trustee

  	
  36

  
	
  SECTION 7.03. Individual
  Rights of Trustee

  	
  36

  
	
  SECTION 7.04. Trustee’s
  Disclaimer

  	
  36

  
	
  SECTION 7.05. Notice of
  Defaults

  	
  36

  
	
  SECTION 7.06. Reports by
  Trustee to Holders

  	
  36

  
	
  SECTION 7.07. Compensation
  and Indemnity

  	
  36

  
	
  SECTION 7.08. Replacement of
  Trustee

  	
  36

  

 

3

 

	
  SECTION 7.09. Successor
  Trustee by Merger

  	
  36

  
	
  SECTION 7.10. Eligibility;
  Disqualification

  	
  36

  
	
  SECTION 7.11. Preferential
  Collection of Claims Against Company

  	
  36

  
	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  
	
   

  	
   

  
	
  Discharge of Indenture; Defeasance

  	
   

  
	
   

  	
   

  
	
  SECTION 8.01. Discharge of
  Liability on Securities; Defeasance

  	
  36

  
	
  SECTION 8.02. Conditions to
  Defeasance

  	
  36

  
	
  SECTION 8.03. Application of
  Trust Money

  	
  36

  
	
  SECTION 8.04. Repayment to
  Company

  	
  36

  
	
  SECTION 8.05. Indemnity for
  Government Obligations

  	
  36

  
	
  SECTION 8.06. Reinstatement

  	
  36

  
	
   

  	
   

  
	
  ARTICLE IX

  	
   

  
	
   

  	
   

  
	
  Amendments

  	
   

  
	
   

  	
   

  
	
  SECTION 9.01. Without Consent
  of Holders

  	
  36

  
	
  SECTION 9.02. With Consent of
  Holders

  	
  36

  
	
  SECTION 9.03. Compliance with
  Trust Indenture Act

  	
  36

  
	
  SECTION 9.04. Revocation and
  Effect of Consents and Waivers

  	
  36

  
	
  SECTION 9.05. Notation on or
  Exchange of Securities

  	
  36

  
	
  SECTION 9.06. Trustee To Sign
  Amendments

  	
  36

  
	
  SECTION 9.07. Payment for
  Consent

  	
  36

  
	
   

  	
   

  
	
  ARTICLE X

  	
   

  
	
   

  	
   

  
	
  Miscellaneous

  	
   

  
	
   

  	
   

  
	
  SECTION 10.01. Trust
  Indenture Act Controls

  	
  36

  
	
  SECTION 10.02. Notices

  	
  36

  
	
  SECTION 10.03. Communication
  by Holders with Other Holders

  	
  36

  
	
  SECTION 10.04. Certificate
  and Opinion as to Conditions Precedent

  	
  36

  
	
  SECTION 10.05. Statements
  Required in Certificate or Opinion

  	
  36

  
	
  SECTION 10.06. When
  Securities Disregarded

  	
  36

  
	
  SECTION 10.07. Rules by
  Trustee, Paying Agent and Registrar

  	
  36

  
	
  SECTION 10.08. Governing Law

  	
  36

  
	
  SECTION 10.09. No Recourse
  Against Others

  	
  36

  
	
  SECTION 10.10. Successors

  	
  36

  
	
  SECTION 10.11. Multiple
  Originals

  	
  36

  
	
  SECTION 10.12. Table of
  Contents; Headings

  	
  36

  

 

 

	
  Exhibit 1

  	
  -

  	
  Form of Security

  

 

 

CROSS-REFERENCE TABLE

 

	
  TIA

  	
   

  	
  Indenture

  
	
  Section

  	
   

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  	
   

  
	
  310

  	
  (a)(1)

  	
  7.10

  
	
   

  	
  (a)(2)

  	
  7.10

  
	
   

  	
  (a)(3)

  	
  N.A.

  
	
   

  	
  (a)(4)

  	
  N.A.

  
	
   

  	
  (b)

  	
  7.08;

  
	
   

  	
   

  	
  7.10

  
	
   

  	
  (c)

  	
  N.A.

  
	
  311

  	
  (a)

  	
  7.11

  
	
   

  	
  (b)

  	
  7.11

  
	
   

  	
  (c)

  	
  N.A.

  
	
  312

  	
  (a)

  	
  2.06

  
	
   

  	
  (b)

  	
  10.03

  
	
   

  	
  (c)

  	
  10.03

  
	
  313

  	
  (a)

  	
  7.06

  
	
   

  	
  (b)(1)

  	
  N.A.

  
	
   

  	
  (b)(2)

  	
  7.06

  
	
   

  	
  (c)

  	
  7.06;

  
	
   

  	
   

  	
  10.02

  
	
   

  	
  (d)

  	
  7.06

  
	
  314

  	
  (a)

  	
  4.02;

  
	
   

  	
   

  	
  10.02

  
	
   

  	
  (b)

  	
  N.A.

  
	
   

  	
  (c)(1)

  	
  10.04

  
	
   

  	
  (c)(2)

  	
  10.04

  
	
   

  	
  (c)(3)

  	
  N.A.

  
	
   

  	
  (d)

  	
  N.A.

  
	
   

  	
  (e)

  	
  10.05

  
	
   

  	
  (f)

  	
  4.13

  
	
  315

  	
  (a)

  	
  7.01

  
	
   

  	
  (b)

  	
  7.05;

  
	
   

  	
   

  	
  10.02

  
	
   

  	
  (c)

  	
  7.01

  
	
   

  	
  (d)

  	
  7.01

  
	
   

  	
  (e)

  	
  6.11

  
	
  316

  	
  (a)

  	
   

  
	
   

  	
  (last
  sentence)

  	
  10.06

  
	
   

  	
  (a)(1)(A)

  	
  6.05

  
	
   

  	
  (a)(1)(B)

  	
  6.04

  
	
   

  	
  (a)(2)

  	
  N.A.

  
	
   

  	
  (b)

  	
  6.07

  
	
  317

  	
  (a)(1)

  	
  6.08

  
	
   

  	
  (a)(2)

  	
  6.09

  
	
   

  	
  (b)

  	
  2.05

  
	
  318

  	
  (a)

  	
  10.01

  

 

N.A. Means Not Applicable.

 

Note:  This Cross-Reference Table shall not, for any
purposes, be deemed to be part of this Indenture.

 

 

INDENTURE dated as of February     ,
2007, between RITE AID CORPORATION, a Delaware corporation (the “Company”), and
BNY MIDWEST TRUST COMPANY, an Illinois trust company, as Trustee (the
“Trustee”).

 

Each party
agrees as follows for the benefit of the other party and for the equal and
ratable benefit of the Holders of the Company’s     %
Senior Notes due 2015, to be issued, from time to time, in one or more series
as provided in this Indenture (the “Initial Securities”):

 

ARTICLE I

Definitions and Incorporation by Reference

 

SECTION 1.01. Definitions.

 

“    %
Notes” means the Company’s     % Senior Secured Notes
due 2017 issued under the Indenture dated as of February     ,
2007, among the Company, the subsidiary guarantors party thereto and BNY
Midwest Trust Company, as trustee, and outstanding on the Issue Date.

 

“Additional
Assets” means:

 

(a) any
Property (other than cash, cash equivalents and securities) to be owned by the
Company or any Restricted Subsidiary and used in a Related Business; or

 

(b) Capital
Stock of a Person that becomes a Restricted Subsidiary as a result of the
acquisition of such Capital Stock by the Company or another Restricted
Subsidiary from any Person other than the Company or an Affiliate of the
Company; provided, however, that, in the case of this
clause (b), such Restricted Subsidiary is primarily engaged in a Related
Business.

 

“Affiliate”
of any specified Person means:

 

(a) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person; or

 

(b) any other
Person who is a director or executive officer of:

 

(1) such
specified Person;

 

(2) any
Subsidiary of such specified Person; or

 

(3) any Person
described in clause (a) above.

 

 

For the
purposes of this definition, “control” when used with respect to any Person
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms “controlling” and “controlled” have meanings
correlative to the foregoing.

 

For purposes
of this definition, after the Jean Coutu Acquisition, Jean Coutu Group (PJC),
LLC and its Affiliates shall be “Affiliates” of the Company so long as Jean
Coutu Group (PJC), LLC beneficially owns more than 10% of the Voting Stock of
the Company.

 

 “Asset Sale” means any sale, lease,
transfer, issuance or other disposition (or series of related sales, leases,
transfers, issuances or dispositions) by the Company or any Restricted
Subsidiary, including any disposition by means of a merger, consolidation or
similar transaction (each referred to for the purposes of this definition as a
“disposition”), of:

 

(a) any shares
of Capital Stock of a Restricted Subsidiary (other than directors’ qualifying
shares); or

 

(b) any other
assets of the Company or any Restricted Subsidiary outside of the ordinary
course of business of the Company or such Restricted Subsidiary,

 

in the case of
either clause (a) or clause (b) above, whether in a single
transaction or a series of related transactions, (i) that have a Fair
Market Value in excess of $15 million or (ii) for aggregate
consideration in excess of $15 million, other than, in the case of
clause (a) or (b) above:

 

(1) any
disposition by a Restricted Subsidiary to the Company or by the Company or a
Restricted Subsidiary to a Wholly Owned Restricted Subsidiary;

 

(2) any
disposition that constitutes a Permitted Investment or Restricted Payment
permitted by Section 4.04;

 

(3) any
disposition effected in compliance with Section 5.01(a);

 

(4) a sale of
accounts receivable and related assets of the type specified in the definition
of “Qualified Receivables Transaction” to a Receivables Entity;

 

(5) a transfer
of accounts receivable and related assets of the type specified in the
definition of “Qualified Receivables Transaction” (or a fractional undivided
interest therein) by a Receivables Entity in connection with a Qualified
Receivables Transaction; or

 

(6) a sale by
the Company or a Restricted Subsidiary of Property by way of a Sale and
Leaseback Transaction but only if (A) such Property 

 

2

 

was owned by
the Company or a Restricted Subsidiary on or after the Issue Date, (B) the
requirements of clause (a) of Section 4.10 are satisfied with respect to such
Sale and Leaseback Transaction, (C) the requirements of clauses (a), (b) and
(c) of the first paragraph of Section 4.06 are satisfied as though such Sale and
Leaseback Transaction constituted an Asset Sale and (D) the aggregate Fair
Market Value of such Property, when added to the Fair Market Value of all other
sales of Property pursuant to this clause (6) since the Issue Date, does
not exceed $150 million.

 

“Attributable
Debt” in respect of a Sale and Leaseback Transaction means, at any date of
determination:

 

(a) if such
Sale and Leaseback Transaction is a Capital Lease Obligation, the amount of
Debt represented thereby according to the definition of “Capital Lease
Obligation,” and

 

(b) in all
other instances, the greater of:

 

(1) the Fair
Market Value of the Property subject to such Sale and Leaseback Transaction;
and

 

(2) the
present value (discounted at the interest rate borne by the Securities,
compounded annually) of the total obligations of the lessee for rental payments
during the remaining term of the lease included in such Sale and Leaseback
Transaction (in each case including any period for which such lease has been
extended).

 

“Average
Life” means, as of any date of determination, with respect to any Debt or
Preferred Stock, the quotient obtained by dividing:

 

(a) the sum of
the product of the numbers of years (rounded to the nearest one-twelfth of one
year) from the date of determination to the dates of each successive scheduled
principal payment of such Debt or redemption or similar payment with respect to
such Preferred Stock multiplied by the amount of such payment by

 

(b) the sum of
all such payments.

 

“Board of
Directors” means the Board of Directors of the Company or any duly
authorized and constituted committee thereof.

 

“Board
Resolution” means a copy of a resolution certified by the Secretary or an
Assistant Secretary of the Company to have been duly adopted by the Board of
Directors and to be in full force and effect on the date of such certification,
and delivered to the Trustee.

 

3

 

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

 

“Capital
Lease Obligations” means any obligation under a lease that is required to
be capitalized for financial reporting purposes in accordance with GAAP; and
the amount of Debt represented by such obligation shall be the capitalized
amount of such obligations determined in accordance with GAAP; and the Stated
Maturity thereof shall be the date of the last payment of rent or any other amount
due under such lease prior to the first date upon which such lease may be
terminated by the lessee without payment of a penalty. For purposes of Section
4.05, a Capital Lease Obligation shall be deemed secured by a Lien on the
Property being leased.

 

“Capital
Stock” means, with respect to any Person, any shares or other equivalents
(however designated) of any class of corporate stock or partnership interests
or any other participations, rights, warrants, options or other interests in
the nature of an equity interest in such Person, including Preferred Stock, but
excluding any debt security convertible or exchangeable into such equity
interest.

 

“Capital
Stock Sale Proceeds” means the aggregate cash proceeds received by the
Company from the issuance or sale (other than to a Subsidiary of the Company or
an employee stock ownership plan or trust established by the Company or any
such Subsidiary for the benefit of their employees) by the Company of its
Capital Stock (other than Disqualified Stock) after the February 12, 2003,
net of attorneys’ fees, accountants’ fees, underwriters’ or placement agents’
fees, discounts or commissions and brokerage, consultant and other fees
actually incurred in connection with such issuance or sale and net of taxes
paid or payable as a result thereof.

 

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

 

(a) if any
“person” or “group” (as such terms are used in Sections 13(d) and 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
(other than one or more Permitted Holders), becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
40% or more of the total voting power of the Voting Stock of the Company (for
purposes of this clause (a), 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 Voting Stock of such parent corporation); or

 

(b) the sale, transfer,
assignment, lease, conveyance or other disposition, directly or indirectly, of
all or substantially all the assets of the Company and the Restricted
Subsidiaries, considered as a whole (other than a disposition of such assets as
an entirety or virtually as an entirety to a Wholly Owned Restricted

 

4

 

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 of the Company is reclassified into or exchanged
for cash, securities or other Property, other than any such transaction where:

 

(1) the
outstanding Voting Stock of the Company is reclassified into or exchanged for
other Voting Stock of the Company or for Voting Stock of the surviving
corporation; and

 

(2) 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

 

(c) 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

 

(d) the
shareholders of the Company shall have approved any plan of liquidation or
dissolution of the Company.

 

“Code”
means the Internal Revenue Code of 1986, as amended.

 

“Commission”
means the Securities and Exchange Commission, as from time to time constituted,
created under the Exchange Act, or, if at any time after the execution of this
Indenture such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act, then the body performing such
duties at such time.

 

“Commodity
Price Protection Agreement” means, in respect of a Person, any forward
contract, commodity swap agreement, commodity option agreement or other similar
agreement or arrangement designed to protect such Person against fluctuations
in commodity prices.

 

“Company”
means the Person named as the “Company” in the first paragraph of this
Indenture until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter “Company” shall mean
such successor Person and, for purposes of any provision contained herein and
expressly required by the TIA, each other obligor on the indenture securities.

 

5

 

“Consolidated
Interest Coverage Ratio” means, as of any date of determination, the ratio
of:

 

(a) the
aggregate amount of EBITDA for the most recent four consecutive fiscal quarters
for which internal financial statements are available prior to such
determination date to

 

(b)
Consolidated Interest Expense for such four fiscal quarters;

 

provided,
however, that:

 

(1) if

 

(A) since the beginning of such period the
Company or any Restricted Subsidiary has Incurred any Debt that remains
outstanding or Repaid any Debt; or

 

(B) the transaction giving rise to the need
to calculate the Consolidated Interest Coverage Ratio is an Incurrence or
Repayment of Debt,

 

Consolidated Interest Expense for such period shall be calculated after
giving effect on a pro forma basis to such Incurrence or Repayment as if such
Debt was Incurred or Repaid on the first day of such period, provided
that, in the event of any such Repayment of Debt, EBITDA for such period shall
be calculated as if the Company or such Restricted Subsidiary had not earned
any interest income actually earned during such period in respect of the funds
used to Repay such Debt, and

 

(2) if

 

(A) since the beginning of such period the
Company or any Restricted Subsidiary shall have made any Asset Sale or an
Investment (by merger or otherwise) in any Restricted Subsidiary (or any Person
which becomes a Restricted Subsidiary) or an acquisition of Property which
constitutes all or substantially all of an operating unit of a business;

 

(B) the transaction giving rise to the need
to calculate the Consolidated Interest Coverage Ratio is such an Asset Sale,
Investment or acquisition; or

 

(C) since the beginning of such period any
Person (that subsequently became a Restricted Subsidiary or was merged with or
into the Company or any Restricted Subsidiary since the beginning of such
period) shall have made such an Asset Sale, Investment or acquisition,

 

6

 

EBITDA for such period shall be calculated after giving pro forma
effect to such Asset Sale, Investment or acquisition as if such Asset Sale,
Investment or acquisition occurred on the first day of such period.

 

If any Debt
bears a floating rate of interest and is being given pro forma effect, the
interest expense on such Debt shall be calculated as if the base interest rate
in effect for such floating rate of interest on the date of determination had
been the applicable base interest rate for the entire period (taking into
account any Interest Rate Agreement applicable to such Debt if such Interest
Rate Agreement has a remaining term in excess of 12 months). In the event
the Capital Stock of any Restricted Subsidiary is sold during the period, the
Company shall be deemed, for purposes of clause (1) above, to have Repaid
during such period the Debt of such Restricted Subsidiary to the extent the
Company and its continuing Restricted Subsidiaries are no longer liable for
such Debt after such sale.

 

“Consolidated
Interest Expense” means, for any period, the total interest expense of the
Company and its consolidated Restricted Subsidiaries (excluding the non-cash
interest expense related to (x) litigation reserves, (y) closed store
liability reserves and (z) self-insurance reserves), plus, to the extent
not included in such total interest expense, and to the extent Incurred by the
Company or its Restricted Subsidiaries, and without duplication:

 

(a) interest
expense attributable to Capital Lease Obligations;

 

(b)
amortization of debt discount and debt issuance cost, including commitment
fees;

 

(c)
capitalized interest;

 

(d) non-cash
interest expense other than expenses under clauses (x), (y) and (z) above;

 

(e)
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers’ acceptance financing;

 

(f) net costs
associated with Hedging Obligations (including amortization of fees but
excluding costs associated with forward contracts for inventory in the ordinary
course of business);

 

(g)
Disqualified Stock Dividends;

 

(h) Preferred
Stock Dividends;

 

(i) interest
Incurred in connection with Investments in discontinued operations;

 

7

 

(j) interest
accruing on any Debt of any other Person to the extent such Debt is Guaranteed by
the Company or any Restricted Subsidiary; and

 

 

(k)  the cash contributions to any employee stock
ownership plan or similar trust to the extent such contributions are used by
such plan or trust to pay interest or fees to any Person (other than the Company)
in connection with Debt Incurred by such plan or trust;

 

provided,
however, that any program fees or liquidity fees on unused amounts
related to any Qualified Receivables Transaction shall not be included in
Consolidated Interest Expense unless otherwise required by GAAP.

 

“Consolidated
Net Income” means, for any period, the net income (loss) of the Company and
its consolidated Subsidiaries; provided, however, that there
shall not be included in such Consolidated Net Income:

 

(a) any net
income (loss) of any Person (other than the Company) if such Person is not a
Restricted Subsidiary, except that:

 

(1) subject to
the exclusion contained in clause (d) below, the Company’s equity in the
net income of any such Person for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash distributed by such
Person during such period to the Company or a Restricted Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or other
distribution to a Restricted Subsidiary, to the limitations contained in
clause (c) below); and

 

(2) the
Company’s equity in a net loss of any such Person other than an Unrestricted
Subsidiary for such period shall be included in determining such Consolidated
Net Income;

 

(b) [intentionally
omitted];

 

(c) any net
income (loss) of any Restricted Subsidiary if such Restricted Subsidiary is
subject to restrictions, directly or indirectly, on the payment of dividends or
the making of distributions, directly or indirectly, to the Company, except
that:

 

(1) subject to
the exclusion contained in clause (d) below, the Company’s equity in the
net income of any such Restricted Subsidiary for such period shall be included
in such Consolidated Net Income up to the aggregate amount of cash distributed
by such Restricted Subsidiary during such period to the Company or another
Restricted Subsidiary as a dividend or other distribution (subject, in the case
of a dividend or other distribution to another Restricted Subsidiary, to the
limitation contained in this clause); and

 

 

8

 

(2) the
Company’s equity in a net loss of any such Restricted Subsidiary for such
period shall be included in determining such Consolidated Net Income;

 

(d) any gain
or loss realized upon the sale or other disposition of any Property of the
Company or any of its consolidated Subsidiaries (including pursuant to any Sale
and Leaseback Transaction) that is not sold or otherwise disposed of in the
ordinary course of business;

 

(e) any
extraordinary gain or loss;

 

(f) the
cumulative effect of a change in accounting principles;

 

(g) any
non-cash compensation expense realized for grants of performance shares, stock
options or other rights to officers, directors and employees of the Company or
any Restricted Subsidiary, provided that such shares, options or other
rights can be redeemed at the option of the holder only for Capital Stock of
the Company (other than Disqualified Stock);

 

(h) store
closing costs;

 

(i) non-cash
charges or credits that relate to use of the last-in-first-out method of
accounting for inventory; and

 

(j) loss on
debt modifications.

 

Notwithstanding
the foregoing, for purposes of Section 4.04 only, there shall be excluded from
Consolidated Net Income any dividends, repayments of loans or advances or other
transfers of assets from Unrestricted Subsidiaries to the Company or a
Restricted Subsidiary to the extent such dividends, repayments or transfers
increase the amount of Restricted Payments permitted by Section 4.04 pursuant
to clause (c)(4) thereof.

 

“Corporation”
means a corporation, association, company, limited liability company,
joint-stock company, partnership or business trust.

 

“Credit
Facilities” means, with respect to the Company or any Restricted
Subsidiary, one or more debt or commercial paper facilities with banks or other
institutional lenders (including the Senior Credit Facilities), providing for
revolving credit loans, term loans, receivables or inventory financing
(including through the sale of receivables or inventory to such lenders or to
special purpose, bankruptcy remote entities formed to borrow from such lenders
against such receivables or inventory), or trade letters of credit, in each
case together with Refinancings thereof on any basis so long as such
Refinancing constitutes Debt.

 

“Currency
Exchange Protection Agreement” means, in respect of a Person, any foreign
exchange contract, currency swap agreement, currency option or other similar
agreement or arrangement designed to protect such Person against fluctuations
in currency exchange rates.

