Document:

Exhibit 4.23

 

EXECUTION COPY

 

RITE AID CORPORATION

 

10.375% Senior Secured Notes due 2016

 

 

INDENTURE

 

Dated as of July 9, 2008

 

 

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

 

as Trustee

 

 

TABLE OF CONTENTS

 

	
   

  	
  ARTICLE I

  

  Definitions and Incorporation by Reference

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 1.01. Definitions

  	
   

  	
  1

  
	
  SECTION 1.02. Other Definitions

  	
   

  	
  36

  
	
  SECTION 1.03. Incorporation by Reference of Trust Indenture Act

  	
   

  	
  37

  
	
  SECTION 1.04. Rules of Construction

  	
   

  	
  37

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE II

  

  The Securities

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.01. Amount of Securities; Issuable in Series

  	
   

  	
  38

  
	
  SECTION 2.02. Form and Dating

  	
   

  	
  39

  
	
  SECTION 2.03. Execution and Authentication

  	
   

  	
  39

  
	
  SECTION 2.04. Registrar and Paying Agent

  	
   

  	
  39

  
	
  SECTION 2.05. Paying Agent To Hold Money in Trust

  	
   

  	
  40

  
	
  SECTION 2.06. Holder Lists

  	
   

  	
  40

  
	
  SECTION 2.07. Replacement Securities

  	
   

  	
  40

  
	
  SECTION 2.08. Outstanding Securities

  	
   

  	
  41

  
	
  SECTION 2.09. Temporary Securities

  	
   

  	
  41

  
	
  SECTION 2.10. Cancellation

  	
   

  	
  41

  
	
  SECTION 2.11. Defaulted Interest

  	
   

  	
  41

  
	
  SECTION 2.12. CUSIP Numbers

  	
   

  	
  41

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE III

  

  Redemption

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.01. Notices to Trustee

  	
   

  	
  42

  
	
  SECTION 3.02. Selection of Securities To Be Redeemed

  	
   

  	
  42

  
	
  SECTION 3.03. Notice of Redemption

  	
   

  	
  42

  
	
  SECTION 3.04. Effect of Notice of Redemption

  	
   

  	
  43

  
	
  SECTION 3.05. Deposit of Redemption Price

  	
   

  	
  43

  
	
  SECTION 3.06. Securities Redeemed in Part

  	
   

  	
  43

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE IV

  

  Covenants

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.01. Payment of Securities

  	
   

  	
  44

  
	
  SECTION 4.02. SEC Reports

  	
   

  	
  44

  
	
  SECTION 4.03. Limitation on Debt

  	
   

  	
  44

  
	
  SECTION 4.04. Limitation on Restricted Payments

  	
   

  	
  48

  

 

i

 

	
  SECTION 4.05. Limitation on Liens

  	
   

  	
  51

  
	
  SECTION 4.06. Limitation on Asset Sales and Specified Collateral
  Dispositions

  	
   

  	
  51

  
	
  SECTION 4.07. Limitation on Restrictions on Distributions from
  Restricted Subsidiaries

  	
   

  	
  55

  
	
  SECTION 4.08. Limitation on Transactions with Affiliates

  	
   

  	
  56

  
	
  SECTION 4.09. Guarantees by Subsidiaries

  	
   

  	
  58

  
	
  SECTION 4.10. Limitation on Sale and Leaseback Transactions

  	
   

  	
  59

  
	
  SECTION 4.11. Designation of Restricted and Unrestricted
  Subsidiaries

  	
   

  	
  60

  
	
  SECTION 4.12. Additional Security Documents

  	
   

  	
  61

  
	
  SECTION 4.13. Change of Control

  	
   

  	
  61

  
	
  SECTION 4.14. Further Instruments and Acts

  	
   

  	
  62

  
	
  SECTION 4.15. Covenant Suspension

  	
   

  	
  63

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE V

  

  Successor Company

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.01. When Company May Merge or Transfer Assets

  	
   

  	
  64

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE VI

  

  Defaults and Remedies

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.01. Events of Default

  	
   

  	
  66

  
	
  SECTION 6.02. Acceleration

  	
   

  	
  68

  
	
  SECTION 6.03. Other Remedies

  	
   

  	
  69

  
	
  SECTION 6.04. Waiver of Past Defaults

  	
   

  	
  69

  
	
  SECTION 6.05. Control by Majority

  	
   

  	
  69

  
	
  SECTION 6.06. Limitation on Suits

  	
   

  	
  69

  
	
  SECTION 6.07. Rights of Holders to Receive Payment

  	
   

  	
  70

  
	
  SECTION 6.08. Collection Suit by Trustee

  	
   

  	
  70

  
	
  SECTION 6.09. Trustee May File Proofs of Claim

  	
   

  	
  70

  
	
  SECTION 6.10. Priorities

  	
   

  	
  70

  
	
  SECTION 6.11. Undertaking for Costs

  	
   

  	
  71

  
	
  SECTION 6.12. Waiver of Stay or Extension Laws

  	
   

  	
  71

  
	
  SECTION 6.13. Enforcement of Remedies

  	
   

  	
  71

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE VII

  

  Trustee

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 7.01. Duties of Trustee

  	
   

  	
  71

  
	
  SECTION 7.02. Rights of Trustee

  	
   

  	
  73

  
	
  SECTION 7.03. Individual Rights of Trustee

  	
   

  	
  74

  
	
  SECTION 7.04. Trustee’s Disclaimer

  	
   

  	
  74

  
	
  SECTION 7.05. Notice of Defaults

  	
   

  	
  74

  
	
  SECTION 7.06. Reports by Trustee to Holders

  	
   

  	
  74

  

 

ii

 

	
  SECTION 7.07. Compensation and Indemnity

  	
   

  	
  74

  
	
  SECTION 7.08. Replacement of Trustee

  	
   

  	
  75

  
	
  SECTION 7.09. Successor Trustee by Merger

  	
   

  	
  76

  
	
  SECTION 7.10. Eligibility; Disqualification

  	
   

  	
  76

  
	
  SECTION 7.11. Preferential Collection of Claims Against Company

  	
   

  	
  77

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE VIII

  

  Discharge of Indenture; Defeasance

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.01. Discharge of Liability on Securities; Defeasance

  	
   

  	
  77

  
	
  SECTION 8.02. Conditions to Defeasance

  	
   

  	
  78

  
	
  SECTION 8.03. Application of Trust Money

  	
   

  	
  79

  
	
  SECTION 8.04. Repayment to Company

  	
   

  	
  79

  
	
  SECTION 8.05. Indemnity for Government Obligations

  	
   

  	
  79

  
	
  SECTION 8.06. Reinstatement

  	
   

  	
  79

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE IX

  

  Amendments

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 9.01. Without Consent of Holders

  	
   

  	
  80

  
	
  SECTION 9.02. With Consent of Holders

  	
   

  	
  81

  
	
  SECTION 9.03. Compliance with Trust Indenture Act

  	
   

  	
  86

  
	
  SECTION 9.04. Revocation and Effect of Consents and Waivers

  	
   

  	
  86

  
	
  SECTION 9.05. Notation on or Exchange of Securities

  	
   

  	
  86

  
	
  SECTION 9.06. Trustee To Sign Amendments

  	
   

  	
  86

  
	
  SECTION 9.07. Payment for Consent

  	
   

  	
  86

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE X

  

  Miscellaneous

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10.01. Trust Indenture Act Controls

  	
   

  	
  87

  
	
  SECTION 10.02. Notices

  	
   

  	
  87

  
	
  SECTION 10.03. Communication by Holders with Other Holders

  	
   

  	
  87

  
	
  SECTION 10.04. Certificate and Opinion as to Conditions
  Precedent

  	
   

  	
  88

  
	
  SECTION 10.05. Statements Required in Certificate or Opinion

  	
   

  	
  88

  
	
  SECTION 10.06. When Securities Disregarded

  	
   

  	
  88

  
	
  SECTION 10.07. Rules by Trustee, Paying Agent and Registrar

  	
   

  	
  89

  
	
  SECTION 10.08. Legal Holidays

  	
   

  	
  89

  
	
  SECTION 10.09. Governing Law

  	
   

  	
  89

  
	
  SECTION 10.10. No Recourse Against Others

  	
   

  	
  89

  
	
  SECTION 10.11. Successors

  	
   

  	
  89

  
	
  SECTION 10.12. Multiple Originals

  	
   

  	
  89

  
	
  SECTION 10.13. Table of Contents; Headings

  	
   

  	
  89

  
	
  SECTION 10.14. Waiver of Jury Trial

  	
   

  	
  89

  

 

iii

 

	
  SECTION 10.15. Force Majeure

  	
   

  	
  90

  

 

Schedule A – Subsidiary Guarantors

 

Exhibit A – Form of Security

 

iv

 

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

  

 

v

 

	
   

  	
   

  	
  (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.

 

vi

 

INDENTURE dated as of July 9, 2008,
among RITE AID CORPORATION, a Delaware corporation (the “Company”), each
of the SUBSIDIARY GUARANTORS named in Schedule A hereto and THE BANK OF NEW
YORK MELLON TRUST COMPANY, N.A., a national banking association, 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 10.375% Senior Secured Notes due 2016, to be issued
from time to time, in one or more series as provided in this Indenture (the “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,

 

 

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, whether or not allowed or allowable as a claim
in any such proceeding) payable with respect to 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, The Jean Coutu Group (PJC), Inc. and its Affiliates shall be “Affiliates”
of the Company so long as The Jean Coutu Group (PJC), Inc. 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

 

2

 

(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 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

 

3

 

(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.

 

“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 

 

4

 

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 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
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 

 

5

 

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.

 

“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 

 

6

 

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

 

(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;

 

7

 

(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
payable with respect to 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);

 

8

 

(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 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 

 

9

 

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.

 

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 principal office of the Trustee at which at any time its corporate
trust business shall be administered, which office at the date hereof is located
at 2 N. LaSalle Street, Suite 1020, Chicago, Illinois 60602, Attention:
Corporate Trust Administration, or such other address as the Trustee may
designate from time to time by notice to the Holders and the Company, or the
principal corporate trust office of any successor Trustee (or such other
address as such successor Trustee may designate from time to time by notice to
the Holders and the Company).

 

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

 

10

 

“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);

 

(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);

 

11

 

(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).

 

“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

 

12

 

(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) 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 charges 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 

 

13

 

consolidation of stores) incurred in connection with acquisitions on or
after June 4, 2007;

 

(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 June 4, 2007 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, as supplemented, among the Company,
the Subsidiary Guarantors and The Bank of New York Trust Company, N.A., as
successor 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 (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 

 

14

 

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;

 

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

 

15

 

(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

 

16

 

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.

 

“Intercreditor
Agreement” means the Amended and Restated Collateral Trust and
Intercreditor Agreement, dated as of June 27, 2001, as amended and
restated as of May 28, 2003, as amended as of September 22, 2004, as
amended as of September 30, 2005, as amended as of November 8, 2006,
as amended as of June 4, 2007, 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

 

17

 

(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.

 

“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;

 

(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

 

18

 

(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.

 

“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,
the Chief Accounting Officer, Treasurer, the 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. The counsel may be an
employee of or counsel to the Company.

 

“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), 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;

 

(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 in accordance
with applicable law consistent with past practices of the 

 

19

 

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 the second
paragraph 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:

 

(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 

 

20

 

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;

 

(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 

 

21

 

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 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:

 

22

 

(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.

 

23

 

“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.

 

“Prospectus
Supplement” means the prospectus supplement dated
                  ,
2008 to the prospectus dated June 26, 2008, relating to the offering and
sale of the Securities.

 

“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.

 

24

 

“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 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).

 

25

 

“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.

 

“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 

 

26

 

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. For the avoidance of doubt, the Receivables Facility, as in effect on
the Issue Date, constitutes a Qualified Receivables Transaction without any
further action on behalf of the Company.

 

“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.

 

“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;

 

27

 

(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.

 

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 

 

28

 

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 7.5% Notes due 2017 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.

 

“Second
Priority Debt Obligations” means, with respect to any series, issue or
class of Second Priority Debt, (a) all principal of and interest (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, whether or not allowed or allowable as a claim
in any such proceeding) payable with respect to 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 (unless any such
Obligor or controlled Affiliate is a holder of such Second Priority Debt, a
trustee or agent therefor or beneficiary of such an indemnification obligation
named as such in a Second Priority Debt Document).

 

“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.

 

29

 

“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.

 

“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 the Securities, as 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.

 

30

 

“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.

 

“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.

 

“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 amended and
restated as 

 

31

 

of September 22, 2004, as amended and restated as of September 30,
2005, as amended and restated as of November 8, 2006, as amended and
restated as of June 4, 2007 (as may be further amended, modified,
supplemented or Refinanced from time to time), among the Company, the Lenders
as defined therein from time to time party thereto, Citicorp North America, Inc.,
as administrative agent and collateral processing agent, Bank of America, N.A.,
as syndication agent, and JPMorgan Chase Bank, N.A., Wells Fargo Foothill, LLC,
and General Electric Capital Corporation, as co-documentation agents.

 

“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.

 

“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.

 

32

 

“7.5% Notes
due 2017” means the Company’s 7.5% Senior Secured Notes due 2017, issued
under the indenture dated as of February 21, 2007, among the Company, the
Subsidiary Guarantors, The Bank of New York Trust Company, N.A., 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, including those in the Receivables Facility as
in effect on the Issue Date.

 

“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 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.

 

33

 

“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 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

 

34

 

(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.

 

“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 

 

35

 

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(a)

  
	
  “Change of Control Payment Date”

  	
   

  	
  4.13(b)

  
	
  “Change of Control Purchase Price”

  	
   

  	
  4.13(a)

  
	
  “covenant defeasance option”

  	
   

  	
  8.01(b)

  
	
  “Custodian”

  	
   

  	
  6.01

  
	
  “Global Security”

  	
   

  	
  Appendix A

  
	
  “legal defeasance option”

  	
   

  	
  8.01(b)

  
	
  “Legal Holiday”

  	
   

  	
  10.08

  
	
  “Offer Amount”

  	
   

  	
  4.06

  
	
  “Offer Period”

  	
   

  	
  4.06

  
	
  “OID”

  	
   

  	
  2.01

  
	
  “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(a)(1)

  
	
  “Suspension Period”

  	
   

  	
  4.15(b)

  

 

36

 

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;

 

(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.

 

37

 

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 $470,000,000 (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);

 

(3) the issue price and issuance date of
such Securities, including the date from which interest payable with respect to
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 

 

38

 

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 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.

 

39

 

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 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.

 

40

 

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 dispose of (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 disposal to the Company upon its request therefor 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 payable with respect to 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, 

 

41

 

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.

 

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;

 

42

 

(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 40 days before the redemption date and at
least five days prior to the Trustee giving the notice of redemption.

 

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.

 

43

 

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

 

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

 

44

 

(2) such
Debt is Permitted Debt.

 

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

 

(a) the
Securities issued on the Issue Date and Debt of Subsidiary Guarantors,
including any future Guarantor, evidenced by guarantees relating to the Securities
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) $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 due
2017 and of Subsidiary Guarantors, including any future Guarantor, evidenced by
guarantees relating to the 7.5% Notes due 2017;

 

(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

 

45

 

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 clause (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

 

46

 

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 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 

 

47

 

described herein and (3) with respect to Debt permitted under
clause (k) of this Section 4.03 in respect of 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 (A) $250
million of the Securities will be deemed to have been Incurred pursuant to
clause (b) of the second paragraph of this Section 4.03 and any
Permitted Refinancing Debt in respect of such portion of the Securities that is
Secured Debt will be deemed to be Incurred pursuant to either clause (b) or
(l) of the second paragraph of this Section 4.03, (B) 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,
(C) 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, (D) [intentionally omitted], (E) 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, (F) 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 (G) 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 commenced after February 12,
2003 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

 

48

 

(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, 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.

 

49

 

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
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;

 

50

 

(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.  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;

 

51

 

(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 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 Sale 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 

 

52

 

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 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.

 

53

 

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 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 

 

54

 

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;

 

(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 that such
restriction is no less 

 

55

 

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 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:

 

56

 

(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 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 in accordance
with applicable law and consistent with the past practices 

 

57

 

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, 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 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.

 

(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 

 

58

 

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 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

 

(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.

 

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 pari passu with, the Subsidiary
Guarantee of such Subsidiary Guarantor.

 

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

 

59

 

(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 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.

 

60

 

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 purchase.

 

(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 

 

61

 

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 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 or as necessary, the Company shall execute and deliver such
further instruments 

 

62

 

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 Section 4.04
will be made as though Section 4.04 had been in effect during the entire
period of time from 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 

 

63

 

(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 reasonably
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, according to their tenor,
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 transaction or series of
transactions), no Default or Event of Default shall have occurred and be
continuing;

 

64

 

(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 reasonably 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

 

65

 

(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 or
substantially 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;

 

66

 

(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
clause (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;

 

67

 

(i) any
Subsidiary Guarantee of a Significant Subsidiary 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 that is a Significant Subsidiary denies or disaffirms
its obligations under its Subsidiary Guarantee (the “guarantee provisions”);
and

 

(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 

 

68

 

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
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
indemnification reasonably satisfactory to it 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;

 

69

 

(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 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 and
premium, if any, or interest payable with respect to 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 (it being understood it shall be under no obligation to do so), 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;

 

70

 

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 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 and expenses,
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.

 

71

 

(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, in the case of
certificates or opinions specifically required by any provision hereof to be
furnished to it, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this Indenture
(but need not confirm or investigate the accuracy of mathematical calculations
stated therein).

 

(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.

 

72

 

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

 

(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 of its selection, 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.

 

(g) The
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the
Holders pursuant to this Indenture, unless such Holders shall have offered to
the Trustee security or indemnity satisfactory to the Trustee against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction.

 

(h) The
Trustee shall not be deemed to have notice of any Default or Event of Default
unless a Trust Officer has actual knowledge thereof or unless written notice of
any event which is in fact such a default is received by the Trustee at the
Corporate Trust Office of the Trustee, and such notice references the Securities
and this Indenture.

 

73

 

(i) The
rights, privileges, protections, immunities and benefits given to the Trustee,
including, without limitation, its right to be indemnified, are extended to,
and shall be enforceable by, the Trustee in each of its capacities hereunder,
and each agent, custodian and other Person employed to act hereunder.

 

(j) In no
event shall the Trustee be responsible or liable for special, indirect, or
consequential loss or damage of any kind whatsoever (including, but not limited
to, loss of profit) irrespective of whether the Trustee has been advised of the
likelihood of such loss or damage and regardless of the form of action.

 

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, 2009, 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 and the
Guarantors, jointly and severally, 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 and the Guarantors, jointly and severally, shall reimburse
the Trustee upon request for all reasonable out-of-

 

74

 

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 and the Guarantors, jointly and
severally, shall indemnify the Trustee against any and all loss, liability,
claim, damage or expense (including reasonable attorneys’ fees and expenses)
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 of which a Trust Officer has received notice 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 or termination 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

 

(4) the Trustee otherwise becomes
incapable of acting.

 

75

 

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 at the expense of the
Company 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 at the expense of the Company 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 

 

76

 

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, 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) and 6.01(j) (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) or 6.01(j) (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 

 

77

 

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.

 

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

 

78

 

(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 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, 

 

79

 

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.  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;

 

80

 

(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; or

 

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

 

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.  (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);

 

81

 

(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.

 

(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 

 

82

 

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
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;

 

83

 

(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 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.

 

84

 

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).

 

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.

 

(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.

 

85

 

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 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 

 

86

 

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:

 

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

2 North
LaSalle Street, Suite 1020

Chicago, IL
60602

facsimile:
312-827-8542

 

Attention
of:  Corporate Trust Administration

 

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 

 

87

 

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,

 

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 

 

88

 

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.

 

SECTION 10.14.  Waiver of
Jury Trial.  EACH OF THE COMPANY AND
THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTION
CONTEMPLATED HEREBY.

 

89

 

SECTION 10.15.  Force
Majeure.  In no event shall the
Trustee be responsible or liable for any failure or delay in the performance of
its obligations hereunder arising out of or caused by, directly or indirectly,
forces beyond its control, including, without limitation, accidents, acts of
war or terrorism, civil or military disturbances, nuclear or natural
catastrophes or acts of God, and interruptions, loss or malfunctions of
utilities, communications or computer (software and hardware) services; it being
understood that the Trustee shall use reasonable efforts which are consistent
with accepted practices in the banking industry to resume performance as soon
as practicable under the circumstances.

 

90

 

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

 

	
   

  	
  RITE AID CORPORATION,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Robert B. Sari

  
	
   

  	
   

  	
  Name:

  	
  Robert B. Sari

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President,

  
	
   

  	
   

  	
   

  	
  Secretary and General Counsel

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EACH OF THE SUBSIDIARY

  
	
   

  	
  GUARANTORS LISTED ON SCHEDULE

  
	
   

  	
  A HERETO,

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Robert B. Sari

  
	
   

  	
   

  	
  Name:

  	
  Robert B. Sari

  
	
   

  	
   

  	
  Title:

  	
  Authorized Person

  
					

 

 

	
   

  	
  THE BANK OF NEW YORK MELLON

  TRUST COMPANY, N.A., as Trustee,

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ D.G. Donovan

  
	
   

  	
   

  	
  Name:

  	
  D.G. Donovan

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

 

SCHEDULE A

 

Subsidiary
Guarantors

 

Corporations

 

3581 Carter Hill Road–Montgomery Corp.

Harco, Inc.

K&B Alabama Corporation

Rite Aid of Alabama, Inc.

Thrifty Corporation

Thrifty PayLess, Inc.

Rite Aid of Connecticut, Inc.

Eagle Managed Care Corp.

K&B, Incorporated

Rite Aid Drug Palace, Inc.

Rite Aid Hdqtrs. Corp.

Rite Aid Hdqtrs. Funding, Inc.

Rite Aid of Delaware, Inc.

Rite Aid Transport, Inc.

Rite Fund, Inc.

Rite Investments Corp.

Rx Choice, Inc.

Rite Aid Realty Corp.

Patton Drive and Navy Boulevard Property Corporation

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.

K&B Louisiana Corporation

K&B Services, Incorporated

Rite Aid of Maine, Inc.

Rite Aid of Massachusetts, Inc.

GDF, Inc.

READ’s Inc.

Rite Aid of Maryland, Inc.

Apex Drug Stores, Inc.

PDS-1 Michigan, Inc.

Perry Distributors, Inc.

Perry Drug Stores, Inc.

Ram–Utica, Inc.

RDS Detroit, Inc.

Rite Aid of Michigan, Inc.

K&B Mississippi Corporation

Rite Aid of New Hampshire, Inc.

657–659 Broad St. Corp.

 

 

Lakehurst and Broadway Corporation

Rite Aid of New Jersey, Inc.

Rite Aid of New York, Inc.

Rite Aid Rome Distribution Center, Inc.

Rite Aid of North Carolina, Inc.

4042 Warrensville Center Road–Warrensville Ohio, Inc.

5600 Superior Properties, Inc.

Broadview and Wallings–Broadview Heights Ohio, Inc.

Rite Aid of Ohio, Inc.

The Lane Drug Company

Keystone Centers, Inc.

Rite Aid of Pennsylvania, Inc.

537 Elm Street Corporation

Rite Aid of South Carolina, Inc.

K&B Tennessee Corporation

Rite Aid of Tennessee, Inc.

K&B Texas Corporation

Rite Aid of Vermont, Inc.

England Street–Asheland Corporation

Rite Aid of Virginia, Inc.

5277 Associates, Inc.

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

Rite Aid of West Virginia, Inc.

Brooks Pharmacy, Inc.

Eckerd Corporation

EDC Licensing, Inc.

Genovese Drug Stores, Inc.

JCG Holdings (USA), Inc.

Maxi Drug North, Inc.

Maxi Drug, Inc.

P.J.C. Distribution, Inc.

P.J.C. Realty Co., Inc.

PJC Lease Holdings, Inc.

PJC Special Realty Holdings, Inc.

The Jean Coutu Group (PJC) USA, Inc.

Thrift Drug Services, Inc.

Thrift Drug, Inc.

Eckerd Fleet, Inc.

PJC of Massachusetts, Inc.

PJC Realty MA, Inc.

EDC Drug Stores, Inc.

MC Woonsocket, Inc.

PJC of Cranston, Inc.

PJC of East Providence, Inc.

PJC of Rhode Island, Inc.

P.J.C. of West Warwick, Inc.

 

2

 

Maxi Green Inc.

PJC of Vermont, Inc.

 

Limited
Liability Companies

 

1515 West State Street Boise, Idaho, LLC

Ann & Government Streets–Mobile, Alabama, LLC

Central Avenue & Main Street Petal-MS, LLC

Eighth and Water Streets–Urichsville, Ohio, LLC

Munson & Andrews, LLC

Name Rite, L.L.C.

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

Rite Aid Services, L.L.C.

Silver Springs Road–Baltimore, Maryland/One, LLC

Silver Springs Road–Baltimore, Maryland/Two, LLC

State & Fortification Streets–Jackson, Mississippi, LLC

State Street and Hill Road–Gerard, Ohio, LLC

Tyler and Sanders Roads, Birmingham–Alabama, LLC

1740 Associates, LLC

Northline & Dix–Toledo–Southgate, LLC

Seven Mile and Evergreen–Detroit, LLC

764 South Broadway–Geneva, Ohio, LLC

Gettysburg and Hoover–Dayton, Ohio, LLC

Mayfield & Chillicothe Roads–Chesterland, LLC

112 Burleigh Avenue Norfolk, LLC

Fairground, L.L.C.

JCG (PJC) USA, LLC

PJC Dorchester Realty LLC

PJC East Lyme Realty LLC

PJC Haverhill Realty LLC

PJC Hermitage Realty LLC

PJC Hyde Park Realty LLC

PJC Manchester Realty LLC

PJC Mansfield Realty LLC

PJC New London Realty LLC

PJC Peterborough Realty LLC

PJC Providence Realty LLC

PJC Realty N.E. LLC

PJC Revere Realty LLC

 

Limited
Partnerships

 

Maxi Drug South, L.P.

 

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]**

  

 

10.375% Senior
Secured Note due 2016

 

CUSIP No. 767754BV5

 

ISIN No. US7677554BV53

 

RITE AID
CORPORATION, a Delaware corporation, promises to pay to [Cede &
Co.]**, or registered assigns, the principal sum [         ]*
[as set forth on the Schedule of Increases or Decreases annexed hereto]** on July 15,
2016.

 

Interest
Payment Dates:  July 15 and January 15, commencing on January 15,
2009.

 

Record Dates: July 1
and January 1.

 

*  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 A
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:

 

THE BANK OF
NEW YORK MELLON TRUST

COMPANY, N.A., 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]

 

10.375% Senior
Secured Note due 2016

 

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 July 15 and January 15
of each year, commencing January 15, 2009. 
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 July 9,
2008.  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 January 1 or July 1next
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, The
Bank of New York Mellon Trust Company, N.A., a banking association organized
and existing under the laws of the United States of America (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

 

4.  Indenture

 

The Company
issued the Securities under an Indenture dated as of  July 9, 2008
(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 $470,000,000.  The Securities include
the Original Securities and an unlimited aggregate principal amount of
additional Securities that may be issued under the Indenture.  The Original Securities and such additional
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 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 July 15, 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, 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).  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.

 

5

 

“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 July 15, 2012 (such Redemption Price
being set forth in the table below) plus (2) all required interest
payments due on such Security through July 15, 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 July 15, 2012;
provided, however, that if the period from the Redemption Date to
July 15, 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 July 15,
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 July 15 of the years set forth below:

 

	
  Redemption Period

  	
   

  	
  Price

  	
   

  
	
  2012

  	
   

  	
  105.188

  	
  %

  
	
  2013

  	
   

  	
  102.594

  	
  %

  
	
  2014 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

Notwithstanding
the foregoing, at any time and from time to time prior to July 15, 2011,
the Company may redeem up to 35% of the original aggregate principal amount of
the Securities (including Securities issued after July 9, 2008, if any)
with the proceeds from one or more Equity Offerings by the Company, at a
Redemption Price equal to 110.375% 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
July 9, 2008, 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.

 

6

 

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.

 

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 

 

7

 

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 $2,000 and whole
multiples in excess thereof 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.

 

11.  Persons Deemed Owners

 

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

 

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.

 

8

 

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

 

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.

 

9

 

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).

 

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 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 

 

10

 

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 WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES
OF CONFLICTS OF LAW.

 

11

 

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 Siganture:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  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
10.1

 

AMENDMENT
AND RESTATEMENT AGREEMENT dated as of July 9, 2008 (this “Amendment”)
relating to the Credit Agreement dated as of June 27, 2001, as amended and
restated as of June 4, 2007 (the “Original Credit Agreement”),
among Rite Aid Corporation, a corporation organized under the laws of the State
of Delaware (the “Borrower”), the lenders from time to time party
thereto (the “Lenders”), and Citicorp North America, Inc., as
administrative agent and collateral processing agent (in such capacities, the “Administrative
Agent”).

 

RECITALS

 

A. 
Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Original Credit Agreement or,
to the extent specified herein, in the Original Credit Agreement as amended
hereby.  The rules of construction
specified in Section 1.03 of the Original Credit Agreement also apply to
this Amendment.

 

B.  On
the 2008 Restatement Effective Date (as defined below), the Borrower intends to
establish an Incremental Facility pursuant to Section 2.21 of the Original
Credit Agreement, which shall be an additional senior secured term loan
facility under the Original Credit Agreement in an aggregate principal amount
of $350,000,000 (the “Tranche 3 Term Facility”; the terms loans
thereunder, “Tranche 3 Term Loans”) to be made available by the lenders
signatory hereto (the “Tranche 3 Term Lenders”).  The proceeds of the Tranche 3 Term Loans will
be used (a) to finance the repurchase, redemption, retirement or
defeasance of the Borrower’s 8.125% senior secured notes due 2010, 7.50% senior
secured notes due 2015 and 9.25% senior notes due 2013, (b) to pay fees
and expenses incurred in connection with the foregoing and (c) for other
general corporate purposes (including the payment of accrued interest).

 

C. 
This Amendment is the Incremental Facility Amendment relating to the
Tranche 3 Facility contemplated by Section 2.21 of the Original Credit
Agreement.  Pursuant to this Amendment,
the Original Credit Agreement shall be amended and restated substantially in
the form of Exhibit A to this Amendment (the Original Credit
Agreement, as so amended and restated, the “Restated Credit Agreement”),
effective as of the 2008 Restatement Effective Date, to establish the
Tranche 3 Term Facility and to effect certain modifications to the
Original Credit Agreement necessary to reflect the terms of the Tranche 3 Term
Facility, all as contemplated hereby.

 

 

AGREEMENTS

 

In consideration of the foregoing and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Borrower, the Subsidiary Loan Parties, the Tranche 3
Term Lenders and the Administrative Agent hereby agree as follows:

 

ARTICLE I

Amendment and Restatement

 

SECTION 1.1.  Amendment and Restatement of Original
Credit Agreement.  The Original
Credit Agreement and the Definitions Annex are hereby amended and restated,
effective as of the 2008 Restatement Effective Date, in the form of the
Restated Credit Agreement attached as Exhibit A to this Amendment.  Schedule 2.01 to the Original Credit
Agreement is amended in its entirety to read in the form of Exhibit A-1
to this Amendment (it being understood that all other schedules and exhibits to
the Original Credit Agreement, in the forms thereof immediately prior to the
2008 Restatement Effective Date, shall constitute schedules and exhibits to the
Restated Credit Agreement).

 

SECTION 1.2.  Tranche 3 Term Loans.  (a)  Subject to the terms and conditions
set forth herein, each Tranche 3 Term Lender agrees to make Tranche 3
Term Loans to the Borrower on the 2008 Restatement Effective Date in a
principal amount equal to such Tranche 3 Term Lender’s Tranche 3 Term
Commitment.  A Person shall become a
Tranche 3 Term Lender and a party to the Restated Credit Agreement by executing
and delivering to the Administrative Agent, on or prior to the 2008 Restatement
Effective Date, a signature page to this Amendment as a “Tranche 3
Term Lender” setting forth the amount of Tranche 3 Term Loans that such
Person commits to make.  The “Tranche 3
Term Commitment” of any Tranche 3 Term Lender will be the amount of
such commitment set forth in its signature page to this Amendment or such
lesser amount as is allocated to it by Citigroup Global Markets Inc. (“CGMI”)
and notified to it prior to the 2008 Restatement Effective Date.  The commitments of the Tranche 3 Term
Lenders are several and no Tranche 3 Term Lender shall be responsible for
any other Tranche 3 Term Lender’s failure to make Tranche 3 Term
Loans.

 

(b)  The obligations of
each Tranche 3 Term Lender to make Tranche 3 Term Loans on the 2008
Restatement Effective Date is subject to the satisfaction of the following
conditions:

 

(i) After giving effect to the borrowing of the Tranche 3 Term
Loans, the conditions set forth in paragraphs (a), (b) and (c) of
Section 4.02 of the Restated Credit Agreement shall be satisfied on and as
of the 2008 Restatement Effective Date, and the Tranche 3 Term Lenders shall
have received a certificate of a Financial Officer dated the 2008 Restatement
Effective Date to such effect.

 

(ii) The Collateral and Guarantee Requirement (as defined in the
Restated Credit Agreement) shall have been satisfied.

 

 

(iii) The Administrative Agent shall have received a favorable
legal opinion of each of (i) Skadden, Arps, Slate, Meagher & Flom
LLP, counsel to the Borrower and (ii) Robert Sari, General Counsel of the
Borrower, in each case addressed to the Administrative Agent and the Lenders
under the Restated Credit Agreement and dated the 2008 Restatement Effective
Date, in substantially the forms of Exhibits J-1 and J-2 to
the Original Credit Agreement, modified, however, to address the Tranche 3
Term Loans and this Amendment, and covering such other matters relating to the
Loan Parties, the other Senior Loan Documents, the Senior Collateral and the
transactions contemplated hereby to occur on the 2008 Restatement Effective
Date as the Administrative Agent may reasonably request, and otherwise
reasonably satisfactory to the Administrative Agent.  The Borrower hereby requests such counsel to
deliver such opinions.

 

(iv) The Administrative Agent shall have received such documents and certificates as
the Administrative Agent or its counsel may reasonably request relating to the
good standing of the Borrower and the organization and existence of each Loan
Party, the organizational documents of each Loan Party, the resolutions of each
Loan Party that authorize the transactions contemplated hereby, the incumbency
and authority of the Person or Persons executing and delivering the Amendment
and the other documents contemplated hereby, all in form and substance
reasonably satisfactory to the Administrative Agent.

 

(v) The Lenders (as defined in the Restated Credit Agreement)
shall have received all documentation and other information required by bank
regulatory authorities under applicable “know your customer” and anti-money
laundering rules and regulations, including the U.S.A. Patriot Act.

 

(vi) The Administrative Agent shall have received a borrowing
request in a form acceptable to the Administrative Agent requesting that the
Tranche 3 Term Lenders make the Tranche 3 Term Loans to the Borrower on the
2008 Restatement Effective Date.

 

(vii) After giving effect to the borrowing of the Tranche 3 Term
Loans, the Borrowing Base Amount on the 2008 Restatement Effective Date shall
be no less than the sum of (A) the aggregate principal amount of Loans (as
defined in the Restated Credit Agreement) outstanding on the 2008 Restatement
Effective Date and (B) the LC Exposure on the 2008 Restatement Effective
Date.  The Administrative Agent shall
have received a completed Borrowing Base Certificate dated the 2008 Restatement
Effective Date and signed by a Financial Officer.

 

(viii) The conditions to effectiveness of this Amendment set forth
in Section 1.3 hereof shall have been satisfied.

 

SECTION 1.3.  Restatement Effectiveness.  The amendment and restatement of the Original
Credit Agreement effected hereby shall become effective as of the first date
(the “2008 Restatement Effective Date”) on which the following
conditions have been satisfied:

 

 

(a)  The Administrative Agent (or its counsel) shall have received
duly executed counterparts hereof that, when taken together, bear the
signatures of (i) the Borrower, (ii) each Subsidiary Loan Party, (iii) each
Tranche 3 Term Lender and (iv) the Administrative Agent.  The aggregate amount of Tranche 3 Term
Commitments shall not exceed $350,000,000.

 

(b)  The conditions to the making of the Tranche 3 Term Loans
set forth in Section 1.2(b) hereof shall have been satisfied.

 

(c)  To the extent invoiced at least two days prior to the 2008
Restatement Effective Date, the Administrative Agent shall have received
payment or reimbursement of its reasonable out-of-pocket expenses in connection
with this Amendment, including the reasonable fees, charges and disbursements
of counsel for the Administrative Agent.

 

(d)  To the extent invoiced at least two days prior to the 2008
Restatement Effective Date, CGMI and Banc of America Securities LLC shall have
received payment of all fees owed to them by the Borrower on the 2008
Restatement Effective Date in connection with this Amendment and the
transactions contemplated hereby.

 

The Administrative Agent shall notify the
Borrower, the Tranche 3 Term Lenders and the other Lenders (as defined in the
Restated Credit Agreement) of the 2008 Restatement Effective Date and such
notice shall be conclusive and binding. 
Notwithstanding the foregoing, the amendment and restatement effected
hereby shall not become effective, and the obligations of the Tranche 3 Term
Lenders hereunder to make Tranche 3 Term Loans will automatically
terminate, if each of the conditions set forth or referred to in
Sections 1.2(b) and 1.3 hereof has not been satisfied at or prior to
5:00 p.m., New York City time, on July 25, 2008.

 

ARTICLE II

Miscellaneous

 

SECTION 2.1.  Representations
and Warranties.  (a)  To induce
the other parties hereto to enter into this Amendment, the Borrower represents
and warrants to each of the Lenders (as defined in the Restated Credit
Agreement) and the Administrative Agent that, as of the 2008 Restatement
Effective Date and after giving effect to the transactions and amendments to
occur on the 2008 Restatement Effective Date:

 

(i) This Amendment has been duly authorized, executed and
delivered by the Borrower and constitutes, and the Restated Credit Agreement,
as amended and restated hereby on the 2008 Restatement Effective Date, will
constitute, its legal, valid and binding obligation, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally
and subject to general principles of equity, regardless of whether considered
in a proceeding in equity or at law.

 

(ii) The representations and warranties set forth in Article III
of the Restated Credit Agreement are true and correct in all material respects
on and as of the 2008 Restatement Effective Date, with the same effect as
though made on and as of the 

 

 

2008
Restatement Effective Date, except to the extent such representations and
warranties expressly relate to an earlier date (in which case such
representations and warranties were true and correct in all material respects
as of such earlier date).

 

(iii) No Default (as defined in the Restated Credit Agreement) or
Event of Default (as defined in the Restated Credit Agreement) has occurred and
is continuing.

 

SECTION 2.2.  Effect of Amendment.  (a)  Except as expressly set forth
herein, this Amendment shall not by implication or otherwise limit, impair,
constitute a waiver of, or otherwise affect the rights and remedies of, the
Lenders or the Agents under the Original Credit Agreement, the Restated Credit
Agreement or any other Senior Loan Document, and shall not alter, modify, amend
or in any way affect any of the terms, conditions, obligations, covenants or
agreements contained in the Original Credit Agreement, the Restated Credit
Agreement or any other Senior Loan Document, all of which are ratified and
affirmed in all respects and shall continue in full force and effect.  Nothing herein shall be deemed to entitle any
Loan Party to a consent to, or a waiver, amendment, modification or other
change of, any of the terms, conditions, obligations, covenants or agreements
contained in the Original Credit Agreement, the Restated Credit Agreement or
any other Senior Loan Document in similar or different circumstances.  This Amendment shall apply to and be effective
only with respect to the provisions of the Original Credit Agreement, the
Restated Credit Agreement and the other Senior Loan Documents specifically
referred to herein.

 

(b)  On and after the
2008 Restatement Effective Date, each reference in the Original Credit
Agreement to “this Agreement”, “hereunder”, “hereof”, “herein”, or words of
like import, and each reference to the Original Credit Agreement, “thereunder”,
“thereof”, “therein” or words of like import in any other Senior Loan Document
shall be deemed a reference to the Restated Credit Agreement.  This Amendment shall constitute a “Senior
Loan Document” for all purposes of the Original Credit Agreement, the Restated
Credit Agreement and the other Senior Loan Documents.

 

SECTION 2.3.  Governing Law.  This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.

 

SECTION 2.4.  Costs and Expenses.  The Borrower agrees to reimburse the
Administrative Agent for its reasonable out-of-pocket expenses in connection
with this Amendment, including the reasonable fees, charges and disbursements
of counsel for the Administrative Agent.

 

SECTION 2.5.  Counterparts.  This Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same
instrument.  Delivery of any executed
counterpart of a signature page of this Amendment by facsimile
transmission or other electronic imaging means shall be as effective as
delivery of a manually executed counterpart hereof.

 

SECTION 2.6.  Headings.  The headings of this Amendment are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.

 

 

IN WITNESS WHEREOF, the parties hereto have
caused this Amendment and Restatement Agreement to be duly executed and
delivered by their officers as of the date first above written.

 

	
   

  	
  RITE
  AID CORPORATION,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
  /s/
  Kevin Twomey

  
	
   

  	
   

  	
  Name:
   Kevin Twomey

  
	
   

  	
   

  	
  Title:
  Executive Vice President and

  Chief Financial Officer

  

 

 

	
   

  	
  EACH
  OF THE SUBSIDIARIES LISTED ON

  PART I OF SCHEDULE A HERETO:

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
  /s/
  Robert B. Sari

  
	
   

  	
   

  	
  Name:  Robert B. Sari

  
	
   

  	
   

  	
  Title:  Executive Vice President and

  Secretary

  

 

 

	
   

  	
  EACH
  OF THE SUBSIDIARIES LISTED ON

  PART II OF SCHEDULE A HERETO:

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
  /s/
  Darrell K. Lane

  
	
   

  	
   

  	
  Name:  Darrell K. Lane

  
	
   

  	
   

  	
  Title:  Vice President and Secretary

  

 

 

	
   

  	
  EACH
  OF THE SUBSIDIARIES LISTED ON

  PART III OF SCHEDULE A HERETO:

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
  /s/
  James J. Comitale

  
	
   

  	
   

  	
  Name:  James J. Comitale

  
	
   

  	
   

  	
  Title:  Vice President and Secretary

  

 

 

	
   

  	
  THRIFTY
  PAYLESS, INC.,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
  /s/
  I. Lawrence Gelman

  
	
   

  	
   

  	
  Name:  I. Lawrence Gelman

  
	
   

  	
   

  	
  Title:  Vice President and Secretary

  

 

 

	
   

  	
  CITICORP
  NORTH AMERICA, INC.,

  as Administrative Agent,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
  /s/
  David Leland

  
	
   

  	
   

  	
  Name:
  David Leland

  
	
   

  	
   

  	
  Title:   Vice President

  

 

 

Tranche
3 Term Lender signature page to

the Amendment and Restatement Agreement dated as of July 9, 2008

to the Rite Aid Credit Agreement

 

	
  To
  approve the Amendment and Restatement:

  	
   

  	
  Tranche
  3 Term Commitment:

  
	
   

  	
   

  	
   

  
	
  Name
  of Tranche 3 Term Lender,

  	
   

  	
  $330,000,000

  
	
   

  	
   

  	
   

  
	
  Citicorp
  North America, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  by

  	
   

  	
   

  	
   

  
	
   

  	
  /s/
  David Leland

  	
   

  	
   

  
	
   

  	
  Name:David
  Leland

  	
   

  	
   

  
	
   

  	
  Title:
  Vice President

  	
   

  	
   

  

 

 

Tranche
3 Term Lender signature page to

the Amendment and Restatement Agreement dated as of July 9, 2008

to the Rite Aid Credit Agreement

 

	
  To
  approve the Amendment and Restatement:

  	
   

  	
  Tranche
  3 Term Commitment:

  
	
   

  	
   

  	
   

  
	
  Name
  of Tranche 3 Term Lender,

  	
   

  	
  $20,000,000

  
	
   

  	
   

  	
   

  
	
  Bank
  of America, N.A.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  by

  	
   

  	
   

  	
   

  
	
   

  	
  /s/
  Richard D. Hill, Jr.

