-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E8SQw46uWbjWOhPAQKtf2hmA5tvkP/h8lxzWvSGtJPim3Rr/6SsIKiB1qNw5FweR kRGtFiSARTZOAp2fngb3eQ== 0000889812-96-000740.txt : 19960626 0000889812-96-000740.hdr.sgml : 19960626 ACCESSION NUMBER: 0000889812-96-000740 CONFORMED SUBMISSION TYPE: SC 13E4 PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19960625 SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: RITE AID CORP CENTRAL INDEX KEY: 0000084129 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DRUG STORES AND PROPRIETARY STORES [5912] IRS NUMBER: 231614034 STATE OF INCORPORATION: DE FISCAL YEAR END: 0304 FILING VALUES: FORM TYPE: SC 13E4 SEC ACT: 1934 Act SEC FILE NUMBER: 005-10478 FILM NUMBER: 96585118 BUSINESS ADDRESS: STREET 1: 30 HUNTER LANE CITY: CAMP HILL OWN STATE: PA ZIP: 17011 BUSINESS PHONE: 7177612633 MAIL ADDRESS: STREET 1: PO BOX 3165 CITY: HARRISBURG STATE: PA ZIP: 17105 FORMER COMPANY: FORMER CONFORMED NAME: LEHRMAN LOUIS & CO DATE OF NAME CHANGE: 19680510 FORMER COMPANY: FORMER CONFORMED NAME: RACK RITE DISTRIBUTORS DATE OF NAME CHANGE: 19680510 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: RITE AID CORP CENTRAL INDEX KEY: 0000084129 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DRUG STORES AND PROPRIETARY STORES [5912] IRS NUMBER: 231614034 STATE OF INCORPORATION: DE FISCAL YEAR END: 0304 FILING VALUES: FORM TYPE: SC 13E4 BUSINESS ADDRESS: STREET 1: 30 HUNTER LANE CITY: CAMP HILL OWN STATE: PA ZIP: 17011 BUSINESS PHONE: 7177612633 MAIL ADDRESS: STREET 1: PO BOX 3165 CITY: HARRISBURG STATE: PA ZIP: 17105 FORMER COMPANY: FORMER CONFORMED NAME: LEHRMAN LOUIS & CO DATE OF NAME CHANGE: 19680510 FORMER COMPANY: FORMER CONFORMED NAME: RACK RITE DISTRIBUTORS DATE OF NAME CHANGE: 19680510 SC 13E4 1 TENDER OFFER STATEMENT - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ SCHEDULE 13E-4 ISSUER TENDER OFFER STATEMENT (PURSUANT TO SECTION 13(E) OF THE SECURITIES EXCHANGE ACT OF 1934) ------------------------ RITE AID CORPORATION (NAME OF ISSUER) ------------------------ RITE AID CORPORATION (NAME OF PERSON(S) FILING STATEMENT) ------------------------ ZERO COUPON CONVERTIBLE SUBORDINATED NOTES DUE 2006 (TITLE OF CLASS OF SECURITIES) ------------------------ 767754 AE 4 (CUSIP NUMBER OF CLASS OF SECURITIES) ------------------------ FRANKLIN C. BROWN EXECUTIVE VICE PRESIDENT AND CHIEF LEGAL COUNSEL RITE AID CORPORATION 30 HUNTER LANE CAMP HILL, PA 17011 TELEPHONE: (717) 761-2633 Copy to: NANCY A. LIEBERMAN, ESQ. SKADDEN, ARPS, SLATE, MEAGHER & FLOM 919 THIRD AVENUE NEW YORK, NEW YORK 10022 TELEPHONE: (212) 735-3000 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT) JUNE 25, 1996 (DATE TENDER OFFER FIRST PUBLISHED, SENT OR GIVEN TO SECURITY HOLDERS) ------------------------ CALCULATION OF FILING FEE
TRANSACTION VALUATION* AMOUNT OF FILING FEE $205,866,771 $41,173.35
* The transaction valuation upon which the filing fee was based was calculated as follows: The purchase price of the Zero Coupon Convertible Subordinated Notes due 2006 (the 'Notes'), as described herein, is $514.86 per $1,000 principal amount outstanding at stated maturity. As of June 25, 1996, there were $399,850,000 in aggregate principal amount at maturity outstanding, resulting in an aggregate purchase price, assuming all Notes are tendered, of $205,866,771. The filing fee was calculated as follows: One-fiftieth of 1% of $205,866,771 equals $41,173.35. / / Check box if any part of the fee is offset as provided Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. AMOUNT PREVIOUSLY PAID: NONE FILING PARTY: NOT APPLICABLE FORM OR REGISTRATION NO.: NOT APPLICABLE DATE FILED: NOT APPLICABLE
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ITEM 1. SECURITY AND ISSUER. (a) The issuer is Rite Aid Corporation, a Delaware Corporation (the 'Company'). The Company's principal executive offices are located at 30 Hunter Lane, Camp Hill, PA 17011. (b) As of June 25, 1996, there were $399,850,000 in aggregate principal amount at stated maturity of the Zero Coupon Convertible Subordinated Notes due 2006 (the 'Notes') of the Company outstanding. The Notes are convertible at any time, on or prior to maturity, at the option of the holder of a Note (each, a 'Holder'), into 15.993 shares of the Company's common stock, par value $1.00 per share (the 'Company Common Stock,' subject to adjustment for dilutive events such as stock dividends or stock splits). Information concerning the tender offer set forth under 'THE OFFER--Principal Terms of the Offer' of the Offer to Purchase is incorporated herein by reference. As to any officer, director or affiliate of the Company who is the Holder of any Notes and who elects to require the Company to purchase any or all of such Holder's Notes on the Purchase Date, the Company will do so as described above, pursuant to the terms of the Indenture (as defined in the Offer to Purchase). (c) The Notes and the Company Common Stock are traded on the New York Stock Exchange (the 'NYSE'). The high and low sales prices of the Notes, as reported by the NYSE, for each full quarterly period during the previous two years is set forth under 'PRICE RANGE OF NOTES AND COMPANY COMMON STOCK' of the Offer to Purchase and is incorporated herein by reference. (d) This Schedule 13E-4 is being filed by the issuer. ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a) and (b) The information set forth under 'THE OFFER--Principal Terms of the Offer' of the Offer to Purchase is incorporated herein by reference. ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE. The information set forth under 'THE OFFER--Purpose of the Offer' of the Offer to Purchase is incorporated herein by reference. Any Notes that are purchased by the Company will be retired. There presently are no plans which relate to or would result in: (a) The acquisition by any person of additional securities of the Company, or the disposition of the securities of the Company; (b) An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries; (c) A sale or transfer of a material amount of assets of the Company or any of its subsidiaries; (d) Any change in the present board of directors or management of the Company including, but not limited to, any plans or proposals to change the number or the term of directors (except as disclosed in the Company's proxy statement for the 1996 Annual Meeting of Stockholders scheduled to be held on June 26, 1996), to fill any existing vacancy on the board or to change any material term of the employment contract of any executive officer; (e) Any material change in the present dividend rate or policy, or indebtedness or capitalization of the company; (f) Any other material change in the Company's corporate structure or business; (g) Changes in the Company's charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Company by any person; (h) Causing a class of equity security of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) A class of equity security of the Company becoming eligible for termination of registration pursuant to Section 12 (g) (4) of the Securities Exchange Act of 1934 (the 'Act'); or (j) The suspension of the issuer's obligation to file reports pursuant to Section 15 (d) of the Act. 2 ITEM 4. INTEREST IN SECURITIES OF THE ISSUER. During the past 40 business days, there have been no transactions in the Notes effected by the Company or, to the best knowledge of the Company, by any of its directors or executive officers. ITEM 5. CONTRACTS, AGREEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE ISSUER'S SECURITIES. Except for Article III of the Indenture herewith filed, there are no contracts, arrangements, understandings, or relationships relating directly or indirectly to the tender offer (whether or not legally enforceable) between the Company (or, to the knowledge of the Company, any director or executive officer of the Company) and any person with respect to any securities of the Company, including, without limitation, any contract, arrangement, understanding, or relationship concerning the transfer or the voting of any of such securities, joint ventures, loan or option arrangements, puts or calls, guaranties or loans, guaranties against loss, or the giving or withholding of proxies, consents or authorizations. The information set forth under 'DESCRIPTION OF THE NOTES' of the Offer to Purchase is incorporated herein by reference. ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. There are no persons employed, retained or to be compensated by the Company to make solicitations or recommendations in connection with the tender offer. ITEM 7. FINANCIAL INFORMATION. The information set forth under 'PRICE RANGE OF NOTES AND COMPANY COMMON STOCK,' 'CERTAIN FEDERAL INCOME TAX CONSIDERATIONS' and 'HISTORICAL FINANCIAL INFORMATION OF THE COMPANY' of the Offer to Purchase is incorporated herein by reference. ITEM 8. ADDITIONAL INFORMATION. (a)-(e) The information set forth in the Offer to Purchase and Purchase Notice and Letter of Transmittal, copies of which are filed herewith as Exhibits (a)(1) and (a)(2), respectively, is incorporated herein by reference. ITEM 9. MATERIAL TO BE FILED AS EXHIBITS. (a)(1) Offer to Purchase, dated June 25, 1996. (a)(2) Purchase Notice and Letter of Transmittal. (a)(3) Notice of Guaranteed Delivery. (a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and other nominees. (a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and other nominees. (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (b) None. (c) Indenture, dated as of July 15, 1991, between the Company and Harris Trust and Savings Bank, as Trustee, relating to $460,000,000 in principal amount of Zero Coupon Convertible Subordinated Notes due 2006. (d) None. (e) None. (f) None.
3 SIGNATURES After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: June 25, 1996 RITE AID CORPORATION By: /s/ ELLIOT S. GERSON -------------------------------- Name: Elliot S. Gerson Title: Senior Vice President and Assistant Chief Legal Counsel 4 EXHIBIT INDEX
EXHIBIT SEQUENTIAL NUMBER DESCRIPTION PAGE NO. - ------ -------------------------------------------------------------------------------------------- ----------- (a)(1) -- Offer to Purchase, dated June 25, 1996. (a)(2) -- Purchase Notice and Letter of Transmittal. (a)(3) -- Notice of Guaranteed Delivery. (a)(4) -- Letter to Brokers, Dealers, Commercial Banks, Trust Companies and other nominees. (a)(5) -- Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and other nominees. (a)(6) -- Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (c) -- Indenture, dated as of July 15, 1991, between the Company and Harris Trust and Savings Bank, as Trustee, relating to $460,000,000 in principal amount of Zero Coupon Convertible Subordinated Notes due 2006.
EX-99.(A)(1) 2 OFFER TO PURCHASE Offer to Purchase for Cash by RITE AID CORPORATION Any and All of Its Zero Coupon Convertible Subordinated Notes due 2006 At a Purchase Price of $514.86 For Each $1,000 Principal Amount at Stated Maturity of Notes THIS COMPANY NOTICE AND OFFER TO PURCHASE FOR CASH (THE 'OFFER TO PURCHASE') ANY AND ALL ZERO COUPON CONVERTIBLE SUBORDINATED NOTES DUE 2006 OF RITE AID CORPORATION (THE 'NOTES') WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JULY 24, 1996 (THE 'PURCHASE DATE'). A HOLDER'S WRITTEN NOTICE REQUESTING PURCHASE OF ANY OR ALL OF HIS NOTES (A 'PURCHASE NOTICE') MAY BE WITHDRAWN AT ANY TIME ON OR PRIOR TO THE CLOSE OF BUSINESS ON THE PURCHASE DATE. RITE AID CORPORATION (THE 'COMPANY') HEREBY OFFERS, UPON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE AND IN THE ACCOMPANYING PURCHASE NOTICE (WHICH TOGETHER CONSTITUTE THE 'OFFER' ), AND AS REQUIRED BY THE PROVISIONS OF THE INDENTURE, DATED AS OF JULY 15, 1991, GOVERNING THE NOTES, TO PURCHASE FOR CASH ANY AND ALL NOTES, AT THE OPTION OF THE HOLDER, ON THE PURCHASE DATE FOR A PURCHASE PRICE OF $514.86 FOR EACH $1,000 PRINCIPAL AMOUNT AT STATED MATURITY OF NOTES (THE 'PURCHASE PRICE') (WHICH AMOUNT EQUALS THE ISSUE PRICE OF $369.43 PLUS ACCRUED ORIGINAL ISSUE DISCOUNT TO THE PURCHASE DATE). AS OF THE CLOSE OF BUSINESS ON MONDAY, JUNE 24, 1996, THE MARKET PRICE PER $1,000 PRINCIPAL AMOUNT AT STATED MATURITY OF THE NOTES ON THE NEW YORK STOCK EXCHANGE (THE 'NYSE') WAS $510.00. IF THE THEN CURRENT MARKET PRICE OF THE NOTES IS GREATER THAN $514.86 ON THE PURCHASE DATE, JULY 24, 1996, ANY HOLDER OF NOTES WHOSE NOTES ARE PURCHASED IN THE OFFER WILL RECEIVE LESS THAN THE THEN CURRENT MARKET PRICE OF THE NOTES. HOLDERS OF THE NOTES ARE URGED TO OBTAIN A CURRENT MARKET PRICE QUOTATION PRIOR TO DELIVERY OF A PURCHASE NOTICE AND PRIOR TO THE PURCHASE DATE. NEITHER THE BOARD OF DIRECTORS NOR THE MANAGEMENT OF THE COMPANY MAKE ANY RECOMMENDATION AS TO WHETHER ANY HOLDER OF NOTES SHOULD TENDER HIS NOTES PURSUANT TO THE OFFER. EACH HOLDER MUST MAKE HIS OWN DECISION AS TO WHETHER TO TENDER FOR PURCHASE ANY OR ALL OF HIS NOTES. EACH HOLDER OF NOTES IS URGED TO CONTACT HIS OWN INVESTMENT ADVISOR. THE NOTES ARE CONVERTIBLE AT THE OPTION OF THE HOLDERS INTO COMMON STOCK, PAR VALUE $1.00 PER SHARE, OF THE COMPANY ('COMPANY COMMON STOCK'), AT A CONVERSION RATE OF 15.993 SHARES PER $1,000 PRINCIPAL AMOUNT AT STATED MATURITY OF THE NOTES, OR $31.89 PER SHARE BASED ON THE CLOSING PRICE OF THE NOTES ON THE NYSE ON JUNE 24, 1996 AND $32.19 PER SHARE BASED ON THE PURCHASE PRICE. ON JUNE 24, 1996, THE LAST REPORTED SALE PRICE OF THE COMPANY COMMON STOCK ON THE NYSE COMPOSITE TAPE WAS $29.00 PER SHARE. NOTES TENDERED AND NOT WITHDRAWN WILL CEASE TO BE CONVERTIBLE ON THE PURCHASE DATE. IMPORTANT Any Holder desiring to deliver Notes for purchase must deliver a Purchase Notice to Harris Trust and Savings Bank (the 'Paying Agent') at any time from the opening of business on June 25, 1996, the date that is twenty (20) business days preceding the Purchase Date, until the close of business on the Purchase Date. Any Purchase Notice may be withdrawn by the Holder by a written notice of withdrawal delivered to the Paying Agent prior to the close of business on the Purchase Date. The notice of withdrawal shall state the principal amount at maturity and the certificate numbers of the Notes as to which the withdrawal notice relates and the principal amount at maturity, if any, which remains subject to the Purchase Notice. Payment of the Purchase Price for a Note for which a Purchase Notice has been delivered and not withdrawn is conditioned upon delivery of such Note (together with any necessary endorsements) to the Paying Agent at its office in the Borough of Manhattan, The City of New York, or any additional office of the Paying Agent maintained for such purpose, at any time on or prior to the Purchase Date or, if such Note is not immediately available or cannot be delivered on a timely basis, in accordance with the procedures for guaranteed delivery set forth herein. See 'The Offer--Procedures for Tendering Notes,' '--Withdrawal of Purchase Notices' and the instructions contained in the Purchase Notice. Questions and requests for assistance or for additional copies of this Offer to Purchase and the Purchase Notice may be directed to the Paying Agent at the address and telephone number set forth on the back cover page hereof. ------------------------ The Paying Agent is: HARRIS TRUST AND SAVINGS BANK June 25, 1996 To the Holders of Zero Coupon Convertible Subordinated Notes due 2006 of Rite Aid Corporation: Rite Aid Corporation, a Delaware corporation (the 'Company'), hereby offers to purchase for cash any and all outstanding Zero Coupon Convertible Subordinated Notes due 2006 of the Company (the 'Notes'), at the option of each holder thereof (a 'Holder'), upon the terms and subject to the conditions set forth in this Offer to Purchase and in the accompanying Purchase Notice (which together constitute the 'Offer'), at a purchase price of $514.86 for each $1,000 principal amount at stated maturity of Notes (the 'Purchase Price'). The Notes were issued in 1991 pursuant to an Indenture (the 'Indenture'), dated as of July 15, 1991, between the Company and Harris Trust and Savings Bank, as trustee (the 'Trustee'). Any Holder who wishes to be eligible to receive the Purchase Price pursuant to the Offer must validly deliver (and not withdraw) on or prior to the Purchase Date a Purchase Notice covering any Note(s) being delivered for purchase. The Company is not required to give notice of defective tender to a Holder whose delivery of a Purchase Notice is defective and Holders should not rely on the Company to give such notice. The Offer will expire on, and Purchase Notices must be received by the Paying Agent on or prior to, 12:00 midnight, New York City time, on Wednesday, July 24, 1996 (the 'Purchase Date'). The Indenture does not provide that the Offer may be extended past the Purchase Date and accordingly the Offer will not be extended. See 'The Offer--Procedures for Tendering Notes.' NOTWITHSTANDING ANY OTHER PROVISION OF THE OFFER, THE COMPANY'S OBLIGATION TO ACCEPT FOR PURCHASE AND TO PAY FOR THE NOTES VALIDLY TENDERED AND NOT WITHDRAWN PURSUANT TO THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE ABSENCE OF (I) A PRELIMINARY OR PERMANENT INJUNCTION OR OTHER ORDER BY ANY UNITED STATES FEDERAL OR STATE COURT WHICH PREVENTS THE ACCEPTANCE FOR PAYMENT OF, OR PAYMENT FOR, SOME OR ALL OF THE NOTES OR (II) CERTAIN LEGAL ACTIONS WHICH WOULD RENDER THE COMPANY UNABLE TO PURCHASE OR PAY FOR THE NOTES OR TO CONSUMMATE THE OFFER, OR MAKE SUCH PURCHASE, PAYMENT OR CONSUMMATION ILLEGAL. SEE 'THE OFFER--CONDITIONS OF THE OFFER.' Any Purchase Notice delivered by a Holder pursuant to the procedures set forth in this Offer to Purchase and in the accompanying Purchase Notice may be withdrawn by the Holder by a written notice of withdrawal delivered to the Paying Agent at any time prior to the Purchase Date. See 'The Offer--Withdrawal of Purchase Notices.' AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the 'Exchange Act'), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the 'Commission'). Such reports, proxy statements and other information can be inspected and copied at the public reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; 75 Park Place, 14th Floor, New York, New York 10007; and John C. Kluczynski Building, 230 South Dearborn Street, Chicago, Illinois 60604. Copies of such materials can be obtained from the Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such material is also available at the Web site maintained by the Commission at http://www.sec.gov. Such material should also be available for inspection at the offices of the NYSE, 20 Broad Street, New York, New York 10005. The Company has filed with the Commission an Issuer Tender Offer Statement on Schedule 13E-4 (including all amendments thereto, the 'Schedule 13E-4') under the Exchange Act with respect to the Offer. For further information pertaining to the Company and the Offer, reference is made to the Schedule 13E-4 and the exhibits thereto, which may be examined without charge at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington D.C. 20549, and copies of which may be obtained from the Commission upon payment of the prescribed fees. TABLE OF CONTENTS
PAGE ----- THE OFFER................................................................. 1 Purpose of the Offer.................................................. 1 Principal Terms of the Offer.......................................... 1 Purchase Date; Amendment; Termination................................. 1 Conditions of the Offer............................................... 2 Acceptance of Notes for Purchase; Payment for Notes................... 2 Procedures for Tendering Notes........................................ 3 Backup Withholding.................................................... 5 Withdrawal of Purchase Notices........................................ 5 Certain Effects of the Offer.......................................... 5 Paying Agent.......................................................... 6 Expenses.............................................................. 6 DESCRIPTION OF THE NOTES.................................................. 7 PRICE RANGE OF NOTES AND COMPANY COMMON STOCK............................. 8 CERTAIN FEDERAL INCOME TAX CONSIDERATIONS................................. 9 HISTORICAL FINANCIAL INFORMATION OF THE COMPANY........................... 10 DESCRIPTION OF THE COMPANY................................................ 11
i THE OFFER PURPOSE OF THE OFFER The purpose of the Offer is for the Company to satisfy its obligation under the Indenture to purchase, on July 24, 1996, at the option of any Holder thereof, any and all outstanding Notes for which a Purchase Notice has been delivered (and not withdrawn) by any Holder as set forth herein and in the accompanying Purchase Notice. Under the Indenture, the Company has the option of choosing whether to purchase in cash or in shares of Common Stock, $1.00 par value, of the Company ('Company Common Stock') or in any combination thereof any Notes validly delivered for purchase. As reflected in this Offer, the Company has elected to meet its obligation under the Indenture by purchasing for cash any Notes validly tendered. PRINCIPAL TERMS OF THE OFFER The Company hereby offers, upon the terms and subject to the conditions set forth herein and in the accompanying Purchase Notice, to purchase for cash on the Purchase Date, at the option of the Holder thereof, any outstanding Note for which a Purchase Notice has been validly and duly delivered by the Holder to the Paying Agent at any time from the opening of business on June 25, 1996, the date that is twenty (20) business days preceding the Purchase Date, until 12:00 midnight, New York City time, on the Purchase Date and for which such Purchase Notice has not been withdrawn, subject to certain additional conditions set forth below. The Purchase Price of a Note per $1,000 principal amount at stated maturity is $514.86. Pursuant to the Indenture, the Company is required to give notice (the 'Company Notice') not less than twenty (20) business days prior to the Purchase Date to all Holders at their addresses shown in the register of the Registrar (and to beneficial owners as required by applicable law) stating, among other things, whether the Company will pay the Purchase Price of the Notes in cash or Company Common Stock or a combination thereof. This Offer to Purchase constitutes the Company Notice pursuant to the Indenture. The Company has elected to pay the Purchase Price in cash for any and all Notes validly tendered pursuant to this Offer. For a discussion of the tax treatment of the purchase of Notes pursuant to this Offer, see 'Certain Federal Income Tax Considerations.' Assuming that the Company purchases all of the outstanding Notes, the total cost of Notes purchased by the Company would be $205,866,771. It is expected that all funds required to consummate the Offer will be obtained from existing working capital and existing credit facilities of the Company and sales of the Company's commercial paper. However, since the market price of the Notes presently exceeds the Purchase Price of the Notes, the Company does not anticipate that a significant dollar amount of Notes will be delivered for purchase pursuant to Purchase Notices. The Notes are convertible at the option of the Holders into Company Common Stock, at a conversion rate of 15.993 shares per $1,000 principal amount at stated maturity of the Notes, or $31.89 per share based on the closing price of the Notes on the NYSE on June 24, 1996 and $32.19 per share based on the Purchase Price. On June 24, 1996, the last reported sale price of the Company Common Stock on the NYSE Composite Tape was $29.00 per share. Notes tendered and not withdrawn will cease to be convertible on the Purchase Date. PURCHASE DATE; AMENDMENT; TERMINATION The Offer will expire at 12:00 midnight, New York City time, on Wednesday, July 24, 1996 (the 'Purchase Date'). The Indenture does not provide that the Offer may be extended and, accordingly, the Offer will not be extended beyond the Purchase Date. The Company expressly reserves the absolute right, in its sole discretion, to (i) waive any condition of the Offer and (ii) amend the terms of the Offer. Any waiver or amendment applicable to the Offer will apply to all Notes tendered, regardless of when or in what order such Notes were tendered. If the Company makes a change in the terms of the Offer or in the information concerning the Offer in a manner determined by the Company, in its sole discretion, to constitute a material adverse change to the Holders of Notes, the Company will disseminate additional material in respect of the Offer, in each case to the extent required by law. The Company expressly reserves the right, in its sole discretion, to terminate the Offer if any of the conditions set forth below under 'Conditions of the Offer' shall remain unfulfilled and shall not have been 1 waived. Any such termination will promptly be disclosed by the Company. In the event the Company shall terminate the Offer, it shall give immediate notice thereof to the Paying Agent, and all Notes theretofore tendered pursuant to the Offer and not theretofore accepted for purchase shall be returned promptly to the tendering Holders thereof. UPON SUCH TERMINATION, THE COMPANY SHALL HAVE NO OBLIGATION TO PAY THE PURCHASE PRICE WITH RESPECT TO THE NOTES TENDERED PURSUANT TO THE OFFER, ALTHOUGH THE COMPANY WILL STILL HAVE THE LEGAL OBLIGATION PURSUANT TO THE TERMS OF THE INDENTURE TO PURCHASE NOTES FROM HOLDERS WHO DELIVERED PURCHASE NOTICES. See '--Withdrawal of Purchase Notices' and '--Conditions of the Offer.' CONDITIONS OF THE OFFER Notwithstanding any other provision of the Offer, the Company shall not be required to accept for purchase or pay for any Notes tendered, and may terminate or amend the Offer, and may postpone the purchase of, and payment for, Notes tendered if, at any time prior to the time of payment for any such Notes, any of the following events shall occur: (a) a preliminary or permanent injunction or other order by any United States federal or state court which prevents the acceptance for payment of, or payment for, some or all of the Notes shall have been issued and shall remain in effect; or (b) there shall be any action taken, or any statute, rule, regulation or order enacted, promulgated or issued or deemed applicable to the Offer, by any United States federal or state government or governmental agency or instrumentality or court, which would (i) render the Company unable to purchase or pay for the Notes or to consummate the Offer or (ii) make such purchase, payment or consummation illegal; which, in the sole judgment of the Company, in any such case, and regardless of the circumstances (including any action or omission by the Company) giving rise to any condition, makes it inadvisable to proceed with the Offer or with such acceptance for purchase or payment. The conditions to the Offer are for the sole benefit of the Company, and may be asserted by the Company in its sole discretion regardless of the circumstances giving rise to such conditions or may be waived by the Company, in whole or in part, in its sole discretion. The Board of Directors of the Company has not made a decision as to what circumstances would lead it to waive any such condition, and any such waiver would depend on circumstances prevailing at the time of such waiver. Any determination by the Company concerning the events described in the foregoing paragraph shall be final and binding upon all persons. ACCEPTANCE OF NOTES FOR PURCHASE; PAYMENT FOR NOTES Upon the terms and subject to the conditions of the Offer, on the close of business on the Purchase Date, the Company is obligated to accept Purchase Notices from any Holders of Notes who desire to deliver such Notes for purchase. The Company expressly reserves the right, in its sole discretion, to delay acceptance for purchase of Notes tendered under the Offer or the payment for Notes accepted for purchase (subject to Rule 14e-1 under the Exchange Act, which requires that the Company pay the consideration offered or return the Notes deposited by or on behalf of the Holders of Notes promptly after the termination or withdrawal of the Offer), or to terminate the Offer, if any of the conditions set forth above under '--Conditions of the Offer' shall exist and shall not have been validly waived by the Company or in order to comply in whole or in part with any applicable law. See '--Conditions of the Offer.' In all cases, payment for Notes accepted for purchase pursuant to the Offer will be made only after timely receipt by the Paying Agent of Notes, a properly completed and duly executed Purchase Notice and any other documents required by the Purchase Notice. The Purchase Notice given by each Holder electing to require the Company to purchase Notes shall state (i) the certificate numbers of the Notes to be delivered by such Holder for purchase by the Company; (ii) the portion of the principal amount at maturity of Notes to be purchased, which portion must be $1,000 or an integral multiple thereof; and (iii) that such Notes are to be purchased by the Company pursuant to the applicable provisions of the Notes. Notes may not be purchased pursuant to the provisions described above if there has occurred and is continuing an Event of Default (other than a default in the payment of the Purchase Price with respect to such Notes) as described in the Indenture. 