 

9

 

“Debt”
means, with respect to any Person on any date of determination (without
duplication):

 

(a) the
principal of and premium (if any) in respect of:

 

(1) debt of
such Person for money borrowed; and

 

(2) debt
evidenced by notes, debentures, bonds or other similar instruments for the
payment of which such Person is responsible or liable;

 

(b) all
Capital Lease Obligations of such Person and all Attributable Debt in respect
of Sale and Leaseback Transactions entered into by such Person;

 

(c) all
obligations of such Person issued or assumed as the deferred purchase price of
Property, all conditional sale obligations of such Person and all obligations
of such Person under any title retention agreement (but excluding trade
accounts payable arising in the ordinary course of business);

 

(d) all
obligations of such Person for the reimbursement of any obligor on any letter
of credit, banker’s acceptance or similar credit transaction (other than
obligations with respect to letters of credit securing obligations (other than
obligations described in (a) through (c) above) entered into in the ordinary
course of business of such Person to the extent such letters of credit are not
drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no
later than the third Business Day following receipt by such Person of a demand
for reimbursement following payment on the letter of credit);

 

(e) the amount
of all obligations of such Person with respect to the Repayment of any
Disqualified Stock or, with respect to any Subsidiary of such Person, any
Preferred Stock (but excluding, in each case, any accrued dividends);

 

(f) all
obligations of the type referred to in clauses (a) through (e) of other
Persons and all dividends of other Persons for the payment of which, in either
case, such Person is responsible or liable, directly or indirectly, as obligor,
guarantor or otherwise, including by means of any Guarantee;

 

(g) all obligations
of the type referred to in clauses (a) through (f) of other Persons
secured by any Lien on any Property of such Person (whether or not such
obligation is assumed by such Person), the amount of such obligation being
deemed to be the lesser of the value of such Property or the amount of the
obligation so secured; and

 

(h) to the
extent not otherwise included in this definition, Hedging Obligations of such
Person.

 

The amount of
Debt of any Person at any date shall be the outstanding balance at such date of
all unconditional obligations as described above and the maximum liability,
upon the occurrence of the contingency giving rise to the obligation, of any
contingent 

 

10

 

obligations at
such date. The amount of Debt represented by a Hedging Obligation shall be
equal to:

 

(1) zero if
such Hedging Obligation has been Incurred pursuant to clause (g) or (h) of
the second paragraph of Section 4.03 or

 

(2) the
notional amount of such Hedging Obligation if not Incurred pursuant to such
clauses.

 

“Debt
Issuances” means, with respect to the Company or any Restricted Subsidiary,
one or more issuances of Debt evidenced by notes, debentures, bonds or other
similar securities or instruments.

 

“Default”
means any event which is, or after notice or passage of time or both would be,
an Event of Default.

 

“Disqualified
Stock” means, with respect to any Person, any Capital Stock that by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable, in either case at the option of the holder thereof)
or otherwise:

 

(a) matures or
is mandatorily redeemable pursuant to a sinking fund obligation or otherwise;

 

(b) is or may
become redeemable or repurchaseable at the option of the holder thereof, in
whole or in part; or

 

(c) is
convertible or exchangeable at the option of the holder thereof for Debt or
Disqualified Stock;

 

on or prior
to, in the case of clause (a), (b) or (c), the first anniversary of the
Stated Maturity of the Securities.

 

“Disqualified
Stock Dividends” means all dividends with respect to Disqualified Stock of
the Company held by Persons other than a Wholly Owned Restricted Subsidiary.
The amount of any such dividend shall be equal to the quotient of such dividend
divided by the difference between one and the maximum statutory federal income
tax rate (expressed as a decimal number between 1 and 0) then applicable to the
Company.

 

“EBITDA”
means, for any period, an amount equal to, for the Company and its consolidated
Restricted Subsidiaries:

 

(a) the sum of
Consolidated Net Income for such period, plus the following to the extent
reducing Consolidated Net Income for such period:

 

(1) the
provision for taxes based on income or profits or utilized in computing net
loss;

 

11

 

(2)
Consolidated Interest Expense and non-cash interest expense related to
litigation reserves, closed store liability reserves and self-insurance
reserves, to the extent excluded from Consolidated Interest Expense;

 

(3)
depreciation;

 

(4)
amortization of intangibles;

 

(5) non-cash
impairment charges;

 

(6) any
expenses or charges (other than depreciation or amortization expense) related
to any Equity Offering, Permitted Investment, acquisition, disposition, recapitalization
or the Incurrence of Debt permitted to be Incurred by the Indenture (including
a refinancing thereof) (whether or not successful), including (i) such fees,
expenses or changes related to the offering of Credit Facilities, Qualified
Receivables Transactions or Debt Issuances and other Debt and (ii) any
amendment or other modification of Credit Facilities, Qualified Receivables
Transactions or Debt Issuances and, in each case, deducted (and not added back)
in computing Consolidated Net Income;

 

(7) the amount of any restructuring charges, integration costs or other
business optimization expenses or reserves deducted (and not added back) in
such period in computing Consolidated Net Income, including any one-time costs
(including costs related to the closure and/or consolidation of stores)
incurred in connection with acquisitions after the Issue Date;

 

(8) the amount
of net cost savings projected by the Company in good faith to be realized as a
result of specified actions taken or initiated during or prior to such period
(calculated on a pro forma basis as though such
cost savings had been realized on the first day of such period), net of the
amount of actual benefits realized during such period from such actions; provided
that (x) such cost savings are reasonably identifiable and factually
supportable, (y) such actions are taken no later than 36 months after the Issue
Date and (z) the aggregate amount of cost savings added pursuant to this clause
(8) shall not exceed $150.0 million for any four consecutive quarter period
(which adjustments may be incremental to pro forma cost
savings adjustments made pursuant to the definition of “Consolidated Interest
Coverage Ratio”); and

 

(9) any other
non-cash items (other than any such non-cash item to the extent that it
represents an accrual of or reserve for cash expenditures in any future
period), minus

 

(b) all
non-cash items increasing Consolidated Net Income for such period (other than
any such non-cash item to the extent that it will result in the receipt of cash
payments in any future period).

 

12

 

Notwithstanding
the foregoing clause (a), the provision for taxes and the depreciation,
amortization and non-cash items of a Restricted Subsidiary shall be added to
Consolidated Net Income to compute EBITDA only to the extent (and in the same
proportion) that the net income of such Restricted Subsidiary was included in
calculating Consolidated Net Income and only if a corresponding amount would be
permitted at the date of determination to be dividended to the Company by such
Restricted Subsidiary without prior approval (that has not been obtained),
pursuant to the terms of its charter and all agreements, instruments,
judgments, decrees, orders, statutes, rules and governmental regulations
applicable to such Restricted Subsidiary or its shareholders.

 

“8.125%
Notes” means the Company’s 8.125% Senior Secured Notes due 2010 issued
under the indenture dated as of April 22, 2003, among the Company, the
subsidiary guarantors party thereto and BNY Midwest Trust Company, as trustee,
and outstanding on the Issue Date.

 

“Equipment
Financing Transaction” means any arrangement (together with any Refinancing
thereof) with any Person pursuant to which the Company or any Restricted Subsidiary
Incurs Debt secured by a Lien on equipment or equipment related property of the
Company or any Restricted Subsidiary.

 

“Equity
Offering” means (i) an underwritten offering of common stock of the
Company by the Company pursuant to an effective registration statement under
the Securities Act or (ii) so long as the Company’s common stock is, at
the time, listed or quoted on a national securities exchange (as such term is
defined in the Exchange Act, an offering of common stock by the Company in a transaction
exempt from or not subject to the registration requirements of the Securities
Act.

 

“Event of
Default” has the meaning set forth under Section 6.01.

 

“Exchange
Act” means the Securities Exchange Act of 1934.

 

 “Expansion Capital Expenditure” means
any capital expenditure incurred by the Company or any Restricted Subsidiary in
developing, relocating, integrating, remodeling and refurbishing a warehouse,
distribution center, store or other facility (other than ordinary course
maintenance) for carrying on the business of the Company and its Restricted
Subsidiaries that the Board of Directors determines in good faith will enhance
the income generating ability of the warehouse, distribution center, store or
other facility.

 

“Fair
Market Value” means, with respect to any Property, the price that could be
negotiated in an arm’s-length free market transaction, for cash, between a
willing seller and a willing buyer, neither of whom is under undue pressure or
compulsion to complete the transaction. Pressure or compulsion shall not
include sales of Property conducted in compliance with the requirements of a
regulatory authority in connection with an acquisition or merger permitted by
this Indenture. Fair Market Value shall be determined, except as otherwise provided:

 

(a) if such
Property has a Fair Market Value equal to or less than $25.0 million, by
any Officer of the Company; or

 

13

 

(b) if such
Property has a Fair Market Value in excess of $25.0 million, by a majority
of the Board of Directors and evidenced by a Board Resolution, dated within
30 days of the relevant transaction, delivered to the Trustee.

 

“Foreign
Subsidiary” means any Subsidiary of the Company which (a) is organized
under the laws of any jurisdiction outside of the United States, (b) is
organized under the laws of Puerto Rico or the U.S. Virgin Islands, (c) has
substantially all its operations outside of the United States, (d) has
substantially all its operations in Puerto Rico or the U.S. Virgin Islands, or
(e) does not own any material assets other than Capital Stock of one or more
Subsidiaries of the Type described in (a) through (d) above.

 

“GAAP”
means United States generally accepted accounting principles as in effect on
February 12, 2003, including those set forth:

 

(a) in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants;

 

(b) in the
statements and pronouncements of the Financial Accounting Standards Board;

 

(c) in such
other statements by such other entity as approved by a significant segment of
the accounting profession; and

 

(d) the rules
and regulations of the Commission governing the inclusion of financial
statements (including pro forma financial statements) in periodic reports
required to be filed pursuant to Section 13 of the Exchange Act, including
opinions and pronouncements in staff accounting bulletins and similar written
statements from the accounting staff of the Commission.

 

“Guarantee”
means any obligation, contingent or otherwise, of any Person directly or
indirectly guaranteeing any Debt of any other Person and any obligation, direct
or indirect, contingent or otherwise, of such Person:

 

(a) to
purchase or pay (or advance or supply funds for the purchase or payment of)
such Debt of such other Person (whether arising by virtue of partnership
arrangements, or by agreements to keep-well, to purchase assets, goods,
securities or services, to take-or-pay or to maintain financial statement
conditions or otherwise); or

 

(b) entered
into for the purpose of assuring in any other manner the obligee against loss
in respect thereof (in whole or in part);

 

provided, however,
that the term “Guarantee” shall not include:

 

(1)
endorsements for collection or deposit in the ordinary course of business; or

 

14

 

(2) a
contractual commitment by one Person to invest in another Person for so long as
such Investment is reasonably expected to constitute a Permitted Investment
under clause (b) of the definition of “Permitted Investment.”

 

The term
“Guarantee” used as a verb has a corresponding meaning. The term “Guarantor”
shall mean any Person Guaranteeing any obligation.

 

“Hedging
Obligation” of any Person means any obligation of such Person pursuant to
any Interest Rate Agreement, Currency Exchange Protection Agreement, Commodity
Price Protection Agreement or any other similar agreement or arrangement.

 

“Holder”
means the Person in whose name a Security is registered in the Security
Register.

 

“Incur”
means, with respect to any Debt or other obligation of any Person, to create,
issue, incur (by merger, conversion, exchange or otherwise), extend, assume,
Guarantee or become liable in respect of such Debt or other obligation or the
recording, as required pursuant to GAAP or otherwise, of any such Debt or
obligation on the balance sheet of such Person (and “Incurrence” and “Incurred”
shall have meanings correlative to the foregoing); provided, however,
that a change in GAAP that results in an obligation of such Person that exists
at such time, and is not theretofore classified as Debt, becoming Debt shall
not be deemed an Incurrence of such Debt; provided further, however,
that any Debt or other obligations of a Person existing at the time such Person
becomes a Subsidiary (whether by merger, consolidation, acquisition or
otherwise) shall be deemed to be Incurred by such Subsidiary at the time it
becomes a Subsidiary; and provided further, however, that solely
for purposes of determining compliance with Section 4.03, amortization of debt
discount shall not be deemed to be the Incurrence of Debt, provided that
in the case of Debt sold at a discount, the amount of such Debt Incurred shall
at all times be the aggregate principal amount at Stated Maturity.

 

“Indenture”
means this instrument as originally executed or as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof including, for all purposes
of this instrument and any such supplemental indenture, the provisions of the
Trust Indenture Act that are deemed to be a part of and govern this instrument
and any such supplemental indenture, respectively.

 

“Independent
Financial Advisor” means an investment banking firm of national standing or
any third party appraiser of national standing, provided that such firm
or appraiser is not an Affiliate of the Company.

 

“Interest
Rate Agreement” means, for any Person, any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement designed to protect against fluctuations in interest rates.

 

“Investment”
by any Person means any direct or indirect loan (other than advances to
customers in the ordinary course of business that are recorded as accounts 

 

15

receivable on
the balance sheet of such Person), advance or other extension of credit or
capital contribution (by means of transfers of cash or other Property to others
or payments for Property or services for the account or use of others, or
otherwise) to, or Incurrence of a Guarantee of any obligation of, or purchase
or acquisition of Capital Stock, bonds, notes, debentures or other securities
or evidence of Debt issued by, any other Person. For purposes of
Sections 4.04 and 4.11 and the definition of “Restricted Payment,”
“Investment” shall include the portion (proportionate to the Company’s equity
interest in such Subsidiary) of the Fair Market Value of the net assets of any
Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted
Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue
to have a permanent “Investment” in an Unrestricted Subsidiary of an amount (if
positive) equal to:

 

(a) the
Company’s “Investment” in such Subsidiary at the time of such redesignation;
less

 

(b) the
portion (proportionate to the Company’s equity interest in such Subsidiary) of
the Fair Market Value of the net assets of such Subsidiary at the time of such
redesignation.

 

In determining
the amount of any Investment made by transfer of any Property other than cash,
such Property shall be valued at its Fair Market Value at the time of such
Investment.

 

“Investment
Grade Rating” means a rating equal to or higher than Baa3 (or the
equivalent) by Moody’s and BBB- (or the equivalent) by S&P, without regard
to outlook.

 

“Issue Date”
means the date on which the Original Securities are initially issued.

 

“Jean Coutu
Acquisition” means the acquisition of Jean Coutu by the Company and the
other transactions contemplated by the Acquisition Agreement.

 

“Jean Coutu
Acquisition Agreement” means the Stock Purchase Agreement, dated as of
August 23, 2006, by and between the Company and The Jean Coutu Group (PJC)
Inc., a Québec corporation, as it may be amended from time to time.

 

“Lien”
means, with respect to any Property of any Person, any mortgage or deed of
trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien, charge, easement (other than any easement not materially
impairing usefulness or marketability), encumbrance, preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever on or with respect to such Property (including any Capital Lease Obligation,
conditional sale or other title retention agreement having substantially the
same economic effect as any of the foregoing or any Sale and Leaseback
Transaction).

 

16

 

“Moody’s”
means Moody’s Investors Service, Inc. or any successor to the rating agency
business thereof.

 

“Net
Available Cash” from any Asset Sale means cash payments received therefrom
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Debt or other obligations relating to the
Property that is the subject of such Asset Sale or received in any other
non-cash form), in each case net of:

 

(a) all legal,
title and recording tax expenses, commissions and other fees and expenses
incurred, and all Federal, state, provincial, foreign and local taxes required
to be accrued as a liability under GAAP, as a consequence of such Asset Sale;

 

(b) all
payments made on any Debt that is secured by any Property subject to such Asset
Sale, in accordance with the terms of any Lien upon or other security agreement
of any kind with respect to such Property, or which must by its terms, or in
order to obtain a necessary consent to such Asset Sale, or by applicable law,
be repaid out of the proceeds from such Asset Sale;

 

(c) all
distributions and other payments required to be made to minority interest
holders in Subsidiaries or joint ventures as a result of such Asset Sale; and

 

(d) the
deduction of appropriate amounts provided by the seller as a reserve, in
accordance with GAAP, against any liabilities associated with the Property
disposed in such Asset Sale and retained by the Company or any Restricted
Subsidiary after such Asset Sale.

 

“9.25%
Notes” means the Company’s 9.25% Senior Notes due 2013 issued under the
indenture as of May 20, 2003 between the Company and BNY Midwest Trust Company,
as trustee, and outstanding on the Issue Date.

 

“9.5% Notes”
means the Company’s 9.5% Senior Secured Notes Due 2011 issued under the
indenture dated as of February 12, 2003, among the Company, subsidiary
guarantors party thereto and BNY Midwest Trust Company, as trustee, and
outstanding on the Issue Date.

 

 “Officer” means the Chief Executive
Officer, the President, the Chief Financial Officer, Chief Accounting Officer,
Treasurer, Vice President of Financial Accounting or any Executive Vice
President of the Company.

 

“Officers’
Certificate” means a certificate signed by two Officers of the Company, at
least one of whom shall be the principal executive officer or principal
financial officer of the Company, and delivered to the Trustee.

 

17

 

“Opinion of
Counsel” means a written opinion from legal counsel who is acceptable to
the Trustee. The counsel may be an employee of or counsel to the Company or the
Trustee.

 

“Paying
Agent” means any Person authorized by the Company to pay the principal of
or interest on any Unsecured Notes on behalf of the Company.

 

“Permitted
Holder” means Leonard Green & Partners L.P. or any of its Affiliates
and (b), if the Jean Coutu Acquisition occurs, The Jean Coutu Group (PJC) Inc.
or any of its Affiliates.

 

“Permitted
Investment” means any Investment by the Company or a Restricted Subsidiary
in:

 

(a)(i) the
Company, (ii) any Restricted Subsidiary or (iii) any Person that
will, upon the making of such Investment, become a Restricted Subsidiary;

 

(b) any Person
if as a result of such Investment such Person is merged or consolidated with or
into, or transfers or conveys all or substantially all its Property to, the
Company or a Restricted Subsidiary;

 

(c) cash and
Temporary Cash Investments;

 

(d) receivables
owing to the Company or a Restricted Subsidiary, if created or acquired in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms; provided, however, that such trade terms
may include such concessionary trade terms as the Company or such Restricted
Subsidiary deems reasonable under the circumstances;

 

(e) payroll,
travel and similar advances to cover matters that are expected at the time of
such advances ultimately to be treated as expenses for accounting purposes and
that are made in the ordinary course of business;

 

(f) loans and
advances to employees made in the ordinary course of business consistent with
past practices of the Company or such Restricted Subsidiary, as the case may
be, provided that such loans and advances do not exceed
$25.0 million at any one time outstanding;

 

(g) stock,
obligations or other securities received in settlement of debts created in the
ordinary course of business and owing to the Company or a Restricted Subsidiary
or in satisfaction of judgments;

 

(h) any Person
to the extent such Investment represents the non-cash portion of the
consideration received in connection with an Asset Sale consummated in
compliance with Section 4.06;

 

(i) Hedging
Obligations permitted under clause (g), (h) or (i) of Section 4.03;

 

18

 

(j) any Person
if the Investments are outstanding on the Issue Date and not otherwise
described in clauses (a) through (i) above;

 

(k)
Investments in Unrestricted Subsidiaries or joint venture entities (including
purchasing cooperatives) that do not exceed $15.0 million outstanding at
any one time in the aggregate;

 

(l) other
Investments that do not exceed $10.0 million outstanding at any one time
in the aggregate;

 

(m)
Investments in any entity, formed by the Company or a Restricted Subsidiary,
organized under Section 501(c)(3) of the Code, that do not exceed an aggregate
amount of $10.0 million in any fiscal year; and

 

(n) any
assets, Capital Stock or other securities to the extent acquired in exchange
for shares of Capital Stock of the Company (other than Disqualified Stock).

 

“Permitted
Liens” means:

 

(a) Liens to
secure Debt permitted to be Incurred under clause (b), (c), (d), (l) or
(p) of the second paragraph of Section 4.03;

 

(b) Liens to
secure Debt permitted to be Incurred under clause (e), (q) or (r) of the
second paragraph of Section 4.03; provided that (i) any such Lien
may not extend to any Property of the Company or any Restricted Subsidiary,
other than the Property acquired, developed, constructed or leased with the
proceeds of such Debt and any improvements or additions to such Property;

 

(c) Liens for
taxes, assessments or governmental charges or levies on the Property of the
Company or any Restricted Subsidiary if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or are being contested in
good faith and by appropriate proceedings promptly instituted and diligently
concluded, provided that any reserve or other appropriate provision that
shall be required in conformity with GAAP shall have been made therefor;

 

(d) Liens
imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens and
other similar Liens, on the Property of the Company or any Restricted Subsidiary
arising in the ordinary course of business and securing payment of obligations
that are not more than 60 days past due or are being contested in good
faith and by appropriate proceedings;

 

(e) Liens on
the Property of the Company or any Restricted Subsidiary Incurred in the
ordinary course of business to secure performance of obligations with respect
to statutory or regulatory requirements, performance or return-of-money bonds,
surety bonds or other obligations of a like nature and Incurred in a manner
consistent with industry practice, in each case which are not Incurred in
connection with the borrowing of money, the obtaining of advances or credit or

 

19

 

the payment of
the deferred purchase price of Property and which do not in the aggregate
impair in any material respect the use of Property in the operation of the
business of the Company and the Restricted Subsidiaries taken as a whole;

 

(f) Liens on
Property at the time the Company or any Restricted Subsidiary acquired such
Property, including any acquisition by means of a merger or consolidation with
or into the Company or any Restricted Subsidiary; provided, however,
that any such Lien may not extend to any other Property of the Company or any
Restricted Subsidiary; provided further, however, that such Liens
shall not have been Incurred in anticipation of or in connection with the
transaction or series of transactions pursuant to which such Property was
acquired by the Company or any Restricted Subsidiary;

 

(g) Liens on
the Property of a Person at the time such Person becomes a Restricted
Subsidiary; provided, however, that any such Lien may not extend
to any other Property of the Company or any other Restricted Subsidiary that is
not a direct Subsidiary of such Person; provided further, however,
that any such Lien was not Incurred in anticipation of or in connection with
the transaction or series of transactions pursuant to which such Person became
a Restricted Subsidiary;

 

(h) pledges or
deposits by the Company or any Restricted Subsidiary under workmen’s
compensation laws, unemployment insurance laws or similar legislation, or good
faith deposits in connection with bids, tenders, contracts (other than for the
payment of Debt) or leases to which the Company or any Restricted Subsidiary is
party, or deposits to secure public or statutory obligations of the Company or
any Restricted Subsidiary, or deposits for the payment of rent, in each case
Incurred in the ordinary course of business;

 

(i) utility easements,
building restrictions and such other encumbrances or charges against real
Property as are of a nature generally existing with respect to properties of a
similar character;

 

(j) Liens
arising out of judgments or awards against the Company or a Restricted
Subsidiary with respect to which the Company or the Restricted Subsidiary shall
then be proceeding with an appeal or other proceeding for review and which do
not give rise to an Event of Default;

 

(k) leases or
subleases of real property granted by the Company or a Restricted Subsidiary to
any other Person in the ordinary course of business and not materially
impairing the use of the real property in the operation of the business of the
Company or the Restricted Subsidiary;

 

(l) licenses
of intellectual property in the ordinary course of business;

 

(m) Liens
existing on the Issue Date not otherwise described in clauses (a) through
(l) above;

 

20

 

(n) Liens on
the Property of the Company or any Restricted Subsidiary to secure any
Refinancing, in whole or in part, of any Debt secured by Liens referred to in
clause (a) (but only to the extent it relates to clause (c) or (d)
referred to therein), (b) (other than Liens securing Debt Incurred pursuant to
clause (r) referred to therein), (f), (g), or (m) above; provided,
however, that any such Lien shall be limited to all or part of the same
Property that secured the original Lien (together with improvements and
accessions to such Property) and the aggregate principal amount of Debt that is
secured by such Lien shall not be increased to an amount greater than the sum
of:

 

(1) the
outstanding principal amount, or, if greater, the committed amount, of the Debt
secured by Liens described under clause (b) (except as referred to above),
(f), (g), or (m) above, as the case may be, at the time the original Lien
became a Permitted Lien under this Indenture; and

 

(2) an amount
necessary to pay any fees and expenses, including premiums and defeasance
costs, incurred by the Company or such Restricted Subsidiary in connection with
such Refinancing; and

 

(o) Liens not
otherwise permitted by clauses (a) through (n) above encumbering assets
that have an aggregate Fair Market Value not in excess of $5.0 million.