  	
   

  	
   

  
	
   

  	
  Name:Richard
  D. Hill, Jr.

  	
   

  	
   

  
	
   

  	
  Title:  Managing Director

  	
   

  	
   

  

 

9

 

SCHEDULE A

 

SUBSIDIARIES

 

	
  Part I

  
	
  1.

  	
  112 Burleigh Avenue
  Norfolk, LLC

  
	
  2.

  	
  1515 West State Street
  Boise, Idaho, LLC

  
	
  3.

  	
  1740 Associates, L.L.C.

  
	
  4.

  	
  3581 Carter Hill
  Road–Montgomery Corp.

  
	
  5.

  	
  4042 Warrensville
  Center Road – Warrensville Ohio, Inc.

  
	
  6.

  	
  5277 Associates, Inc.

  
	
  7.

  	
  537 Elm Street Corp.

  
	
  8.

  	
  5600 Superior
  Properties, Inc.

  
	
  9.

  	
  657-659 Broad St. Corp.

  
	
  10.

  	
  764 South
  Broadway-Geneva, Ohio, LLC

  
	
  11.

  	
  Ann & Government
  Streets - Mobile, Alabama, LLC

  
	
  12.

  	
  Apex Drug Stores, Inc.

  
	
  13.

  	
  Broadview and Wallings-Broadview
  Heights Ohio, Inc.

  
	
  14.

  	
  Brooks Pharmacy, Inc.

  
	
  15.

  	
  Central Avenue and Main
  Street - Petal, MS, LLC

  
	
  16.

  	
  Eagle Managed Care
  Corp.

  
	
  17.

  	
  Eckerd Corporation

  
	
  18.

  	
  Eckerd Fleet, Inc.

  
	
  19.

  	
  EDC Drug Stores, Inc.

  
	
  20.

  	
  Eighth and Water
  Streets – Urichsville, Ohio, LLC

  
	
  21.

  	
  England Street-Asheland
  Corporation

  
	
  22.

  	
  Fairground, L.L.C.

  
	
  23.

  	
  GDF, Inc.

  
	
  24.

  	
  Genovese Drug Stores,
  Inc.

  
	
  25.

  	
  Gettysburg and
  Hoover-Dayton, Ohio, LLC

  
	
  26.

  	
  Harco, Inc.

  
	
  27.

  	
  K & B Alabama
  Corporation

  
	
  28.

  	
  K & B Louisiana
  Corporation

  
	
  29.

  	
  K & B Mississippi
  Corporation

  
	
  30.

  	
  K & B Services,
  Incorporated

  
	
  31.

  	
  K & B Tennessee
  Corporation

  
	
  32.

  	
  K&B Texas
  Corporation

  
	
  33.

  	
  K & B, Incorporated

  
	
  34.

  	
  Keystone Centers, Inc.

  
	
  35.

  	
  Lakehurst and Broadway
  Corporation

  
	
  36.

  	
  Maxi Drug North, Inc.

  
	
  37.

  	
  Maxi Drug South, L.P.

  
	
  38.

  	
  Maxi Drug, Inc.

  
	
  39.

  	
  Maxi Green Inc.

  
	
  40.

  	
  Mayfield &
  Chillicothe Roads – Chesterland, LLC

  
	
  41.

  	
  MC Woonsocket, Inc.

  
	
  42.

  	
  Munson & Andrews,
  LLC

  
	
  43.

  	
  Name Rite, L.L.C.

  
	
  44.

  	
  Northline & Dix –
  Toledo – Southgate, LLC

  

 

 

	
  45.

  	
  P.J.C. Distribution,
  Inc.

  
	
  46.

  	
  P.J.C. of West Warwick,
  Inc.

  
	
  47.

  	
  P.J.C. Realty Co., Inc.

  
	
  48.

  	
  Patton Drive and Navy
  Boulevard Property Corporation

  
	
  49.

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

  
	
  50.

  	
  PDS-1 Michigan, Inc.

  
	
  51.

  	
  Perry Distributors,
  Inc.

  
	
  52.

  	
  Perry Drug Stores, Inc.

  
	
  53.

  	
  PJC Dorchester Realty
  LLC

  
	
  54.

  	
  PJC East Lyme Realty
  LLC

  
	
  55.

  	
  PJC Haverhill Realty
  LLC

  
	
  56.

  	
  PJC Hermitage Realty
  LLC

  
	
  57.

  	
  PJC Hyde Park Realty
  LLC

  
	
  58.

  	
  PJC Lease Holdings,
  Inc.

  
	
  59.

  	
  PJC Manchester Realty
  LLC

  
	
  60.

  	
  PJC Mansfield Realty
  LLC

  
	
  61.

  	
  PJC New London Realty
  LLC

  
	
  62.

  	
  PJC of Cranston, Inc.

  
	
  63.

  	
  PJC of East Providence,
  Inc.

  
	
  64.

  	
  PJC of Massachusetts,
  Inc.

  
	
  65.

  	
  PJC of Rhode Island,
  Inc.

  
	
  66.

  	
  PJC of Vermont, Inc.

  
	
  67.

  	
  PJC Peterborough Realty
  LLC

  
	
  68.

  	
  PJC Providence Realty
  LLC

  
	
  69.

  	
  PJC Realty MA, Inc.

  
	
  70.

  	
  PJC Realty N.E. LLC

  
	
  71.

  	
  PJC Revere Realty LLC

  
	
  72.

  	
  PJC Special Realty
  Holdings, Inc.

  
	
  73.

  	
  Ram-Utica, Inc.

  
	
  74.

  	
  RDS Detroit, Inc.

  
	
  75.

  	
  Read's, Inc.

  
	
  76.

  	
  Rite Aid Drug Palace,
  Inc.

  
	
  77.

  	
  Rite Aid Hdqtrs. Corp.

  
	
  78.

  	
  Rite Aid of Alabama,
  Inc.

  
	
  79.

  	
  Rite Aid of
  Connecticut, Inc.

  
	
  80.

  	
  Rite Aid of Delaware,
  Inc.

  
	
  81.

  	
  Rite Aid of Florida,
  Inc.

  
	
  82.

  	
  Rite Aid of Georgia,
  Inc.

  
	
  83.

  	
  Rite Aid of Illinois,
  Inc.

  
	
  84.

  	
  Rite Aid of Indiana
  Inc.

  
	
  85.

  	
  Rite Aid of Kentucky,
  Inc.

  
	
  86.

  	
  Rite Aid of Maine, Inc.

  
	
  87.

  	
  Rite Aid of Maryland,
  Inc.

  
	
  88.

  	
  Rite Aid of
  Massachusetts, Inc.

  
	
  89.

  	
  Rite Aid of Michigan,
  Inc.

  
	
  90.

  	
  Rite Aid of New
  Hampshire, Inc.

  

 

 

	
  91.

  	
  Rite Aid of New Jersey,
  Inc.

  
	
  92.

  	
  Rite Aid of New York,
  Inc.

  
	
  93.

  	
  Rite Aid of North
  Carolina, Inc.

  
	
  94.

  	
  Rite Aid of Ohio, Inc.

  
	
  95.

  	
  Rite Aid of
  Pennsylvania, Inc.

  
	
  96.

  	
  Rite Aid of South
  Carolina, Inc.

  
	
  97.

  	
  Rite Aid of Tennesssee,
  Inc.

  
	
  98.

  	
  Rite Aid of Vermont,
  Inc.

  
	
  99.

  	
  Rite Aid of Virginia,
  Inc.

  
	
  100.

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

  
	
  101.

  	
  Rite Aid of West
  Virginia, Inc.

  
	
  102.

  	
  Rite Aid Realty Corp.

  
	
  103.

  	
  Rite Aid Rome
  Distribution Center, Inc.

  
	
  104.

  	
  Rite Aid Services,
  L.L.C.

  
	
  105.

  	
  Rite Aid Transport,
  Inc.

  
	
  106.

  	
  RX Choice, Inc.

  
	
  107.

  	
  Seven Mile and
  Evergreen – Detroit, LLC

  
	
  108.

  	
  Silver Springs Road –
  Baltimore, Maryland/One, LLC

  
	
  109.

  	
  Silver Springs Road –
  Baltimore, Maryland/Two, LLC

  
	
  110.

  	
  State &
  Fortification Streets – Jackson, Mississippi, LLC

  
	
  111.

  	
  State Street and Hill
  Road – Gerard, Ohio, LLC

  
	
  112.

  	
  The Jean Coutu Group
  (PJC) USA, Inc.

  
	
  113.

  	
  The Lane Drug Company

  
	
  114.

  	
  Thrift Drug Services,
  Inc.

  
	
  115.

  	
  Thrift Drug, Inc.

  
	
  116.

  	
  Thrifty Corporation

  
	
  117.

  	
  Tyler and Sanders
  Roads, Birmingham - Alabama, LLC

  

 

	
  Part
  II

  
	
  1.

  	
  Rite
  Aid Hdqtrs. Funding, Inc.

  
	
  2.

  	
  Rite
  Fund, Inc.

  
	
  3.

  	
  Rite
  Investments Corp.

  

 

	
  Part
  III

  
	
  1.

  	
  EDC
  Licensing, Inc.

  
	
  2.

  	
  JCG
  (PJC) USA, LLC

  
	
  3.

  	
  JCG
  Holdings (USA) Inc.

  

 

Exhibit A

 

 

CREDIT AGREEMENT

 

dated as of June 27, 2001,

 

as amended and restated as of July 9, 2008,

 

among

 

RITE AID CORPORATION,

 

The Lenders Party Hereto,

 

CITICORP NORTH AMERICA, INC.,

as Administrative Agent and Collateral Processing Agent,

 

BANK OF AMERICA, N.A.,

as Syndication Agent,

 

JPMORGAN CHASE BANK , N.A.,

as Co-Documentation Agent,

 

WELLS FARGO FOOTHILL, LLC, 

as Co-Documentation Agent

 

and

 

GENERAL ELECTRIC CAPITAL CORPORATION, 

as Co-Documentation Agent

 

 

CITIGROUP GLOBAL MARKETS INC.,

as Joint Lead Arranger and Joint Bookrunner

 

and

 

BANC OF AMERICA SECURITIES LLC, 

as Joint Lead Arranger and Joint Bookrunner

 

 

 

TABLE OF
CONTENTS

 

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  
	
   

  	
   

  	
   

  
	
  Definitions

  
	
   

  	
   

  	
   

  
	
  SECTION 1.01.

  	
  Defined
  Terms

  	
  2

  
	
  SECTION 1.02.

  	
  Classification
  of Loans and Borrowings

  	
  36

  
	
  SECTION 1.03.

  	
  Terms
  Generally

  	
  36

  
	
  SECTION 1.04.

  	
  Accounting
  Terms; GAAP

  	
  37

  
	
  SECTION 1.05.

  	
  Terms
  Defined in Definitions Annex

  	
  37

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  
	
   

  	
   

  	
   

  
	
  The Credits

  
	
   

  	
   

  	
   

  
	
  SECTION 2.01.

  	
  Commitments

  	
  37

  
	
  SECTION 2.02.

  	
  Loans and
  Borrowings

  	
  38

  
	
  SECTION 2.03.

  	
  Requests for
  Borrowings

  	
  39

  
	
  SECTION 2.04.

  	
  Swingline
  Loans

  	
  40

  
	
  SECTION 2.05.

  	
  Letters of
  Credit

  	
  41

  
	
  SECTION 2.06.

  	
  Funding of
  Borrowings

  	
  47

  
	
  SECTION 2.07.

  	
  Interest
  Elections

  	
  47

  
	
  SECTION 2.08.

  	
  Termination
  and Reduction of Commitments

  	
  49

  
	
  SECTION 2.09.

  	
  Repayment of
  Loans; Evidence of Indebtedness

  	
  49

  
	
  SECTION 2.10.

  	
  Amortization
  and Repayment of Term Loans

  	
  50

  
	
  SECTION 2.11.

  	
  Prepayment
  of Loans

  	
  51

  
	
  SECTION 2.12.

  	
  Fees

  	
  53

  
	
  SECTION 2.13.

  	
  Interest

  	
  54

  
	
  SECTION 2.14.

  	
  Alternate
  Rate of Interest

  	
  55

  
	
  SECTION 2.15.

  	
  Increased
  Costs

  	
  56

  
	
  SECTION 2.16.

  	
  Break
  Funding Payments

  	
  57

  
	
  SECTION 2.17.

  	
  Taxes

  	
  57

  
	
  SECTION 2.18.

  	
  Payments
  Generally; Pro Rata Treatment; Sharing of Setoffs

  	
  58

  
	
  SECTION 2.19.

  	
  Mitigation
  Obligations; Replacement of Lenders

  	
  60

  
	
  SECTION 2.20.

  	
  Adjustments
  to Borrowing Base Advance Rates

  	
  61

  
	
  SECTION 2.21.

  	
  Incremental
  Loans

  	
  61

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
   

  	
   

  	
   

  
	
  Representations
  and Warranties

  
	
   

  	
   

  	
   

  
	
  SECTION 3.01.

  	
  Organization;
  Powers

  	
  63

  
	
  SECTION 3.02.

  	
  Authorization;
  Enforceability

  	
  63

  

 

 

	
  SECTION 3.03.

  	
  Governmental
  Approvals; No Conflicts

  	
  63

  
	
  SECTION 3.04.

  	
  Financial
  Condition; No Material Adverse Change

  	
  63

  
	
  SECTION 3.05.

  	
  Properties

  	
  64

  
	
  SECTION 3.06.

  	
  Litigation
  and Environmental Matters

  	
  64

  
	
  SECTION 3.07.

  	
  Compliance
  with Laws and Agreements

  	
  65

  
	
  SECTION 3.08.

  	
  Investment
  and Holding Company Status

  	
  65

  
	
  SECTION 3.09.

  	
  Taxes

  	
  65

  
	
  SECTION 3.10.

  	
  ERISA

  	
  65

  
	
  SECTION 3.11.

  	
  Disclosure;
  Accuracy of Information

  	
  65

  
	
  SECTION 3.12.

  	
  Subsidiaries

  	
  66

  
	
  SECTION 3.13.

  	
  Insurance

  	
  66

  
	
  SECTION 3.14.

  	
  Labor
  Matters

  	
  66

  
	
  SECTION 3.15.

  	
  Solvency

  	
  66

  
	
  SECTION 3.16.

  	
  Federal
  Reserve Regulations

  	
  67

  
	
  SECTION 3.17.

  	
  Security
  Interests

  	
  67

  
	
  SECTION 3.18.

  	
  Use of
  Proceeds

  	
  68

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  
	
   

  	
   

  	
   

  
	
  Conditions

  
	
   

  	
   

  	
   

  
	
  SECTION 4.01.

  	
  Second Restatement Effective Date

  	
  68

  
	
  SECTION 4.02.

  	
  Each Credit
  Event

  	
  68

  
	
  SECTION 4.03.

  	
  Borrowing
  Base Date

  	
  69

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  
	
   

  	
   

  	
   

  
	
  Affirmative
  Covenants

  
	
   

  	
   

  	
   

  
	
  SECTION 5.01.

  	
  Financial
  Statements and Other Information

  	
  70

  
	
  SECTION 5.02.

  	
  Notices of
  Material Events

  	
  73

  
	
  SECTION 5.03.

  	
  Information
  Regarding Collateral

  	
  73

  
	
  SECTION 5.04.

  	
  Existence;
  Conduct of Business

  	
  74

  
	
  SECTION 5.05.

  	
  Payment of
  Obligations

  	
  74

  
	
  SECTION 5.06.

  	
  Maintenance
  of Properties

  	
  74

  
	
  SECTION 5.07.

  	
  Insurance

  	
  74

  
	
  SECTION 5.08.

  	
  Books and
  Records; Inspection and Audit Rights; Collateral and Borrowing Base Reviews

  	
  76

  
	
  SECTION 5.09.

  	
  Compliance
  with Laws

  	
  77

  
	
  SECTION 5.10.

  	
  Use of
  Proceeds and Letters of Credit

  	
  77

  
	
  SECTION 5.11.

  	
  Additional
  Subsidiaries

  	
  78

  
	
  SECTION 5.12.

  	
  Further
  Assurances

  	
  78

  
	
  SECTION 5.13.

  	
  Subsidiaries

  	
  79

  
	
  SECTION 5.14.

  	
  Intercompany
  Transfers

  	
  79

  
	
  SECTION 5.15.

  	
  Inventory
  Purchasing

  	
  79

  
	
  SECTION 5.16.

  	
  Cash
  Management System

  	
  80

  

 

 

	
  SECTION 5.17.

  	
  Termination
  of Factoring Transactions

  	
  80

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  
	
   

  	
   

  	
   

  
	
  Negative
  Covenants

  
	
   

  	
   

  	
   

  
	
  SECTION 6.01.

  	
  Indebtedness;
  Certain Equity Securities

  	
  80

  
	
  SECTION 6.02.

  	
  Liens

  	
  83

  
	
  SECTION 6.03.

  	
  Fundamental Changes

  	
  85

  
	
  SECTION 6.04.

  	
  Investments,
  Loans, Advances, Guarantees and Acquisitions

  	
  86

  
	
  SECTION 6.05.

  	
  Asset Sales

  	
  87

  
	
  SECTION 6.06.

  	
  Sale and
  Leaseback Transactions

  	
  89

  
	
  SECTION 6.07.

  	
  Hedging
  Agreements

  	
  89

  
	
  SECTION 6.08.

  	
  Restricted
  Payments; Certain Payments of Indebtedness

  	
  89

  
	
  SECTION 6.09.

  	
  Transactions
  with Affiliates

  	
  91

  
	
  SECTION 6.10.

  	
  Restrictive
  Agreements

  	
  93

  
	
  SECTION 6.11.

  	
  Amendment of
  Material Documents

  	
  94

  
	
  SECTION 6.12.

  	
  Consolidated
  Fixed Charge Coverage Ratio

  	
  95

  
	
  SECTION 6.13.

  	
  Restrictions
  on Asset Holdings by the Borrower

  	
  96

  
	
  SECTION 6.14.

  	
  Corporate
  Separateness

  	
  96

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  
	
   

  	
   

  	
   

  
	
  Events of
  Default

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  
	
   

  	
   

  	
   

  
	
  The Agents

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  
	
   

  	
   

  	
   

  
	
  Miscellaneous

  
	
   

  	
   

  	
   

  
	
  SECTION 9.01.

  	
  Notices

  	
  102

  
	
  SECTION 9.02.

  	
  Waivers;
  Amendments

  	
  103

  
	
  SECTION 9.03.

  	
  Expenses;
  Indemnity; Damage Waiver

  	
  105

  
	
  SECTION 9.04.

  	
  Successors
  and Assigns

  	
  106

  
	
  SECTION 9.05.

  	
  Survival

  	
  110

  
	
  SECTION 9.06.

  	
  Integration;
  Effectiveness

  	
  110

  
	
  SECTION 9.07.

  	
  Severability

  	
  111

  
	
  SECTION 9.08.

  	
  Right of
  Setoff

  	
  111

  
	
  SECTION 9.09.

  	
  Governing
  Law; Jurisdiction; Consent to Service of Process

  	
  111

  
	
  SECTION 9.10.

  	
  WAIVER OF
  JURY TRIAL

  	
  112

  
	
  SECTION 9.11.

  	
  Headings

  	
  112

  

 

 

	
  SECTION 9.12.

  	
  Confidentiality

  	
  112

  
	
  SECTION 9.13.

  	
  Interest
  Rate Limitation

  	
  113

  
	
  SECTION 9.14.

  	
  Collateral
  Trust and Intercreditor Agreement

  	
  113

  
	
  SECTION 9.15.

  	
  Cash Sweep

  	
  113

  
	
  SECTION 9.16.

  	
  Electronic
  Communications

  	
  114

  
	
  SECTION 9.17.

  	
  USA Patriot
  Act

  	
  115

  
	
  SECTION 9.18.

  	
  Release of
  Interim Collateral; Termination of Interim Collateral Documents

  	
  116

  

 

 

ANNEXES:

 

Annex 1 – Definitions Annex

Annex 2 – Subordination Terms

 

SCHEDULES:

 

	
  Schedule 1.01

  	
  -

  	
  Subsidiary Loan Parties

  
	
  Schedule 2.01

  	
  -

  	
  Commitments

  
	
  Schedule 3.04

  	
  -

  	
  Undisclosed Liabilities

  
	
  Schedule 3.05 (a)

  	
  -

  	
  Properties

  
	
  Schedule 3.05(c)

  	
  -

  	
  Leased Warehouses and Distribution Centers

  
	
  Schedule 3.06(a)

  	
  -

  	
  Litigation

  
	
  Schedule 3.06(b)

  	
  -

  	
  Environmental Matters

  
	
  Schedule 3.07

  	
  -

  	
  Compliance with Laws

  
	
  Schedule 3.09

  	
  -

  	
  Taxes

  
	
  Schedule 3.12

  	
  -

  	
  Subsidiaries

  
	
  Schedule 3.13

  	
  -

  	
  Insurance

  
	
  Schedule 3.14

  	
  -

  	
  Labor

  
	
  Schedule 5.11

  	
  -

  	
  Subsidiaries

  
	
  Schedule 6.01(a)(xii)

  	
  -

  	
  Existing Indebtedness

  
	
  Schedule 6.01(b)

  	
  -

  	
  Equity Issuances

  
	
  Schedule 6.02(xi)

  	
  -

  	
  Liens

  
	
  Schedule 6.04

  	
  -

  	
  Investments

  
	
  Schedule 6.08(a)

  	
  -

  	
  Restricted Payments

  
	
  Schedule 6.09

  	
  -

  	
  Affiliate Transactions

  
	
   

  	
   

  	
   

  
	
  EXHIBITS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A-1

  	
  -

  	
  Form of Term Note

  
	
  Exhibit A-2

  	
  -

  	
  Form of Revolving Credit Note

  
	
  Exhibit B

  	
  -

  	
  Form of Borrowing Base Certificate

  
	
  Exhibit C

  	
  -

  	
  Form of Assignment and Acceptance Agreement

  
	
  Exhibit D-1

  	
  -

  	
  Form of Senior Subsidiary Guarantee Agreement

  
	
  Exhibit D-2

  	
  -

  	
  Form of Interim Collateral and Guarantee Agreement

  
	
  Exhibit E

  	
  -

  	
  Form of Senior Subsidiary Security Agreement

  
	
  Exhibit F-1

  	
  -

  	
  Form of Senior Indemnity, Subrogation and Contribution Agreement

  
	
  Exhibit F-2

  	
  -

  	
  Form of Interim Indemnity, Subrogation and Contribution
  Agreement

  
	
  Exhibit G

  	
  -

  	
  Form of Second Priority Subsidiary Guarantee Agreement

  
	
  Exhibit H

  	
  -

  	
  Form of Second Priority Subsidiary Security Agreement

  
	
  Exhibit I

  	
  -

  	
  Form of Second Priority Indemnity, Subrogation and Contribution
  Agreement

  
	
  Exhibit J-1

  	
  -

  	
  Form of Opinion of Skadden, Arps, Slate, Meagher & Flom
  LLP, Special New York Counsel to the Borrower

  

 

 

	
  Exhibit J-2

  	
  -

  	
  Form of Opinion of Robert Sari, General Counsel of the Borrower

  

 

 

CREDIT AGREEMENT dated as of June 27,
2001, as amended and restated as of July 9, 2008 (this “Agreement”),
among RITE AID CORPORATION, a Delaware corporation, the LENDERS party hereto,
CITICORP NORTH AMERICA, INC., as Administrative Agent and Collateral Processing
Agent and BANK OF AMERICA, N.A., as Syndication Agent.

 

On the Effective Date (such
term and each other capitalized term used but not otherwise defined in this
preamble having the meaning assigned to such term in Article I below or in
the Definitions Annex), the Borrower, the Administrative Agent, the Collateral
Agent and certain of the Lenders entered into this Agreement pursuant to which
certain of the Lenders thereunder agreed to extend credit to the Borrower on a
revolving credit basis and to make term loans to the Borrower.

 

On the First Restatement
Effective Date, the Tranche 1 Term Lenders made Tranche 1 Term Loans in an
aggregate principal amount of $145,000,000. 
On the Second Restatement Effective Date, the Tranche 2 Term Lenders made
Tranche 2 Term Loans in an aggregate principal amount of $1,105,000,000.

 

Pursuant to Section 2.21
of the Original Agreement, the Borrower has requested that the Original
Agreement be amended pursuant to an Incremental Facility Amendment to provide
for an Incremental Facility consisting of Tranche 3 Term Loans in an aggregate
principal amount of $350,000,000.  The
Borrower, the Subsidiary Loan Parties, the Tranche 3 Term Lenders and the
Administrative Agent accordingly entered into the 2008 Amendment and Restatement
Agreement in order to provide for such Tranche 3 Term Loans, and pursuant
thereto the Original Agreement is being amended and restated in its entirety in
the form hereof.

 

The proceeds of the Tranche 3
Term Loans will be used (i) to finance the repurchase, redemption,
retirement or defeasance of the Borrower’s 8.125% Notes, 7.5% Notes and 9.25%
Notes, (ii) to pay fees and expenses incurred in connection with the
foregoing and (iii) for other general corporate purposes (including the
payment of accrued interest).  The
proceeds of Revolving Loans and Swingline Loans made on or after the 2008
Restatement Effective Date will be used for general corporate purposes,
including the financing of Optional Debt Repurchases, permitted capital
expenditures, the repurchase of the Borrower’s and/or its Subsidiaries’
(including Rite Aid Lease Management Company’s) Preferred Stock and permitted
Restricted Payments, as more fully described herein.  Letters of Credit will be used solely to
support payment obligations of the Borrower and the Subsidiaries incurred in
the ordinary course of business.

 

Accordingly, in consideration
of the mutual agreements herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:

 

 

ARTICLE I

 

Definitions

 

SECTION 1.01.  Defined Terms.  As used in this Agreement, the following
terms have the meanings specified below:

 

“2008 Amendment and
Restatement Agreement” means the Amendment and Restatement Agreement dated
as of July 9, 2008, among the Borrower, the Subsidiary Loan Parties, the
Tranche 3 Term Lenders and the Administrative Agent.

 

“2008 Restatement Effective
Date” means the date on which this Agreement becomes effective pursuant to
the terms of the 2008 Amendment and Restatement Agreement.

 

“ABR”, when used in
reference to any Loan or Borrowing, refers to whether such Loan, or the Loans
comprising such Borrowing, are bearing interest at a rate determined by
reference to the Alternate Base Rate.

 

“Account” means any
right to payment for goods sold or leased or for services rendered, whether or
not earned by performance.

 

“Account Debtor” means,
with respect to any Account, the obligor with respect to such Account.

 

“Accounts Receivable Advance Rate” means the accounts
receivable advance rate determined in accordance with Section 2.20.

 

“Acquisition” means the
acquisition by the Borrower of all the Equity Interests in Holdings.

 

“Additional Lender” has
the meaning assigned to such term in Section 2.21.

 

“Adjusted LIBO Rate”
means, with respect to any Eurodollar Borrowing for any Interest Period, an
interest rate per annum (rounded upwards, if necessary, to the next 1/100 of
1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the
Statutory Reserve Rate.

 

“Adjustment Date” means
the first day of each calendar month.

 

“Administrative Agent”
means CNAI, in its capacity as administrative agent for the Lenders.

 

“Administrative
Questionnaire” means an Administrative Questionnaire in a form supplied by
the Administrative Agent.

 

“Agents” means the
Administrative Agent and the Collateral Agent.

 

2

 

“Agent Parties” has the
meaning assigned to such term in Section 9.16(c).

 

“Alternate Base Rate”
means, for any day, a rate per annum equal to the greater of (a) the
Citibank Base Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%; provided,
however, that solely for purposes of calculating interest in respect of any
Tranche 3 Term Loan that is an ABR Loan the Alternate Base Rate will be deemed
to be 4.00% per annum on any day when the Alternate Base Rate would otherwise
be less than 4.00% per annum.  Any change
in the Alternate Base Rate due to a change in the Citibank Base Rate or the
Federal Funds Effective Rate shall be effective from and including the
effective date of such change in the Citibank Base Rate or the Federal Funds
Effective Rate.

 

“Amendment and Restatement
Agreement” means the Amendment and Restatement Agreement, dated November 8,
2006, relating to the Original Agreement.

 

“Applicable Percentage”
means, with respect to any Revolving Lender, the percentage of the total
Revolving Commitments represented by such Lender’s Revolving Commitment.  If the Revolving Commitments have been
terminated or expired, the Applicable Percentages shall be determined based
upon the Revolving Commitments most recently in effect, giving effect to any
assignments.

 

“Applicable Rate” means,
on any day, (a) with respect to any ABR Tranche 2 Term Loan, a rate
per annum of 0.75% and, with respect to any Eurodollar Tranche 2 Term
Loan, a rate per annum of 1.75%, (b) with respect to any ABR Tranche 3
Term Loan, a rate per annum of 2.00% and, with respect to any Eurodollar
Tranche 3 Term Loan, a rate per annum of 3.00% and (c) with respect to any
ABR Loan (other than a Tranche 2 Term Loan or a Tranche 3 Term Loan) or
Eurodollar Loan (other than a Tranche 2 Term Loan or a Tranche 3 Term
Loan), as the case may be, the applicable rate per annum set forth below
(expressed in basis points) under the caption “ABR Spread” or “Eurodollar
Spread”, as the case may be, in each case based upon the Average Revolver
Availability determined as of the most recent Adjustment Date; provided
that until the first Adjustment Date occurring after the Original Restatement
Effective Date, the Applicable Rate shall be the applicable rate per annum set
forth below in Category 2; and provided further, that during any period
after the date that is 120 days after the Second Restatement Effective Date but
prior to the Borrowing Base Date, the “Applicable Rate” shall mean (i) with
respect to ABR Tranche 2 Term Loans, a rate per annum of 1.25% and (ii) with
respect to Eurodollar Tranche 2 Term Loans, a rate per annum of 2.25%:

 

	
  RATING:

  	
   

  	
  ABR Spread

  (bps)

  	
   

  	
  Eurodollar Spread

  (bps)

  	
   

  
	
  Category 1

  Average Revolver Availability greater than $1,250,000,000

  	
   

  	
  25

  	
   

  	
  125

  	
   

  
	
  Category 2
  

  Average Revolver Availability greater than $500,000,000 but less than or
  equal to $1,250,000,000

  	
   

  	
  50

  	
   

  	
  150

  	
   

  

 

3

 

	
  Category 3

  Average Revolver Availability less than or equal to $500,000,000

  	
   

  	
  75

  	
   

  	
  175

  	
   

  

 

“Approved Fund” means (a) with
respect to any Lender, a CLO managed by such Lender or by an Affiliate of such
Lender or (b) with respect to any Lender that is a fund which invests in
bank loans and similar extensions of credit, any other fund that invests in
bank loans and similar extensions of credit and is managed or advised by the
same investment advisor as such Lender or by an Affiliate of such investment
advisor.

 

“Assignment and Acceptance”
means an assignment and acceptance entered into by a Lender and an assignee
(with the consent of any party whose consent is required by Section 9.04),
and accepted by the Administrative Agent, in the form of Exhibit C
or any other form approved by the Administrative Agent.

 

“Average Revolver
Availability” means, as determined on any Adjustment Date, the average
daily Revolver Availability during the calendar month immediately preceding
such Adjustment Date; provided that the Average Revolver Availability as
determined on the first Adjustment Date occurring after the Original
Restatement Effective Date shall be the average daily Revolver Availability for
the period from the Original Restatement Effective Date to the day immediately
prior to such first Adjustment Date.

 

“Board” means the Board
of Governors of the Federal Reserve System of the United States of America.

 

“Borrower” means Rite Aid
Corporation, a Delaware corporation.

 

“Borrowing” means (a) a
Loan of the same Class and Type, made, converted or continued on the same
date and, in the case of a Eurodollar Loan, as to which a single Interest
Period is in effect or (b) a Swingline Loan.

 

“Borrowing Base Amount” means, with respect to the Borrower,
an amount equal to the sum, without duplication, of the following;

 

(a) the Accounts
Receivable Advance Rate multiplied by the book value of Eligible Accounts
Receivable; plus

 

(b) the Pharmaceutical
Inventory Advance Rate multiplied by the Eligible Pharmaceutical Inventory
Value; plus

 

(c) the Other Inventory
Advance Rate multiplied by the Eligible Other Inventory Value; plus

 

(d) the Script Lists
Advance Rate multiplied by the Eligible Script Lists Value; minus

 

4

 

(e) a reserve in an
aggregate amount equal to the Borrower’s then-current exposure upon early
termination under each of its existing and future Hedging Agreements; minus

 

(f) any reserves
established by the Collateral Agent in the exercise of its reasonable judgment
to reflect Borrowing Base Factors;

 

provided,
that, for purposes of determining the Borrowing Base Amount at any date of
determination, the amount set forth in clause (d) of this definition
shall not exceed the lesser of (i) $800,000,000 and (ii) 25% of the
Borrowing Base Amount.

 

The Borrowing Base Amount shall
be computed (i) weekly with respect to Eligible Accounts Receivable and
Eligible Inventory stored at any location other than a distribution center, (ii) monthly
with respect to Eligible Inventory stored at a distribution center and (iii) annually
with respect to Eligible Script Lists, in each case in accordance with Sections
2.20 and 5.01(f).  The Borrowing Base
Amount at any time in effect shall be determined by reference to the Borrowing
Base Certificate most recently delivered pursuant to Section 5.01(f).

 

“Borrowing Base Certificate” means a certificate
substantially in the form of Exhibit B or in such other form as the
Agents may approve.

 

“Borrowing Base Date”
means the first date after the Second Restatement Effective Date on which the
conditions set forth in Section 4.03 have been satisfied.

 

“Borrowing Base Factors” means landlord’s liens affecting
Eligible Inventory, factors affecting the saleability or collectability of
Eligible Accounts Receivable and Eligible Inventory at retail or in
liquidation, factors affecting the market value of Eligible Inventory, Eligible
Accounts Receivable or Eligible Script Lists, other impediments to the
Collateral Agent’s ability to realize upon the Eligible Accounts Receivable,
the Eligible Inventory or the Eligible Script Lists and other factors affecting
the credit value to be afforded the Eligible Accounts Receivable, the Eligible
Inventory and the Eligible Script Lists.

 

“Borrowing Request”
means a request by the Borrower for a Borrowing in accordance with Section 2.03.

 

“Bridge Facility” means
the bank credit facility, if any, under which loans are made to the Borrower on
the Second Restatement Effective Date in an aggregate principal amount equal to
$1,220,000,000 minus the aggregate principal amount, if any, of New
Notes issued on or prior to the Second Restatement Effective Date.

 

“Business Acquisition” means (i) an Investment by the
Borrower or any of the Subsidiaries in any other Person (including an
Investment by way of acquisition of debt or equity securities of any other
Person) pursuant to which such Person shall become a Subsidiary or shall be
merged into or consolidated with the Borrower or any of the Subsidiaries or (ii) an
acquisition by the Borrower or any of the Subsidiaries of the property and
assets of any Person (other than the Borrower or any of the Subsidiaries) 

 

5

 

that
constitute substantially all the assets of such Person or any division or other
business unit of such Person; provided
that the acquisition of prescription files and Stores and the acquisition of
Persons substantially all of whose assets consist of fewer than 10 Stores,
in each case in the ordinary course of business and not substantially
inconsistent with the business projections of the Borrower and the Subsidiaries
delivered to the Lenders on or about the Original Restatement Effective Date shall
not constitute a Business Acquisition.

 

“Capital Lease Obligations”
of any Person means the obligations of such Person to pay rent or other amounts
under any Capital Lease, which obligations should be classified and accounted
for as capital leases on a balance sheet of such Person under GAAP, and the
amount of such obligations shall be the capitalized amount thereof determined
in accordance with GAAP.

 

“Cash Management System” shall have the meaning assigned to
such term in the Senior Subsidiary Security Agreement.

 

“Cash Sweep Cash Collateral Account” shall have the meaning
assigned to such term in the Senior Subsidiary Security Agreement.

 

“Cash Sweep Notice” shall have the meaning assigned to such
term in the Senior Subsidiary Security Agreement.

 

“Cash Sweep Period” shall have the meaning assigned to such
term in the Senior Subsidiary Security Agreement.

 

“Change in Control”
means (a) the acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person or group (within the meaning of the
Securities Exchange Act of 1934, as amended, and the rules of the SEC
thereunder as in effect on the Second Restatement Effective Date) (other than (i) Green
Equity Investors III, L.P. and its Affiliates or (ii) the Seller and
its Affiliates as a result of the Acquisition), of 30% or more of the
outstanding shares of common stock of the Borrower; (b) at the end of any
period of 12 consecutive calendar months, the occupation of a majority of the
seats on the board of directors of the Borrower by Persons who were not members
of the board of directors of the Borrower on the first day of such period; or (c) the
occurrence of a “Change of Control”, as defined in any Indenture or other
agreement that governs the terms of any Material Indebtedness.

 

“Change in Law” means (a) the
adoption of any law, rule or regulation after the Original Restatement
Effective Date, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the Original Restatement Effective Date or (c) compliance by any Lender or
any Issuing Bank (or, for purposes of Section 2.15(b), by any lending
office of such Lender or by such Lender’s or such Issuing Bank’s holding
company, if any) with any request, guideline or directive (whether or not
having the force of law) of any Governmental Authority made or issued after the
Original Restatement Effective Date.

 

“Charges” has the
meaning assigned to such term in Section 9.13.

 

6

 

“Citibank Base Rate” means the rate of interest publicly
announced by Citibank, N.A. in New York City from time to time as the
Citibank Base Rate.

 

“Citibank Concentration Account” shall have the meaning
assigned to such term in the Senior Subsidiary Security Agreement.

 

“Class”, when used in
reference to any Loan or Borrowing, refers to whether such Loan, or the Loans
comprising such Borrowing, are Revolving Loans, Tranche 1 Term Loans,
Tranche 2 Term Loans, Tranche 3 Term Loans or Swingline Loans and, when
used in reference to any Commitment, refers to whether such Commitment is a
Revolving Commitment, a Tranche 1 Term Commitment, a Tranche 2 Term
Commitment or a Tranche 3 Term Commitment.

 

“CLO” means any entity
(whether a corporation, partnership, trust or otherwise) that is engaged in
making, purchasing, holding or otherwise investing in bank loans and similar
extensions of credit in the ordinary course of its business and is administered
or managed by a Lender or an Affiliate of a Lender.

 

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

 

“Collateral Agent” means
CNAI, in its capacity as collateral processing agent for the Lenders.

 

“Collateral
and Guarantee Requirement” means the requirement that:

 

(a)  the Administrative Agent shall have received from each
Subsidiary Loan Party either (i) a counterpart of, or a supplement to,
each Senior Collateral Document duly executed and delivered on behalf of such
Loan Party or (ii) in the case of any Person that becomes a Subsidiary
Loan Party after the Second Restatement Effective Date, a supplement to each
applicable Senior Collateral Document, in the form specified therein, duly
executed and delivered on behalf of such Subsidiary Loan Party;

 

(b)  (i) all documents and instruments, including Uniform
Commercial Code financing statements, required by law or reasonably requested
by the Administrative Agent to be filed, registered or recorded to create the
Liens intended to be created by the Senior Collateral Documents and perfect such
Liens to the extent required by, and with the priority required by, this
Agreement and the Senior Collateral Documents, shall have been filed,
registered or recorded or delivered to the Administrative Agent for filing,
registration or recording or (ii) the Administrative Agent shall have been
provided with all authorizations, consents and approvals from each Loan Party,
Governmental Authority and other Person reasonably requested by it to file,
record or register all documents and instruments referred to in clause (b)(i) of
this definition; and

 

(c)  each Loan Party shall have obtained all consents and
approvals required to be obtained by it in connection with the execution and
delivery of all 

 

7

 

Senior Collateral
Documents to which it is a party, the performance of its obligations thereunder
and the granting by it of the Liens thereunder.

 

“Commitment” means the
Revolving Commitments, the Tranche 1 Term Commitments, the Tranche 2
Term Commitments and the Tranche 3 Term Commitments, or any combination thereof
(as the context requires).

 

“Communications” has the
meaning assigned to such term in Section 9.16(a).

 

“Consolidated Capital Expenditures” means, for any period,
the aggregate amount of expenditures by the Borrower and its Consolidated
Subsidiaries for plant, property and equipment and prescription files during
such period (including any such expenditure by way of acquisition of a Person
or by way of assumption of Indebtedness or other obligations of a Person, to
the extent reflected as plant, property and equipment or as prescription file
assets) minus the aggregate amount of Net Cash Proceeds received by the
Borrower and its Consolidated Subsidiaries from the sale of Stores to third
parties pursuant to Sale and Leaseback Transactions; provided that the
aggregate amount of expenditures by the Borrower and its Consolidated
Subsidiaries referred to above shall exclude, without duplication, (i) any
such expenditures made for the replacement or restoration of assets to the
extent financed by Casualty/Condemnation Proceeds relating to the asset or
assets being replaced or restored, (ii) any amounts paid to any party
under a lease entered into in connection with a Sale and Leaseback Transaction
with respect to the termination of such lease and the reacquisition by the
Borrower or any of the Subsidiaries of the property subject to such lease and (iii) any
such expenditures made for the purchase or other acquisition from a third party
of Stores, leases and prescription files, but only to the extent that an
equivalent or greater amount is received from such third party as consideration
for the sale or other disposition to such third party of Stores, leases and/or
prescription files of a substantially equivalent value closed at substantially
the same time as, and entered into as part of a single related transaction
with, such purchase or acquisition (and if a lesser amount is received from
such third party as consideration for such sale or other disposition, then the
amount of Consolidated Capital Expenditures for purposes hereof shall be the
expenditures made net of the consideration received); provided  further
that Consolidated Capital Expenditures shall in no case be less than zero.

 

“Consolidated EBITDA” means, for any period, without
duplication, Consolidated Net Income for such period, plus (a) to the extent
deducted in determining Consolidated Net Income for such period, the aggregate
amount of (i) consolidated interest expenses, whether cash or non-cash,
and charges, commissions, discounts, yield and other similar fees and charges
incurred pursuant to Factoring Transactions or by Securitization Vehicles in
connection with Securitizations which are payable to any Person other than a
Loan Party, and any other amounts comparable to or in the nature of interest
under any Securitization or Factoring Transaction, including losses on the sale
of Securitization Assets in a Securitization accounted for as a “true sale” or
Factoring Assets in a Factoring Transaction accounted for as a “true sale,” (ii) provision
for income taxes, (iii) depreciation and amortization, (iv) LIFO
Adjustments which reduced such 

 

8

 

Consolidated
Net Income, (v) store closing and non-cash impairment expenses, (vi) any
other nonrecurring charge to the extent such nonrecurring charge does not
involve any cash expenditure during such period, (vii) non-cash
compensation expenses related to stock option and restricted stock employee
benefit plans, (viii) the non-cash interest component, as adjusted from
time to time, in respect of reserves, (ix) all costs, fees, charges and
expenses incurred in connection with the Transactions, (x) all charges
incurred relating to the investigation of the Borrower by the United States
Attorney’s Office and the United States Department of Labor and all amounts
paid in satisfaction of any judgment, fine or settlement resulting therefrom,
(xi) all costs and litigation expenses incurred in connection with
litigation, investigations and other proceedings relating to the business
conduct and practices of the former management of the Borrower and (xii) all
Integration Expenses, and minus (b) to the extent not deducted in
determining Consolidated Net Income for such period, the aggregate amount of (i) any
cash expenditure during such period in connection with which a nonrecurring
charge was taken and added back to Consolidated Net Income pursuant to clause (a) above
in calculating Consolidated EBITDA in any prior period and (ii) LIFO Adjustments
which increased such Consolidated Net Income.