2 For purposes of the Offer, the Company will be deemed to have accepted for purchase validly tendered Notes (or defectively tendered Notes with respect to which the Company has waived such defect) if, as and when the Company gives oral or written notice thereof to the Paying Agent. Payment of the Purchase Price for a Note for which a Purchase Notice has been delivered and not withdrawn is conditioned upon delivery of such Note (together with necessary endorsements) to the Paying Agent at its office in the Borough of Manhattan, The City of New York, or any additional office of the Paying Agent maintained for such purpose, at any time on or prior to the Purchase Date or, if such Note is not immediately available or cannot be delivered on a timely basis, in accordance with the procedures for guaranteed delivery set forth herein (see '--Procedures For Tendering Notes'). Payment of the Purchase Price for Notes will be made promptly following the Purchase Date. If the Paying Agent holds, in accordance with the terms of the Indenture, money or securities sufficient to pay the Purchase Price of Notes on the business day following the Purchase Date, then, on and after such date, the Original Issue Discount on such Note will cease to accrue, whether or not such Note is delivered to the Paying Agent, and all other rights of the Holder shall terminate (other than the right to receive the Purchase Price upon delivery of the Note). The Company shall purchase from the Holder thereof a portion of the Note if the Principal Amount (as defined in the Indenture) of such portion is $1,000 or an integral multiple of $1,000. If, for any reason, acceptance for purchase of or payment for validly tendered Notes pursuant to the Offer is delayed or the Company is unable to accept for purchase or pay for validly tendered Notes pursuant to the Offer, then, without prejudice to the rights of the Company under '--Purchase Date; Amendment; Termination' and '--Conditions of the Offer' above and '--Withdrawal of Purchase Notices' below, but subject to Rule 14e-1 under the Exchange Act (which requires that the Company pay the consideration offered or return the Notes tendered promptly after the termination or withdrawal of an Offer), the Paying Agent may, nevertheless, on behalf of the Company, retain tendered Notes and such Notes may not be withdrawn. If any tendered Notes are not accepted for payment for any reason pursuant to the terms and conditions of the Offer or if certificates are submitted evidencing more Notes than are tendered, certificates evidencing unpurchased Notes will be returned, without expense, to the tendering Holder, unless otherwise requested by such Holder under 'Special Delivery Instructions' in the Purchase Notice, as promptly as practicable following the Purchase Date or termination of the Offer. Tendering Holders of Notes purchased in the Offer will not be obligated to pay brokerage commissions or fees or to pay transfer taxes with respect to the purchase of their Notes unless the box entitled 'Special Issuance Instructions' or the box entitled 'Special Delivery Instructions' in the Purchase Notice has been completed, as described in the Instructions to such Purchase Notice. The Company will pay all other charges and expenses of the Company in connection with the Offer. See '--Paying Agent' below. PROCEDURES FOR TENDERING NOTES Holders who do not tender their Notes by delivering a Purchase Notice on or before the Purchase Date will not receive the Purchase Price. In order for a Holder to validly tender Notes, a properly completed and duly executed Purchase Notice, together with any signature guarantees and any other documents required by the Instructions to such Purchase Notice (including any required signature guarantees by an Eligible Institution (as defined herein)), must be received by the Paying Agent at one of its addresses set forth herein and certificates for tendered Notes (or a duly executed Notice of Guaranteed Delivery) must be received by the Paying Agent at any of such addresses on or prior to the Purchase Date. NO BOOK-ENTRY TRANSFERS OF NOTES WILL BE ACCEPTED. A HOLDER WHO DESIRES TO DELIVER FOR PURCHASE ANY NOTE(S) MUST DELIVER OR ARRANGE FOR PHYSICAL DELIVERY OF SUCH NOTE(S) TO THE PAYING AGENT PRIOR TO THE PURCHASE DATE. A Holder who desires to tender Notes and who cannot comply with the procedures set forth herein for tender on a timely basis or whose Notes are not immediately available must comply with the procedures for guaranteed delivery set forth below. PURCHASE NOTICES AND NOTES SHOULD BE SENT ONLY TO THE PAYING AGENT AND NOT TO THE COMPANY. If the certificates for Notes are registered in the name of a person other than the signer of a Purchase Notice, then, in order to tender such Notes, the certificates for such Notes must be endorsed or accompanied by appropriate bond powers signed exactly as the name or names of the registered owner or owners appear on the certificates, with the signatures on the certificates or bond powers guaranteed as provided below. 3 Any beneficial owner whose Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender Notes should contact the registered Holder promptly and instruct such registered Holder to tender Notes and deliver a Purchase Notice on such beneficial owner's behalf. If such beneficial owner wishes to tender such Notes himself, such beneficial owner must, prior to completing and executing the Purchase Notice and delivery of such Notes, either make appropriate arrangements to register ownership of the Notes in such beneficial owner's name or follow the procedures described above. The transfer of record ownership may take considerable time. THE METHOD OF DELIVERY OF NOTES, PURCHASE NOTICES AND ALL OTHER REQUIRED DOCUMENTS TO THE PAYING AGENT IS AT THE ELECTION AND RISK OF THE HOLDER TENDERING NOTES. IF SUCH DELIVERY IS BY MAIL, IT IS SUGGESTED THAT THE HOLDER USE PROPERLY INSURED, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, AND THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE PURCHASE DATE TO PERMIT DELIVERY TO THE PAYING AGENT PRIOR TO SUCH DATE. No signature guarantee is required if (i) the Purchase Notice is signed by the registered Holder of the Notes tendered therewith and payment of the Purchase Price is to be made, or if any Notes for principal amounts not tendered or not accepted for purchase are to be issued, directly to such registered Holder and neither the 'Special Issuance Instructions' box nor the 'Special Delivery Instructions' box on the Purchase Notice has been completed or (ii) such Notes are tendered for the account of a bank, broker, dealer, credit union, savings association or other entity that is a member of a recognized Medallion Program approved by the Securities Transfer Association, Inc. (an 'Eligible Institution'). In all other cases, all signatures on Purchase Notices accompanying Notes must be guaranteed by an Eligible Institution. If a Holder desires to tender Notes pursuant to the Offer, but the certificates evidencing such Notes have been mutilated, lost, stolen or destroyed, such Holder should write to or telephone the Trustee, at the address or telephone number listed below, about procedures for obtaining replacement certificates for Notes and arranging for indemnification or about any other matter which requires handling by such Trustee: Trustee: Harris Trust and Savings Bank 311 West Monroe Street 11th Floor, Bond Service Unit Chicago, IL 60606 (312) 461-2532 Notwithstanding any other provision of the Offer, payment of the Purchase Price in exchange for Notes tendered and accepted for purchase pursuant to the Offer will, in all cases, occur only after timely receipt by the Paying Agent of the tendered Notes together with a properly completed and duly executed Purchase Notice and any other required documents. If a Holder desires to tender Notes pursuant to the Offer, and (i) certificates representing the Notes are not lost but are not immediately available or (ii) time will not permit such Holder's certificates representing Notes or other required documents to reach the Paying Agent prior to the Purchase Date, a tender may be effected if all of the following are complied with: (a) on or prior to the Purchase Date, the Paying Agent has received a properly completed and duly executed Purchase Notice; (b) such tender is made by or through an Eligible Institution; (c) on or prior to the Purchase Date, the Paying Agent has received from such Eligible Institution at one of the addresses of the Paying Agent set forth herein, a properly completed and duly executed Notice of Guaranteed Delivery (at the address specified on the cover thereof) substantially in the form provided by the Company; and (d) certificates for all physically delivered Notes pursuant to the Purchase Notice in proper form for transfer and other required documents are received by the Paying Agent within three NYSE trading days after the date of the Notice of Guaranteed Delivery. 4 Tenders of Notes pursuant to any of the procedures described above and acceptance thereof by the Company will constitute a binding agreement between the tendering Holder and the Company upon the terms and subject to the conditions of the Offer. All questions as to the form of all documents and the validity (including time of receipt) and acceptance of all tenders of Notes will be determined by the Company, in its sole discretion, whose determination shall be final and binding. CONDITIONAL OR CONTINGENT TENDERS WILL NOT BE CONSIDERED VALID. The Company reserves the absolute right to reject any or all tenders of Notes that are not in proper form or the acceptance of which would, in the Company's opinion, be unlawful. The Company also reserves the right to waive any defects, irregularities or conditions of tenders to particular Notes. Any defect or irregularity in connection with tenders of Notes must be cured within such time as the Company determines, unless waived by the Company. Tenders of Notes shall not be deemed to have been made until all defects and irregularities have been waived by the Company or cured. None of the Company, the Paying Agent or any other person will be under any duty to give notice of any defects or irregularities in tenders of Notes or delivery of Purchase Notices, or will incur any liability to Holders for failure to give any such notice. BACKUP WITHHOLDING A Holder whose tendered Notes are accepted for purchase must provide the Paying Agent (as payor) with such Holder's correct taxpayer identification number, which, in the case of a Holder who is an individual, is such Holder's social security number, or otherwise establish a basis for exemption from backup withholding. (In this regard, corporations are generally exempt from backup withholding provided they properly establish their status when required to do so.) If the Paying Agent is not provided with the correct taxpayer identification number or adequate basis for exemption, the Holder may be subject to penalties imposed by the Internal Revenue Service (the 'IRS') and backup withholding at a rate of 31%. If withholding results in an overpayment of taxes, a refund may be obtained from the IRS. TO PREVENT BACKUP WITHHOLDING, EACH TENDERING HOLDER THAT IS A UNITED STATES PERSON SHOULD COMPLETE AND SIGN THE SUBSTITUTE FORM W-9 INCLUDED IN THE PURCHASE NOTICE AND EITHER: (I) PROVIDE ITS CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY THAT THE TAXPAYER IDENTIFICATION NUMBER PROVIDED IS CORRECT (OR THAT SUCH HOLDER IS AWAITING A TAXPAYER IDENTIFICATION NUMBER) AND (A) THE HOLDER HAS NOT BEEN NOTIFIED BY THE IRS THAT THE HOLDER IS SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF A FAILURE TO REPORT ALL INTEREST OR DIVIDENDS, OR (B) THE IRS HAS NOTIFIED THE HOLDER THAT THE HOLDER IS NO LONGER SUBJECT TO BACKUP WITHHOLDING, OR (II) OTHERWISE PROVIDE AN ADEQUATE BASIS FOR EXEMPTION. WITHDRAWAL OF PURCHASE NOTICES Any Purchase Notice may be withdrawn by the Holder by a written notice of withdrawal delivered to the Paying Agent at any time on or prior to the close of business on the Purchase Date. The notice of withdrawal shall state the principal amount at maturity and the certificate numbers of the Notes as to which the withdrawal notice relates and the principal amount at maturity, if any, which remains subject to the Purchase Notice. Any Notes as to which a Purchase Notice has been given may be converted into Company Common Stock only if the applicable Purchase Notice has been withdrawn in accordance with the terms of the Offer and the Indenture. If the Company is delayed in its acceptance for purchase of, or payment for, any Notes pursuant to the Offer or is unable to accept for purchase or pay for Notes pursuant to the Offer, for any reason, then, without prejudice to the Company's rights hereunder, tendered Notes may be retained by the Paying Agent on behalf of the Company and may not be withdrawn (subject to Rule 14e-1 under the Exchange Act, which requires that the Company pay the consideration offered or return the Notes deposited by or on behalf of the Holders promptly after the termination or withdrawal of the Offer). See '--Acceptance of Notes for Purchase; Payment for Notes.' CERTAIN EFFECTS OF THE OFFER The purchase of Notes pursuant to the Offer will reduce the amount of Notes that might otherwise trade publicly and may reduce the number of holders of Notes. Nonetheless, it is anticipated that there will be a sufficient amount of Notes outstanding and publicly traded following the Offer so as to not adversely affect the 5 market therefor. Based upon the published guidelines of the NYSE, on which the Notes are currently listed, it is expected that the purchase of Notes pursuant to the Offer will not cause the Company's remaining Notes to be delisted from the NYSE. The Notes are currently 'margin securities' under the rules of the Federal Reserve Board, which has the effect, among other things, of allowing brokers to extend credit on the collateral of such Notes. It is expected that, following the repurchase of Notes pursuant to the Offer, the Notes will continue to be 'margin securities' for purposes of the Federal Reserve Board's margin regulations. The Notes are registered under the Exchange Act, which requires, among other things, that the Company furnish certain information to its shareholders and to the Commission and comply with the Commission's proxy rules in connection with meetings of the Company's shareholders. It is expected that the purchase of Notes pursuant to the Offer will not result in the Notes becoming eligible for termination of registration under the Exchange Act. PAYING AGENT Harris Trust and Savings Bank is acting as Paying Agent for the Offer. Purchase Notices and all correspondence in connection with the Offer should be sent or delivered by each Holder or a beneficial owner's broker, dealer, commercial bank, trust company or other nominee to the Paying Agent at the addresses and telephone number set forth on the back cover page of this Offer to Purchase. Purchase Notices should be sent to the Paying Agent and should not be sent directly to the Company. The Company has agreed to pay the Paying Agent reasonable and customary fees for its services and to reimburse the Paying Agent for its reasonable out-of-pocket expenses in connection therewith. EXPENSES Costs of this Offer will be borne by the Company. In addition to compensation to the Paying Agent, the Company will pay brokerage houses and other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding copies of this Offer to Purchase and any related documents to the beneficial owners of the Notes, and in handling or forwarding Purchase Notices for their customers. No charge, expense or fee of any kind will be payable by any Holder in connection with the Offer. 6 DESCRIPTION OF THE NOTES The following summary of certain provisions of the Indenture does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the Indenture, including the definitions therein of certain terms. Wherever particular sections or defined terms of the Indenture are referred to, such sections or defined terms are incorporated by reference. A copy of the Indenture may be obtained from the Commission. See 'Available Information.' A copy may also be obtained, free of charge, by writing to the Trustee. The Notes are unsecured, subordinated obligations of the Company limited to $460,000,000 (including the Over-Allotment Option under the Indenture) aggregate principal amount at maturity due on July 24, 2006. As of June 25, 1996, there were outstanding Notes representing $399,850,000 aggregate principal amount at maturity. Each Note has an Issue Price of $369.43 and a principal amount due at maturity of $1,000. The yield to maturity of the Notes is 6.75% per annum (computed on a semi-annual bond equivalent basis) calculated from July 24, 1991. There are no periodic payments of interest on the Notes. The Notes are convertible at any time on or prior to maturity at the option of the Holder, unless previously redeemed or otherwise purchased, into Company Common Stock at the conversion rate of 15.993 shares per Note (the 'Conversion Rate'). The Conversion Rate will not be adjusted for accrued Original Issue Discount, but will be subject to adjustment upon the occurrence of certain events affecting the Common Stock as set forth in the Indenture. Upon conversion, the Holder will not receive any cash payment representing accrued Original Issue Discount; such accrued Original Issue Discount will be deemed paid by the Company Common Stock received on conversion. The name and address of the Conversion Agent is Harris Trust and Savings Bank, 311 West Monroe Street, Chicago, Illinois 60606. The Notes are subordinated in right of payment to all existing and future senior indebtedness of the Company and effectively subordinated to indebtedness and other liabilities of subsidiaries of the Company. No sinking fund provision exists with respect to the Notes. Each Note was offered at an Original Issue Discount for federal income tax purposes equal to the excess of the principal amount at maturity of the Note over the amount of its Issue Price. The Notes are presently redeemable in cash at any time, at the option of the Company, in whole or in part, at Redemption Prices equal to the Issue Price plus accrued Original Issue Discount to the date of redemption. On July 24, 1996 and July 24, 2001, the Company will become obligated to purchase, at the option of the Holder thereof, any outstanding Note for which a Purchase Notice has been delivered by the Holder to the Paying Agent or an office or agency maintained by the Paying Agent for such purpose in the Borough of Manhattan, The City of New York, at any time from the opening of business on the date that is 20 business days preceding such Purchase Date until the close of business on such Purchase Date and for which such Purchase Notice has not been withdrawn, subject to certain conditions set forth below. The Purchase Price of a Note per $1,000 principal amount at stated maturity on July 24, 1996 is $514.86, and on July 24, 2001 is $717.54. The Company, at its option, may elect to pay such Purchase Price in cash or shares of Company Common Stock or in any combination thereof. The Company has elected to pay the Purchase Price for the July 24, 1996 Purchase Date in cash. As of thirty-five (35) business days after the occurrence of any Change in Control of the Company (as defined in the Indenture) occurring on or prior to July 24, 1996, subject to certain restrictions, the Company will purchase for cash any Note, at the option of the Holder, at a price equal to the Issue Price plus accrued Original Issue Discount to the date set for such purchase. The ability of the Company to pay the Change in Control Purchase Price (as defined in the Indenture) could result in acceleration of the maturity of other indebtedness, including senior indebtedness, of the Company pursuant to certain cross-default provisions. 7 PRICE RANGE OF NOTES AND COMPANY COMMON STOCK The following tables contain the high/ask and low/bid prices for the Notes and the high and low sales prices for the Company Common Stock, respectively, as listed on the NYSE. The Notes and Company Common Stock are currently traded on the NYSE. Prices for the Notes set forth below are per $1,000 principal amount at stated maturity. HOLDERS OF NOTES ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE NOTES. NOTES
HIGH/ASK LOW/BID -------- ------- 1994 First Calendar Quarter.......................................................... $ 445.00 $433.75 Second Calendar Quarter......................................................... 442.65 435.00 Third Calendar Quarter.......................................................... 453.75 442.50 Fourth Calendar Quarter......................................................... 457.50 450.00 1995 First Calendar Quarter.......................................................... 475.00 450.00 Second Calendar Quarter......................................................... 485.00 467.50 Third Calendar Quarter.......................................................... 500.00 477.50 Fourth Calendar Quarter......................................................... 540.00 497.50 1996 First Calendar Quarter.......................................................... 550.00 510.00 Second Calendar Quarter (through June 24, 1996)................................. 535.00 440.00
AS OF THE CLOSE OF BUSINESS ON MONDAY, JUNE 24, 1996, THE MARKET PRICE FOR EACH $1,000 PRINCIPAL AMOUNT AT STATED MATURITY OF NOTES ON THE NYSE WAS $510.00. HOLDERS OF THE NOTES ARE URGED TO OBTAIN A CURRENT MARKET PRICE QUOTATION PRIOR TO DELIVERY OF A PURCHASE NOTICE AND PRIOR TO THE PURCHASE DATE. Since no periodic interest is paid on the Notes, a portion of the increase in the market price of the Notes is attributable to accrued original issue discount. Other factors affect the market price, however, including the prevailing interest rates, the market price of the Company Common Stock into which the Notes are convertible, the market's perception of the Company's debt paying abilities and other factors. Each holder of Notes is urged to contact an investment advisor. COMPANY COMMON STOCK
HIGH LOW ------- ------- 1995 First Fiscal Quarter............................................................ $20.375 $18.125 Second Fiscal Quarter........................................................... 21.50 18.875 Third Fiscal Quarter............................................................ 24.00 20.00 Fourth Fiscal Quarter........................................................... 26.375 21.625 1996 First Fiscal Quarter............................................................ 25.50 22.25 Second Fiscal Quarter........................................................... 29.00 24.25 Third Fiscal Quarter............................................................ 32.625 26.625 Fourth Fiscal Quarter........................................................... 34.25 30.25 1997 First Fiscal Quarter............................................................ 34.50 27.625 Second Fiscal Quarter (through June 24, 1996)................................... 30.25 28.875
On June 24, 1996, the last reported sale price of the Company Common Stock on the NYSE Composite Tape was $29.00 per share. 8 CERTAIN FEDERAL INCOME TAX CONSIDERATIONS The following is a general summary of the principal federal income tax consequences of the sale of Notes pursuant to the Offer by Holders who are United States persons and who hold such Notes as capital assets. This summary does not address the federal income tax consequences to all categories of Holders, and certain Holders (including insurance companies, tax-exempt organizations, financial institutions, brokers, dealers, nonresident aliens, foreign corporations, foreign partnerships and foreign estates) may be subject to special rules not discussed herein. This summary does not discuss federal tax consequences other than income tax consequences, and does not discuss foreign, state or local income or other tax laws. This summary is based upon current provisions of the Internal Revenue Code of 1986, as amended (the 'Code'), applicable Treasury Regulations promulgated thereunder, judicial authority and current Internal Revenue Service rulings and practice, all of which are subject to change, possibly on a retroactive basis. EACH HOLDER IS URGED TO CONSULT A TAX ADVISOR REGARDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF SELLING NOTES PURSUANT TO THE OFFER, IN LIGHT OF SUCH HOLDER'S PARTICULAR CIRCUMSTANCES. The sale of Notes by a Holder pursuant to the Offer will be a taxable transaction. A selling Holder will recognize gain or loss upon the sale equal to the difference between the amount of cash received and the Holder's adjusted tax basis in the Notes sold. The adjusted tax basis of a Holder in a Note generally will equal the price such Holder paid for the Note, increased by market discount or original issue discount to the extent that any such market discount or original issue discount was previously included in income by the Holder, and reduced (but not below zero) by any amortized bond premium in respect of such Note. The gain or loss, if any, realized by a selling Holder generally will be capital gain or loss and will be long-term capital gain or loss if such Holder has held its Notes for more than one year at the time of the sale. However, any Holder who acquired Notes with market discount (i.e., who acquired Notes after their original issuance for a purchase price less than the issue price of such Notes increased by the amount of original issue discount includible in the income of all holders for all periods before the taxpayer's acquisition of the Notes) generally will be required to treat any gain realized pursuant to the Offer as ordinary income to the extent of the market discount accrued to the date of the exchange, less any accrued market discount income previously reported as ordinary income. 9 HISTORICAL FINANCIAL INFORMATION OF THE COMPANY The following table sets forth certain selected historical financial data of the Company for each of the last five years. The selected historical financial data for the last five years has been derived from the audited historical financial statements of the Company and should be read in conjunction with such information. See 'Available Information'.