 

“Permitted
Refinancing Debt” means any Debt that Refinances any other Debt, including
any successive Refinancings, so long as:

 

(a) such Debt
is in an aggregate principal amount (or if Incurred with original issue
discount, an aggregate issue price) not in excess of the sum of:

 

(1) the
aggregate principal amount (or if Incurred with original issue discount, the
aggregate accreted value) then outstanding of the Debt being Refinanced; and

 

(2) an amount
necessary to pay any fees and expenses, including premiums and defeasance
costs, related to such Refinancing;

 

(b) the
Average Life of such Debt is equal to or greater than the Average Life of the
Debt being Refinanced;

 

(c) the Stated
Maturity of such Debt is no earlier than the Stated Maturity of the Debt being
Refinanced; and

 

(d) the new
Debt shall not be senior in right of payment to the Debt that is being
Refinanced;

 

provided,
however, that Permitted Refinancing Debt shall not include:
(x) Debt of a Subsidiary that Refinances Debt of the Company, or
(y) Debt of the Company or a Restricted Subsidiary that Refinances Debt of
an Unrestricted Subsidiary.

 

21

 

“Person”
means any individual, corporation, company (including any limited liability
company), association, partnership, joint venture, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.

 

“Preferred
Stock” means any Capital Stock of a Person, however designated, which
entitles the holder thereof to a preference with respect to the payment of
dividends, or as to the distribution of assets upon any voluntary or
involuntary liquidation or dissolution of such Person, over shares of any other
class of Capital Stock issued by such Person.

 

“Preferred
Stock Dividends” means all dividends with respect to Preferred Stock of
Restricted Subsidiaries held by Persons other than the Company or a Wholly
Owned Restricted Subsidiary. The amount of any such dividend shall be equal to
the quotient of such dividend divided by the difference between one and the
maximum statutory federal income rate (expressed as a decimal number between 1
and 0) then applicable to the issuer of such Preferred Stock.

 

“pro forma”
means, unless the context otherwise requires, with respect to any calculation
made or required to be made pursuant to the terms hereof, a calculation
performed in accordance with Article 11 of Regulation S-X promulgated
under the Securities Act, as interpreted in good faith by the Board of
Directors after consultation with the independent certified public accountants
of the Company, or otherwise a calculation made in good faith by the Board of
Directors after consultation with the independent certified public accountants
of the Company, as the case may be.

 

“Property”
means, with respect to any Person, any interest of such Person in any kind of
property or asset, whether real, personal or mixed, or tangible or intangible,
including Capital Stock in, and other securities of, any other Person. For
purposes of any calculation required pursuant to this Indenture, the value of
any Property shall be its Fair Market Value.

 

“Purchase
Money Debt” means Debt Incurred to finance the acquisition, development,
construction or lease by the Company or a Restricted Subsidiary of Property,
including additions and improvements thereto, where the maturity of such Debt
does not exceed the anticipated useful life of the Property being financed; provided,
however, that such Debt is Incurred within 24 months after the
completion of the acquisition, development construction or lease of such
Property by the Company or such Restricted Subsidiary.

 

“Qualified
Consideration” means, with respect to any Asset Sale (or any other
transaction or series of related transactions required to comply with
clause (b) of the first paragraph of Section 4.06), any one or more of (a)
cash or cash equivalents, (b) notes or obligations that are converted into cash
(to the extent of the cash received) within 180 days of such Asset Sale,
(c) equity securities listed on a national securities exchange (as such term is
defined in the Exchange Act) and converted into cash (to the extent of the cash
received) within 180 days of such Asset Sale, (d) the assumption by the

 

22

 

purchaser of liabilities of the
Company or any Restricted Subsidiary (other than liabilities that are by their
terms subordinated to the Securities) as a result of which the Company and the
Restricted Subsidiaries are no longer obligated with respect to such liabilities,
(e) Additional Assets or (f) other Property, provided that the
aggregate Fair Market Value of all Property received since the Issue Date by
the Company and its Restricted Subsidiaries pursuant to Asset Sales (or such
other transactions) that is used to determine Qualified Consideration pursuant
to this clause (f) does not exceed the greater of $100.0 million and
5% of Total Assets.

 

“Qualified
Receivables Transaction” means any transaction or series of transactions
that may be entered into by the Company or any of its Subsidiaries pursuant to
which the Company or any of its Subsidiaries may sell, convey or otherwise
transfer to:

 

(a) a
Receivables Entity (in the case of a transfer by the Company or any of its
Subsidiaries); and

 

(b) any other
Person (in the case of a transfer by a Receivables Entity),

 

or may grant a
security interest in, any accounts receivable (whether now existing or arising
in the future) of the Company or any of its Subsidiaries, and any assets
related thereto including, without limitation, all collateral securing those
accounts receivable, all contracts and all Guarantees or other obligations in
respect of those accounts receivable, proceeds of those accounts receivable and
other assets which are customarily transferred or in respect of which security
interests are customarily granted in connection with asset securitization
transactions involving accounts receivable; provided that:

 

(1) if the
transaction involves a transfer of accounts receivable with Fair Market Value
equal to or greater than $25.0 million, the Board of Directors shall have
determined in good faith that the Qualified Receivables Transaction is
economically fair and reasonable to the Company and the Receivables Entity;

 

(2) all sales
of accounts receivable and related assets to or by the Receivables Entity are
made at Fair Market Value; and

 

(3) the
financing terms, covenants, termination events and other provisions thereof
shall be market terms (as determined in good faith by the Board of Directors).

 

“Rating
Agencies” means Moody’s and S&P.

 

“Real
Estate Financing Transaction” means any arrangement with any Person
pursuant to which the Company or any Restricted Subsidiary Incurs Debt secured
by a Lien on real property of the Company or any Restricted Subsidiary and
related personal property together with any Refinancings thereof.

 

23

 

“Receivables
Entity” means a Wholly Owned Subsidiary of the Company (or another Person
formed for the purposes of engaging in a Qualified Receivables Transaction with
the Company in which the Company or any Subsidiary of the Company makes an
Investment and to which the Company or any Subsidiary of the Company transfers
accounts receivable and related assets) which engages in no activities other than
in connection with the financing of accounts receivable of the Company and its
Subsidiaries, all proceeds thereof and all rights (contractual or other),
collateral and other assets relating thereto, and any business or activities
incidental or related to that business, and (with respect to any Receivables
Entity formed after the Issue Date) which is designated by the Board of
Directors (as provided below) as a Receivables Entity and:

 

(a) no portion
of the Debt or any other obligations (contingent or otherwise) of which:

 

(1) is
Guaranteed by the Company or any Subsidiary of the Company (excluding
Guarantees of obligations (other than the principal of, and interest on, Debt)
pursuant to Standard Securitization Undertakings);

 

(2) is
recourse to or obligates the Company or any Subsidiary of the Company in any
way other than pursuant to Standard Securitization Undertakings; or

 

(3) subjects
any property or asset of the Company or any Subsidiary of the Company, directly
or indirectly, contingently or otherwise, to the satisfaction thereof, other
than pursuant to Standard Securitization Undertakings;

 

(b) with which
neither the Company nor any Subsidiary of the Company has any material
contract, agreement, arrangement or understanding other than on terms which the
Company reasonably believes to be no less favorable to the Company or the
Subsidiary than those that might be obtained at the time from Persons that are
not Affiliates of the Company; and

 

(c) to which
neither the Company nor any Subsidiary of the Company has any obligation to
maintain or preserve the entity’s financial condition or cause the entity to
achieve certain levels of operating results other than pursuant to Standard
Securitization Undertakings.

 

Any
designation of this kind by the Board of Directors shall be evidenced to the
Trustee by filing with the Trustee a certified copy of the Board Resolution
giving effect to the designation and an Officers’ Certificate certifying that
the designation complied with the foregoing conditions. For the avoidance of
doubt, Rite Aid Funding I and Rite Aid Funding II are designated Receivables
Entities without any further action on the part of the Company.

 

“Receivables
Facility” means the Receivables Financing Agreement dated as of September
21, 2004 (as such may be further amended, modified, supplemented or Refinanced
from time to time), among Rite Aid Funding II, the Investors named therein, 

 

24

 

the Banks named therein,
Citicorp North America Inc., as Program Agent, Rite Aid Headquarters Funding
Inc., as Collection Agent, the Originators named therein and JPMorgan Chase
Bank, as trustee.

 

“Refinance”
means, in respect of any Debt, to refinance, extend, renew, refund, repay,
prepay, repurchase, redeem, defease or retire, or to issue other Debt, in
exchange or replacement for, such Debt. “Refinanced” and “Refinancing” shall
have correlative meanings.

 

“Related
Business” means any business that is related, ancillary or complementary to
the businesses of the Company and the Restricted Subsidiaries on the Issue
Date.

 

“Repay”
means, in respect of any Debt, to repay, prepay, repurchase, redeem, legally
defease or otherwise retire such Debt. “Repayment” and “Repaid” shall have
correlative meanings. For purposes of Section 4.06 and the definition of
“Consolidated Interest Coverage Ratio,” Debt shall be considered to have been
Repaid only to the extent the related loan commitment, if any, shall have been
permanently reduced in connection therewith.

 

“Restricted
Payment” means:

 

(a) any
dividend or distribution (whether made in cash, securities or other Property)
declared or paid on or with respect to any shares of Capital Stock of the
Company or any Restricted Subsidiary (including any payment in connection with
any merger or consolidation with or into the Company or any Restricted
Subsidiary), except for any dividend or distribution that is made solely to the
Company or a Restricted Subsidiary (and, if such Restricted Subsidiary is not a
Wholly Owned Restricted Subsidiary, to the other shareholders of such
Restricted Subsidiary on a pro rata basis or on a basis that results in the
receipt by the Company or a Restricted Subsidiary of dividends or distributions
of greater value than it would receive on a pro rata basis) or any dividend or
distribution payable solely in shares of Capital Stock (other than Disqualified
Stock) of the Company;

 

(b) the
purchase, repurchase, redemption, acquisition or retirement for value of any
Capital Stock of the Company or any Restricted Subsidiary (other than from the
Company or a Restricted Subsidiary);

 

(c) the
purchase, repurchase, redemption, acquisition or retirement for value, prior to
the date for any scheduled maturity, sinking fund or amortization or other
installment payment, of any Subordinated Obligation (other than the purchase,
repurchase or other acquisition of any Subordinated Obligation purchased in
anticipation of satisfying a scheduled maturity, sinking fund or amortization
or other installment obligation, in each case due within one year of the date
of acquisition);

 

(d) any
Investment (other than Permitted Investments) in any Person; or

 

25

 

(e) the
issuance, sale or other disposition of Capital Stock of any Restricted Subsidiary
to a Person other than the Company or another Restricted Subsidiary if the
result thereof is that such Restricted Subsidiary shall cease to be a
Restricted Subsidiary, in which event the amount of such “Restricted Payment”
shall be the Fair Market Value of the remaining interest, if any, in such
former Restricted Subsidiary held by the Company and the other Restricted
Subsidiaries.

 

Notwithstanding
the foregoing, no payment or other transaction permitted by clause (c) or
(f) of the second paragraph of Section 4.08 will be considered a Restricted
Payment.

 

“Restricted
Subsidiary” means any Subsidiary of the Company other than an Unrestricted
Subsidiary.

 

“S&P”
means Standard & Poor’s Ratings Service or any successor to the rating
agency business thereof.

 

“Sale and
Leaseback Transaction” means any direct or indirect arrangement relating to
Property now owned or hereafter acquired whereby the Company or a Restricted
Subsidiary transfers such Property to another Person and the Company or a
Restricted Subsidiary leases it from such Person.

 

“Secured
Debt” means indebtedness for money borrowed which is secured by a mortgage,
pledge, lien, security interest or encumbrance on property of the Company or
any Restricted Subsidiary, but shall not include guarantees arising in
connection with the sale, discount, guarantee or pledge of notes, chattel
mortgages, leases, accounts receivable, trade acceptances and other paper
arising, in the ordinary course of business, out of installment or conditional
sales to or by, or transactions involving title retention with, distributors,
dealers or other customers, of merchandise, equipment or services.

 

“Securities”
means the Initial Securities designated in the first paragraph of this
Indenture.

 

“Securities
Act” means the Securities Act of 1933.

 

“Senior
Credit Facility” means the Senior Credit Agreement dated as of June 27,
2001, as amended and restated as of August 4, 2003, as further amended and
restated as of September 22, 2004, as further amended and restated as of
November 8, 2006, (as may be further amended, modified, supplemented or
Refinanced from time to time), among the Company, the Banks as defined therein,
Citicorp North America, Inc., as administrative agent and collateral processing
co-agent, JPMorgan Chase Bank, as syndication agent and collateral processing
co-agent, Fleet Retail Group, Inc., as co-documentation agent and collateral
agent and The CTT Group/Business Credit, Inc. and General Electric Capital
Corporation, as co-documentation agents. Following effectiveness of the “Second
Restated Credit Agreement” included as Exhibit B to the Amendment and
Restatement Agreement dated as of November 8, 2006 among the Company, the Banks
as defined therein, Citicorp North America Inc., as administrative agent and
collateral processing agent and Bank of America, N.A., as syndication agent, as
it may be amended, modified or supplemented from time to time, the “Second
Restated

 

26

 

Credit Agreement,” as it may be
further amended, modified, supplemented or Refinanced from time to time, shall
be the Senior Credit Facility.

 

“7.5% Notes”
means the Company’s 7.5% Senior Secured Notes due 2015, issued under the
indenture dated as of January 11, 2005, among the Company, the subsidiary guarantors
party thereto, BNY Midwest Trust Company, as trustee, and outstanding on the
Issue Date.

 

“Significant
Subsidiary” means any Subsidiary that would be a “Significant Subsidiary”
of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated
by the Commission.

 

“Standard
Securitization Undertakings” means representations, warranties, covenants
and indemnities entered into by the Company or any Subsidiary of the Company
which are customary in an accounts receivable securitization transaction
involving a comparable company.

 

“Stated
Maturity” means, with respect to any security, the date specified in such
security as the fixed date on which the payment of principal of such security
is due and payable, including pursuant to any mandatory redemption provision
(but excluding any provision providing for the repurchase of such security at
the option of the holder thereof upon the happening of any contingency beyond
the control of the issuer unless such contingency has occurred).

 

“Subordinated
Obligation” means any Debt of the Company (whether outstanding on the Issue
Date or thereafter Incurred) that is subordinate or junior in right of payment
to the Securities pursuant to a written agreement to that effect.

 

“Subsidiary”
means, in respect of any Person, any corporation, company (including any
limited liability company), association, partnership, joint venture or other
business entity of which a majority of the total voting power of the Voting
Stock is at the time owned or controlled, directly or indirectly, by:

 

(a) such
Person;

 

(b) such
Person and one or more Subsidiaries of such Person; or

 

(c) one or
more Subsidiaries of such Person.

 

 “Temporary Cash Investments” means any
of the following:

 

(a)
Investments in U.S. Government Obligations maturing within 365 days of the
date of acquisition thereof;

 

(b)
Investments in time deposit accounts, certificates of deposit, money market
deposits maturing within 90 days of the date of acquisition thereof issued
by a bank or trust company organized under the laws of the United States of
America or any state thereof having capital, surplus and undivided profits

 

27

 

aggregating in
excess of $500 million and whose long-term debt is rated “A-3” or “A–” or higher
according to Moody’s or S&P (or such similar equivalent rating by at least
one “nationally recognized statistical rating organization” (as defined in
Rule 436 under the Securities Act));

 

(c) repurchase
obligations with a term of not more than 30 days for underlying securities
of the types described in clause (a) entered into with:

 

(1) a bank
meeting the qualifications described in clause (b) above; or

 

(2) any
primary government securities dealer reporting to the Market Reports Division
of the Federal Reserve Bank of New York;

 

(d)
Investments in commercial paper, maturing not more than 90 days after the
date of acquisition, issued by a corporation (other than an Affiliate of the
Company) organized and in existence under the laws of the United States of
America with a rating at the time as of which any Investment therein is made of
“P-1” (or higher) according to Moody’s or “A-1” (or higher) according to
S&P (or such similar equivalent rating by at least one “nationally
recognized statistical rating organization” (as defined in Rule 436 under
the Securities Act));

 

(e) direct
obligations (or certificates representing an ownership interest in such
obligations) of any state of the United States of America (including any agency
or instrumentality thereof) for the payment of which the full faith and credit
of such state is pledged and which are not callable or redeemable at the
issuer’s option, provided that:

 

(1) the
long-term debt of such state is rated “A-3” or “A–” or higher according to
Moody’s or S&P (or such similar equivalent rating by at least one
“nationally recognized statistical rating organization” (as defined in
Rule 436 under the Securities Act)); and

 

(2) such
obligations mature within 180 days of the date of acquisition thereof; and

 

(f) money
market funds at least 95% of the assets of which constitute Temporary Cash
Equivalents of the kinds described in clauses (a) through (e) of this
definition.

 

“Total
Assets” means the total assets of the Company and the Restricted
Subsidiaries on a consolidated basis determined in accordance with GAAP as
shown on the most recent consolidated balance sheet of the Company.

 

“Trust
Indenture Act” or “TIA” means the Trust Indenture Act of 1939 as in
force at the date as of which this Indenture was executed, except as provided
in Section 9.03; provided, however, that in the event the Trust
Indenture Act of 1939 is amended after such date, “Trust Indenture Act” means,
to the extent required by any such amendment, the Trust Indenture Act of 1939
as so amended.

 

28

 

“Trustee”
means the Person named as the “Trustee” in the first paragraph of this
Indenture until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter “Trustee” shall mean
such successor Trustee.

 

“Trust
Officer” means any officer within the Corporate Trust department of the
Trustee (or any successor group of the Trustee) with direct responsibility for
the administration of this Indenture and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.

 

“Uniform
Commercial Code” means the New York Uniform Commercial Code as in effect
from time to time.

 

“Unrestricted
Subsidiary” means:

 

(a) any
Subsidiary of the Company that is designated after the Issue Date as an
Unrestricted Subsidiary as permitted or required pursuant to Section 4.11
and is not thereafter redesignated as a Restricted Subsidiary as permitted
pursuant thereto; and

 

(b) any
Subsidiary of an Unrestricted Subsidiary.

 

“U.S.
Government Obligations” means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer’s option.

 

“Voting
Stock” of any Person means all classes of Capital Stock or other interests
(including partnership interests) of such Person then outstanding and normally
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof.

 

“Wholly
Owned Restricted Subsidiary” means, at any time, a Restricted Subsidiary
all the Voting Stock of which (except directors’ qualifying shares) is at such
time owned, directly or indirectly, by the Company and its other Wholly Owned
Subsidiaries.

 

29

 

SECTION 1.02. Other
Definitions.

 

	
  Term

  	
   

  	
  Defined in Section

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “Affiliate
  Transaction”

  	
   

  	
  4.08

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “Asset Sales
  Prepayment Offer”

  	
   

  	
  4.06

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “Bankruptcy
  Law”

  	
   

  	
  6.01

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “Change of
  Control Offer”

  	
   

  	
  4.12

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “Change of
  Control Payment Date”

  	
   

  	
  4.12

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “Change of
  Control Purchase Price”

  	
   

  	
  4.12

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “covenant
  defeasance option”

  	
   

  	
  8.01

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “Custodian”

  	
   

  	
  6.01

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “legal
  defeasance option”

  	
   

  	
  8.01

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “Offer
  Amount”

  	
   

  	
  4.06

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “Offer
  Period”

  	
   

  	
  4.06

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “OID”

  	
   

  	
  2.01

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “Original
  Securities”

  	
   

  	
  2.01

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “Paying
  Agent”

  	
   

  	
  2.04

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “Purchase
  Date”

  	
   

  	
  4.06

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “Registrar”

  	
   

  	
  2.04

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  “Surviving
  Person”

  	
   

  	
  5.01

  	
   

  

 

SECTION 1.03. Incorporation
by Reference of Trust Indenture Act. This Indenture is subject to the
mandatory provisions of the TIA, which are incorporated by reference in and
made a part of this Indenture. The following TIA terms have the following
meanings:

 

“Commission”
means the SEC.

 

“indenture
securities” means the Securities.

 

“indenture
security holder” means a Holder.

 

“indenture to
be qualified” means this Indenture.

 

“indenture
trustee” or “institutional trustee” means the Trustee.

 

“obligor” on
the indenture securities means the Company and any other obligor on the
indenture securities.

 

All other TIA
terms used in this Indenture that are defined by the TIA, defined by TIA
reference to another statute or defined by SEC rule have the meanings assigned
to them by such definitions.