 

“Consolidated Fixed Charge Coverage Ratio” means, for any
period, the ratio of (i) Consolidated EBITDA plus Consolidated Rent
less Consolidated Capital Expenditures plus Integration Capital
Expenditures to (ii) Consolidated Interest Charges plus
Consolidated Rent plus cash dividends paid pursuant to Section 6.08(a),
in each case for such period and determined in accordance with GAAP.

 

“Consolidated Interest Charges” means, for any period, the
aggregate amount of interest charges, whether expensed or capitalized, incurred
or accrued during such period by the Borrower and its Consolidated
Subsidiaries, solely to the extent paid or payable (whether during or after
such period) in cash (i) minus non-cash interest expenses during
such period related to (x) litigation reserves, (y) closed store
liability reserves, if any, and (z) self-insurance reserves and (ii) plus,
to the extent not otherwise included in such interest charges, commissions,
discounts, yield and other similar fees and charges incurred pursuant to
Factoring Transactions or by Securitization Vehicles in connection with
Securitizations which are payable to any Person other than a Loan Party, and
any other amounts comparable to or in the nature of interest under any
Securitization or Factoring Transaction, including losses on the sale of
Securitization Assets in a Securitization accounted for as a “true sale” or
Factoring Assets in a Factoring Transaction accounted for as a “true sale”.

 

“Consolidated Net Income” means, for any period, the net
income (or loss) of the Borrower and its Consolidated Subsidiaries (exclusive
of (a) extraordinary items of gain or loss during such period or gains or
losses from Indebtedness modifications during such period, (b) any gain or
loss in connection with any Asset Sale during such period, other than sales of
inventory in the ordinary course of business, but in the case of any loss only
to the extent that such loss does not involve any current or future cash expenditure,
(c) the cumulative effect of accounting changes during such period and (d) net
income or loss attributable to any Investments in Persons other than Affiliates
of 

 

9

 

the Borrower),
determined on a consolidated basis for such period in accordance with GAAP.

 

“Consolidated Rent” means, for any period, the consolidated
rental expense of the Borrower and its Consolidated Subsidiaries for such
period, and including in any event rental costs of closed stores for such
period whether or not reflected as an expense in the determination of
Consolidated Net Income for such period.

 

“Consolidated Subsidiary” means, with respect to any Person,
at any date, any Subsidiary or other entity the accounts of which would, in
accordance with GAAP, be consolidated with those of such Person in its
consolidated financial statements if such statements were prepared as of such
date.

 

“Control” means the
possession, directly or indirectly, of the power to direct or cause the direction
of the management or policies of a Person, whether through the ability to
exercise voting power, by contract or otherwise.  “Controlling” and “Controlled”
have meanings correlative thereto.

 

“CNAI” means Citicorp
North America, Inc.

 

“Direct Delivery Vendor”
has the meaning assigned to such term in the Intercompany Inventory Purchase
Agreement.

 

“Default” means any
event or condition which constitutes an Event of Default or which upon notice,
lapse of time or both would, unless cured or waived, become an Event of
Default.

 

“Definitions Annex”
means the definitions annex attached hereto as Annex 1 (as the same may be
amended, supplemented or otherwise modified from time to time).

 

“Deposit Account” shall
have the meaning assigned to such term in the Senior Subsidiary Security
Agreement.

 

“dollars” or “$”
refers to lawful money of the United States of America.

 

“Eligible Accounts Receivable” means, at any date of
determination, all Accounts that satisfy at the time of creation and continue
to meet the same at the time of such determination the criteria established
from time to time by the Collateral Agent in its reasonable judgment to reflect
Borrowing Base Factors.  On the Second
Restatement Effective Date, those criteria are:

 

(a)  such Account constitutes an “account” or “chattel paper”
within the meaning of the Uniform Commercial Code of the state in which the
Account is located;

 

(b)  all payments on such Account are by the terms of such Account
due not later than 90 days after the date of service (i.e., the
transaction date) and are 

 

10

 

otherwise on
terms that are normal and customary in the business of the Borrower and the
Subsidiaries;

 

(c)  such Account has been billed and has not remained unpaid for
more than 120 days following the date of service;

 

(d)  such Account is denominated in dollars;

 

(e)  such Account arose from a completed, outright and lawful sale
of goods or the completed performance of services by the applicable Subsidiary
Loan Party and accepted by the applicable Account Debtor, and the amount of
such Account has been properly recognized as revenue on the books of the
applicable Subsidiary Loan Party;

 

(f)  such Account is owned solely by a Subsidiary Guarantor (and
has not been transferred pursuant to a Securitization or a Factoring
Transaction);

 

(g)  the proceeds of such Account are payable solely to a Deposit
Account which (A) is under the control of the Collateral Agent and (B) has
not been released or transferred in accordance with Section 5.16 or
otherwise;

 

(h)  such Account arose in the ordinary course of business of the
applicable Subsidiary Loan Party;

 

(i)  not more than 50% of the aggregate amount of Accounts from
the same Account Debtor and any Affiliates thereof remain unpaid for more than
120 days following the date of service;

 

(j)  to the knowledge of the Borrower and the Subsidiaries, no
event of death, bankruptcy, insolvency or inability to pay creditors generally
of the Account Debtor of such Account has occurred, and no notice thereof has
been received;

 

(k)  payment of such Account is not being disputed by the Account
Debtor thereof;

 

(l)  such Account complies in all material respects with the
requirements of all applicable laws and regulations, whether Federal, state or
local, including the Federal Consumer Credit Protection Act, the Federal Truth
in Lending Act and Regulation Z of the Federal Reserve Board;

 

(m)  with respect to such Account, the Account Debtor (i) is
organized in the United States (or, if such Account Debtor is not organized in
the United States, such Account is supported by a letter of credit approved by
the Collateral Agent in favor of the applicable Subsidiary Loan Party) and (ii) is
not an Affiliate or Subsidiary or an Affiliate of any of the Subsidiaries;

 

11

 

(n)  such Account is subject to a perfected first priority
security interest in favor of the Collateral Agent for the benefit of the
Lenders pursuant to the Senior Collateral Documents and is not subject to any
other Lien (other than the Second Priority Lien);

 

(o)  with respect to any such Account for an amount greater than
$5,000,000, the Account Debtor has not been disapproved by the Required Lenders
(based, on the Required Lenders’ reasonable judgment, upon the creditworthiness
of such Account Debtor);

 

(p)  the representations and warranties contained in the Senior
Loan Documents with respect to such Account are true and correct in all
material respects; and

 

(q)  such Account is in full force and effect and constitutes a
legal, valid and binding obligation of the Account Debtor, enforceable against
such Account Debtor in accordance with its terms.

 

“Eligible Inventory” means, at any date of determination, all
inventory (as defined in the Uniform Commercial Code) owned by any Subsidiary
Loan Party that satisfies at the time of such determination the criteria
established from time to time by the Collateral Agent in its reasonable
judgment to reflect Borrowing Base Factors. 
On the Second Restatement Effective Date, Eligible Inventory shall
exclude, without duplication, the following:

 

(a)  any such inventory that has been shipped to a customer, even
if on a consignment or “sale or return” basis, or is otherwise not in the
possession or control of or any Subsidiary Loan Party or a warehouseman or
bailee of any Subsidiary Loan Party;

 

(b)  any inventory against which any Subsidiary Loan Party has
taken a reserve, to the extent of such reserve, to the extent specified by the
Collateral Agent from time to time in its reasonable judgment to reflect
Borrowing Base Factors;

 

(c)  any inventory that has been discontinued or is otherwise of a
type (SKU) not currently offered for sale on a regular basis by the Subsidiary
Loan Parties (including any such inventory obtained in connection with a
Business Acquisition) to the extent specified by the Collateral Agent from time
to time in its reasonable judgment to reflect Borrowing Base Factors;

 

(d)  any inventory not located in the United States or otherwise
not subject to a valid and perfected Lien under the Senior Collateral
Documents, subject to no prior or equal Lien;

 

(e)  any supply, scrap or obsolete inventory or inventory that is
otherwise unsaleable;

 

12

 

(f)  any inventory that is past its expiration date, is damaged or
not in good condition, is a sample used for marketing purposes or does not meet
all material standards imposed by any governmental authority having regulatory
authority over such inventory, except in each case to the extent of its net
realizable value as determined by the Collateral Agent from time to time in its
reasonable judgment;

 

(g)  any inventory that is subject to any licensing, patent,
royalty, trademark, trade name or copyright agreement with any third Person
from whom the Borrower or any of its Subsidiaries has received notice of a
dispute in respect of such agreement, to the extent that the Collateral Agent
determines, in its reasonable judgment, that such dispute could be expected to
prevent the sale of such inventory;

 

(h)  any inventory which is subject to a negotiable document of
title which has not been delivered to the Administrative Agent;

 

(i)  any inventory to the extent that such inventory is not
comprised of readily marketable materials of a type manufactured, consumed or
held for resale by the Subsidiary Loan Parties in the ordinary course of
business;

 

(j)  any inventory to the extent that such inventory consists of
raw materials, component parts and/or work-in-progress;

 

(k)  any inventory in respect of which the applicable representations
and warranties in the Senior Loan Documents are not true and correct in all
material respects;

 

(l)  any inventory to which the Subsidiary Loan Parties do not
have good title or any inventory which a Subsidiary Loan Party holds on
consignment or on a “sale or return” basis; and

 

(m)  any inventory (as notified by the Collateral Agent to the
Borrower) that the Collateral Agent has, in its reasonable judgment, deemed
ineligible in order to reflect Borrowing Base Factors;

 

provided, however, that no inventory which is stored at a distribution
center leased by the Borrower or any other Person shall be considered “Eligible
Inventory” unless each of the waivers obtained pursuant to the Original
Agreement from the lessor of each leased distribution center of the Subsidiary
Loan Parties of any statutory, common law or contractual landlord’s lien with
respect to any inventory of any Subsidiary Loan Party (other than with respect
to inventory located at leased warehouses having a value in the aggregate not
to exceed $40,000,000) shall be in full force and effect (or the Collateral
Agent shall have granted a waiver to such compliance).

 

“Eligible Other Inventory Value” means, at any date of
determination, an amount equal to (i) the cost of Eligible Inventory that
is Other Inventory (less any appropriate reserve for obsolete Other
Inventory and any profits accrued in connection with transfers of Other
Inventory between the Borrower and the Subsidiaries or between 

 

13

 

Subsidiaries)
at such date, in dollars, determined in accordance with GAAP consistently
applied and on a basis consistent with that used in the preparation of the most
recent audited consolidated financial statements of the Borrower and its
Consolidated Subsidiaries delivered to the Lenders pursuant to Section 5.01(a) multiplied
by (ii) the Net Orderly Liquidation Rate with respect to such Other
Inventory.

 

“Eligible Pharmaceutical
Inventory Value” means, at any date of determination, an amount equal
to (i) the cost of Eligible Inventory that is Pharmaceutical Inventory (less
any appropriate reserve for obsolete Pharmaceutical Inventory and any profits
accrued in connection with transfers of Pharmaceutical Inventory between the
Borrower and the Subsidiaries or between Subsidiaries) at such date, in
dollars, determined in accordance with GAAP consistently applied and on a basis
consistent with that used in the preparation of the most recent audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries delivered to the Lenders pursuant to Section 5.01(a) multiplied
by (ii) the Net Orderly Liquidation Rate with respect to such
Pharmaceutical Inventory.

 

“Eligible Script Lists”
means, at any date of determination, all lists owned and maintained on such
date by the Subsidiary Loan Parties setting forth Persons (and addresses,
telephone numbers or other contact information therefor) who currently purchase
or otherwise obtain, in any Store owned or operated by any Subsidiary Loan Party,
medication required to be dispensed by a licensed professional.

 

“Eligible Script Lists Value”
means, at any date of determination, the liquidation value of the Eligible
Script Lists in dollars, as most recently determined in connection with an appraisal
performed for purposes of this Agreement by Washburn & Associates or
such other appraisal firm satisfactory to the Collateral Agent.

 

“Environmental Laws”
means all laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the management,
release or threatened release of any Hazardous Material or to health and safety
matters.

 

“Environmental Liability”
means all liabilities, obligations, damages, losses, claims, actions, suits,
judgments, orders, fines, penalties, fees, expenses and costs, (including
administrative oversight costs, natural resource damages and remediation
costs), whether contingent or otherwise, arising out of or relating to: (a) compliance
or non-compliance with any Environmental Law, (b) the generation, use,
handling, transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release
of any Hazardous Materials or (e) any contract, agreement or other
consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.

 

“Equity Interests” means
shares of capital stock, partnership interests, membership interests in a
limited liability company, beneficial interests in a trust or other equity
ownership interests in a Person.

 

14

 

“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended from time to time.

 

“ERISA Affiliate” means
any trade or business (whether or not incorporated) that, together with the
Borrower, is treated as a single employer under Section 414(b) or (c) of
the Code or, solely for purposes of Section 302 of ERISA and Section 412
of the Code, is treated as a single employer under Section 414 of the
Code.

 

“ERISA Event” means (a) any
“reportable event”, as defined in Section 4043 of ERISA or the regulations
issued thereunder with respect to a Plan (other than an event for which the
30-day notice period is waived); (b) the existence with respect to any
Plan of an “accumulated funding deficiency” (as defined in Section 412 of
the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of
ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its
ERISA Affiliates of any liability under Title IV of ERISA with respect to
the termination of any Plan; (e) the receipt by the Borrower or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to an
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (f) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability with respect to the withdrawal or partial
withdrawal from any Plan or Multiemployer Plan; (g) the receipt by the Borrower
or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan
from the Borrower or any ERISA Affiliate of any notice, concerning the
imposition of Withdrawal Liability or a determination that a Multiemployer Plan
is, or is expected to be, insolvent or in reorganization, within the meaning of
Title IV of ERISA; or (h) the existence of any event or condition
that could reasonably be expected to constitute grounds under ERISA for the
termination of, or the appointment of a trustee to administer, any Plan.

 

“Estimated Borrowing Base
Amount” means the Borrowing Base Amount; provided that for this
purpose the assets and properties of Holdings and its subsidiaries shall be
deemed to have been pledged, on a first priority basis, to the Collateral Agent
for the benefit of the Lenders pursuant to the Senior Collateral Documents.

 

“Eurodollar”, when used
in reference to any Loan or Borrowing, refers to whether such Loan, or the
Loans comprising such Borrowing, are bearing interest at a rate determined by
reference to the Adjusted LIBO Rate.

 

“Event of Default” has
the meaning assigned to such term in Article VII.

 

“Excess Cash Flow”
means, for any fiscal year, without duplication, of:

 

(a)  net cash proceeds from operating activities adjusted by net
(repayments to) proceeds from accounts receivable securitization as reflected
in the statement of cash flows to the financial statements of the Borrower
filed with the SEC for the applicable fiscal year; minus

 

15

 

(b)  the sum of (i) Consolidated Capital Expenditures for
such fiscal year (except to the extent attributable to the incurrence of
Capital Lease Obligations or synthetic lease obligations or otherwise financed
by incurring Long-Term Indebtedness (exclusive of Revolving Loans), by issuing
Equity Interests (exclusive of any issuance of Equity Interests to the Borrower
or any of the Subsidiaries and any amounts prepaid pursuant to Section 2.11(c)(ii)),
through the receipt of capital contributions (other than capital contributions
made by the Borrower or any of the Subsidiaries) or using the proceeds of any
disposition of assets outside the ordinary course of business or other proceeds
not included in Consolidated Net Income) plus (ii) cash consideration
paid during such fiscal year to make acquisitions or other capital investments
(except to the extent financed by incurring Long-Term Indebtedness (exclusive
of Revolving Loans), by issuing Equity Interests (other than to the Borrower or
any of the Subsidiaries), through the receipt of capital contributions (other
than capital contributions made by the Borrower or any of the Subsidiaries) or
using the proceeds of any disposition of assets outside the ordinary course of
business or other proceeds not included in Consolidated Net Income); minus

 

(c)  the aggregate principal amount of Long-Term Indebtedness
repaid or prepaid (other than Refinancing Indebtedness) by the Borrower and its
Consolidated Subsidiaries during such fiscal year, excluding Indebtedness in
respect of Revolving Loans (except to the extent accompanied by a corresponding
reduction in Revolving Commitments pursuant to Section 2.08) and Letters
of Credit.

 

“Excluded Taxes” means,
with respect to any Agent, any Lender, any Issuing Bank or any other recipient
of any payment to be made by or on account of any obligation of the Borrower
hereunder, (a) income or franchise taxes imposed on (or measured by) its
net income by the United States of America, or by the jurisdiction under the
laws of which such recipient is organized or in which its principal office is
located or, in the case of any Lender, in which its applicable lending office
is located, (b) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction described in
clause (a) above and (c) in the case of a Foreign Lender (other than
an assignee pursuant to a request by the Borrower under Section 2.19(b)),
any withholding tax that (i) is in effect and would apply to amounts
payable to such Foreign Lender at the time such Foreign Lender becomes a party
to this Agreement (or designates a new lending office), except to the extent
that such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from the Borrower with respect to any withholding tax pursuant to Section 2.17(a),
or (ii) is attributable to such Foreign Lender’s failure to comply with Section 2.17(e).

 

“Existing Guaranteed
Unsecured Indebtedness” means Indebtedness outstanding as of the Second
Restatement Effective Date under the 9.25% Notes and the 8.625% Notes.

 

16

 

“Existing Non-Guaranteed
Indebtedness” means Indebtedness outstanding as of the Second Restatement
Effective Date under the Borrower’s 6.125% Notes due 2008, the Borrower’s
6.875% Senior Debentures due 2013, the Borrower’s 7.70% Notes due 2027 and the
Borrower’s 6.875% Notes due 2028.

 

“Existing Second Priority
Debt” means Indebtedness outstanding as of the Second Restatement Effective
Date under the 8.125% Notes, the 7.5% Notes and the 2017 7.5% Notes.

 

“Factoring Assets” means
any accounts receivable owed to the Borrower or any Subsidiary (whether now
existing or arising or acquired in the future) arising in the ordinary course
of business from the sale of goods or services, all collateral securing such
accounts receivable, all contracts and contract rights and all guarantees or
other obligations in respect of such accounts receivable, all proceeds of such
accounts receivable and other assets (including contract rights) which are of
the type customarily transferred in connection with the factoring of accounts
receivable and which are sold, transferred or otherwise conveyed by the
Borrower or a Subsidiary pursuant to a Factoring Transaction permitted by this
Agreement.

 

“Factoring Notice” means
a written notice delivered by the Borrower to the Administrative Agent at least
30 days after the termination of any Securitization program indicating that the
Borrower or its Subsidiaries intend to engage in a Factoring Transaction.

 

“Factoring Transaction”
means any transaction or series of transactions entered into by the Borrower
and any Subsidiaries pursuant to which the Borrower or such Subsidiaries sells,
conveys or otherwise transfers (or purports to sell, convey or  otherwise transfer) Factoring Assets of the
Borrower or such Subsidiaries to a non-related third party factor on market
terms as determined in good faith by the senior management of the Borrower; provided
that (i) no portion of any Indebtedness deemed to exist as a result of
such Factoring Transaction (x) is incurred or Guaranteed by the Borrower
or any other Subsidiary (in each case, other than as permitted pursuant to Section 6.01(a)(xvi)),
(y) is recourse to the Borrower or any other Subsidiary (in each case,
other than as permitted pursuant to Section 6.01(a)(xvi)) and (z) is
secured (contingently or otherwise) by any Lien on assets of the Borrower or
any other Subsidiary (other than by the Factoring Assets to be sold, conveyed
or transferred to the third party factor), (ii) such Factoring Transaction
is consummated pursuant to customary contracts, arrangements or agreements
entered into with respect to the sale, purchase and servicing of Factoring
Assets on market terms for similar factoring, and (iii) in connection with
such Factoring Transaction, the third party factor enters into an intercreditor
arrangement reasonably acceptable to the Collateral Agent.

 

“Federal Funds Effective
Rate” means, for any day, the weighted average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
that is a 

 

17

 

Business Day,
the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the
quotations for such day for such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by it.

 

“Financial Covenant
Effectiveness Period” means each period on or after the Second Restatement
Effective Date commencing on and including any date on which Revolver
Availability is less than $100,000,000 and ending on and excluding the first
day thereafter, if any, which is the 30th consecutive calendar day on which Revolver
Availability is equal to or greater than $100,000,000.

 

“Financial Officer”
means the chief financial officer, principal accounting officer, treasurer,
vice president of financial accounting or controller of the Borrower.

 

“Financial
Statement Delivery Date” means the first date after the Second Restatement
Effective Date on which a consolidated balance sheet of the Borrower including
the assets of Holdings and its subsidiaries is filed with the SEC.

 

“First Amendment to the
Amendment and Restatement” means the First Amendment dated as of June 4,
2007 to the Amendment and Restatement Agreement.

 

“First Amendment Effective
Date” shall have the meaning assigned to such term in the First Amendment
to the Amendment and Restatement.

 

“Foreign Lender” means
any Lender that is organized under the laws of a jurisdiction other than that
in which the Borrower is located.  For
purposes of this definition, the United States of America, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.

 

“GAAP” means generally
accepted accounting principles in the United States of America.

 

“Government Lockbox Account” shall have the meaning assigned
to such term in the Senior Subsidiary Security Agreement.

 

“Government Lockbox Account Agreement” shall have the meaning
assigned to such term in the Senior Subsidiary Security Agreement.

 

“Government Lockbox Account Bank” shall have the meaning
assigned to such term in the Senior Subsidiary Security Agreement.

 

“Governmental Authority”
means the government of the United States of America, any other nation or any
political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other
entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

 

“Grantor” shall have the meaning assigned to such term in the
Senior Subsidiary Security Agreement.

 

18

 

“Hazardous Materials”
means (a) petroleum products and byproducts, asbestos, urea formaldehyde
foam insulation, polychlorinated biphenyls, radon gas, chlorofluorocarbons and
all other ozone-depleting substances, or (b) any chemical, material,
substance, waste, pollutant or contaminant that is prohibited, limited or
regulated by or pursuant to any Environmental Law.

 

“Hedging Agreement”
means any rate swap transaction, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index swap, equity or equity
index option, bond option, interest rate option, foreign exchange transaction,
cap transaction, floor transaction, collar transaction, currency swap
transaction, cross-currency rate swap transaction, currency option or any other
similar transaction (including any option with respect to any of the foregoing
transactions) or any combination of the foregoing transactions.

 

“Holdings” means The
Jean Coutu Group (PJC) USA, Inc., a corporation organized under the laws
of the State of Delaware or, if the Reorganization (as defined in the Stock
Purchase Agreement dated as of August 23, 2006, pursuant to which the
Borrower intends to acquire all the outstanding Equity Interests in Holdings)
is consummated prior to the Second Restatement Effective Date, JCG (PJC) USA,
LLC, a limited liability company organized under the laws of the State of
Delaware.

 

“HIPAA” has the meaning
assigned to such term in Section 3.07.

 

“Incremental Commitment”
has the meaning assigned to such term in Section 2.21.

 

“Incremental Facility”
has the meaning assigned to such term in Section 2.21.

 

“Incremental Facility
Amendment” has the meaning assigned to such term in Section 2.21.

 

“Indemnified Taxes”
means Taxes other than Excluded Taxes.

 

“Inside Indebtedness” means
Indebtedness of the Borrower or any Subsidiary (other than intercompany
Indebtedness permitted by Section 6.01(a)(iii)) which matures on or before
the Tranche 2/Tranche 3 Term Maturity Date and any portion of any other
Indebtedness subject to scheduled amortization on or before the Tranche
2/Tranche 3 Term Maturity Date.

 

“Integration Capital
Expenditures” means, for any period, all capital expenditures that (a) are
directly attributable to the integration of the acquisition of Holdings and its
subsidiaries and (b) will not recur once the integration of such
acquisition of Holdings and its subsidiaries is complete.

 

“Integration Expenses”
means, for any period, all expenses that (a) are directly attributable to
the integration of the acquisition of Holdings and its subsidiaries 

 

19

 

and (b) will
not recur once the integration of such acquisition of Holdings and its
subsidiaries is complete.

 

“Interest Election Request”
means a request by the Borrower to convert or continue a Revolving Borrowing or
a Term Borrowing in accordance with Section 2.07.

 

“Interest Payment Date”
means (a) with respect to any ABR Loan (other than a Swingline Loan), the
last day of each March, June, September and December, (b) with respect
to any Eurodollar Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months’ duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months’ duration after the first day of such Interest Period, and (c) with
respect to any Swingline Loan, the day that such Loan is required to be repaid.

 

“Interest Period” means,
with respect to any Eurodollar Borrowing, the period commencing on the date of
such Borrowing and ending (x) on the numerically corresponding day in the
calendar month that is one, two, three or six and, if agreed to by all
Lenders in the applicable Class, nine or 12 months thereafter, (y) in the
case of Revolving Loans, seven days thereafter or (z) in the case of
Revolving Loans, six weeks thereafter if, at the time of the relevant
Borrowing, all Lenders participating therein agree to make an interest period
of such duration available, in each case as the Borrower may elect; provided
that (i) if any Interest Period would end on a day other than a Business
Day, such Interest Period shall be extended to the next succeeding Business Day
(unless, in the case of Interest Periods of one, two, three or six months, such
next succeeding Business Day would fall in the next calendar month, in which
case such Interest Period shall end on the next preceding Business Day), (ii) any
Interest Period of one, two, three or six months that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest Period and
(iii) there shall be no more than two Revolving Loans with a seven day
Interest Period at any time outstanding. 
For purposes hereof, the date of a Borrowing initially shall be the date
on which such Borrowing is made and thereafter shall be the effective date of
the most recent conversion or continuation of such Borrowing.

 

“Interim Collateral and
Guarantee Requirement” means the requirement that:

 

(a) the Administrative Agent shall have received from each of
Holdings and its domestic subsidiaries either (i) a counterpart of, or a
supplement to, each Interim Collateral Document duly executed and delivered on
behalf of such party or (ii) in the case of any Person that becomes a
domestic subsidiary of Holdings after the Second Restatement Effective Date but
before the Borrowing Base Date, a supplement to each applicable Interim
Collateral Document, in the form specified therein, duly executed and delivered
on behalf of such party;

 

20

 

(b) the Administrative Agent shall have received from each
Subsidiary Loan Party either (i) a counterpart of, or a supplement to, the
Interim Subsidiary Loan Party Guarantee Agreement duly executed and delivered
on behalf of such party or (ii) in the case of any Person that becomes a
Subsidiary Loan Party after the Second Restatement Effective Date but before
the Borrowing Base Date, a supplement to the Interim Subsidiary Loan Party
Guarantee Agreement, in the form specified therein, duly executed and delivered
on behalf of such party;

 

(c) all outstanding Equity Interests in each domestic subsidiary
of Holdings shall have been pledged pursuant to the Interim Collateral and
Guarantee Agreement and the Collateral Agent shall have received certificates
or other instruments representing all such Equity Interests (to the extent
certificated), together with undated stock powers or other instruments of
transfer with respect thereto endorsed in blank;

 

(d) (i) all documents and instruments, including Uniform
Commercial Code financing statements, required by law or reasonably requested
by the Administrative Agent to be filed, registered or recorded to create the
Liens intended to be created by the Interim Collateral Documents and perfect
such Liens to the extent required by, and with the priority required by, this
Agreement and the Interim Collateral Documents, shall have been filed,
registered or recorded or delivered to the Administrative Agent for filing,
registration or recording or (ii) the Administrative Agent shall have been
provided with all authorizations, consents and approvals from each of Holdings
and its domestic subsidiaries, Governmental Authority and other Person
reasonably requested by it to file, record or register all documents and
instruments referred to in clause (d)(i) of this definition; and

 

(e) each of Holdings and its domestic subsidiaries shall have
obtained all consents and approvals required to be obtained by it in connection
with the execution and delivery of all Interim Collateral Documents to which it
is a party, the performance of its obligations thereunder and the granting by
it of the Liens thereunder.

 

“Inventory” has the
meaning assigned to such term in the Intercompany Inventory Purchase Agreement.

 

“Investment” by any Person in any other Person means (i) any
direct or indirect loan, advance or other extension of credit or capital
contribution to or for the account of such other Person (by means of any
transfer of cash or other property to any Person or any payment for property or
services for the account or use of any Person, or otherwise), (ii) any
direct or indirect purchase or other acquisition of any Equity Interests, bond,
note, debenture or other debt or equity security or evidence of Indebtedness,
or any other ownership interest (including, any option, warrant or any other
right to acquire any of the foregoing), issued by such other Person, whether or
not such acquisition is from such or any other Person, (iii) any direct or
indirect payment by such Person on a Guarantee of any obligation of or for the
account of such other Person or any direct or 

 

21

 

indirect
issuance by such Person of such a Guarantee (provided, however,
that for purposes of Section 6.04, payments under Guarantees not exceeding
the amount of the Investment attributable to the issuance of such Guarantee
will not be deemed to result in an increase in the amount of such Investment)
or (iv) any other investment of cash or other property by such Person in
or for the account of such other Person. 
Any repurchase by the Borrower of its own Equity Interests or
Indebtedness shall not constitute an Investment for purposes of this
Agreement.  The amount of any Investment
shall be the original principal or capital amount thereof less all returns of
principal or equity thereon (and without adjustment by reason of the financial
condition of such other Person) and shall, if made by the transfer or exchange
of property other than cash, be deemed to have been made in an original
principal or capital amount equal to the fair market value of such property at
the time of such transfer or exchange.

 

“Issuing Bank Agreement”
has the meaning assigned to such term in Section 2.05(i).

 

“Issuing Banks” means
CNAI, JPMorgan Chase Bank, N.A., Bank of America, N.A. and any other Lender
designated as an Issuing Bank in accordance with the provisions of Section 2.05(k),
in each case in its capacity as an issuer of Letters of Credit hereunder, and
its successors in such capacity as provided in Section 2.05(i).  An Issuing Bank may, in its discretion,
arrange for one or more Letters of Credit to be issued by Affiliates of such
Issuing Bank, in which case the term “Issuing Banks” shall include any such
Affiliate with respect to Letters of Credit issued by such Affiliate.

 

 “Joint
Venture” means, with respect to any Person, at any date, any other
Person in whom such Person directly or indirectly holds an Investment
consisting of an Equity Interest, and whose financial results would not be
consolidated under GAAP with the financial results of such Person on the
consolidated financial statements of such Person, if such statements were
prepared in accordance with GAAP as of such date.

 

“LC Commitment” means,
with respect to each Issuing Bank, the commitment of such Issuing Bank to issue
Letters of Credit pursuant to Section 2.05.  The initial amount of each Issuing Bank’s LC
Commitment is set forth on Schedule 2.01 or in such Issuing Bank’s
Issuing Bank Agreement.

 

“LC Disbursement” means
a payment made by an Issuing Bank pursuant to a Letter of Credit.

 

“LC Exposure” means, at
any time, the sum of (a) the aggregate undrawn amount of all outstanding
Letters of Credit at such time plus (b) the aggregate amount of all
LC Disbursements that have not yet been reimbursed by or on behalf of the
Borrower at such time.  The LC Exposure
of any Revolving Lender at any time shall be its Applicable Percentage of the
total LC Exposure at such time.

 

“Lenders” means the
Persons listed on Schedule 2.01 as having a Revolving Commitment, a
Tranche 1 Term Commitment, a Tranche 2 Term Commitment or a Tranche 3 Term
Commitment and any other Person that shall have 

 

22

 

become a party
hereto pursuant to an Assignment and Acceptance, other than any such Person
that ceases to be a party hereto pursuant to an Assignment and Acceptance.  Unless the context otherwise requires, the
term “Lenders” includes the Swingline Lender.

 

“Letter of Credit” means
any letter of credit issued pursuant to this Agreement.

 

“Leverage Ratio” means,
on any date, the ratio of (a) Total Indebtedness as of such date to (b) Consolidated
EBITDA for the period of the four fiscal quarters most recently completed on or
prior to such date.

 

“LIBO Rate” means, with respect
to any Eurodollar Borrowing for any Interest Period, the rate appearing on Page 3750
of the Telerate Service (or on any successor or substitute page of such
Service, or any successor to or substitute for such Service, providing rate
quotations comparable to those currently provided on such page of such
Service, as determined by the Administrative Agent from time to time for
purposes of providing quotations of interest rates applicable to dollar
deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, as the rate for dollar deposits with a maturity comparable to such
Interest Period.  In the event that such
rate is not available at such time for any reason, then the “LIBO Rate”
with respect to such Eurodollar Borrowing for such Interest Period shall be the
rate rounded upwards, if necessary, to the next 1/100 of 1% at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of
such Interest Period.  Notwithstanding
the foregoing, solely for purposes of calculating interest in respect of any
Tranche 3 Term Loan that is a Eurodollar Loan, the LIBO Rate in respect of any
applicable Interest Period will be deemed to be 3.00% per annum if the LIBO
Rate for such Interest Period calculated pursuant to the foregoing provisions
would otherwise be less than 3.00% per annum.

 

“LIFO Adjustments” means, for any period, the net adjustment
to costs of goods sold for such period required by the Borrower’s LIFO
inventory method, determined in accordance with GAAP.

 

“Loan Parties” means the
Borrower and the Subsidiary Loan Parties.

 

“Loans” means the loans
made by the Lenders to the Borrower pursuant to this Agreement.

 

“Lockbox Account” shall
have the meaning assigned to such term in the Senior Subsidiary Security
Agreement.

 

“Long-Term Indebtedness”
means any Indebtedness that, in accordance with GAAP, constitutes (or, when
incurred, constituted) a long-term liability.

 

23

 

“Margin Stock” means “margin
stock”, as such term is defined in Regulation U of the Board.

 

“Material Adverse Effect”
means a material adverse effect on (a) the business, assets, operations,
properties, condition (financial or otherwise), or prospects of the Borrower
and the Subsidiaries, taken as a whole, (b) the ability of any Loan Party
to perform any of its material obligations under any Senior Loan Document to
which it is a party or (c) the legality, validity or enforceability of the
Senior Loan Documents (including, without limitation, the validity,
enforceability or priority of security interests granted thereunder) or the
rights of or benefits available to the Lenders under any Senior Loan Document.

 

“Material Indebtedness”
means Indebtedness (other than the Loans and Letters of Credit), or obligations
in respect of one or more Hedging Agreements, of any one or more of the
Borrower and the Subsidiaries in an aggregate principal amount exceeding
$50,000,000.  For purposes of this
definition, the “principal amount” of the obligations of the Borrower or any
Subsidiary in respect of any Hedging Agreement at any time shall be the maximum
aggregate amount (giving effect to any netting agreements) that the Borrower or
such Subsidiary would be required to pay if such Hedging Agreement were
terminated at such time.

 

“Maximum Rate” has the
meaning assigned to such term in Section 9.13.

 

“Multiemployer Plan”
means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

 

“Net Proceeds” means,
with respect to any event (a) the cash proceeds received in respect of
such event including (i) any cash received in respect of any non-cash
proceeds, but only as and when received, (ii) in the case of a casualty,
insurance proceeds and (iii) in the case of a condemnation or similar
event, condemnation awards and similar payments, net of (b) the sum
of (i) all reasonable fees and out-of-pocket expenses paid by the Borrower
and the Subsidiaries to third parties (other than Affiliates) in connection
with such event, (ii) in the case of a sale, transfer or other disposition
of an asset (including pursuant to a sale and leaseback transaction or a
casualty or a condemnation or similar proceeding), the amount of all payments
required to be made by the Borrower and the Subsidiaries as a result of such
event to repay Indebtedness (other than Loans) secured by such asset and (iii) the
amount of all taxes paid (or reasonably estimated to be payable) by the
Borrower and the Subsidiaries, and the amount of any reserves established by
the Borrower and the Subsidiaries to fund contingent liabilities reasonably
estimated to be payable, in each case during the year that such event occurred
or the next succeeding year and that are directly attributable to such event
(as determined reasonably and in good faith by a Financial Officer).

 

“Net Orderly Liquidation
Rate” means, with respect to any type of inventory, at any date of
determination, the net orderly liquidation rate with respect to such type of
inventory, expressed as a percentage of carrying cost after giving effect to
reserves, as determined by Hilco Appraisal Services, LLC (or another appraisal
firm 

 

24

 

chosen by the
Collateral Agent) in connection with the most recent appraisal of inventory of the
Borrower and the Subsidiaries.

 

“New Notes” means one or
more tranches of the Borrower’s notes issued or sold on or about the Second
Restatement Effective Date in one or more public offerings or Rule 144A/Regulation
S offerings or other private placements.

 

“Offer Period” has the
meaning assigned to such term in Section 2.21.

 

“Operating
Subsidiary” has the meaning assigned to such term in the Intercompany
Inventory Purchase Agreement.

 

“Optional
Debt Repurchase” means any optional or voluntary repurchase,
redemption, retirement or defeasance for cash by the Borrower or any Subsidiary
of any publicly-traded Indebtedness of the Borrower.

 

“Original Agreement”
means this Agreement, including all amendments hereto and waivers hereof
effective prior to the 2008 Restatement Effective Date, as in effect
immediately prior to the 2008 Restatement Effective Date.

 

“Other Inventory” means all inventory other than
Pharmaceutical Inventory.

 

“Other Inventory Advance Rate” means the other inventory
advance rate determined in accordance with Section 2.20.

 

“Other Taxes” means any
and all present or future recording, stamp, documentary, excise, transfer,
sales, property or similar taxes, charges or levies arising from any payment
made under any Senior Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Senior Loan Document.

 

“Outside Indebtedness”
means Indebtedness of the Borrower or any Subsidiary (other than intercompany
Indebtedness permitted by Section 6.01(a)(iii)) that matures after the
Tranche 2/Tranche 3 Term Maturity Date, including the amount of any scheduled
amortization after the Tranche 2/Tranche 3 Term Maturity Date.

 

“Parent Undertaking”
means an agreement by the Borrower to cause a Subsidiary other than a Securitization
Vehicle to perform its obligations under the instruments governing a
Securitization which agreement (a) contains terms that are customarily
included in securitizations of accounts receivable involving comparable
companies and (b) does not provide for any Guarantee of payment or other
credit support in respect of Securitization Assets or Third Party Interests.

 

“Participant” has the
meaning assigned to such term in Section 9.04(c)(i).

 

“PBGC” means the Pension
Benefit Guaranty Corporation referred to and defined in ERISA and any successor
entity performing similar functions.

 

25

 

“Perfection Certificate”
means a certificate in the form of Schedule 8 to the Senior Subsidiary
Security Agreement or any other form approved by the Agents.

 

“Permitted Encumbrances” means:

 

(a)  Liens imposed by law for taxes that are not yet due or are
being contested in compliance with Section 5.05;

 

(b)  carriers’, warehousemen’s, mechanics’, materialmen’s,
repairmen’s and other like Liens imposed by law, arising in the ordinary course
of business and securing obligations that are not overdue by more than 60 days
or are being contested in compliance with Section 5.05;

 

(c)  pledges and deposits made in the ordinary course of business
in compliance with workers’ compensation, unemployment insurance and other
social security laws or regulations;

 

(d)  deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature, in each case in the ordinary course of
business;

 

(e)  judgment liens in respect of judgments that do not constitute
an Event of Default under clause (k) of Article VII;

 

(f)  easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations and do not materially
detract from the value of the affected property or interfere with the ordinary
conduct of business of the Borrower or any Subsidiary;

 

(g)  licenses, sublicenses, leases or subleases granted in the
ordinary course of business with respect to real property; and

 

(h)  landlord Liens arising by law securing obligations not
overdue by more than 60 days or being contested in good faith;

 

provided
that the term “Permitted Encumbrances” shall not include any Lien securing
Indebtedness.

 

“Permitted Second Priority Debt” means
Second Priority Debt of the Borrower; provided that (a) the terms
of any such Indebtedness, and of any agreement entered into and of any
instrument issued in connection therewith, are otherwise permitted by the
Senior Loan Documents, (b) if such Indebtedness is issued or incurred to
refinance existing Indebtedness, such Indebtedness has a later maturity and a
longer weighted average life than such existing Indebtedness, (c) such
Indebtedness bears an interest rate not in excess of the market interest rate
with respect to such type of Indebtedness as of the time of its issuance or
incurrence, (d) at the option of the Borrower, such Indebtedness may
contain market call and make-whole provisions as of 

 

26

 

the time of its issuance or incurrence, (e) the
senior management of the Borrower determines in good faith that such
Indebtedness contains covenants (including with respect to amortization and
convertibility) and events of default on market terms and (f) notwithstanding
clause (ii) of the definition of “Second Priority Debt”,
such Indebtedness may mature prior to the date that is three months after the
Tranche 2/Tranche 3 Term Maturity Date.

 

“Permitted Unsecured
Indebtedness” means unsecured Indebtedness of the Borrower; provided
that (a) the terms of any such Indebtedness, and of any agreement entered
into and of any instrument issued in connection therewith, are otherwise
permitted by the Senior Loan Documents, (b) if such Indebtedness is issued
or incurred to refinance existing Indebtedness, such Indebtedness has a later
maturity and a longer weighted average life than such existing Indebtedness, (c) such
Indebtedness bears an interest rate not in excess of the market interest rate
with respect to such type of Indebtedness as of the time of its issuance or
incurrence, (d) at the option of the Borrower, such Indebtedness may
contain market call and make-whole provisions as of the time of its issuance or
incurrence and (e) the senior management of the Borrower determines in
good faith that such Indebtedness contains covenants (including with respect to
amortization and convertibility) and events of default on market terms.

 

“Person” means any
natural person, corporation, limited liability company, trust, joint venture,
association, company, partnership, Governmental Authority or other entity.

 

“Pharmaceutical Inventory” means all inventory consisting of
products that can be dispensed only on order of a licensed professional.

 

“Pharmaceutical Inventory Advance Rate” means the
pharmaceutical inventory advance rate determined in accordance with Section 2.20.

 

“Plan” means any
employee pension benefit plan (other than a Multiemployer Plan) subject to the
provisions of Title IV of ERISA or Section 412 of the Code or Section 302
of ERISA, and in respect of which the Borrower or any ERISA Affiliate has any
liability or is (or, if such plan were terminated, would under Section 4069
of ERISA be deemed to be) an “employer” as defined in Section 3(5) of
ERISA.

 

“Platform” has the
meaning assigned to such term in Section 9.16(b).

 

“Preferred Stock” means,
with respect to any corporation, capital stock issued by such corporation that
is entitled to a preference or priority, in respect of dividends or
distributions upon liquidation, over some other class of capital stock issued
by such corporation.

 

“Prepayment Event” means:

 

(a)  any sale, transfer or other disposition (including pursuant
to a sale and leaseback transaction) of any property or asset of the Borrower
or any Subsidiary, 

 

27

 

other than (i) sales,
transfers or other dispositions described in clauses (i), (iii), (iv), (vi) and
(vii) of Section 6.05, (ii) sales, transfers or other
dispositions described in clause (v) of Section 6.05 to the extent
the resulting aggregate Net Proceeds from all such sales, transfers or other
dispositions do not exceed $50,000,000 and (iii) other sales, transfers or
dispositions resulting in aggregate Net Proceeds not exceeding $10,000,000
during any fiscal year of the Borrower; or

 

(b)  any casualty or other insured damage to, or any taking under
power of eminent domain or by condemnation or similar proceeding of, any
property or asset of the Borrower or any Subsidiary; or

 

(c)  the issuance by the Borrower or any Subsidiary of any Equity
Interests, or the receipt by the Borrower or any Subsidiary of any capital
contribution, other than (i) any such issuance of Equity Interests to, or
receipt of any such capital contribution from, the Borrower or a Subsidiary or (ii) any
such issuance of Equity Interests to the extent the proceeds of such issuance
are used to fund a Business Acquisition; or

 

(d)  the incurrence by the Borrower or any Subsidiary of any
Indebtedness, other than (i) Indebtedness described in clauses (i), (ii),
(iii), (iv), (v), (vi), (ix), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi),
(xvii) and (xviii) of Section 6.01(a), (ii) extensions, renewals,
refinancings or replacements of Indebtedness described in clauses (vii) and
(viii) of Section 6.01(a) and (iii) Indebtedness described
in clauses (vii) and (viii) of Section 6.01(a) to the
extent the proceeds of such Indebtedness are used to fund a Business
Acquisition.