MARCH 2, MARCH 4, FEB. 26, FEB. 27, FEB. 29, 1996 1995 1994 1993 1992 (52 WEEKS) (53 WEEKS) (52 WEEKS) (52 WEEKS) (52 WEEKS) ---------- ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) SUMMARY OF OPERATIONS: Net Sales........................................ $5,446,017 $4,533,851 $4,058,711 $3,833,591 $3,530,560 Cost of goods sold, including occupancy costs.... 4,017,351 3,327,920 2,970,025 2,804,787 2,564,751 Selling, general and administrative expenses..... 1,104,123 932,167 865,137 798,848 741,144 Interest expense................................. 68,341 42,300 28,683 29,387 37,463 Restructuring and other charges.................. -- -- 149,196 -- -- ---------- ---------- ---------- ---------- ---------- Income from continuing operations before income taxes.......................................... 256,202 231,464 45,670 200,569 187,202 Income taxes..................................... 97,255 90,178 19,462 76,819 72,261 ---------- ---------- ---------- ---------- ---------- Income from continuing operations................ 158,947 141,286 26,208 123,750 114,941 Income (loss) from discontinued operations, net of income taxes................................ -- -- (16,920) 8,646 9,075 ---------- ---------- ---------- ---------- ---------- Net income....................................... $ 158,947 $ 141,286 $ 9,288 $ 132,396 $ 124,016 ---------- ---------- ---------- ---------- ---------- PER SHARE OF COMMON STOCK: Income from continuing operations................ $ 1.90 $ 1.67 $ .30 $ 1.41 $ 1.32 Net income....................................... $ 1.90 $ 1.67 $ .11 $ 1.51 $ 1.43 Dividends per share.............................. $ .695 $ .62 $ .60 $ .5625 $ .5125 Book value, based on shares outstanding at year end............................................ $ 13.16 $ 12.02 $ 11.10 $ 11.76 $ 10.82 ---------- ---------- ---------- ---------- ---------- YEAR-END FINANCIAL POSITION: Working capital.................................. $ 835,049 $ 795,995 $ 763,216 $ 811,645 $ 723,195 Current ratio.................................... 2.33:1 2.38:1 3.11:1 4.03:1 3.49:1 Property, plant and equipment (net).............. $ 979,549 $ 778,479 $ 638,694 $ 551,392 $ 502,728 Long-term debt................................... $ 994,321 $ 805,984 $ 613,418 $ 489,220 $ 427,503 Total assets..................................... $2,841,995 $2,472,607 $1,989,070 $1,858,506 $1,734,479 Stockholders' equity............................. $1,103,619 $1,011,812 $ 954,714 $1,035,643 $ 950,575 ---------- ---------- ---------- ---------- ----------
* * * RECENT FINANCIAL RESULTS ------------------------ On June 24, 1996, the Company announced its sales and earnings for the first quarter ended June 1, 1996. Sales for the quarter were $1,405,302,000 or 3.7% higher compared to $1,354,841,000 in the first quarter of last year. Earnings for the period were $32,716,000 or $.39 per share compared to $38,383,000 or $.46 per share a year earlier. The results for the quarter ended June 1, 1996 included a pre-tax charge of $16,057,000 for expenses associated with the attempted acquisition of Revco D.S., Inc. On an after tax basis, the charge was $9,955,000 or $.12 per share. 10 DESCRIPTION OF THE COMPANY The Company is a Delaware corporation with its principal executive offices located at 30 Hunter Lane, Camp Hill, Pennsylvania 17011. The telephone number of the Company at such offices is (717)761-2633. The Company is one of the largest retail drugstore chains in the United States. As of March 2, 1996, the Company operated 2,759 drugstores, ranging approximately from 7,200 to 11,000 square feet per store in size, in twenty-one states and the District of Columbia. The Company and its subsidiaries employed over 35,700 employees. Pharmacy service forms the core of the Company's business, with prescriptions accounting for approximately 55% of drugstore sales in the year ended March 2, 1996. The Company's drugstores cater to convenience, offering a full selection of health and personal care products, seasonal merchandise and a large private label product line. Express mail with complementary services and one hour photo departments have recently been added in select locations. The Company also operates Eagle Managed Care Corporation, a wholly owned subsidiary, which markets prescription plans and sells other managed health care services to large employer and government-sponsored employee benefit programs. 11 The Purchase Notice, certificates for the Notes and any other required documents should be sent or hand-delivered by each Holder or his broker, dealer, commercial bank, trust company or other nominee to the Paying Agent as follows: The Paying Agent is: HARRIS TRUST AND SAVINGS BANK By Mail or Overnight Courier: By Hand: Harris Trust Company of New York Harris Trust Company of New York 77 Water Street Receive Window 4th Floor 77 Water Street New York, NY 10005 4th Floor New York, NY 10005 or or Harris Trust and Savings Bank Harris Trust and Savings Bank 311 West Monroe Street 311 West Monroe Street 11th Floor, Bond Service Unit 11th Floor, Bond Service Unit Chicago, Illinois 60606 Chicago, Illinois 60606 Telephone: (312) 461-2532 Any questions or requests for assistance or additional copies of this Offer to Purchase, the Purchase Notice or other materials may be directed to the Paying Agent at the telephone number and addresses listed above. You may also contact your broker, dealer, commercial bank or trust company or other nominee for assistance concerning the Offer. EX-99.(A)(2) 3 PURCHASE NOTICE AND LETTER OF TRANSMITTAL PURCHASE NOTICE and LETTER OF TRANSMITTAL To Tender Zero Coupon Convertible Subordinated Notes due 2006 of RITE AID CORPORATION Pursuant to the Offer to Purchase Dated June 25, 1996 by RITE AID CORPORATION THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JULY 24, 1996. THE PAYING AGENT FOR THE OFFER IS: HARRIS TRUST AND SAVINGS BANK By Hand: By Overnight Courier or By Mail: Harris Trust Company of New York Harris Trust Company of New York Receive Window 77 Water Street 77 Water Street 4th Floor 4th Floor New York, NY 10005 New York, NY 10005 or or Harris Trust and Savings Bank Harris Trust and Savings Bank 311 West Monroe Street 311 West Monroe Street 11th Floor, Bond Service Unit 11th Floor, Bond Service Unit Chicago, Illinois 60606 Chicago, Illinois 60606
------------------------ NOTE: THE PURCHASE PRICE OF THE NOTES IS $514.86 FOR EACH $1,000 PRINCIPAL AMOUNT AT STATED MATURITY OF THE NOTES. THE MARKET PRICE FOR EACH $1,000 PRINCIPAL AMOUNT AT STATED MATURITY OF THE NOTES ON JUNE 24, 1996 WAS $510.00. HOLDERS ARE URGED TO CONSIDER THE CURRENT MARKET PRICE OF THE NOTES BEFORE TENDERING SUCH NOTES IN THE OFFER AND PRIOR TO THE PURCHASE DATE. THE NOTES ARE CONVERTIBLE AT THE OPTION OF THE HOLDERS INTO COMMON STOCK, PAR VALUE $1.00 PER SHARE, OF THE COMPANY ('COMPANY COMMON STOCK'), AT A CONVERSION RATE OF 15.993 SHARES PER $1,000 PRINCIPAL AMOUNT AT STATED MATURITY OF THE NOTES, OR $31.89 PER SHARE BASED ON THE CLOSING PRICE OF THE NOTES ON THE NEW YORK STOCK EXCHANGE (THE 'NYSE') ON JUNE 24, 1996 AND $32.19 PER SHARE BASED ON THE PURCHASE PRICE. ON JUNE 24, 1996, THE LAST REPORTED SALE PRICE OF THE COMPANY COMMON STOCK ON THE NYSE COMPOSITE TAPE WAS $29.00 PER SHARE. NOTES TENDERED AND NOT WITHDRAWN WILL CEASE TO BE CONVERTIBLE ON THE PURCHASE DATE. DELIVERY OF THIS PURCHASE NOTICE AND LETTER OF TRANSMITTAL (THE 'PURCHASE NOTICE') TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS PURCHASE NOTICE SHOULD BE READ CAREFULLY BEFORE THIS PURCHASE NOTICE IS COMPLETED. This Purchase Notice is to be completed by holders of Zero Coupon Convertible Subordinated Notes due 2006 (the 'Notes') of Rite Aid Corporation (the 'Company') tendering Notes into the Offer (as defined in the Offer to Purchase (as defined herein)). Holders of Notes ('Noteholders') whose certificates evidencing Notes ('Note Certificates') are not immediately available or who cannot deliver their Note Certificates and all other documents required hereby to the Paying Agent prior to midnight, New York City time, on July 24, 1996 (the 'Purchase Date') and who wish to tender their Notes must do so pursuant to the guaranteed delivery procedure described in 'THE OFFER--Procedures for Tendering Notes' of the Offer to Purchase. See Instruction 2. / / CHECK HERE IF NOTES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY SENT TO THE PAYING AGENT AND COMPLETE THE FOLLOWING: Name(s) of Registered Noteholder(s): _________________________ Window Ticket No. (if any): __________________________________ Date of Execution of Notice of Guaranteed Delivery: __________ Name of Institution which Guaranteed Delivery: _______________
DESCRIPTION OF NOTES TENDERED - -------------------------------------------------------------------------------- NAME(S) AND ADDRESS(ES) OF REGISTERED NOTEHOLDER(S) NOTE CERTIFICATE(S) AND NOTE(S) (PLEASE FILL IN EXACTLY AS NAME(S) TENDERED APPEAR(S) ON NOTE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY) - -------------------------------------------------------------------------------- TOTAL PRINCIPAL AMOUNT TOTAL (AT MATURITY) PRINCIPAL OF NOTES AMOUNT (AT NOTE EVIDENCED BY MATURITY) CERTIFICATE NOTE OF NOTES NUMBER(S) CERTIFICATE(S) TENDERED* - -------------------------------------------------------------------------------- --------------------------------------- --------------------------------------- --------------------------------------- --------------------------------------- --------------------------------------- TOTAL NOTES: - --------------------------------------------------------------------------------
* Unless otherwise indicated, it will be assumed that the entire principal amount (at maturity) of all Notes evidenced by each Note Certificate delivered to the Paying Agent is being tendered hereby. See Instruction 4. NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS PURCHASE NOTICE CAREFULLY. Ladies and Gentlemen: The undersigned hereby tenders to Rite Aid Corporation, a Delaware corporation (the 'Company'), the above-described Zero Coupon Convertible Subordinated Notes due 2006 (the 'Notes') of the Company pursuant to the terms and conditions of Paragraph 6 of the Notes and to the Company's offer to purchase any and all outstanding Notes of the Company, at a purchase price (the 'Purchase Price') of $514.86 for each $1,000 principal amount at stated maturity of the Notes, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated June 25, 1996 (the 'Offer to Purchase'), receipt of which is hereby acknowledged, and in this Purchase Notice (which, as amended from time to time, together constitute the 'Offer'). The Company has elected to repurchase the Notes for cash pursuant to the terms of the Notes and the Indenture, dated as of July 15, 1991, between the Company and Harris Trust and Savings Bank, as trustee, with respect to the Notes (the 'Indenture'). Subject to, and effective upon, acceptance for purchase of the Notes tendered herewith, in accordance with the terms of the Offer, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Company all right, title and interest in and to all the Notes that are being tendered hereby and all interest accrued upon and to accrue upon such Notes and the right to receive the principal amount of such Notes at maturity and irrevocably appoints the Paying Agent the true and lawful agent and attorney-in-fact of the undersigned with respect to such Notes, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (i) deliver Note Certificates evidencing such Notes, together with all accompanying evidences of transfer and authenticity, to or upon the order of the Company, (ii) present such Notes for transfer on the books of the Company and (iii) receive all benefits and otherwise exercise all rights of beneficial ownership of such Notes, all in accordance with the terms of the Offer. The undersigned hereby represents and warrants that the undersigned has not delivered to the Company or the Conversion Agent (as defined in the Indenture) any notice of conversion of Notes into Company Common Stock with respect to the Notes tendered hereby and further covenants and agrees not to so convert the Notes tendered hereby unless such Notes are first withdrawn from the Offer pursuant to the terms of the Offer to Purchase. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Notes tendered hereby, and that when such Notes are accepted for payment by the Company, the Company will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances, and that none of such Notes will be subject to any adverse claim. The undersigned, upon request, shall execute and deliver all additional documents deemed by the Paying Agent or the Company to be necessary or desirable to complete the sale, assignment and transfer of the Notes tendered hereby. No authority herein conferred or agreed to be conferred shall be affected by, and all such authority shall survive, the death or incapacity of the undersigned. All obligations of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable. The undersigned understands that tenders of Notes pursuant to the procedures described in 'THE OFFER--Procedures for Tendering Notes' of the Offer to Purchase and in the instructions hereto will constitute the undersigned's acceptance of the terms and conditions of the Offer. The Company's acceptance of such Notes for payment will constitute a binding agreement between the undersigned and the Company upon the terms and subject to the conditions of the Offer. Unless otherwise indicated herein in the box entitled 'Special Payment Instructions,' please issue the check for the purchase price of all Notes purchased, and return all Note Certificates evidencing Notes not purchased or not tendered, in the name(s) of the registered holder(s) appearing above under 'Description of Notes Tendered.' Similarly, unless otherwise indicated in the box entitled 'Special Delivery Instructions,' please mail the check for the purchase price of all Notes purchased and all Note Certificates evidencing Notes not tendered or not purchased (and accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing above under 'Description of Notes Tendered.' In the event that the boxes entitled 'Special Payment Instructions' and 'Special Delivery Instructions' are both completed, please issue the check for the purchase price of all Notes purchased and return all Note Certificates evidencing Notes not purchased or not tendered in the name(s) of, and mail such check and Note Certificates to, the person(s) so indicated. SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if the check for the purchase To be completed ONLY if the check for the purchase price price of Notes purchased or Note Certificates evidencing of Notes purchased or Note Certificates evidencing Notes Notes not tendered or not purchased are to be issued in not tendered or not purchased are to be mailed to someone the name of someone other than the undersigned. other than the undersigned, or to the undersigned at an address other than that shown under 'Description of Notes Tendered.' Issue / / check / / Note Certificate(s) to: Mail / / check / / Note Certificate(s) to: Name: _____________________________________________ Name: _____________________________________________ (PRINT) (PRINT) Address: __________________________________________ Address: __________________________________________ ___________________________________________________ ___________________________________________________ (INCLUDE ZIP CODE) (INCLUDE ZIP CODE) ___________________________________________________ TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER (SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
IMPORTANT NOTEHOLDERS: SIGN HERE (Please Complete Substitute Form W-9 on Reverse) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Signature(s) of Holder(s) Dated: , 1996 ------------------------------------ (Must be signed by registered holder(s) exactly as name(s) appear(s) on Note Certificates or by a person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, please provide the following information. See Instruction 5.) Name(s): ------------------------------------------------------------------------ - -------------------------------------------------------------------------------- (Please Print) Capacity (full title): ---------------------------------------------------------- Address: ------------------------------------------------------------------------ - -------------------------------------------------------------------------------- (Include Zip Code) Area Code and Telephone No.: ---------------------------------------------------- Taxpayer Identification or Social Security No.: --------------------------------- (See Substitute Form W-9 on reverse side) GUARANTEE OF SIGNATURE(S) (If Required -- See Instructions 1 and 5) FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE BELOW. Authorized Signature: ----------------------------------------------------------- Name: --------------------------------------------------------------------------- (Please Print) Name of Firm: ------------------------------------------------------------------- Address: ------------------------------------------------------------------------ - -------------------------------------------------------------------------------- (Include Zip Code) Area Code and Telephone No.: ---------------------------------------------------- Dated: , 1996 -------------------------------------------------------------------- INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. Guarantee of Signatures. Except as otherwise provided below, all signatures on this Purchase Notice must be guaranteed by a financial institution (including most banks, savings and loans associations and brokerage houses) that is a participant in the Security Transfer Agents Medallion Program or the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (each an 'Eligible Institution'). No signature guarantee is required on this Purchase Notice (a) if this Purchase Notice is signed by the registered holder(s) of Notes tendered herewith, unless such holder(s) has completed either the box entitled 'Special Delivery Instructions' or the box entitled 'Special Payment Instructions' above, or (b) if such Notes are tendered for the account of an Eligible Institution. See Instruction 5. 2. Delivery of Purchase Notice and Note Certificates; Notice of Guaranteed Delivery. This Purchase Notice is to be used to tender the Note Certificates forwarded herewith. Note Certificates evidencing all tendered Notes as well as a properly completed and duly executed Purchase Notice and any other documents required by this Purchase Notice, must be received by the Paying Agent at one of its addresses set forth on the front hereof prior to midnight, New York City time, on July 24, 1996. If Note Certificates are forwarded to the Paying Agent in multiple deliveries, a properly completed and duly executed Purchase Notice must accompany each such delivery. Noteholders whose Note Certificates are not immediately available or who cannot deliver their Note Certificates and all other required documents to the Depositary prior to midnight, New York City time, on July 24, 1996 may tender their Notes pursuant to the guaranteed delivery procedure described in 'THE OFFER--Procedures for Tendering Notes' of the Offer to Purchase. Pursuant to such procedure: (i) on or prior to the Purchase Date, the Paying Agent must receive a properly completed and duly executed Purchase Notice; (ii) such tender must be made by or through an Eligible Institution; (iii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by the Company, must be received by the Paying Agent prior to the midnight, New York City time, on July 24, 1996; and (iv) the Note Certificates evidencing all physically delivered Notes in proper form for transfer by delivery, properly completed and duly executed, with any required signature guarantees, and any other documents required by this Purchase Notice, must be received by the Paying Agent within three New York Stock Exchange, Inc. ('NYSE') trading days after the date of execution of such Notice of Guaranteed Delivery, all as described in 'THE OFFER--Procedures for Tendering Notes' of the Offer to Purchase. THE METHOD OF DELIVERY OF THIS PURCHASE NOTICE, NOTE CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING NOTEHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE PAYING AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. No alternative, conditional or contingent tenders will be accepted. By execution of this Purchase Notice (or a facsimile hereof), all tendering Noteholders waive any right to receive any notice of the acceptance of their Notes for payment. 3. Inadequate Space. If the space provided herein under 'Description of Notes Tendered' is inadequate, the Note Certificate numbers, the number of Notes evidenced by such Note Certificates and the number of Notes tendered should be listed on a separate schedule and attached hereto. 4. Partial Tenders. If fewer than all the Notes evidenced by any Note Certificate delivered to the Paying Agent herewith are to be tendered hereby, fill in the principal amount at stated maturity of Notes which are to be tendered in the box entitled 'Total Principal Amount (at maturity) of Notes Tendered.' The Company will purchase a portion of the Notes evidenced by any Note Certificate if the Principal Amount (as defined in the Indenture) of such portion is $1,000 or an integral multiple of $1,000. In such cases, new Note Certificate(s) evidencing the remainder of the Notes that were evidenced by the Note Certificates delivered to the Paying Agent herewith will be sent to the person(s) signing this Purchase Notice, unless otherwise provided in the box entitled 'Special Delivery Instructions' above, as soon as practicable after the expiration or termination of the Offer. All Notes evidenced by Note Certificates delivered to the Paying Agent will be deemed to have been tendered unless otherwise indicated. 5. Signatures on Purchase Notice; Stock Powers and Endorsements. If this Purchase Notice is signed by the registered holder(s) of the Notes tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the Note Certificates evidencing such Notes without alteration, enlargement or any other change whatsoever. If any Note tendered hereby is owned of record by two or more persons, all such persons must sign this Purchase Notice. If any of the Notes tendered hereby are registered in the names of different holders, it will be necessary to complete, sign and submit as many separate Purchase Notices as there are different registrations of such Notes. If this Purchase Notice is signed by the registered holder(s) of the Notes tendered hereby, no endorsements of Note Certificates or separate stock powers are required, unless payment is to be made to, or Note Certificates evidencing Notes not tendered or not purchased are to be issued in the name of, a person other than the registered holder(s), in which case the Note Certificate(s) evidencing the Notes tendered hereby must be endorsed or accompanied by appropriate bond powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on such Note Certificate(s). Signatures on such Note Certificate(s) and bond powers must be guaranteed by an Eligible Institution. If this Purchase Notice is signed by a person other than the registered holder(s) of the Notes tendered hereby, the Note Certificate(s) evidencing the Notes tendered hereby must be endorsed or accompanied by appropriate bond powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on such Note Certificate(s). Signatures on such Note Certificate(s) and bond powers must be guaranteed by an Eligible Institution. If this Purchase Notice or any Note Certificate or bond power is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to the Company of such person's authority so to act must be submitted. 