 

SECTION 1.04. Rules
of Construction. Unless the context otherwise requires:

 

(1) a term has the meaning assigned to it;

 

30

 

(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;

 

(3) “or” is not exclusive;

 

(4) “including” means including without limitation;

 

(5) words in the singular include the plural and words in the plural
include the singular;

 

(6) unsecured Debt shall not be deemed to be subordinate or junior to
secured Debt merely by virtue of its nature as unsecured Debt;

 

(7) the principal amount of any noninterest bearing or other discount
security at any date shall be the principal amount thereof that would be shown
on a balance sheet of the issuer dated such date prepared in accordance with
GAAP; and

 

(8) the principal amount of any Preferred Stock shall be the greater of
(i) the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock.

 

ARTICLE II

The Securities

 

SECTION 2.01. Amount
of Securities; Issuable in Series. The aggregate principal amount of
Securities which may be authenticated and delivered under this Indenture is
unlimited. All Securities shall be identical in all respects other than issue
prices and issuance dates. The Securities may be issued in one or more series; provided,
however, that any Securities issued with original issue discount (“OID”)
for Federal income tax purposes shall not be issued as part of the same series
as any Securities that are issued with a different amount of OID or are not
issued with OID. All Securities of any one series shall be substantially
identical except as to denomination.

 

Subject to
Section 2.03, the Trustee shall authenticate Securities for original issue
on the Issue Date in the aggregate principal amount of $500,000,000 (the
“Original Securities”). With respect to any Securities issued after the Issue
Date (except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, Original Securities pursuant to
Section 2.07, 2.08, 2.09 or 3.06), there shall be established in or
pursuant to a Board Resolution, and subject to Section 2.03, set forth, or
determined in the manner provided in an Officers’ Certificate, or established
in one or more indentures supplemental hereto, prior to the issuance of such
Securities:

 

(1) whether such Securities shall be issued as part of a new or
existing series of Securities and, if issued as part of a new series, the title

 

31

 

of such
Securities (which shall distinguish the Securities of the series from
Securities of any other series);

 

(2) the aggregate principal amount of such Securities to be authenticated
and delivered under this Indenture, which may be issued for an unlimited
aggregate principal amount (except for Securities authenticated and delivered
upon registration of transfer of, or in exchange for, or in lieu of, other
Securities of the same series pursuant to Section 2.07, 2.08, 2.09 or 3.06
and except for Securities which, pursuant to Section 2.03, are deemed
never to have been authenticated and delivered hereunder);

 

(3) the issue price and issuance date of such Securities, including the
date from which interest on such Securities shall accrue; and

 

(4) if applicable, that such Securities shall be issuable in whole or
in part in the form of one or more Global Securities and, in such case, the
respective depositories for such Global Securities; the form of any legend or
legends that shall be borne by any such Global Security in addition to or in
lieu of that set forth in Exhibit 1 and any circumstances in which any
such Global Security may be exchanged in whole or in part for Securities registered;
and any transfer of such Global Security in whole or in part may be registered
in the name or names of Persons other than the depository for such Global
Security or a nominee thereof;

 

SECTION 2.02. Form
and Dating. The Securities of each series and the Trustee’s certificate of
authentication shall be substantially in the form of Exhibit 1 which is
hereby incorporated in and expressly made a part of this Indenture. The
Securities of each series may have notations, legends or endorsements required
by law, stock exchange rule, agreements to which the Company is subject, if
any, or usage, provided that any such notation, legend or endorsement is in a
form reasonably acceptable to the Company. Each Security shall be dated the
date of its authentication. The terms of the Securities of each series set
forth in Exhibit 1 are part of the terms of this Indenture.

 

SECTION 2.03. Execution
and Authentication. An Officer (and for purposes of this Section 2.03, the
term Officer shall include any Vice President of the Company authorized by the
Board of Directors) shall sign the Securities for the Company by manual or
facsimile signature.

 

If an Officer
whose signature is on a Security no longer holds that office at the time the
Trustee authenticates the Security, the Security shall be valid nevertheless.

 

At any time
and from time to time after the execution and delivery of this Indenture, the
Company may deliver Securities of any series executed by the Company to the
Trustee for authentication, together with a written order of the Company in the
form of an Officers’ Certificate for the authentication and delivery of such
Securities, and the 

 

32

 

Trustee in
accordance with such written order of the Company shall authenticate and
deliver such Securities.

 

A Security
shall not be valid until an authorized signatory of the Trustee manually signs
the certificate of authentication on the Security. The signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.

 

The Trustee
may appoint an authenticating agent reasonably acceptable to the Company to
authenticate the Securities. Unless limited by the terms of such appointment,
an authenticating agent may authenticate Securities whenever the Trustee may do
so. Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as
any Registrar, Paying Agent or agent for service of notices and demands.

 

SECTION 2.04. Registrar
and Paying Agent. The Company shall maintain an office or agency in the
city of New York where Securities may be presented for registration of transfer
or for exchange (the “Registrar”) and an office or agency in the city of New
York where Securities may be presented for payment (the “Paying Agent”). The
Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may have one or more co-registrars and one or more
additional paying agents. The term “Paying Agent” includes any additional
paying agent.

 

The Company
shall enter into an appropriate agency agreement with any Registrar, Paying
Agent or co-registrar not a party to this Indenture, which shall incorporate
the terms of the TIA. The agreement shall implement the provisions of this
Indenture that relate to such agent. The Company shall notify the Trustee of
the name and address of any such agent. If the Company fails to maintain a
Registrar or Paying Agent, the Trustee shall act as such and shall be entitled
to appropriate compensation therefor pursuant to Section 7.07. The Company
or any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar, co-registrar or transfer agent.

 

The Company
initially appoints the Trustee as Registrar and Paying Agent in connection with
the Securities.

 

SECTION 2.05. Paying
Agent To Hold Money in Trust. Prior to each due date of the principal and
interest on any Security, the Company shall deposit with the Paying Agent a sum
sufficient to pay such principal and interest when so becoming due. The Company
shall require each Paying Agent (other than the Trustee) to agree in writing
that the Paying Agent shall hold in trust for the benefit of Holders or the
Trustee all money held by the Paying Agent for the payment of principal of or
interest on the Securities and shall notify the Trustee of any default by the
Company in making any such payment. If the Company or a Wholly Owned Subsidiary
acts as Paying Agent, it shall segregate the money held by it as Paying Agent
and hold it as a separate trust fund. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee and to account for any
funds disbursed by the Paying Agent. Upon complying 

 

33

 

with this Section 2.05, the
Paying Agent shall have no further liability for the money delivered to the
Trustee.

 

SECTION 2.06. Holder
Lists. The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee, in writing at least five Business Days before each interest payment
date and at such other times as the Trustee may request in writing, a list in
such form and as of such date as the Trustee may reasonably require of the
names and addresses of Holders.

 

SECTION 2.07. Replacement
Securities. If a mutilated Security is surrendered to the Registrar or if
the Holder of a Security claims that such Security has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Security if the requirements of Section 8-405 of the Uniform
Commercial Code are met and the Holder satisfies any other reasonable
requirements of the Trustee. If required by the Trustee or the Company, such
Holder shall furnish an indemnity bond sufficient in the judgment of the
Company and the Trustee to protect the Company, the Trustee, the Paying Agent,
the Registrar and any co-registrar from any loss which any of them may suffer
if a Security is replaced. The Company and the Trustee may charge the Holder
for their expenses in replacing a Security.

 

Every
replacement Security is an additional obligation of the Company.

 

SECTION 2.08. Outstanding
Securities. Securities outstanding at any time are all Securities
authenticated by the Trustee except for those canceled by it, those delivered
to it for cancellation and those described in this Section 2.08 as not
outstanding. A Security does not cease to be outstanding because the Company or
an Affiliate of the Company holds the Security.

 

If a Security
is replaced pursuant to Section 2.07, it ceases to be outstanding unless
the Trustee and the Company receive proof satisfactory to them that the
replaced Security is held by a bona fide purchaser.

 

If the Paying
Agent segregates and holds in trust, in accordance with this Indenture, on a
redemption date or maturity date money sufficient to pay all principal and
interest payable on that date with respect to the Securities (or portions
thereof) to be redeemed or maturing, as the case may be, then on and after that
date such Securities (or portions thereof) cease to be outstanding and interest
on them ceases to accrue.

 

SECTION 2.09. Temporary
Securities. Until definitive Securities are ready for delivery, the Company
may prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities but may
have variations that the Company considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Securities and deliver them in exchange
for temporary Securities.

 

34

 

SECTION 2.10. Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee and no one else shall cancel and destroy (subject to the
record retention requirements of the Exchange Act) all Securities surrendered
for registration of transfer, exchange, payment or cancellation and deliver a
certificate of such destruction to the Company unless the Company directs the
Trustee to deliver canceled Securities to the Company. The Company may not
issue new Securities to replace Securities it has redeemed, paid or delivered to
the Trustee for cancellation.

 

SECTION 2.11. Defaulted
Interest. If the Company defaults in a payment of interest on the
Securities, the Company shall pay the defaulted interest (plus interest on such
defaulted interest to the extent lawful) in any lawful manner. The Company may
pay the defaulted interest to the persons who are Holders on a subsequent
special record date. The Company shall fix or cause to be fixed any such
special record date and payment date to the reasonable satisfaction of the
Trustee and shall promptly mail to each Holder a notice that states the special
record date, the payment date and the amount of defaulted interest to be paid.

 

SECTION 2.12. CUSIP
Numbers. The Company in issuing the Securities may use “CUSIP” numbers (if
then generally in use) and, if so, the Trustee shall use “CUSIP” numbers in
notices of redemption as a convenience to Holders; provided, however,
that neither the Company nor the Trustee shall have any responsibility for any
defect in the “CUSIP” number that appears on any Security, check, advice of
payment or redemption notice, and any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that reliance
may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.

 

ARTICLE III

Redemption

 

SECTION 3.01. Notices
to Trustee. If the Company elects to redeem Securities pursuant to
paragraph 5 of the Securities or is required to redeem Securities pursuant
to paragraph 8 of the Securities, it shall notify the Trustee in writing
of the redemption date, the principal amount of Securities to be redeemed and
that such redemption is being made pursuant to either paragraph 5 or
paragraph 8 of the Securities.

 

The Company
shall give each notice to the Trustee provided for in this Section 3.01 at
least 45 days before the redemption date unless the Trustee consents to a
shorter period. Such notice shall be accompanied by an Officers’ Certificate
from the Company to the effect that such redemption will comply with the
conditions herein.

 

35

 

SECTION 3.02. Selection
of Securities To Be Redeemed. If fewer than all the Securities are to be
redeemed pursuant to paragraph 5 of the Securities, the Trustee shall
select the Securities to be redeemed pro rata or by lot or by a method that
complies with applicable legal and securities exchange requirements, if any,
and that the Trustee considers fair and appropriate and in accordance with
methods generally used at the time of selection by fiduciaries in similar
circumstances. The Trustee shall make the selection from outstanding Securities
not previously called for redemption. The Trustee may select for redemption
portions of the principal of Securities that have denominations larger than
$1,000. Securities and portions of them the Trustee selects shall be in amounts
of $1,000 or a whole multiple of $1,000. Provisions of this Indenture that
apply to Securities called for redemption also apply to portions of Securities
called for redemption. The Trustee shall notify the Company promptly of the
Securities or portions of Securities to be redeemed.

 

SECTION 3.03. Notice
of Redemption. At least 30 days but not more than 60 days before a
date for redemption of Securities, the Company shall mail a notice of
redemption by first-class mail to each Holder of Securities to be redeemed at
such Holder’s registered address.

 

The notice
shall identify the Securities to be redeemed and shall state:

 

(1) the redemption date;

 

(2) the redemption price;

 

(3) the name and address of the Paying Agent;

 

(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;

 

(5) if fewer than all the outstanding Securities are to be redeemed,
the identification and principal amounts of the particular Securities to be
redeemed;

 

(6) that, unless the Company defaults in making such redemption
payment, interest on Securities (or portion thereof) called for redemption
ceases to accrue on and after the redemption date, and the only remaining right
of the Holders is to receive payment of the redemption price upon surrender to
the Paying Agent; and

 

(7) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Securities.

 

At the Company’s
request, the Trustee shall give the notice of redemption in the Company’s name
and at the Company’s expense. In such event, the Company shall provide the
Trustee with the information required by this Section 3.03 at least
45 days before the redemption date.

 

36

 

SECTION 3.04. Effect
of Notice of Redemption. Once notice of redemption is mailed, Securities
called for redemption become due and payable on the redemption date and at the
redemption price stated in the notice. Upon surrender to the Paying Agent, such
Securities shall be paid at the redemption price stated in the notice, plus
accrued interest, if any, to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
related interest payment date that is on or prior to the date of redemption). Failure
to give notice or any defect in the notice to any Holder shall not affect the
validity of the notice to any other Holder.

 

SECTION 3.05. Deposit
of Redemption Price. Prior to or on the redemption date, the Company shall
deposit with the Paying Agent (or, if the Company or a Wholly Owned Subsidiary
is the Paying Agent, shall segregate and hold in trust) money sufficient to pay
the redemption price of and accrued interest, if any (subject to the right of
Holders of record on the relevant record date to receive interest due on the
related interest payment date that is on or prior to the date of redemption),
on all Securities to be redeemed on that date other than Securities or portions
of Securities called for redemption that have been delivered by the Company to
the Trustee for cancellation.

 

SECTION 3.06. Securities
Redeemed in Part. Upon surrender of a Security that is redeemed in part,
the Company shall execute and the Trustee shall authenticate for the Holder (at
the Company’s expense) a new Security equal in principal amount to the
unredeemed portion of the Security surrendered.

 

ARTICLE IV

Covenants

 

SECTION 4.01. Payment
of Securities. The Company shall promptly pay the principal of and interest
on the Securities on the dates and in the manner provided in the Securities and
in this Indenture. Principal and interest shall be considered paid on the date
due if on such date the Trustee or the Paying Agent holds in accordance with
this Indenture money sufficient to pay all principal and interest then due.

 

The Company
shall pay interest on overdue principal at the rate per annum specified
therefor in the Securities, and it shall pay interest on overdue installments
of interest at the rate borne by the Securities, to the extent lawful.

 

SECTION 4.02. SEC
Reports. Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall
file with the Commission and provide the Trustee with such annual and quarterly
reports and such information, documents and other reports as are specified in
Sections 13 and 15(d) of the Exchange Act and applicable to a U.S.
corporation subject to such Sections, such information, documents and reports
to be so filed and provided at the times specified for the filing of such
information, documents and reports under such Sections; provided, however,
that the Company shall not be so obligated to file such

 

37

 

information, documents and
reports with the Commission if the Commission does not permit such filings; provided
further, however, that the Company shall be required to provide
to Holders any such information, documents or reports that are not so filed. The
Company shall also comply with the other provisions of TIA § 314(a). Notwithstanding
anything herein to the contrary, the Company will not be deemed to have failed
to comply with any of its obligations hereunder for purposes of clause (d) of Section
6.01 until 120 days after the date any report hereunder is due.

 

SECTION 4.03. Limitation
on Debt. The Company shall not, and shall not permit any Restricted
Subsidiary to, Incur, directly or indirectly, any Debt unless, after giving
effect to the application of the proceeds thereof, no Default or Event of
Default would occur as a consequence of such Incurrence and no Default or Event
of Default would be continuing following such Incurrence and application of
proceeds and either:

 

(1) after giving effect to the Incurrence of such Debt and the
application of the proceeds thereof, the Consolidated Interest Coverage Ratio
would be greater than 2.00 to 1.00 provided that, if such Debt is Debt
of a Restricted Subsidiary then, simultaneously with the Incurrence of such
Debt, the Restricted Subsidiary executes and delivers a supplemental indenture
providing for a full and unconditional Guarantee of payment of the Securities
by such Restricted Subsidiary; or

 

(2) such Debt is Permitted Debt.

 

The term “Permitted
Debt” is defined to include the following:

 

(a) Debt of the Company evidenced by the securities and of Restricted
Subsidiaries Restricted Subsidiary, evidenced by guarantees relating to the Securities;

 

(b) Debt of the Company or a Restricted Subsidiary (including
Guarantees thereof) (i) under any Credit Facilities, (ii) Incurred
pursuant to a Real Estate Financing Transaction, a Sale and Leaseback
Transaction or an Equipment Financing Transaction, (iii) Incurred in
respect of Capital Lease Obligations, (iv) Incurred pursuant to Debt
Issuances or (v) Incurred by a Receivables Entity, in a Qualified
Receivables Transaction that is not recourse to the Company or any other
Restricted Subsidiary (except for Standard Securitization Undertakings), provided
that the aggregate principal amount of all such Debt in clauses (i)
through (v) hereof at any one time outstanding shall not exceed the greater of
(1) $2,500 million (or following the Jean Coutu Acquisition, $3,500
million), which amount shall be permanently reduced by the amount of Net
Available Cash used to Repay Debt under the Credit Facilities, and not
subsequently reinvested in Additional Assets or used to purchase Securities or
Repay other Debt, pursuant to Section 4.06 and (2) the sum of the amount equal
to (A) 60% of the book value of the inventory (determined using the
first-in-first-out method of accounting) of the Company and the Restricted
Subsidiaries and (B) 85% of the book value of the

 

38

 

accounts
receivables of the Company and the Restricted Subsidiaries, including any
Receivable Entity that is a Restricted Subsidiary;

 

(c) Debt of the Company outstanding on the Issue Date and evidenced by
the [•]%
Notes and of Restricted Subsidiaries, including any future Restricted
Subsidiary, evidenced by guarantees relating to the [•]% Notes;

 

(d) Debt of the Company outstanding on the Issue Date and evidenced by
the 7.5% Notes and of Restricted Subsidiaries, including any furture Restricted
Subsidiary evidenced by Guarantees relating to the 7.5% Notes;

 

(e) Debt Incurred after the Issue Date in respect of Purchase Money
Debt, provided that the aggregate principal amount of such Debt does not
exceed 80% of the Fair Market Value (on the date of the Incurrence thereof) of
the Property acquired, constructed, developed or leased, including additions
and improvements thereto;

 

(f) Debt of the Company owing to and held by any consolidated
Restricted Subsidiary and Debt of a Restricted Subsidiary owing to and held by
the Company or any consolidated Restricted Subsidiary; provided, however,
that any subsequent issue or transfer of Capital Stock or other event that
results in any such consolidated Restricted Subsidiary ceasing to be a
consolidated Restricted Subsidiary or any subsequent transfer of any such Debt
(except to the Company or a consolidated Restricted Subsidiary) shall be
deemed, in each case, to constitute the Incurrence of such Debt by the issuer
thereof;

 

(g) Debt under Interest Rate Agreements entered into by the Company or
a Restricted Subsidiary for the purpose of limiting interest rate risk of the
financial management of the Company or such Restricted Subsidiary and not for
speculative purposes, provided that the obligations under such
agreements are directly related to payment obligations on Debt otherwise
permitted by the terms of this Section 4.03;

 

(h) Debt under Currency Exchange Protection Agreements entered into by
the Company or a Restricted Subsidiary for the purpose of limiting currency exchange
rate risks directly related to transactions entered into by the Company or such
Restricted Subsidiary and not for speculative purposes;

 

(i) Debt under Commodity Price Protection Agreements entered into by
the Company or a Restricted Subsidiary of the financial management of the
company or that Restricted Subsidiary and not for speculative purposes;

 

(j) Debt in connection with one or more standby letters of credit,
banker’s acceptance, performance or surety bonds or completion guarantees
issued by the Company or a Restricted Subsidiary or pursuant to self-insurance
obligations and not in connection with the borrowing of money or the obtaining
of advances or credit;

 

(k) Debt outstanding on the Issue Date not otherwise described in
clauses (a) through (j) above or clauses (p) through (q) below;

 

39

 

(l) other Debt of the Company or a Restricted Subsidiary (including
Guarantees thereof) in an aggregate principal amount outstanding at any one
time not to exceed $600 million;

 

(m) Debt of a Restricted Subsidiary outstanding on the date on which
that Restricted Subsidiary was acquired by the Company or otherwise became a
Restricted Subsidiary (other than Debt Incurred as consideration in, or to
provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of transactions pursuant to which that
Restricted Subsidiary became a Subsidiary of the Company or was otherwise
acquired by the Company), provided that at the time that Restricted
Subsidiary was acquired by the Company or otherwise became a Restricted
Subsidiary and after giving effect to the Incurrence of that Debt, the Company
would have been able to Incur $1.00 of additional Debt pursuant to
clause (1) of the first paragraph of this Section 4.03;

 

(n) Debt arising from the honoring by a bank or other financial
institution of a check or draft or other similar instrument inadvertently drawn
against insufficient funds, provided that such Debt is extinguished
within five Business Days of its Incurrence;

 

(o) endorsements of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business;

 

(p) [intentionally omitted];

 

(q) Debt in respect of Sale and Leaseback Transactions or Real Estate
Financing Transactions involving only real property (and the related personal
property) owned by the Company or a Restricted Subsidiary on or after the Issue
Date in an aggregate principal amount outstanding at any one time not to exceed
$150.0 million, provided that such Sale and Leaseback Transactions
or Real Estate Financing Transactions may involve Property other than real
property (and the related personal property) owned on or after the Issue Date
to the extent the portion of the Debt related to such Property is permitted by
another provision of this Section 4.03 at the time of Incurrence;

 

(r) Debt in respect of Sale and Leaseback Transactions that are not
Capital Lease Obligations Incurred to finance the acquisition, construction and
development of Property after the Issue Date, including additions and
improvements thereto, provided that any reclassification of such Debt as
a Capital Lease Obligation shall be deemed an Incurrence of such Debt;

 

(s) Permitted Refinancing Debt Incurred in respect of Debt Incurred
pursuant to clause (1) of the first paragraph of this Section 4.03
and clauses (a), (d), (e), (k), (m) and (q) above; and

 

(t) Debt arising from agreements of the Company or any Restricted
Subsidiary providing for indemnification, adjustment of purchase price or
similar 

 

40

 

obligations,
in each case, Incurred or assumed in connection with the disposition of any
business, assets or a Subsidiary, other than Guarantees of Debt incurred by any
Person acquiring all or any portion of such business, assets or Restricted
Subsidiary for the purpose of financing such acquisition; provided, however,
that (a) such Debt is not reflected on the balance sheet of the Company or any
Restricted Subsidiary (contingent obligations referred to in a footnote or
footnotes to financial statements and not otherwise reflected on the balance
sheet will not be deemed to be reflected on such balance sheet for purposes of
this clause (a)) and (b) the maximum assumable liability in respect of
such Debt will at no time exceed the gross proceeds including non-cash proceeds
(the fair market value of such non-cash proceeds being measured at the time
received and without giving effect to any subsequent changes in value) actually
received by the Company or such Restricted Subsidiary in connection with such
disposition.