 

“Qualified Preferred Stock” means Preferred Stock of the
Borrower that does not require any cash payment (including in respect of redemptions
or repurchases), other than in respect of cash dividends, before the date that
is six months after the Tranche 2/Tranche 3 Term Maturity Date.

 

“Refinancing Indebtedness” means
Indebtedness (which shall be deemed to include Attributable Debt solely for the
purposes of this definition) issued or incurred (including by means of the
extension or renewal of existing Indebtedness) to extend, renew or refinance
existing Indebtedness or Attributable Debt (“Refinanced Debt”); provided
that (i) the terms of any such Indebtedness, and of any agreement entered
into and of any instrument issued in connection therewith, are otherwise
permitted by the Senior Loan Documents, (ii) such extending, renewing or
refinancing Indebtedness is in an original aggregate principal amount not
greater than the aggregate principal amount of, and unpaid interest on, the
Refinanced Debt plus the amount of any premiums paid thereon and fees
and expenses associated therewith, (iii) such Indebtedness (x) does
not mature or require scheduled payments of principal prior to the date that is
three months after the Tranche 2/Tranche 3 Term Maturity Date and (y) has
a later maturity and a longer weighted average life than the Refinanced Debt, (iv) such
Indebtedness bears an interest rate not in excess of the market interest rate
with respect to such type of Indebtedness as of the time of its issuance or
incurrence, (v) at the option of the 

 

28

 

Borrower, such Indebtedness may contain
market call and make-whole provisions as of the time of its issuance or
incurrence, (vi) if the Refinanced Debt or any Guarantees thereof are
subordinated to the Senior Obligations (or prior to the Borrowing Base Date the
Interim Obligations), such Indebtedness shall be subordinated to the Senior
Obligations or the Interim Obligations, as the case may be, on terms no less
favorable, taken as a whole, to the holders of the Senior Obligations or the
Interim Obligations, as the case may be, than the subordination terms of such
Refinanced Debt or Guarantees thereof (and no Loan Party, Holdings, nor any of
its subsidiaries that has not guaranteed such Refinanced Debt guarantees such
Indebtedness), (vii) the senior management of the Borrower determines in
good faith that such Indebtedness contains covenants (including with respect to
amortization and convertibility) and events of default on market terms, (viii) such
Indebtedness is benefited by Guarantees (if any) which, taken as a whole, are
not materially less favorable to the Lenders than the Guarantees (if any) in
respect of such Refinanced Debt, (ix) if such Refinanced Debt or any
Guarantees thereof are secured, such Indebtedness and any Guarantees thereof
are either unsecured or secured only by such property or assets as secured the
Refinanced Debt and Guarantees thereof and not any additional
property or assets of the Borrower or any Subsidiary (other than (A) property
or assets acquired after the issuance or incurrence of such Refinancing
Indebtedness that would have been subject to the Lien securing refinanced
Indebtedness if such Indebtedness had not been refinanced, (B) additions
to the property or assets subject to the Lien and (C) the proceeds of the
property or assets subject to the Lien), (x) if such Refinanced Debt and any
Guarantees thereof are unsecured, such Indebtedness and Guarantees thereof are
also unsecured and (xi) any Net Cash Proceeds of such Indebtedness are
used no later than 45 days following receipt thereof to repay the Refinanced
Debt and pay any accrued interest, fees, premiums (if any) and expenses in
connection therewith.

 

“Register” has the
meaning set forth in Section 9.04.

 

“Related Parties” means,
with respect to any specified Person, such Person’s Affiliates and the
directors, officers, employees, agents, trustees and advisors of such Person
and such Person’s Affiliates.

 

“Repurchase Expenditures”
means, with respect to any Optional Debt Repurchase, the aggregate amount of
expenditures made or required to be made to effect such Optional Debt
Repurchase, including without limitation payments on account of principal,
premium and fees payable to holders of the Indebtedness purchased or reacquired
in connection with such Optional Debt Repurchase, but excluding payments
representing accrued interest to the date of such Optional Debt Repurchase and
excluding fees and expenses paid to third parties in connection therewith.

 

“Required Lenders”
means, at any time, Lenders having Revolving Exposures, outstanding Term Loans
and unused Commitments representing more than 50% of the sum of the total
Revolving Exposures, outstanding Term Loans and unused Commitments at such
time.

 

29

 

“Requirement of Law”
means, with respect to any Person, the charter and by-laws or other
organizational or governing documents of such Person, and any law, rule or
regulation (including Environmental Laws, the Code and ERISA) or order, decree
or other determination of an arbitrator or a court or other Governmental
Authority applicable to or binding upon such Person or any of its property or
assets or to which such Person or any of its property or assets is subject.

 

“Restricted Payment”
means any dividend or other distribution (whether in cash, securities or other
property, except dividends payable solely in shares of the Borrower’s common
stock or Qualified Preferred Stock) with respect to any Equity Interests in the
Borrower or any Subsidiary, or any payment (whether in cash, securities or
other property, except payments made solely with common equity), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any Equity Interests in
the Borrower or any Subsidiary or any option, warrant or other right to acquire
any such Equity Interests in the Borrower or any Subsidiary; provided
that in no event shall any exchange of Qualified Preferred Stock with other
Qualified Preferred Stock be deemed a Restricted Payment.

 

“Revolver Availability”
means, on any date of determination, the maximum amount of Revolving Loans that
could be made to the Borrower on such date pursuant to Section 2.01(b) pursuant
to the use of unused Commitments on such date.

 

“Revolving Availability
Period” means the period from and including the Second Restatement
Effective Date to but excluding the earlier of the Revolving/Tranche 1 Term
Maturity Date and the date of termination of the Revolving Commitments.

 

“Revolving Commitment”
means, with respect to each Lender, the commitment, if any, of such Lender to
make Revolving Loans and to acquire participations in Letters of Credit and
Swingline Loans hereunder, expressed as an amount representing the maximum
aggregate amount of such Lender’s Revolving Exposure hereunder, as such
commitment may be (a) reduced from time to time pursuant to Section 2.08
and (b) reduced or increased from time to time pursuant to assignments by
or to such Lender pursuant to Section 9.04.  The initial amount of each Lender’s Revolving
Commitment is set forth on Schedule 2.01, or in the Assignment and
Acceptance pursuant to which such Lender shall have assumed its Revolving
Commitment, as applicable.  The aggregate
amount of the Lenders’ Revolving Commitments on the Second Restatement
Effective Date is $1,750,000,000.

 

“Revolving Exposure”
means, with respect to any Lender at any time, the sum of the outstanding
principal amount of such Lender’s Revolving Loans and its LC Exposure and
Swingline Exposure at such time.

 

“Revolving Lender” means
a Lender with a Revolving Commitment or, if the Revolving Commitments have
terminated or expired, a Lender with a Revolving Exposure.

 

30

 

“Revolving Loan” means a
Loan made pursuant to clause (b) of Section 2.01.

 

“Revolving/Tranche 1 Term
Maturity Date” means September 30, 2010.

 

“Script Lists Advance Rate”
means the Script Lists advance rate determined in accordance with Section 2.20.

 

“Second Priority Debt”
means any Indebtedness (including the 8.125% Notes, 7.5% Notes and the 2017
7.5% Notes) incurred by Rite Aid and Guaranteed by the Subsidiary Guarantors on
or after the Effective Date pursuant to the Second Priority Subsidiary Guarantee
Agreement (i) which is secured by the Second Priority Collateral on a pari
passu basis (other than as provided by the terms of the applicable
Second Priority Debt Documents) with the other Second Priority Debt Obligations
and (ii) if issued on or after the Second Restatement Effective Date,
matures after the
date that is three months after the Tranche 2/Tranche 3 Term Maturity Date;
provided, however, that (A) such Indebtedness is permitted
to be incurred, secured and Guaranteed on such basis by each Senior Loan
Document and each Second Priority Debt Document and (B) the Representative
for the holders of such Second Priority Debt shall have become party to the
Collateral Trust and Intercreditor Agreement pursuant to, and by satisfying the
conditions set forth in, Section 8.12 thereof.  Second Priority Debt shall include any
Registered Equivalent Notes issued in exchange thereof.

 

“Second Restatement Date
Amount” means the aggregate principal amount of Tranche 2 Loans that the
Borrower is permitted under instruments governing its Indebtedness to, on the
Second Restatement Effective Date, borrow and secure by the Liens created under
the Interim Collateral Documents.

 

“Securitization” means
any transaction or series of transactions entered into by the Borrower and any
Subsidiaries pursuant to which the Borrower or such Subsidiaries sell, convey
or otherwise transfer (or purport to sell, convey or otherwise transfer)
Securitization Assets to a Securitization Vehicle or another Subsidiary which
sells, conveys or otherwise transfers (or purports to sell, convey or otherwise
transfer) Securitization Assets to a Securitization Vehicle, and such
Securitization Vehicle finances the acquisition of such Securitization Assets (i) with
proceeds from the issuance of Third Party Interests, (ii) with Sellers’
Retained Interests, (iii) with proceeds from the sale or collection of
Securitization Assets previously purchased by such Securitization Vehicle or (iv) with
proceeds from the sale of Securitization Assets to another Securitization
Vehicle.  For purposes of this Agreement,
the “amount” or “principal amount” of any Securitization shall be deemed at any
time to be (1) the aggregate principal or stated amount of the Third Party
Interests (which stated amount may be described as a “net investment”, “capital”,
“invested amount” or similar term reflecting the amount invested in any
beneficial interest constituting a Third Party Interest) incurred or issued
pursuant to such Securitization, in each case outstanding at such time, or (2) in
the case of any Securitization in respect of which no such principal or stated
amount is determinable, the cash purchase price paid by the buyer in connection
with its purchase of Third Party Interests less the amount of collections
received in respect of such Third 

 

31

 

Party
Interests and paid to such buyer, excluding any amounts applied to purchase
fees or discount or in the nature of interest.

 

“Securitization Assets”
means any accounts receivable owed to the Borrower or any Subsidiary (whether
now existing or arising or acquired in the future) arising in the ordinary
course of business from the sale of goods or services, all collateral securing
such accounts receivable, all contracts and contract rights and all guarantees
or other obligations in respect of such accounts receivable, all proceeds of
such accounts receivable and other assets (including contract rights) which are
the type customarily transferred in connection with securitizations of accounts
receivable and which are sold, transferred or otherwise conveyed (or purported
to be sold, transferred or otherwise conveyed) by the Borrower or a Subsidiary
to a Securitization Vehicle in connection with a Securitization permitted by
Sections 6.01 and 6.05.

 

“Securitization Vehicle”
means a Person that is a direct or indirect wholly owned Subsidiary used solely
for the purpose of effecting one or more Securitizations to which the Borrower
and/or Subsidiaries and/or another Securitization Vehicle transfer
Securitization Assets and which, in connection with such Securitization either
issues Third Party Interests or transfers such Securitization Assets to another
Securitization Vehicle that issues Third Party Interests; provided, in
each case, that (i) each such Person shall engage in no business other
than the purchase of Securitization Assets pursuant to Securitizations
permitted by Sections 6.01 and 6.05, the issuance of Third Party Interests
and any activities reasonably related thereto, (ii) no portion of the
Indebtedness or other obligations (contingent or otherwise) of such Person (x) is
Guaranteed by the Borrower or any other Subsidiary, other than any Guarantee of
obligations (other than of principal of, or interest on, Indebtedness) that may
be deemed to exist solely by virtue of Standard Securitization Undertakings, (y) is
recourse to the Borrower or any other Subsidiary other than by virtue of
Standard Securitization Undertakings and (z) is secured (contingently or
otherwise) by any Lien on assets of the Borrower or any other Subsidiary other
than by virtue of Standard Securitization Undertakings, (iii) such Person
has no contract, agreement, arrangement or understanding with the Borrower or
any other Subsidiary other than (A) customary contracts, arrangements or
agreements entered into with respect to the sale, purchase and servicing of
Securitization Assets on market terms for similar securitization transactions
and (B) Guarantees and pledges of security as required by the Senior Loan
Documents and the Second Priority Debt Documents and (iv) neither the
Borrower nor any Subsidiary has any obligations to maintain or preserve such
Person’s financial condition or cause it to achieve certain levels of operating
results other than pursuant to Standard Securitization Undertakings.

 

“Seller” means The Jean
Coutu Group (PJC) Inc., a corporation organized under the laws of Quebec.

 

“Sellers’ Retained Interests”
means the debt or equity interests held by the Borrower or any Subsidiary in a
Securitization Vehicle to which Securitization Assets have been transferred (or
purported to have been transferred) in a Securitization permitted by
Sections 6.01 and 6.05, including any such debt or equity received in
consideration for the Securitization Assets transferred.

 

32

 

“Series E Preferred
Stock” means the Borrower’s 7% Series E mandatory convertible
preferred stock issued prior to the Second Restatement Effective Date.

 

“Series G Preferred
Stock” means the Borrower’s 7% Series G cumulative, convertible
pay-in-kind preferred stock held by Green Equity Investors III, L.P. or one of
its Affiliates on the Second Restatement Effective Date.

 

“Series H Preferred
Stock” means the Borrower’s 6% Series H cumulative, convertible
pay-in-kind preferred stock held by Green Equity Investors III, L.P. or one of
its Affiliates on the Second Restatement Effective Date.

 

“Series I Preferred
Stock” means the Borrower’s 5.5% Series I mandatory convertible
preferred stock issued prior to the Second Restatement Effective Date.

 

“Standard Securitization
Undertakings” means representations, warranties, covenants and indemnities
made by the Borrower or a Subsidiary in connection with Securitizations
permitted by Sections 6.01 and 6.05 which representations, warranties,
covenants and indemnities are customarily included in securitizations of
accounts receivable involving comparable companies.

 

“Statutory Reserve Rate”
means a fraction (expressed as a decimal), the numerator of which is the number
one and the denominator of which is the number one minus the aggregate
of the maximum reserve percentages expressed as a decimal (including any
marginal, special, emergency or supplemental reserves) established by the Board
to which the Administrative Agent is subject with respect to eurocurrency
funding (currently referred to as “Eurocurrency Liabilities” in
Regulation D of the Board).  Such
reserve percentages shall include those imposed pursuant to such
Regulation D.  Eurodollar Loans
shall be deemed to constitute eurocurrency funding and to be subject to such
reserve requirements without benefit of or credit for proration, exemptions or
offsets that may be available from time to time to any Lender under such
Regulation D or any comparable regulation. 
The Statutory Reserve Rate shall be adjusted automatically on and as of
the effective date of any change in any reserve percentage.

 

“Store” means any retail store (which may include any real
property, fixtures, equipment, inventory and script files related thereto)
operated, or to be operated, by any Subsidiary Loan Party (and, prior to the
Borrowing Base Date, Holdings or any of its subsidiaries).

 

“subsidiary” means, with
respect to any Person (the “parent”) at any date, any corporation,
limited liability company, partnership, association or other entity the
accounts of which would be consolidated with those of the parent in the parent’s
consolidated financial statements if such financial statements were prepared in
accordance with GAAP as of such date, as well as any other corporation, limited
liability company, partnership, association or other entity of which securities
or other ownership interests representing more than 50% of the ordinary voting
power or, in the case of a partnership, more than 50% of the general
partnership interests are, as of such date, 

 

33

 

owned,
controlled or held by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.

 

“Subsidiary” means any
subsidiary of the Borrower.

 

“Subsidiary Loan Party”
means each Subsidiary set forth on Schedule 1.01 hereto and any
wholly-owned Domestic Subsidiary, including any Securitization Vehicle that is
a Domestic Subsidiary, that owns any assets consisting of inventory, accounts
receivable, intellectual property, or script lists; provided that (a) no
Subsidiary that engages solely in the Borrower’s pharmacy benefits management
business shall be deemed a Subsidiary Loan Party and (b) Holdings and its
subsidiaries shall not be Subsidiary Loan Parties prior to the Borrowing Base
Date.

 

“Supermajority Lenders”
means, at any time, Lenders having Revolving Exposures, outstanding Term Loans
and unused Commitments representing more than 66-2/3% of the aggregate
Revolving Exposures, outstanding Term Loans and unused Commitments of all
Lenders at such time.

 

“Swingline Exposure”
means, at any time, the aggregate principal amount of all Swingline Loans
outstanding at such time.  The Swingline
Exposure of any Lender at any time shall be its Applicable Percentage of the
total Swingline Exposure at such time.

 

“Swingline Lender” means
CNAI, in its capacity as the lender of Swingline Loans hereunder.

 

“Swingline Loan” means a
Loan made pursuant to Section 2.04.

 

“Taxes” means any and
all present or future taxes, levies, imposts, duties, deductions, charges or
withholdings imposed by any Governmental Authority.

 

“Term Loans” means the
Tranche 1 Term Loans, the Tranche 2 Term Loans and the Tranche 3 Term Loans, or
any combination thereof (as the context requires).

 

“Third Party Interests”
means, with respect to any Securitization, notes, bonds or other debt
instruments, beneficial interests in a trust, ownership interests (including
any fractional undivided interests) in a pool or pools of accounts receivable
or other interests or securities issued or sold for cash consideration by a
Securitization Vehicle to banks, investors or other financing sources (other
than the Borrower or its Subsidiaries) the proceeds of which are used to
finance, in whole or in part, the purchase by such Securitization Vehicle of
accounts receivables or other Securitization Assets in a Securitization.

 

“Total Indebtedness”
means, as of any date, the sum of the aggregate principal amount of
Indebtedness of the Borrower and its Consolidated Subsidiaries outstanding as
of such date, in the amount that would be reflected on a balance sheet prepared
as of such date on a consolidated basis in accordance with GAAP plus,
without 

 

34

 

duplication,
the aggregate outstanding amount of Third Party Interests (which amount may be
described as a “net investment”, “capital”, “invested amount”, “principal
amount” or similar term reflecting the aggregate amount invested in beneficial
interests constituting Third Party Interests).

 

“Tranche 1 Term Lender”
means a Lender with a Tranche 1 Term Commitment or an outstanding
Tranche 1 Term Loan.

 

“Tranche 2 Term Lender”
means a Lender with a Tranche 2 Term Commitment or an outstanding
Tranche 2 Term Loan.

 

“Tranche 3 Term Lender”
means a Lender with a Tranche 3 Term Commitment or an outstanding
Tranche 3 Term Loan.

 

“Tranche 1 Term Loans”
means Loans made or deemed made under clause (a) of Section 2.01.

 

“Tranche 2 Term Loans”
means Loans made or deemed made under clause (c) of Section 2.01.

 

“Tranche 3 Term Loans”
means Loans made or deemed made under clause (d) of Section 2.01.

 

“Tranche 1 Term Commitment”
means, with respect to each Lender, the commitment, if any, of such Lender to
make a Tranche 1 Term Loan hereunder on the First Restatement Effective
Date, expressed as an amount representing the maximum principal amount of the
Tranche 1 Term Loans to be made by such Lender hereunder, as such commitment
may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced
or increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04.  The
initial amount of each Lender’s Tranche 1 Term Commitment is set forth on Schedule
2.01, or in the Assignment and Acceptance pursuant to which such Lender
shall have assumed its Tranche 1 Term Commitment, as applicable.  The aggregate amount of the Lenders’ Tranche
1 Term Commitments on the First Restatement Effective Date is $145,000,000.

 

“Tranche 2 Term Commitment”
means, with respect to each Lender, the commitment, if any, of such Lender to
make a Tranche 2 Term Loan hereunder on the Second Restatement Effective Date,
expressed as an amount representing the maximum principal amount of the Tranche
2 Term Loans to be made by such Lender hereunder, as such commitment may be (a) reduced
from time to time pursuant to Section 2.08 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04.  The
initial amount of each Lender’s Tranche 2 Term Commitment is set forth on
Schedule 2.01, or in the Assignment and Acceptance pursuant to which such
Lender shall have assumed its Tranche 2 Term Commitment, as applicable.  The aggregate amount of the Lenders’ Tranche
2 Term Commitments on the Second Restatement Effective Date is $1,105,000,000.

 

35

 

“Tranche 3 Term Commitment”
means, with respect to each Lender, the commitment, if any, of such Lender to
make a Tranche 3 Term Loan hereunder on the 2008 Restatement Effective Date,
expressed as an amount representing the maximum principal amount of the Tranche
3 Term Loans to be made by such Lender hereunder, as such commitment may be (a) reduced
from time to time pursuant to Section 2.08 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04.  The
initial amount of each Lender’s Tranche 3 Term Commitment is set forth on
Schedule 2.01, or in the Assignment and Acceptance pursuant to which such
Lender shall have assumed its Tranche 3 Term Commitment, as applicable.  The aggregate amount of the Lenders’ Tranche
3 Term Commitments on the 2008 Restatement Effective Date is $350,000,000.

 

“Tranche 2/Tranche 3 Term
Maturity Date” means June 4, 2014.

 

“Transactions” means the
execution, delivery and performance by the Borrower, the Subsidiary Loan
Parties and Holdings and its subsidiaries, as applicable, of the Amendment and
Restatement Agreement and each other document contemplated thereby to be
executed on the Second Restatement Effective Date or the Borrowing Base Date to
which it is a party, the borrowing of Tranche 2 Term Loans, the use of proceeds
thereof and the other transactions to be effected on the Second Restatement
Effective Date (including the Acquisition).

 

“Type”, when used in
reference to any Loan or Borrowing, refers to whether the rate of interest on
such Loan, or on the Loans comprising such Borrowing, is determined by
reference to the Adjusted LIBO Rate or the Alternate Base Rate.

 

“USA Patriot Act” means
the Uniting and Strengthening America by Providing Appropriate Tools Required
to Intercept and Obstruct Terrorism Act of 2001.

 

“Withdrawal Liability”
means liability to a Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are defined in
Title IV of ERISA.

 

SECTION 1.02.  Classification of Loans and Borrowings.  For purposes of this Agreement, Loans may be
classified and referred to by Class (e.g., a “Revolving Loan”) or
by Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g.,
a “Eurodollar Revolving Loan”). 
Borrowings also may be classified and referred to by Class (e.g.,
a “Revolving Borrowing”) or by Type (e.g., a “Eurodollar Borrowing”) or
by Class and Type (e.g., a “Eurodollar Revolving Borrowing”).

 

SECTION 1.03.  Terms Generally.  The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have
the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other 

 

36

 

document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein); provided, however,
that amendments to the Indentures and the Second Priority Debt Documents after
the Second Restatement Effective Date shall be effective for purposes of
references thereto in this Agreement and the other Senior Loan Documents only
if such amendments are permitted hereunder or are consented to in writing for
such purpose by the Required Lenders (or such other percentage of the Lenders
as may be specified herein), (b) any reference herein to any Person shall
be construed to include such Person’s successors and assigns, (c) the
words “herein”, “hereof” and “hereunder”, and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (d) all references herein to Articles, Sections,
Exhibits and Schedules shall be construed to refer to Articles and Sections of,
and Exhibits and Schedules to, this Agreement and (e) the words “asset”
and “property” shall be construed to have the same meaning and effect and to
refer to any and all tangible and intangible assets and properties, including
cash, securities, accounts and contract rights.

 

SECTION 1.04.  Accounting Terms; GAAP.  Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if
the Borrower notifies the Administrative Agent that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the Second Restatement Effective Date in GAAP or in the
application thereof on the operation of such provision (or if the
Administrative Agent notifies the Borrower that the Required Lenders request an
amendment to any provision hereof for such purpose), regardless of whether any
such notice is given before or after such change in GAAP or in the application
thereof, then such provision shall be interpreted on the basis of GAAP as in
effect and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in
accordance herewith.

 

SECTION 1.05.  Terms Defined in Definitions Annex.  Capitalized terms used in this Agreement that
are not defined in Section 1.01 shall have the meanings assigned to such
terms in the Definitions Annex (but any definition of such a term in the
Definitions Annex shall be disregarded for purposes hereof if such term is also
defined in Section 1.01).

 

ARTICLE II

 

The Credits

 

SECTION 2.01.  Commitments.  (a)  Subject to the terms and conditions
set forth herein, each Lender made a Tranche 1 Term Loan to the Borrower
on the First Restatement Effective Date in an aggregate principal amount not
exceeding its Tranche 1 Term Commitment. 
Amounts repaid or prepayed in respect of Tranche 1 Term Loans may not be
reborrowed.

 

37

 

(b)  Subject to the terms
and conditions set forth herein, each Lender agrees to make Revolving Loans to
the Borrower from time to time during the Revolving Availability Period in an
aggregate principal amount that will not result in such Lender’s Revolving
Exposure exceeding the lesser of (i) such Lender’s Revolving Commitment
and (ii) such Lender’s Applicable Percentage of an amount equal to (A) the
Borrowing Base Amount in effect at such time minus (B) the sum of (1) the
outstanding Tranche 1 Term Loans at such time, (2) prior to the Borrowing
Base Date, zero and from and after the Borrowing Base Date, the outstanding
Tranche 2 Term Loans at such time and (3) the outstanding Tranche 3 Term
Loans at such time.  Within the foregoing
limits and subject to the terms and conditions set forth herein, the Borrower
may borrow, prepay and reborrow Revolving Loans.

 

(c)  Subject to the terms
and conditions set forth herein, each Lender made a Tranche 2 Term Loan to the
Borrower on the Second Restatement Effective Date in an aggregate principal
amount not exceeding its Tranche 2 Term Commitment.  Amounts repaid or prepayed in respect of
Tranche 2 Term Loans may not be reborrowed.

 

(d)  Subject to the terms
and conditions set forth herein, each Lender agrees to make its pro rata share of the Tranche 3 Term Loans to be made to the
Borrower on the 2008 Restatement Effective Date (determined based upon the
relative amount such Tranche 3 Term Lender’s Tranche 3 Term Commitment).  The aggregate principal amount of Tranche 3
Term Loans of any Lender shall not exceed such Lender’s Tranche 3 Term
Commitment.  Amounts repaid or prepayed
in respect of Tranche 3 Term Loans may not be reborrowed.  Notwithstanding anything to the contrary
contained herein (and without affecting any other provisions hereof), the
funded portion of each Tranche 3 Term Loan to be made on the 2008 Restatement
Effective Date (i.e., the amount advanced to the
Borrower on the 2008 Restatement Effective Date) shall be equal to 90.00% of
the principal amount of such Loan (it being agreed that the full principal
amount of each such Loan will be deemed outstanding on the 2008 Restatement
Effective Date and the Borrower shall be obligated to repay 100% of the principal
amount of each such Loan as provided hereunder).

 

SECTION 2.02.  Loans and Borrowings.  (a)  Each Loan (other than a Swingline
Loan) shall be made as part of a Borrowing consisting of Loans of the same Class and
Type made by the Lenders ratably in accordance with the amounts of their
Commitments of the applicable Class.  The
failure of any Lender to make any Loan required to be made by it shall not
relieve any other Lender of its obligations hereunder; provided that the
Commitments of the Lenders are several and no Lender shall be responsible for
any other Lender’s failure to make Loans as required.

 

(b)  Subject to Section 2.14,
each Revolving Borrowing and Term Borrowing shall be comprised entirely of ABR
Loans or Eurodollar Loans as the Borrower may request in accordance
herewith.  Each Swingline Loan shall be
an ABR Loan.  Each Lender at its option
may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate
of such Lender to make such Loan; provided that any exercise of such option
shall not affect the obligation of the Borrower to repay such Loan in
accordance with the terms of this Agreement.

 

38

 

(c)  At the commencement
of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be
in an aggregate amount that is an integral multiple of $1,000,000 and not less
than $5,000,000.  At the time that each
ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is
an integral multiple of $1,000,000 and not less than $5,000,000; provided
that an ABR Revolving Borrowing may be in an aggregate amount that is equal to
the entire unused balance of the total Revolving Commitments or that is
required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.05(e).  Each Swingline Loan shall be in an amount
that is an integral multiple of $1,000,000. 
Borrowings of more than one Class and Type may be outstanding at
the same time; provided that there shall not at any time be more than a
total of 10 Eurodollar Borrowings outstanding.

 

(d)  Notwithstanding any
other provision of this Agreement, the Borrower shall not be entitled to
request, or to elect to convert or continue, any Revolving Borrowing, Tranche 1
Term Borrowing, Tranche 2 Term Borrowing or Tranche 3 Term Borrowing if
the Interest Period requested with respect thereto would end after the
Revolving/Tranche 1 Term Maturity Date or the Tranche 2/Tranche 3 Term Maturity
Date, as the case may be.

 

SECTION 2.03.  Requests for Borrowings.  To request a Borrowing, the Borrower shall
notify the Administrative Agent of such request by telephone (a) in the
case of a Eurodollar Borrowing, not later than 11:00 a.m., New York
City time, three Business Days before the date of the proposed Borrowing or (b) in
the case of an ABR Borrowing, not later than (1) 10:30 a.m.,
New York City time, on the Business Day of the proposed Borrowing, in the
case of Borrowings to be made on the same day as such notice is given or (2) 12:00
noon, New York City time, on the Business Day before the proposed
Borrowing, in the case of all other Borrowings. 
Each such telephonic Borrowing Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent of
a written Borrowing Request in a form approved by the Administrative Agent and
signed by the Borrower.  Each such
telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.02:

 

(i) whether the requested Borrowing is to be a Revolving
Borrowing, a Tranche 1 Term Borrowing, a Tranche 2 Term Borrowing or a
Tranche 3 Term Borrowing;

 

(ii) the aggregate amount of such Borrowing;

 

(iii) the date of such Borrowing, which shall be a Business Day;

 

(iv) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;

 

(v) in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated by the
definition of the term “Interest Period”; and

 

39

 

(vi) the location and number of the Borrower’s account to which
funds are to be disbursed, which shall comply with the requirements of Section 2.06.

 

If no election as to the Type
of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing.  If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be
deemed to have selected an Interest Period of one month’s duration.  Promptly following receipt of a Borrowing
Request in accordance with this Section, the Administrative Agent shall advise
each Lender of the details thereof and of the amount of such Lender’s Loan to
be made as part of the requested Borrowing.

 

SECTION 2.04.  Swingline Loans.  (a)  Subject to the terms and conditions
set forth herein, the Swingline Lender may, in its sole discretion, make
Swingline Loans to the Borrower from time to time during the Revolving
Availability Period in an aggregate principal amount at any time outstanding
that will not result in (i) the aggregate principal amount of outstanding
Swingline Loans exceeding $100,000,000 or (ii) the sum of the total
Revolving Exposures exceeding the lesser of (A) the total Revolving
Commitments at such time and (B) the Borrowing Base Amount in effect at
such time minus the sum of (1) the outstanding Tranche 1 Term Loans
at such time, (2) prior to the Borrowing Base Date, zero and from and
after the Borrowing Base Date, the outstanding Tranche 2 Term Loans at such
time and (3) the outstanding Tranche 3 Term Loans at such time; provided
that (i) the Swingline Lender shall not be required to make a Swingline
Loan to refinance an outstanding Swingline Loan and (ii) the Swingline
Lender shall not have any obligation, under this Agreement or otherwise, to
make any Swingline Loan requested by the Borrower hereunder and may, in its
sole discretion, decline to make a requested Swingline Loan.  Within the foregoing limits and subject to
the terms and conditions set forth herein, the Borrower may borrow, prepay and
reborrow Swingline Loans.

 

(b)  To request a
Swingline Loan, the Borrower shall notify the Administrative Agent of such
request by telephone (confirmed by telecopy), not later than 1:00 p.m.,
New York City time, on the day of a proposed Swingline Loan.  Each such notice shall be irrevocable and
shall specify the requested date (which shall be a Business Day) and amount of
the requested Swingline Loan.  The
Administrative Agent will promptly advise the Swingline Lender of any such notice
received from the Borrower.  The Swingline
Lender shall make each Swingline Loan available to the Borrower by means of a
wire transfer to an account designated by the Borrower (or, in the case of a
Swingline Loan made to finance the reimbursement of an LC Disbursement as
provided in Section 2.05(e), by remittance to the relevant Issuing Bank)
by 3:00 p.m., New York City time, on the requested date of such Swingline
Loan.

 

(c)  Interest on each
Swingline Loan shall be payable on the Interest Payment Date with respect
thereto.

 

(d)  The Administrative
Agent shall (i) at any time when Swingline Loans in an aggregate principal
amount of $10,000,000 or more are outstanding, at the request of the Swingline
Lender in its sole discretion, or (ii) on the date that is seven days
after 

 

40

 

the date on which a Swingline Loan was made,
deliver on behalf of the Borrower a Borrowing Request pursuant to Section 2.03
for an ABR Revolving Borrowing in the amount of such Swingline Loans; provided,
however, that the obligations of the
Lenders to fund such Borrowing shall not be subject to the conditions set forth
in Section 4.02.

 

(e)  The Swingline Lender
may by written notice given to the Administrative Agent not later than
12:00 noon, New York City time, on any Business Day require the Revolving
Lenders to acquire participations on such Business Day in all or a portion of
the Swingline Loans outstanding.  Such
notice shall specify the aggregate amount of Swingline Loans in which Revolving
Lenders will participate.  Promptly upon
receipt of such notice (but no later than 2:00 p.m., New York City time,
on such Business Day), the Administrative Agent will give notice thereof to
each Revolving Lender, specifying in such notice such Lender’s Applicable
Percentage of such Swingline Loan or Loans. 
Each Revolving Lender hereby absolutely and unconditionally agrees, upon
timely receipt of notice as provided above, to pay to the Administrative Agent,
for the account of the Swingline Lender, such Lender’s Applicable Percentage of
such Swingline Loan or Loans.  Each
Revolving Lender acknowledges and agrees that its obligation to acquire
participations in Swingline Loans pursuant to this paragraph is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made
without any offset, abatement, withholding or reduction whatsoever.  Each Revolving Lender shall comply with its
obligation under this paragraph by wire transfer of immediately available
funds, in the same manner as provided in Section 2.06 with respect to
Loans made by such Lender (and Section 2.06 shall apply, mutatis  mutandis,
to the payment obligations of the Revolving Lenders), and the Administrative
Agent shall promptly pay to the Swingline Lender the amounts so received by it
from the Revolving Lenders.  The
Administrative Agent shall notify the Borrower of any participations in any
Swingline Loan acquired pursuant to this paragraph, and thereafter payments in
respect of such Swingline Loan shall be made to the Administrative Agent and
not to the Swingline Lender.  Any amounts
received by the Swingline Lender from the Borrower (or other Person on behalf
of the Borrower) in respect of a Swingline Loan after receipt by the Swingline
Lender of the proceeds of a sale of participations therein shall be promptly
remitted to the Administrative Agent, and any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to
the Revolving Lenders that shall have made their payments pursuant to this
paragraph and to the Swingline Lender, as their interests may appear.  The purchase of participations in a Swingline
Loan pursuant to this paragraph shall not relieve the Borrower of any default
in the payment thereof.

 

SECTION 2.05.  Letters of Credit.  (a)  General.  Subject to the terms and conditions set forth
herein, the Borrower may request the issuance of (and the applicable Issuing
Bank, as specified by the Borrower, will issue) Letters of Credit for its own
account, in a form reasonably acceptable to the Administrative Agent and the
relevant Issuing Bank, at any time and from time to time during the Revolving
Availability Period.  In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrower to, or entered into by the Borrower with, an 

 

41

 

Issuing Bank relating to any Letter of
Credit, the terms and conditions of this Agreement shall control.

 

(b)  Notice of
Issuance, Amendment, Renewal, Extension; Certain Conditions.  To request the issuance of a Letter of Credit
(or the amendment, renewal or extension of an outstanding Letter of Credit),
the Borrower shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the applicable
Issuing Bank) to the relevant Issuing Bank and the Administrative Agent
(reasonably in advance of the requested date of issuance, amendment, renewal or
extension) a notice requesting the issuance of a Letter of Credit, or
identifying the Letter of Credit to be amended, renewed or extended, and
specifying the date of issuance, amendment, renewal or extension (which shall
be a Business Day), the date on which such Letter of Credit is to expire (which
shall comply with paragraph (c) of this Section), the amount of such
Letter of Credit, the name and address of the beneficiary thereof and such
other information as shall be necessary to prepare, amend, renew or extend such
Letter of Credit.  If requested by an
Issuing Bank, the Borrower also shall submit a letter of credit application on
such Issuing Bank’s standard form in connection with any request for a Letter
of Credit.  A Letter of Credit shall be
issued, amended, renewed or extended only if (and upon issuance, amendment,
renewal or extension of each Letter of Credit the Borrower shall be deemed to
represent and warrant that), after giving effect to such issuance, amendment,
renewal or extension (i) the total LC Exposure shall not exceed
$450,000,000, (ii) the amount of the LC Exposure attributable to Letters
of Credit issued by the applicable Issuing Bank will not exceed the LC
Commitment of such Issuing Bank and (iii) the total Revolving Exposures
shall not exceed the lesser of (A) the total Revolving Commitments at such
time and (B) the Borrowing Base Amount in effect at such time minus the
sum of (1) the outstanding Tranche 1 Term Loans at such time, (2) prior
to the Borrowing Base Date, zero and from and after the Borrowing Base Date,
the outstanding Tranche 2 Term Loans at such time and (3) the outstanding
Tranche 3 Term Loans at such time.

 

(c)  Expiration Date.  Each Letter of Credit shall expire at or
prior to the close of business on the earlier of (i) the date that is one
year after the date of the issuance of such Letter of Credit (or, in the case
of any renewal or extension thereof, one year after such renewal or extension)
and (ii) the date that is five Business Days prior to the
Revolving/Tranche 1 Term Maturity Date.

 

(d)  Participations.  By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the applicable Issuing Bank or the Lenders, such
Issuing Bank hereby grants to each Revolving Lender, and each Revolving Lender
hereby acquires from such Issuing Bank, a participation in such Letter of
Credit in an amount equal to such Lender’s Applicable Percentage of the
aggregate amount available to be drawn under such Letter of Credit.  In consideration and in furtherance of the
foregoing, each Revolving Lender hereby absolutely and unconditionally agrees
to pay to the Administrative Agent, for the account of the applicable Issuing
Bank, such Lender’s Applicable Percentage of each LC Disbursement made by such
Issuing Bank and not reimbursed by the Borrower on the date due as provided in
paragraph (e) of this Section, or of any reimbursement payment 

 

42

 

required to be refunded to the Borrower for
any reason.  Each Revolving Lender
acknowledges and agrees that its obligation to acquire participations pursuant
to this paragraph in respect of Letters of Credit is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including any
amendment, renewal or extension of any Letter of Credit or the occurrence and
continuance of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever.

 

(e)  Reimbursement.  If any Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse
such LC Disbursement by paying to the Administrative Agent an amount equal to
such LC Disbursement not later than 3:30 p.m., New York City time, on the
date that such LC Disbursement is made, if the Borrower shall have received
notice of such LC Disbursement prior to 10:00 a.m., New York City time, on
such date, or, if such notice has not been received by the Borrower prior to
such time on such date, then not later than 1:00 p.m., New York City time,
on the Business Day immediately following the day that the Borrower receives
such notice; provided that, if such LC Disbursement is not less than
$5,000,000, the Borrower may, subject to the conditions to borrowing set forth
herein, request in accordance with Section 2.03 or 2.04 that such payment
be financed with an ABR Revolving Borrowing or Swingline Loan in an equivalent
amount and, to the extent so financed, the Borrower’s obligation to make such
payment shall be discharged and replaced by the resulting ABR Revolving
Borrowing or Swingline Loan.  If the
Borrower fails to make such payment when due, the Administrative Agent shall
notify each Revolving Lender of the applicable LC Disbursement, the payment
then due from the Borrower in respect thereof and such Lender’s Applicable
Percentage thereof.  Promptly following
receipt of such notice, each Revolving Lender shall pay to the Administrative
Agent its Applicable Percentage of the payment then due from the Borrower, in
the same manner as provided in Section 2.06 with respect to Loans made by
such Lender (and Section 2.06 shall apply, mutatis  mutandis,
to the payment obligations of the Revolving Lenders), and the Administrative
Agent shall promptly pay to the relevant Issuing Bank the amounts so received
by it from the Revolving Lenders. 
Promptly following receipt by the Administrative Agent of any payment
from the Borrower pursuant to this paragraph, the Administrative Agent shall
distribute such payment to such Issuing Bank or, to the extent that Revolving
Lenders have made payments pursuant to this paragraph to reimburse such Issuing
Bank, then to such Lenders and such Issuing Bank as their interests may
appear.  Any payment made by a Revolving
Lender pursuant to this paragraph to reimburse an Issuing Bank for any LC
Disbursement (other than the funding of ABR Revolving Loans or a Swingline Loan
as contemplated above) shall not constitute a Loan and shall not relieve the
Borrower of its obligation to reimburse such LC Disbursement.

 

(f)  Obligations
Absolute.  The Borrower’s obligation
to reimburse LC Disbursements as provided in paragraph (e) of this Section shall
be absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability
of any Letter of Credit or this Agreement, or any term or provision therein or
herein, (ii) any draft or other document presented under a 

 

43

 

Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by any Issuing Bank under a
Letter of Credit against presentation of a draft or other document that does
not comply with the terms of such Letter of Credit or (iv) any other event
or circumstance whatsoever, whether or not similar to any of the foregoing,
that might, but for the provisions of this Section, constitute a legal or
equitable discharge of, or provide a right of setoff against, the Borrower’s
obligations hereunder.  None of the
Administrative Agent, any Lender or any Issuing Bank, or any of their Related
Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of
the relevant Issuing Bank; provided that the foregoing shall not be
construed to excuse such Issuing Bank from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the fullest extent
permitted by applicable law) suffered by the Borrower that are caused by such
Issuing Bank’s gross negligence or willful misconduct (as determined by a court
of competent jurisdiction by a final and non-appealable judgment) in
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. 
The parties hereto expressly agree that, in the absence of gross negligence
or willful misconduct on the part of an Issuing Bank (as determined by a court
of competent jurisdiction by a final and non-appealable judgment), such Issuing
Bank shall be deemed to have exercised care in each such determination.  In furtherance of the foregoing and without
limiting the generality thereof, the parties agree that, with respect to
documents presented which appear on their face to be in substantial compliance
with the terms of a Letter of Credit, an Issuing Bank may, in its sole discretion,
either accept and make payment upon such documents without responsibility for
further investigation, regardless of any notice or information to the contrary,
or refuse to accept and make payment upon such documents if such documents are
not in strict compliance with the terms of such Letter of Credit.

 

(g)  Disbursement
Procedures.  The applicable Issuing
Bank shall, promptly following its receipt thereof, examine all documents
purporting to represent a demand for payment under a Letter of Credit.  The applicable Issuing Bank shall promptly
notify the Administrative Agent and the Borrower by telephone (confirmed by
telecopy) of such demand for payment and whether such Issuing Bank has made or
will make an LC Disbursement thereunder; provided that any failure to
give or delay in giving such notice shall not relieve the Borrower of its
obligation to reimburse the Issuing Bank and the Revolving Lenders with respect
to any such LC Disbursement.

 

(h)  Interim Interest.  If an Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that 

 

44

 

the Borrower reimburses such LC Disbursement,
at the rate per annum then applicable to ABR Revolving Loans; provided
that, if the Borrower fails to reimburse such LC Disbursement when due pursuant
to paragraph (e) of this Section, then Section 2.13(c) shall
apply.  Interest accrued pursuant to this
paragraph shall be for the account of the applicable Issuing Bank, except that
interest accrued on and after the date of payment by any Revolving Lender
pursuant to paragraph (e) of this Section to reimburse such Issuing
Bank shall be for the account of such Lender to the extent of such payment.