6. Transfer Taxes. Except as otherwise provided in this Instruction 6, the Company will pay all transfer taxes with respect to the sale and transfer of any Notes to it or its order pursuant to the Offer. If, however, payment of the purchase price of any Notes purchased is to be made to, or Note Certificate(s) evidencing Notes not tendered or not purchased are to be issued in the name of, a person other than the registered holder(s), the amount of any transfer taxes (whether imposed on the registered holder(s), such other person or otherwise) payable on account of the transfer to such other person will be deducted from the purchase price of such Notes purchased, unless evidence satisfactory to the Company of the payment of such taxes, or exemption therefrom, is submitted. Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the Note Certificates evidencing the Notes tendered hereby. 7. Special Payment and Delivery Instructions. If a check for the purchase price of any Notes tendered hereby is to be issued, or Note Certificate(s) evidencing Notes not tendered or not purchased are to be issued, in the name of a person other than the person(s) signing this Purchase Notice or if such check or any such Note Certificate is to be sent to someone other than the person(s) signing this Purchase Notice or to the person(s) signing this Purchase Notice but at an address other than that shown in the box entitled 'Description of Notes Tendered' above, the appropriate boxes on this Purchase Notice must be completed. 8. Questions and Requests for Assistance or Additional Copies. Questions and requests for assistance may be directed to the Paying Agent at its address set forth above or by calling (312) 461-2532. Additional copies of the Offer to Purchase and this Purchase Notice may be obtained from the Paying Agent or from brokers, dealers, commercial banks or trust companies. 9. Substitute Form W-9. Each tendering Noteholder is required to provide the Paying Agent with a correct Taxpayer Identification Number ('TIN') on the Substitute Form W-9 which is provided under 'Important Tax Information' below, and to certify, under penalties of perjury, that such number is correct and that such Noteholder is not subject to backup withholding of federal income tax. If a tendering Noteholder has been notified by the Internal Revenue Service that such Noteholder is subject to backup withholding, such Noteholder must cross out item (2) of the Certification box of the Substitute Form W-9, unless such Noteholder has since been notified by the Internal Revenue Service that such Noteholder is no longer subject to backup withholding. Failure to provide the information on the Substitute Form W-9 may subject the tendering Noteholder to 31% federal income tax withholding on the payment of the purchase price of all Notes purchased from such Noteholder. If the tendering Noteholder has not been issued a TIN and has applied for one or intends to apply for one in the near future, such Noteholder should write 'Applied For' in the space provided for the TIN in Part I of the Substitute Form W-9, and sign and date the Substitute Form W-9. If 'Applied For' is written in Part I and the Paying Agent is not provided with a TIN within 60 days, the Paying Agent will withhold 31% on all payments of the purchase price to such Noteholder until a TIN is provided to the Paying Agent. 10. Lost, Destroyed or Stolen Certificates. If any certificate(s) representing Notes has been lost, destroyed or stolen, the Noteholder should promptly notify the Paying Agent. The Noteholder will then be instructed as to the steps that must be taken in order to replace the Note Certificate(s). This Purchase Notice and related documents cannot be processed until the procedures for replacing lost or destroyed certificates have been followed. IMPORTANT: THIS PURCHASE NOTICE PROPERLY COMPLETED AND DULY EXECUTED (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES AND NOTE CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS) OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE PAYING AGENT PRIOR TO THE MIDNIGHT, NEW YORK CITY TIME, ON JULY 24, 1996. IMPORTANT TAX INFORMATION Under the federal income tax law, a Noteholder whose tendered Notes are accepted for payment is required by law to provide the Paying Agent (as payer) with such Noteholder's correct TIN on Substitute Form W-9 below. If such Noteholder is an individual, the TIN is such Noteholder's social security number. If the Paying Agent is not provided with the correct TIN, the Noteholder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, payments that are made to such Noteholder with respect to Notes purchased pursuant to the Offer may be subject to backup withholding of 31%. Certain Noteholders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, such individual must submit a statement, signed under penalties of perjury, attesting to such individual's exempt status. Forms of such statements can be obtained from the Paying Agent. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. If backup withholding applies, the Paying Agent is required to withhold 31% of any payments made to the Noteholder. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup withholding on payments that are made to a Noteholder with respect to Notes purchased pursuant to the Offer, the Noteholder is required to notify the Paying Agent of such Noteholder's correct TIN by completing the form below certifying (a) that the TIN provided on Substitute Form W-9 is correct (or that such Noteholder is awaiting a TIN), and (b) that (i) such Noteholder has not been notified by the Internal Revenue Service that such Noteholder is subject to backup withholding as a result of a failure to report all interest or dividends or (ii) the Internal Revenue Service has notified such Noteholder that such Noteholder is no longer subject to backup withholding. WHAT NUMBER TO GIVE THE PAYING AGENT The Noteholder is required to give the Paying Agent the social security number or employer identification number of the record holder of the Notes tendered hereby. If the Notes are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidance on which number to report. If the tendering Noteholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, the Noteholder should write 'Applied For' in the space provided for the TIN in Part I, and sign and date the Substitute Form W-9. If 'Applied For' is written in Part I and the Paying Agent is not provided with a TIN within 60 days, the Paying Agent will withhold 31% of all payments of the purchase price to such Noteholder until a TIN is provided to the Paying Agent. PAYOR'S NAME: HARRIS TRUST AND SAVINGS BANK SUBSTITUTE PART I--Taxpayer FORM W-9 Identification Number-- ------------------------- For all accounts, enter Social Security Number DEPARTMENT OF THE taxpayer identification OR TREASURY number in the box at ------------------------ INTERNAL REVENUE SERVICE right. (For most Employee Identification individuals, this is your Number social security number. If you do not have a (If awaiting TIN write number, see Obtaining a 'Applied For') Number in the enclosed Guidelines.) Certify by signing and dating below. Note: If the account is in more than one name, see the chart in the enclosed Guidelines to determine which number to give the payer. Payer's Request for PART II--For Payee Exempt From Backup Withholding, Taxpayer Identification see the enclosed Guidelines and complete as Number (TIN) instructed herein. CERTIFICATION--Under penalties of perjury, I certify that: (l) The number shown in this form is my correct Taxpayer Identification Number (or a Taxpayer Identification Number has not been issued to me and either (a) I have mailed or delivered an application to receive a Taxpayer Identification Number to the appropriate Internal Revenue Service ('IRS') or Social Security Administration office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a Taxpayer Identification Number within sixty (60) days, 31% of all acceptable payments made to me thereafter will be withheld until I provide a number), and (2) I am not subject to backup withholding either because I have not been notified by the IRS that I am subject to backup withholding as a result of failure to report all interest or dividends, or the IRS has notified me that I am no longer subject to backup withholding. CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS that you are subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out item (2). (Also see instructions in the enclosed Guidelines.) ------------------------------------- --------------------------------------- SIGNATURE DATE , 1996 NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. JUNE 25, 1996 EX-99.(A)(3) 4 NOTICE OF GUARANTEED DELIVERY NOTICE OF GUARANTEED DELIVERY for Tender of Zero Coupon Convertible Subordinated Notes due 2006 of RITE AID CORPORATION (Not To Be Used For Signature Guarantees) This Notice of Guaranteed Delivery, or one substantially in the form hereof, must be used to accept the Offer (as defined below) (i) if certificates ('Note Certificates') evidencing Zero Coupon Convertible Notes due 2006 ('Notes'), of Rite Aid Corporation, a Delaware corporation (the 'Company'), issued pursuant to the Indenture, dated as of July 15, 1991, between the Company and Harris Trust and Savings Bank, as trustee, are not immediately available or (ii) if Note Certificates and all other required documents cannot be delivered to Harris Trust and Savings Bank, as Paying Agent (the 'Paying Agent'), prior to midnight, New York City time, on July 24, 1996. This Notice of Guaranteed Delivery may be delivered by hand or mail to the Paying Agent. See 'THE OFFER--Procedures for Tendering Notes' of the Offer to Purchase. The Paying Agent for the Offer is: HARRIS TRUST AND SAVINGS BANK By Hand: By Overnight Courier or By Mail: Harris Trust Company of New York Harris Trust Company of New York Receive Window 77 Water Street 77 Water Street 4th Floor 4th Floor New York, NY 10005 New York, NY 10005 or or Harris Trust and Savings Bank Harris Trust and Savings Bank 311 West Monroe Street 311 West Monroe Street 11th Floor, Bond 11th Floor, Bond Service Unit Service Unit Chicago, Illinois 60606 Chicago, Illinois 60606 DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. This form is not to be used to guarantee signatures. If a signature on a Purchase Notice and Letter of Transmittal (the 'Purchase Notice') is required to be guaranteed by an 'Eligible Institution' under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Purchase Notice. Ladies and Gentlemen: The undersigned hereby tenders to Rite Aid Corporation, a Delaware corporation (the 'Company'), upon the terms and subject to the conditions set forth in the Offer to Purchase, dated June 25, 1996 (the 'Offer to Purchase'), and the related Purchase Notice and Letter of Transmittal (the 'Purchase Notice') (which, as amended from time to time, together constitute the 'Offer'), receipt of each of which is hereby acknowledged, the aggregate principal amount at maturity of Notes specified below pursuant to the guaranteed delivery procedures described in 'THE OFFER--Procedures for Tendering Notes' of the Offer to Purchase. Principal Amount at Stated Maturity of Notes: Name(s) of Record Holder(s): -------------------------- ------------------------------------------------ Certificate Nos. (if available): --------------------- ------------------------------------------------ (Please Print) Address(es): ------------------------------------ ------------------------------------------------ (Zip Code) Company Area Code and Tel. No.: ----------------- Area Code and Tel. No.: ------------------------- Signature(s): ----------------------------------- Dated: ----------------------------------------------- ------------------------------------------------
GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a participant in the Security Transfer Agents Medallion Program or the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program hereby guarantees to deliver to the Paying Agent the certificates representing the Notes tendered hereby, in proper form for transfer of such Notes, together with any other documents required by the Purchase Notice within three New York Stock Exchange, Inc. trading days after the date hereof. The Eligible Institution that completes this form must communicate the guarantee to the Paying Agent and must deliver the Note Certificates to the Paying Agent within the time period shown herein. Failure to do so could result in financial loss to such Eligible Institution. Name of Firm: ---------------------------------------- ------------------------------------------------ (Authorized Signature) Address: Title: --------------------------------------------- ------------------------------------------ - ----------------------------------------------------- (Zip Code) Area Code and Tel. No.: Date: ------------------------------ -------------------------------------------
2 EX-99.(A)(4) 5 LETTER TO BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES AND OTHER NOMINEES HARRIS TRUST AND SAVINGS BANK Offer to Purchase for Cash by RITE AID CORPORATION Any and All of Its Zero Coupon Convertible Subordinated Notes due 2006 At a Purchase Price of $514.86 For each $1,000 Principal Amount at Stated Maturity of Notes THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JULY 24, 1996. To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees We have been appointed by Rite Aid Corporation, a Delaware corporation (the 'Company'), to act as Paying Agent in connection with the Company's offer to purchase any and all outstanding Zero Coupon Convertible Subordinated Notes due 2006 (the 'Notes') of the Company, at a purchase price (the 'Purchase Price') of $514.86 for each $1,000 principal amount at stated maturity of the Notes, payable in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated June 25, 1996 (the 'Offer to Purchase'), and the related Purchase Notice and Letter of Transmittal (the 'Purchase Notice') (which, as amended from time to time, together constitute the 'Offer') enclosed herewith. Please furnish copies of the enclosed materials to those of your clients for whose accounts you hold Notes registered in your name or in the name of your nominee. Enclosed for your information and use are copies of the following documents: 1. Offer to Purchase, dated June 25, 1996; 2. Purchase Notice to be used by holders of Notes in accepting the Offer and tendering Notes; 3. A letter which may be sent to your clients for whose accounts you hold Notes registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer; and 4. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JULY 24, 1996. In all cases, payment for Notes accepted for payment pursuant to the Offer will be made only after timely receipt by the Paying Agent of certificates evidencing such Notes, a Purchase Notice properly completed and duly executed and any other required documents in accordance with the instructions contained in the Purchase Notice. The Company will not pay any fees or commissions to any broker, dealer or other person (other than the Paying Agent as described in the Offer) in connection with the solicitation of tenders of Notes pursuant to the Offer. However, the Company will reimburse you for customary mailing and handling expenses incurred by you in forwarding any of the enclosed materials to your clients. The Company will pay or cause to be paid any transfer taxes payable with respect to the transfer of Notes to it, except as otherwise provided in Instruction 6 of the Purchase Notice. Any inquiries you may have with respect to the Offer and requests for additional copies of the enclosed material should be addressed to the Paying Agent at our address and telephone number set forth on the back cover page of the Offer to Purchase. Very truly yours, HARRIS TRUST AND SAVINGS BANK NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON THE AGENT OF THE COMPANY OR THE PAYING AGENT, OR OF ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR TO MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN. 2 EX-99.(A)(5) 6 LETTER TO CLIENTS Offer to Purchase for Cash by RITE AID CORPORATION Any and All of Its Zero Coupon Convertible Subordinated Notes due 2006 At a Purchase Price of $514.86 For each $1,000 Principal Amount at Stated Maturity of Notes THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JULY 24, 1996. June 25, 1996 To Our Clients: Enclosed for your consideration is an Offer to Purchase, dated June 25, 1996 (the 'Offer to Purchase'), and a related Purchase Notice and Letter of Transmittal (the 'Purchase Notice') (which, as amended from time to time, together constitute the 'Offer') in connection with the Offer by Rite Aid Corporation, a Delaware corporation (the 'Company'), to purchase any and all outstanding Zero Coupon Convertible Subordinated Notes due 2006 of the Company, at a purchase price (the 'Purchase Price') of $514.86 for each $1,000 principal amount at stated maturity of the Notes, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer. We are the holder of record of Notes held by us for your account. A TENDER OF SUCH NOTES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE PURCHASE NOTICE IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER NOTES HELD BY US FOR YOUR ACCOUNT. We request instructions as to whether you wish to have us tender on your behalf any or all of the Notes held by us for your account, upon the terms and subject to the conditions set forth in the Offer. Your attention is invited to the following: 1. The Purchase Price is $514.86 for each $1,000 principal amount at stated maturity of the Notes, payable in cash. THE MARKET PRICE OF THE NOTES ON JUNE 24, 1996 WAS $510.00 FOR EACH $1,000 PRINCIPAL AMOUNT AT STATED MATURITY. IF THE THEN CURRENT MARKET PRICE OF THE NOTES FOR EACH $1,000 PRINCIPAL AMOUNT AT STATED MATURITY IS GREATER THAN $514.86 ON THE PURCHASE DATE, JULY 24, 1996, ANY HOLDER OF NOTES WHOSE NOTES ARE PURCHASED IN THE OFFER WILL RECEIVE LESS THAN THE THEN CURRENT MARKET PRICE OF THE NOTES. HOLDERS OF NOTES ARE URGED TO CONSIDER THE MARKET PRICE OF THE NOTES BEFORE TENDERING SUCH NOTES IN THIS OFFER AND PRIOR TO THE PURCHASE DATE. THE NOTES ARE CONVERTIBLE AT THE OPTION OF THE HOLDERS INTO COMMON STOCK, PAR VALUE $1.00 PER SHARE, OF THE COMPANY ('COMPANY COMMON STOCK'), AT A CONVERSION RATE OF 15.993 SHARES PER $1,000 PRINCIPAL AMOUNT AT STATED MATURITY OF THE NOTES, OR $31.89 PER SHARE BASED ON THE CLOSING PRICE OF THE NOTES ON THE NEW YORK STOCK EXCHANGE (THE 'NYSE') ON JUNE 24, 1996 AND $32.19 PER SHARE BASED ON THE PURCHASE PRICE. ON JUNE 24, 1996, THE LAST REPORTED SALE PRICE OF THE COMPANY COMMON STOCK ON THE NYSE COMPOSITE TAPE WAS $29.00 PER SHARE. NOTES TENDERED AND NOT WITHDRAWN WILL CEASE TO BE CONVERTIBLE ON THE PURCHASE DATE. 2. The Offer is being made for all outstanding Notes. 3. The Offer and withdrawal rights will expire at 12:00 Midnight, New York City time, on Wednesday, July 24, 1996. 4. Tendering Noteholders will not be obligated to pay brokerage fees or commissions or, except as otherwise provided in Instruction 6 of the Purchase Notice, transfer taxes with respect to the purchase of Notes by the Company pursuant to the Offer. If you wish to have us tender any or all of your Notes, please so instruct us by completing, executing and returning to us the instruction form contained in this letter. An envelope in which to return your instructions to us is enclosed. If you authorize the tender of your Notes, all such Notes will be tendered unless otherwise specified in your instructions. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER. The Offer is made solely by the Offer to Purchase and the related Purchase Notice and is being made to all holders of Notes. The Company is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If the Company becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Notes pursuant thereto, the Company will make a good faith effort to comply with such state statute. If, after such good faith effort, the Company cannot comply with such state statute, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the holders of Notes in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Company by one or more registered brokers or dealers licensed under the laws of such jurisdiction. 2 Instructions with Respect to the Offer to Purchase for Cash by RITE AID CORPORATION Any and All of Its Zero Coupon Convertible Subordinated Notes due 2006 At a Purchase Price of $514.86 For each $1,000 Principal Amount at Stated Maturity of Notes The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated June 25, 1996, and the related Purchase Notice and Letter of Transmittal (which, as amended from time to time, together constitute the 'Offer'), in connection with the offer by Rite Aid Corporation, a Delaware corporation (the 'Company'), to purchase any and all Zero Coupon Convertible Subordinated Notes due 2006 (the 'Notes') of the Company. This will instruct you to instruct your nominee to tender the principal amount at stated maturity of Notes indicated below (or, if no amount is indicated below, all Notes) that are held for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer.
SIGN HERE Principal Amount at Stated Maturity of Notes to be Tendered: --------------------------- Notes* ---------------------------------------- Account Number: ------------------- ---------------------------------------- Signature(s) ---------------------------------------- Dated: , 1996 ---------------------------------------- Please type or print name(s) ---------------------------------------- ---------------------------------------- Please type or print address(es) here ---------------------------------------- Area Code and Telephone Number ---------------------------------------- Taxpayer Identification or Social Security Number(s)
- ------------------ * Unless otherwise indicated, it will be assumed that all Notes held by us for your account are to be tendered. EX-99.(A)(6) 7 GUIDELINES FOR CERTIFICATION GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e. 00-0000000. The table below will help determine the number to give the payer.