 

For purposes
of determining compliance with this Section 4.03, (1) in the event that an item
of Debt meets the criteria of more than one of the types of Debt described
herein, the Company, in its sole discretion, will classify such item of Debt at
the time of Incurrence and only be required to include the amount and type of
such Debt in one of the above clauses, (2) the Company will be entitled at the
time of such Incurrence to divide and classify an item of Debt in more than one
of the types of Debt described herein and (3) with respect to Debt permitted
under clause (k) in respect or Sale and Leaseback Transactions that are not
Capital Lease Obligations on the Issue Date, any reclassification of such Debt
as a Capital Lease Obligation shall not be deemed an Incurrence of such Debt; provided,
however, that (u) all outstanding Debt evidenced by the 8.125% Notes
will be deemed to have been incurred pursuant to clause (b) of the second
paragraph of this Section 4.03, (v) all outstanding Debt evidenced by the
Receivables Facility will be deemed to have been incurred pursuant to clause (b)
of the second paragraph of this Section 4.03, (w) [intentionally omitted], (x)
all outstanding Debt under the Senior Credit Facility immediately following the
Issue Date will be deemed to have been Incurred pursuant to clause (b) of the
second paragraph of this Section 4.03, (y) any Permitted Debt that is not
Secured Debt may later be reclassified as having been Incurred pursuant to
clause (1) of the first paragraph of this Section 4.03 to the extent such Debt
could be Incurred pursuant to such clause at the time of such reclassification,
and (z) any Permitted Debt may later be reclassified as having been Incurred
pursuant to any other clause of the second paragraph of this Section 4.03 to
the extent such Debt could be Incurred pursuant to such clause at the time of
such reclassification.

 

SECTION 4.04. Limitation
on Restricted Payments. The Company shall not make, and shall not permit
any Restricted Subsidiary to make, directly or indirectly, any Restricted
Payment if at the time of, and after giving effect to, such proposed Restricted
Payment:

 

(a) a Default or Event of Default shall have occurred and be
continuing;

 

(b) the Company could not Incur at least $1.00 of additional Debt
pursuant to clause (1) of the first paragraph of Section 4.03; or

 

41

 

(c) the aggregate amount of such Restricted Payment and all other
Restricted Payments declared or made since February 12, 2003 (the amount of any
Restricted Payment, if made other than in cash, to be based upon Fair Market
Value) would exceed an amount equal to the sum of:

 

(1) 50% of the aggregate amount of Consolidated Net Income accrued
during the period (treated as one accounting period) from the beginning of the
first fiscal quarter that commences after February 12, 2003 occurs to the end
of the most recent fiscal quarter for which financial statements have been
filed with the SEC (or if the aggregate amount of Consolidated Net Income for
such period shall be a deficit, minus 100% of such deficit); plus

 

(2) 100% of Capital Stock Sale Proceeds; plus

 

(3) the sum of:

 

(A) the aggregate net cash proceeds received by the Company or any
Restricted Subsidiary from the issuance or sale after February 12, 2003 of
convertible or exchangeable Debt that has been converted into or exchanged for
Capital Stock (other than Disqualified Stock) of the Company; and

 

(B) the aggregate amount by which Debt (other than Subordinated
Obligations) of the Company or any Restricted Subsidiary is reduced on the
Company’s consolidated balance sheet after February 12, 2003 upon the
conversion or exchange of any Debt (other than convertible or exchangeable debt
issued or sold after February 12, 2003) for Capital Stock (other than
Disqualified Stock) of the Company;

 

excluding, in the case of clause (A) or (B):

 

(x) any such Debt issued or sold to the
Company or a Subsidiary of the Company or an employee stock ownership plan or
trust established by the Company or any such Subsidiary for the benefit of
their employees; and

 

(y) the aggregate amount of any cash or
other Property distributed by the Company or any Restricted Subsidiary upon any
such conversion or exchange;

 

plus

 

(4) an amount equal to the sum of:

 

(A) the net reduction in Investments in any Person other than the
Company or a Restricted Subsidiary resulting from dividends, 

 

42

 

repayments of
loans or advances or other transfers of Property made after February 12, 2003,
in each case to the Company or any Restricted Subsidiary from such Person less
the cost of the disposition of such Investments; and

 

(B) the portion (proportionate to the Company’s equity interest in such
Unrestricted Subsidiary) of the Fair Market Value of the net assets of an
Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated
a Restricted Subsidiary (provided that such designation occurs after February
12, 2003);

 

provided, however,
that the foregoing sum shall not exceed, in the case of any Person, the amount
of Investments previously made (and treated as a Restricted Payment) by the
Company or any Restricted Subsidiary in such Person.

 

Notwithstanding
the foregoing limitation, the Company may:

 

(a) pay dividends on its Capital Stock within 60 days of the
declaration thereof if, on said declaration date, such dividends could have
been paid in compliance with the Indenture; provided, however,
that at the time of such payment of such dividend, no other Default or Event of
Default shall have occurred and be continuing (or result therefrom); provided
further, however, that, if declared on or after February 12, 2003,
such dividend shall be included in the calculation of the amount of Restricted
Payments;

 

(b) purchase, repurchase, redeem, legally defease, acquire or retire
for value Capital Stock of the Company or Subordinated Obligations on or after
February 12, 2003 in exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of the Company (other than Disqualified Stock
and other than Capital Stock issued or sold to a Subsidiary of the Company or
an employee stock ownership plan or trust established by the Company or any
such Subsidiary for the benefit of their employees); provided, however,
that:

 

(1) such purchase, repurchase, redemption, legal defeasance,
acquisition or retirement shall be excluded in the calculation of the amount of
Restricted Payments; and

 

(2) the Capital Stock Sale Proceeds from such exchange or sale shall be
excluded from the calculation pursuant to clause (c)(2) above;

 

(c) purchase, repurchase, redeem, legally defease, acquire or retire
for value any Subordinated Obligations on or after February 12, 2003 in
exchange for, or out of the proceeds of the substantially concurrent sale of,
Permitted Refinancing Debt; provided, however, that such
purchase, repurchase, redemption, legal defeasance, acquisition or retirement
shall be excluded in the calculation of the amount of Restricted Payments;

 

43

 

(d) [intentionally omitted];

 

(e) so long as no Default or Event of Default has occurred and is
continuing the repurchase or other acquisition on or after February 12, 2003 of
shares of, or options to purchase shares of, Capital Stock of the Company or
any of its Subsidiaries from employees, former employees, directors or former
directors of the Company or any of its Subsidiaries (or permitted transferees
of such employees, former employees, directors or former directors), pursuant
to the terms of the agreements (including employment agreements) or plans (or
amendments thereto) approved by the Board of Directors under which such individuals
purchase or sell, or are granted the option to purchase or sell, shares of such
Capital Stock; provided, however, that the aggregate amount of
such repurchases and other acquisitions shall not exceed $15.0 million; provided
further, however, that such repurchases and other acquisitions shall
be included in the calculation of the amount of Restricted Payments;

 

(f) make payments not to exceed $2.5 million in the aggregate to
enable the Company to make payments to holders of its Capital Stock in lieu of
the issuance of fractional shares of its Capital Stock on or after February 12,
2003; provided, however, that such payments shall be included in
the calculation of the amount of Restricted Payments; and

 

(g) make any other Restricted Payments on or after February 12, 2003 not
to exceed an aggregate amount of $40.0 million; provided, however,
that such payments shall be included in the calculation of the amount of
Restricted Payments.

 

SECTION 4.05. Limitation
on Liens. The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, Incur or suffer to exist, any Lien
(other than Permitted Liens) upon any of its Property (including Capital Stock
of a Restricted Subsidiary), whether owned on the Issue Date or thereafter
acquired, or any interest therein or any income or profits therefrom, unless it
has made or will make effective provision whereby the Securities will be
secured by such Lien equally and ratably with (or prior to) all other Debt of
the Company or any Restricted Subsidiary secured by such Lien.

 

SECTION 4.06. Limitation
on Asset Sales. The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, consummate any Asset Sale unless:

 

(a) the Company or such Restricted Subsidiary receives consideration at
the time of such Asset Sale at least equal to the Fair Market Value of the
Property subject to such Asset Sale;

 

(b) at least 75% of the consideration paid to the Company or such
Restricted Subsidiary in connection with such Asset Sale is in the form of
Qualified Consideration; and

 

44

 

(c) the Company delivers an Officers’ Certificate to the Trustee
certifying that such Asset Sale complies with the foregoing clauses (a)
and (b).

 

The Net
Available Cash (or any portion thereof) from Asset Sales may be applied by the
Company or a Restricted Subsidiary, to the extent the Company or such
Restricted Subsidiary elects (or is required by the terms of any Debt):

 

(a) to Repay the Credit Facilities, the 9.5% Notes, the 8.125% Notes,
the 7.5% Notes, the [•]% Notes or any other Debt of the Company or any
Restricted Subsidiary secured by a Lien on Property of the Company or any
Restricted Subsidiary of the Company (excluding, in any such case, any Debt
owed to the Company or an Affiliate of the Company); or

 

(b) to reinvest in Additional Assets or Expansion Capital Expenditures
(including by means of an Investment in Additional Assets or Expansion Capital
Expenditures by a Restricted Subsidiary with Net Available Cash received by the
Company or another Restricted Subsidiary); provided, however,
that the Net Available Cash (or any portion thereof) from Asset Sales from the
Company to any Subsidiary must be reinvested in Additional Assets or Expansion
Capital Expenditures of the Company.

 

Pending
application of Net Available Cash pursuant to this Section 4.06, which
shall not be required in respect of an Asset Sale if the Net Available Cash
from such Asset Sale is less than $1 million, such Net Available Cash
shall be invested in Temporary Cash Investments or applied to temporarily
reduce revolving credit indebtedness. If the Net Available Cash from an Asset
Sale equals or exceeds $1 million, any Net Available Cash from such Asset
Sale not applied in accordance with the preceding paragraph within 270 days
from the date of the receipt of such Net Available Cash or that is not
segregated from the general funds of the Company for investment in identified
Additional Assets in respect of a project that shall have been commenced, and
for which binding contractual commitments have been entered into, prior to the
end of such 270-day period and that shall not have been completed or abandoned
shall constitute “Excess Proceeds”; provided, however, that the
amount of any Net Available Cash that ceases to be so segregated as
contemplated above and any Net Available Cash that is segregated in respect of
a project that is abandoned or completed shall also constitute “Excess Proceeds”
at the time any such Net Available Cash ceases to be so segregated or at the
time the relevant project is so abandoned or completed, as applicable; provided
further, however, that the amount of any Net Available Cash that
continues to be segregated for investment and that is not actually reinvested
within 24 months from the date of the receipt of such Net Available Cash
shall also constitute “Excess Proceeds”.

 

When the
aggregate amount of Excess Proceeds exceeds $50.0 million (taking into
account income earned on such Excess Proceeds, if any), the Company will be
required to make an offer to purchase (the “Asset Sales Prepayment Offer”) the
Securities which offer shall be in the amount of the Allocable Excess Proceeds,
on a pro rata basis according to principal amount at maturity, at a purchase price
equal to 100% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the purchase 

 

45

 

date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date), in accordance with the procedures (including
prorating in the event of oversubscription) set forth in this Indenture. To the
extent that any portion of the amount of Net Available Cash remains after
compliance with the preceding sentence and provided that all Holders have been
given the opportunity to tender their Securities for purchase in accordance
with this Indenture, the Company or such Restricted Subsidiary may use such
remaining amount for any purpose permitted by this Indenture and the amount of
Excess Proceeds will be reset to zero.

 

The term “Allocable
Excess Proceeds” will mean the product of:

 

(a) the Excess Proceeds and

 

(b) a fraction,

 

(1) the numerator of which is the aggregate principal amount of the
Securities outstanding on the date of the Asset Sales Prepayment Offer, and

 

(2) the denominator of which is the sum of the aggregate principal
amount of the Securities outstanding on the date of the Asset Sales Prepayment
Offer and the aggregate principal amount of other Debt of the Company
outstanding on the date of the Asset Sales Prepayment Offer that is pari
passu in right of payment with the Securities and subject to terms and
conditions in respect of Asset Sales similar in all material respects to this Section 4.06
and requiring the Company to make an offer to purchase such Debt or otherwise
repay such Debt at substantially the same time as the Asset Sales Prepayment
Offer.

 

Within five
Business Days after the Company is obligated to make an Asset Sales Prepayment
Offer as described in the preceding paragraph, the Company shall send a written
notice, by first-class mail, to the Holders, accompanied by such information
regarding the Company and its Subsidiaries as the Company in good faith believes
will enable such Holders to make an informed decision with respect to such Asset
Sales Prepayment Offer. Such notice shall state, among other things, the
purchase price and the purchase date (the “Purchase Date”), which shall be,
subject to any contrary requirements of applicable law, a Business Day no
earlier than 30 days nor later than 60 days from the date such notice is
mailed.

 

Not later than
the date upon which written notice of an Asset Sales Prepayment Offer is
delivered to the Trustee as provided above, the Company shall deliver to the
Trustee an Officers’ Certificate as to (i) the amount of the Asset Sales Prepayment
Offer (the “Offer Amount”), (ii) the allocation of the Net Available Cash
from the Asset Sales pursuant to which such Prepayment Offer is being made and
(iii) the compliance of such allocation with the provisions of
clause (b) of the second paragraph of this Section 4.06. On or before
the Purchase Date, the Company shall also irrevocably deposit with the Trustee
or with the Paying Agent (or, if the Company or a Wholly

 

46

 

Owned Subsidiary is the Paying
Agent, shall segregate and hold in trust) in Temporary Cash Investments (other
than in those enumerated in such clause (b) of the definition of Temporary
Cash Investments), maturing on the last day prior to the Purchase Date or on
the Purchase Date if funds are immediately available by open of business, an
amount equal to the Offer Amount to be held for payment in accordance with the
provisions of this Section 4.06. Upon the expiration of the period for which
the Prepayment Offer remains open (the “Offer Period”), the Company shall
deliver to the Trustee for cancellation the Securities or portions thereof that
have been properly tendered to and are to be accepted by the Company. The
Trustee or the Paying Agent shall, on the Purchase Date, mail or deliver
payment to each tendering Holder in the amount of the purchase price. In the
event that the aggregate purchase price of the Securities delivered by the
Company to the Trustee is less than the Offer Amount, the Trustee or the Paying
Agent shall deliver the excess to the Company immediately after the expiration
of the Offer Period for application in accordance with this Section 4.06.

 

Holders electing
to have a Security purchased shall be required to surrender the Security, with
an appropriate form duly completed, to the Company or its agent at the address
specified in the notice at least three Business Days prior to the Purchase Date.
Holders shall be entitled to withdraw their election if the Trustee or the
Company receives not later than one Business Day prior to the Purchase Date, a
telegram, telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Security that was delivered for purchase by
the Holder and a statement that such Holder is withdrawing its election to have
such Security purchased. If at the expiration of the Offer Period the aggregate
principal amount of Securities surrendered by Holders exceeds the Offer Amount,
the Company shall select the Securities to be purchased on a pro rata basis for
all Securities (with such adjustments as may be deemed appropriate by the
Company so that only Securities in denominations of $1,000, or integral
multiples thereof, shall be purchased). Holders whose Securities are purchased
only in part shall be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered.

 

At the time
the Company delivers Securities to the Trustee that are to be accepted for
purchase, the Company shall also deliver an Officers’ Certificate stating that
such Securities are to be accepted by the Company pursuant to and in accordance
with the terms of this Section 4.06. A Security shall be deemed to have been
accepted for purchase at the time the Trustee or the Paying Agent mails or
delivers payment therefor to the surrendering Holder.

 

The Company
will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or
regulations in connection with the repurchase of Securities pursuant to this Section 4.06.
To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section 4.06, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under this Section 4.06 by virtue thereof.

 

47

 

SECTION 4.07. Limitation
on Restrictions on Distributions from Restricted Subsidiaries. The Company
shall not, and shall not permit any Restricted Subsidiary to, directly or
indirectly, create or otherwise cause or suffer to exist any consensual
restriction on the right of any Restricted Subsidiary to:

 

(a) pay dividends, in cash or otherwise, or make any other
distributions on or in respect of its Capital Stock, or pay any Debt or other
obligation owed, to the Company or any other Restricted Subsidiary;

 

(b) make any loans or advances to the Company or any other Restricted
Subsidiary; or

 

(c) transfer any of its Property to the Company or any other Restricted
Subsidiary.

 

The foregoing
limitations will not apply:

 

(1) with respect to clauses (a), (b) and (c), to restrictions:

 

(A) in effect on the Issue Date;

 

(B) relating to Debt of a Restricted Subsidiary and existing at the
time it became a Restricted Subsidiary if such restriction was not created in
connection with or in anticipation of the transaction or series of transactions
pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or
was acquired by the Company;

 

(C) that result from the Refinancing of Debt Incurred pursuant to an
agreement referred to in clause (1)(A) or (B) above or in
clause (2)(A) or (B) below, provided such restriction is no less
favorable to the Holders in any material respect, as reasonably determined by
the Board of Directors (as evidenced by a Board Resolution), than those under
the agreement evidencing the Debt so Refinanced;

 

(D) resulting from the Incurrence of any Permitted Debt permitted
pursuant to Section 4.03, provided that (i) the restriction is no
less favorable to the Holders in any material respect, as reasonably determined
by the Board of Directors (as evidenced by a Board Resolution), than the
restrictions of the same type contained in this Indenture and (ii) the
Board of Directors determines (as evidenced by a Board Resolution) in good
faith that such restrictions will not impair the ability of the Company to make
payments of principal and interest on the Securities when due;

 

(E) existing by reason of applicable law; or

 

48

 

(F) any contractual requirements incurred with respect to Qualified
Receivables Transactions relating exclusively to a Receivables Entity that, in
the good faith determination of the Board of Directors, are customary for
Qualified Receivables Transactions; and

 

(2) with respect to clause (c) only, to restrictions:

 

(A) relating to Debt that is permitted to be Incurred and secured
without also securing the Securities pursuant to Sections 4.03 and 4.05 that
limit the right of the debtor to dispose of the Property securing such Debt;

 

(B) encumbering Property at the time such Property was acquired by the
Company or any Restricted Subsidiary, so long as such restriction relates
solely to the Property so acquired and was not created in connection with or in
anticipation of such acquisition;

 

(C) resulting from customary provisions restricting subletting or
assignment of leases or customary provisions in other agreements that restrict
assignment of such agreements or rights thereunder; or

 

(D) customary restrictions contained in agreements relating to the sale
or other disposition of Property limiting the transfer of such Property pending
the closing of such sale.

 

SECTION 4.08. Limitation
on Transactions with Affiliates. The Company shall not, and shall not
permit any Restricted Subsidiary to, directly or indirectly, conduct any
business or enter into or suffer to exist any transaction or series of
transactions (including the purchase, sale, transfer, assignment, lease,
conveyance or exchange of any Property or the rendering of any service) with,
or for the benefit of, any Affiliate of the Company (an “Affiliate Transaction”),
unless:

 

(a) the terms of such Affiliate Transaction are:

 

(1) set forth in writing;

 

(2) in the best interest of the Company or such Restricted Subsidiary,
as the case may be; and

 

(3) no less favorable to the Company or such Restricted Subsidiary, as the
case may be, than those that could be obtained in a comparable arm’s-length
transaction with a Person that is not an Affiliate of the Company;

 

49

 

(b) if such Affiliate Transaction involves aggregate payments or value
to the Affiliate in excess of $25.0 million in any 12-month period, the
Board of Directors (including a majority of the disinterested members of the
Board of Directors) approves such Affiliate Transaction and, in its good faith
judgment, believes that such Affiliate Transaction complies with
clauses (a)(2) and (3) of this Section 4.08 as evidenced by a Board
Resolution promptly delivered to the Trustee; and

 

(c) if such Affiliate Transaction involves aggregate payments or value
to the Affiliate in excess of $75.0 million in any 12-month period, the
Company obtains a written opinion from an Independent Financial Advisor to the
effect that the consideration to be paid or received in connection with such
Affiliate Transaction is fair, from a financial point of view, to the Company
and the Restricted Subsidiaries, taken as a whole.

 

Notwithstanding
the foregoing limitation, the Company or any Restricted Subsidiary may enter
into or suffer to exist the following:

 

(a) any transaction or series of transactions between the Company and
one or more Restricted Subsidiaries or between two or more Restricted
Subsidiaries, provided that no more than 5% of the total voting power of
the Voting Stock (on a fully diluted basis) of any such Restricted Subsidiary is
owned by an Affiliate of the Company (other than a Restricted Subsidiary);

 

(b) any Restricted Payment permitted to be made pursuant to Section
4.04 or any Permitted Investment (other than pursuant to clauses (a)(iii),
(b), (g), (h), (i), (k) or (l) of the definition of “Permitted Investment”);

 

(c) the payment of compensation (including amounts paid pursuant to
employee benefit plans) for the personal services of and related indemnities
provided to officers, directors, consultants and employees of the Company or
any of the Restricted Subsidiaries, so long as the Board of Directors in good
faith shall have approved the terms thereof and deemed the services theretofore
or thereafter to be performed for such compensation to be fair consideration
therefor;

 

(d) loans and advances to employees made in the ordinary course of
business and consistent with the past practices of the Company or such
Restricted Subsidiary, as the case may be, provided that such loans and
advances do not exceed $25.0 million in the aggregate at any one time
outstanding;

 

(e) any transaction effected as part of a Qualified Receivables
Transaction or any transaction involving the transfer of accounts receivable of
the type specified in the definition of “Credit Facilities” and permitted under
clause (b) of Section 4.03;

 

(f) payments of customary fees by the Company or any of its Restricted
Subsidiaries to Leonard Green & Partners L.P. or any of its Affiliates made
for any corporate advisory services or financial advisory, financing, underwriting
or 

 

50

 

placement
services or in respect of other investment banking activities including,
without limitation, in connection with acquisitions or divestitures, which are
approved by a majority of the Board of Directors in good faith;

 

(g) if such Affiliate Transaction is with any Person solely in its
capacity as a holder of Debt or Capital Stock of the Company or any of its
Restricted Subsidiaries, where such Person is treated no more favorably than any
other holder of such Debt or Capital Stock of the Company or any of its
Restricted Subsidiaries; and

 

(h) any agreement as in effect on the Issue Date or any amendment
thereto (so long as such amendment is not disadvantageous to the Holders of the
Securities in any material respect).