 

(i)  Resignation or
Replacement of the Issuing Bank.  An
Issuing Bank may resign at any time by giving 180 days’ prior written notice to
the Administrative Agent, the Borrower and the Lenders, and an Issuing Bank may
be replaced at any time by written agreement (an “Issuing Bank Agreement”)
among the Borrower, the Administrative Agent, the replaced Issuing Bank and the
successor Issuing Bank, which shall set forth the LC Commitment of such Issuing
Bank.  The Administrative Agent shall
notify the Lenders of any such replacement of an Issuing Bank.  At the time any such replacement shall become
effective, the Borrower shall pay all unpaid fees accrued for the account of
the replaced Issuing Bank pursuant to Section 2.12(b).  From and after the effective date of any such
replacement, (i) the successor Issuing Bank shall have all the rights and
obligations of an Issuing Bank under this Agreement with respect to Letters of
Credit to be issued thereafter and (ii) references herein to the term “Issuing
Bank” shall be deemed to refer to such successor or to any previous Issuing
Bank, or to such successor and all previous Issuing Banks, as the context shall
require.  After the replacement of an
Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto
and shall continue to have all the rights and obligations of an Issuing Bank
under this Agreement with respect to Letters of Credit issued by it prior to
such replacement, but shall not be required to issue additional Letters of
Credit.

 

(j)  Cash
Collateralization.  If any Event of
Default shall occur and be continuing, on the Business Day that the Borrower
receives notice from the Administrative Agent or the Required Lenders (or, if
the maturity of the Loans has been accelerated, Revolving Lenders with LC
Exposure representing greater than 50% of the total LC Exposure) demanding the
deposit of cash collateral pursuant to this paragraph, the Borrower shall (or
shall cause Subsidiary Loan Parties to) deposit in an account with the
Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders, an amount in cash equal to the total LC Exposure as of
such date plus any accrued and unpaid interest thereon; provided
that the obligation to deposit such cash collateral shall become effective
immediately, and such deposit shall become immediately due and payable, without
demand or other notice of any kind, upon the occurrence of any Event of Default
with respect to the Borrower or any Subsidiary Loan Party described in
clause (h) or (i) of Article VII.  The Borrower also shall (or shall cause
Subsidiary Loan Parties and, prior to the Borrowing Base Date, Holdings and its
subsidiaries to) deposit cash collateral pursuant to this paragraph as and to
the extent required by Section 2.11(b), and any such cash collateral so
deposited and held by the Administrative Agent hereunder shall constitute part
of the Borrowing Base Amount for purposes of determining compliance with Section 2.11(b).  Each such deposit shall be held by the
Administrative Agent as collateral for the payment and performance of the
obligations of the Borrower under this Agreement.  The Administrative Agent shall have 

 

45

 

exclusive dominion and control, including the
exclusive right of withdrawal, over such account.  The Administrative Agent shall, at the
Borrower’s risk and expense, invest all such deposits in Permitted Investments
chosen in the sole discretion of the Administrative Agent after consultation
with the Borrower, provided that no consultation shall be required if a
Default has occurred and is continuing. 
Other than any interest earned in respect of the investment of such
deposits, such deposits shall not bear interest.  Interest or profits, if any, on such
investments shall accumulate in such account. 
Moneys in such account shall be applied by the Administrative Agent to
reimburse each Issuing Bank for LC Disbursements for which it has not been
reimbursed and, to the extent not so applied, shall be held for the
satisfaction of the reimbursement obligations of the Borrower for the LC
Exposure at such time or, if the maturity of the Loans has been accelerated
(but subject to the consent of Revolving Lenders with LC Exposure representing
greater than 50% of the total LC Exposure), be applied to satisfy the Senior
Obligations.  If the Borrower is required
to provide an amount of cash collateral hereunder as a result of the occurrence
of an Event of Default, such amount (to the extent not applied as aforesaid)
shall be returned to the Borrower within three Business Days after all Events
of Default have been cured or waived (or, during a Cash Sweep Period, paid into
the Citibank Concentration Account).  If
the Borrower is required to provide an amount of cash collateral hereunder
pursuant to Section 2.11(b), such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower as and to the extent that, after
giving effect to such return, the Borrower would remain in compliance with Section 2.11(b) and
no Default shall have occurred and be continuing.  Unless and except to the extent that the deposit
of cash collateral directly by the Borrower would not result in an obligation
to grant a security interest in such cash collateral to the holders of other
outstanding Indebtedness of the Borrower, the Borrower will cause Subsidiary
Loan Parties (and, prior to the Borrowing Base Date, Holdings and its
subsidiaries) to deposit all cash collateral required to be deposited pursuant
to this Section 2.05(j) or Section 2.11(b).

 

(k)  Additional Issuing
Banks  The Borrower may, at any time
and from time to time with the consent of the Administrative Agent (which
consent shall not be unreasonably withheld) and such Lender, designate one or
more additional Lenders to act as an issuing bank under the terms of this
Agreement.  Any Lender designated as an
issuing bank pursuant to this clause (k) shall be deemed to be an “Issuing
Bank” (in addition to being a Lender) in respect of Letters of Credit issued or
to be issued by such Lender, and, with respect to such Letters of Credit, such
term shall thereafter apply to the other Issuing Banks and such Lender in its
capacity as an Issuing Bank.

 

(l)  Reporting by
Issuing Banks to the Administrative Agent. 
At the end of each week and otherwise upon request of the Administrative
Agent, each Issuing Bank shall provide the Administrative Agent with a
certificate identifying the Letters of Credit issued by such Issuing Bank and
outstanding on such date, the amount and expiration date of each such Letter of
Credit, the beneficiary thereof, the amount, if any, drawn under each such
Letter of Credit and any other information reasonably requested by the
Administrative Agent with respect to such Letters of Credit.  The Administrative Agent shall promptly enter
all such information received by it pursuant to this Section 2.05(l) in
the Register.

 

46

 

SECTION 2.06.  Funding of Borrowings.  (a)  Each Lender shall make each Loan to
be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, New York City time, to the account
of the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders; provided that Swingline Loans shall be made as
provided in Section 2.04.  The
Administrative Agent will make such Loans available to the Borrower by wire
transfer, in like funds, to an account designated by the Borrower in the
applicable Borrowing Request.  Wire
transfers to the Borrower of all Loans (other than Swingline Loans and same-day
ABR Revolving Borrowings) shall be made no later than 1:00 p.m.,
New York City time.  Wire transfers
to the Borrower of Swingline Loans and same-day ABR Revolving Borrowings shall
be made no later than 4:00 p.m., New York City time.

 

(b)  Unless the
Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender’s share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with paragraph (a) of this Section and may, in reliance
upon such assumption, make available to the Borrower a corresponding
amount.  In such event, if a Lender has
not in fact made its share of the applicable Borrowing available to the
Administrative Agent, then the applicable Lender and the Borrower severally
agree to pay to the Administrative Agent forthwith on demand such corresponding
amount with interest thereon, for each day from and including the date such
amount is made available to the Borrower to but excluding the date of payment
to the Administrative Agent, at (i) in the case of such Lender, the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on
interbank compensation or (ii) in the case of the Borrower, the interest
rate applicable to ABR Revolving Loans. 
If such Lender pays such amount to the Administrative Agent, then such
amount shall constitute such Lender’s Loan included in such Borrowing.

 

SECTION 2.07.  Interest Elections.  (a)  Each Borrowing initially shall be
of the Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in
such Borrowing Request.  Thereafter, the
Borrower may elect to convert such Borrowing to a different Type or to continue
such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest
Periods therefor, all as provided in this Section.  The Borrower may elect different options with
respect to different portions of the affected Borrowing, in which case each
such portion shall be allocated ratably among the Lenders holding the Loans
comprising such Borrowing, and the Loans comprising each such portion shall be
considered a separate Borrowing.  This Section shall
not apply to Swingline Borrowings, which may not be converted or continued.

 

(b)  To make an election
pursuant to this Section, the Borrower shall notify the Administrative Agent of
such election by telephone by the time that a Borrowing Request would be
required to be made under Section 2.03 if the Borrower were requesting a
Revolving Borrowing of the Type resulting from such election to be made on the
effective date of such election.  Each such
telephonic Interest Election Request shall be irrevocable and shall be
confirmed promptly by hand delivery or 

 

47

 

telecopy to the Administrative Agent of a
written Interest Election Request in a form approved by the Administrative
Agent and signed by the Borrower.

 

(c)  Each telephonic and
written Interest Election Request shall specify the following information in
compliance with Section 2.02 and paragraph (f) of this Section:

 

(i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing (in
which case the information to be specified pursuant to clauses (iii) and (iv) below
shall be specified for each resulting Borrowing);

 

(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;

 

(iii) whether the resulting Borrowing is to be an ABR Borrowing or
a Eurodollar Borrowing; and

 

(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such election,
which shall be a period contemplated by the definition of the term “Interest
Period”.

 

If any such Interest Election
Request requests a Eurodollar Borrowing but does not specify an Interest
Period, then the Borrower shall be deemed to have selected an Interest Period
of one month’s duration.

 

(d)  Promptly following
receipt of an Interest Election Request, the Administrative Agent shall advise
each Lender of the details thereof and of such Lender’s portion of each
resulting Borrowing.

 

(e)  If the Borrower fails
to deliver a timely Interest Election Request with respect to a Eurodollar
Borrowing prior to the end of the Interest Period applicable thereto, then,
unless such Borrowing is repaid as provided herein, at the end of such Interest
Period such Borrowing shall be converted to an ABR Borrowing.  Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Required Lenders, so notifies the
Borrower, then, so long as an Event of Default is continuing (i) no
outstanding Borrowing may be converted to or continued as a Eurodollar
Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be
converted to an ABR Borrowing at the end of the Interest Period applicable
thereto.

 

(f)  A Revolving
Borrowing, Tranche 1 Term Borrowing, Tranche 2 Term Borrowing or Tranche 3
Term Borrowing may not be converted to or continued as a Eurodollar Borrowing
if after giving effect thereto the Interest Period therefor would end after the
Revolving/Tranche 1 Term Maturity Date or the Tranche 2/Tranche 3 Term Maturity
Date, as the case may be.

 

48

 

SECTION 2.08.  Termination and Reduction of Commitments.   (a) 
Unless previously terminated in accordance with the terms of this Agreement, (i) the
Tranche 1 Term Commitments shall terminate at 5:00 p.m., New York City
time on the First Restatement Effective Date, (ii) the Revolving
Commitments shall terminate on the Revolving/Tranche 1 Term Maturity Date, (iii) the
Tranche 2 Term Commitments shall terminate at 5:00 p.m., New York City
time on the Second Restatement Effective Date and (iv) the Tranche 3 Term
Commitments shall terminate at 5:00 p.m., New York City time on the 2008
Restatement Effective Date.

 

(b)  The Borrower may at
any time terminate, or from time to time reduce, the Commitments of any Class; provided
that (i) each reduction of the Commitments of any Class shall be in
an amount that is an integral multiple of $1,000,000 and not less than
$5,000,000 and (ii) the Borrower shall not terminate or reduce the
Revolving Commitments if, after giving effect to any concurrent prepayment of
the Revolving Loans in accordance with Section 2.11, the total Revolving
Exposures would exceed the total Revolving Commitments.

 

(c)  The Borrower shall
notify the Administrative Agent of any election to terminate or reduce the
Commitments under paragraph (b) of this Section at least one
Business Day prior to the effective date of such termination or reduction,
specifying such election and the effective date thereof.  Promptly following receipt of any such
notice, the Administrative Agent shall advise the Lenders of the contents
thereof.  Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable; provided
that a notice of voluntary termination of the Revolving Commitments delivered
by the Borrower may state that such notice is conditioned upon the
effectiveness of other credit facilities, in which case such notice may be
revoked by the Borrower (by notice to the Administrative Agent on or prior to
the specified effective date) if such condition is not satisfied.  Any termination or reduction of the
Commitments of any Class shall be permanent.  Each reduction of the Commitments of any Class shall
be made ratably among the Lenders in accordance with their Commitments of such
Class.

 

SECTION 2.09.  Repayment of Loans; Evidence of
Indebtedness.   (a)  The Borrower hereby unconditionally
promises to pay (i) to the Administrative Agent for the account of each
Tranche 1 Term Lender the then unpaid principal amount of the Tranche 1
Term Loan of such Lender as provided in Section 2.10, (ii) to the
Administrative Agent for the account of each Revolving Lender the then unpaid
principal amount of each Revolving Loan of such Lender on the Revolving/Tranche
1 Term Maturity Date, (iii) to the Swingline Lender the then unpaid
principal amount of each Swingline Loan on the earlier of (A) the
Revolving/Tranche 1 Term Maturity Date and (B) the date that is seven days
after the date on which such Swingline Loan was made; provided that on
each date that a Revolving Borrowing is made, the Borrower shall repay all
Swingline Loans that were outstanding on the date such Borrowing was requested,
(iv) to the Administrative Agent for the account of each Tranche 2 Term
Lender the then unpaid principal amount of the Tranche 2 Term Loan of such
Lender as provided in Section 2.10 and (v) to the Administrative
Agent for the account of each Tranche 3 Term Lender the then unpaid principal
amount of the Tranche 3 Term Loan of such Lender as provided in Section 2.10.

 

49

 

(b)  Each Lender shall
maintain in accordance with its usual practice an account or accounts
evidencing the Indebtedness of the Borrower to such Lender resulting from each
Loan made by such Lender, including the amounts of principal and interest
payable and paid to such Lender from time to time under this Agreement.

 

(c)  The Administrative
Agent shall maintain accounts in which it shall record (i) the amount of
each Loan made hereunder, the Class and Type thereof and the Interest
Period, if any, applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the
Administrative Agent hereunder for the account of the Lenders and each Lender’s
share thereof.

 

(d)  The entries made in
the accounts maintained pursuant to paragraph (b) or (c) of
this Section shall be prima  facie evidence of the existence
and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.

 

(e)  Any Lender may
request that Loans of any Class made by it be evidenced by a promissory
note.  In such event, the Borrower shall
prepare, execute and deliver to such Lender a promissory note payable to the
order of such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in the form attached hereto as Exhibit A-1 or A-2,
as applicable, or in such other form approved by the Administrative Agent and
the Borrower.  Thereafter, the Loans evidenced
by such promissory note and interest thereon shall at all times (including
after assignment pursuant to Section 9.04) be represented by one or more
promissory notes in such form payable to the order of the payee named therein
(or, if such promissory note is a registered note, to such payee and its
registered assigns).

 

SECTION 2.10.  Amortization and Repayment of Term Loans.  (a)  The Borrower shall repay to the
Administrative Agent for the ratable account of the Tranche 2 Term Lenders
0.25% of the initial aggregate principal amount of the Tranche 2 Term
Loans on the last Business Day of each March, June, September and
December, commencing on the first such date to occur on or after the first
anniversary of the Second Restatement Effective Date (which installments shall
be reduced as a result of the application of prepayments in accordance with the
order of priority set forth in paragraph (d) of this Section).

 

(b)  The Borrower shall
repay to the Administrative Agent for the ratable account of the Tranche 3 Term
Lenders 0.25% of the initial aggregate principal amount of the Tranche 3 Term
Loans on the last Business Day of each March, June, September and
December, commencing on December 31, 2008 (which installments shall be
reduced as a result of the application of prepayments in accordance with the
order of priority set forth in paragraph (d) of this Section).

 

50

 

(c)  To the extent not
previously paid, all Tranche 1 Term Loans shall be due and payable on the
Revolving/Tranche 1 Term Maturity Date. 
To the extent not previously paid, all Tranche 2 Term Loans shall be due
and payable on the Tranche 2/Tranche 3 Term Maturity Date.  To the extent not previously paid, all
Tranche 3 Term Loans shall be due and payable on the Tranche 2/Tranche 3 Term
Maturity Date.

 

(d)  Any prepayment of a
Tranche 2 Term Borrowing or a Tranche 3 Term Borrowing pursuant to Section 2.11(b),
(c) or (d) shall be applied to reduce the subsequent scheduled
repayments of such Borrowings to be made pursuant to this Section as
follows: first, in order of their maturity for the next fiscal year
after such prepayment and second, to the extent of any excess, on a pro rata basis to the remaining scheduled repayments.

 

(e)  Prior to any
repayment of any Term Borrowing hereunder, the Borrower shall select the
Borrowing or Borrowings to be repaid and shall notify the Administrative Agent
by telephone (confirmed by telecopy) of such selection not later than 11:00 a.m.,
New York City time, three Business Days before the scheduled date of such
repayment.  Each repayment of a Borrowing
shall be applied ratably to the Loans included in the repaid Borrowing.  Repayments of Term Borrowings shall be
accompanied by accrued interest on the amount repaid.

 

SECTION 2.11.  Prepayment of Loans.  (a)  The Borrower shall have the right,
at any time and from time to time, to prepay any Borrowing in whole or in part,
subject to the requirements of this Section; provided, however,
that any partial prepayment made pursuant to this Section 2.11(a) shall
be in a principal amount that is a multiple of $1,000,000 and not less than
$5,000,000.

 

(b)  (i) 
  In the event and on each date that the sum of (A) the total
Revolving Exposures on such date, (B) the outstanding Tranche 1 Term Loans
on such date, (C) if such date is prior to the Borrowing Base Date, zero
and, if such date is on or after the Borrowing Base Date, the outstanding Tranche
2 Term Loans on such date and (D) the outstanding Tranche 3 Term Loans on
such date exceed the then-current Borrowing Base Amount, the Borrower shall on
each such date apply an amount equal to such excess as follows: first, to prepay Revolving Borrowings
or Swingline Loans, second,
to the extent of any remaining excess or, if no Revolving Borrowings or
Swingline Loans are outstanding, to make a deposit in a cash collateral account
maintained by the Administrative Agent pursuant to Section 2.05(j) to
be held as security for the Borrower’s obligations in respect of Letters of
Credit and third, to the extent of any remaining excess, to prepay Term
Borrowings on a pro rata basis (determined based
upon the sum of the outstanding Term Loans at such time).

 

(ii)  In the event and on
each date that the total Revolving Exposures exceed the total Revolving
Commitments, the Borrower shall on such date apply an amount equal to such
excess first, to prepay Revolving Borrowings or Swingline Borrowings and
second, to the extent of any remaining excess, or if no Revolving
Borrowings or Swingline Loans are outstanding, to a cash collateral account
maintained 

 

51

 

by the Administrative Agent pursuant to Section 2.05(j) to
be held as security for the Borrower’s obligations in respect of Letters of
Credit.

 

(c)  In the event and on
each occasion that any Net Proceeds are received by or on behalf of the
Borrower or any Subsidiary in respect of any Prepayment Event, the Borrower
shall, within three Business Days after such Net Proceeds are received, prepay
Tranche 2 Term Borrowings and Tranche 3 Term Borrowings, on a pro rata basis, in an aggregate amount equal to (i) 100%
of the Net Proceeds resulting from prepayment events described in clauses (a), (b) and
(d) of the definition of “Prepayment Event” and (ii) 50% of the Net
Proceeds resulting from prepayment events described in clause (c) of the
definition of “Prepayment Event”; provided that if at the time any (x) Net
Proceeds resulting from prepayment events described in clause (a) of the
definition of “Prepayment Events” are received and the Revolver Availability is
less than $900,000,000 (or, if such time is prior to the Borrowing Base Date,
$475,000,000) or (y) Net Proceeds resulting from any Prepayment Event are
received during a Cash Sweep Period, such Net Proceeds will be applied as
follows: first, to prepay Revolving Borrowings or Swingline Loans and second,
to the extent of any remaining excess, to prepay Tranche 2 Term Borrowings and
Tranche 3 Term Borrowings, on a pro rata basis;
provided  further that, in the case of any prepayment event
described in clause (a) or (b) of the definition of “Prepayment
Event”, if the Borrower shall elect to apply the Net Proceeds from such event
(or a portion thereof specified in such certificate), within 365 days after
receipt of such Net Proceeds, to acquire real property, equipment or other
tangible assets to be used in the business of the Borrower and the
Subsidiaries, and certifying that no Default has occurred and is continuing,
then no prepayment shall be required pursuant to this paragraph in respect of
the Net Proceeds in respect of such event (or the portion of such Net Proceeds
specified in such certificate, if applicable), except to the extent of any such
Net Proceeds therefrom that have not been so applied by the end of such 365 day
period, at which time a prepayment shall be required in an amount equal to such
Net Proceeds that have not been so applied.

 

(d)  Following the end of
each fiscal year of the Borrower, commencing with the fiscal year ending February 29,
2008, the Borrower shall prepay Tranche 2 Term Borrowings and Tranche 3 Term
Borrowings, on a pro rata basis, in an aggregate
amount equal to (i) if on the last day of such fiscal year the Leverage
Ratio is greater than or equal to 4.50 to 1.00, 50% of the Excess Cash Flow for
such fiscal year, (ii) if on the last day of such fiscal year the Leverage
Ratio is greater than or equal to 4.00 to 1.00 but less than 4.50 to 1.00, 25%
of the Excess Cash Flow for such fiscal year and (iii) if on the last day
of such fiscal year the Leverage Ratio is less than 4.00 to 1.00, 0% of the
Excess Cash Flow for such fiscal year. 
Each prepayment pursuant to this paragraph shall be made on or before
the date on which financial statements are delivered pursuant to Section 5.01
with respect to the fiscal year for which Excess Cash Flow is being calculated
(and in any event within 90 days after the end of such fiscal year).

 

(e)  Prior to any optional
or mandatory prepayment of Borrowings hereunder, the Borrower shall select the
Borrowing or Borrowings to be prepaid and shall specify such selection in the
notice of such prepayment pursuant to paragraph (f) of this Section.

 

52

 

(f)  The Borrower shall
notify the Administrative Agent (and, in the case of prepayment of a Swingline
Loan, the Swingline Lender) by telephone (confirmed by telecopy) of any
prepayment hereunder (i) in the case of prepayment of a Eurodollar
Borrowing, not later than 11:00 a.m., New York City time, three Business
Days before the date of prepayment, (ii) in the case of prepayment of an
ABR Borrowing, not later than 11:00 a.m., New York City time, one Business
Day before the date of prepayment or (iii) in the case of prepayment of a
Swingline Loan, not later than 12:00 noon, New York City time, on the date of
prepayment.  Each such notice shall be
irrevocable and shall specify the prepayment date, the Borrowings to be prepaid
and the principal amount of each Borrowing or portion thereof to be prepaid
and, in the case of a mandatory prepayment, a reasonably detailed calculation
of the amount of such prepayment; provided that, if a notice of optional
prepayment is given in connection with a conditional notice of termination of
the Revolving Commitments as contemplated by Section 2.08, then such
notice of prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.08. 
Promptly following receipt of any such notice (other than a notice
relating solely to Swingline Loans), the Administrative Agent shall advise the
Lenders of the contents thereof.  Each
partial prepayment of any Borrowing shall be in an amount that would be
permitted in the case of an advance of a Borrowing of the same Type as provided
in Section 2.02, except as necessary to apply fully the required amount of
a mandatory prepayment.  Each prepayment
of a Borrowing shall be applied ratably to the Loans included in the prepaid
Borrowing.  Prepayments shall be
accompanied by accrued interest to the extent required by Section 2.13.

 

SECTION 2.12.  Fees. 
(a)  The Borrower agrees to pay to the Administrative Agent for the
account of each Revolving Lender a commitment fee, which shall accrue at the
rate of 0.25% per annum on the daily unused amount of the Revolving Commitment
of such Lender during the period from and including the Original Restatement
Effective Date to but excluding the date on which such Commitment terminates.  Accrued commitment fees shall be payable in
arrears on the last day of March, June, September and December of
each year and on the date on which the Revolving Commitments terminate,
commencing on the first such date to occur after the Original Restatement
Effective Date.  All commitment fees
shall be computed on the basis of a year of 360 days and shall be payable for
the actual number of days elapsed (including the first day but excluding the
last day).  For purposes of computing
commitment fees pursuant to this Section 2.12(a), a Revolving Commitment
of a Lender shall be deemed to be used to the extent of the outstanding
Revolving Loans and LC Exposure of such Lender (and the Swingline Exposure of
such Lender shall be disregarded for such purpose).

 

(b)  The Borrower agrees
to pay (i) to the Administrative Agent for the account of each Revolving
Lender a participation fee with respect to its participations in Letters of
Credit, which shall accrue at the same Applicable Rate as in effect from time
to time for interest on Eurodollar Revolving Loans on the daily amount of such
Lender’s LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the
Original Restatement Effective Date to but excluding the later of the date on
which such Lender’s Revolving Commitment terminates and the date on which such
Lender ceases to have any LC Exposure, and (ii) 

 

53

 

to each Issuing Bank a fronting fee, which
shall accrue at the rate of 0.25% per annum on the daily outstanding amount of
such Issuing Bank’s Letters of Credit during the period from and including the
Original Restatement Effective Date to but excluding the later of the date of
termination of the Revolving Commitments and the date on which there ceases to
be any LC Exposure, as well as such Issuing Bank’s standard fees with respect
to the issuance, amendment, renewal or extension of any Letter of Credit or
processing of drawings thereunder. 
Participation fees and fronting fees accrued through and including the
last day of March, June, September and December of each year shall be
payable on the third Business Day following such last day, commencing on the
first such date to occur after the Original Restatement Effective Date; provided
that all such fees shall be payable on the date on which the Revolving
Commitments terminate and any such fees accruing after the date on which the
Revolving Commitments terminate shall be payable on demand.  Any other fees payable to an Issuing Bank
pursuant to this paragraph shall be payable within 10 days after demand.  All participation fees and fronting fees
shall be computed on the basis of a year of 360 days and shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day).

 

(c)  The Borrower agrees
to pay to the Administrative Agent and the Collateral Agent, for their own
accounts, fees payable in the amounts and at the times separately agreed upon
between the Borrower and the Administrative Agent or the Collateral Agent, as
the case may be.

 

(d)  All fees payable
hereunder shall be paid on the dates due, in immediately available funds, to
the Administrative Agent (or to the relevant Issuing Bank, in the case of fees
payable to it) for distribution, in the case of commitment fees and
participation fees, to the Lenders entitled thereto.  Fees paid shall not be refundable under any
circumstances.

 

SECTION 2.13.  Interest.  (a)  The Loans comprising each
ABR Borrowing (including each Swingline Loan) shall bear interest at the
Alternate Base Rate plus the Applicable Rate.

 

(b)  The Loans comprising
each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the
Interest Period in effect for such Borrowing plus the Applicable Rate.

 

(c)  Notwithstanding the
foregoing, upon the occurrence and during the continuation of an Event of
Default, at the option of the Administrative Agent or at the request of the
Required Lenders, the Borrower shall pay interest on all of the Senior
Obligations (and, prior to the Borrowing Base Date, the Interim Obligations) to
but excluding the date of actual payment, after as well as before judgment, (i) in
the case of principal, at a rate per annum equal to 2% plus the rate
otherwise applicable to such Loan as provided in the preceding paragraphs of
this Section and (ii) in the case of any other amount, at a rate per
annum equal to 2% plus the rate applicable to ABR Revolving Loans as
provided in paragraph (a) of this Section.

 

54

 

(d)  Accrued interest on
each Loan shall be payable in arrears on each Interest Payment Date for such
Loan and (i) in the case of Tranche 1 Term Loans, on the Revolving/Tranche
1 Term Maturity Date, (ii) in the case of Revolving Loans, the earlier of
the Revolving/Tranche 1 Term Maturity Date and the date on which all Revolving
Commitments hereunder are terminated, (iii) in the case of Tranche 2
Term Loans, on the Tranche 2/Tranche 3 Term Maturity Date and (iv) in the
case of Tranche 3 Term Loans, on the Tranche 2/Tranche 3 Term Maturity Date; provided
that (i) interest accrued pursuant to paragraph (c) of this Section shall
be payable on demand, (ii) in the event of any repayment or prepayment of
any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of
the Revolving Availability Period), accrued interest on the principal amount
repaid or prepaid shall be payable on the date of such repayment or prepayment
and (iii) in the event of any conversion of any Eurodollar Loan prior to
the end of the current Interest Period therefor, accrued interest on such Loan
shall be payable on the effective date of such conversion, together with any
amounts due and payable pursuant to Section 2.16.

 

(e)  All interest hereunder
shall be computed on the basis of a year of 360 days, except that interest
computed by reference to the Alternate Base Rate at times when the Alternate
Base Rate is based on the Citibank Base Rate shall be computed on the basis of
a year of 365 days (or 366 days in a leap year), and in each case shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).  The applicable
Alternate Base Rate or Adjusted LIBO Rate shall be determined by the
Administrative Agent, and such determination shall be conclusive absent
manifest error.

 

SECTION 2.14.  Alternate Rate of Interest.  If prior to the commencement of any Interest
Period for a Eurodollar Borrowing:

 

(a)  the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable means
do not exist for ascertaining the Adjusted LIBO Rate for such Interest Period;
or

 

(b)  the Administrative Agent is advised by the Required Lenders
that the Adjusted LIBO Rate for such Interest Period will not adequately and
fairly reflect the cost to such Lenders of making or maintaining their Loans
included in such Borrowing for such Interest Period;

 

then the Administrative Agent
shall give notice thereof to the Borrower and the Lenders by telephone or
telecopy as promptly as practicable thereafter and, until the Administrative
Agent notifies the Borrower and the Lenders that the circumstances giving rise
to such notice no longer exist, (i) any Interest Election Request that requests
the conversion of any Borrowing to, or continuation of any Borrowing as, a
Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing
Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR
Borrowing.

 

55

 

SECTION 2.15.  Increased Costs.  (a)  If any Change in Law shall:

 

(i) impose, modify or deem applicable any reserve, special deposit
or similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender (except any such reserve requirement
reflected in the Adjusted LIBO Rate) or any Issuing Bank; or

 

(ii) impose on any Lender or any Issuing Bank or the London
interbank market any other condition affecting this Agreement or Eurodollar
Loans made by such Lender or any Letter of Credit or participation therein;

 

and the result of any of the
foregoing shall be to increase the cost to such Lender of making or maintaining
any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or
to increase the cost to such Lender or such Issuing Bank of participating in,
issuing or maintaining any Letter of Credit or to reduce the amount of any sum
received or receivable by such Lender or such Issuing Bank hereunder (whether of
principal, interest or otherwise), then the Borrower will pay to such Lender or
such Issuing Bank, as the case may be, such additional amount or amounts as
will compensate such Lender or such Issuing Bank, as the case may be, for such
additional costs incurred or reduction suffered.

 

(b)  If any Lender or any
Issuing Bank determines that any Change in Law regarding capital requirements
has or would have the effect of reducing the rate of return on such Lender’s or
such Issuing Bank’s capital or on the capital of such Lender’s or such Issuing
Bank’s holding company, if any, as a consequence of this Agreement or the Loans
made by, or participations in Letters of Credit held by, such Lender, or the
Letters of Credit issued by such Issuing Bank, to a level below that which such
Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding
company could have achieved but for such Change in Law (taking into
consideration such Lender’s or such Issuing Bank’s policies and the policies of
such Lender’s or such Issuing Bank’s holding company with respect to capital
adequacy), then from time to time the Borrower will pay to such Lender or such
Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or such Issuing Bank or such Lender’s or such Issuing
Bank’s holding company for any such reduction suffered.  Each Lender will promptly notify the Borrower
and the Administrative Agent of any event of which it has knowledge that will
entitle such Lender to compensation pursuant to this Section 2.15; provided
that the failure to provide such notification will not affect such Lender’s
rights to compensation hereunder.

 

(c)  A certificate of a
Lender or an Issuing Bank setting forth the amount or amounts necessary to
compensate such Lender or such Issuing Bank or its holding company, as the case
may be, as specified in paragraph (a) or (b) of this Section shall
be delivered to the Borrower and shall be conclusive absent manifest
error.  The Borrower shall pay such
Lender or such Issuing Bank, as the case may be, the amount shown as due on any
such certificate within 10 days after receipt thereof.

 

56

 

(d) 
Failure or delay on the part of any Lender or any Issuing Bank to demand
compensation pursuant to this Section shall not constitute a waiver of
such Lender’s or such Issuing Bank’s right to demand such compensation; provided
that the Borrower shall not be required to compensate a Lender or an Issuing
Bank pursuant to this Section for any increased costs or reductions
incurred more than 270 days prior to the date that such Lender or such Issuing
Bank, as the case may be, notifies the Borrower of the Change in Law giving
rise to such increased costs or reductions and of such Lender’s or such Issuing
Bank’s intention to claim compensation therefor; provided  further
that, if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the 270-day period referred to above shall be extended to
include the period of retroactive effect thereof.

 

SECTION 2.16.  Break Funding Payments.  In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b) the
conversion of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto, (c) the failure to borrow, convert, continue or
prepay any Eurodollar Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under Section 2.11(f) and
is revoked in accordance therewith), or (d) the assignment of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrower pursuant to Section 2.19,
then, in any such event, the Borrower shall compensate each Lender for the
loss, cost and expense attributable to such event.  In the case of a Eurodollar Loan, such loss,
cost or expense to any Lender shall be deemed to consist of an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable
to such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period
for such Loan), over (ii) the amount of interest which would accrue on
such principal amount for such period at the interest rate which such Lender
would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the eurodollar
market.  A certificate of any Lender
setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error.  The
Borrower shall pay such Lender the amount shown as due on any such certificate
within 10 days after receipt thereof.

 

SECTION 2.17.  Taxes. 
(a)  Any and all payments by or on account of any obligation of the
Borrower hereunder or under any other Senior Loan Document shall be made free
and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided
that if the Borrower shall be required to deduct any Indemnified Taxes or Other
Taxes from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Agent, Lender or
Issuing Bank (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall
make such deductions and (iii) the 

 

57

 

Borrower shall pay the full amount deducted
to the relevant Governmental Authority in accordance with applicable law.

 

(b)  In addition, the
Borrower shall pay any Other Taxes to the relevant Governmental Authority in
accordance with applicable law.

 

(c)  The Borrower shall
indemnify the Administrative Agent, each Lender and each Issuing Bank, within
10 days after written demand therefor, for the full amount of any Indemnified
Taxes or Other Taxes paid by the Administrative Agent, such Lender or such
Issuing Bank, as the case may be, on or with respect to any payment by or on
account of any obligation of the Borrower hereunder or under any other Senior
Loan Document (including Indemnified Taxes or Other Taxes imposed or asserted
on or attributable to amounts payable under this Section) and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such
payment or liability delivered to the Borrower by a Lender or an Issuing Bank,
or by the Administrative Agent on its own behalf or on behalf of a Lender or an
Issuing Bank, shall be conclusive absent manifest error.

 

(d)  As soon as
practicable after any payment of Indemnified Taxes or Other Taxes by the
Borrower to a Governmental Authority, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

 

(e)  Any Foreign Lender
that is entitled to an exemption from or reduction of withholding tax under the
law of the jurisdiction in which the Borrower is located, or any treaty to
which such jurisdiction is a party, with respect to payments under this
Agreement shall deliver to the Borrower (with a copy to the Administrative
Agent), at the time or times prescribed by applicable law, such properly
completed and executed documentation prescribed by applicable law or reasonably
requested by the Borrower as will permit such payments to be made without
withholding or at a reduced rate, provided that such Foreign Lender has
received written notice from the Borrower advising it of the availability of
such exemption or reduction and supplying all applicable documentation.

 

SECTION 2.18.  Payments Generally; Pro Rata Treatment;
Sharing of Setoffs.  (a)  The
Borrower shall make each payment required to be made by it hereunder or under
any other Senior Loan Document (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under Section 2.15,
2.16 or 2.17, or otherwise) prior to the time expressly required hereunder or
under such other Senior Loan Document for such payment (or, if no such time is
expressly required, prior to 2:00 p.m., New York City time), on the date
when due, in immediately available funds, without setoff or counterclaim.  Any amounts received after such time on any
date may, in the discretion of the Administrative Agent, be deemed to have been
received on the next succeeding Business Day for purposes of calculating
interest thereon.  All such 

 

58

 

payments shall be made to the Administrative
Agent at its offices at 388 Greenwich Street, New York, NY 10013, except
payments to be made directly to an Issuing Bank or Swingline Lender as
expressly provided herein and except that payments pursuant to Sections 2.15,
2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto and
payments pursuant to other Senior Loan Documents shall be made to the Persons
specified therein.  The Administrative
Agent shall distribute any such payments received by it for the account of any
other Person to the appropriate recipient promptly following receipt
thereof.  If any payment under any Senior
Loan Document shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day, and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension.  All payments
under each Senior Loan Document shall be made in dollars.

 

(b)  If at any time
insufficient funds are received by and available to the Administrative Agent to
pay fully all amounts of principal, unreimbursed LC Disbursements, interest and
fees then due hereunder, such funds shall be applied (i) first,
towards payment of interest and fees then due hereunder, ratably among the
parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties, and (ii) second, towards payment of
principal and unreimbursed LC Disbursements then due hereunder, ratably among
the parties entitled thereto in accordance with the amounts of principal and
unreimbursed LC Disbursements then due to such parties.

 

(c)  If any Lender shall,
by exercising any right of setoff or counterclaim or otherwise, obtain payment
in respect of any principal of or interest on any of its Loans or
participations in LC Disbursements or Swingline Loans resulting in such Lender
receiving payment of a greater proportion of the aggregate amount of its Loans
and participations in LC Disbursements and Swingline Loans and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Loans and participations in LC Disbursements and
Swingline Loans of other Lenders to the extent necessary so that the benefit of
all such payments shall be shared by the Lenders ratably in accordance with the
aggregate relative amounts of principal of and accrued interest on their Loans
and participations in LC Disbursements and Swingline Loans; provided
that (i) if any such participations are purchased and all or any portion
of the payment giving rise thereto is recovered, such participations shall be
rescinded and the purchase price restored to the extent of such recovery,
without interest, and (ii) the provisions of this paragraph shall not be
construed to apply to any payment made by the Borrower pursuant to and in
accordance with the express terms of this Agreement or any payment obtained by
a Lender as consideration for the assignment of or sale of a participation in
any of its Loans or participations in LC Disbursements to any assignee or
participant, other than to the Borrower or any Subsidiary or Affiliate thereof
(as to which the provisions of this paragraph shall apply).  The Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against the Borrower rights of setoff and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of the
Borrower in the amount of such participation.

 

59

 

(d)  Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders or the Issuing Bank hereunder that the Borrower will not make such
payment, the Administrative Agent may assume that the Borrower has made such
payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders or an Issuing Bank, as the case may be,
the amount due.  In such event, if the
Borrower has not in fact made such payment, then each of the Lenders or such
Issuing Bank, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or such Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date
of payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.

 

(e)  If any Lender shall
fail to make any payment required to be made by it pursuant to Section 2.04(c),
2.05(d) or (e), 2.06(b), 2.18(d) or 9.03(c), then the Administrative
Agent may, in its discretion (notwithstanding any contrary provision hereof),
apply any amounts thereafter received by the Administrative Agent for the
account of such Lender to satisfy such Lender’s obligations under such Sections
until all such unsatisfied obligations are fully paid.

 

SECTION 2.19.  Mitigation Obligations; Replacement of
Lenders.  (a)  If any Lender
requests compensation under Section 2.15, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental Authority
for the account of any Lender pursuant to Section 2.17, then such Lender
shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the
judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17, as
the case may be, in the future and (ii) would not subject such Lender to
any unreimbursed cost or expense and would not otherwise be disadvantageous to
such Lender.  The Borrower hereby agrees
to pay all reasonable costs and expenses incurred by any Lender in connection
with any such designation or assignment.

 

(b)  If (i) any
Lender requests compensation under Section 2.15, (ii) the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, (iii) any
Lender defaults in its obligation to fund Loans hereunder or (iv) any
Lender refuses to consent to any amendment or waiver of any Senior Loan
Document requested by the Borrower that requires the consent of all Lenders,
and such amendment or waiver is consented to by the Supermajority Lenders, then
the Borrower may, at its sole expense and effort, upon notice to such Lender
and the Administrative Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained
in Section 9.04), all its interests, rights and obligations under this
Agreement to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment); provided that (i) the
Borrower shall have received the prior written consent of the Administrative
Agent (and, if a Revolving Commitment is being 

 

60

 

assigned, the Issuing Banks and the Swingline
Lender), which consent shall not unreasonably be withheld, (ii) such Lender
shall have received payment of an amount equal to the outstanding principal of
its Loans and participations in LC Disbursements and Swingline Loans, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts) and (iii) in
the case of any such assignment resulting from a claim for compensation under Section 2.15
or payments required to be made pursuant to Section 2.17, such assignment
will result in a material reduction in such compensation or payments.  A Lender shall not be required to make any
such assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrower to require
such  assignment and delegation cease to
apply.

 

SECTION 2.20.  Adjustments to Borrowing Base Advance
Rates.  (a)  As of the Second
Restatement Effective Date, the Accounts Receivable Advance Rate will be 85%,
the Pharmaceutical Inventory Advance Rate will be 85%, the Other Inventory
Advance Rate will be 80% and the Scripts List Advance Rate will be 30%.

 

(b)  Any increase in the
Pharmaceutical Inventory Advance Rate, the Other Inventory Advance Rate, the
Accounts Receivable Advance Rate or the Script Lists Advance Rate above that
would result in any rate in excess of the initially applicable rate set forth
in Section 2.20(a) will in each case require the consent of all the
Lenders.

 

(c)  The Collateral Agent,
in the exercise of its reasonable judgment to reflect Borrowing Base Factors,
may (i) reduce the Accounts Receivable Advance Rate, the Pharmaceutical
Inventory Advance Rate, the Other Inventory Advance Rate and the Script Lists
Advance Rate from time to time and (ii) thereafter increase such rate to a
rate not in excess of the applicable rate set forth in Section 2.20(a).

 

(d)  The Administrative
Agent will give prompt written notice to the Borrower and the Lenders of any
adjustments effected pursuant to this Section 2.20.

 

SECTION 2.21.  Incremental Loans.  At any time after the Second Restatement
Effective Date prior to the Tranche 2/Tranche 3 Term Maturity Date, the
Borrower may, by notice to the Administrative Agent (which shall promptly deliver
a copy to each of the Lenders), request the addition to this Agreement of a new
tranche of term loans, or an incremental revolving credit facility or any
combination thereof (the “Incremental Facilities”); provided, however,
that both (x) at the time of any such request and (y) upon the
effectiveness of any such Incremental Facility, no Default shall exist and the
Borrower shall, if a Financial Covenant Effectiveness Period is then occurring,
be in compliance with Section 6.12 (calculated, in the case of clause (y),
on a pro forma basis to give effect to any borrowing under the Incremental
Facility and any substantially simultaneous repayments of Revolving
Loans).  The Incremental Facilities shall
(i) be in an aggregate principal amount not in excess of $350,000,000 minus
the initial aggregate principal amount of Tranche 3 Term Loans made on the 2008
Restatement Effective Date, (ii) rank pari  passu in right of
payment and of security with the other Loans, (iii) if 

 

61

 

such Incremental Facility is a term loan
facility, amortize in a manner, and be subject to mandatory prepayments (if
any) on terms, acceptable to the Agents, and mature no earlier than the Tranche
2/Tranche 3 Term Maturity Date, (iv) bear interest at the market interest
rate, as determined at the time such Incremental Facility becomes effective, (v) have
such other pricing as may be agreed by the Borrower and the Administrative
Agent and (vi) otherwise be treated hereunder no more favorably than the
Revolving Loans (or, after the Revolving/Tranche 1 Term Maturity Date, the
Tranche 2 Term Loans and the Tranche 3 Term Loans); provided, that
the terms and provisions applicable to the Incremental Facilities may provide
for additional or different financial or other covenants applicable only during
periods after the Tranche 2/Tranche 3 Term Maturity Date.  At no time shall the sum of (i) the
aggregate amount of loans outstanding under the Incremental Facilities at such
time, (ii) the total Revolving Exposure at such time, (iii) the
outstanding Tranche 1 Term Loans at such time, (iv) the outstanding
Tranche 2 Term Loans at such time and (v) the outstanding Tranche 3 Term
Loans at such time exceed the Borrowing Base Amount (or, if prior to the
Borrowing Base Date, the Estimated Borrowing Base Amount) in effect at such
time, and the proceeds of the Incremental Facilities shall be used solely for
the purposes set forth in Section 5.10 and the preamble.  Such notice shall set forth the requested
amount and class of Incremental Facilities, and shall offer each Lender the
opportunity to offer a commitment (the “Incremental Commitment”) to
provide a portion of the Incremental Facility by giving written notice of such
offered commitment to the Administrative Agent and the Borrower within a time
period (the “Offer Period”) to be specified in the Borrower’s notice; provided,
however, that no existing Lender will be obligated to subscribe for any
portion of such commitments.  In the
event that, at the expiration of the Offer Period, Lenders shall have provided
commitments in an aggregate amount less than the total amount of the
Incremental Facility initially requested by the Borrower, the Borrower may
request that Incremental Facility commitments be made in a lesser amount equal
to such commitments and/or shall have the right to arrange for one or more
banks or other financial institutions (any such bank or other financial
institution being called an “Additional Lender”) to extend commitments
to provide a portion of the Incremental Facility in an aggregate amount equal
to the unsubscribed amount of the initial request; provided that each
Additional Lender shall be subject to the approval of the Administrative Agent
(such consent not to be unreasonably withheld); and provided  further
that the Additional Lenders shall be offered the opportunity to provide the
Incremental Facility only on terms previously offered to the existing Lenders
pursuant to the immediately preceding sentence. 
Commitments in respect of Incremental Facilities will become Commitments
under this Agreement pursuant to an amendment to this Agreement (such an
amendment, an “Incremental Facility Amendment”) executed by each of the
Borrower and each Subsidiary Loan Party (and, prior to the Borrowing Base Date,
Holdings and each of its subsidiaries), each Lender agreeing to provide such
Commitment, if any, each Additional Lender, if any, and the Administrative
Agent.  The effectiveness of any
Incremental Facility Amendment shall be subject to the satisfaction on the date
thereof of each of the conditions set forth in Section 4.02 of the
Original Agreement as in effect immediately prior to the First Restatement
Effective Date.