- ---------------------------------------------------------------- GIVE THE SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: NUMBER OF-- - ---------------------------------------------------------------- 1. An individual's account The individual 2. Two or more individuals The actual owner of the account or, (joint account) if combined funds, any one of the individuals(1) 3. Husband and wife The actual owner of the account or, (joint account) if joint funds, either person(1) 4. Custodian account of a minor (Uniform The minor(2) Gift to Minors Act) 5. Adult and minor The adult or, if the minor is the (joint account) only contributor, the minor(1) 6. Account in the name of guardian or The ward, minor, or incompetent committee for a designated ward, person(3) minor, or incompetent person 7. a. The usual revocable savings trust The grantor-trustee(1) account (grantor is also trustee) b. So-called trust account that is The actual owner(1) not a legal or valid trust under State law 8. Sole proprietorship account The owner(4)
- ----------------------------------------------------------------
- ---------------------------------------------------------------- GIVE THE EMPLOYER IDENTIFICATION FOR THIS TYPE OF ACCOUNT: NUMBER OF-- - ---------------------------------------------------------------- 9. A valid trust, estate, or pension The legal entity (Do not furnish the trust identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)(5) 10. Corporate account The corporation 11. Religious, charitable, or educational The organization organization account 12. Partnership account held in the name The partnership of the business 13. Association, club, or other The organization tax-exempt organization 14. A broker or registered nominee The broker or nominee 15. Account with the Department of The public entity Agriculture in the name of a public entity (such as a State or local government, school district, or prison) that receives agricultural program payments
- ---------------------------------------------------------------- (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number. (4) Show the name of the owner. (5) List first and circle the name of the legal trust, estate, or pension trust. NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 PAGE 2 OBTAINING A NUMBER If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on ALL payments include the following: o A corporation. o A financial institution. o An organization exempt from tax under section 501(a), or an individual retirement plan. o The United States or any agency or instrumentality thereof. o A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. o A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. o An international organization or any agency, or instrumentality thereof. o A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S. o A real estate investment trust. o A common trust fund operated by a bank under section 584(a). o An exempt charitable remainder trust, or a nonexempt trust described in section 4947(a)(1). o An entity registered at all times under the Investment Company Act of 1940. o A foreign central bank of issue. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: o Payments to nonresident aliens subject to withholding under section 1441. o Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. o Payments of patronage dividends where the amount received is not paid in money. o Payments made by certain foreign organizations. o Payments made to a nominee. Payments of interest not generally subject to backup withholding include the following: o Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. o Payments of tax-exempt interest (including exempt-interest dividends under section 852). o Payments described in section 6049(b)(5) to non-resident aliens. o Payments on tax-free covenant bonds under section 1451. o Payments made by certain foreign organizations. o Payments made to a nominee. Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE 'EXEMPT' ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. Certain payments other than interest, dividends, and patronage dividends, that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041(a), 6045, and 6050A. PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to IRS. IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Beginning January 1, 1984, payers must generally withhold 20% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to include any portion of an includible payment for interest, dividends, or patronage dividends in gross income, such failure will be treated as being due to negligence and will be subject to a penalty of 5% on any portion of an under-payment attributable to that failure unless there is clear and convincing evidence to the contrary. (3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.-- Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. EX-99.(C) 8 INDENTURE - -------------------------------------------------------------------------------- RITE AID CORPORATION $460,000,000 Zero Coupon Convertible Subordinated Notes due 2006 -------------------- INDENTURE Dated as of July 15, 1991 -------------------- HARRIS TRUST AND SAVINGS BANK TRUSTEE - -------------------------------------------------------------------------------- CROSS REFERENCE TABLE* TIA Indenture Section Section - ------- --------- 310(a)(1)...................................................7.10 (a)(2)...................................................7.10 (a)(3)...................................................N.A.** (a)(4)...................................................N.A. (b)......................................................7.8; 7.10 (c)......................................................N.A. 311(a)......................................................7.11 (b)......................................................7.11 (c)......................................................N.A. 312(a)......................................................2.5 (b)......................................................12.3 (c)......................................................12.3 313(a)......................................................7.6 (b)(1)...................................................N.A. (b)(2)...................................................7.6 (c)......................................................12.2 (d)......................................................7.6 314(a)......................................................4.2; 12.2 (b)......................................................N.A. (c)(1)...................................................12.4 (c)(2)...................................................12.4 (c)(3)...................................................N.A. (d)......................................................N.A. (e)......................................................12.5 (f)......................................................4.3 315(a)......................................................7.1 (b)......................................................7.5; 12.2 (c)......................................................7.1 (d)......................................................7.1 (e)......................................................6.11 - -------- * This Cross Reference Table shall not, for any purpose, be deemed part of the Indenture. ** N.A. means Not Applicable. i TIA Indenture Section Section - ------- --------- 316(a) (last sentence)......................................2.8 (a)(1)(A)................................................6.5 (a)(1)(B)................................................6.4 (a)(2)...................................................N.A. (b)......................................................6.7 317(a)(1)...................................................6.8 (a)(2)...................................................6.9 (b)......................................................2.4 318(a)......................................................12.1 ii TABLE OF CONTENTS* Page ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.1. Definitions....................................... 1 SECTION 1.2. Other Definitions................................. 6 SECTION 1.3. Incorporation by Reference of Trust Indenture Act..................................... 7 SECTION 1.4. Rules of Construction............................. 8 ARTICLE 2 THE SECURITIES SECTION 2.1. Form and Dating................................... 8 SECTION 2.2. Execution and Authentication...................... 8 SECTION 2.3. Registrar, Paying Agent and Conversion Agent............................................. 9 SECTION 2.4. Paying Agent to Hold Money and Securi- ties in Trust..................................... 10 SECTION 2.5. Securityholder Lists.............................. 11 SECTION 2.6. Transfer and Exchange............................. 11 SECTION 2.7. Replacement Securities............................ 12 SECTION 2.8. Outstanding Securities; Determinations of Holders' Action................................ 13 SECTION 2.9. Temporary Securities.............................. 14 SECTION 2.10. Cancellation...................................... 14 ARTICLE 3 REDEMPTION AND PURCHASES SECTION 3.1. Right to Redeem; Notices to Trustee............... 15 SECTION 3.2. Selection of Securities to Be Redeemed.......................................... 15 SECTION 3.3. Notice of Redemption.............................. 16 SECTION 3.4. Effect of Notice of Redemption.................... 17 SECTION 3.5. Deposit of Redemption Price....................... 18 SECTION 3.6. Securities Redeemed in Part....................... 18 SECTION 3.7. Conversion Arrangement on Call for Redemption........................................ 18 - -------- * This Table of Contents shall not, for any purpose, be deemed part of the Indenture. iii Page SECTION 3.8. Purchase of Securities at Option of the Holder........................................ 19 SECTION 3.9. Purchase of Securities at Option of the Holder upon Change in Control................. 28 SECTION 3.10. Effect of Purchase Notice of Change in Control Purchase Notice........................ 32 SECTION 3.11. Deposit of Purchase Price or Change in Control Purchase Price......................... 34 SECTION 3.12. Securities Purchased in Part...................... 34 SECTION 3.13. Covenant to Comply with Securities Laws upon Purchase of Securities.................. 34 SECTION 3.14. Repayment to the Company.......................... 35 ARTICLE 4 COVENANTS SECTION 4.1. Payment of Securities............................. 35 SECTION 4.2. SEC and Other Reports............................. 36 SECTION 4.3. Compliance Certificate............................ 36 SECTION 4.4. Further Instruments and Acts...................... 37 SECTION 4.5. Maintenance of Office or Agency................... 37 ARTICLE 5 SUCCESSOR CORPORATION SECTION 5.1. When Company May Merge or Transfer Assets............................................ 38 ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.1. Events of Default................................. 39 SECTION 6.2. Acceleration...................................... 41 SECTION 6.3. Other Remedies.................................... 41 SECTION 6.4. Waiver of Past Defaults........................... 42 SECTION 6.5. Control by Majority............................... 42 SECTION 6.6. Limitation on Suits............................... 42 SECTION 6.7. Rights of Holders to Receive Payment.............. 43 SECTION 6.8. Collection Suit by Trustee........................ 43 SECTION 6.9. Trustee May File Proofs of Claim.................. 44 SECTION 6.10. Priorities........................................ 45 SECTION 6.11. Undertaking for Costs............................. 45 SECTION 6.12. Notice of Defaults................................ 46 SECTION 6.13. Waiver of Stay, Extension or Usury Laws.............................................. 46 iv Page ARTICLE 7 TRUSTEE SECTION 7.1. Duties of Trustee................................. 47 SECTION 7.2. Rights of Trustee................................. 48 SECTION 7.3. Individual Rights of Trustee...................... 49 SECTION 7.4. Trustee's Disclaimer.............................. 49 SECTION 7.5. Notice of Defaults................................ 49 SECTION 7.6. Reports by Trustee to Holders..................... 49 SECTION 7.7. Compensation and Indemnity........................ 50 SECTION 7.8. Replacement of Trustee............................ 50 SECTION 7.9. Successor Trustee by Merger....................... 52 SECTION 7.10. Eligibility; Disqualification..................... 52 SECTION 7.11. Preferential Collection of Claims against Company................................... 52 ARTICLE 8 DISCHARGE OF INDENTURE SECTION 8.1. Discharge of Liability on Securities........................................ 52 SECTION 8.2. Repayment to the Company.......................... 53 ARTICLE 9 AMENDMENTS SECTION 9.1. Without Consent of Holders........................ 53 SECTION 9.2. With Consent of Holders........................... 54 SECTION 9.3. Compliance with Trust Indenture Act............... 55 SECTION 9.4. Revocation and Effect of Consents, Waivers and Actions............................... 55 SECTION 9.5. Notation on or Exchange of Securities........................................ 56 SECTION 9.6. Trustee to Sign Supplemental Indentures........................................ 56 SECTION 9.7. Effect of Supplemental Indentures................. 57 ARTICLE 10 SUBORDINATION SECTION 10.1. Securities Subordinate to Senior Indebtedness...................................... 57 SECTION 10.2. Payment over of Proceeds Upon Dissolution, etc.................................. 57 SECTION 10.3. Acceleration of Securities........................ 60 v Page SECTION 10.4. Default on Senior Indebtedness.................... 60 SECTION 10.5. Payment Permitted If No Default................... 62 SECTION 10.6. Subrogation to Rights of Holders of Senior Indebtedness............................... 62 SECTION 10.7. Provisions Solely to Define Relative Rights............................................ 63 SECTION 10.8. Trustee to Effectuate Subordination............... 63 SECTION 10.9. No Waiver of Subordination Provisions........................................ 64 SECTION 10.10. Notice to Trustee................................. 64 Section 10.11. Reliance on Judicial Order or Certificate of Liquidating Agent.................. 66 SECTION 10.12. Trustee Not Fiduciary for Holders of Senior Indebtedness............................... 66 SECTION 10.13. Rights of Trustee as Holder of Senior Indebtedness; Preservation of Trustee's Rights.................................. 66 SECTION 10.14. Article 10 Applicable to Paying Agents............................................ 67 ARTICLE 11 CONVERSION SECTION 11.1. Conversion Privilege.............................. 67 SECTION 11.2. Conversion Procedure.............................. 69 SECTION 11.3. Fractional Shares................................. 71 SECTION 11.4. Taxes on Conversions.............................. 71 SECTION 11.5. Company to Provide Stock.......................... 71 SECTION 11.6. Adjustment for Change in Capital Stock............................................. 72 SECTION 11.7. Adjustment for Rights Issue....................... 73 SECTION 11.8. Adjustment for Other Distributions................ 74 SECTION 11.9. When Adjustment May Be Deferred................... 77 SECTION 11.10. When No Adjustment Required....................... 77 SECTION 11.11. Notice of Adjustment.............................. 78 SECTION 11.12. Voluntary Increase................................ 78 SECTION 11.13. Notice of Certain Transactions.................... 78 SECTION 11.14. Reorganization of Company; Special Distributions..................................... 79 SECTION 11.15. Company Determination Final....................... 80 SECTION 11.16. Trustee's Adjustment Disclaimer................... 80 SECTION 11.17. Simultaneous Adjustments.......................... 81 SECTION 11.18. Successive Adjustments............................ 81 SECTION 11.19. Rights Issued in Respect of Common Stock Issued Upon Conversion...................... 81 vi Page ARTICLE 12 MISCELLANEOUS SECTION 12.1. Trust Indenture Act Controls...................... 81 SECTION 12.2. Notices........................................... 82 SECTION 12.3. Communication by Holders with Other Holders........................................... 83 SECTION 12.4. Certificate and Opinion as to Conditions Precedent.............................. 83 SECTION 12.5. Statements Required in Certificate or Opinion........................................... 83 SECTION 12.6. Separability Clause............................... 84 SECTION 12.7. Rules by Trustee, Paying Agent, Conversion Agent and Registrar.................... 84 SECTION 12.8. Legal Holidays.................................... 84 SECTION 12.9. GOVERNING LAW..................................... 84 SECTION 12.10. No Recourse Against Others........................ 84 SECTION 12.11. Successors........................................ 84 SECTION 12.12. Multiple Originals................................ 85 SIGNATURES........................................................ 86 EXHIBIT A Form of Security vii INDENTURE, dated as of July 15, 1991, between Rite Aid Corporation, a Delaware corporation (the "Company"), and Harris Trust and Savings Bank, an Illinois banking corporation (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 Zero Coupon Convertible Subordinated Notes due 2006 (the "Securities"): ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.1. Definitions. "Affiliate" of any specified person means any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person. For the purposes of this definition, "control" when used with respect to any specified person means the power to direct or cause the direction of 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. "Board of Directors" means, with respect to any matter, either the board of directors of the Company or any committee of such board authorized, with respect to such matter, to exercise the powers of such board. "Business Day" means each day of the year on which banking institutions in the City of New York are not required or authorized to close. "Capital Stock" means, with respect to any corporation, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests (however designated) in stock issued by that corporation. "Capitalized Lease Obligations" means, with respect to any person, all obligations of such person under any agreement to lease, or lease of, any real or personal property that are required to be capitalized for financial reporting purposes in accordance with generally accepted accounting principles and the amount of such Debt shall be the capitalized amount of such obligations determined in accordance with such principles. "Cash" or "cash" means such coin or currency of the United States as at any time of payment is legal tender for the payment of public and private debts. "Company" means the party named as the "Company" in the first paragraph of this Indenture until a successor replaces it pursuant to the applicable provisions of this Indenture and, thereafter, shall mean such successor. "Company Request" or "Company Order" means a written request or order signed in the name of the Company by its Chairman of the Board, a Vice Chairman, its President or a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee. "Debt" means (i) all indebtedness for borrowed money (whether or not the recourse of the lender is to the whole of the assets of the borrower or only to a portion thereof and including all indebtedness evidenced by notes, bonds, debentures, or other securities sold for money), (ii) all indebtedness incurred or assumed in the acquisition (whether by way of purchase, merger, consolidation, or otherwise) of any business, real property, or other assets (except assets other than real property acquired in the ordinary course of the conduct of the acquirer's usual business), (iii) all Capitalized Lease Obligations, (iv) Hedging Obligations, (v) guarantees of indebtedness described in clauses (i), (ii), (iii), or (iv) of any other person and (vi) renewals, extensions, refundings, deferrals, restructurings, amendments, and modifications of any such indebtedness (including, without limitation, by way of exchange offers), obligation, or guarantee. "Default" means any event that is, or after notice or passage of time or both would be, an Event of Default. "Hedging Obligations" means with respect to the 2 Company, the net liability of the Company under interest rate swap agreements and interest rate collar agreements, and all other agreements or arrangements designed to protect the Company against fluctuations in interest rates or currency exchange rates. "Holder" or "Securityholder" means a person in whose name a Security is registered on the Registrar's books. "Indenture" means this Indenture, as amended or supplemented from time to time in accordance with the terms hereof, including the provisions of the TIA that are deemed to be a part hereof. "Issue Date" of any Security means the date on which the Security was originally issued or deemed issued as set forth on the face of the Security. "Issue Price" of any Security means, in connection with the original issuance of such Security, the initial issue price at which the Security is sold as set forth on the face of the Security. "Officer" means the Chairman of the Board, any Vice Chairman, the President, any Vice President, the Treasurer, the Secretary, any Assistant Treasurer or any Assistant Secretary of the Company. "Officers' Certificate" means a written certificate containing the information specified in Sections 12.4 and 12.5, signed in the name of the Company by its Chairman of the Board, a Vice Chairman, its President or a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee. "Opinion of Counsel" means a written opinion containing the information specified in Sections 12.4 and 12.5, rendered by legal counsel who is acceptable to the Trustee. The counsel may be an employee of, or counsel to, the Company or the Trustee. "Original Issue Discount" of any Security means the difference between the Issue Price and the Principal Amount of the Security as set forth on the face of the Security. 3 "Person" or "person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof. "Principal" or "Principal Amount" of a Security means the Principal Amount as set forth on the face of the Security. "Redemption Date" or "redemption date" shall mean the date specified for redemption of the Securities in accordance with the terms of the Securities and this Indenture. "Redemption Price" or "redemption price" shall have the meaning set forth in paragraph 5 of the Securities. "Sale Price" means, for any given day, the last reported per share sale price (or, if no sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and average ask prices) on such day of the Common Stock on the New York Stock Exchange Composite Tape or, in the event shares of Common Stock are not listed on the New York Stock Exchange, such other national or regional securities exchange upon which the Common Stock is listed, or, if the shares of Common Stock are not listed on a national or regional securities exchange, as quoted on the National Association of Securities Dealers Automated Quotation System or by the National Quotation Bureau Incorporated. In the absence of one or more such quotations specified in the definition of Sale Price, the Company shall determine such price on the basis of such quotations as it deems appropriate. "SEC" means the Securities and Exchange Commission. "Securities" means any of the Company's Zero Coupon Convertible Subordinated Notes due 2006, as amended or supplemented from time to time in accordance with the terms hereof, issued under this Indenture. 4 "Securityholder" or "Holder" means a person in whose name a Security is registered on the Registrar's books. "Senior Indebtedness" means the principal of, (and premium, if any) and interest on (including interest accruing after the filing of a petition initiating any proceeding pursuant to any Bankruptcy Law, but only to the extent allowed or permitted to the holder of such Debt against the bankruptcy or any other insolvency estate of the Company in such proceeding) or accrued Original Issue Discount on and other amounts due on or in connection with any Debt incurred, assumed or guaranteed by the Company whether outstanding on the date of the Indenture or thereafter incurred, assumed or guaranteed, and all renewals, extensions and refundings of any such Debt; provided, however, that the following will not constitute Senior Indebtedness; (i) any Debt which expressly provides (a) that such Debt shall not be senior in right of payment to the Securities, or (b) that such Debt shall be subordinated to any other Debt of the Company, unless such Debt expressly provides that such Debt shall be senior in right of payment to the Securities; (ii) any Debt of the Company in respect of the Securities; (iii) any Debt or liability for compensation to employees, for goods or materials purchased in the ordinary course of business or for services; (iv) any Debt of the Company to any subsidiary for money borrowed or advanced from such subsidiary; and (v) any liability for federal, state, local or other taxes owed or owing by the Company. "Stated Maturity," when used with respect to any Security, means the date specified in such Security as the fixed date on which an amount equal to the Principal of such Security is due and payable. "Subsidiary" means (i) a corporation, a majority of whose Capital Stock with voting power, under ordinary circumstances, to elect directors is, at the date of determination, directly or indirectly owned by the Company, by one or more Subsidiaries of the Company or by the Company and one or more Subsidiaries of the Company or (ii) a partnership in which the Company or a Subsidiary of the Company is, at the date of determination, a general partner of such partnership, or (iii) any other person (other than a corporation or a 5 partnership) in which the Company, a Subsidiary of the Company or the Company and one or more Subsidiaries of the Company, directly or indirectly, at the date of determination, has (x) at least a majority ownership interest or (y) the power to elect or direct the election of a majority of the directors or other governing body of such person. "TIA" means the Trust Indenture Act of 1939 as in effect on the date of this Indenture; provided, however, that in the event the TIA is amended after such date, TIA means, to the extent required by any such amendment, the TIA as so amended. "Trading Day" means each day on which the securities exchange which is used to determine the Sale Price is open for trading or quotation. "Trust Officer" means any officer of the Trustee assigned by the trustee to administer its corporate trust matters. "Trustee" means the party named as the "Trustee" in the first paragraph of this Indenture until a successor replaces it pursuant to the applicable provisions of this Indenture and, thereafter, shall mean such successor. SECTION 1.2. Other Definitions. Defined in Term Section ---- ------- "Associate".................................. 3.9(a) "Average Sale Price"......................... 11.1 "Bankruptcy Law"............................. 6.1 "beneficial owner"........................... 3.9(a) "Change in Control".......................... 3.9(a) "Change in Control Purchase Date"............ 3.9(a) "Change in Control Purchase Notice".......... 3.9(c) "Change in Control Purchase Price"........... 3.9(a) "Common Stock"............................... 3.9(a) "Company Notice"............................. 3.8(e) "Company Notice Date"........................ 3.8(e) "Conversion Agent"........................... 2.3 "Conversion Date"............................ 11.2 "Conversion Rate"............................ 11.1 6 "Custodian".................................. 6.1 "Event of Default"........................... 6.1 "Exchange Act"............................... 3.8(d) "Ex-Dividend Time"........................... 11.1 "Extraordinary Cash Dividend"................ 11.8 "Grass Family"............................... 3.9(a) "Legal Holiday".............................. 12.8 "Market Price"............................... 3.8(d) "Notice of Default".......................... 6.1 "Over-Allotment Option"...................... 2.2 "Paying Agent"............................... 2.3 "Purchase Date".............................. 3.8(a) "Purchase Notice"............................ 3.8(a) "Purchase Price"............................. 3.8(a) "Registrar".................................. 2.3 "Rights"..................................... 3.8(d) "Rights Agreement"........................... 3.8(d) "Securities Act"............................. 3.8(d) "Time of Determination"...................... 11.1 SECTION 1.3. Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, such provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "Commission" means the SEC. "indenture securities" means the Securities. "indenture security holder" means a Securityholder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. "obligor" on the indenture securities means the Company. 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. 7 SECTION 1.4. 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 generally accepted accounting principles as in effect from time to time in the United States; (3) "or" is not exclusive; (4) "including" means including, without limitation; and (5) words in the singular include the plural, and words in the plural include the singular. ARTICLE 2 THE SECURITIES SECTION 2.1. Form and Dating. The Securities and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A, which is a part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule or usage (provided that any such notation, legend or endorsement required by usage is in a form acceptable to the Company). Each Security shall be dated the date of its authentication. SECTION 2.2. Execution and Authentication. The Securities shall be executed on behalf of the Company by its Chairman of the Board, one of its Vice Chairmen, its President or one of its Vice Presidents, under its corporate seal reproduced thereon attested by its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and 8 delivery of such Securities or did not hold such offices at the date of such Securities. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein duly executed by the Trustee by manual signature of an authorized signatory, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. The Trustee shall authenticate and make available for delivery Securities for original issue in an aggregate Principal Amount at maturity of up to $400,000,000 upon a Company order without any further action by the Company; provided, however, that in the event that the Company sells any Securities pursuant to the Underwriter's over-allotment option (the "Over-Allotment Option") granted pursuant to Section 2 of the Underwriting Agreement between the Company and Bear, Stearns & Co. Inc. and Smith Barney, Harris Upham & Co. Incorporated, dated July 17, 1991, then the Trustee shall authenticate and make available for delivery Securities for original issue in an aggregate Principal Amount at maturity of up to $400,000,000 plus up to $60,000,000 aggregate Principal Amount at maturity of Securities sold pursuant to the Over-Allotment Option upon a Company Order without further action by the Company. The aggregate Principal Amount of Securities Outstanding at any time may not exceed the amount set forth in the foregoing sentence, subject to the proviso set forth therein, except as provided in Section 2.7. SECTION 2.3. Registrar, Paying Agent and Conversion Agent. The Company shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange ("Registrar"), an office or agency where Securities may be presented for purchase or payment ("Paying Agent") and an office or agency where Securities may be presented for conversion ("Conversion 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, one or more additional paying agents and one or more additional conversion agents. The term Paying Agent includes any addi- 9 tional paying agent. The term Conversion Agent includes any additional conversion agent. The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent, Conversion Agent or co-registrar (if not the Trustee or the Company). 