 

SECTION 4.09. Limitation
on Guarantees by Restricted Subsidiaries. The Company shall not permit any
Restricted Subsidiary to Guarantee the payment of any Debt or Capital Stock of
the Company (other than Guarantees of Debt incurred under clause (a), (b),
(c), (d), or (l) of the second paragraph of Section 4.03 or Guarantees
permitted pursuant to clause (j) of the second paragraph of Section 4.03
or Guarantees permitted by clause (s) of the second paragraph of Section
4.03 as it relates to clause (c) or (d) of the second paragraph of Section
4.03), except that a Restricted Subsidiary may Guarantee Debt of the Company provided
that:

 

(a) such Debt and the Debt represented by such Guarantee is permitted
by Section 4.03;

 

(b) such Restricted Subsidiary simultaneously executes and delivers a
supplemental indenture to this Indenture providing for a Guarantee of payment
of the Securities by such Restricted Subsidiary and such Guarantee of Debt of
the Company:

 

(1) unless such Debt is a Subordinated Obligation, shall be pari
passu (or subordinate) in right of payment to and on substantially the
same terms as (or less favorable to such Debt than) such Restricted Subsidiary’s
Guarantee with respect to the Securities; and

 

(2) if such Debt is a Subordinated Obligation, shall be subordinated in
right of payment to such Restricted Subsidiary’s Guarantee with respect to the
Securities to at least the same extent as such Debt is subordinated to the
Securities; and

 

(c) such Restricted Subsidiary shall deliver to the Trustee an Opinion
of Counsel to the effect that:

 

(1) such Guarantee of the Securities has been duly executed and
authorized; and

 

51

 

(2) such Guarantee of the Securities constitutes a valid, binding and
enforceable obligation of such Restricted Subsidiary, except insofar as
enforcement thereof may be limited by bankruptcy, insolvency or similar laws
(including, without limitation, all laws relating to fraudulent transfers) and
except insofar as enforcement thereof is subject to general principles of
equity.

 

The failure of any Restricted Subsidiary to provide a Guarantee if the
prohibited to do so by Debt of the Company or a Restricted Subsidiary shall not
constitute a violation of clauses (a), (b) or (c) of this section 4.09; provided,
however, that at the time such prohibition no longer exists if a Guarantee
would then be required to comply with such clauses, such Restricted Subsidiary
provides such Guarantee.

 

SECTION 4.10. Limitation
on Sale and Leaseback Transactions. The Company shall not, and shall not
permit any Restricted Subsidiary to, enter into any Sale and Leaseback
Transaction with respect to any Property unless:

 

(a) the Company or such Restricted Subsidiary would be entitled to:

 

(1) Incur Debt in an amount equal to the Attributable Debt with respect
to such Sale and Leaseback Transaction pursuant to Section 4.03; and

 

(2) create a Lien on such Property securing such Attributable Debt
without also securing the Securities pursuant to Section 4.05; and

 

(b) such Sale and Leaseback Transaction is effected in compliance with
Section 4.06; provided that such Sale and Leaseback Transaction
constitutes an Asset Sale.

 

SECTION 4.11. Designation
of Restricted and Unrestricted Subsidiaries. The Board of Directors may
designate any Subsidiary of the Company to be an Unrestricted Subsidiary if:

 

(a) the Subsidiary to be so designated does not own any Capital Stock
or Debt of, or own or hold any Lien on any Property of, the Company or any
other Restricted Subsidiary; and

 

(b) either:

 

(1) the Subsidiary to be so designated has total assets of $1,000 or
less; or

 

(2) such designation is effective immediately upon such entity becoming
a Subsidiary of the Company.

 

Unless so
designated as an Unrestricted Subsidiary, any Person that becomes a Subsidiary
of the Company will be classified as a Restricted Subsidiary; provided, however,
that such Subsidiary shall not be designated a Restricted Subsidiary and shall
be automatically classified as an Unrestricted Subsidiary if either of the
requirements set forth in clauses (x) and (y) of the second immediately
following paragraph will not be satisfied after giving pro forma effect to such
classification as a Restricted Subsidiary or if such Person is a Subsidiary of
an Unrestricted Subsidiary.

 

52

 

Except as
provided in the first sentence of the preceding paragraph, no Restricted
Subsidiary may be redesignated as an Unrestricted Subsidiary. In addition,
neither the Company nor any Restricted Subsidiary shall at any time be directly
or indirectly liable for any Debt that provides that the holder thereof may
(with the passage of time or notice or both) declare a default thereon or cause
the payment thereof to be accelerated or payable prior to its Stated Maturity
upon the occurrence of a default with respect to any Debt, Lien or other
obligation of any Unrestricted Subsidiary (including any right to take
enforcement action against such Unrestricted Subsidiary).

 

The Board of
Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary if, immediately after giving pro forma effect to such designation,
(x) the Company could Incur at least $1.00 of additional Debt pursuant to
clause (1) of the first paragraph of Section 4.03 and (y) no Default
or Event of Default shall have occurred and be continuing or would result
therefrom.

 

Any such
designation or redesignation by the Board of Directors will be evidenced to the
Trustee by filing with the Trustee a Board Resolution giving effect to such
designation or redesignation and an Officers’ Certificate that:

 

(a) certifies that such designation or redesignation complies with the
foregoing provisions; and

 

(b) gives the effective date of such designation or redesignation,

 

such filing
with the Trustee to occur within 45 days after the end of the fiscal
quarter of the Company in which such designation or redesignation is made (or,
in the case of a designation or redesignation made during the last fiscal
quarter of the Company’s fiscal year, within 90 days after the end of such
fiscal year).

 

SECTION 4.12. Change
of Control. (a)  Upon the occurrence
of a Change of Control, each Holder shall have the right to require the Company
to repurchase all or any part of such Holder’s Securities pursuant to the offer
described below (the “Change of Control Offer”) at a purchase price (the “Change
of Control Purchase Price”) equal to 101.0% of the principal amount thereof,
plus accrued and unpaid interest, if any, to, but not including, the purchase
date (subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date). If the purchase
date is on or after a record date and on or before the relevant interest
payment date, the accrued and unpaid interest, if any, will be paid to the
person or entity in whose name the Security is registered at the close of
business on that record date, and no additional interest will be payable to
Holders whose Securities shall be subject to redemption.

 

(b)  Within 30 days following any Change of
Control, the Company shall (i) cause a notice of the Change of Control
Offer to be sent at least once to the Dow Jones News Service or similar
business news service in the United States and (ii) send, by first-class
mail, with a copy to the Trustee, to each Holder, at such Holder’s address
appearing in the Security Register, a notice stating:  (A) that a Change of Control Offer is
being 

 

53

 

made pursuant to this
Section 4.12 and that all Securities timely tendered will be accepted for
payment; (B) the Change of Control Purchase Price and the purchase date,
which shall be, subject to any contrary requirements of applicable law, a Business
Day no earlier than 30 days nor later than 60 days from the date such
notice is mailed (the “Change of Control Payment Date”); (C) the circumstances
and relevant facts regarding the Change of Control (including, to the extent
reasonably practicable, information with respect to pro forma historical
income, cash flow and capitalization after giving effect to the Change of
Control); and (D) the procedures that Holders must follow in order to
tender their Securities (or portions thereof) for payment and the procedures
that Holders must follow in order to withdraw an election to tender Securities
(or portions thereof) for payment.

 

(c)  Holders electing to have a Security purchased
shall be required to surrender the Security, with an appropriate form duly completed,
to the Company or its agent at the address specified in the notice at least
three Business Days prior to the Change of Control Payment Date. Holders shall
be entitled to withdraw their election if the Trustee or the Company receives
not later than one Business Day prior to the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Security that was delivered for purchase by
the Holder and a statement that such Holder is withdrawing its election to have
such Security purchased.

 

(d)  On or prior to the Change of Control Payment
Date, the Company shall irrevocably deposit with the Trustee or with the Paying
Agent (or, if the Company or any of its Wholly Owned Subsidiaries is acting as
the Paying Agent, segregate and hold in trust) in cash an amount equal to the
Change of Control Purchase Price payable to the Holders entitled thereto, to be
held for payment in accordance with the provisions of this Section 4.12. On
the Change of Control Payment Date, the Company shall deliver to the Trustee
the Securities or portions thereof that have been properly tendered to and are
to be accepted by the Company for payment. The Trustee or the Paying Agent
shall, on the Change of Control Payment Date, mail or deliver payment to each
tendering Holder of the Change of Control Purchase Price. In the event that the
aggregate Change of Control Purchase Price is less than the amount delivered by
the Company to the Trustee or the Paying Agent, the Trustee or the Paying
Agent, as the case may be, shall deliver the excess to the Company immediately
after the Change of Control Payment Date.

 

(e)  The Company will comply, to the extent
applicable, with the requirements of Section 14(e) of the Exchange Act and
any other securities laws or regulations in connection with the purchase of
Securities pursuant to this Section 4.12. To the extent that the
provisions of any securities laws or regulations conflict with the provisions
of this Section 4.12, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under this Section 4.12 by virtue thereof.

 

SECTION 4.13. Further
Instruments and Acts. Upon request of the Trustee, the Company shall
execute and deliver such further instruments and do such 

 

54

 

further acts as may be
reasonably necessary or proper to carry out more effectively the purpose of
this Indenture.

 

SECTION 4.14. Covenant
Suspension.  (a)  During any period of time that:

 

(1) the Securities have Investment Grade Ratings from both Rating
Agencies and

 

(2) no Default or Event of Default has occurred and is continuing under
this Indenture,

 

the Company
and the Restricted Subsidiaries will not be subject to the following Sections
of this Indenture: Section 4.03, Section 4.04, Section 4.06, Section 4.07,
Section 4.08, clauses (a)(1) and (b) of Section 4.10, clause (x) of the fourth
paragraph (and such clause (x) as referred to in the second paragraph) of
Section 4.11, and clause (a)(5) of Section 5.01 (collectively, the “Suspended
Covenants”).

 

(b) Solely for the purpose of determining the amount of permitted Liens
under Section 4.05 during any Suspension Period (as defined below) and without
limiting the Company’s or any Restricted Subsidiary’s ability to Incur
Indebtedness during any Suspension Period, to the extent that calculations in
Section 4.05 refer to Section 4.03, such calculations shall be made as though
Section 4.03 remains in effect during the Suspension Period. In the event that
the Company and the Restricted Subsidiaries are not subject to the Suspended
Covenants for any period of time as a result of paragraph (a) of this Section
4.15 and, on any subsequent date (the “Reversion Date”), one or both of the
Rating Agencies withdraws its ratings or downgrades the ratings assigned to the
Securities below the required Investment Grade Ratings or a Default or Event of
Default occurs and is continuing, then the Company and the Restricted
Subsidiaries will thereafter again be subject to the Suspended Covenants. The
period of time between the Suspension Date and the Reversion Date is referred
to as the “Suspension Period.” Notwithstanding that the Suspended Covenants may
be reinstated, no Default will be deemed to have occurred as a result of a
failure to comply with the Suspended Covenants during the Suspension Period. On
the Reversion Date, all Debt Incurred during the Suspension Period will be
classified to have been Incurred pursuant to clause (1) of the first paragraph
or one of the clauses set forth in the second paragraph of Section 4.03 (to the
extent such Debt would be permitted to be Incurred thereunder as of the
Reversion Date and after giving effect to Debt Incurred prior to the Suspension
Period and outstanding on the Reversion Date). To the extent such Debt would
not be permitted to be Incurred pursuant to clause (1) of the first paragraph
or one of the clauses set forth in the second paragraph of Section 4.03, such
Debt will be deemed to have been outstanding on the Issue Date, so that it is
classified as permitted under clause (k) of the second paragraph of Section
4.03. Calculations made after the Reversion Date of the amount available to be
made as Restricted Payments under Section 4.04 will be made as though Section
4.04 had been in effect during the entire

 

55

 

period of time
from the February 12, 2003. Accordingly, Restricted Payments made during
the Suspension Period will reduce the amount available to be made as Restricted
Payments under the first paragraph of Section 4.04 following any Reversion
Date, and the items specified in clauses (c)(1) through (c)(4) of the first
paragraph of Section 4.04 will increase the amount available to be made under
the first paragraph thereof following any Reversion Date. For purposes of
determining compliance with the first five paragraphs of Section 4.06, on the
Reversion Date, the Net Available Cash from all Asset Sales not applied in
accordance with the covenant will be deemed to be reset to zero.

 

ARTICLE V

Successor Company

 

SECTION 5.01. When
Company May Merge or Transfer Assets. The Company shall not merge,
consolidate or amalgamate with or into any other Person (other than a merger of
a Wholly Owned Restricted Subsidiary into the Company) or sell, transfer,
assign, lease, convey or otherwise dispose of all or substantially all its
Property in any one transaction or series of transactions unless:

 

(a) the Company will be the surviving Person (the “Surviving Person”)
or the Surviving Person (if other than the Company) formed by such merger,
consolidation or amalgamation or to which such sale, transfer, assignment,
lease, conveyance or disposition is made will be a corporation organized and
existing under the laws of the United States of America, any State thereof or
the District of Columbia;

 

(b) the Surviving Person (if other than the Company) expressly assumes,
by supplemental indenture in form satisfactory to the Trustee, executed and
delivered to the Trustee by such Surviving Person, the due and punctual payment
of the principal of, premium, if any, and interest on, all the Securities, and
the due and punctual performance and observance of all the covenants and conditions
of this Indenture to be performed by the Company;

 

(c) in the case of a sale, transfer, assignment, lease, conveyance or
other disposition of all or substantially all the Property of the Company, such
Property shall have been transferred as an entirety or virtually as an entirety
to one Person;

 

(d) immediately before and after giving effect to such transaction or
series of transactions on a pro forma basis (and treating, for purposes of this
clause (d) and clause (e) below, any Debt that becomes, or is
anticipated to become, an obligation of the Surviving Person or any Restricted
Subsidiary as a result of such transaction or series of transactions as having
been Incurred by the Surviving Person or such Restricted Subsidiary at the time
of such transaction or series of transactions), no Default or Event of Default
shall have occurred and be continuing;

 

56

 

(e) immediately after giving effect to such transaction or series of
transactions on a pro forma basis, either (i) the Company or the Surviving
Person, as the case may be, would be able to Incur at least $1.00 of additional
Debt under clause (1) of the first paragraph of Section 4.03 or
(ii) the Surviving Person would have a Consolidated Interest Coverage
Ratio which is not less than the Consolidated Interest Coverage Ratio of the
Company immediately prior to such transaction or series of transactions; and

 

(f) the Company shall deliver, or cause to be delivered, to the
Trustee, in form and substance reasonably satisfactory to the Trustee, an
Officers’ Certificate and an Opinion of Counsel, each stating that such
transaction and the supplemental indenture, if any, in respect thereto comply
with this Section 5.01 and that all conditions precedent herein provided
for relating to such transaction have been satisfied.

 

The Surviving
Person shall succeed to, and be substituted for, and may exercise every right
and power of the Company under the Indenture, but the predecessor Company in
the case of:

 

(a) a sale, transfer, assignment, conveyance or other disposition
(unless such sale, transfer, assignment, conveyance or other disposition is of
all the assets of the Company as an entirety or virtually as an entirety); or

 

(b) a lease,

 

shall not be
released from any obligation to pay the principal of, premium, if any, and
interest on, the Securities.

 

ARTICLE VI

Defaults and Remedies

 

SECTION 6.01. Events
of Default. The following events shall be “Events of Default”:

 

(1) the Company fails to make the payment of any interest on any of the
Securities when the same becomes due and payable, and such failure continues
for a period of 30 days;

 

(2) the Company fails to make the payment of any principal of, or
premium, if any, on any of the Securities when the same becomes due and payable
at its Stated Maturity, upon acceleration, redemption, optional redemption,
required repurchase or otherwise;

 

(3) the Company fails to comply with Article V;

 

57

 

(4) the Company fails to comply with any covenant or agreement in the
Securities or in this Indenture (other than a failure that is the subject of
the foregoing clauses (1), (2) or (3)) and such failure continues for
30 days after written notice is given to the Company as provided below;

 

(5) a default under any Debt by the Company or any Restricted
Subsidiary that results in acceleration of the final maturity of such Debt, or
the failure to pay any such Debt at final maturity (giving effect to applicable
grace periods), in an aggregate amount in excess of $35.0 million or its
foreign currency equivalent at the time;

 

(6) the Company or any Significant Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:

 

(A) commences a voluntary case;

 

(B) consents to the entry of an order for relief against it in an
involuntary case;

 

(C) consents to the appointment of a Custodian of it or for any
substantial part of its property; or

 

(D) makes a general assignment for the benefit of its creditors;

 

or takes any comparable action under any foreign laws relating to
insolvency;

 

(7) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:

 

(A) is for relief against the Company or any Significant Subsidiary in
an involuntary case;

 

(B) appoints a Custodian of the Company or any Significant Subsidiary
or for any substantial part of its property; or

 

(C) orders the winding up or liquidation of the Company or any
Significant Subsidiary;

 

and in each such case the order or decree remains unstayed and in effect
for 45 days; or

 

(8) any judgment or judgments for the payment of money in an aggregate
amount in excess of $35.0 million or its foreign currency equivalent at the
time is rendered against the Company or any Restricted Subsidiary and 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.

 

58

 

The foregoing
will constitute Events of Default whatever the reason for any such Event of
Default and whether it is voluntary or involuntary or is 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.

 

The term “Bankruptcy
Law” means Title 11, United States Code, or any similar Federal or
state law for the relief of debtors. The term “Custodian” means any receiver,
trustee, assignee, liquidator, custodian or similar official under any
Bankruptcy Law.

 

A Default
under clause (4) is not an Event of Default until the Trustee or the
Holders of not less than 25% in aggregate principal amount of the Securities
then outstanding notify the Company (and in the case of such notice by Holders,
the Trustee) of the Default and the Company does not cure such Default within
the time specified after receipt of such notice. Such notice must specify the
Default, demand that it be remedied and state that such notice is a “Notice of
Default”.

 

The Company
shall deliver to the Trustee, within 30 days after the occurrence thereof,
written notice in the form of an Officers’ Certificate of any event that with
the giving of notice or the lapse of time would become an Event of Default, its
status and what action the Company is taking or proposes to take with respect
thereto.

 

SECTION 6.02. Acceleration.
If an Event of Default with respect to the Securities (other than an Event
of Default specified in Section 6.01(6) or (7) with respect to the
Company) shall have occurred and be continuing, the Trustee by notice to the
Company, or the Holders of not less than 25% in aggregate principal amount of
the Securities then outstanding by notice to the Company and the Trustee, may
declare to be immediately due and payable the principal amount at maturity of
all the Securities then outstanding, plus accrued but unpaid interest to the
date of acceleration on all the Securities to be due and payable. Upon such a
declaration, such principal and interest shall be due and payable immediately. If
an Event of Default specified in Section 6.01(6) or 6.01(7) with respect
to the Company occurs, the principal of and accrued and unpaid interest on all
the Securities shall, automatically and without any action by the Trustee or
any Holder, become and be immediately due and payable. The Holders of a
majority in aggregate principal amount of the outstanding Securities by notice
to the Trustee and the Company may rescind and annul such declaration of
acceleration if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived except
nonpayment of principal, premium or interest that has become due solely because
of the acceleration. No such rescission shall affect any subsequent Default or
impair any right consequent thereto.

 

SECTION 6.03. Other
Remedies. If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal of or interest
on the Securities or to enforce the performance of any provision of the Securities
or this Indenture.

 

59

 

The Trustee
may maintain a proceeding even if it does not possess any of the Securities or
does not produce any of them in the proceeding. A delay or omission by the
Trustee or any Holder in exercising any right or remedy accruing upon an Event
of Default shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. No remedy is exclusive of any other
remedy. All available remedies are cumulative.

 

SECTION 6.04. Waiver
of Past Defaults. The Holders of a majority in aggregate principal amount
of the Securities then outstanding by notice to the Trustee may waive an
existing Default and its consequences except (i) a Default in the payment
of the principal of, premium, if any, or interest on a Security or (ii) a
Default in respect of a provision that under Section 9.02 cannot be amended
without the consent of each Holder affected. When a Default is waived, it is
deemed cured, but no such waiver shall extend to any subsequent or other
Default or impair any consequent right.

 

SECTION 6.05. Control
by Majority. The Holders of a majority in aggregate principal amount of the
Securities then outstanding may direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or of exercising any
trust or power conferred on the Trustee with respect to the Securities. However,
the Trustee may refuse to follow any direction that conflicts with law or this
Indenture or, subject to Section 7.01, that the Trustee determines is
unduly prejudicial to the rights of other Holders or would involve the Trustee
in personal liability; provided, however, that the Trustee may
take any other action deemed proper by the Trustee that is not inconsistent
with such direction. Prior to taking any action or following any direction
hereunder, the Trustee shall be entitled to reasonable indemnification against
all losses and expenses caused by taking or not taking such action.

 

SECTION 6.06. Limitation
on Suits. A Holder may not pursue any remedy with respect to this Indenture
or the Securities unless:

 

(1) such Holder shall have previously given to the Trustee written
notice of a continuing Event of Default;

 

(2) the Holders of at least 25% in aggregate principal amount of the
Securities then outstanding shall have made a written request, and such Holder
of or Holders shall have offered reasonable indemnity, to the Trustee to pursue
a remedy; and

 

(3) the Trustee has failed to institute such proceeding and has not
received from the Holders of at least a majority in aggregate principal
amount of the Securities outstanding a direction inconsistent with such
request, within 60 days after such notice, request and offer.

 

The foregoing
limitations on the pursuit of remedies by a Holder shall not apply to a suit
instituted by a Holder for the enforcement of payment of the principal of or
interest on such Security on or after the applicable due date specified in such
Security.

 

60

 

A Holder may
not use this Indenture to prejudice the rights of another Holder or to obtain a
preference or priority over another Holder.

 

SECTION 6.07. Rights
of Holders to Receive Payment. Notwithstanding any other provision of this
Indenture, the right of any Holder to receive payment of principal of and
interest on the Securities held by such Holder, on or after the respective due
dates expressed in the Securities, or to bring suit for the enforcement of any
such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.