 

62

 

ARTICLE III

Representations and Warranties

 

The Borrower represents and
warrants to the Lenders that:

 

SECTION 3.01.  Organization; Powers.  Each of the Borrower and the Subsidiaries is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to
carry on its business as now conducted and, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.

 

SECTION 3.02.  Authorization; Enforceability.  The Transactions to be entered into by each
Loan Party are within such Loan Party’s corporate powers and have been duly
authorized by all necessary corporate and, if required, stockholder
action.  This Agreement has been duly
executed and delivered by the Borrower and constitutes, and each other Senior
Loan Document to which any Loan Party is to be a party, when executed and
delivered by such Loan Party, will constitute, a legal, valid and binding
obligation of the Borrower or such Loan Party (as the case may be), enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’
rights generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law.

 

SECTION 3.03.  Governmental Approvals; No Conflicts.  The Transactions (a) do not require any
consent or approval of, registration or filing with, or any other action by,
any Governmental Authority, except such as have been obtained or made and are
in full force and effect and except filings necessary to perfect Liens created
under the Senior Loan Documents, (b) will not violate any applicable law
or regulation or the charter, by-laws or other organizational documents of the
Borrower or any of the Subsidiaries or any order of any Governmental Authority,
(c) will not violate or result in a default under any indenture, agreement
or other instrument evidencing or governing Indebtedness or any other material
agreement binding upon the Borrower or any Subsidiary or its assets, or give
rise to a right thereunder to require any payment to be made by the Borrower or
any Subsidiary, and (d) will not result in the creation or imposition of
any Lien on any asset of the Borrower or any Subsidiary, except Liens created
under the Senior Loan Documents and the Second Priority Collateral Documents.

 

SECTION 3.04.  Financial Condition; No Material Adverse
Change.   (a)  The Borrower has heretofore
furnished to the Lenders its consolidated balance sheet and statements of
income, stockholders equity and cash flows as of and for the fiscal year ended March 3,
2007, reported on by Deloitte & Touche LLP.  Such financial statements present fairly the
financial position and results of operations and cash flows of the Borrower and
its Consolidated Subsidiaries as of such dates and for such periods in
accordance with GAAP.

 

63

 

(b)  Except as disclosed (i) in
the financial statements referred to in paragraph (a) above or the
notes thereto, (ii) in the Borrower’s report or Form 10-K for the
fiscal year ended March 3, 2007 or (iii) on Schedule 3.04, after
giving effect to the Transactions, none of the Borrower or the Subsidiaries
has, as of the Second Restatement Effective Date, any material contingent
liabilities, unusual long-term loan commitments or unrealized losses.

 

(c)  Since March 3,
2007, there has been no material adverse change in the business, assets,
operations, properties, condition (financial or otherwise), or prospects of the
Borrower and the Subsidiaries, taken as a whole.

 

SECTION 3.05.  Properties.  (a)  Each of the Borrower and the
Subsidiaries has good and marketable title to, or valid leasehold interests in,
all its real and personal property material to its business, except (i) for
minor defects in title that do not interfere with its ability to conduct its
business as currently conducted or to utilize such properties for their
intended purposes and (ii) as set forth on Schedule 3.05(a).  All such real and personal property are free
and clear of all Liens, other than Liens permitted by Section 6.02.

 

(b)  Each of the Borrower
and the Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, patents and other intellectual property material to its business,
and the use thereof by the Borrower and the Subsidiaries does not infringe upon
the rights of any other Person, except for any such infringements that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.

 

(c)  Schedule 3.05(c) sets
forth the address of every leased warehouse or distribution center in which
inventory owned by the Borrower or any Subsidiary is located as of the Second
Restatement Effective Date.

 

SECTION 3.06.  Litigation and Environmental Matters.  (a)  Except as set forth on Schedule
3.06(a), there are no actions, suits or proceedings by or before any arbitrator
or Governmental Authority pending against or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or any of the Subsidiaries (i) as
to which there is a reasonable possibility of an adverse determination and
that, if adversely determined, could reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Effect or (ii) that involve
any of the Senior Loan Documents or the Transactions.

 

(b)  Except as set forth
on Schedule 3.06(b) and except with respect to any other matters that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, neither the Borrower nor any of the Subsidiaries (i) has
failed to comply with any Environmental Law or to obtain, maintain or comply
with any permit, license or other approval required under any Environmental
Law, (ii) has become subject to any Environmental Liability, (iii) has
received notice of any claim with respect to any Environmental Liability or (iv) knows
of any basis for any Environmental Liability.

 

64

 

SECTION 3.07.  Compliance with Laws and Agreements.  Except as set forth on Schedule 3.07, each of
the Borrower and the Subsidiaries is in compliance with all laws, regulations
and orders of any Governmental Authority applicable to it or its property
(including, without limitation, the Health Insurance Portability and
Accountability Act of 1996 (“HIPAA”) and all other material healthcare
laws and regulations) and all indentures, agreements and other instruments
binding upon it or its property or assets, except where the failure to be so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.  No Default
has occurred and is continuing.

 

SECTION 3.08.  Investment and Holding Company Status.  Neither the Borrower nor any of the
Subsidiaries is an “investment company” as defined in, or subject to regulation
under, the Investment Company Act of 1940.

 

SECTION 3.09.  Taxes. 
Each of the Borrower and the Subsidiaries has timely filed or caused to
be filed all United States Federal income tax returns and reports and all other
material tax returns and reports required to have been filed and has paid or
caused to be paid all material Taxes due pursuant to such returns or pursuant
to any assessment received by the Borrower or any Subsidiary, except (i) where
the payment of any such Taxes is being contested in good faith by appropriate
proceedings and for which the Borrower or such Subsidiary, as applicable, has
set aside on its books adequate reserves and (ii) as set forth on Schedule
3.09.  The charges, accruals and reserves
on the books of the Borrower and its Consolidated Subsidiaries in respect of
Taxes or charges imposed by a Governmental Authority are, in the opinion of the
Borrower, adequate.

 

SECTION 3.10.  ERISA. 
No ERISA Event has occurred or is reasonably expected to occur that,
when taken together with all other ERISA Events for which liability is
reasonably expected to result, could reasonably be expected to result in
liability exceeding $50,000,000.  The
minimum funding standards of ERISA and the Code with respect to each Plan have
been satisfied.  The present value of all
accumulated benefit obligations under each Plan (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did
not, as of the date of the most recent financial statements reflecting such
amounts, exceed by more than $50,000,000 the fair market value of the assets of
such Plan, and the present value of all accumulated benefit obligations of all
underfunded Plans (based on the assumptions used for purposes of Statement of
Financial Accounting Standards No. 87) did not, as of the date of the most
recent financial statements reflecting such amounts, exceed by more than
$50,000,000 the fair market value of the assets of all such underfunded Plans.

 

SECTION 3.11.  Disclosure; Accuracy of Information.  (a)  As of the Second Restatement
Effective Date, none of the reports, financial statements, certificates or
other information furnished by or on behalf of any Loan Party to any Agent or
any Lender in connection with the negotiation of this Agreement or any other
Senior Loan Document or delivered hereunder or thereunder (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected 

 

65

 

financial information, the Borrower
represents only that such information was prepared in good faith based upon
assumptions believed to be reasonable at the time.

 

(b)  Each Borrowing Base
Certificate that has been or will be delivered to the Collateral Agent, the
Administrative Agent or any Lender is and will be complete and correct in all
material respects.

 

SECTION 3.12.  Subsidiaries.  Schedule 3.12 sets forth the name of,
and the ownership interest of the Borrower in, each Subsidiary and identifies
each Subsidiary that is a Subsidiary Loan Party, in each case as of the Second
Restatement Effective Date.  As of the
Second Restatement Effective Date, each of the Subsidiaries is an “Unrestricted
Subsidiary” as defined in, and for all purposes of, the Indentures.

 

SECTION 3.13.  Insurance.  Schedule 3.13 sets forth a description of all
liability, property and casualty insurance maintained by or on behalf of the
Borrower and the Subsidiaries as of the Second Restatement Effective Date.  As of the Second Restatement Effective Date,
all premiums in respect of such insurance have been paid.  The Borrower and the Subsidiaries have
insurance in such amounts and covering such risks and liabilities as are in
accordance with normal industry practice and as required by the Senior Loan
Documents.  The Borrower reasonably
believes that the insurance maintained by or on behalf of the Borrower and the
Subsidiaries is adequate.

 

SECTION 3.14.  Labor Matters.  Except as set forth on Schedule 3.14, as of
the Second Restatement Effective Date, there are no strikes, lockouts or
slowdowns against the Borrower or any Subsidiary pending or, to the knowledge
of the Borrower, threatened which could reasonably be expected to result in a
Material Adverse Effect.  Except as set
forth on Schedule 3.14, the hours worked by and payments made to employees of
the Borrower and the Subsidiaries have not been in violation in any material
respect of the Fair Labor Standards Act or any other applicable Federal, state,
local or foreign law dealing with such matters. 
Except as set forth on Schedule 3.14, all payments due from the Borrower
or any Subsidiary, or for which any claim may be made against the Borrower or
any Subsidiary, on account of wages and employee health and welfare insurance
and other benefits, have been paid or accrued as a liability on the books of
the Borrower or such Subsidiary.  Except
as set forth on Schedule 3.14, the consummation of the Transactions will not
give rise to any right of termination or right of renegotiation on the part of
any union under any collective bargaining agreement to which the Borrower or
any Subsidiary is bound.

 

SECTION 3.15.  Solvency.  Immediately after the consummation of the
Transactions to occur on the Second Restatement Effective Date (including the
making of each Loan made on the Second Restatement Effective Date and after
giving effect to the application of the proceeds of such Loans), (a) the
fair value of the assets of the Borrower and the other Loan Parties, taken as a
whole, at a fair valuation, will exceed their debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value
of the property of the Borrower and the other Loan Parties, taken as a whole,
will be greater than the amount that will be required to pay the probable
liability of their debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities 

 

66

 

become absolute and matured; (c) the
Borrower and the other Loan Parties taken as a whole, will be able to pay their
debts and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) the Borrower and the
other Loan Parties will not have unreasonably small capital with which to
conduct the business in which they are engaged as such business is now
conducted and is proposed to be conducted following the Second Restatement
Effective Date.

 

SECTION 3.16.  Federal Reserve Regulations.  (a)  Neither the Borrower nor any
Subsidiary is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of buying or carrying Margin
Stock.

 

(b)  No part of the
proceeds of any Loan or any Letter of Credit will be used by the Borrower or
any Subsidiary, whether directly or indirectly, and whether immediately, incidentally
or ultimately, for any purpose that entails a violation of, or that is
inconsistent with, the provisions of Regulation T, U or X of the Board.

 

SECTION 3.17.  Security Interests.  (a)  The Senior Subsidiary Security
Agreement is effective to create in favor of the Collateral Agent, for the
ratable benefit of the Senior Secured Parties, a legal, valid and enforceable
security interest in the Senior Collateral subject to such agreement and, when
financing statements in appropriate form are filed in the offices specified on
Schedule 6 to the Perfection Certificate, such security interest shall
constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the grantors thereunder in the Senior Collateral, to the
extent perfection can be obtained by filing Uniform Commercial Code financing
statements, in each case prior and superior in right to any other Person to the
extent perfection can be obtained by filing Uniform Commercial Code financing
statements, other than with respect to the rights of Persons pursuant to Liens
expressly permitted by Section 6.02.

 

(b)  The Interim
Collateral and Guarantee Agreement is effective to create in favor of the
Collateral Agent, for the ratable benefit of the Interim Secured Parties, a legal,
valid and enforceable security interest in the Interim Collateral subject to
such agreement and (i) when the Interim Collateral constituting
certificated securities (as defined in the Uniform Commercial Code) is
delivered to the Collateral Agent thereunder together with instruments of
transfer duly endorsed in blank, the security interest of the Collateral Agent
therein will constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the pledgors in such Interim Collateral, prior
and superior in right to any other Person subject only to Permitted
Encumbrances and (ii) when financing statements in appropriate form are
filed in the offices specified in the Perfection Certificate delivered on the
Second Restatement Effective Date, the security interest of the Collateral
Agent will constitute a fully perfected Lien on and security in all right,
title and interest of the Grantors (as defined in the Interim Collateral
Agreement) in the remaining Interim Collateral to the extent perfection can be
obtained by filing Uniform Commercial Code financing statements, prior and
superior in right to any other Person subject only to Permitted Encumbrances.

 

67

 

SECTION 3.18.  Use of Proceeds.  The Borrower will use the proceeds of the
Loans and will request the issuance of Letters of Credit only for the purposes
specified in the preamble to this Agreement and set forth in Section 5.10.

 

ARTICLE IV

 

Conditions

 

SECTION 4.01.  2008 Restatement Effective Date.  Without affecting the rights of the Borrower
or any Subsidiary under the Original Agreement at all times prior to the 2008
Restatement Effective Date, the amendment and restatement in the form hereof of
the Original Agreement and the obligations of the Lenders to make Loans and
acquire participations in Letters of Credit and Swingline Loans and of the
Issuing Banks to issue Letters of Credit hereunder shall not become effective
until the date on which the conditions set forth in Sections 1.2(b) and
1.3 of the 2008 Amendment and Restatement Agreement shall have been satisfied.

 

It is understood and agreed
that no term of the amendment and restatement contemplated hereby shall be
effective until the 2008 Restatement Effective Date occurs, and that the
Original Agreement shall continue in full force and effect without regard to
the amendment and restatement contemplated hereby until the 2008 Restatement
Effective Date.

 

SECTION 4.02.  Each Credit Event.  The obligation of each Revolving Lender to
make a Revolving Loan on the occasion of any Revolving Borrowing after the 2008
Restatement Effective Date, and of each Issuing Bank to issue, amend, renew or
extend any Letter of Credit after the 2008 Restatement Effective Date, is
subject to receipt of the request therefore in accordance herewith and to the
satisfaction of the following conditions (each Borrowing and each issuance,
amendment, renewal or extension of a Letter of Credit (for purposes of this
Section, an “issuance”) shall be deemed to constitute a representation and
warranty by Borrower on the date thereof as to the matters specified in
paragraphs (a), (b) and (c) of this Section):

 

(a)  the representations and warranties of the Loan Parties
contained in each Senior Loan Document are true and correct in all material
respects on and as of the date of such Borrowing or issuance, before and after
giving effect to such Borrowing or issuance and to the application of the
proceeds therefrom, as though made on and as of such date (except to the extent
any such representation or warranty expressly relates to an earlier date, in
which case such representation and warranty shall have been true and correct in
all material respects as of such earlier date);

 

(b)  no event has occurred and is continuing, or would result from
such Borrowing or issuance or from the application of the proceeds therefrom,
that constitutes a Default or an Event of Default and such Borrowing or
issuance would not result in a violation of the amount of secured Indebtedness
permitted under the Second Priority Debt Documents; and

 

68

 

(c)  after giving effect to such Borrowing or issuance the
Borrowing Base Amount shall be equal to or greater than the sum of (i) the
total Revolving Exposures, (ii) the outstanding Tranche 1 Term Loans, (iii) if
prior to the Borrowing Base Date, zero and, if on or after the Borrowing Base
Date, the outstanding Tranche 2 Term Loans and (iv) the outstanding
Tranche 3 Term Loans.

 

SECTION 4.03.  Borrowing Base Date.  The “Borrowing Base Date” will occur
on the first date on which the following conditions have been satisfied:

 

(a)  The Financial
Statement Delivery Date shall have occurred.

 

(b)  The Administrative
Agent shall have received a favorable legal opinion of each of (i) Skadden,
Arps, Slate, Meagher & Flom LLP, counsel to the Borrower and (ii) Robert
Sari, General Counsel of the Borrower, in each case addressed to the
Administrative Agent and the Lenders and dated as of such date, covering such matters
relating to the Loan Parties, this Agreement, the other Senior Loan Documents
and the Senior Collateral as the Administrative Agent may reasonably request,
and otherwise reasonably satisfactory to the Administrative Agent.  The Borrower hereby requests such counsel to
deliver such opinions.

 

(c)  The Collateral and
Guarantee Requirement shall have been satisfied in respect of Holdings and its
subsidiaries and the Administrative Agent shall have received (i) a
completed Perfection Certificate dated as of such date and signed by an
executive officer or Financial Officer together with all attachments
contemplated thereby, including the results of a search of the Uniform
Commercial Code (or equivalent) filings made with respect to Holdings and its
subsidiaries in the jurisdictions contemplated by the Perfection Certificate
and copies of the financing statements (or similar documents) disclosed by such
search and (ii) evidence reasonably satisfactory to the Administrative
Agent that the Liens disclosed by such search are permitted by Section 6.02
or have been released.

 

(d)  Each Subsidiary Loan
Party shall have entered into a written instrument reasonably satisfactory to
the Administrative Agent pursuant to which it confirms that the Senior
Collateral Documents to which it is party will continue to apply in respect of
this Agreement and the Senior Obligations (as such term is defined in respect
of the period after the Borrowing Base Date).

 

(e)  After the
satisfaction of the Collateral and Guarantee Requirement in respect of Holdings
and its subsidiaries on the Borrowing Base Date, the Borrowing Base Amount on
such date shall be no less than the sum of (i) the total Revolving
Exposures on such date, (ii) the outstanding Tranche 1 Term Loans on such
date and (iii) the outstanding Tranche 2 Term Loans on such date.  The Administrative Agent shall have received
a completed Borrowing Base Certificate dated as of such date and signed by a
Financial Officer.

 

69

 

(f)  To the extent
invoiced, the Administrative Agent shall have received payment or reimbursement
of its reasonable out-of-pocket expenses, including the reasonable fees,
charges and disbursements of counsel for the Administrative Agent.

 

ARTICLE V

 

Affirmative Covenants

 

Until the Commitments have
expired or been terminated and the principal of and interest on each Loan and
all fees payable hereunder shall have been paid in full and all Letters of
Credit shall have expired, terminated or been cash collateralized and all LC
Disbursements shall have been reimbursed, the Borrower covenants and agrees
with the Lenders that:

 

SECTION 5.01.  Financial Statements and Other
Information.  The Borrower will
furnish to the Administrative Agent and each Lender:

 

(a)  as soon as available and in any event within 105 days
(or such earlier date that is 10 days after the then-current filing
deadline for the Borrower’s Annual Report on Form 10-K) after the end of
each fiscal year of the Borrower, its audited consolidated balance sheet and
related statements of income and cash flows as of the end of and for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all reported on by Deloitte & Touche LLP or another
registered independent public accounting firm of recognized national standing
(without a “going concern” or like qualification or exception and without any
material qualification or exception as to the scope of such audit) to the
effect that such consolidated financial statements present fairly in all
material respects the financial position, results of operations and cash flows
of the Borrower and its Consolidated Subsidiaries on a consolidated basis in
accordance with GAAP;

 

(b)  as soon as available and in any event within 50 days (or
such earlier date that is five days after the then-current filing deadline for
the Borrower’s Quarterly Report on Form 10-Q) after the end of each of the
first three fiscal quarters of each fiscal year of the Borrower, its
consolidated balance sheet as of the end of such fiscal quarter and related
statements of income for such fiscal quarter and of income and cash flows for
the then elapsed portion of such fiscal year, setting forth in each case in
comparative form the figures for the corresponding period or periods of (or, in
the case of the balance sheet, as of the end of) the previous fiscal year;

 

(c)  concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer (i) certifying
as to whether a Default has occurred and, if a Default has occurred, specifying
the details thereof and any action taken or proposed to be taken with respect
thereto, (ii) setting forth reasonably detailed calculations demonstrating
(x) compliance with Section 6.08(c) and (y) the Borrower’s
ratio under Section 6.12, (iii) stating 

 

70

 

whether any
change in GAAP or in the application thereof has occurred since the date of the
Borrower’s audited financial statements referred to in Section 3.04 and,
if any such change has occurred, specifying the effect of such change on the
financial statements accompanying such certificate, (iv) identifying any
Subsidiary formed or acquired since the end of the fiscal quarter immediately
preceding the most recent fiscal quarter covered by such financial statements, (v) identifying
any change in a Subsidiary Loan Party’s (and, prior to the Borrowing Base Date,
Holding’s and any of its subsidiaries’) name, form of organization or
jurisdiction of organization, including as a result of any merger transaction,
since the end of the fiscal quarter immediately preceding the most recent
fiscal quarter covered by such financial statements, (vi) setting forth
the aggregate amount of Optional Debt Repurchases made by the Borrower during
the most recent fiscal quarter covered by such financial statements,
identifying the Indebtedness repurchased, redeemed, retired or defeased and
specifying the provisions of Section 6.08(b) or (c) pursuant to
which each such Optional Debt Repurchase was effected and quantifying the
amounts effected under each such provision, (vii) setting forth the amount
and type of Indebtedness issued or incurred and Securitizations (or increases
in the amounts thereof) and Factoring Transactions consummated during the most
recent fiscal quarter covered by such financial statements, (viii) identifying,
with respect to all Indebtedness of the Borrower and the Subsidiaries
outstanding on the date of the most recent balance sheet included in such
financial statements, the clause of Section 6.01(a) pursuant to which
such Indebtedness is then permitted to be outstanding, (ix) setting forth
the amount of Restricted Payments made during the most recent fiscal quarter
covered by such financial statements and the provision of Section 6.08(a) pursuant
to which such Restricted Payments were made, and (x) setting forth the
aggregate sale price of Eligible Script Lists sold since the most recent date
on which the Eligible Script Lists Value was provided to the Lenders in the
event aggregate sale price for all Eligible Script Lists sold since such date
of determination exceeds 5% of the most recently determined Eligible Script
Lists Value;

 

(d)  concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on
such financial statements (i) stating whether they obtained knowledge
during the course of their examination of such financial statements of any
Default and (ii) confirming the calculations set forth in the officer’s
certificate delivered simultaneously therewith pursuant to clause (c)(ii) above
(which certificate may be limited to the extent required by accounting rules or
guidelines);

 

(e)  within three Business Days after the end of each fiscal month
of the Borrower, a certificate of a Financial Officer setting forth in
reasonable detail a description of each disposition of assets not in the
ordinary course of business for which the book value or fair market value of the
assets of the Borrower or the Subsidiaries disposed or the consideration
received therefor was greater than $10,000,000;

 

71

 

(f)  within 14 Business Days after the end of each fiscal month of
the Borrower, a Borrowing Base Certificate showing the Borrowing Base Amount as
of the close of business on the last day of such fiscal month, certified as
complete and correct by a Financial Officer; provided that a Borrowing
Base Certificate shall be delivered by the Borrower to the Administrative Agent
and each Lender within four Business Days after the end of a fiscal week of the
Borrower if at any time during such fiscal week the Revolver Availability is
less than or equal to $200,000,000 (with the amount with respect to Eligible
Inventory stored at distribution centers included in the Borrowing Base Amount
shown on such Borrowing Base Certificate delivered under this proviso being the
amount computed as of the close of business on the last day of the Borrower’s
most recent fiscal month for which such amount is available, which computation
shall be completed within 14 Business Days after the end of each fiscal month
of the Borrower);

 

(g)  no later than 60 days following the end of each fiscal
year of the Borrower (or, in the reasonable discretion of the Administrative
Agent, no later than 30 days thereafter), forecasts for the Borrower and
its Consolidated Subsidiaries of (i) quarterly consolidated balance sheet
data and related consolidated statements of income and cash flows for each
quarter in the next succeeding fiscal year and (ii) consolidated balance
sheet data and related consolidated statements of income and cash flows for
each of the five fiscal years immediately following such fiscal year (but
excluding any fiscal year ending after 2013);

 

(h)  promptly after the same become publicly available, copies of
all periodic and other reports, proxy statements and other materials filed by
the Borrower or any Subsidiary with the SEC, or with any national securities exchange,
or distributed by the Borrower to its shareholders generally, as the case may
be; and

 

(i)  promptly following any request therefor, such other
information regarding the financial condition, business or identity of the
Borrower or any Subsidiary, or compliance with the terms of any Senior Loan
Document, as any Agent, at the request of any Lender, may reasonably request,
including any information to be provided pursuant to Section 9.17.

 

Information required to be
delivered pursuant to clauses (a), (b) and (h) shall be deemed to
have been delivered on the date on which the Borrower provides notice to the
Lenders that such information has been posted on the Borrower’s website on the
Internet at www.riteaid.com, at www.sec.gov/edgar/searchedgar/webusers.htm or
at another website identified in such notice and accessible by the Lenders
without charge; provided
that (i) such notice may be included in a certificate delivered pursuant
to clause (c) and (ii) the Borrower shall deliver paper copies
of the information referred to in clauses (a), (b) and (h) to
any Lender which requests such delivery.

 

72

 

SECTION 5.02.  Notices of Material Events.  The Borrower will furnish to the
Administrative Agent and each Lender prompt written notice after any officer of
the Borrower obtains knowledge of any of the following:

 

(a)  the occurrence of any Default;

 

(b)  the filing or commencement of any action, suit or proceeding
by or before any arbitrator or Governmental Authority against or affecting the
Borrower or any Affiliate thereof that could reasonably be expected to result
in a Material Adverse Effect;

 

(c)  the occurrence of any ERISA Event;

 

(d)  any Lien (other than security interests created under any
Senior Loan Document or Second Priority Debt Document or Permitted
Encumbrances) on any material portion of the Senior Collateral (or, prior to
the Borrowing Base Date, the Interim Collateral);

 

(e)  the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the security interests created by
the Senior Loan Documents or on the aggregate value of the Senior Collateral
(or, prior to the Borrowing Base Date, the Interim Collateral); and

 

(f)  any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.

 

Each notice delivered under
this Section shall be accompanied by a statement of a Financial Officer or
other executive officer of the Borrower setting forth the details of the event
or development requiring such notice and any action taken or proposed to be
taken with respect thereto.

 

SECTION 5.03.  Information Regarding Collateral.  (a)  The Borrower will furnish to the
Administrative Agent prompt written notice of any change (i) in any Loan
Party’s corporate name, (ii) in the location of any Loan Party’s
jurisdiction of incorporation or organization, (iii) in any Loan Party’s
form of organization or (iv) in any Loan Party’s Federal Taxpayer
Identification Number or other identification number assigned by such Loan
Party’s jurisdiction of incorporation or formation.  The Borrower agrees not to effect or permit
any change referred to in the preceding sentence unless all filings have been
made under the Uniform Commercial Code or otherwise that are required in order
for the Administrative Agent to continue at all times following such change to
have a valid, legal and perfected security interest in all the Senior
Collateral (and, prior to the Borrowing Base Date, the Interim Collateral).  The Borrower also agrees promptly to notify
the Agents if any material portion of the Senior Collateral is damaged or
destroyed.

 

(b)  Each year, at the
time of delivery of annual financial statements with respect to the preceding
fiscal year pursuant to clause (a) of Section 5.01, the Borrower
shall deliver to the Agents a certificate of the chief legal officer of the
Borrower 

 

73

 

(i) setting forth the information
required pursuant to Section 1 of the Perfection Certificate or confirming
that there has been no change in such information since the date of the
Perfection Certificate delivered on the Second Restatement Effective Date or
the date of the most recent certificate delivered pursuant to this Section and
(ii) certifying that all Uniform Commercial Code financing statements
(including fixture filings, as applicable) or other appropriate filings,
recordings or registrations, including all refilings, rerecordings and
reregistrations, containing a description of the Senior Collateral have been
filed of record in each governmental, municipal or other appropriate office in
each jurisdiction identified pursuant to clause (i) above to the extent
necessary to protect and perfect the security interests under the Senior
Subsidiary Security Agreement for a period of not less than 18 months after the
date of such certificate (except as noted therein with respect to any
continuation statements to be filed within such period).

 

SECTION 5.04.  Existence; Conduct of Business.  Except as otherwise permitted by this
Agreement, the Borrower will continue, and will cause each Subsidiary to
continue, to engage in business of the same general type as now conducted by
the Borrower and the Subsidiaries.  The
Borrower will, and will cause each of the Subsidiaries to, do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence and the rights, licenses, permits, privileges, franchises,
patents, copyrights, trademarks and trade names, in each case material to the
conduct of its business; provided that the foregoing shall not prohibit
any merger, consolidation, liquidation, dissolution or sale of assets permitted
under Section 6.03.

 

SECTION 5.05.  Payment of Obligations.  The Borrower will, and will cause each of the
Subsidiaries to, pay its Indebtedness and other obligations, including Tax
liabilities, which, if unpaid, could result in a material Lien on any of their
properties or assets, before the same shall become delinquent or in default,
except where (a) the validity or amount thereof is being contested in good
faith by appropriate proceedings, (b) the Borrower or such Subsidiary has
set aside on its books adequate reserves with respect thereto in accordance
with GAAP and (c) the failure to make payment pending such contest could
not reasonably be expected to result in a Material Adverse Effect.

 

SECTION 5.06.  Maintenance of Properties.  The Borrower will, and will cause each of the
Subsidiaries to, keep and maintain all property material to the conduct of its
business in good working order and condition, ordinary wear and tear excepted.

 

SECTION 5.07.  Insurance.  (a)  The Borrower will, and will cause
each of the Subsidiaries to, maintain (either in the name of the Borrower or in
such Subsidiary’s own name), with financially sound and reputable insurance
companies insurance in such amounts (with no greater risk retention) and
against such risks as are customarily maintained by companies of established
repute engaged in the same or similar businesses operating in the same or
similar locations.  The Borrower will
furnish to the Lenders, upon request of the Agents, information in reasonable
detail as to the insurance so maintained.

 

(b)  The Borrower will,
and will cause each of the Subsidiaries to, maintain such insurance in a
coverage amount of not less than 90% of the coverage 

 

74

 

amount as of the Original Restatement
Effective Date, with deductibles, risks covered and other provisions (other
than the amount of premiums) not materially less favorable to the Borrower and
the Subsidiaries as of the Original Restatement Effective Date.

 

(c)  The Borrower will,
and will cause each of the Subsidiary Loan Parties (and, prior to or on the
Borrowing Base Date, Holdings and its subsidiaries) to, (i) cause all such
policies to be endorsed or otherwise amended to include a “standard” or “New
York” lender’s loss payable endorsement, in form and substance satisfactory to
the Agents, which endorsement shall provide that, from and after the Original
Restatement Effective Date if the insurance carrier shall have received written
notice from the Administrative Agent of the occurrence of an Event of Default,
the insurance carrier shall pay all proceeds otherwise payable to the Borrower
and any other Loan Party under such policies directly to the Collateral Agent
for application pursuant to the Collateral Trust and Intercreditor Agreement; (ii) cause
all such policies to provide that neither the Borrower, the Administrative
Agent, either Collateral Agent nor any other party shall be a coinsurer
thereunder and to contain a “Replacement Cost Endorsement”, without any
deduction for depreciation, and such other provisions as the Agents may
reasonably require from time to time to protect their interests; (iii) deliver
broker’s certificates to the Collateral Agent; (iv) cause each such policy
to provide that it shall not be canceled or not renewed by reason of nonpayment
of premium upon not less than 10 days’ prior written notice thereof by the
insurer to the Administrative Agent (giving the Administrative Agent the right
to cure defaults in the payment of premiums) or for any other reason upon not
less than 30 days’ prior written notice thereof by the insurer to the
Administrative Agent; and (v) deliver to the Administrative Agent, before
the cancellation or nonrenewal of any such policy of insurance, a copy of a
renewal or replacement policy (or other evidence of renewal of a policy
previously delivered to the Administrative Agent), together with evidence
reasonably satisfactory to the Agents of payment of the premium therefor.

 

(d)  In
connection with the covenants set forth in this Section, it is agreed that:

 

(i) none of the Agents, the Lenders, or their agents or employees
shall be liable for any loss or damage insured by the insurance policies
required to be maintained under this Section, and (A) the Borrower and
each Subsidiary Loan Party (and, prior to the Borrowing Base Date, Holdings and
each of its subsidiaries) shall look solely to their insurance companies or any
other parties other than the aforesaid parties for the recovery of such loss or
damage and (B) such insurance companies shall have no rights of
subrogation against the Agents, the Lenders or their agents or employees.  If, however, the insurance policies do not
provide waiver of subrogation rights against such parties, as required above,
then the Borrower hereby agrees, to the extent permitted by law, to waive its
right of recovery, if any, against the Agents, the Lenders and their agents and
employees; and

 

(ii) the designation of any form, type or amount of insurance
coverage by the Agents or the Required Lenders under this Section shall in
no event be 

 

75

 

deemed a
representation, warranty or advice by the Agents or the Lenders that such
insurance is adequate for the purposes of the business of the Borrower and the
Subsidiaries or the protection of their properties.

 

(e)  The Borrower will,
and will cause each of the Subsidiaries to, permit any representatives that are
designated by a Collateral Agent to inspect the insurance policies maintained
by or on behalf of the Borrower and the Subsidiaries and inspect books and
records related thereto and any properties covered thereby.  The Borrower shall pay the reasonable fees
and expenses of any representatives retained by a Collateral Agent to conduct
any such inspection.

 

SECTION 5.08.  Books and Records; Inspection and Audit
Rights; Collateral and Borrowing Base Reviews.  (a)  The Borrower will, and will cause each of the
Subsidiaries to, keep proper books of record and account in which full, true
and correct entries are made of all dealings and transactions in relation to
its business and activities.  The
Borrower will, and will cause each of the Subsidiaries to, permit any
representatives designated by any Lender (at such Lender’s expense, unless a
Default has occurred and is continuing, in which case at the Borrower’s
expense), and after such Lender has consulted the Administrative Agent with
respect thereto, to visit and inspect its properties, to examine and make
extracts from its books and records, and to discuss its affairs, finances and
condition with its officers and independent accountants, all at such reasonable
times and as often as reasonably requested.

 

(b)  The Borrower will,
and will cause each of the Subsidiaries to, permit any representatives
designated by any Collateral Agent (including any consultants, field examiners,
accountants, lawyers and appraisers retained by such Collateral Agent) to
conduct (i) a field examination of the Senior Collateral at or about the
end of each fiscal quarter of the Borrower, (ii) an appraisal of the
Borrower’s computation of the assets included in the Borrowing Base Amount and
the Estimated Borrowing Base at or about the end of each fiscal year of the
Borrower, (iii) an appraisal of the Eligible Script Lists at or about the
end of the fiscal quarter ending August 31 of each fiscal year of the Borrower
and (iv) other evaluations and appraisals of the Borrower’s computation of
the Borrowing Base Amount and the Estimated Borrowing Base Amount and the
assets included in therein, all at such reasonable times and as often as
reasonably requested.  The Borrower shall
pay the reasonable fees and expenses of any representatives retained by any
Collateral Agent to conduct any such evaluation or appraisal.  The Administrative Agent shall promptly
deliver to the Lenders copies of all such appraisals and other information
provided to the Borrower in connection with such evaluations and appraisals.

 

(c)  The Borrower will,
and will cause each of the Subsidiaries to, in connection with any evaluation
and appraisal relating to the computation of the Borrowing Base Amount or the
Estimated Borrowing Base Amount, maintain such additional reserves (for
purposes of computing the Borrowing Base Amount or the Estimated Borrowing Base
Amount) in respect of Eligible Accounts Receivable and Eligible Inventory and
make such other adjustments to its parameters for including Eligible Accounts
Receivable, Eligible Inventory and Eligible Script Lists in the Borrowing Base
Amount and the Estimated Borrowing Base Amount as the Collateral 

 

76

 

Agent shall require based upon the results of
such evaluation and appraisal in its reasonable judgment to reflect Borrowing
Base Factors.

 

SECTION 5.09.  Compliance with Laws.  The Borrower will, and will cause each of the
Subsidiaries to, comply in all material respects with all laws, rules,
regulations and orders of any Governmental Authority applicable to it or its
property, including all Environmental Laws, HIPAA and all other material
healthcare laws and regulations, except where the necessity of compliance
therewith is contested in good faith by appropriate proceedings or to the
extent that any failures so to comply, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.

 

SECTION 5.10.  Use of Proceeds and Letters of Credit.  (a)  The proceeds of the Tranche 3 Term
Loans will be used by the Borrower for the purposes set forth in the preamble
hereto.

 

(b)  The proceeds of the
Revolving Loans, Swingline Loans and loans under the Incremental Facilities made
on or after the Second Restatement Effective Date will be used by the Borrower
as set forth in the preamble and for general corporate purposes, including:

 

(i) payment of part of the consideration due to the Seller in
connection with the Acquisition;

 

(ii) payment of fees and expenses (including any premiums and
amendment fees) incurred in connection with the Transactions;

 

(iii) loans or other transfers to Rite Aid Hdqtrs. Corp. for
purposes of financing inventory purchases pursuant to the Intercompany
Inventory Purchase Agreement and advancing funds to Subsidiary Loan Parties for
their general corporate purposes, including working capital, Consolidated
Capital Expenditures and Business Acquisitions permitted pursuant to Section 6.04;

 

(iv) transfers to an operating account for the payment of
operating expenses (including rent, utilities, taxes, wages, repair and similar
expenses) of, and intercompany Investments permitted under Section 6.04
in, the Borrower or any Subsidiary Loan Party;

 

(v) payment by the Borrower of principal, interest, fees and
expenses with respect to its Indebtedness when due (including associated costs,
fees and expenses) and payment of the Borrower’s taxes, administrative,
operating and other expenses;

 

(vi) dividends permitted to be made in respect of the Equity
Interests listed on Schedule 6.08(a) or described in Section 6.08(a);

 

(vii) repurchase shares of the Borrower’s Preferred Stock pursuant
to Section 6.08(a);

 

77

 

(viii) payment of principal, interest, fees and expenses with
respect to Third Party Interests in accordance with the terms thereof; and

 

(ix) the financing of Optional Debt Repurchases, permitted capital
expenditures, the repurchase of the Borrower’s and/or its Subsidiaries’
(including Rite Aid Lease Management Company’s) Preferred Stock and permitted
Restricted Payments.

 

(c)  Letters of Credit
will be used solely to support payment obligations of the Borrower and the
Subsidiaries incurred in the ordinary course of business.

 

(d)  No proceeds of Loans
will be used to prepay commercial paper prior to the maturity thereof and no
such proceeds will be used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of buying or carrying any Margin Stock.  The Borrower will ensure that no such use of
Loan proceeds and no issuance of Letters of Credit will entail any violation of
Regulation T, U or X of the Board.

 

SECTION 5.11.  Additional Subsidiaries.  If any additional wholly-owned Domestic Subsidiary
is formed or acquired after the Second Restatement Effective Date, and (i) if
such Subsidiary is required to become a Subsidiary Loan Party hereunder, the
Borrower will, within three Business Days after such Subsidiary is formed or
acquired, notify the Administrative Agent and the Lenders thereof and cause the
Collateral and Guarantee Requirement to be satisfied with respect to such
Subsidiary, including each Securitization Vehicle which is a Domestic
Subsidiary, but excluding any Subsidiary that engages solely in the pharmacy
benefits management business, and (ii) if such Subsidiary is a subsidiary
of Holdings and such Subsidiary is formed or acquired prior to the Borrowing
Base Date, the Borrower will, within three Business Days after such Subsidiary
is formed or acquired, notify the Administrative Agent and the Lenders thereof
and cause the Interim Collateral and Guarantee Requirement to be satisfied with
respect to such Subsidiary, including each Securitization Vehicle which is a
Domestic Subsidiary, but excluding any Subsidiary that engages solely in the
pharmacy benefits management business. 
Notwithstanding any other provision of this Agreement, (i) no
Domestic Subsidiary listed on Schedule 5.11 shall be required to become a
Subsidiary Loan Party (it being understood and agreed that Schedule 5.11 shall
not include any Securitization Vehicle that is a Domestic Subsidiary), (ii) no
Domestic Subsidiary shall be required to become a Subsidiary Loan Party unless
and until such time as such Subsidiary has assets in excess of $1,000,000 or
acquires assets in excess of $1,000,000 or has revenue in excess of $500,000
per annum and (iii) neither Holdings nor any of its subsidiaries shall be
required to become a Subsidiary Loan Party until the Borrowing Base Date.

 

SECTION 5.12.  Further Assurances.  (a)  The Borrower will, and will cause
each Subsidiary Loan Party to, execute any and all further documents, financing
statements, agreements and instruments, and take all such further actions
(including the filing and recording of financing statements, fixture filings,
deeds of trust and other documents), which may be required under any applicable
law, or which any Collateral Agent or the Required Lenders may reasonably
request, to cause the Collateral and 

 

78

 

Guarantee Requirement to be and remain
satisfied, all at the expense of the Loan Parties.  The Borrower also agrees to provide to the
Collateral Agent, from time to time upon request, evidence reasonably satisfactory
to the Collateral Agent as to the perfection and priority of the Liens created
or intended to be created by the Senior Collateral Documents.

 

(b)  The Borrower will
cause Holdings and each of its domestic subsidiaries to execute any and all
further documents, agreements and instruments, and take all such further
actions, which may be required under any applicable law, or which any
Collateral Agent or the Required Lenders may reasonably request, to cause the
Interim Collateral and Guarantee Requirement to be and remain satisfied at all
times prior to the Borrowing Base Date, all at the expense of the
Borrower.  The Borrower also agrees to
provide to the Collateral Agent, from time to time upon request, evidence
reasonably satisfactory to the Collateral Agent as to the perfection and
priority of the Liens created or intended to be created by the Interim
Collateral Documents.

 

SECTION 5.13.  Subsidiaries.  The Borrower will cause all of the
Subsidiaries that own Eligible Accounts Receivable, Eligible Inventory or
Eligible Script Lists (and, prior to the Borrowing Base Date, Holdings and its
subsidiaries) to be and at all times remain “Unrestricted Subsidiaries” as
defined in, and for all purposes of, each of the Effective Date Indentures and
will deliver such documents to the trustees under each such Effective Date
Indenture and take such actions thereunder as may be necessary to effect the
foregoing.

 

SECTION 5.14.  Intercompany Transfers.  The Borrower shall maintain accounting
systems capable of tracing intercompany transfers of funds and other assets.