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, Paying Agent or Conversion Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.7. The Company or any Subsidiary or an Affiliate of either of them may act as Paying Agent, Registrar, Conversion Agent or co-registrar. The Company initially appoints the Trustee as Registrar, Conversion Agent and Paying Agent in connection with the Securities. SECTION 2.4. Paying Agent to Hold Money and Securities in Trust. Except as otherwise provided herein, prior to or on each due date of payments in respect of any Security, the Company shall deposit with the Paying Agent a sum of money or, if permitted by the terms hereof, securities sufficient to make such payments when so becoming due. The Company shall require each Paying Agent (other than the Trustee or the Company) to agree in writing that the Paying Agent shall hold in trust for the benefit of Securityholders or the Trustee all money and securities held by the Paying Agent for the making of payments in respect of the Securities and shall notify the Trustee of any default by the Company in making any such payment. At any time during the continuance of any such default, the Paying Agent shall, upon the written request of the Trustee, forthwith pay to the Trustee all money and securities so held in trust. If the Company, a Subsidiary or an Affiliate of either of them acts as Paying Agent, it shall segregate the money and securities 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 and securities held by it to the Trustee and to account for any money and securities disbursed by it. Upon doing so, the Paying Agent shall have no further liability for the money and securities. 10 SECTION 2.5. Securityholder 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 Securityholders. If the Trustee is not the Registrar, the Company shall cause to be furnished to the Trustee (i) at least semiannually on July 1 and January 1 a list of the names and addresses of Securityholders dated within 15 days of the date on which the list is furnished and (ii) at such other times as the Trustee may request in writing, within 30 days of such written request, a list, in such form as the Trustee may reasonably require, of the names and addresses of Securityholders. SECTION 2.6. Transfer and Exchange. Upon surrender for registration of transfer of any Security at the office or agency of the Company designated as Registrar or co-registrar pursuant to Section 2.3 or at the office or agency referred to in Section 4.5, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denomination or denominations, of a like aggregate Principal Amount. The Company shall not charge a service charge for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to pay all taxes, assessments or other governmental charges that may be imposed in connection with the transfer or exchange of the Securities from the Securityholder requesting such transfer or exchange (other than any exchange of a temporary Security for a definitive Security not involving any change in ownership). At the option of the Holder, Securities may be exchanged for other Securities of any authorized denomination or denominations, of a like aggregate Principal Amount, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. The Company shall not be required to make, and the Registrar need not register, transfers or exchanges of (a) Securities selected for redemption (except, in the case of Securities to be redeemed in part, the portion 11 thereof not to be redeemed), (b) Securities in respect of which a Purchase Notice or a Change in Control Purchase Notice has been given and not withdrawn by the Holder thereof in accordance with the terms of this Indenture (except, in the case of Securities to be purchased in part, the portion thereof not to be purchased) or (c) any Securities for a period of 15 days before a selection of Securities to be redeemed. SECTION 2.7. Replacement Securities. If (a) any mutilated Security is surrendered to the Company or the Trustee, or (b) the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Security, and there is delivered to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute, and upon its written request the Trustee shall authenticate and deliver, in exchange for any such mutilated Security or in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and Principal Amount, bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, or is about to be purchased by the Company pursuant to Article 3 hereof, the Company in its discretion may, instead of issuing a new Security, pay or purchase such Security, as the case may be. Upon the issuance of any new Securities under this Section 2.7, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) in connection therewith. Every new Security issued pursuant to this Section 2.7 in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. 12 The provisions of this Section 2.7 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 2.8. Outstanding Securities; Determinations of Holders' Action. Securities outstanding at any time are all the Securities authenticated by the Trustee except for those cancelled by it, those delivered to it for cancellation, those paid for or purchased by the Company pursuant to Section 2.7 and those described in this Section 2.8 as not outstanding. A Security does not cease to be outstanding because the Company or an Affiliate thereof holds the Security; provided, however, that in determining whether the Holders of the requisite Principal Amount of Securities have given or concurred in any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee knows to be so owned shall be so disregarded. Subject to the foregoing, only Securities outstanding at the time of such determination shall be considered in any such determination (including determinations pursuant to Articles 6 and 9). If a Security is replaced pursuant to Section 2.7, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser. If the Paying Agent holds, in accordance with this Indenture, on a Redemption Date, or on the Business Day following a Purchase Date or a Change in Control Purchase Date, or on Stated Maturity, money or, if permitted by the terms hereof, securities sufficient to pay the Securities payable on that date, then immediately after such Redemption Date, Purchase Date, Change in Control Purchase Date or Stated Maturity, as the case may be, such Securities shall cease to be outstanding and Original Issue Discount and interest, if any, on such Securities shall cease to accrue; provided that if such 13 Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made. If a Security is converted in accordance with Article 11, then from and after such conversion such Security shall cease to be outstanding and Original Issue Discount and interest, if any, shall cease to accrue on such Security. SECTION 2.9. Temporary Securities. Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the Officers executing such Securities may determine, as conclusively evidenced by their execution of such Securities. If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at the office or agency of the Company designated for such purpose pursuant to Section 2.3, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like Principal Amount of definitive Securities of authorized denominations. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefit under this Indenture as definitive Securities. SECTION 2.10. Cancellation. All Securities surrendered for payment, purchase by the Company pursuant to Article 3, redemption, conversion pursuant to Article 11, or registration of transfer or exchange shall, if surrendered to any person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenti- 14 cated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly cancelled by the Trustee. The Company may not reissue, or issue new Securities to replace Securities it has paid or delivered to the Trustee for cancellation or that any Holder has converted pursuant to Article 11. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section 2.10, except as expressly permitted by this Indenture. All cancelled Securities held by the Trustee shall be destroyed by the Trustee and evidence of their destruction delivered to the Company unless the Company directs by Company Order that the Trustee deliver cancelled Securities to the Company. ARTICLE 3 REDEMPTION AND PURCHASES SECTION 3.1. Right to Redeem; Notices to Trustee. The Company, at its option, may redeem the Securities for cash in accordance with the provisions of paragraphs 5 and 7 of the Securities. 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 the Redemption Price. The Company shall give the notice to the Trustee provided for in this Section 3.1 at least 30 days but not more than 60 days before the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee). If fewer than all the Securities are to be redeemed, the record date relating to such redemption shall be selected by the Company and given to the Trustee, which record date shall not be less than 10 days after the date of notice to the Trustee. SECTION 3.2. Selection of Securities to Be Redeemed. If less than all the outstanding securities are to be redeemed, the Trustee shall select the Securi- ties to be redeemed pro rata or by lot or by a method the Trustee considers fair and appropriate (so long as such method is not prohibited by the rules of any stock exchange on which the Securities are then listed). The 15 Trustee shall make the selection at least 30 but not more than 60 days before the Redemption Date 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 Principal Amounts of $1,000 or an integral 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. If any Security selected for partial redemption is thereafter surrendered for conversion in part before termination of the conversion right with respect to the portion of the Security so selected, the converted portion of such Security shall be deemed (so far as may be), solely for purposes of determining the aggregate Principal Amount of Securities to be redeemed by the Company, to be the portion selected for redemption. Securities that have been converted during a selection of Securities to be redeemed may be treated by the Trustee as outstanding for the purpose of such selection. Nothing in this section 3.2 shall affect the right of any Holder to convert any Security pursuant to Article 11 before the termination of the conversion right with respect thereto. SECTION 3.3. Notice of Redemption. At least 15 days but not more than 60 days before a Redemption Date, the Company shall mail a notice of redemption by first-class mail, postage prepaid, to each Holder of Securities to be redeemed. The notice shall identify the Securities to be redeemed and shall state: (1) the Redemption Date; (2) the Redemption Price; (3) the Conversion Rate; (4) the CUSIP number; (5) the name and address of the Paying Agent and Conversion Agent; 16 (6) that Securities called for redemption may be converted at any time before the close of business on the Redemption Date; (7) that Holders who want to convert Securities must satisfy the requirements set forth in paragraph 9 of the Securities; (8) that Securities called for redemption must be surrendered to the Paying Agent to collect the Redemption Price; (9) if fewer than all the outstanding Securities are to be redeemed, the identification and Principal Amounts of the particular Securities to be redeemed; and (10) that, unless the Company defaults in making such redemption payment, Original Issue Discount on Securities called for redemption, and interest, if any, will cease to accrue on and after the Redemption Date. At the Company's written request, the Trustee shall give the notice of redemption in the Company's name and at the Company's expense; provided, however, that in all cases, the text of such notice of redemption shall be prepared by the Company. If the redemption occurs prior to July 24, 1993, prior to mailing the foregoing notice the Company shall deliver to the Trustee an Officers' Certificate stating that the restriction on such redemption set forth in paragraph 5 of the Securities has been complied with; provided, however, that the stock price stated in paragraph 5 of the Securities shall be proportionately adjusted to give effect to any (i) dividend or distribution of Common Stock in shares of Common Stock, (ii) subdivision of outstanding shares of Common Stock into a greater number of shares of Common Stock or (iii) combination of outstanding shares of Common Stock into a smaller number of shares of Common Stock. SECTION 3.4. Effect of Notice of Redemption. Once notice of redemption is given, Securities called for redemption become due and payable on the Redemption Date and at the Redemption Price stated in the notice, except 17 for Securities that are converted in accordance with the terms of this Indenture. Upon the later of the Redemption Date and the date such Securities are surrendered to the Paying Agent, such Securities called for redemption shall be paid at the Redemption Price stated in the notice. SECTION 3.5. 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 Subsidiary or an Affiliate of either of them is the Paying Agent, shall segregate and hold in trust) money sufficient to pay the Redemption Price of all Securities to be redeemed on that date other than Securities or portions of Securities called for redemption which prior thereto have been delivered by the Company to the Trustee for cancellation or have been converted. The Paying Agent shall as promptly as practicable return to the Company any money not required for that purpose because of conversion of Securities pursuant to Article 11. If such money is then held by the Company or a Subsidiary or an Affiliate of the Company in trust and is not required for such purpose, it shall be discharged from such trust. SECTION 3.6. Securities Redeemed in Part. Upon surrender of a Security that is redeemed in part, the Company shall execute, and the Trustee shall authenticate and deliver to the Holder, a new Security in an authorized denomination equal in Principal Amount to the unredeemed portion of the Security surrendered. SECTION 3.7. Conversion Arrangement on Call for Redemption. In connection with any redemption of Securities, the Company may arrange for the purchase and conversion of any Securities called for redemption by an agreement with one or more investment bankers or other purchasers to purchase all or a portion of such Securities by paying to the Paying Agent in trust for the Securityholders whose Securities are to be so purchased, on or before the close of business on the Redemption Date, an amount that, together with any amounts deposited with the Paying Agent by the Company for the redemption of such Securities, is not less than the Redemption Price, together with interest, if any, accrued to the Redemption Date, of such Securities. Notwithstanding anything to the contrary contained in this Article 3, the obligation of the Company to pay the Redemption Price of such Secu- 18 rities, including all accrued interest, if any, shall be deemed to be satisfied and discharged to the extent such amount is so paid by such purchasers. If such an agreement is entered into, any Securities not duly surrendered for conversion by the Holders thereof may, at the option of the Company, be deemed, to the fullest extent permitted by law, acquired by such purchasers from such Holders and (notwithstanding anything to the contrary contained in Article 11) surrendered by such purchasers for conversion, all as of immediately prior to the close of business on the Redemption Date, subject to payment of the above amount as aforesaid. The Paying Agent shall hold and pay to the Holders whose Securities are selected for redemption any such amount paid to it in the same manner as it would moneys deposited with it by the Company for the redemption of Securities. Without the prior written consent of the Trustee and the Paying Agent, no arrangement between the Company and such purchasers for the purchase and conversion of any Securities shall increase or otherwise affect any of the powers, duties, responsibilities or obligations of the Trustee or the Paying Agent as set forth in this Indenture, and the Company agrees to indemnify the Trustee and the Paying Agent from, and hold it harmless against, any loss, liability or expense arising out of or in connection with any such arrangement for the purchase and conversion of any Securities between the Company and such purchasers, including the costs and expenses incurred by the Trustee and the Paying Agent in the defense of any claim or liability arising out of or in connection with the exercise or performance of any of its powers, duties, responsibilities or obligations under this Indenture. SECTION 3.8. Purchase of Securities at Option of the Holder. (a) General. Securities shall be purchased by the Company pursuant to paragraph 6 of the Securities as of July 24, 1996 and July 24, 2001 (each, a "Purchase Date"), at the purchase price specified therein (each, a "Purchase Price"), at the option of the Holder thereof, upon: (1) delivery to the Paying Agent by the Holder of a written notice of purchase (a "Purchase Notice") at any time from the opening of business on the date that is 20 Business Days prior to a 19 Purchase Date until the close of business on such Purchase Date, stating: (A) the certificate number of the Security that the Holder will deliver to be purchased, (B) the portion of the Principal Amount of the Security that the Holder will deliver to be purchased, which portion must be $1,000 or an integral multiple thereof, (C) that such Security shall be purchased pursuant to the terms and conditions specified in paragraph 6 of the Securities, and (D) whether, if the Company elects pursuant to a Company Notice to pay the Purchase Price on such Purchase Date, in whole or in part, in Common Stock, but such portion of the Purchase Price is ultimately to be paid in cash because any condition in Section 3.8(d) is not satisfied, such Holder elects (x) to withdraw such Purchase Notice as to some or all of the Securities to which it relates (stating the Principal Amount and certificate numbers of the Securities as to which such withdrawal shall relate), or (y) to receive cash in respect of the entire Purchase Price for all Securities subject to such Purchase Notice; and (2) delivery of such Security to the Paying Agent prior to, on or after the Purchase Date (together with all necessary endorsements), such delivery being a condition to receipt by the Holder of the Purchase Price therefor; provided, however, that such Purchase Price shall be so paid pursuant to this Section 3.8 only if the Security so delivered conforms in all respects to the description thereof in the related Purchase Notice. If a Holder fails to indicate in such Holder's Purchase Notice and in any written notice of withdrawal delivered by such Holder pursuant to the terms of Section 3.10 a choice with respect to the election described in clause (1)(D) above, such Holder shall be deemed to have elected to receive cash in respect of the Purchase Price 20 otherwise payable in Common Stock for all Securities subject to such Purchase Notice in the circumstances set forth in such clause (1)(D). The Company shall purchase from the Holder thereof, pursuant to this Section 3.8, a portion of a Security if the Principal Amount of such portion is $1,000 or an integral multiple of $1,000. Provisions of this Indenture that apply to the purchase of all of a Security also apply to the purchase of such portion of such Security. Each purchase pursuant to this Section 3.8 shall be consummated by the delivery of the consideration to be received by the Holder promptly following the later of the Purchase Date and the time of delivery of the Security to the Paying Agent. Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent a Purchase Notice shall have the right at any time prior to the close of business on the Purchase Date to withdraw such Purchase Notice by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 3.10. The Paying Agent shall promptly notify the Company of the receipt by it of any Purchase Notice or written notice of withdrawal thereof. (b) Company's Right to Elect Manner of Payment of Purchase Price. The Securities to be purchased pursuant to Section 3.8(a) may be paid for, at the election of the Company, in cash or Common Stock, or in any combination of cash or Common Stock, subject to the conditions set forth in Sections 3.8(c) and (d). The Company shall designate, in the Company Notice delivered pursuant to Section 3.8(e), whether the Company will purchase the Securities for cash or Common Stock, and, if a combination thereof, the percentages of the Purchase Price of Securities in respect of which it will pay in cash or Common Stock; provided that the Company will pay cash for fractional interests in Common Stock. For purposes of determining the existence of potential fractional interests, all Securities subject to purchases by the Company held by a Holder shall be considered together (no matter how many separate certificates are to be presented). 21 Each Holder whose Securities are purchased pursuant to this Section 3.8 shall receive the same percentage of cash of Common Stock in payment of the Purchase Price for such Securities, except (i) as provided in Section 3.8(d) with regard to the payment of cash in lieu of fractional shares of Common Stock and (ii) in the event that the Company is unable to purchase the Securities of a Holder or Holders for Common Stock because any necessary qualifications or registrations of the Common Stock under applicable state securities laws cannot be obtained, the Company may purchase the Securities of such Holder or Holders for cash. The Company may not change the form of consideration (or components or percentages of components thereof) to be paid in respect of the Purchase Price once the Company has given its Company Notice thereof to Securityholders, except, as set forth in Section 3.8(d), in the event of a failure to satisfy, prior to the close of business on the Purchase Date, any condition to the payment of the Purchase Price, in whole or in part, in Common Stock. At least two Business Days before the Company Notice Date, the Company shall deliver an Officers' Certificate to the Trustee specifying: (i) the manner of payment selected by the Company, (ii) the information required by Section 3.8(e), (iii) if the Company elects to pay the Purchase Price, or a specified percentage thereof, in Common Stock, that the conditions to such manner of payment set forth in Section 3.8(d) have been or will be complied with, and (iv) whether the Company desires the Trustee to give the Company Notice required by Section 3.8(e). (c) Payment by Cash. On each Purchase Date, at the option of the Company, the Purchase Price of the Securities in respect of which a Purchase Notice pursuant to Section 3.8(a) has been given, or a specified percentage thereof, may be purchased by the Company with cash equal to the aggregate Purchase Price of such Securities. 22 (d) Conditions to Payment by Issuance of Common Stock. On each Purchase Date, at the option of the Company, the Purchase Price of Securities in respect of which a Purchase Notice pursuant to Section 3.8(a) has been given, or a specified percentage thereof, may be paid by the Company by the issuance of a number of shares of Common Stock equal to the quotient obtained by dividing (i) the amount of cash to which the Securityholders would have been entitled had the Company elected to pay all or such specified percentage, as the case may be, of the Purchase Price of such Securities in cash by (ii) the Market Price of a share of Common Stock, subject to the next succeeding paragraph. The Company will not issue any fractional shares of Common Stock in payment of the Purchase Price. Instead the Company will pay cash for the current market value of such fractional shares. The current market value of a fraction of a share shall be determined by multiplying the Market Price by such fraction and rounding the product to the nearest whole cent. It is understood that if a Holder elects to have more than one Security purchased, the number of Shares of Common Stock shall be based on the aggregate amount of Securities to be purchased. Each share of Common Stock issued upon purchase of Securities pursuant to Section 3.8(a) shall be entitled to receive the appropriate number of preferred stock purchase rights (the "Rights"), if any, and the certificates representing the Common Stock issued upon such conversion shall bear such legends, if any, in each case as provided by the terms of the Rights Agreement, dated as of April 5, 1989, between the Company and Harris Trust Company of New York, as Rights Agent (the "Rights Agreement"), as in effect at the time of such purchase. The Company's right to exercise its election to purchase the Securities pursuant to Section 3.8 through the issuance of shares of Common Stock shall be conditioned upon: (i) the Company's not having given its Company Notice of an election to pay entirely in cash and its giving of timely Company Notice of an election to purchase all or a specified percentage of the Securities with Common Stock as provided 23 herein; (ii) the registration of the shares of Common Stock to be issued in respect of the payment of the Purchase Price under the Securities Act of 1933, as amended (the "Securities Act"), or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), if required; (iii) in respect of any Holder, any necessary qualification or registration under applicable state securities laws or the availability of an exemption from such qualification or registration; and (iv) the receipt by the Trustee on or prior to the Purchase Date of an Officers' Certificate and an Opinion of Counsel each stating that (A) the terms of the issuance of the Common Stock are in conformity with this Indenture and (B) the shares of Common Stock to be issued by the Company in payment of the Purchase Price in respect of Securities have been duly authorized and, when issued and delivered pursuant to the terms of this Indenture in payment of the Purchase Price in respect of Securities, will be validly issued, fully paid and nonassessable and shall be free of any preemptive rights and any lien or adverse claim, and, in the case of such Officers' Certificate, stating that conditions (i), (ii) and (iii) above and the condition set forth in the second succeeding sentence have been satisfied and, in the case of such Opinion of Counsel, stating that conditions (ii) and (iii) above have been satisfied. Such Officers' Certificate shall also set forth in the number of shares of Common Stock to be issued for each $1,000 Principal Amount of Securities and the Sale Price of a share of Common Stock for the five Trading Day period ending on (if the third Business Day prior to the applicable Purchase Date is a Trading Day, or if not, then on the last Trading Day Prior to) the third Business Day prior to the Purchase Date. The Company may pay the Purchase Price (or any portion thereof) in Common Stock only if the information necessary to calculate the Market Price is reported in a daily newspaper of national circulation. If such conditions are not satisfied with respect to a Holder or Holders prior to or on the Purchase 24 Date and the Company elected to purchase the Securities to be purchased as of such Purchase Date pursuant to this Section 3.8 through the issuance of shares of Common Stock, the Company shall pay the entire Purchase Price in respect of the Securities of such Holder or Holders in cash. The "Market Price" means the average of the Sales Prices of the Common Stock for the five Trading Day period ending on (if the third Business Day prior to the applicable Purchase Date is a Trading Day, or if not, then on the last Trading Day prior to) the third Business Day prior to the applicable Purchase Date, appropriately adjusted to take into account the actual occurrence, during the seven Trading Days preceding such Purchase Date, of any event described in Section 11.6, 11.7 or 11.8; subject, however, to the conditions set forth in Sections 11.9 and 11.10. (e) Notice of Election. The Company shall send a notice of its election to purchase with cash or Common Stock or any combination thereof (a "Company Notice") to the Holders (and to beneficial owners as required by applicable law including, without limitation, Rule 13e-4 under the Exchange Act ("Rule 133-4")) in the manner provided in Section 12.2 not less than 20 Business Days prior to the Purchase Date (the "Company Notice Date"). Such Company Notice shall state the manner of payment elected and: In the event the Company has elected to pay the Purchase Price (or any specified percentage thereof) with Common Stock, the Company Notice shall: (1) state that each Holder will receive Common Stock having a Market Price determined as of a specified date prior to the Purchase Date equal to such specified percentage of the Purchase Price of the Securities held by such Holder (except for any cash amount to be paid in lieu of fractional shares); (2) set forth the method of calculating the Market Price of the Common Stock; and (3) state that because the Market Price of Common Stock will be determined prior to the 25 Purchase Date, Holders will bear the market risk with respect to the value of the Common Stock to be received from the date such Market Price is determined to the Purchase Date. In any case, each notice shall include a form of Purchase Notice to be completed by the Securityholder and shall state: (i) the Purchase Price and Conversion Rate; (ii) the name and address of the Paying Agent and the Conversion Agent; (iii) that Securities as to which a Purchase Notice has been given may be converted only if the applicable Purchase Notice has been withdrawn in accordance with the terms of this Indenture; (iv) that Securities must be surrendered to the Paying Agent to collect payment; (v) that the Purchase Price for any security as to which a Purchase Notice has been given and not withdrawn will be paid promptly following the later of the Purchase Date and the time of surrender of such Security as described in (iv); (vi) the procedures the Holder must follow to exercise rights under Section 3.8 and a brief description of those rights; (vii) briefly, the conversion rights of the Securities; and (viii) the procedures for withdrawing a Purchase Notice (including, without limitation, procedures for a conditional withdrawal pursuant to the terms of Section 3.8(a)(1)(D) or Section 3.10). At the Company's request, the Trustee shall give notice in the Company's name and at the Company's expense; provided, however, that, in all cases, the text of such Company Notice shall be prepared by the Company. Upon determination of the actual number of 26 shares of Common Stock to be issued for each $1,000 Principal Amount of Securities, the Company will publish such determination in a daily newspaper of national circulation. (f) Covenants of the Company. All shares of Common Stock delivered upon purchase of the Securities shall be newly issued shares or treasury shares, shall