 

SECTION 6.08. Collection
Suit by Trustee. If an Event of Default specified in Section 6.01(1)
or (2) occurs and is continuing, the Trustee may recover judgment in its own
name and as trustee of an express trust against the Company for the whole
amount then due and owing (together with interest on any unpaid interest to the
extent lawful) and the amounts provided for in Section 7.07.

 

SECTION 6.09. Trustee
May File Proofs of Claim. The Trustee may file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee and the Holders allowed in any judicial proceedings
relative to the Company, its creditors or its property and, unless prohibited
by law or applicable regulations, may vote on behalf of the Holders in any
election of a trustee in bankruptcy or other Person performing similar
functions, and any Custodian in any such judicial proceeding is hereby
authorized by each Holder to make payments to the Trustee and, in the event
that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and its counsel, and any other amounts due the Trustee under Section 7.07.

 

SECTION 6.10. Priorities.
If the Trustee collects any money or property pursuant to this Article VI,
it shall pay out the money or property in the following order:

 

FIRST:  to the Trustee for amounts due under Section
7.07;

 

SECOND:  to Holders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Securities for
principal and interest, respectively; and

 

THIRD:  to the Company.

 

The Trustee
may fix a record date and payment date for any payment to Holders pursuant to
this Section 6.10. At least 15 days before such record date, the Company
shall mail to each Holder and the Trustee a notice that states the record date,
the payment date and amount to be paid.

 

SECTION 6.11. Undertaking
for Costs. In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by

 

61

 

any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys’ fees, against any
party litigant in the suit, having due regard to the merits and good faith of
the claims or defenses made by the party litigant. This Section 6.11 does not
apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07
or a suit by Holders of more than 10% in aggregate principal amount of the
Securities.

 

SECTION 6.12. Waiver
of Stay or Extension Laws. The Company (to the extent it may lawfully do
so) shall not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, that may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any
such law, and shall not hinder, delay or impede the execution of any power
herein granted to the Trustee, but shall suffer and permit the execution of
every such power as though no such law had been enacted.

 

ARTICLE VII

Trustee

 

SECTION 7.01. Duties
of Trustee. (a) If an Event of Default has occurred and is continuing,
the Trustee shall exercise the rights and powers vested in it by this Indenture
and use the same degree of care and skill in their exercise as a prudent Person
would exercise or use under the circumstances in the conduct of such Person’s
own affairs.

 

(b) Except during the continuance of an Event of Default:

 

(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and

 

(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. However, the Trustee
shall examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.

 

(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:

 

(1) this paragraph does not limit the effect of paragraph (b) of
this Section 7.01;

 

62

 

(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and

 

(3) the Trustee shall not be liable with respect to any action it takes
or omits to take in good faith in accordance with a direction received by it
pursuant to Section 6.05.

 

(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.

 

(e) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company.

 

(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.

 

(g) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or
powers.

 

(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA, and
the provisions of this Article VII shall apply to the Trustee in its role as
Registrar, Paying Agent and Security Custodian.

 

(i) The Trustee shall not be deemed to have notice of a Default or an
Event of Default unless (a) the Trustee has received written notice thereof
from the Company or any Holder or (b) a Trust Officer shall have actual
knowledge thereof.

 

SECTION 7.02. Rights
of Trustee. (a)  The Trustee may rely
on any document believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not investigate any fact or
matter stated in the document. The Trustee may, however, in its discretion make
such further inquiry or investigation into such facts or matters as it may see
fit and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney.

 

(b) Before the
Trustee acts or refrains from acting, it may require an Officers’ Certificate
or an Opinion of Counsel. The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on the Officers’ Certificate
or Opinion of Counsel.

 

(c) The
Trustee may act through agents and shall not be responsible for the misconduct
or negligence of any agent appointed with due care and with the consent of the
Company.

 

63

 

(d) The
Trustee shall not be liable for any action it takes or omits to take in good
faith that it believes to be authorized or within its rights or powers;
provided, however, that the Trustee’s conduct does not constitute willful
misconduct or negligence.

 

(e) The
Trustee may consult with counsel, and the advice or opinion of counsel with
respect to legal matters relating to this Indenture and the Securities shall be
full and complete authorization and protection from liability in respect to any
action taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.

 

(f) The
permissive rights of the Trustee to do things enumerated in this Indenture
shall not be construed as a duty unless so specified herein.

 

SECTION 7.03. Individual
Rights of Trustee. The Trustee in its individual or any other capacity may
become the owner or pledgee of Securities and may otherwise deal with the
Company or its Affiliates with the same rights it would have if it were not
Trustee. Any Paying Agent, Registrar or co-registrar may do the same with like
rights. However, the Trustee must comply with Sections 7.10 and 7.11.

 

SECTION 7.04. Trustee’s
Disclaimer. The Trustee shall not be responsible for and makes no representation
as to the validity, priority or adequacy of this Indenture or the Securities,
it shall not be accountable for the Company’s use of the proceeds from the
Securities, and it shall not be responsible for any statement of the Company in
this Indenture or in any document issued in connection with the sale of the
Securities or in the Securities other than the Trustee’s certificate of
authentication.

 

SECTION 7.05. Notice
of Defaults. If a Default or Event of Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to each Holder notice of
the Default or Event of Default within 30 days after it is known to a Trust
Officer or written notice of it is received by the Trustee. Except in the case
of a Default or Event of Default in payment of principal of or interest on any
Security, the Trustee may withhold the notice if and so long as a committee of
its Trust Officers in good faith determines that withholding the notice is in
the interests of Holders.

 

SECTION 7.06. Reports
by Trustee to Holders. Within 60 days after February 1 each
year beginning with February 1, 2004, the Trustee shall mail to each Holder
a brief report dated as of such February 1 that complies with TIA
§ 313(a), if and to the extent required by such subsection. The Trustee
shall also comply with TIA § 313(b).

 

A copy of each
report at the time of its mailing to Holders shall be filed with the Commission
and each stock exchange (if any) on which the Securities are listed. The
Company agrees to notify promptly the Trustee whenever the Securities become
listed on any stock exchange and of any delisting thereof.

 

SECTION 7.07. Compensation
and Indemnity. The Company shall pay to the Trustee from time to time
reasonable compensation for its services. The Trustee’s compensation shall not
be limited by any law on compensation of a trustee of an express

 

64

 

trust. The Company shall reimburse the
Trustee upon request for all reasonable out-of-pocket expenses incurred or made
by it, including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee’s agents, counsel, accountants and
experts. The Company shall indemnify the Trustee against any and all loss,
liability or expense (including reasonable attorneys’ fees) incurred by it in
connection with the acceptance and administration of this trust and the
performance of its duties hereunder. The Trustee shall notify the Company
promptly of any claim for which it may seek indemnity. Failure by the Trustee
to so notify the Company shall not relieve the Company of its obligations
hereunder unless the Company has been prejudiced thereby. The Company shall
defend the claim, and the Trustee may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The Company need
not reimburse any expense or indemnify against any loss, liability or expense
incurred by the Trustee through the Trustee’s own willful misconduct,
negligence or bad faith. The Company need not pay for any settlement made by
the Trustee without the Company’s consent, such consent not to be unreasonably
withheld. All indemnifications and releases from liability granted hereunder to
the Trustee shall extend to its officers, directors, employees, agents,
successors and assigns.

 

To secure the
Company’s payment obligations in this Section, the Trustee shall have a lien
prior to the Securities on all money or property held or collected by the
Trustee other than money or property held in trust to pay principal of and
interest on particular Securities.

 

The Company’s
payment obligations pursuant to this Section 7.07 shall survive the resignation
or removal of the Trustee and the discharge of this Indenture. When the Trustee
incurs expenses after the occurrence of a Default specified in
Section 6.01(6) or (7) with respect to the Company, the expenses are
intended to constitute expenses of administration under the Bankruptcy Law.

 

SECTION 7.08. Replacement
of Trustee. The Trustee may resign at any time by so notifying the Company.
The Holders of a majority in aggregate principal amount of the Securities the
outstanding may remove the Trustee by so notifying the Trustee and may appoint
a successor Trustee, provided that so long as no Default or Event of
Default has occurred and is continuing, the Company shall have the right to
consent to the successor Trustee, such consent not to be unreasonably withheld.
The Company shall remove the Trustee if:

 

(1) the Trustee fails to comply with Section 7.10;

 

(2) the Trustee is adjudged bankrupt or insolvent;

 

(3) a receiver or other public officer takes charge of the Trustee or
its property; or

 

(4) the Trustee otherwise becomes incapable of acting.

 

65

 

If the Trustee
resigns or is removed by the Company or by the Holders of a majority in
aggregate principal amount of the Securities then outstanding, and such Holders
do not reasonably promptly appoint a successor Trustee, or if a vacancy exists
in the office of Trustee for any reason (the Trustee in such event being
referred to herein as the retiring Trustee), the Company shall promptly appoint
a successor Trustee.

 

A successor
Trustee shall deliver a written acceptance of its appointment to the retiring
Trustee and to the Company. Thereupon the resignation or removal of the
retiring Trustee shall become effective, and the successor Trustee shall have
all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Holders. The
retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee, subject to the lien provided for in Section 7.07.

 

If a successor
Trustee does not take office within 60 days after the retiring Trustee
resigns or is removed, the retiring Trustee or the Holders of 10% in aggregate
principal amount of the Securities then outstanding may petition any court of
competent jurisdiction for the appointment of a successor Trustee.

 

If the Trustee
fails to comply with Section 7.10, any Holder who has been a bona fide
Holder of a Security for at least six months may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.

 

Notwithstanding
the replacement of the Trustee pursuant to this Section 7.08, the Company’s
obligations under Section 7.07 shall continue for the benefit of the
retiring Trustee.

 

SECTION 7.09. Successor
Trustee by Merger. If the Trustee consolidates with, merges or converts
into, or transfers all or substantially all its corporate trust business or
assets to, another corporation or banking association, the resulting, surviving
or transferee corporation or banking association without any further act shall
be the successor Trustee.

 

In case at the
time such successor or successors by merger, conversion or consolidation to the
Trustee shall succeed to the trusts created by this Indenture any of the
Securities shall have been authenticated but not delivered, any such successor
to the Trustee may adopt the certificate of authentication of any predecessor
trustee, and deliver such Securities so authenticated; and in case at that time
any of the Securities shall not have been authenticated, any such successor to
the Trustee may authenticate such Securities either in the name of any
predecessor hereunder or in the name of the successor to the Trustee; and in
all such cases such certificates shall have the full force which it is anywhere
in the Securities or in this Indenture provided that the certificate of the
Trustee shall have.

 

SECTION 7.10. Eligibility;
Disqualification. The Trustee shall at all times satisfy the requirements
of TIA § 310(a). The Trustee shall have (or, in the case of

 

66

 

a corporation included in a bank holding
company system, the related bank holding company shall have) a combined capital
and surplus of at least $50,000,000 as set forth in its (or its related bank
holding company’s) most recent published annual report of condition. The
Trustee shall comply with TIA § 310(b), subject to the penultimate
paragraph thereof; provided, however, that there shall be
excluded from the operation of TIA § 310(b)(1) any indenture or
indentures under which other securities or certificates of interest or
participation in other securities of the Company are outstanding if the
requirements for such exclusion set forth in TIA § 310(b)(1) are met.

 

SECTION 7.11. Preferential
Collection of Claims Against Company. The Trustee shall comply with
TIA § 311(a), excluding any creditor relationship listed in TIA
§ 311(b). A Trustee who has resigned or been removed shall be subject to
TIA § 311(a) to the extent indicated.

 

ARTICLE VIII

Discharge of Indenture; Defeasance

 

SECTION 8.01. Discharge
of Liability on Securities; Defeasance. (a)  When
(i) the Company delivers to the Trustee all outstanding Securities (other
than Securities replaced pursuant to Section 2.07) for cancellation or
(ii) all outstanding Securities have become due and payable, whether at
maturity or as a result of the mailing of a notice of redemption pursuant to
Article III and the Company irrevocably deposits with the Trustee funds sufficient
to pay at maturity or upon redemption all outstanding Securities, including
interest thereon to maturity or such redemption date (other than Securities
replaced pursuant to Section 2.07), and if in either case the Company pays all
other sums payable hereunder by the Company, then this Indenture shall, subject
to Section 8.01(c), cease to be of further effect. The Trustee shall
acknowledge satisfaction and discharge of this Indenture on demand of the
Company accompanied by an Officers’ Certificate and an Opinion of Counsel and
at the cost and expense of the Company.

 

(b)  Subject to Sections 8.01(c) and 8.02, the
Company at any time may terminate (i) all of its obligations under the
Securities and this Indenture (“legal defeasance option”) or (ii) its
obligations under Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09,
4.10, 4.11, 4.12 and 4.13 and the operation of Sections 6.01(5), 6.01(6),
6.01(7) and 6.01(8) (but, in the case of Sections 6.01(6) and (7), with
respect only to Significant Subsidiaries) and the limitations contained in Section 5.01
(e) (“covenant defeasance option”). The Company may exercise its legal
defeasance option notwithstanding its prior exercise of its covenant defeasance
option.

 

If the Company
exercises its legal defeasance option, payment of the Securities may not be
accelerated because of an Event of Default. If the Company exercises its
covenant defeasance option, payment of the Securities may not be accelerated
because of an Event of Default specified in Sections 6.01(4) (with respect
to the covenants of Article IV identified in the immediately preceding
paragraph), 6.01(5), 6.01(6), 6.01(7) and 6.01(8) (with respect only to
Significant Subsidiaries in the case of

 

67

 

Sections 6.01(6)
and 6.01(7)) or because of the failure of the Company to comply with the
limitations contained in Section 5.01 (e).

 

Upon
satisfaction of the conditions set forth herein and upon request of the
Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.

 

(c)  Notwithstanding clauses (a) and (b)
above, the Company’s obligations in Sections 2.04, 2.05, 2.06, 2.07, 7.07,
7.08, 8.05 and 8.06 shall survive until the Securities have been paid in full. Thereafter,
the Company’s obligations in Sections 7.07 and 8.05 shall survive.

 

SECTION 8.02. Conditions
to Defeasance. The Company may exercise its legal defeasance option or its
covenant defeasance option only if:

 

(1) the Company irrevocably deposits in trust with the Trustee money
or U.S. Government Obligations for the payment of principal of and
interest on the Securities to maturity or redemption, as the case may be;

 

(2) the Company delivers to the Trustee a certificate from a nationally
recognized firm of independent certified public accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in such
amounts as will be sufficient to pay principal and interest when due on all the
Securities to maturity or redemption, as the case may be;

 

(3) 123 days pass after the deposit is made and during the 123-day
period no Default specified in Section 6.01(7) occurs with respect to the
Company or any other Person making such deposit which is continuing at the end
of the period;

 

(4) no Default or Event of Default has occurred and is continuing on
the date of such deposit and after giving effect thereto;

 

(5) such deposit does not constitute a default under any other
agreement or instrument binding on the Company;

 

(6) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the Investment Company Act
of 1940;

 

(7) in the case of the legal defeasance option, the Company delivers to
the Trustee an Opinion of Counsel stating that:

 

68

 

(A) the Company has received from the Internal Revenue Service a
ruling; or

 

(B) since the date of this Indenture there has been a change in the
applicable Federal income tax law, to the effect, in either case, that, and
based thereon such Opinion of Counsel shall confirm that, the Holders will not
recognize income, gain or loss for Federal income tax purposes as a result of
such defeasance and will be subject to Federal income tax on the same amounts,
in the same manner and at the same time as would have been the case if such
defeasance has not occurred;

 

(8) in the case of the covenant defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the Holders
will not recognize income, gain or loss for Federal income tax purposes as a
result of such covenant defeasance and will be subject to Federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such covenant defeasance had not occurred; and

 

(9) the Company delivers to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities as contemplated by this Article VIII
have been complied with.

 

Before or
after a deposit, the Company may make arrangements satisfactory to the Trustee
for the redemption of Securities at a future date in accordance with
Article III.

 

SECTION 8.03. Application
of Trust Money. The Trustee shall hold in trust money or U.S.
Government Obligations deposited with it pursuant to this Article VIII. It
shall apply the deposited money and the money from U.S. Government
Obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal of and interest on the Securities.

 

SECTION 8.04. Repayment
to Company. The Trustee and the Paying Agent shall promptly turn over to
the Company upon request any excess money or securities held by them at any
time.

 

Subject to any
applicable abandoned property law, the Trustee and the Paying Agent shall pay
to the Company upon request any money held by them for the payment of principal
or interest that remains unclaimed for two years, and, thereafter, Holders
entitled to the money must look to the Company for payment as general
creditors.

 

SECTION 8.05. Indemnity
for Government Obligations. The Company shall pay and shall indemnify the
Trustee against any tax, fee or other charge imposed on

 

69

 

or assessed against deposited U.S.
Government Obligations or the principal and interest received on such U.S.
Government Obligations.

 

SECTION 8.06. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with this Article VIII by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company’s obligations under this Indenture and the Securities
shall be revived and reinstated as though no deposit had occurred pursuant to
this Article VIII until such time as the Trustee or Paying Agent is
permitted to apply all such money or U.S. Government Obligations in
accordance with this Article VIII; provided, however, that,
if the Company has made any payment of interest on or principal of any
Securities because of the reinstatement of its obligations, the Company shall
be subrogated to the rights of the Holders of such Securities to receive such
payment from the money or U.S. Government Obligations held by the Trustee or
Paying Agent.

 

ARTICLE IX

Amendments

 

SECTION 9.01. Without
Consent of Holders. The Company and the Trustee may amend this Indenture or
the Securities without notice to or consent of any Holder:

 

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

 

(2) to provide for the assumption by a successor corporation of the
obligations of the Company under this Indenture in accordance with
Article V;

 

(3) to provide for uncertificated Securities in addition to or in place
of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;

 

(4) to add Guarantees with respect to the Securities or to secure the
Securities;

 

(5) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the Company;

 

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

 

70

 

(7) to make any change that does not adversely affect the rights of any
Holder.

 

After an
amendment under this Section 9.01 becomes effective, the Company shall
mail to Holders a notice briefly describing such amendment. The failure to give
such notice to all Holders, or any defect therein, shall not impair or affect
the validity of an amendment under this Section 9.01.

 

SECTION 9.02. With
Consent of Holders. The Company, when authorized by a Board Resolution, and
the Trustee may amend this Indenture or the Securities and waive any past
default or compliance with any provisions (except, in the case of this
Indenture, as provided in Section 6.04), with the consent of the Holders of at
least a majority in aggregate principal amount of the Securities then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for the Securities). However, without the consent of each Holder
affected thereby, an amendment may not:

 

(1) reduce the amount of Securities whose Holders are required to consent
to an amendment or waiver;

 

(2) reduce the rate of or extend the time for payment of interest on
any Security;

 

(3) reduce the principal of or extend the Stated Maturity of any
Security;

 

(4) impair the right of any Holder to receive payment of principal of
and interest on such Holder’s Securities on or after the due dates therefor or
to institute suit for the enforcement of any payment on or with respect to such
Holder’s Securities;

 

(5) reduce the premium payable upon the redemption of any Security or
change the time at which any Security may be redeemed in accordance with
Article III;

 

(6) reduce the premium payable upon a Change of Control or, at any time
after a Change of Control has occurred, amend the definition of “Change of
Control” or change the time at which any Change of Control Offer relating
thereto must be made or at which the Securities must be repurchased pursuant to
such Change of Control Offer;

 

(7) at any time after the Company is obligated to make an Asset Sales
Prepayment Offer with the Excess Proceeds from Asset Sales, change the time at
which such Asset Sales Prepayment Offer must be made or at which the Securities
must be repurchased pursuant thereto;

 

(8) make any Security payable in money other than that stated in the
Security; or

 

71

 

(9) subordinate the Securities to any other obligation of the Company.

 

It shall not
be necessary for the consent of the Holders under this Section 9.02 to
approve the particular form of any proposed amendment, but it shall be
sufficient if such consent approves the substance thereof.

 

After an
amendment under this Section 9.02 becomes effective, the Company shall mail to each
Holder at such Holder’s address appearing in the Security Register a notice
briefly describing such amendment. The failure to give such notice to all Holders,
or any defect therein, shall not impair or affect the validity of an amendment
under this Section 9.02.

 

SECTION 9.03. Compliance
with Trust Indenture Act. Every amendment to this Indenture or the
Securities shall comply with the TIA as then in effect.

 

SECTION 9.04. Revocation
and Effect of Consents and Waivers. A consent to an amendment or a waiver
by a Holder shall bind the Holder and every subsequent Holder of that Security
or portion of the Security that evidences the same debt as the consenting
Holder’s Security, even if notation of the consent or waiver is not made on the
Security. However, any such Holder or subsequent Holder may revoke the consent
or waiver as to such Holder’s Security or portion of the Security if the
Trustee receives the notice of revocation before the date the amendment or
waiver becomes effective. After an amendment or waiver becomes effective, it
shall bind every Holder. An amendment or waiver becomes effective upon the
execution of such amendment or waiver by the Trustee.

 

The Company
may, but shall not be obligated to, fix a record date for the purpose of
determining the Holders entitled to give their consent or take any other action
described above or required or permitted to be taken pursuant to this Indenture.
If a record date is fixed, then notwithstanding the immediately preceding
paragraph, those Persons who were Holders at such record date (or their duly
designated proxies), and only those Persons, shall be entitled to give such
consent or to revoke any consent previously given or to take any such action,
whether or not such Persons continue to be Holders after such record date. No
such consent shall be valid or effective for more than 120 days after such
record date.

 

SECTION 9.05. Notation
on or Exchange of Securities. If an amendment changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver such
Security to the Trustee. The Trustee may place an appropriate notation on the
Security regarding the changed terms and return such Security to the Holder. Alternatively,
if the Company or the Trustee so determines, the Company in exchange for the
Security shall issue and the Trustee shall authenticate a new Security that
reflects the changed terms. Failure to make the appropriate notation or to
issue a new Security shall not affect the validity of such amendment.

 

72

 

SECTION 9.06. Trustee
To Sign Amendments. The Trustee shall sign any amendment authorized
pursuant to this Article IX if the amendment does not adversely affect the
rights, duties, liabilities or immunities of the Trustee. If such amendment
does adversely affect the rights, duties, liabilities or immunities of the
Trustee, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it
and to receive, and (subject to Section 7.01) shall be fully protected in
relying upon, an Officers’ Certificate and an Opinion of Counsel stating that
such amendment is authorized or permitted by this Indenture.