 

SECTION 5.15.  Inventory Purchasing.  (a)  The Borrower shall, and shall cause
each Subsidiary party to the Intercompany Inventory Purchase Agreement to, at
all times maintain in all material respects the vendor inventory purchasing
system and the intercompany inventory purchasing system in accordance with the
terms of the Intercompany Inventory Purchase Agreement.  The Borrower shall cause each Subsidiary
which owns or acquires any Senior Collateral consisting of inventory to be
party to the Intercompany Inventory Purchase Agreement.  Notwithstanding the foregoing, the Borrower
shall only be required to cause Holdings and its subsidiaries to comply with
the foregoing as soon as reasonably practicable after the Second Restatement
Effective Date (but in any event by the Borrowing Base Date).

 

(b)  The Borrower shall
not permit any Operating Subsidiary to purchase any Inventory from any Direct
Delivery Vendor other than (i) the acquisition of inventory from McKesson
Corporation (or any Persons that replace McKesson Corporation, in whole or in
part, and sell or otherwise provide inventory substantially similar to
inventory sold or otherwise provided by McKesson Corporation) consistent with
past practice and (ii) food-stuffs, beverages, periodicals, greeting cards
and similar items which are either paid for in cash substantially concurrently
with the time of delivery or otherwise consistent with past practice.

 

79

 

SECTION 5.16.  Cash Management System.  (a)  The Borrower will cause each
Subsidiary Loan Party to at all times maintain a Cash Management System that
complies with Schedule 3 of the Senior Subsidiary Security Agreement.  The Borrower will cause each Subsidiary Loan
Party to comply with each obligation thereof under the Cash Management
System.  The Borrower will cause each
Subsidiary Loan Party to comply with each of its obligations under the Cash
Management System, and shall cause each Subsidiary Loan Party to use its best
efforts to cause any applicable third party to effectuate the Cash Management
System.  Notwithstanding the foregoing,
the Borrower shall only be required to cause Holdings and its subsidiaries to comply
with the foregoing as soon as reasonably practicable after the Second
Restatement Effective Date (but in any event by the Borrowing Base Date).

 

(b)  Each party hereto
authorizes the Administrative Agent and the Collateral Agent to (i) permit
the creation by the Grantors of accounts that receive payments in respect of
the Securitization Assets and/or Factoring Assets (but not other payments) and (ii) release
the security interest of the Collateral Agent for the ratable benefit of the
Senior Secured Parties in the Lockbox Account, the Governmental Lockbox Account
and/or any accounts created pursuant to clause (i) of this paragraph from
the Cash Management System and transfer control of the Lockbox Account, the
Governmental Lockbox Account and/or any accounts created pursuant to clause (i) of
this paragraph to (A) any Person in connection with a Factoring
Transaction permitted by this Agreement for so long as a Factoring Transaction
is ongoing or (B) any Person for the benefit of holders of Third Party
Interests in respect of a Securitization permitted by this Agreement for as
long as any Third Party Interests are outstanding.

 

SECTION 5.17.  Termination of Factoring Transactions.  If an Event of Default has occurred and the
Collateral Agent has elected to exercise any remedies under the Senior Collateral
Documents as a result thereof, the Borrower shall, and shall cause each of its
Subsidiaries to, terminate all existing Factoring Transactions and cease to
engage in any further Factoring Transactions; provided, however,
that neither the Borrower nor any such Subsidiary shall be required hereby to
repurchase any Factoring Assets previously sold, transferred or otherwise
conveyed pursuant to any such Factoring Transaction.

 

ARTICLE VI

 

Negative Covenants

 

Until the Commitments have
expired or terminated and the principal of and interest on each Loan and all
fees payable hereunder have been paid in full and all Letters of Credit have
expired, terminated or been cash collateralized and all LC Disbursements shall
have been reimbursed, the Borrower covenants and agrees with the Lenders that:

 

SECTION 6.01.  Indebtedness; Certain Equity Securities.  (a)  The Borrower will not, and will not
permit any Subsidiary to, create, incur, assume or permit 

 

80

 

to exist any Indebtedness, any Attributable
Debt in respect of any Sale and Leaseback Transaction or any Third Party
Interests except:

 

(i) Indebtedness under the Senior Loan Documents;

 

(ii) unsecured Indebtedness of the Borrower that is not Guaranteed
by any Subsidiary, that does not mature or require scheduled payments of
principal prior to the date that is three months after the Tranche 2/Tranche 3
Term Maturity Date, and that has covenants and events of default which are
determined in good faith by the senior management of the Borrower to be on
market terms, and Refinancing Indebtedness issued in respect of such
Indebtedness;

 

(iii) Indebtedness of the Borrower and the Subsidiaries in respect
of intercompany Investments permitted under Section 6.04; provided
that such Indebtedness is subordinated to the Senior Obligations (and, prior to
the Borrowing Base Date, the Interim Obligations) pursuant to terms
substantially the same as those forth on Annex 2 hereto;

 

(iv) Existing Non-Guaranteed Indebtedness;

 

(v) Existing Second Priority Debt;

 

(vi) Existing Guaranteed Unsecured Indebtedness;

 

(vii) Permitted Second Priority Debt incurred after the Second
Restatement Effective Date in an aggregate principal amount, together with the
aggregate principal amount of Indebtedness incurred pursuant to clause (viii) of
this Section 6.01(a), not in excess of $1,500,000,000 at any time
outstanding; provided that the aggregate principal amount of Permitted
Second Priority Debt incurred under this clause which matures or requires
scheduled payments of principal prior to the date that is three months after
the Tranche 2/Tranche 3 Term Maturity Date, together with the aggregate
principal amount of any Permitted Unsecured Indebtedness incurred under clause (viii) of
this Section 6.01(a) which matures or requires schedule payments of
principal prior to the date that is three months after the Tranche 2/Tranche 3
Term Maturity Date, shall not exceed $750,000,000 at any time outstanding;

 

(viii)  Permitted Unsecured Indebtedness incurred after the Second
Restatement Effective Date in an aggregate principal amount, together with the
aggregate principal amount of Indebtedness incurred pursuant to clause (vii) of
this Section 6.01(a), not in excess of $1,500,000,000 at any time
outstanding; provided that the aggregate principal amount of Permitted
Unsecured Indebtedness incurred under this clause which matures or requires
scheduled payments of principal prior to the date that is three months after
the Tranche 2/Tranche 3 Term Maturity Date, together with the aggregate
principal amount of any Permitted Second Priority Debt incurred under clause (vii) of
this Section 6.01(a) which matures or requires schedule payments of
principal prior to the date 

 

81

 

that is three
months after the Tranche 2/Tranche 3 Term Maturity Date, shall not exceed
$750,000,000 at any time outstanding;

 

(ix) Indebtedness secured by Liens on real property or
Attributable Debt incurred in connection with Sale and Leaseback Transactions
involving real property; provided that any such Indebtedness, or any
such lease entered into in connection with the Sale and Leaseback Transaction
giving rise to such Attributable Debt, shall have a maturity date or
termination date, as the case may be, after the date that is three months after
the Tranche 2/Tranche 3 Term Maturity Date; and provided  further
that the aggregate principal amount of Indebtedness and Attributable Debt
incurred pursuant to this clause (ix) shall not exceed $600,000,000
at any time outstanding;

 

(x) Refinancing Indebtedness issued in respect of Indebtedness or
Attributable Debt permitted under clauses (iv), (v), (vi), (xv) and (xviii);

 

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

 

(xii) Indebtedness for borrowed money and Capital Lease Obligations
existing on the Second Restatement Effective Date (other than Second Priority
Debt and Indebtedness referred to in clauses (ii), (iv), (v) and (vi) above)
and set forth on Schedule 6.01(a)(xii), but not any extensions,
renewals, refinancings or replacements of such Indebtedness;

 

(xiii) Capital Lease Obligations with respect to leases existing on the
Second Restatement Effective Date that were accounted for as operating leases
on the Original Restatement Effective Date and thereafter reclassified as
Capital Lease Obligations;

 

(xiv) Indebtedness (including Capital Lease Obligations) and
Attributable Debt in respect of Sale and Leaseback Transactions in respect of
equipment financing or leasing in the ordinary course of business of the
Borrower and the Subsidiaries consistent with past practices;

 

(xv) purchase money Indebtedness (including Capital Lease Obligations)
and Attributable Debt in respect of Sale and Leaseback Transactions in each
case incurred to finance the acquisition, development, construction or opening
of any Store after the Second Restatement Effective Date; provided that
such Indebtedness or Attributable Debt (A) is incurred not later than 24
months following the completion of the acquisition, development, construction
or opening of such Store, (B) any Lien securing such Indebtedness or
Attributable Debt is limited to the Store financed with the proceeds thereof,
and (C) is incurred in connection with a transaction that is substantially
consistent with the business plan of the Borrower provided to the Lenders prior
to the Second Restatement Effective Date;

 

82

 

(xvi) (A) Third Party Interests issued by Securitization Vehicles
in Securitizations permitted by Section 6.05, and Indebtedness represented
by such Third Party Interests and (B) Indebtedness of the Borrower or its
Subsidiaries that may be deemed to exist solely by virtue of a Factoring
Transaction permitted by this Agreement; provided that the aggregate
amount of all Securitizations plus the aggregate amount of Indebtedness
permitted by clause (B) shall not exceed $950,000,000 at any time
outstanding;

 

(xvii) Indebtedness of Subsidiaries other than Securitization Vehicles
that may be deemed to exist solely by virtue of Standard Securitization
Undertakings entered into by such Subsidiaries as sellers of Securitization
Assets in Securitizations permitted by paragraph (xvi) above;

 

(xviii) Indebtedness under the New Notes and/or the Bridge Facility, in
an aggregate principal amount not in excess of the amount equal to
$1,220,000,000, and Guarantees by Subsidiaries of such Indebtedness (and
Refinancing Indebtedness of such Indebtedness);

 

(xix) Guarantees by Subsidiaries of the Existing Second Priority Debt
(and Refinancing Indebtedness of Existing Second Priority Debt), the Existing
Guaranteed Unsecured Indebtedness (and Refinancing Indebtedness of Existing Guaranteed
Unsecured Indebtedness) and any Indebtedness under clause (vii) or (viii) of
this Section 6.01(a); and

 

(xx) Indebtedness of Holdings in respect of letters of credit assumed
in connection with the Acquisition in an aggregate principal amount not in
excess of (A) $75,000,000 at any time outstanding prior to any date that
is 60 days after the Second Restatement Effective Date and (B) $10,000,000
at any time outstanding on or after any date that is 60 days after the Second
Restatement Effective Date but prior to 120 days after the Second Restatement
Effective Date.

 

(b)  The Borrower will
not, nor will it permit any Subsidiary to, issue any Preferred Stock or other
preferred Equity Interests, other than Qualified Preferred Stock of the
Borrower, Third Party Interests issued by Securitization Vehicles, and other
preferred Equity Interests issued and outstanding on the Second Restatement
Effective Date and set forth on Schedule 6.01(b).

 

SECTION 6.02.  Liens. 
(a)  The Borrower will not, and will not permit any Subsidiary to,
create, incur, assume or permit to exist any Lien on any property or asset now
owned or hereafter acquired by it, or assign or sell any income or revenues
(including accounts receivable) or rights in respect of any thereof, except:

 

(i) Liens created under the Senior Loan Documents;

 

(ii) Permitted Encumbrances;

 

(iii) any Lien created or permitted by the Second Priority
Collateral Documents with respect to the Second Priority Debt Obligations in
favor of the 

 

83

 

Second
Priority Debt Parties; provided that (A) such Lien is created
simultaneously with or after an equivalent Lien under the Senior Collateral
Documents on the applicable Senior Collateral, (B) such Lien is subject to
the Collateral Trust and Intercreditor Agreement, (C) any Lien on the
proceeds of such Senior Collateral is permitted by the Collateral Trust and
Intercreditor Agreement and (D) such Second Priority Debt Obligations are
permitted to be incurred under Section 6.01(a);

 

(iv) intentionally omitted;

 

(v) any Lien securing Indebtedness of a Subsidiary owing to a
Subsidiary Loan Party;

 

(vi) any Lien securing Attributable Debt and other payment
obligations under leases incurred in connection with a Sale and Leaseback Transaction
permitted pursuant to Section 6.01(a)(xiv) or (xv) and Section 6.06; provided
that such Liens attach only to the equipment, real property or other assets
subject to such Sale and Leaseback Transaction;

 

(vii) any Lien on real property securing Indebtedness permitted
and incurred under Section 6.01(a)(ix);

 

(viii) any Lien securing Capital Lease Obligations permitted and
incurred under Section 6.01(a)(xiii), provided that such Lien is
limited to the equipment or other property subject to leases existing on the
Original Restatement Effective Date that were subsequently reclassified as
Capital Lease Obligations;

 

(ix) any Lien on equipment securing Indebtedness incurred to
finance such equipment pursuant to Section 6.01(a)(xiv);

 

(x) Liens securing Indebtedness permitted and incurred under Section 6.01(a)(xv),
provided that such Liens apply only to the property or other assets
acquired, developed or constructed, as the case may be, with the proceeds of
such Indebtedness;

 

(xi) Liens existing on the Second Restatement Effective Date and
identified on Schedule 6.02(xi); provided, that such Liens do not attach
to any property other than the property identified on such Schedule and secure
only the obligations they secured on the Second Restatement Effective Date;

 

(xii) any Lien (A) on Net Cash Proceeds that are required to be
applied to the repayment of Second Priority Debt Obligations in accordance with
the Collateral Trust and Intercreditor Agreement or (B) that arises
pursuant to any provisions in any Second Priority Debt Document equivalent to Section 10.14
of the 12.5% Note Indenture;

 

(xiii) Liens securing Refinancing Indebtedness permitted under Section 6.01(a),
to the extent that the Indebtedness being refinanced was 

 

84

 

originally
secured in accordance with this Section 6.02; provided that such
Lien does not apply to any additional property or assets of the Borrower or any
Subsidiary (other than (i) property or assets acquired after the issuance
or incurrence of such Refinancing Indebtedness that would have been subject to
the Lien securing refinanced Indebtedness if such Indebtedness had not been
refinanced, (ii) additions to the property or assets subject to the Lien
and (iii) the proceeds of the property or assets subject to the Lien);

 

(xiv) Liens on property or assets acquired pursuant to Section 6.04(vi),
(x) or (xiii); provided that (A) such Liens apply only to the
property or other assets subject to such Liens at the time of such acquisition
and (B) such Liens existed at the time of such acquisition and were not
created in contemplation thereof;

 

(xv) put and call agreements with respect to Equity Interests acquired
or created in connection with Joint Ventures permitted pursuant to Section 6.04(x) or
(xiii); provided that neither the Borrower nor any Subsidiary shall be
permitted to enter into any such agreement that requires or, upon the
occurrence of any event or condition, contingent or otherwise, may require the
Borrower or any Subsidiary Loan Party (or, prior to the Borrowing Base Date,
Holdings or any of its subsidiaries) to repurchase Equity Interests,
Indebtedness or otherwise expend any amounts on or prior to the Tranche
2/Tranche 3 Term Maturity Date (other than as permitted under Section 6.04(x) or
(xiii));

 

(xvi) (A) Liens on Securitization Assets transferred or purported
to be transferred to Securitization Vehicles securing Third Party Interests
issued in Securitizations permitted by Sections 6.01 and 6.05, (B) Liens
on account receivables not purchased by a Securitization Vehicle, which Liens (i) are
granted in connection with Securitizations permitted by Sections 6.01 and
6.05, (ii) are granted pursuant to Standard Securitization Undertakings, (iii) are
perfected prior to an Event of Default and (iv) secure Third Party
Interests issued in Securitizations permitted by Sections 6.01 and 6.05
and (C) Liens on Factoring Assets transferred or purported to be
transferred in Factoring Transactions permitted by this Agreement; and

 

(xvii) Liens (other than Liens securing Indebtedness) that are not
otherwise permitted under any other provision of this Section 6.02(a); provided,
that the fair market value of the property and assets with respect to which
such Liens are granted shall not at any time exceed $40,000,000.

 

(b) 
Notwithstanding anything in clause (a) of this Section 6.02, the
Borrower may not grant or otherwise permit to exist Liens on any cash or cash
equivalents that secure the Senior Obligations or are otherwise held by the
Lenders or the Administrative Agent pursuant to Section 2.05(k) or
9.15.

 

SECTION 6.03.  Fundamental Changes.  Without limiting the restrictions on Business
Acquisitions set forth in Section 6.04, the Borrower will not, and will
not permit any Subsidiary Loan Party (or, prior to the Borrowing Base Date,
Holdings or any 

 

85

 

of its subsidiaries) to, merge into or
consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or liquidate or dissolve, except that, if at the time
thereof and immediately after giving effect thereto no Default shall have
occurred and be continuing (i) any Person may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation, provided,
that if such other Person is a Subsidiary Loan Party, it shall have no assets
that constitute Senior Collateral, (ii) any Person may merge into a
Subsidiary Loan Party in a transaction in which such Subsidiary Loan Party is
the surviving corporation and (iii) any Subsidiary Loan Party may
liquidate or dissolve if such liquidation or dissolution is not materially
disadvantageous to the Lenders; provided that (A) any such merger
involving a Person that is not a wholly-owned Subsidiary immediately prior to
such merger shall not be permitted to engage in such merger unless also
permitted by Section 6.04 and (B) the Borrower and the applicable
Subsidiary Loan Party shall comply with the provisions of Section 5.11
with respect to any Subsidiary acquired pursuant to this Section 6.03.

 

SECTION 6.04.  Investments, Loans, Advances, Guarantees
and Acquisitions.  The Borrower will
not, and will not permit any of the Subsidiaries to, make any Investment in, or
Guarantee any obligations of, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) any assets of any
other Person constituting a business unit, except:

 

(i) Permitted Investments;

 

(ii) Investments of the Borrower, the Subsidiary Loan Parties and
Holdings and its subsidiaries set forth on Schedule 6.04;

 

(iii) Guarantees of Indebtedness and/or Guarantees consisting of
Indebtedness permitted by Section 6.01;

 

(iv) Investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;

 

(v) Investments by (A) the Borrower or any Subsidiary Loan
Party in Subsidiary Loan Parties and (B) prior to the Borrowing Base Date,
Holdings in its subsidiaries and subsidiaries of Holdings in Holdings or any
other subsidiary of Holdings; provided that the Borrower and such
Subsidiary Loan Party or Holdings and such subsidiary of Holdings, as the case
may be, shall comply with the applicable provisions of Section 5.11 with
respect to any newly formed Subsidiary;

 

(vi) Investments consisting of non-cash consideration received in
connection with any Asset Sale permitted by Section 6.05;

 

(vii) Investments by the Subsidiaries in the Borrower; provided
that the proceeds of such Investments are used for a purpose set forth in Section 5.10(b);

 

86

 

(viii) prior to the Borrowing Base Date, Investments by the
Borrower or any Subsidiary Loan Party in Holdings and its subsidiaries;

 

(ix) usual and customary loans and advances to employees, officers
and directors of the Borrower and the Subsidiaries;

 

(x) Investments by the Borrower or any of the Subsidiaries in
Joint Ventures in an amount not to exceed $15,000,000 in the aggregate in any
fiscal year of the Borrower;

 

(xi) Investments in charitable foundations organized under Section 501(c) of
the Code in an amount not to exceed $7,500,000 in the aggregate in any calendar
year;

 

(xii) any Investment consisting of a Hedging Agreement permitted by Section 6.07;

 

(xiii) Business Acquisitions and Investments that are not otherwise
permitted under any other provision of this Section 6.04; provided
that (A) at the time of such Business Acquisition or Investment no Default
has occurred and is continuing or would result therefrom and (B) immediately
after giving effect to any such Business Acquisition or Investment, the
Revolver Availability is greater than $100,000,000;

 

(xiv) Investments consisting of Sellers’ Retained Interests in
Securitizations permitted by Sections 6.01 and 6.05; and

 

(xv) (A) Investments by the Borrower or a Subsidiary in connection
with a Securitization permitted pursuant to this Agreement and (B) any
Investment or other Guarantee that may be deemed made by the Borrower due to
the fact that a Parent Undertaking has been entered into in respect of a
Securitization permitted pursuant to the Agreement.

 

SECTION 6.05.  Asset Sales.  The Borrower will not, and will not permit
any of the Subsidiary Loan Parties (and, prior to the Borrowing Base Date,
Holdings or any of its subsidiaries) to, conduct any Asset Sale, including any
sale of any Equity Interest owned by it and any sale of Securitization Assets
in connection with a Securitization, nor will the Borrower permit any of the
Subsidiary Loan Parties (and, prior to the Borrowing Base Date, Holdings or any
of its subsidiaries) to issue any additional Equity Interest in such
Subsidiary, except:

 

(i) Permitted Dispositions;

 

(ii) any Asset Sale (other than a Sale and Leaseback Transaction,
the issuance of Equity Interests, sales or contributions of Securitization
Assets in a Securitization or sales of Factoring Assets in Factoring
Transactions) for fair value not in the ordinary course of business;

 

87

 

(iii) any sale, transfer or disposition to a third party of
Stores, leases and prescription files closed at substantially the same time as,
and entered into as part of a single related transaction with, the purchase or
other acquisition from such third party of Stores, leases and prescription
files of a substantially equivalent value;

 

(iv) any issuance of (A) Equity Interests of any Subsidiary
Loan Party by such Subsidiary Loan Party to the Borrower or any other
Subsidiary Loan Party and (B) prior to the Borrowing Base Date, any
issuance of Equity Interests of Holdings by Holdings to the Borrower and any
issuance of Equity Interests of any subsidiary of Holdings by such subsidiary
to Holdings or any other subsidiary of Holdings;

 

(v) any Sale and Leaseback Transaction permitted pursuant to Section 6.01(a)(ix),
(xiv) or (xv) and Section 6.06;

 

(vi) sales or contributions of Securitization Assets to
Securitization Vehicles in connection with Securitizations, provided
that (a) each such Securitization is effected on market terms as
determined in good faith by the senior management of the Borrower, (b) the
aggregate amount of all such Securitizations plus the aggregate amount
of Indebtedness permitted by Section 6.01(a)(xvi)(B) does not exceed
$950,000,000 at any time outstanding, (c) the aggregate amount of the
Sellers’ Retained Interests in such Securitizations does not exceed an amount
at any time outstanding that is customary for similar transactions and (d) the
proceeds to each such Securitization Vehicle from the issuance of Third Party
Interests are applied substantially simultaneously with receipt thereof to the
purchase from Subsidiary Loan Parties of Securitization Assets; provided
that, in the case of clause (d), the Securitization Vehicle may use a portion
of such proceeds to pay a customary collection agent fee in connection with
such Securitization to the extent such fee is permitted pursuant to Section 6.09(f);

 

(vii) unless otherwise restricted by Section 5.17, sales of
Factoring Assets in connection with Factoring Transactions; provided
that (i) a Factoring Notice with respect to such Factoring Transaction has
been delivered by the Borrower to the Administrative Agent and (ii) each
such Factoring Transaction is effected on market terms as determined in good
faith by the senior management of the Borrower; and

 

(viii) the sale, transfer or other disposition of assets or
properties of Holdings and its subsidiaries required by any Governmental
Authority as a condition to its consent or forbearance from opposing the
consummation of the Transactions.

 

provided that, with respect to sales,
transfers or dispositions under clause (ii), (v) or (viii), and with
respect to any net consideration received from any transaction described in
clause (iii), (1) at least 75% of the consideration therefor shall consist
of cash and (2) the 

 

88

 

aggregate fair market value of all assets sold, transferred or disposed
of in reliance upon clauses (ii) and (v) shall not exceed
$200,000,000 in any fiscal year of the Borrower; provided  further
that subject to the condition set forth in clause (1) above, additional
assets with an aggregate fair market value not in excess of $450,000,000 may be
sold, transferred or disposed of in any fiscal year of the Borrower in reliance
upon clauses (ii) and (v) if the Borrower reinvests, or causes
the applicable Subsidiary Loan Party (or, prior to the Borrowing Base Date, if
applicable, Holdings or any of its subsidiaries) to reinvest, Net Cash Proceeds
received in connection therewith in Business Acquisitions or the purchase of
Stores or prescription files within 365 days after the receipt thereof.

 

SECTION 6.06.  Sale and Leaseback Transactions.  The Borrower will not, and will not permit
any of the Subsidiaries to, enter into any Sale and Leaseback Transaction,
except for Sale and Leaseback Transactions permitted by and effected pursuant
to Section 6.01(a)(ix), (xiv) or (xv) which do not result in Liens other
than Liens permitted pursuant to Section 6.02(a).

 

SECTION 6.07.  Hedging Agreements.  The Borrower will not, and will not permit
any of the Subsidiaries to, incur or at any time be liable with respect to any
monetary liability under any Hedging Agreements, unless such Hedging Agreements
(i) are entered into for bona fide hedging purposes of the Borrower, any
Subsidiary Loan Party or, prior to the Borrowing Base Date, Holdings or any of
its subsidiaries (as determined in good faith by the senior management of the
Borrower), (ii) correspond in terms of notional amount, duration,
currencies and interest rates, as applicable, to Indebtedness of the Borrower
or any Subsidiary Loan Party (or, prior to the Borrowing Base Date, Holdings or
any of its subsidiaries) permitted to be incurred under Section 6.01(a) or
to business transactions of the Borrower and the Subsidiary Loan Parties (and,
prior to the Borrowing Base Date, Holdings and its subsidiaries) on customary
terms entered into in the ordinary course of business and (iii) do not
exceed an amount equal to the aggregate principal amount of the Senior
Obligations and the Second Priority Debt Obligations (and, prior to the
Borrowing Base Date, the Interim Obligations).

 

SECTION 6.08.  Restricted Payments; Certain Payments of
Indebtedness.  (a)  The Borrower
will not, nor will it permit any Subsidiary to, declare or make, or agree to
pay or make, directly or indirectly, any Restricted Payment, or incur any
obligation (contingent or otherwise) to do so, except (i) the Borrower may
declare and pay dividends with respect to its common stock or Qualified
Preferred Stock payable solely in additional shares of its common stock or
Qualified Preferred Stock, (ii) Subsidiaries (other than those directly
owned, in whole or part, by the Borrower) may declare and pay dividends ratably
with respect to their common stock, (iii) the Borrower may declare and pay
cash dividends with respect to its common stock and effect repurchases,
redemptions or other Restricted Payments with respect to its common stock,
together in an aggregate amount in any fiscal year of the Borrower not to
exceed 50% of Consolidated Net Income (if positive) for the immediately
preceding fiscal year of the Borrower; provided that immediately prior
and after giving effect to any such payment no Default or Event of Default
shall have occurred and be continuing and, immediately after giving effect to
any such payment, the Borrower shall have Revolver Availability of more than
$100,000,000, (iv) the Borrower may pay cash dividends in an amount not to
exceed $60,000,000 in any 

 

89

 

fiscal year of the Borrower with respect to
the Series E Preferred Stock, Series I Preferred Stock or any other
Qualified Preferred Stock; provided that (x) immediately prior and
after giving effect to any such payment, no Default or Event of Default shall
have occurred and be continuing and (y) only so long as a Financial
Covenant Effectiveness Period is then occurring, the Consolidated Fixed Charge
Coverage Ratio for the period of four consecutive fiscal quarters most recently
ended on or prior to the date of such payment, calculated on a pro forma basis
as if such payment were made on the last day of such period (and excluding any
such payments previously made pursuant to this clause during such four quarter
period but attributed for purposes of this calculation to the last day of a
prior period which day does not occur in such four quarter period) is not less
than the ratio applicable to such period of four fiscal quarters under Section 6.12,
(v) the Borrower and the Subsidiaries may make Restricted Payments
consisting of the repurchase or other acquisition of shares of, or options to
purchase shares of, capital stock of the Borrower or any of its Subsidiaries
from employees, former employees, directors or former directors of the Borrower
or any Subsidiary (or their permitted transferees), in each case pursuant to
stock option plans, stock plans, employment agreements or other employee benefit
plans approved by the board of directors of the Borrower; provided that
no Default has occurred and is continuing; and provided  further
that the aggregate amount of such Restricted Payments made after the Original
Restatement Effective Date shall not exceed $10,000,000, (vi) the
Subsidiaries may declare and pay cash dividends to the Borrower; provided
that the Borrower shall, within a reasonable time following receipt of any such
payment, use all of the proceeds thereof for a purpose set forth in Section 5.10(b) (including
the payment of dividends required or permitted pursuant to this Section 6.08(a)),
(vii) the Borrower and the Subsidiaries may declare and pay cash dividends
with respect to the Equity Interests set forth on Schedule 6.08(a) to
the extent, and only to the extent, required pursuant to the terms of such
Equity Interests or any other agreement in effect on the Effective Date and (viii) so
long as no Default or Event of Default has occurred and is continuing or would
result therefrom, the Borrower may redeem or repurchase shares of the Borrower’s
and/or its Subsidiaries’ (including Rite Aid Lease Management Company’s)
Preferred Stock (A) solely with Net Cash Proceeds received by the Borrower
from issuances of its common stock after the Original Restatement Effective
Date, provided that any such repurchase or redemption is effected within
150 days after the receipt of such proceeds or (B) with other funds
available to the Borrower if, immediately after giving effect to any such
redemption or repurchase, the Borrower shall have Revolver Availability of more
than $100,000,000.

 

(b)  The Borrower will
not, nor will it permit any Subsidiary to, make or agree to pay or make,
directly or indirectly, any payment or other distribution (whether in cash,
securities or other property) of or in respect of principal of or interest on
any Indebtedness, or any payment or other distribution (whether in cash,
securities or other property), including any sinking fund or similar deposit,
on account of the purchase, redemption, retirement, acquisition, cancellation
or termination of any Indebtedness, except:

 

(i) payments or prepayments of Indebtedness created under the
Senior Loan Documents;

 

90

 

(ii) payments of regularly scheduled interest and principal
payments as and when due in respect of any Indebtedness permitted pursuant to Section 6.01(a);

 

(iii) prepayments of Indebtedness permitted pursuant to clause
(vii), (viii) or (ix) of Section 6.01(a) with the proceeds
of Indebtedness permitted pursuant to clause (vii), (viii) or (ix) of
Section 6.01(a);

 

(iv) payments of secured Indebtedness that becomes due as a result
of the voluntary sale or transfer of the property or assets securing such
Indebtedness;

 

(v) provided no Default has occurred and is continuing or would
result therefrom, Optional Debt Repurchases of Inside Indebtedness and, to the
extent permitted by paragraph (c) of this Section, Optional Debt
Repurchases of Outside Indebtedness;

 

(vi) repurchases, exchanges or redemptions of Indebtedness for
consideration consisting solely of common stock of the Borrower or Qualified
Preferred Stock;

 

(vii) prepayments of Capital Lease Obligations in connection with
the sale, closing or relocation of Stores;

 

(viii) prepayments of Indebtedness in connection with the
incurrence of Refinancing Indebtedness permitted pursuant to Section 6.01(a)(ii) or
(x);

 

(ix) prepayments of Indebtedness permitted pursuant to Section 6.01(a)(iii),
if permitted by the subordination provisions applicable to such Indebtedness;
and

 

(x) unless an Event of Default shall have occurred and be
continuing, mandatory prepayments of Indebtedness and interest under the New
Notes and/or the Bridge Facility.

 

(c)  The Borrower and the
Subsidiaries will not effect Optional Debt Repurchases of Outside Indebtedness
unless immediately prior and after giving effect to any such Optional Debt
Repurchases, (x) no Default or Event of Default shall have occurred and be
continuing and (y) the Borrower shall have Revolver Availability of more
than $100,000,000.

 

SECTION 6.09.  Transactions with Affiliates.  The Borrower will not, and will not permit
any Subsidiary to, directly or indirectly, sell, lease or otherwise transfer
any property or assets to, or purchase, lease or otherwise acquire any property
or assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except:

 

(a)  payment of compensation to directors, officers, and employees
of the Borrower and the Subsidiaries in the ordinary course of business;

 

91

 

(b)  payments in respect of transactions required to be made
pursuant to agreements or arrangements in effect on the Second Restatement
Effective Date and set forth on Schedule 6.09;

 

(c)  transactions involving the acquisition of inventory in the
ordinary course of business; provided that (i) the terms of such
transaction are (A) set forth in writing, (B) in the best interests
of the Borrower or such Subsidiary, as the case may be, and (C) no less
favorable to the Borrower or such 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 Borrower or a Subsidiary and, (ii) if such
transaction involves aggregate payments or value in excess of $75,000,000, the
board of directors of the Borrower (including a majority of the disinterested
members of the board of directors) approves such transaction and, in its good
faith judgment, believes that such transaction complies with clauses (i)(B) and
(C) of this paragraph;

 

(d)  (i) transactions between or among the Borrower and/or
one or more Subsidiary Loan Parties, (ii) sales of Securitization Assets
to Securitization Vehicles in Securitizations permitted by Sections 6.01
and 6.05, (iii) prior to the Borrowing Base Date, transactions between or
among (A) the Borrower or any Subsidiary Loan Party, on one hand, and
Holdings or any of its subsidiaries, on the other hand, (B) Holdings, on
one hand, and any subsidiary of Holdings, on the other hand, and (C) any
subsidiary of Holdings, on one hand, and any other subsidiary of Holdings, on
the other hand, (iv) transactions under, involving, related to and/or in
connection with the Acquisition and documents related thereto including, (A) the
Stock Purchase Agreement, dated as of August 23, 2006, by and between the
Borrower and The Jean Coutu Group (PJC) Inc., (B) the Stockholder
Agreement, dated as of August 23, 2006, between the Borrower, The Jean
Coutu Group (PJC) Inc., Jean Coutu, Marcelle Coutu, Francois J. Coutu, Michel
Coutu, Louis Coutu, Sylvie Coutu and Marie-Josée Coutu and (C) the
Registration Rights Agreement, dated as of August 23, 2006, by and between
the Borrower and The Jean Coutu Group (PJC) Inc. and (v) the Transition
Services Agreement, dated as of June 4, 2007, by and between the Borrower
and the Seller; provided that the terms of the transactions referred to
in clauses (iii), (iv) and (v) above are in the best interest of the
Borrower, such Subsidiary Loan Party or Holdings or any such subsidiary of
Holdings which is a party thereto, as the case may be;

 

(e)  issuances of Preferred Stock of the Borrower (and
transactions that are necessary to effect such issuances) in respect of
pay-in-kind obligations of the Borrower relating to Series G Preferred
Stock or Series H Preferred Stock; and

 

(f)  any other Affiliate transaction not otherwise permitted
pursuant to this Section 6.09; provided that (i) the terms of
such transaction are (A) set forth in writing, (B) in the best
interests of the Borrower or such Subsidiary, as the case may be, and (C) no
less favorable to the Borrower or such Subsidiary, as the case may be, than
those that could be obtained in a comparable arm’s length 

 

92

 

transaction
with a Person that is not an Affiliate of the Borrower or a Subsidiary, (ii) if
such transaction involves aggregate payments or value in excess of $25,000,000
in any consecutive 12-month period, the board of directors of the Borrower
(including a majority of the disinterested members of the board of directors)
approves such transaction and, in its good faith judgment, believes that such
transaction complies with clauses (i)(B) and (C) of this paragraph
and (iii) if such transaction (other than any transaction necessary for
the redemption or exchange of the Borrower’s Series G Preferred Stock or Series H
Preferred Stock) involves aggregate payments or value in excess of $50,000,000
in any consecutive 12-month period, the Borrower obtains a written opinion from
an independent investment banking firm or appraiser of national prominence, as
appropriate, to the effect that such transaction is fair to the Borrower or
such Subsidiary, as the case may be, from a financial point of view.

 

SECTION 6.10.  Restrictive Agreements.  (a)  The Borrower will not, and will not
permit any Subsidiary to, enter into any agreement which imposes a limitation
on the incurrence by the Borrower and the Subsidiaries of Liens that (i) would
restrict any Subsidiary from granting Liens on any of its assets (including
assets in addition to the then-existing Senior Collateral and, prior to the
Borrowing Base Date, the then-existing Interim Collateral, to secure the Senior
Obligations, the Second Priority Obligations and, prior to the Borrowing Base
Date, the Interim Obligations) or (ii) is more restrictive, taken as a
whole, than the limitation on Liens set forth in this Agreement except, in each
case, (A)(u) the Senior Loan Documents, (w) agreements with respect
to Indebtedness secured by Liens permitted by Section 6.02(a) restricting
the ability to transfer or grant Liens on the assets securing such
Indebtedness, (x) agreements with respect to Second Priority Debt (1) containing
provisions described in clauses (i) and/or (ii) above that are not
materially more restrictive, taken as a whole, than those of the 8.125% Note
Indenture as in effect on the Second Restatement Effective Date or (2) requiring
that such Indebtedness be secured by assets in respect of which Liens are
granted to secure other Indebtedness (provided that in the case of any
such assets subject to a Senior Lien, such Indebtedness will be required to be
secured only with a Second Priority Lien); provided, however,
that the Second Priority Debt Documents relating to any such Indebtedness may
not contain terms requiring any Liens be granted with respect to Senior
Collateral consisting of cash or Permitted Investments pledged pursuant to Section 2.05(j) of
this Agreement or Section 5 of the Senior Subsidiary Guarantee Agreement
or otherwise required to be provided upon the occurrence of a default under any
bank credit facility to secure obligations in respect of letters of credit
issued thereunder, (y) agreements with respect to unsecured Indebtedness
governed by indentures or by credit agreements or note purchase agreements with
institutional investors permitted by this Agreement containing terms that are
not materially more restrictive, taken as a whole, than those of the 9.25% Note
Indenture as in effect on the Second Restatement Effective Date and (z) the
New Notes and/or the Bridge Facility, (B) customary restrictions contained
in purchase and sale agreements limiting the transfer of the subject assets
pending closing, (C) customary non-assignment provisions in leases and
other contracts entered into in the ordinary course of business, (D) pursuant
to applicable law, (E) agreements in effect as of the Second Restatement
Effective Date and not entered into in contemplation of the transactions
effected in connection with the closing of the Original Agreement, (F) the

 

93

 

Indentures, in each case when originally
entered into, (G) any restriction existing under agreements relating to
assets acquired by the Borrower or a Subsidiary in a transaction permitted hereby;
provided that such agreements existed at the time of such acquisition,
were not put into place in anticipation of such acquisition and are not
applicable to any assets other than assets so acquired, (H) any
restriction existing under any agreement of a Person acquired as a Subsidiary
pursuant to Section 6.03 or Section 6.04(a)(xiii); provided
that any such agreement existed at the time of such acquisition, was not put
into place in anticipation of such acquisition and was not applicable to any
Person or assets other than the Person or assets so acquired and (I) customary
restrictions and conditions contained in agreements relating to Securitizations
permitted hereunder, provided that such restrictions and conditions
apply only to Securitization Vehicles and to the Securitization Assets that are
subject to such Securitizations.

 

(b)  The Borrower will
not, and will not permit any Subsidiary to, enter into or suffer to exist or
become effective any consensual encumbrance or restriction on the ability of any
Subsidiary to (i) make Restricted Payments in respect of any Equity
Interests of such Subsidiary held by, or pay any Indebtedness owed to, the
Borrower or any other Subsidiary, (ii) make any Investment in the Borrower
or any other Subsidiary, or (iii) transfer any of its assets to the
Borrower or any other Subsidiary, except for (A) any restriction existing
under (1) the Senior Loan Documents or existing on the Second Restatement
Effective Date under the Indentures, (2) the indenture or agreement
governing any Refinancing Indebtedness in respect of Indebtedness set forth in
clause (1) above or (3) agreements with respect to Indebtedness
permitted by this Agreement containing provisions described in clauses (i), (ii) and
(iii) above that are not materially more restrictive, taken as a whole,
than those of the 8.125% Note Indenture or, alternatively, the 9.25% Note
Indenture, in each case as in effect on the Second Restatement Effective Date, (B) customary
non-assignment provisions in leases and other contracts entered into in the
ordinary course of business, (C) as required by applicable law, (D) customary
restrictions contained in purchase and sale agreements limiting the transfer of
the subject assets pending closing, (E) any restriction existing under
agreements relating to assets acquired by the Borrower or a Subsidiary in a
transaction permitted hereby; provided that such agreements existed at
the time of such acquisition, were not put into place in anticipation of such
acquisition and are not applicable to any assets other than assets so acquired,
(F) any restriction existing under any agreement of a Person acquired as a
Subsidiary pursuant to Section 6.03 or Section 6.04(a)(xiii); provided
any such agreement existed at the time of such acquisition, was not put into
place in anticipation of such acquisition and was not applicable to any Person
or assets other than the Person or assets so acquired, (G) agreements with
respect to Indebtedness secured by Liens permitted by Section 6.02 that
restrict the ability to transfer the assets securing such Indebtedness, (H) customary
restrictions and conditions contained in agreements relating to Securitizations
permitted hereunder, provided that such restrictions and conditions
apply only to Securitization Vehicles and to the Securitization Assets that are
subject to such Securitizations and (I) any restriction existing under the
New Notes and/or the Bridge Facility.

 

SECTION 6.11.  Amendment of Material Documents.  (a)  The Borrower will not, nor will it
permit any Subsidiary to, amend, modify or waive any Second 

 

94

 

Priority Security Document or any of its
rights thereunder without the consent of the Collateral Agent, other than
modifications to such agreements in connection with (i) the joinder of
additional Subsidiary Loan Parties effected by the execution of supplements to
such agreements and (ii) the inclusion of additional Second Priority Debt
permitted pursuant to Section 6.01(a)(vii) constituting Secured
Obligations (as defined in the Second Priority Security Agreement) under such
agreements.  The Borrower will not, nor
will it permit any Subsidiary to, amend, modify or waive any instrument
governing the New Notes or the Bridge Facility and any related security documents,
or any of its rights under any of the foregoing without the consent of the
Collateral Agent, other than amendments, modifications and waivers that are not
material and adverse to the interests of the Lenders.

 

(b)  The Borrower will
not, and will not permit any Subsidiary party to the Intercompany Inventory
Purchase Agreement to, amend, terminate, or otherwise modify the Intercompany
Inventory Purchase Agreement in any manner materially adverse to the Lenders or
their interests under the Senior Loan Documents without the prior written
approval of the Collateral Agent; provided, however, that the
foregoing shall not limit the Borrower’s responsibilities pursuant to Section 3.2
of the Intercompany Inventory Purchase Agreement.

 

SECTION 6.12.  Consolidated Fixed Charge Coverage Ratio.  The Borrower will not permit the Consolidated
Fixed Charge Coverage Ratio for the period of four consecutive fiscal quarters
most recently ended on or prior to any day during a Financial Covenant
Effectiveness Period to be less than the ratio set forth below opposite the
period that includes the last day of such four quarter period:

 

	
  Four Fiscal Quarter Period
  Ending

  	
   

  	
  Ratio

  
	
  December 3, 2006 through March 3, 2007

  	
   

  	
  1.00 to 1.00

  
	
  March 4, 2007 through June 2, 2007

  	
   

  	
  1.00 to 1.00

  
	
  June 3, 2007 through September 1, 2007

  	
   

  	
  1.00 to 1.00

  
	
  September 2, 2007 through December 1, 2007

  	
   

  	
  1.00 to 1.00

  
	
  December 2, 2007 through March 1, 2008

  	
   

  	
  1.00 to 1.00

  
	
  March 2, 2008 through May 31, 2008

  	
   

  	
  1.00 to 1.00

  
	
  June 1, 2008 through August 30, 2008

  	
   

  	
  1.00 to 1.00

  
	
  August 31, 2008 through November 29, 2008

  	
   

  	
  1.05 to 1.00

  
	
  November 30, 2008 through February 28, 2009

  	
   

  	
  1.05 to 1.00

  
	
  March 1, 2009 through May 30, 2009

  	
   

  	
  1.05 to 1.00

  
	
  May 31, 2009 through August 29, 2009

  	
   

  	
  1.05 to 1.00

  
	
  August 30, 2009 through November 28, 2009

  	
   

  	
  1.05 to 1.00

  
	
  November 29, 2009 through February 27, 2010

  	
   

  	
  1.15 to 1.00

  

 

95

 

	
  February 28, 2010 through May 29, 2010

  	
   

  	
  1.15 to 1.00

  
	
  May 30, 2010 through August 28, 2010

  	
   

  	
  1.15 to 1.00

  
	
  August 29, 2010 through November 27, 2010

  	
   

  	
  1.15 to 1.00

  
	
  November 28, 2010 through February 26, 2011

  	
   

  	
  1.15 to 1.00

  
	
  February 27, 2011 through May 28, 2011

  	
   

  	
  1.15 to 1.00

  
	
  May 29, 2011 through the Tranche 2/Tranche 3 Term Maturity Date

  	
   

  	
  1.25 to 1.00

  

 

SECTION 6.13.  Restrictions on Asset Holdings by the
Borrower.  The Borrower will not at
any time:

 

(i) make or hold any Investments other than investments in the
Equity Interests of the Subsidiaries (including any distributions or other
assets received in respect thereto), intercompany advances to Subsidiaries and
Investments permitted by clause (iii) below;

 

(ii) acquire or hold any Stores, other capital assets, inventory
or accounts receivable, other than any real estate which the Borrower holds
only as lessor and which is leased and operated by another Person; or

 

(iii) acquire or hold cash, cash equivalents, Permitted
Investments or balances in bank accounts, other than such amounts as are
reasonably anticipated (at the time so acquired or held) to be utilized within
five Business Days to pay costs, expenses and other obligations of the Borrower
referred to in Section 5.10(b).

 

SECTION 6.14.  Corporate Separateness.  The Borrower will, and will cause each
Subsidiary to, take all necessary steps to maintain its identity as a separate
legal entity from other Persons and to make it manifest to third parties that
it is an entity with assets and liabilities distinct from those of each of
other Person.

 

ARTICLE VII

Events of Default

 

If any of the following events
(“Events of Default”) shall occur:

 

(a)  the Borrower shall fail to pay any principal of any Loan or
any reimbursement obligation in respect of any LC Disbursement when and as the
same shall become due and payable, whether at the due date thereof or at a date
fixed for prepayment thereof or otherwise;

 

(b)  the Borrower shall fail to pay any interest on any Loan or
any fee or any other amount (other than an amount referred to in clause (a) of
this Article) payable under this Agreement or any other Senior Loan Document,
when and as 

 

96

 

the same shall
become due and payable, and such failure shall continue unremedied for a period
of five days;

 

(c)  any representation or warranty made or deemed made by or on
behalf of the Borrower or any Subsidiary in or in connection with any Senior
Loan Document or any amendment or modification thereof or waiver thereunder, or
in any report, certificate, financial statement or other document furnished
pursuant to or in connection with any Senior Loan Document or any amendment or
modification thereof or waiver thereunder, shall prove to have been incorrect
in any material respect when made or deemed made;

 

(d)  the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02(a), 5.10, 5.11, 5.15 or
5.16 or in Article VI;

 

(e)  any Loan Party (and, prior to the Borrowing Base Date,
Holdings or any of its subsidiaries) shall fail to observe or perform any
covenant, condition or agreement contained in any Senior Loan Document (other
than those specified in clause (a), (b) or (d) of this Article), and
such failure shall continue unremedied (i) in the case of covenants
contained in Section 5.08, for five days, (ii) in the case of
covenants contained in Sections 5.01 and 5.02(b), (c) and (f), for 10
days and (iii) in the case of any other covenant, for a period of
20 days after notice thereof has been delivered by the Administrative
Agent to the Borrower (which notice shall be given promptly at the request of
any Lender);

 

(f)  the Borrower or any Subsidiary shall fail to make any
payment (whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness, including any obligation to reimburse letter of
credit obligations or to post cash collateral with respect thereto, when and as
the same shall become due and payable or within any applicable grace period;

 

(g)  any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its
or their behalf to cause any Material Indebtedness to become due, or to require
the prepayment, repurchase, redemption or defeasance thereof, prior to its
scheduled maturity; provided that this clause (g) shall not
apply to secured Indebtedness that becomes due as a result of the voluntary
sale or transfer of the property or assets securing such Indebtedness;

 

(h)  an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of the Borrower or any Subsidiary or
its Indebtedness, or of a substantial part of its assets, under any Federal,
state or foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect or (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the 

 

97

 

Borrower or
any Subsidiary or for a substantial part of its assets, and, in any such case,
such proceeding or petition shall continue undismissed for 60 days or an
order or decree approving or ordering any of the foregoing shall be entered;

 

(i)  the Borrower or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect, (ii) consent
to the institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in clause (h) of this Article, (iii) apply
for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any
Subsidiary or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or (vi) take
any action for the purpose of effecting any of the foregoing;

 

(j)  the Borrower or any Subsidiary shall become unable to, or
admits in writing its inability or fails to, generally pay its debts as they
become due;

 

(k)  one or more judgments for the payment of money in an
aggregate amount in excess of $75,000,000 shall be rendered against the
Borrower, any Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to attach or levy upon any assets of the Borrower or any
Subsidiary to enforce any such judgment;

 

(l)  (i) the Borrower or any ERISA Affiliate shall fail to
pay when due an amount or amounts aggregating in excess of $15,000,000 which it
shall have become liable to pay under Section 302 or Title IV of
ERISA; or notice of intent to terminate a Plan shall be filed under
Title IV of ERISA by the Borrower or any ERISA Affiliate, any plan
administrator or any combination of the foregoing; or the PBGC shall institute
proceedings under Title IV of ERISA to terminate, to impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or to
cause a trustee to be appointed to administer, any Plan; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Plan must be terminated; or there shall occur a complete
or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5) of
ERISA, with respect to, one or more Multiemployer Plans which could cause the
Borrower and/or one or more ERISA Affiliates to incur a current payment
obligation in excess of $75,000,000; or (ii) any other ERISA Event shall
have occurred that, in the opinion of the Required Lenders, when taken together
with all other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Borrower, the ERISA Affiliates and the Subsidiaries
in an aggregate amount exceeding $75,000,000;

 

98

 

(m)  (i) any Lien purported to be created under any Senior
Collateral Document or Interim Collateral Document shall cease to be a valid
and perfected Lien on any material portion of the Senior Collateral or, prior
to the Borrowing Base Date, the Interim Collateral, as the case may be, with
the priority required by the Senior Loan Documents, except as a result of the
sale or other disposition of the applicable Collateral in a transaction
permitted under the Senior Loan Documents, or the Borrower or any Subsidiary
shall so assert in writing, or (ii) any Senior Loan Document shall become
invalid, or the Borrower or any Subsidiary shall so assert in writing;

 

(n)  a Change in Control shall occur; or

 

(o)  any Subsidiary Loan Party shall amend or revoke any
instruction in the Government Lockbox Account Agreement to any Government
Lockbox Account Bank in respect of a Government Lockbox Account unless (i) the
Administrative Agent shall have given its prior written consent or (ii) the
Government Lockbox Account is then under the control of any other Person
pursuant to Section 5.16;

 

then, and in every such event
(other than an event with respect to the Borrower or any Subsidiary Loan Party
(or, prior to the Borrowing Base Date, Holdings or any of its subsidiaries)
described in clause (h) or (i) of this Article), and at any time
thereafter during the continuance of such event, the Administrative Agent may,
and at the request of the Required Lenders shall, by notice to the Borrower,
take either or both of the following actions, at the same or different
times:  (i) terminate the Commitments, and thereupon the
Commitments shall terminate immediately, and (ii) declare the Loans then
outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to
be due and payable), and thereupon the principal of the Loans so declared to be
due and payable, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall become  due and payable immediately, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; and in case of any event with respect to the
Borrower or any Subsidiary Loan Party (and, prior to the Borrowing Base Date,
Holdings or any of its subsidiaries) described in clause (h) or (i) of
this Article, the Commitments shall automatically terminate and the principal
of the Loans then outstanding, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower.

 

ARTICLE VIII

 

The Agents

 

Each of the Lenders and each
Issuing Bank hereby irrevocably appoints (i) the Administrative Agent as
its agent and authorizes the Administrative Agent to take such actions on its
behalf and to exercise such powers as are delegated to the 

 

99

 

Administrative
Agent by the terms of the Senior Loan Documents, together with such actions and
powers as are reasonably incidental thereto and (ii) the Collateral Agent
as its agent and authorizes the Collateral Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Collateral Agent by
the terms of the Senior Loan Documents, together with such actions and powers
as are reasonably incidental thereto.

 

The financial institutions
serving as the Agents hereunder shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it
were not an Agent, and such financial institutions and their Affiliates may
accept deposits from, lend money to and generally engage in any kind of
business with the Borrower or any Subsidiary or any Affiliate of any of the
foregoing as if they were not Agents hereunder.

 

No Agent shall have any duties
or obligations except those expressly set forth in the Senior Loan
Documents.  Without limiting the
generality of the foregoing, (a) no Agent shall be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) no Agent shall have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated by the Senior Loan Documents that such
Agent is required to exercise in writing by the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 2.20 or 9.02) and (c) except as
expressly set forth in the Senior Loan Documents, no Agent shall have any duty
to disclose, and no Agent shall be liable for the failure to disclose, any
information relating to the Borrower or any of the Subsidiaries that is communicated
to or obtained by the financial institution serving as such Agent or any of its
Affiliates in any capacity.  No Agent
shall be liable for any action taken or not taken by it with the consent or at
the request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section 2.20
or 9.02) or in the absence of its own gross negligence or willful misconduct
(as determined by a court of competent jurisdiction by final and non-appealable
judgment).  No Agent shall be deemed to
have knowledge of any Default unless and until written notice thereof is given
to such Agent by the Borrower or a Lender, as applicable, and no Agent shall be
responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with any Senior
Loan Document, (ii) the contents of any certificate, report or other
document delivered thereunder or in connection therewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth in any Senior Loan Document, (iv) the validity,
enforceability, effectiveness or genuineness of any Senior Loan Document or any
other agreement, instrument or document or (v) the satisfaction of any
condition set forth in Article IV or elsewhere in any Senior Loan
Document, other than to confirm receipt of items expressly required to be
delivered to such Agent.

 

Each Agent shall be entitled to
rely upon, and shall not incur any liability for relying upon, any notice,
request, certificate, consent, statement, instrument, document or other writing
believed by it to be genuine and to have been signed or sent by the proper
Person.  Each Agent also may rely upon
any statement made to it orally or by 

 

100

 

telephone and
believed by it to be made by the proper Person, and shall not incur any
liability for relying thereon.  Any Agent
may consult with legal counsel (who may be counsel for the Borrower),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts.

 

Each Agent may perform any and
all of its duties and exercise any and all of its rights and powers by or
through any one or more sub-agents appointed by such Agent.  Any Agent and any such sub-agent may perform
any and all of its duties and exercise any and all of its rights and powers
through their Related Parties.  The
exculpatory provisions of the preceding paragraphs shall apply to any such
sub-agent and to the Related Parties of any Agent and any such sub-agent, and
shall apply to their activities in connection with the syndication of the
credit facilities provided for herein as well as activities as an Agent.

 

Subject to the appointment and
acceptance of a successor Agent as provided in this paragraph, any Agent may
resign at any time by notifying the Lenders, the Issuing Banks and the Borrower.  Upon any such resignation, the Required
Lenders shall have the right, in consultation with the Borrower, to appoint a
successor.  If no successor shall have
been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the Lenders and the
Issuing Banks, appoint a successor Agent (which shall be a financial
institution with an office in New York, New York, or an Affiliate of any such
financial institution).  Upon the
acceptance of its appointment as an Agent hereunder by a successor, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder.  The fees payable by the Borrower to a
successor Agent shall be the same as those payable to its predecessor unless
otherwise agreed between the Borrower and such successor.  After an Agent’s resignation hereunder, the
provisions of this Article and Section 9.03 shall continue in effect
for the benefit of such retiring Agent, its sub-agents and their respective
Related Parties in respect of any actions taken or omitted to be taken by any
of them while it was acting as Agent.

 

Each Lender acknowledges that
it has, independently and without reliance upon any Agent or any other Lender
and based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will,
independently and without reliance upon any Agent or any other Lender and based
on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Senior Loan Document or related
agreement or any document furnished hereunder or thereunder.

 

Each party hereto authorizes
the Administrative Agent to enter into customary intercreditor agreements in
connection with Securitizations and Factoring Transactions permitted under this
Agreement.

 

101

 

ARTICLE
IX

 

Miscellaneous

 

SECTION 9.01.  Notices.  Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

 

(a) 
Rite Aid Corporation, 30 Hunter Lane Camp Hill, PA 17011, Attention of General
Counsel (Telecopy No. 717-760-7867; email address: rsari@riteaid.com);

 

(b) 
if to the Administrative Agent, (i) in respect of matters of an
operational nature, to Citicorp North America, Inc., 388 Greenwich
Street, New York, NY 10013, Attention of Dana Fuski Dugan (Telecopy No. 212-994-0894;
email address: dana.a.fuskidugan@citigroup.com, with a copy to
oploanswebadmin@citigroup.com) and (ii) in respect of all other matters,
to Citicorp North America, Inc., 388 Greenwich Street, New York, NY
10013, Attention of Jeffrey Nitz (Telecopy No. 646-375-1663; email
address: jeffrey.nitz@citigroup.com, with a copy to
oploanswebadmin@citigroup.com);

 

(c) 
if to the Syndication Agent, to Bank of America, N.A., Bank of America Retail
Group, 40 Broad Street, Boston, MA 02109, Attention of Christine Hutchinson
(Telecopy No. 617-434-4339; email address:
christine.hutchinson@bankofamerica.com);

 

(d) 
if to the Issuing Banks, to (i)  Citicorp North America, Inc.,
388 Greenwich Street, New York, NY 10013, Attention of Jeffrey Nitz
(Telecopy No. 646-375-1663; email address: jeffrey.nitz@citigroup.com) and
(ii) JPMorgan Chase Bank, N.A., 270 Park Avenue, New York, NY 10017,
Attention of Teri Streusand (Telecopy No. 212-270-6637; email address:
teri.streusand@jpmorgan.com);

 

(e) 
if to the Swingline Lender, to it at Citicorp North America, Inc.,
388 Greenwich Street, New York, NY 10013, Attention of Jeffrey Nitz
(Telecopy No: 646-375-1663; email address: jeffrey.nitz@citigroup.com); and

 

(f) 
if to any other Lender, to it at its address (or telecopy number) set forth in
its Administrative Questionnaire.

 

Any party hereto may change its address or
telecopy number for notices and other communications hereunder by notice to the
other parties hereto.  All notices and
other communications given to any party hereto in accordance with the
provisions of this Agreement shall be deemed to have been given on the date of
receipt.

 

102

 

SECTION 9.02.  Waivers; Amendments.  (a)  No failure or delay by any Agent,
any Issuing Bank or any Lender in exercising any right or power hereunder or
under any other Senior Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power, preclude
any other or further exercise thereof or the exercise of any other right or
power.  The rights and remedies of the
Agents, the Issuing Banks and the Lenders hereunder and under the other Senior
Loan Documents are cumulative and are not exclusive of any rights or remedies
that they would otherwise have.  No
waiver of any provision of any Senior Loan Document or consent to any departure
by any Loan Party therefrom shall in any event be effective unless the same shall
be permitted by paragraph (b) of this Section, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given.  Without limiting the
generality of the foregoing, the making of a Loan or issuance of a Letter of
Credit shall not be construed as a waiver of any Default, regardless of whether
any Agent, any Lender or any Issuing Bank may have had notice or knowledge of
such Default at the time.

 

(b)  Neither this Agreement nor any
other Senior Loan Document nor any provision hereof or thereof may be waived,
amended or modified except, in the case of this Agreement, pursuant to an
agreement or agreements in writing entered into by the Borrower and the
Required Lenders or, in the case of any other Senior Loan Document, pursuant to
an agreement or agreements in writing entered into by the Administrative Agent
and the Loan Party or Loan Parties that are parties thereto, in each case with
the consent of the Required Lenders; provided that (i) no such
agreement shall change any provision of any Senior Loan Document in a manner
that by its terms adversely affects the rights of Lenders holding Loans of any Class differently
than those holding Loans of any other Class, without the written consent of
Lenders holding a majority in interest of the outstanding Loans and unused
Commitments of each affected Class and (ii) any waiver, amendment or
modification of this Agreement that by its terms affects the rights or duties
under this Agreement of one or more Classes of Lenders (but not the other Class or
Classes of Lenders) may be effected by an agreement or agreements in writing
entered into by the Borrower and requisite percentage in interest of the
affected Class or Classes of Lenders that would be required to consent
thereto under this Section if such Class or Classes of Lenders were
the only Class or Classes of Lenders hereunder at the time; and provided
further that no such agreement shall (i) increase the Commitment of
any Lender without the written consent of such Lender, (ii) reduce or
forgive the principal amount of any Loan or LC Disbursement or reduce the rate
of interest thereon, or reduce any fees payable hereunder, without the written
consent of each Lender affected thereby, (iii) postpone the maturity of
any Loan, or any scheduled date of payment of the principal amount of any Term
Loan under Section 2.10, or the required date of reimbursement of any LC
Disbursement, or any date for the payment of any interest or fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or postpone
the scheduled date of expiration of any Commitment, without the written consent
of each Lender affected thereby, (iv) amend Section 2.18(b) or (c) in
a manner that would alter the pro rata
sharing of payments required thereby, without the written consent of each
Lender, (v) amend the proviso of the definition of “Borrowing Base Amount”
or the definition of “Account Receivable Advance Rate”, “Pharmaceutical
Inventory Advance 

 

103

 

Rate”, “Other Inventory Advance Rate” or “Script Lists Advance Rate”
without the written consent of each Lender, (vi) subordinate the priority
of the Lien granted to the Collateral Agent pursuant to the Senior Loan
Documents without the written consent of each Lender, (vii) change any of
the provisions of this Section or the percentage set forth in the
definition of “Required Lenders”, “Supermajority Lenders” or any other
provision of any Senior Loan Document specifying the number or percentage of
Lenders (or Lenders of any Class) required to waive, amend or modify any rights
thereunder or make any determination or grant any consent thereunder, without
the written consent of each Lender (or each Lender of such Class, as the case
may be), (viii) release the Borrower or any Subsidiary Loan Party from its
Guarantee under the Senior Subsidiary Guarantee Agreement (except as expressly
provided in the Senior Subsidiary Guarantee Agreement or in Section 9.18),
or limit its liability in respect of such Guarantee, without the written consent
of each Lender, (ix) prior to the Borrowing Base Date, release any
Subsidiary Loan Party from its Guarantee under the Interim Subsidiary Loan
Party Guarantee Agreement (except as expressly provided in the Interim
Subsidiary Loan Party Guarantee Agreement), or limit its liability in respect
of such Guarantee, without the written consent of each Lender, (x) prior
to the Borrowing Base Date, release Holdings or any of its subsidiaries from
its Guarantee under the Interim Collateral and Guarantee Agreement (except as
expressly provided in the Interim Collateral and Guarantee Agreement), or limit
its liability in respect of such Guarantee, without the written consent of each
Lender (xi) release all or substantially all of the Senior Collateral from
the Liens under the Senior Collateral Documents, without the written consent of
each Lender, (xii) prior to the Borrowing Base Date, release all or
substantially all of the Interim Collateral from the Liens under the Interim
Collateral Documents, without the written consent of each Lender or
(xiii) amend Section 2.21 to increase the permitted amount of the
Incremental Facilities to in excess of $350,000,000 minus the initial aggregate
payment amount of the Tranche 3 Term Loans made on the 2008 Restatement
Effective Date, without the written consent of the Supermajority Lenders; and provided
further, that no such agreement shall amend, modify or otherwise affect
the rights or duties of any Agent, the Issuing Banks or the Swingline Lender
without the prior written consent of such Agent, the Issuing Banks or the
Swingline Lender, as the case may be. 
Notwithstanding the foregoing, any provision of this Agreement may be
amended by an agreement in writing entered into by the Borrower, the Required
Lenders and the Administrative Agent (and, if their rights or obligations are
affected thereby, the Issuing Banks and the Swingline Lender) if (i) by
the terms of such agreement the Commitment of each Lender not consenting to the
amendment provided for therein shall terminate upon the effectiveness of such
amendment and (ii) at the time such amendment becomes effective, each
Lender not consenting thereto receives payment in full of the principal of and
interest accrued on each Loan made by it and all other amounts owing to it or
accrued for its account under this Agreement.

 

(c)  Notwithstanding the foregoing, (i) Senior
Collateral shall be released from the Lien under the Senior Collateral
Documents from time to time as necessary to effect any sale of Senior
Collateral permitted by the Senior Loan Documents, and the Administrative Agent
shall execute and deliver all release documents reasonably requested to
evidence such release; provided
that arrangements satisfactory to the Administrative Agent shall have been made
for application of the cash proceeds thereof 

 

104

 

in accordance with Section 2.11, if required, and for the pledge
of any non-cash proceeds thereof pursuant to the Senior Collateral Documents, (ii) the
accounts created pursuant to clause (i) of Section 5.16(b), the
Lockbox Account and/or the Governmental Lockbox Account may be released by the
Administrative Agent and transferred in accordance with Section 5.16, (iii) if
a Subsidiary Loan Party ceases to be a Subsidiary in accordance with this
Agreement, or ceases to own any property that constitutes Senior Collateral, at
the request of and at the expense of the Borrower, such Subsidiary Loan Party
shall be released from the Senior Subsidiary Guarantee Agreement, the Senior Subsidiary
Security Agreement and each other Senior Loan Document to which it is a party
and (iv) prior to the Borrowing Base Date, if Holdings or any of its
subsidiaries ceases to be a Subsidiary in accordance with this Agreement or
ceases to own any property that constitutes Interim Collateral, at the request
of and at the expense of the Borrower, such party shall be released from the
Interim Collateral Documents and the Senior Loan Documents to which it is a
party.

 

SECTION 9.03.  Expenses; Indemnity; Damage Waiver.  (a)  The Borrower shall pay (i) all
reasonable out-of-pocket expenses incurred by the Agents and their Affiliates,
including the reasonable fees, charges and disbursements of counsel for the
Agents, in connection with the syndication of the credit facilities provided
for herein, the preparation and administration of the Senior Loan Documents or
any amendments, modifications or waivers of the provisions thereof (whether or
not the transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable out-of-pocket expenses incurred by any Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder and (iii) all out-of-pocket expenses
incurred by any Agent, any Issuing Bank or any Lender, including the fees,
charges and disbursements of counsel for any Agent, any Issuing Bank or any
Lender, in connection with the enforcement or protection of its rights under or
in connection with the Senior Loan Documents, including its rights under this
Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit.

 

(b)  The Borrower shall indemnify each
Agent, each Issuing Bank and each Lender, and each Related Party of any of the
foregoing Persons (each such Person being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted
against any Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of any Senior Loan Document, the performance by the
parties to the Senior Loan Documents of their respective obligations thereunder
or the consummation of the Transactions or any other transactions contemplated
hereby, (ii) any Loan or Letter of Credit or the use of the proceeds
therefrom (including any refusal by an Issuing Bank to honor a demand for
payment under a Letter of Credit if the documents presented in connection with
such demand do not strictly comply with the terms of such Letter of Credit), (iii) any
actual or alleged presence or release of Hazardous Materials on or from any
property currently or formerly owned or operated by the Borrower or any of the
Subsidiaries, or any Environmental Liability related in any way to the Borrower
or any of 

 

105

 

the Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall
not, as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
gross negligence or willful misconduct of such Indemnitee.

 

(c)  To the extent that the Borrower
fails to pay any amount required to be paid by it to any Agent, any Issuing
Bank or any Lender under paragraph (a) or (b) of this Section, each
Lender severally agrees to pay to such Agent, such Issuing Bank or such Lender,
as the case may be, such Lender’s pro rata share
(determined as of the time that the applicable unreimbursed expense or
indemnity payment is sought) of such unpaid amount; provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against such Agent,
such Issuing Bank or such Lender in its capacity as such.  For purposes hereof, a Lender’s “pro rata share” shall be determined based upon its share of
the sum of the total Revolving Exposures, outstanding Term Loans and unused
Commitments at the time.

 

(d)  To the extent permitted by applicable
law, the Borrower shall not assert, and hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any other Senior Loan
Document or any other agreement or instrument contemplated hereby or thereby,
the Transactions, any Loan or Letter of Credit or the use of the proceeds
thereof.

 

(e)  All amounts due under this Section shall
be payable not later than 10 Business Days after written demand therefor.

 

SECTION 9.04.  Successors and Assigns.  (a)  The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby (including any Affiliate of
any Issuing Bank that issues any Letter of Credit), except that the Borrower
may not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender (and any attempted assignment
or transfer by the Borrower without such consent shall be null and void).  Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their successors and assigns permitted hereby (including any Affiliate
of any Issuing Bank that issues any Letter of Credit) and, to the extent
expressly contemplated hereby, the Related Parties of each of the Agents, the
Issuing Banks and the Lenders) any legal or equitable right, remedy or claim
under or by reason of this Agreement.

 

(b)  (i)    Subject to
the conditions set forth in paragraph (b)(ii) below, any Lender may
assign to one or more assignees all or a portion of its rights and obligations
under this Agreement (including all or a portion of its Commitments and the
Loans at the time owing to it), with the prior written consent (such consent
not to be unreasonably withheld or delayed) of:

 

106

 

(A) the Borrower; provided that no consent of the Borrower
shall be required for an assignment to a Lender, an Affiliate of a Lender, an
Approved Fund or, if an Event of Default under clause (a), (b), (h), or (i) of
Article VII has occurred and is continuing, any other assignee; and

 

(B) the Administrative Agent; provided that no consent of
the Administrative Agent shall be required for an assignment to an assignee
that is a Lender, an Affiliate of a Lender or an Approved Fund.

 

(ii)  Assignments shall be subject to the
following additional conditions:

 

(A) except in the case of an assignment to a Lender, an Affiliate
of a Lender or an Approved Fund, the amount of the Commitment or Loans of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than (1) with respect to Revolving
Commitments and Revolving Loans, $5,000,000 and (2) with respect to
Tranche 1 Term Loan Commitments, Tranche 2 Term Commitments, Tranche 3 Term
Commitments, Tranche 1 Term Loans, Tranche 2 Term Loans and Tranche 3 Term
Loans, $1,000,000 or, in each case, if smaller, the entire remaining amount of
the assigning Lender’s Commitment or Loans, unless each of the Borrower and the
Administrative Agent shall otherwise consent; provided that (i) no
such consent of the Borrower shall be required if an Event of Default has
occurred and is continuing and (ii) in the event of concurrent assignments
to two or more assignees that are Affiliates of one another, or to two or more
Approved Funds managed by the same investment advisor or by affiliated
investment advisors, all such concurrent assignments shall be aggregated in
determining compliance with this subsection;

 

(B) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
this Agreement;

 

(C) the parties to each assignment shall execute and deliver to
the Administrative Agent an Assignment and Acceptance, together with a
processing and recordation fee of $3,500; provided that, in the event of
concurrent assignments to two or more assignees that are Affiliates of one
another, or by or to two or more Approved Funds managed by the same investment
advisor or by affiliated investment advisors, only one such fee shall be
payable; and

 

(D) the assignee, if it shall not be a Lender, shall deliver to
the Administrative Agent an Administrative Questionnaire.

 

(iii)  Subject to acceptance and recording
thereof pursuant to paragraph (b)(iv) of this Section, from and after
the effective date specified in each Assignment and Acceptance the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and 

 

107

 

obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of
Sections 2.15, 2.16, 2.17 and 9.03). 
Any assignment or transfer by a Lender of rights or obligations under
this Agreement that does not comply with this Section 9.04 shall be
treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (c) of
this Section.

 

(iv)  The Administrative Agent, acting
for this purpose as an agent of the Borrower, shall maintain at one of its
offices a copy of each Assignment and Acceptance delivered to it and a register
for the recordation of the names and addresses of the Lenders, and the
Commitment of, and principal amount of the Loans and LC Disbursements owing to,
each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive, and the Borrower, the Agents, the Issuing Banks and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. 
The Register shall be available for inspection by the Borrower, any
other Agent, any Issuing Bank and any Lender at any reasonable time and from
time to time upon reasonable prior notice.

 

(v)  Upon its receipt of a duly
completed Assignment and Acceptance executed by an assigning Lender and an
assignee, the assignee’s completed Administrative Questionnaire (unless the
assignee shall already be a Lender hereunder), the processing and recordation
fee referred to in paragraph (b) of this Section and any written
consent to such assignment required by paragraph (b) of this Section, the
Administrative Agent shall accept such Assignment and Acceptance and record the
information contained therein in the Register. 
No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this paragraph.

 

(vi)  By executing and delivering an
Assignment and Acceptance, the assigning Lender thereunder and the assignee
thereunder shall be deemed to confirm to and agree with each other and the
other parties hereto as follows: (A) such assigning Lender warrants that
it is the legal and beneficial owner of the interest being assigned thereby
free and clear of any adverse claim and that its Commitment and the outstanding
balances of its Loans, in each case without giving effect to assignments
thereof that have not become effective, are as set forth in such Assignment and
Acceptance; (B) except as set forth in clause (A) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or any other Senior Loan Document
or any other instrument or document furnished pursuant hereto or thereto, or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of any of the foregoing, or the financial condition of the Loan Parties
or the performance or observance by the Loan Parties of any of their
obligations under this Agreement or under 

 

108

 

any other Senior Loan Document or any other instrument or document
furnished pursuant hereto or thereto; (C) each of the assignee and the
assignor represents and warrants that it is legally authorized to enter into
such Assignment and Acceptance; (D) such assignee confirms that it has
received a copy of this Agreement, together with copies of any amendments or
consents entered into prior to the date of such Assignment and Acceptance and
copies of the most recent financial statements delivered pursuant to Section 5.01
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance; (E) such assignee will independently and without reliance upon
the Agents, such assigning Lender or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement; (F) such assignee appoints and authorizes the Agents to take
such action as agents on its behalf and to exercise such powers under this
Agreement and the other Senior Loan Documents as are delegated to them by the
terms hereof and thereof, together with such powers as are reasonably
incidental thereto; and (G) such assignee agrees that it will perform in
accordance with their terms all the obligations that by the terms of this
Agreement are required to be performed by it as a Lender.

 

(c)  (i)  Any Lender may, without
the consent of or notice to the Borrower, the Agents, the Issuing Banks or the
Swingline Lender, sell participations to one or more banks or other entities (a
“Participant”) in all or a portion of such Lender’s rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans owing to it); provided that (A) such Lender’s
obligations under this Agreement shall remain unchanged, (B) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations and (C) the Borrower, the Agents, the Issuing Banks
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under this
Agreement.  Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, modification or
waiver described in the first proviso to Section 9.02(b)(i), (ii) or (iii) that
affects such Participant.  Subject to
paragraph (c)(ii) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17
to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section.  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 9.08 as
though it were a Lender, provided such Participant agrees to be subject to Section 2.18(c) as
though it were a Lender.

 

(ii)  A Participant shall not be
entitled to receive any greater payment under Section 2.15 or 2.17 than
the applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent.  A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.17
unless the Borrower is notified of the participation sold to such 

 

109

 

Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 2.17(e) as though it were a Lender.

 

(d)  Any Lender may at any time pledge
or assign a security interest in all or any portion of its rights under this
Agreement to secure obligations of such Lender, including, without limitation,
any pledge or assignment to secure obligations to a Federal Reserve Bank, and
this Section shall not apply to any such pledge or assignment of a
security interest; provided that no such pledge or assignment of a
security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.

 

(e)  In the case of any Lender that is a
fund that invests in bank loans, such Lender may, without the consent of the
Borrower or the Administrative Agent, assign or pledge all or any portion of
its rights under the Senior Loan Documents, including the Loans and promissory
notes or any other instrument evidencing its rights as a Lender under the
Senior Loan Documents, to any holder of, trustee for, or any other
representative of holders of obligations owed or securities issued by such
fund, as security for such obligations or securities; provided that any
foreclosure or similar action by such trustee or representative shall be
subject to the provisions of this Section 9.04 concerning assignments.

 

SECTION 9.05.  Survival.  All covenants, agreements, representations
and warranties made by the Loan Parties in the Senior Loan Documents and in the
certificates or other instruments 
delivered in connection with or pursuant to this Agreement or any other
Senior Loan Document shall be considered to have been relied upon by the other
parties hereto and shall survive the execution and delivery of the Senior Loan
Documents and the making of any Loans and issuance of any Letters of Credit, regardless
of any investigation made by any such other party or on its behalf and
notwithstanding that the Administrative Agent, any Issuing Bank or any Lender
may have had notice or knowledge of any Default or incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue in
full force and effect as long as the principal of or any accrued interest on
any Loan or any fee or any other amount payable under this Agreement is
outstanding and unpaid or any Letter of Credit is outstanding and so long as
the Commitments have not expired or terminated. 
The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII
shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.

 

SECTION 9.06.  Integration; Effectiveness.  This Agreement, the other Senior Loan
Documents and any separate letter agreements with respect to fees payable to
the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof.  This Agreement shall become
effective as provided in Section 4.01.

 

110

 

SECTION 9.07.  Severability.  Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

 

SECTION 9.08.  Right of Setoff.  If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of the Borrower
against any of and all the obligations of the Borrower now or hereafter
existing under this Agreement held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement and although
such obligations may be unmatured.  The
rights of each Lender under this Section are in addition to other rights
and remedies (including other rights of setoff) which such Lender may have.

 

SECTION 9.09.  Governing Law; Jurisdiction; Consent to
Service of Process.  (a)  This
Agreement shall be construed in accordance with and governed by the law of the
State of New York.

 

(b)  The Borrower hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to any Senior Loan Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the
extent permitted by law, in such Federal court. 
Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law.  Nothing in this Agreement or any
other Senior Loan Document shall affect any right that any Agent, the Issuing
Bank or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or any other Senior Loan Document against the
Borrower or its properties in the courts of any jurisdiction.

 

(c)  The Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any other Senior Loan Document in any court referred to in paragraph (b) of
this Section.  Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.

 

111

 

(d)  Each party to this Agreement
irrevocably consents to service of process in the manner provided for notices
in Section 9.01.  Nothing in this
Agreement or any other Senior Loan Document will affect the right of any party
to this Agreement to serve process in any other manner permitted by law.

 

SECTION 9.10.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN  ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER
SENIOR LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

SECTION 9.11.  Headings.  Article and Section headings and
the Table of Contents used herein are for convenience of reference only, are
not part of this Agreement and shall not affect the construction of, or be
taken into consideration in interpreting, this Agreement.

 

SECTION 9.12.  Confidentiality.  Each of the Agents, the Issuing Banks and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its
Affiliates’ directors, officers, trustees, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or any other Senior Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any
assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under this Agreement, (g) with the
consent of the Borrower, (h) to any pledgee referred to in Section 9.04(d) or
any direct or indirect contractual counterparty in any Hedging Agreement (or to
any such contractual counterparty’s professional advisor), so long as such
pledgee or contractual counterparty (or such professional advisor) agrees to be
bound by the provisions of this Section 9.12, or (i) to the extent
such Information (i) becomes publicly available other than as a result of
a breach of this Section or (ii) becomes available to any Agent, any
Issuing Bank or any Lender on a nonconfidential basis from a source other than
the Borrower.  For the purposes of this
Section, “Information” means all information received from the 

 

112

 

Borrower relating to the Borrower or its business, other than any such
information that is available to any Agent, any Issuing Bank or any Lender on a
nonconfidential basis prior to disclosure by the Borrower.  Any Person required to maintain the
confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential
information.  Notwithstanding anything in
this Agreement or in any other Senior Loan Document to the contrary, the
Borrower and each Lender (and each employee, representative or other agent of
the Borrower) may disclose to any and all persons, without limitation of any
kind, the U.S. tax treatment and U.S. tax structure of the Transactions and all
materials of any kind (including opinions or other tax analyses) that are
provided to the Borrower relating to such U.S. tax treatment and U.S. tax
structure.

 

SECTION 9.13.  Interest Rate Limitation.  Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts which are treated as interest on such
Loan under applicable law (collectively the “Charges”), shall exceed the
maximum lawful rate (the “Maximum Rate”) which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the
interest and Charges payable to such Lender in respect of other Loans or
periods shall be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together with interest thereon at the Federal Funds Effective
Rate to the date of repayment, shall have been received by such Lender.

 

SECTION 9.14.  Collateral Trust and Intercreditor
Agreement.  Each Lender, each Issuing Bank
and each Agent hereby authorizes each Agent to enter into the Collateral Trust
and Intercreditor Agreement, each other Senior Collateral Document and each
other Interim Collateral Document on its behalf, and agrees that the
Administrative Agent and the Collateral Agent may enforce the rights and
remedies of the Lenders under each Senior Loan Document to the extent provided
in the Collateral Trust and Intercreditor Agreement, each other Senior
Collateral Document and each other Interim Collateral Document.

 

SECTION 9.15.  Cash Sweep.  (a)  On any day on which (i) an
Event of Default exists or (ii) the lesser of (x) the average
Revolving Commitments (after deducting the average total Revolving Exposure)
over any 30-day period and (y) the average Borrowing Base Amount (after
deducting the sum of (1) the average total Revolving Exposure, (2) the
average outstanding Tranche 1 Term Loans, (3) if prior to the Borrowing
Base Date, zero, or if on or after the Borrowing Base Date, the average
outstanding Tranche 2 Term Loans and (4) the average outstanding Tranche 3
Term Loans) over any 30-day period, in each case, together with all amounts
then on deposit in the Cash Sweep Cash Collateral Account, is less than
$75,000,000, then the 

 

113

 

Administrative Agent, upon its determination or upon request by the
Required Lenders, shall immediately be entitled to deliver Cash Sweep Notices.

 

(b)  During a Cash Sweep Period, if (i) there
is no Event of Default and (ii) the lesser of (x) the average
Revolving Commitments (after deducting the average total Revolving Exposure)
over any 30-day period and (y)  the average Borrowing Base Amount (after
deducting the sum of (1) the average total Revolving Exposure, (2) the
average outstanding Tranche 1 Term Loans, (3) if prior to the Borrowing
Base Date, zero, or if on or after the Borrowing Base Date, the average
outstanding Tranche 2 Term Loans and (4) the average outstanding Tranche 3
Term Loans) over any 30-day period, in each case, together with all amounts
then on deposit in the Cash Sweep Cash Collateral Account, is greater than
$100,000,000, then the Administrative Agent shall automatically rescind any
Cash Sweep Notice and shall be prohibited from delivering any other Cash Sweep
Notice (unless and until the occurrence of the events set forth in paragraph (a) of
this Section).

 

(c)  The Administrative Agent reserves
the right to send a Cash Sweep Notice on each occasion of the occurrence of the
events set forth in Section 9.15(a).

 

SECTION 9.16.  Electronic Communications.  (a) 
Notwithstanding anything in any Senior Loan Document to the contrary, the
Borrower hereby agrees that it will use its reasonable best efforts to provide
to the Administrative Agent all information, documents and other materials that
it is obligated to furnish to the Administrative Agent pursuant to the Senior
Loan Documents, including, without limitation, all notices, requests, financial
statements, financial and other reports, certificates and other information materials,
but excluding any such communication that (i) relates to a request for a
new, or a conversion of an existing, Borrowing or other extension of credit
(including any election of an interest rate or Interest Period relating
thereto), (ii) relates to the payment of any principal or other amount due
under any Senior Loan Document prior to the scheduled date therefor, (iii) provides
notice of any Default or Event of Default under any Senior Loan Document or (iv) is
required to be delivered to satisfy any condition set forth in Section 4.01
and/or 4.02 (all such non-excluded communications being referred to herein
collectively as the “Communications”), by transmitting the
Communications in an electronic/soft medium in a format acceptable to the
Administrative Agent to oploanswebadmin@citigroup.com, with a copy to
jeffrey.nitz@citigroup.com.  In
addition, the Borrower agrees to continue to provide the Communications to the
Administrative Agent in the manner specified in the Senior Loan Documents, but
only to the extent requested by the Administrative Agent.

 

(b)  The
Borrower further agrees that the Administrative Agent may make the
Communications available to the Lenders by posting the Communications on
Intralinks, Fixed Income Direct or a
substantially similar electronic transmission system (each such system,
a “Platform”).  The Borrower
acknowledges that the distribution of material through an electronic medium is
not necessarily secure and that there are confidentiality and other risks
associated with such distribution.

 

114

 

(c)  EACH PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”.  THE AGENT PARTIES (AS DEFINED BELOW) DO NOT
WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS,  OR THE ADEQUACY OF ANY PLATFORM, AND
EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE
COMMUNICATIONS.  NO WARRANTY OF ANY KIND,
EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE
AGENT PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR ANY PLATFORM.  IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR
ANY OF ITS AFFILIATES OR ANY OF THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ADVISORS OR REPRESENTATIVES (COLLECTIVELY, THE “AGENT PARTIES”) HAVE ANY
LIABILITY TO THE BORROWER, ANY OTHER LOAN PARTY, ANY LENDER OR ANY OTHER PERSON
OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, DIRECT OR INDIRECT,
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN
TORT, CONTRACT OR OTHERWISE) ARISING OUT OF THE BORROWER’S OR THE
ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET,
EXCEPT TO THE EXTENT THE LIABILITY OF ANY AGENT PARTY IS FOUND IN A FINAL
NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED
PRIMARILY FROM SUCH AGENT PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

 

(d)  The
Administrative Agent agrees that the receipt of the Communications by it at its
e-mail address set forth in Section 9.01 shall constitute effective
delivery of the Communications to the Administrative Agent for purposes of this
Section.  Each Lender agrees that notice to it (as provided in the next sentence)
specifying that the Communications have been posted to a Platform shall
constitute effective delivery of the Communications to such Lender for purposes
of this Section.  Each Lender agrees (i) to
notify the Administrative Agent in writing (including by electronic
communication) from time to time of such Lender’s e-mail address to which the
foregoing notice may be sent by electronic transmission and (ii) that the
foregoing notice may be sent to such e-mail address.

 

(e)  Nothing in this Section 9.16
shall prejudice the right of the Administrative Agent or any Lender to give any
notice or other communication pursuant to any Senior Loan Document in any other
manner specified in such Senior Loan Document.

 

SECTION 9.17.  USA Patriot Act.  Each Lender and each Issuing Bank hereby
notifies the Borrower that pursuant to the requirements of the USA Patriot Act,
it is required to obtain, verify and record information that identifies the
Borrower, which information includes the name and address of the Borrower and
other information that 

 

115

 

will allow such Lender or Issuing Bank to identify the Borrower in
accordance with its requirements.  The
Borrower shall promptly, following a request by the Administrative Agent, any
Lender or any Issuing Bank, provide all documentation and other information
that the Administrative Agent, such Lender or such Issuing Bank reasonably
requests in order to comply with its ongoing obligations under applicable “know
your customer” and anti-money laundering rules and regulations, including
the USA Patriot Act.

 

SECTION 9.18.  Release of Interim Collateral; Termination
of Interim Collateral Documents. 
Upon the occurrence of the Borrowing Base Date, the security interests
granted in the Interim Collateral, and the guarantees made, under the Interim
Collateral Documents shall be automatically released, and the Interim
Collateral Documents shall automatically terminate in accordance with their
terms.  In connection with the release of
security interests granted in the Interim Collateral, and the guarantees made,
under the Interim Collateral Documents, the Tranche 2 Lenders hereby authorize
the Borrower (or its counsel) to file, register or record all documents and
instruments, including amendments to Uniform Commercial Code financing
statements, required by law, advisable or reasonably requested by the Borrower,
and agree to execute and deliver all further instruments and documents and take
all further action that may be necessary or that the Borrower may reasonably
request in order to effectuate such release, all at the expense of the
Borrower.  For the avoidance of doubt,
the foregoing does not authorize the Borrower to take any action that would
result in the release of the security interests granted in the Interim
Collateral under the Interim Collateral Documents prior to the Borrowing Base
Date.

 

116

 

EXHIBIT A

 

Schedule 2.01:  Commitments

 

	
  Lender

  	
   

  	
  Commitment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Citicorp North America, Inc.

  	
   

  	
  $

  	
  330,000,000

  	
   

  
	
  Bank of America, N.A.

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total:

  	
   

  	
  $

  	
  350,000,000

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