 

SECTION 9.07. Payment
for Consent. Neither the Company nor any Affiliate of the Company shall,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder for or as an inducement to any
consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Securities unless such consideration is offered to be paid to
all Holders that so consent, waive or agree to amend in the time frame set
forth in solicitation documents relating to such consent, waiver or agreement.

 

ARTICLE X

Miscellaneous

 

SECTION 10.01.
Trust Indenture Act Controls. If any provision of this Indenture limits,
qualifies or conflicts with another provision that is required to be included
in this Indenture by the TIA, the required provision shall control.

 

SECTION 10.02.
Notices. Any notice or communication shall be in writing and delivered
in person or mailed by first-class mail or sent by facsimile (with a hard copy
delivered in person or by mail promptly thereafter) and addressed as follows:

 

if to the Company:

 

Rite Aid Corporation

30 Hunter Lane

Camp Hill, Pennsylvania 17011

facsimile: 717-760-7867

 

Attention of: 
Robert B. Sari, Esq.

 

if to the Trustee:

 

BNY Midwest Trust Company

2 North LaSalle Street, Suite 1020

Chicago, IL 60602

facsimile: 312-827-8542

Attention of: 
Corporate Trust

 

73

 

The Company or
the Trustee by notice to the other may designate additional or different
addresses for subsequent notices or communications.

 

Any notice or
communication mailed to a Holder shall be mailed to the Holder at the Holder’s
address as it appears on the registration books of the Registrar and shall be
sufficiently given if so mailed within the time prescribed.

 

Failure to
mail a notice or communication to a Holder or any defect in it shall not affect
its sufficiency with respect to other Holders. If a notice or communication is
mailed in the manner provided above, it is duly given, whether or not the
addressee receives it.

 

SECTION 10.03.
Communication by Holders with Other Holders. Holders may communicate
pursuant to TIA § 312(b) with other Holders with respect to their rights
under this Indenture or the Securities. The Company, the Trustee, the Registrar
and anyone else shall have the protection of TIA § 312(c).

 

SECTION 10.04.
Certificate and Opinion as to Conditions Precedent. Upon any request or
application by the Company to the Trustee to take or refrain from taking any
action under this Indenture, the Company shall furnish to the Trustee:

 

(1) an Officers’ Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with; and

 

(2) except in the case of Section 3.01 under which an opinion will not
be required, an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel, all
such conditions precedent have been complied with; provided, however,
that with respect to matters of fact an Opinion of Counsel may rely on an
Officers’ Certificate or certificates of public officials.

 

SECTION 10.05.
Statements Required in Certificate or Opinion. Each certificate with
respect to compliance with a covenant or condition provided for in this
Indenture shall include:

 

(1) a statement that the individual making such certificate has read
such covenant or condition;

 

(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements contained in such certificate are
based;

 

(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express

 

74

 

an informed
opinion as to whether or not such covenant or condition has been complied with;
and

 

(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.

 

Each opinion
with respect to compliance with a covenant or condition provided for in this
Indenture shall be in form and substance reasonably satisfactory to the party
requesting such opinion and the party giving such opinion.

 

SECTION 10.06.
When Securities Disregarded. In determining whether the Holders of the
required principal amount of Securities have concurred in any direction, waiver
or consent, Securities owned by the Company or by any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company shall be disregarded and deemed not to be outstanding,
except that, for the purpose of determining whether the Trustee shall be
protected in relying on any such direction, waiver or consent, only Securities
that the Trustee knows are so owned shall be so disregarded. Also, subject to
the foregoing, only Securities outstanding at the time shall be considered in
any such determination.

 

SECTION 10.07.
Rules by Trustee, Paying Agent and Registrar. The Trustee may make
reasonable rules for action by or a meeting of Holders. The Registrar and the
Paying Agent or co-registrar may make reasonable rules for their functions.

 

SECTION 10.08.
Governing Law. THIS INDENTURE AND THE
SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES
OF CONFLICTS OF LAW.

 

SECTION 10.09.
No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Holder shall waive and release all such
liability. The waiver and release shall be part of the consideration for the
issue of the Securities.

 

SECTION 10.10.
Successors. All agreements of the Company in this Indenture and the
Securities shall bind its successors. All agreements of the Trustee in this
Indenture shall bind its successors.

 

SECTION 10.11.
Multiple Originals. The parties may sign any number of copies of this
Indenture. Each signed copy shall be an original, but all of them together
represent the same agreement. One signed copy is enough to prove this
Indenture.

 

SECTION 10.12.
Table of Contents; Headings. The table of contents, cross-reference
sheet and headings of the Articles and Sections of this Indenture have

 

75

 

been inserted for convenience of reference
only, are not intended to be considered a part hereof and shall not modify or
restrict any of the terms or provisions hereof.

 

76

 

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

 

	
   

  	
  RITE AID CORPORATION,

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BNY MIDWEST TRUST COMPANY,

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

77

 

EXHIBIT A

 

[FORM OF FACE OF SECURITY]

 

[Global Securities Legend]

 

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.

 

TRANSFERS OF
THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART,
TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO
ON THE REVERSE HEREOF.

 

[Definitive Securities Legend]

 

IN CONNECTION
WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT
SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY
REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

 

 

[FORM OF FACE OF SECURITY]

 

	
  No.

  	
   

  	
  [Up to]**$

  

 

 

   % Senior Note due 2015

 

	
   

  	
   

  	
  CUSIP No.

  

 

RITE AID
CORPORATION, a Delaware corporation, promises to pay to [Cede &
Co.]**, or registered assigns, the principal sum [of [    ]
Dollars]* [as set forth on the Schedule of Increases or Decreases annexed
hereto]** on February    , 2015.

 

Interest
Payment Dates: February     and August    ,
commencing on August    , 2007.

 

Record
Dates:  May 15 and November 15.

 

*  Insert for Definitive Securities.

 

** Insert for
Global Securities. If the Security is to be issued in global form, add the
Global Securities Legend from Exhibit A and the attachment from such
Exhibit captioned “TO BE ATTACHED TO GLOBAL SECURITIES - SCHEDULE OF
INCREASES OR DECREASES IN GLOBAL SECURITY”.

 

 

Additional
provisions of this Security are set forth on the other side of this Security.

 

IN WITNESS
WHEREOF, the parties have caused this instrument to be duly executed.

 

	
   

  	
  RITE AID CORPORATION,

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
  TRUSTEE’S CERTIFICATE OF

  AUTHENTICATION

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
   

  
	
   

  	
   

  
	
  BNY MIDWEST
  TRUST COMPANY,

  	
   

  
	
   

  	
   

  
	
  as Trustee, certifies

  that this is one of

  the Securities referred

  to in the Indenture.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized
  Signatory

  	
   

  	
   

  

 

 

[FORM OF REVERSE SIDE OF SECURITY]

 

   %
Senior Note due 2015

 

1. Interest

 

RITE AID
CORPORATION, a Delaware corporation (such corporation, and its successors
and assigns under the Indenture hereinafter referred to, being herein called
the “Company”), promises to pay interest on the principal amount of this
Security at the rate per annum shown above. The Company will pay interest
semiannually on February     and August     of
each year, commencing August    , 2007. Interest on the
Securities will accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from February    , 2007. Interest
shall be computed on the basis of a 360-day year of twelve 30-day months. The
Company shall pay interest on overdue principal at the rate per annum borne by
the Securities plus 1% per annum, and it shall pay interest on overdue
installments of interest at the rate per annum borne by the Securities to the
extent lawful.

 

2. Method
of Payment

 

The Company
will pay interest on the Securities (except defaulted interest) to the Persons
who are registered Holders at the close of business on the February    
or August     next preceding the interest payment date even if
Securities are canceled after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States of America that at the time of payment is legal tender for
payment of public and private debts. Payments in respect of the Securities
represented by a Global Security (including principal and interest) will be
made by wire transfer of immediately available funds to the accounts specified
by the Depository. The Company will make all payments in respect of a
Definitive Security (including principal and interest), by mailing a check to
the registered address of each Holder thereof; provided, however,
that payments on the Securities may also be made, in the case of a Holder of at
least $1,000,000 aggregate principal amount of Securities, by wire transfer to
a U.S. dollar account maintained by the payee with a bank in the
United States if such Holder elects payment by wire transfer by giving
written notice to the Trustee or the Paying Agent to such effect designating
such account no later than 30 days immediately preceding the relevant due
date for payment (or such other date as the Trustee may accept in its
discretion).

 

3. Paying
Agent and Registrar

 

Initially, BNY
Midwest Trust Company, an Illinois trust company (the “Trustee”), will act as
Paying Agent and Registrar. The Company may appoint and change any Paying
Agent, Registrar or co-registrar without notice. The Company or any of its
domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent,
Registrar or co-registrar.

 

 

4. Indenture

 

The Company
issued the Securities under an Indenture dated as of May 20, 2003 (the “Indenture”),
between the Company and the Trustee. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to
the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in
effect on the date of the Indenture (the “TIA”). Terms defined in the Indenture
and not defined in the Securities have the meanings ascribed thereto in the
Indenture. The Securities are subject to all such terms, and Holders are
referred to the Indenture and the TIA for a statement of those terms.

 

The Securities
are unsubordinated, unsecured obligations of the Company. This Security is one
of the Original Securities referred to in the Indenture issued in an aggregate
principal amount of $500,000,000. The Securities include the Original
Securities and an unlimited aggregate principal amount of additional Initial Securities
that may be issued under the Indenture. The Original Securities and such
additional Initial Securities are treated as a single class of securities under
the Indenture. The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries to, among other things, make certain
Investments and other Restricted Payments, pay dividends and other distributions,
incur Debt, enter into consensual restrictions upon the payment of certain
dividends and distributions by such Restricted Subsidiaries, enter into or
permit certain transactions with Affiliates, create or incur Liens and make
Asset Sales. The Indenture also imposes limitations on the ability of the
Company to consolidate or merge with or into any other Person or sell,
transfer, assign, lease, convey or otherwise dispose of all or substantially
all of the Property of the Company.

 

5. Optional
Redemption

 

The Company
may choose to redeem the Securities at any time. If it does so, it may redeem
all or any portion of the Securities, at once or over time, after giving the
required notice under the Indenture.

 

To redeem the
Securities prior to February    , 2011, the Company must pay a
redemption price equal to 100% of the principal amount of the Securities to be
redeemed plus the Applicable Premium as of, and accrued and unpaid interest, if
any, to, the redemption date (subject to the right of holders of record on the
relevant record date to receive interest due on the relevant Interest Payment Date
that is on or prior to the redemption date). Any notice to Holders of such a
redemption needs to include the appropriate calculation of the redemption price,
but need not include the redemption price itself. The actual redemption price
must be set forth in an Officers’ Certificate delivered to the Trustee no later
than two Business Days prior to the redemption date.

 

“Applicable
Premium” means, with respect to any Security on any redemption date, the
greater of (i) 1.0% of the principal amount of such Security and (ii) the
excess of (a) the present value at such redemption date of (1) the redemption
price of such Security at February    , 2011 (such redemption price
being set forth in the table

 

2

 

below) plus
(2) all required interest payments due on such Security through February    ,
2011 (excluding accrued but unpaid interest), computed using a discount rate
equal to the Treasury Rate on such redemption date plus 75 basis points over (b)
the principal amount of such Security.

 

“Treasury Rate”
means, as of any redemption date, the yield to maturity as of such redemption
date of United States Treasury securities with a constant maturity (as
compiled and published in the most recent Federal Reserve Statistical Release
H.15 (519) that has become publicly available at least two Business Days prior
to the redemption date (or, if such statistical release is no longer published,
any publicly available source of similar market data)) most nearly equal to the
period from the redemption date to February    , 2011; provided,
however, that if the period from the redemption date to February    ,
2011 is less than one year, the weekly average yield on actually traded
United States Treasury securities adjusted to a constant maturity of one
year shall be used.

 

On and after February
   , 2011, the Company may redeem the Securities in whole at any
time or in part from time to time at the following redemption prices (expressed
in percentages of principal amount), plus accrued and unpaid interest, if any,
to, but not including, the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
Interest Payment Date that is on or prior to the redemption date), if redeemed
during the 12-month period beginning on February     of the
years set forth below:

 

	
  Redemption Period

  	
   

  	
  Price

  	
   

  
	
  2011

  	
   

  	
   

  	
  %

  
	
  2012

  	
   

  	
   

  	
  %

  
	
  2013

  	
   

  	
   

  	
  %

  
	
  2014 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

Notwithstanding
the foregoing, at any time and from time to time prior to February    ,
2010, the Company may redeem up to 35% of the original aggregate principal
amount of the Securities (including Securities issued after the Issue Date, if
any) with the proceeds from one or more Equity Offerings by the Company, at a redemption
price equal to    % of the principal amount thereof, plus
accrued and unpaid interest thereon, if any, to the redemption date (subject to
the right of Holders of record on the relevant record date to receive interest
due on the relevant Interest Payment Date that is on or prior to the redemption
date); provided, however, that after giving effect to any such
redemption, at least 65% of the original aggregate principal amount of the
Securities (including Securities issued after the Issue Date) remains
outstanding. Any such redemption shall be made within 75 days of such
Equity Offering upon not less than 30 nor more than 60 days’ prior notice.

 

If the
optional redemption date is on or after a record date and on or before the
relevant Interest Payment Date, the accrued and unpaid interest if any, will be
paid to the person or entity in whose name the Security is registered at the
close of business on

 

3

 

that record
date, and no additional interest will be payable to Holders whose Securities
shall be subject to repurchase.

 

6. Sinking
Fund

 

The Securities
are not subject to any sinking fund.

 

7. Notice
of Redemption

 

Notice of
redemption will be mailed by first-class mail at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities
to be redeemed at his or her registered address. Securities in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000. If money sufficient to pay the redemption price of and accrued interest
on all Securities (or portions thereof) to be redeemed on the redemption date
is deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to
accrue on such Securities (or such portions thereof) called for redemption.

 

8.  (a)      Repurchase of Securities at the Option
of Holders upon Change of Control

 

Upon a Change
of Control, any Holder will have the right, subject to certain conditions
specified in the Indenture, to cause the Company to repurchase all or any part
of the Securities of such Holder at a purchase price equal to 101% of the
principal amount of the Securities to be repurchased plus accrued and unpaid
interest, if any, to, but not including, the date of purchase (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant Interest Payment Date that is on or prior to the date of
purchase) as provided in, and subject to the terms of, the Indenture.

 

8.  (b)      Prepayment Offer Upon Asset Sale

 

When the
aggregate amount of Excess Proceeds exceeds $25.0 million (taking into account
income earned on such Excess Proceeds, if any), the Company will be required to
make an offer to purchase (the “Asset Sales Prepayment Offer”) the Securities,
which offer shall be in the amount of the Allocable Excess Proceeds, on a pro
rata basis according to principal amount at maturity, at a purchase price equal
to 100% of the principal amount thereof, plus accrued and unpaid interest, if
any, to, but not including, the purchase date (subject to the right of Holders
of record on the relevant record date to receive interest due on the relevant Interest
Payment Date), in accordance with the procedures (including prorating in the
event of oversubscription) set forth in the Indenture. To the extent that any
portion of the amount of Net Available Cash remains after compliance with the
preceding sentence and provided that all Holders have been given the
opportunity to tender their Securities for purchase in accordance with the
Indenture, the Company or such Restricted Subsidiary may use such remaining
amount for any purpose permitted by the Indenture and the amount of Excess
Proceeds will be reset to zero.

 

4

 

9.  Denominations;
Transfer; Exchange

 

The Securities
are in registered form without coupons in denominations of $2,000 and whole
multiples of $1,000. A Holder may transfer or exchange Securities in accordance
with the Indenture. Upon any transfer or exchange, the Registrar and the
Trustee may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes required by law or
permitted by the Indenture. The Registrar need not register the transfer of or
exchange any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be
redeemed) or to transfer or exchange any Securities for a period of
15 days prior to a selection of Securities to be redeemed or 15 days
before an Interest Payment Date.

 

10.  Persons
Deemed Owners

 

The registered
Holder of this Security may be treated as the owner of it for all purposes.

 

11.  Unclaimed
Money

 

If money for
the payment of principal or interest remains unclaimed for two years, the
Trustee or Paying Agent shall pay the money back to the Company at its written
request unless an abandoned property law designates another Person. After any
such payment, Holders entitled to the money must look only to the Company and
not to the Trustee for payment.

 

12.  Discharge
and Defeasance

 

Subject to
certain conditions, the Company at any time may terminate some of or all its
obligations under the Securities and the Indenture if the Company deposits with
the Trustee money or U.S. Government Obligations for the payment of principal
and interest on the Securities to redemption or maturity, as the case may be.

 

13.  Amendment,
Waiver

 

Subject to
certain exceptions set forth in the Indenture, (i) the Indenture or the
Securities may be amended without prior notice to any Holder but with the
written consent of the Holders of at least a majority in aggregate principal
amount of the outstanding Securities and (ii) any default or noncompliance
with any provision may be waived with the written consent of the Holders of at
least a majority in principal amount of the outstanding Securities. Subject to
certain exceptions set forth in the Indenture, without the consent of any
Holders, the Company, when authorized by a Board Resolution, and the Trustee
may amend the Indenture or the Securities (i) to cure any ambiguity,
omission, defect or inconsistency; (ii) to provide for the assumption by a
successor corporation of the obligations of the Company in accordance with
Article V under the Indenture; (iii) to provide for uncertificated
Securities in addition to or in place of certificated Securities; provided,
however, that the uncertificated Securities are issued in registered
form for purposes of Section 163(f) of the Code, or in a manner such that the

 

5

 

uncertificated
Securities are described in Section 163(f)(2)(B) of the Code; (iv) to add
Guarantees with respect to the Securities; (v) to secure the Securities;
(vi) to add additional covenants or to surrender rights and powers
conferred on the Company; (vii) to comply with the requirements of the Commission
in connection with the qualification of the Indenture under the TIA; or
(viii) to make any change that does not adversely affect the rights of any
Holder.

 

14.  Defaults
and Remedies

 

If an Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
aggregate principal amount of the Securities then outstanding, subject to
certain limitations, may declare all the Securities to be immediately due and
payable. Certain events of bankruptcy or insolvency are Events of Default and
shall result in the Securities being immediately due and payable upon the
occurrence of such Events of Default without any further act of the Trustee or
any Holder.

 

Holders of
Securities may not enforce the Indenture or the Securities except as provided
in the Indenture. The Trustee may refuse to enforce the Indenture or the
Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in aggregate principal amount of the
Securities then outstanding may direct the Trustee in its exercise of any trust
or power under the Indenture. The Holders of a majority in aggregate principal
amount of the Securities then outstanding, by written notice to the Company and
the Trustee, may rescind any declaration of acceleration and its consequences
if the rescission would not conflict with any judgment or decree, and if all
existing Events of Default have been cured or waived except nonpayment of
principal, premium or interest that has become due solely because of the acceleration.

 

15.  Trustee
Dealings with the Company

 

Subject to
certain limitations imposed by the TIA, 
the Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with and collect obligations owed to it by the Company or its Affiliates and
may otherwise deal with the Company or its Affiliates with the same rights it
would have if it were not Trustee.

 

16.  No
Recourse Against Others

 

A director,
officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.

 

6

 

17.  Successors

 

Subject to
certain exceptions set forth in the Indenture, when a successor assumes all the
obligations of its predecessor under the Securities and the Indenture in
accordance with the terms of the Indenture, the predecessor will be released
from those obligations.

 

18.  Authentication

 

This Security
shall not be valid until an authorized signatory of the Trustee (or an
authenticating agent) manually signs the certificate of authentication on the
other side of this Security.

 

19.  Abbreviations

 

Customary
abbreviations may be used in the name of a Securityholder or an assignee, such
as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN
(=joint tenants with rights of survivorship and not as tenants in common), CUST
(=custodian), and U/G/M/A (=Uniform Gift to Minors Act).

 

20.  Governing
Law

 

THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW.

 

21.  CUSIP
Numbers

 

Pursuant to a
recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed on the
Securities and has directed the Trustee to use CUSIP numbers in notices of
redemption as a convenience to Holders. No representation is made as to the
accuracy of such numbers either as printed on the Securities or as contained in
any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.

 

The Company will furnish to any Holder upon written request and without
charge to the Holder a copy of the Indenture which has in it the text of this
Security.

 

7

 

ASSIGNMENT FORM

 

To assign this
Security, fill in the form below:

 

I or we assign
and transfer this Security to

 

(Print or type
assignee’s name, address and zip code)

 

(Insert
assignee’s soc. sec. or tax I.D. No.)

 

and
irrevocably
appoint                          as
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.

 

 

 

	
  Date: 

  	
   

  	
   

  	
  Your
  Signature:

  	
   

  	
   

  
	
   

  
	
   

  	
   

  
	
  Sign exactly
  as your name appears on the other side of this Security.

  
							

 

	
  Signature Guarantee:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature must be guaranteed by a

  participant in a recognized signature

  guaranty medallion program or other

  signature guarantor acceptable to the Trustee

  	
   

  	
  Signature of Signature Guarantee

  	
   

  
									

 

 

[TO BE ATTACHED TO GLOBAL SECURITIES]

 

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL
SECURITY

 

The initial
principal amount of this Global Security is
$[        ]. The following increases or
decreases in this Global Security have been made:

 

	
  Date of

  Exchange

  	
   

  	
  Amount of decrease

  in Principal Amount

  of this Global

  Security

  	
   

  	
  Amount of increase

  in Principal Amount

  of this Global

  Security

  	
   

  	
  Principal amount of

  this Global Security

  following such

  decrease or increase

  	
   

  	
  Signature of

  authorized signatory

  of Trustee or

  Securities Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to
elect to have this Security purchased by the Company pursuant to
Section 4.06 (Asset Sale) or 4.12 (Change of Control) of the Indenture,
check the box:

 

o

 

If you want to
elect to have only part of this Security purchased by the Company pursuant to
Section 4.06 or 4.12 of the Indenture, state the amount:

 

$

 

 

	
  Date: 

  	
   

  	
   

  	
  Your Signature: 

  	
   

  	
   

  

(Sign exactly as your name appears on the other side of the Security)

 

 

	
  Signature Guarantee:

  	
   

  	
   

  
	
   

  	
  Signature must be guaranteed by a

  participant in a recognized signature

  guaranty medallion program or other

  signature guarantor acceptable to the Trustee.

  

 

2

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