be fully paid and nonassessable and shall be free from preemptive rights and free of any lien or adverse claim. The Company shall use its best efforts to list or cause to have quoted any shares of Common Stock to be issued to purchase Securities on each national securities exchange or over-the-counter or other domestic market on which any other shares of the Common Stock are then listed or quoted. (g) Procedure upon Purchase. On the Business Day following the Purchase Date the Company shall deposit with the Paying Agent cash (in respect of a cash purchase under Section 3.8(a) or for fractional interests, as applicable) or shares of Common Stock, or a combination thereof, as applicable; sufficient to pay the Purchase Price due and owing as of the close of business on the Purchase Date of the Securities to be purchased pursuant to this Section 3.8. Promptly following the Purchase Date, the Company shall deliver to each Holder entitled to receive Common Stock, through the Paying Agent, a certificate for the number of full shares of Common Stock issuable in payment of such Purchase Price and cash in lieu of any fractional interests. The person in whose name the certificate for Common Stock is registered shall be treated as a holder of record of such Common Stock immediately after the Purchase Date. Subject to Section 3.8(d), no payment or adjustment will be made for dividends on the Common Stock the record date for which occurred on or prior to the Purchase Date. (h) Taxes. If a Holder is paid in Common Stock, the Company shall pay any documentary, stamp or similar issue or transfer tax due on such issue of shares of Common Stock. However, the Holder shall pay any such tax which is due because the Holder requests the shares of Common Stock to be issued in a name other than the Holder's name. The Paying Agent may refuse to deliver the certificates representing the Common Stock being 27 issued in a name other than the Holder's name until the Paying Agent receives a sum sufficient to pay any tax which will be due because the shares of Common Stock are to be issued in a name other than the Holder's name. Nothing herein shall preclude any income tax withholding required by law or regulations. SECTION 3.9. Purchase of Securities at Option of the Holder upon Change in Control. (a) If on or prior to July 24, 1996, there shall have occurred a Change in Control, Securities shall be purchased by the Company at the option of the Holder thereof, at the purchase price specified in paragraph 6 of the Securities (the "Change in Control Purchase Price"), as of the date that is 35 Business Days after the occurrence of the Change in Control (the "Change in Control Purchase Date"), subject to satisfaction by or on behalf of the Holder of the requirements set forth in Section 3.9(c). A "Change in Control" shall be deemed to have occurred at such time as either of the following events shall occur: (i) There shall be consummated any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which the Common Stock would be converted into cash, securities or other property, other than a consolidation or merger of the Company in which the holders of the Common Stock immediately prior to the consolidation or merger have, directly or indirectly, at least a majority of the Common Stock of the continuing or surviving corporation immediately after such consolidation or of the common stock of the surviving corporation immediately after such merger as they had of the Common Stock immediately prior to such consolidation or merger; or (ii) There is a report filed on Schedule 13D or 14D-1 (or any successor schedule, form or report) pursuant to the Exchange Act, disclosing that any person (for the purposes of this Section 3.9 only, as the term "person" is used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or 28 any successor provision to either of the foregoing) has become the beneficial owner (as the term "beneficial owner" is defined under Rule 13d-3 or any successor rule or regulation promulgated under the Exchange Act) of 50% or more of the combined voting power of all the Company's then outstanding securities entitled to vote generally for the election of directors; provided, however, that a person shall not be deemed to be the beneficial owner of, or to own beneficially, (A) any securities tendered pursuant to a tender or exchange offer made by or on behalf of such person or any of such person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange thereunder, or (B) any securities if such beneficial ownership (1) arises solely as a result of a revocable proxy delivered in response to a proxy or consent solicitation made pursuant to the applicable rules and regulations under the Exchange Act, and (2) is not also then reportable on Schedule 13D (or any successor schedule) under the Exchange Act. Notwithstanding the foregoing provisions of this Section 3.9, a Change in Control shall not be deemed to have occurred by virtue of the Company, any Subsidiary, any employee stock ownership plan or any other employee benefit plan of the Company or any Subsidiary, any person holding securities of the Company for or pursuant to the terms of any such employee benefit plan, or the Grass Family, filing or becoming obligated to file a report under or in response to Schedule 13D or Schedule 14D-1 (or any successor schedule, form or report) under the Exchange Act disclosing beneficial ownership by it of shares of securities of the Company, whether in excess of 50% or otherwise. "Common Stock" shall mean the shares of Common Stock, par value $1.00 per share, of the Company as it exists on the date of this Indenture or any other shares of Capital Stock of the Company into which the Common Stock shall be reclassified or changed. "Associate" shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in effect on the date hereof. 29 "Grass Family" shall mean Alex Grass, Martin L. Grass or any entity over which Alex Grass or Martin L. Grass has direct or indirect control. (b) Within 15 Business Days after the occurrence of a Change in Control, the Company shall mail a written notice of Change in Control by first-class mail to the Trustee and to each Holder (and to beneficial owners as required by applicable law) and shall cause a copy of such notice to be published in a daily newspaper of national circulation. The notice shall include a Change in Control Purchase Notice (as defined below) to be completed by the Holder and shall state: (1) the date of such Change in Control and, briefly, the events causing such Change in Control; (2) the date by which the Change in Control Purchase Notice pursuant to this Section 3.9 must be given; (3) the Change of Control Purchase Date; (4) the Change in Control Purchase Price; (5) briefly, the conversion rights of the Securities; (6) the name and address of the Paying Agent and the Conversion Agent; (7) the Conversion Rate and any adjustments thereto; (8) that Securities as to which a Change in Control Purchase Notice has been given may be converted into Common Stock only if the Change in Control Purchase Notice has been withdrawn in accordance with the terms of this Indenture; (9) the procedures the Holder must follow to exercise rights under this Section 3.9; (10) the procedures for withdrawing a Change in Control Purchase Notice; 30 (11) that Securities must be surrendered to the Paying Agent to collect payment; and (12) that the Change in Control Purchase Price for any Security as to which a Change in Control Purchase Notice has been duly given and not withdrawn will be paid promptly following the later of the Change in Control Purchase Date and the time of surrender of such security as described in (11) above. (c) A Holder may exercise its rights specified in Section 3.9(a) upon delivery of a written notice of purchase (a "Change in Control Purchase Notice") to the Paying Agent at any time prior to the close of business on the Change in Control Purchase Date, stating: (1) the certificate number of the Security which the Holder will deliver to be purchased; (2) the portion of the Principal Amount of the Security which the Holder will deliver to be purchased, which portion must be $1,000 or an integral multiple thereof; and (3) that such Security shall be purchased pursuant to the terms and conditions specified in paragraph 6 of the Securities. The delivery of such Security to the Paying Agent prior to, on or after the Change in Control Purchase Date (together with all necessary endorsements) at the offices of the Paying Agent shall be a condition to the receipt by the Holder of the Change in Control Purchase Price therefor; provided, however, that such Change in Control Purchase Price shall be so paid pursuant to this Section 3.9 only if the Security so delivered to the Paying Agent shall conform in all respects to the description thereof set forth in the related Change in Control Purchase Notice. The Company shall purchase from the Holder thereof, pursuant to this Section 3.9, a portion of a Security if the Principal Amount of such portion is $1,000 or an integral multiple of $1,000. Provisions of this Indenture that apply to the purchase of all of a 31 Security also apply to the purchase of such portion of such Security. Any purchase by the Company contemplated pursuant to the provisions of this Section 3.9 shall be consummated by the delivery of the consideration to be received by the Holder promptly following the later of the Change in Control Purchase Date and the time of delivery of the Security. Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Change in Control Purchase Notice contemplated by this Section 3.9(c) shall have the right to withdraw such Change in Control Purchase Notice at any time prior to the close of business on the Change in Control Purchase Date by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 3.10. The Paying Agent shall promptly notify the Company of the receipt by it of any Change in Control Purchase Notice or written withdrawal thereof. SECTION 3.10. Effect of Purchase Notice of Change in Control Purchase Notice. Upon receipt by the Paying Agent of the Purchase Notice or Change in Control Purchase Notice specified in Section 3.8(a) or Section 3.9(c), as applicable, the Holder of the Security in respect of which such Purchase Notice or Change in Control Purchase Notice, as the case may be, was given shall (unless such Purchase Notice or Change in Control Purchase Notice is withdrawn as specified in the following two paragraphs) thereafter be entitled to receive solely the Purchase Price or Change in Control Purchase Price, as the case may be, with respect to such Security. Such Purchase Price or Change in Control Purchase Price shall be paid to such Holder promptly following the later of (x) the Purchase Date or the Change in Control Purchase Date, as the case may be, with respect to such Security (provided the conditions in Section 3.8(a) or Section 3.9(c), as applicable, have been satisfied) and (y) the time of delivery of such Security to the Paying Agent by the Holder thereof in the manner required by Section 3.8(a) or Section 3.9(c), as applicable. Securities in respect of which a Purchase Notice or Change in Control Purchase Notice, as the case may be, has been given by the Holder thereof may not be converted into shares of 32 Common Stock on or after the date of the delivery of such Purchase Notice or Change in Control Purchase Notice, as the case may be, unless such Purchase Notice or Change in Control Purchase Notice, as the case may be, has first been validly withdrawn as specified in the following two paragraphs. A Purchase Notice or Change in Control Purchase Notice, as the case may be, may be withdrawn by means of a written notice of withdrawal delivered to the office of the Paying Agent at any time prior to the close of business on the Purchase Date or the Change in Control Purchase Date, as the case may be, to which it relates specifying: (1) the certificate number of the Security in respect of which such notice of withdrawal is being submitted, (2) the Principal Amount of the Security with respect to which such notice of withdrawal is being submitted, and (3) the Principal Amount, if any, of such Security which remains subject to the original Purchase Notice or Change in Control Purchase Notice, as the case may be, and which has been or will be delivered for purchase by the Company. A written notice of withdrawal of a Purchase Notice may be in the form set forth in the preceding paragraph or may be in the form of (i) a conditional withdrawal contained in the Purchase Notice pursuant to the terms of Section 3.8(a)(1)(D) or (ii) a conditional withdrawal containing the information set forth in Section 3.8(a)(1)(D) and the preceding paragraph and contained in a written notice of withdrawal delivered to the Paying Agent as set forth in the preceding paragraph. There shall be no purchase of any Securities pursuant to Section 3.8 (other than through the issuance of Common Stock, including cash in lieu of fractional shares) or 3.9 if there has occurred (prior to, on or after, as the case may be, the giving, by the Holders of such Securities, of the required Purchase Notice or Change in Control Purchase Notice, as the case may be) 33 and is continuing an Event of Default (other than a default in the payment of the Purchase Price or Change in Control Purchase Price, as the case may be, with respect to such Securities). SECTION 3.11. Deposit of Purchase Price or Change in Control Purchase Price. On or before the Business Day following a Purchase Date or a Change in Control Purchase Date, as the case may be, the Company shall deposit with the Trustee or with the Paying Agent (or, if the Company or a Subsidiary or an Affiliate of either of them is acting as the Paying Agent, shall segregate and hold in trust as provided in Section 2.4) an amount of money or, if permitted by the terms hereof, securities sufficient to pay the aggregate Purchase Price or Change in Control Purchase Price, as the case may be, of all the Securities or portions thereof which are to be purchased as of such Purchase Date or Change in Control Purchase Date, as the case may be. SECTION 3.12. Securities Purchased in Part. Any Security which is to be purchased only in part shall be surrendered at the office of the Paying Agent (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder's attorney duly authorized in writing) and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Security, without service charge, a new Security or Securities of any authorized denomination as requested by such Holder in aggregate Principal Amount equal to, and in exchange for, the portion of the Principal Amount of the Security so surrendered which is not purchased. SECTION 3.13. Covenant to Comply with Securities Laws upon Purchase of Securities. In connection with any offer to purchase or purchase of Securities under Section 3.8 or 3.9 hereof (provided that such offer or purchase constitutes an "issuer tender offer" for purposes of Rule 13e-4 (which term, as used herein, includes any successor provision thereto) at the time of such offer of purchase), the Company shall (i) comply with Rule 13e-4 and Rule 14e-1 under the Exchange Act, (ii) file the related Schedule 13E-4 (or any successor schedule, form or report) under the Exchange Act, and (iii) otherwise comply with all Federal and state securi- 34 ties laws so as to permit the rights and obligations under Section 3.8 and 3.9 to be exercised in the time and in the manner specified in Sections 3.8 and 3.9. SECTION 3.14. Repayment to the Company. The Trustee and the Paying Agent shall return to the Company any cash or shares of Common Stock, together with any dividends on such shares of Common Stock, held by them for the payment of a Purchase Price or Change in Control Purchase Price, as the case may be, in respect of cash or shares of Common Stock that remain unclaimed as provided in paragraph 13 of the Securities; provided, however, that to the extent that the aggregate amount of cash or shares of Common Stock deposited by the Company pursuant to Section 3.11 exceeds the aggregate Purchase Price or Change in Control Purchase Price, as the case may be, of the Securities or portions thereof to be purchased, then promptly after the Business Day following the Purchase Date or Change in Control Purchase Date, as the case may be, the Trustee shall return any such excess to the Company together with dividends, if any, thereon. ARTICLE 4 COVENANTS SECTION 4.1. Payment of Securities. The Company shall promptly make all payments in respect of the Securities on the dates and in the manner provided in the Securities or pursuant to this Indenture. Principal Amount, Issue Price, accrued Original Issue Discount, Redemption Price, Purchase Price, Change in Control Purchase Price and interest, if any, shall be considered paid on the applicable date due if on such date the Trustee or the Paying Agent holds, in accordance with this Indenture, money or securities, if permitted hereunder, sufficient to pay all such amounts then due. The Company shall pay interest on overdue amounts at the rate set forth in paragraph 1 of the Securities, compounded semi-annually, and it shall pay interest on overdue interest at the same rate, compounded semi-annually (to the extent that the payment of such interest shall be legally enforceable), which interest on overdue interest shall accrue from the date such amounts became overdue. All such interest shall be payable on 35 demand. SECTION 4.2. SEC and Other Reports. (a) The Company shall file with the Trustee, within 15 days after it files such annual and quarterly reports, information, documents and other reports with the SEC, copies of its annual report and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. In the event the Company is at any time no longer subject to the reporting requirements of Section 13 and 15(d) of the Exchange Act, it shall provide the Trustee, in accordance with the rules and regulations prescribed from time to time by the SEC, such reports which may be required pursuant to Section 13 of the Exchange Act in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations. In such event, such reports shall be provided at the times the Company would have been required to provide reports had it continued to have been subject to such reporting requirements. The Company also shall comply with the other provisions of TIA Section 314(a). (b) The Company shall, at its expense, transmit to Holders of Securities within 30 days after the filing thereof with the Trustee such summaries of any information, documents and reports required to be filed by the Company pursuant to subsection (a) as may be required to be transmitted to such Holders by the rules and regulations prescribed from time to time by the SEC. SECTION 4.3. Compliance Certificate. (a) The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company (beginning with the fiscal year ending on March 31, 1993) a brief certificate from the principal executive officer, principal financial officer or principal accounting officer as to his or her knowledge of the Company's compliance with all conditions and covenants under the Indenture and, if the signer has obtained knowledge of any default by the Company in the performance, observance or fulfillment of any such condition or covenant, specifying each such default and the nature thereof. For purposes of this Section 4.3, such compliance shall be 36 determined without regard to any period of grace or requirement of notice provided under the terms of the Indenture. (b) The Company shall file with the Trustee written notice of the occurrence of any Default or Event of Default within five Business Days of its becoming aware of such Default or Event of Default. SECTION 4.4. Further Instruments and Acts. Upon request of the Trustee, the Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of this Indenture. SECTION 4.5. Maintenance of Office or Agency. The Company will maintain in the Borough of Manhattan, The City of New York, an office or agency of the Trustee, Registrar, Paying Agent and Conversion Agent where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer, exchange, purchase, redemption or conversion and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The corporate trust office of the Trustee in care of Harris Trust Company of New York, 77 Water Street, New York, N.Y. 10005 shall initially be such office or agency for all of the aforesaid purposes. The Company shall give prompt written notice to the Trustee of any change of location of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 12.2. The Company may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York, for such purposes. 37 ARTICLE 5 SUCCESSOR CORPORATION SECTION 5.1. When Company May Merge or Transfer Assets. The Company, in a single transaction or through a series of related transactions, shall not consolidate with or merge with or into any other person or transfer (by lease, assignment, sale or otherwise) all or substantially all of its properties and assets to another person or group of affiliated persons, unless: (a) either (1) the Company shall be the continuing corporation or (2) the person (if other than the Company) formed by such consolidation or into which the Company is merged or to which all or substantially all of the properties and assets of the Company are transferred (i) shall be a corporation, partnership or trust organized and validly existing under the laws of the United States or any State thereof or the District of Columbia and (ii) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, all of the obligations of the Company under the Securities and this Indenture; (b) immediately after giving effect to such transaction, and the assumption contemplated by clause (a) above, no Default or Event of Default shall have occurred and be continuing; and (c) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with this Article 5 and that all conditions precedent herein provided for relating to such transaction have been satisfied. For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise) of the properties and assets of one or more Subsidiaries (other than to the Company or another wholly owned Subsidiary), which, if such assets were owned by the Company, would constitute all or substantially all of the properties and assets of the Company, shall be deemed to be the transfer of all or substantially all of the properties and assets of the 38 Company. The successor person formed by such consolidation or into which the Company is merged or the successor person to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor had been named as the Company herein; and thereafter, except in the case of (i) a lease of its properties and assets substantially as an entirety and (ii) obligations the Company may have under a supplemental indenture pursuant to Section 11.14, the Company shall be discharged and released from all obligations and covenants under this Indenture and the Securities. The Trustee shall enter into a supplemental indenture to evidence the succession and substitution of such successor person and such discharge and release of the Company. ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.1. Events of Default. An "Event of Default" occurs if one of the following shall have occurred and be continuing: (1) the Company defaults in the payment of the Principal Amount, Issue Price plus accrued Original Issue Discount, Redemption Price, Purchase Price or Change in Control Purchase Price on any Security when the same becomes due and payable at its Stated Maturity, upon redemption, upon declaration, when due for purchase by the Company or otherwise, whether or not such payment shall be prohibited by Article 10; (2) the Company fails to comply with any of its agreements in the Securities or this Indenture (other than those referred to in clause (1) above) and such failure continues for 90 days after receipt by the Company of a Notice of Default; (3) a decree or order by a court having 39 jurisdiction in the premises shall have been entered adjudging the Company as bankrupt or insolvent, or approving as properly filed a petition seeking reorganization of the Company under any Bankruptcy Law, and such decree or order shall have continued undischarged and unstayed for a period of 90 consecutive days; or a decree or order or a court having jurisdiction in the premises for the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of the Company or of its property, or for the winding up or liquidation of its affairs, shall have been entered, and such decree or order shall have remained in force undischarged and unstayed of a period of 90 consecutive days; or (4) the Company shall institute proceedings to be adjudicated a voluntary bankrupt, or shall consent to the filing of a bankruptcy proceeding against it, or shall file a petition or answer or consent seeking reorganization under any Bankruptcy Law, or shall consent to the filing of any such petition, or shall consent to the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of it or of its property or shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due. "Bankruptcy Law" means Title 11, United States Code, or any similar Federal or state law for the relief of debtors. "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator, custodian or similar official under any Bankruptcy Law. A Default under clause (2) above is not an Event of Default until the Trustee notifies the Company, or the Holders of at least 25% in aggregate Principal Amount of the Securities at the time outstanding notify the Company and the Trustee, of the Default and the Company does not cure such Default within the time specified in clause (2) above after receipt of such notice. Any such notice must specify the Default, demand that it be remedied and state that such notice is a "Notice of Default". 40 The Company shall deliver to the Trustee, within 30 days after it becomes aware of the occurrence thereof, written notice of any event which with the giving of notice or the lapse of time, or both, would become an Event of Default under clause (2) above, its status and what action the Company is taking or proposes to take with respect thereto. SECTION 6.2. Acceleration. If an Event of Default (other than an Event of Default specified in Section 6.1(3) or (4) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in aggregate Principal Amount of the Securities at the time outstanding by notice to the Company and the Trustee, may declare the Issue Price and accrued Original Issue Discount to the date of declaration on all the Securities to be immediately due and payable. Upon such a declaration, such Issue Price and accrued Original Issue Discount shall be due and payable immediately. If an Event of Default specified in Section 6.1(3) or (4) occurs and is continuing, the Issue Price plus accrued Original Issue Discount on all the Securities shall become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Securityholders. The Holders of a majority in aggregate Principal Amount of the Securities at the time outstanding, by notice to the Trustee (and without notice to any other Securityholder), may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of the Issue Price and accrued Original Issue Discount that have become due solely as a result of acceleration and if all amounts due to the Trustee under Section 7.7 have been paid. No such rescission shall affect any subsequent Default or impair any right consequent thereto. SECTION 6.3. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of the Issue Price and accrued Original Issue Discount 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 the Trustee does not possess any of the Securities or does not produce any of the Securities in the proceeding. 41 A delay or omission by the Trustee or any Securityholder 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 6.4. Waiver of Past Defaults. The Holders of a majority in aggregate Principal Amount of the Securities at the time outstanding, by notice to the Trustee (and without notice to any other Securityholder), may waive an existing Default and its consequences except (a) an Event of Default described in Section 6.1(1), (b) a Default in respect of a provision that under Section 9.2 cannot be amended without the consent of each Securityholder affected or (c) a Default under Article 11. When a Default is waived, it is deemed cured and shall cease to exist, but no such waiver shall extend to any subsequent or other Default or impair any consequent right. This Section 6.4 shall be in lieu of Section 316(a)1(B) of the TIA and said Section 316(a)1(B) is hereby expressly excluded from this Indenture, as permitted by the TIA. SECTION 6.5. Control by Majority. The Holders of a majority in aggregate Principal Amount of the Securities at the time 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. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or that the Trustee determines in good faith is unduly prejudicial to the rights of other Securityholders or would involve the Trustee in personal liability. This Section 6.5 shall be in lieu of Section 316(a)1(A) of the TIA and said Section 316(a)1(A) is hereby expressly excluded from this Indenture, as permitted by the TIA. SECTION 6.6. Limitation on Suits. A Securityholder may not pursue any remedy with respect to this Indenture or the Securities unless: (1) the Holder gives to the Trustee written notice stating that an Event of Default is continuing; 42 (2) the Holders of at least 25% in aggregate Principal Amount of the Securities at the time outstanding make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer to the Trustee reasonable security or indemnity against any loss, liability or expense satisfactory to the Trustee; (4) the Trustee does not comply with the request within 60 days after receipt of the notice, the request and the offer of security or indemnity; and (5) the Holders of a majority in aggregate Principal Amount of the Securities at the time outstanding do not give the Trustee a direction inconsistent with the request during such 60-day period. A Securityholder may not use this Indenture to prejudice the rights of any other Securityholder or to obtain a preference or priority over any other Securityholder. SECTION 6.7. Rights of Holders to Receive Payment. Notwithstanding any other provision of this Indenture, but subject to Article 10, the right of any Holder to receive payment of the Principal Amount, Issue Price plus accrued Original Issue Discount, Redemption Price, Purchase Price, Change in Control Purchase Price or interest, if any, in respect of the Securities held by such Holder, on or after the respective due dates expressed in the Securities or any Redemption Date, and to convert the Securities in accordance with Article 11 at the Conversion Rate, or to bring suit for the enforcement of any such payment on or after such respective dates or the right to convert at the Conversion Rate, shall not be impaired or affected adversely without the consent of each such Holder. SECTION 6.8. Collection Suit by Trustee. If an Event of Default described in Section 6.1(1) 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 owing with respect to 43 the Securities and the amounts provided for in Section 7.7. SECTION 6.9. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the Principal Amount, Issue Price plus accrued Original Issue Discount, Redemption Price, Purchase Price, Change in Control Purchase Price or interest, if any, in respect of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of any such amount) shall be entitled and empowered, by intervention in such proceeding or otherwise, (a) to file and prove a claim for the whole amount of the Principal Amount, Issue Price plus accrued Original Issue Discount, Redemption Price, Purchase Price, Change in Control Purchase Price, or interest, if any, and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and (b) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of 44 reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 6.10. Priorities. If the Trustee collects any money pursuant to this Article 6, it shall pay out the money in the following order: FIRST: to the Trustee for amounts due under Section 7.7; SECOND: to holders of Senior Indebtedness to the extent required by Article 10; THIRD: to Securityholders for amounts due and unpaid on the Securities for the Principal Amount, Issue Price plus accrued Original Issue Discount, Redemption Price, Purchase Price, Change in Control Purchase Price or interest, if any, as the case may be, ratably, without preference or priority of any kind, according to such amounts due and payable on the Securities; and FOURTH: the balance, if any, to the Company. The Trustee may fix a record date and payment date for any payment to Securityholders pursuant to this Section 6.10. At least 15 days before such record date, the Company shall mail to each Securityholder 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 (other than the Trustee) in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.7 or a suit by Holders of more than 10% in aggregate Principal Amount of 45 the Securities at the time outstanding. This Section 6.11 shall be in lieu of Section 315(e) of the TIA and said Section 315(e) is hereby expressly excluded from this Indenture, as permitted by the TIA. SECTION 6.12. Notice of Defaults. The Trustee shall, within 90 days after the occurrence of any Default, mail to all Securityholders, as the names and addresses of such Holders appear on the books of registry of the Company, notice of all Defaults of which the Trustee shall be aware, unless such Defaults shall have been cured or waived before the giving of such notice, provided that, except in the case of a Default described in Section 6.1(1), the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors or Trust Officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Securityholders. SECTION 6.13. Waiver of Stay, Extension or Usury Laws. The Company covenants (to the extent that it may lawfully do so) that it will 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 or any usury or other law wherever enacted, now or at any time hereafter in force, that would prohibit or forgive the Company from paying all or any portion of the Principal Amount, Issue Price plus accrued Original Issue Discount, Redemption Price, Purchase Price or Change in Control Purchase Price in respect of Securities, or any interest on any such amounts, as contemplated herein, or 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 covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. 46 ARTICLE 7 TRUSTEE SECTION 7.1. 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 its exercise as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default, (1) the Trustee need perform only those duties that are specifically set forth in this Indenture and no others; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. This Section 7.1(b) shall be in lieu of Section 3.15(a) of the TIA and said Section 315(a) is hereby expressly excluded from this Indenture, as permitted by the TIA. The Trustee shall not be liable for any interest on any money received by it, except as the Trustee may otherwise agree with the Company. (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 (c) does not limit the effect of paragraph (b) of this Section 7.1; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Trust 47 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 6.5. Subparagraphs (c)(1), (2) and (3) shall be in lieu of Sections 315(d)1), 315(d)(2) and 315(d)(3) of the TIA and said Sections 315(d)(1), (2) and (3) are hereby excluded from this Indenture, as permitted by the TIA. (d) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 7.1 (e) The Trustee may refuse to perform any duty or exercise any right or power or extend or risk its own funds or otherwise incur any financial liability unless it receives indemnity satisfactory to it against any loss, liability or expense. (f) Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. SECTION 7.2. 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. (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 such 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. (d) Subject to the provisions of Section 7.1(c), the Trustee shall not be liable for any action it 48 takes or omits to take in good faith which it believes to be authorized or within its rights or powers. SECTION 7.3. 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, co-registrar or Conversion Agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11. SECTION 7.4. Trustee's Disclaimer. The Trustee makes no representation as to the validity 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 in the registration statement for the Securities under the Securities Act (other than statements contained in the Form T-1 filed with the Commission under the TIA and any statements provided by the Trustee in writing specifically for use in such registration statement) or in the Indenture or the Securities (other than its certificate of authentication), or the determination as to which beneficial owners are entitled to receive any notices hereunder. SECTION 7.5. Notice of Defaults. If a Default occurs and is continuing and if it is known to the Trustee, the Trustee shall give to each Securityholder notice of the Default within 90 days after it occurs. Except in the case of a Default described in Section 6.1(1), the Trustee may withhold such notice if and so long as a committee of its Trust Officers in good faith determines that the withholding of such notice is in the interests of Securityholders. The second sentence of this Section 7.5 shall be in lieu of the proviso to Section 315(b) of the TIA and said proviso is hereby expressly excluded from this Indenture, as permitted by the TIA. SECTION 7.6. Reports by Trustee to Holders. Within 60 days after each July 24 beginning with July 24, 1993, the Trustee shall mail to each Securityholder a brief report dated as of such July 24 that complies with TIA Section 313(a) if required by such Section 313(a). The Trustee also shall comply with TIA Section 313(b). 49 A copy of each report at the time of its mailing to Securityholders shall be filed with the SEC and each stock exchange on which the Securities are listed. The Company agrees to promptly notify the Trustee whenever the Securities become listed on any stock exchange and of any delisting thereof. SECTION 7.7. Compensation and Indemnity. The Company agrees: (a) to pay to the Trustee from time to time such compensation as shall be agreed between the Company and the Trustee for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (b) to reimburse the Trustee upon its request and, if required by the Company, submission of reasonable documentation, for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses, disbursements and advances of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (c) to indemnify the Trustee for, and to hold it harmless against, any and all loss, liability or expense, incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Company's payment obligations pursuant to this Section 7.7 shall survive the discharge of this Indenture. When the Trustee incurs expenses after the occurrence of a Default specified in Section 6.1(3) or (4), the expenses are intended to constitute expenses of administration under any Bankruptcy Law. SECTION 7.8. Replacement of Trustee. The Trustee may resign by so notifying the Company; provided, however, no such resignation shall be effective until a successor Trustee has accepted its appointment pursuant 50 to this Section 7.8. The Holders of a majority in aggregate Principal Amount of the Securities at the time outstanding may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee subject to the consent of the Company, which consent shall not be unreasonable 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 public officer takes charge of the Trustee or its property; or (4) the Trustee otherwise becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint, by resolution of its Board of Directors, 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 Securityholders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee. If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of a majority in aggregate Principal Amount of the Securities at the time outstanding may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with Section 7.10, any Securityholder may petition any court of competent jurisdiction for the removal of the Trustee and the 51 appointment of a successor Trustee. SECTION 7.9. Successor Trustee by Merger. If the Trustee consolidates wit, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee. SECTION 7.10. Eligibility; Disqualification. The Trustee shall at all times satisfy the requirements of TIA Section 310(a)(1). The Trustee shall have a combined capital and surplus of at least $100,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with TIA Section 310(b). In determining whether the Trustee has conflicting interests as defined in TIA Section 310(b)(1), the provisions contained in the proviso to TIA Section 310(b)(1) shall be deemed incorporated herein. SECTION 7.11. Preferential Collection of Claims against Company. The Trustee shall comply with TIA section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein. ARTICLE 8 DISCHARGE OF INDENTURE SECTION 8.1. Discharge of Liability on Securities. When (i) the company delivers to the Trustee all outstanding securities (other than Securities replaced pursuant to Section 2.7) for cancellation or (ii) all outstanding Securities have become due and payable and the Company deposits with the Trustee cash sufficient to pay at Stated Maturity the Principal Amount of all outstanding Securities (other than Securities replaced pursuant to Section 2.7), and if in either case the Company pays all other sums payable hereunder by the Company, then this Indenture shall, subject to Section 7.7, cease to be of further effect. The Trustee shall join in the execution of a document prepared by the Company acknowledging satisfaction and discharge of this Indenture on demand of the Company accompanied by an Officers' Certif- 52 icate and Opinion of Counsel and at the cost and expense of the Company. SECTION 8.2. Repayment to the Company. The Trustee and the Paying Agent shall return to the Company upon written request any money or securities held by them for the payment of any amount with respect to the Securities that remains unclaimed for two years, provided, however, that the Trustee or such Paying Agent, before being required to make any such return, may at the expense of the Company cause to be published once in a newspaper of national circulation or mail to each such Holder notice that such money or securities remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing, any unclaimed money or securities then remaining will be returned to the Company. After return to the Company, Holders entitled to the money or securities must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person. ARTICLE 9 AMENDMENTS SECTION 9.1. Without Consent of Holders. The Company and the Trustee may amend this Indenture or the Securities without the consent of any Securityholder: (1) to cure any ambiguity, defect or inconsistency, provided that such amendment does not materially adversely affect the rights of any Securityholder; or (2) to comply with Article 5 or Section 11.14; or (3) to provide for uncertificated Securities in addition to certificated Securities so long as such uncertificated Securities are in registered form for purposes of the Internal Revenue Code of 1986, as amended; or (4) to make any other change that does not adversely affect the rights of any Securityholder; 53 (5) to add to the covenants or obligations of the Company hereunder or to surrender any right, power or option herein conferred upon the Company; or (6) to comply with any requirement of the SEC in connection with the qualification of this Indenture under the TIA. SECTION 9.2. With Consent of Holders. With the written consent of the Holders of at least a majority in aggregate Principal Amount of the Securities at the time outstanding, the Company and the Trustee may amend this Indenture or the Securities. However, without the consent of each Securityholder affected, an amendment to this Indenture or the Securities may not: (1) make any change to the Principal Amount of Securities whose Holders must consent to an amendment; (2) make any change to the rate or manner of accrual of Original Issue Discount, reduce the rate of interest referred to in paragraph 1 of the Securities or extend the time for payment of Original issue Discount or interest, if any, on any Security; (3) reduce the Principal Amount or the Issue Price, or extend the Stated Maturity, of any Security; (4) reduce the Redemption Price, Purchase Price or Change in Control Purchase Price of any Security; (5) make any Security payable in money or securities other than that stated in the Security; (6) make any change in Article 10 that adversely effects the rights of any Securityholder; (7) make any change in Section 6.4, Section 6.7 or this Section 9.2, except to increase any applicable percentage; (8) make any change that adversely affects the 54 right to convert any Security; (9) make any change that adversely affects the right to require the Company to purchase the Securities in accordance with the terms thereof and this indenture; (10) except as provided in this Indenture, decrease the Conversion Rate of any Security; (11) modify the provisions of this Indenture relating to the subordination of the Securities in a manner adverse to the Securityholders; or (12) impair the right to institute suit for the enforcement of any payment with respect to, or conversion of, the Securities. It shall not be necessary for the consent of the Holders under this Section 9.2 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof. An amendment under this Section 9.2 or Section 9.1 may not make any change that adversely affects the rights under Article 10 of any holder of Senior Indebtedness then outstanding unless the requisite holders of such Senior Indebtedness consent to such change pursuant to the terms of such Senior Indebtedness. After an amendment under this Section 9.2 becomes effective, the Company shall mail to each Holder a notice briefly describing the amendment. SECTION 9.3. Compliance with Trust Indenture Act. Every supplemental indenture executes pursuant to this Article 9 shall comply with the TIA. SECTION 9.4. Revocation and Effect of Consents, Waivers and Actions. Until an amendment, waiver or other action by Holders becomes effective, a consent to it or any other action by a Holder of a Security hereunder is a continuing consent by the Holder and every subsequent Holder of that Security or portion of the Security that evidences the same obligation as the consenting Holder's Security, even if notation of the con- 55 sent, waiver or action is not made on the Security. However, any such Holder or subsequent Holder may revoke the consent, waiver or action as to such Holder's Security or portion of the Security if the Trustee receives the notice of revocation before the Company or an agent of the Company certifies to the Trustee that the consent of the requisite aggregate principal amount of the Securities then outstanding has been obtained and not revoked. After an amendment, waiver or action becomes effective, it shall bind every Securityholder, except as provided in Section 9.2. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment or waiver. If a record date is fixed, then, notwithstanding the first two sentences of 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 revoke any consent previously given, whether or not such persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 90 days after such record date. SECTION 9.5. Notation on or Exchange of Securities. Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article 9 may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for outstanding Securities. SECTION 9.6. Trustee to Sign Supplemental Indentures. The Trustee shall sign any supplemental Indenture authorized pursuant to this Article 9 if the supplemental indenture does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may, but need not, sign it. In signing such amendment the Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating 56 that such supplemental indenture is authorized or permitted by this Indenture. SECTION 9.7. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article 9, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. ARTICLE 10 SUBORDINATION SECTION 10.1. Securities Subordinate to Senior Indebtedness. The Company covenants and agrees, and each Holder of a Security by such Holder's acceptance thereof likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Article 10, the indebtedness represented by the Securities and the payment of the Principal Amount at maturity, Issue Price plus accrued Original Issue Discount, Redemption Price, Purchase Price, Change in Control Purchase Price and interest, if any, in respect of each and all of the Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness. SECTION 10.2. Payment over of Proceeds Upon Dissolution, etc. Upon any distribution of assets of the Company in the event of: (a) any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding in connection therewith, relative to the Company or to its creditors, as such, or to its assets, or (b) any liquidation, dissolution or other winding up of the Company, whether voluntary or involuntary and whether or not involving insolvency or bankruptcy, or (c) any assignment for the benefit of credi- 57 tors or any other marshalling of assets and liabilities of the Company, then and in such event (1) the holders of Senior Indebtedness shall be entitled to receive payment in full of all amounts due or to become due on or in respect of all Senior Indebtedness, or provision shall be made for such payment, before the Holders of the Securities are entitled to receive any payment on account of the Principal Amount, Issue Price plus accrued Original Issue Discount, Redemption Price, Purchase Price, Change in Control Purchase Price or interest, if any, in respect of the Securities; and (2) any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, by set-off or otherwise, to which the Holders or the Trustee would be entitled but for the provisions of this Article 10, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other Debt of the Company being subordinated to the payment of the Securities, shall be paid by the liquidating trustee or agent or other person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of Senior Indebtedness or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness may have issued, ratably according to the aggregate amounts remaining unpaid on account of the principal of, and premium, if any, and interest on, the Senior Indebtedness held or represented by each, to the extent necessary to make payment in full of all Senior Indebtedness remaining unpaid, after giving effect to any concurrent payment or distribution to or for the holders of such Senior Indebtedness. In the event that, notwithstanding the foregoing provisions of this Section 10.2, the Trustee or the Holder of any Security shall receive any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, including 58 any such payment or distribution which may be payable or deliverable by reason of the payment of any other Debt of the Company being subordinated to the payment of the Securities, before all Senior Indebtedness is paid in full or payment thereof provided for, and if such fact shall then have been made known to the Trustee, or, as the case may be, such Holder, then and in such event such payment or distribution shall be paid over or delivered forthwith to the trustee in bankruptcy, receiver, liquidating trustee, Custodian, assignee, agent or other person making payment or distribution of assets of the Company for application to the payment of all Senior Indebtedness remaining unpaid, to the extent necessary to pay all Senior Indebtedness in full, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness. For purposes of this Article 10 only, the words "cash, property or securities" shall not be deemed to include shares of the Company as reorganized or readjusted, or securities of the Company or any other corporation provided for by a plan of reorganization or readjustment the payment of which is subordinated, at least to the extent provided in this Article 10 with respect to the Securities, to the payment of all Senior Indebtedness which may at the time be outstanding; provided, however, that (i) Senior Indebtedness is assumed by the new corporation, if any, resulting from any such reorganization or readjustment, and (ii) the rights of the holders of the Senior Indebtedness are not, without the consent of such holders, altered by such reorganization or readjustment. The consolidation of the Company with, or the merger of the Company into, another corporation or the liquidation or dissolution of the Company following the conveyance or transfer of all or substantially all of its properties and assets to another person upon the terms and conditions set forth in Article 5 shall not be deemed a dissolution, winding up, liquidation, reorganization, assignment for the benefit of creditors or marshalling of assets and liabilities of the Company for the purposes of this Section 10.2 if the corporation formed by such consolidation or into which the Company is merged or the person which acquires by conveyance or transfer all or substantially all of the assets of the Company, as the case may be, shall, as a part of such consolidation, merger, conveyance or transfer, comply with the condi- 59 tions set forth in Article 5. SECTION 10.3. Acceleration of Securities. In the event that any Securities are declared or become due and payable before their Stated Maturity pursuant to Section 6.2, then and in such event the Company shall promptly notify holders of Senior Indebtedness of such acceleration. The Company may not pay the Securities until 120 days have passed after such acceleration occurs and may thereafter pay the Securities if this Article 10 permits the payment at that time. In the event that, notwithstanding the foregoing, the Company shall make any payment to the Trustee or the Holder of any Securities prohibited by the foregoing provisions of this Section 10.3, and if such facts then shall have been known or thereafter shall have been made known to the Trustee as provided in Section 10.10 or such Holder, as the case may be, pursuant to the terms of this Indenture, then and in such event such payment shall be paid over and delivered forthwith to the company by or on behalf of the person holding such payment for the benefit of the holders of Senior Indebtedness. The provisions of this Section 10.3 shall not apply to any payment with respect to which Section 10.2 would be applicable. SECTION 10.4. Default on Senior Indebtedness. The Company may not make any payment of the Principal Amount at maturity, Issue Price plus accrued original Issue Discount, Redemption Price, Change in Control Purchase Price or interest, if any, in respect of the Securities and may not pay cash in respect of the Purchase Price (or portion thereof) of any Security (other than for fractional shares of Common Stock) or otherwise acquire any Securities for cash or property (except as otherwise provided by Article 11 and other than for Capital Stock of the Company) if: (1) a default on Senior indebtedness occurs and is continuing that permits holders of such Senior Indebtedness to accelerate its maturity and the Company has actual knowledge of such default; and (2) after giving effect to such payment or 60 acquisition, any default on Senior indebtedness that would permit the holders of Senior Indebtedness to accelerate its maturity would occur. The Company may resume payments on the Securities and may acquire Securities if and when: (A) the default is cured or waived (including, without limitation, by payment of Senior Indebtedness in full); or (B) 120 or more days pass after the receipt by the Trustee of the notice described in clause (1) above and the default is not then the subject of judicial proceedings; and this Article 10 otherwise permits the payment or acquisition at that time. The Company covenants and agrees to give the Trustee notice of any default referred to in clause (1) above or potential default referred to in clause (2) above within five Business Days after the Company has actual knowledge of Such default or potential default. In the event that, notwithstanding the foregoing, the Company shall make any payment to the Trustee or the Holder of any Security prohibited by the foregoing provisions of this Section 10.4, and if such fact then shall have been known or thereafter shall have been made known to the Trustee, as provided in Section 10.10, or such Holder, as the case may be, pursuant to the terms of this indenture, then and in such event such payment shall be paid over and delivered forthwith to the Company by or on behalf of the person holding such payment for the benefit of the holders of the Senior Indebtedness. Nothing contained in this Article 10 or elsewhere in this Indenture or in any of the Securities shall prevent the conversion by a Holder of any Securities in accordance with the provisions for conversion of such Securities set forth in this Indenture, including the payment of cash in lieu of fractional shares of Common stock in accordance with Article 11, or in any of such Securities in the event of an occurrence of the events described in clauses (1) and (2) of this Section 10.4. 61 The provisions of this Section 10.4 shall not apply to any payment with respect to which Section 10.2 would be applicable. SECTION 10.5. Payment Permitted If No Default. Nothing contained in this Article 10 or elsewhere in this Indenture or in any of the Securities shall prevent (a) the Company, at any time except during the pendency of any case, proceeding, dissolution, liquidation or other winding up, assignment for the benefit of creditors or other marshalling of assets and liabilities of the Company referred to in Section 10.2 or under the conditions described in Section 10.3 or 10.4, from making payments at any time of the Principal Amount at maturity, Issue Price plus accrued Original Issue Discount, Redemption Price, Purchase Price, Change in Control Purchase Price or interest, if any, as the case may be, in respect of the Securities, or (b) the application by the Trustee or the retention by any Holder of any money deposited with it hereunder to the payment of or on account of the Principal Amount at maturity, Issue Price Plus accrued Original Issue Discount, Redemption Price, Purchase Price, Change in Control Purchase Price or interest, if any, as the case may be, in respect of the Securities if the Trustee did not have, at the time provided in the proviso to the first paragraph of Section 10.10, notice that such payment would have been prohibited by the provisions of this Article 10. SECTION 10.6. Subrogation to Rights of Holders of Senior Indebtedness. Subject to the payment in full of all Senior Indebtedness, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Indebtedness pursuant to the provisions of this Article 10 to the rights of the holders of such Senior Indebtedness to receive payments or distributions of cash, property or securities applicable to the Senior Indebtedness until the Principal Amount at Maturity, Issue Price plus accrued Original Issue Discount, Redemption Price, Purchase Price or Change in Control Purchase Price or interest, if any, as the case may be, in respect of the Securities shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Indebtedness of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article 10, 62 and no payments pursuant to the provisions of this Article 10 to the Company or to the holders of Senior Indebtedness by Holders of the Securities or the Trustee, shall, as between the Company, its creditors other than holders of Senior Indebtedness and the Holders of the Securities, be deemed to be a payment or distribution by the Company to or on account of the Senior Indebtedness. SECTION 10.7. Provisions Solely to Define Relative Rights. The provisions of this Article 10 are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities, on one hand, and the holders of Senior Indebtedness, on the other hand. Nothing contained in this Article 10 or elsewhere in this Indenture or in the Securities is intended to or shall: (a) impair, as between the Company and the Holders of the Securities, the obligation of the Company, which is absolute and unconditional, to pay to the Holders of the Securities the Principal Amount at maturity, Issue Price plus accrued Original Issue Discount, Redemption Price, Purchase Price, Change in Control Purchase Price, and interest, if any, as the case may be, in respect of the Securities as and when the same shall become due and payable in accordance with the terms of the Securities and this Indenture and which, subject to the rights under this Article 10 of the holders of Senior Indebtedness, are intended to rank equally with all other general obligations of the Company; or (b) affect the relative rights against the Company of the Holders of the Securities and creditors of the Company other than holders of Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article 10 of the holders of Senior Indebtedness to receive cash, property or securities otherwise payable or deliverable to the Trustee or such Holder. SECTION 10.8. Trustee to Effectuate Subordination. Each Holder of a Security by such Holder's acceptance thereof authorizes and directs the Trustee on such Holder's behalf to take such action as may be necessary 63 or appropriate to effectuate the subordination provided in this Article 10 and appoints the Trustee such Holder's attorney-in-fact for any and all such purposes. SECTION 10.9. No Waiver of Subordination Provisions. No right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof any such holder may have or be otherwise charged with. Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of, or notice to, the Trustee or the Holders of the Securities, without incurring responsibility to the Holders of the Securities and without impairing or releasing the subordination provided in this Article 10 or the obligations hereunder of the Holders of the Securities to the holders of Senior Indebtedness, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness or any instrument evidencing the same or any agreement under which Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise dispose of any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii) release any person liable in any manner for the collection of Senior Indebtedness; and (iv) exercise or refrain from exercising any rights against the Company or any other person. SECTION 10.10. Notice to Trustee. The Company shall give prompt written notice to the Trustee of any fact known to the Company which would prohibit the making of any payment to or by the Trustee in respect of the Securities. Failure to give such notice shall not affect the subordination of the Securities to Senior Indebtedness. Notwithstanding the provisions of this Article 10 or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment 64 to or by the Trustee in respect of the Securities, unless and until the Trustee shall have received written notice thereof at the address specified in Section 12.2 from the Company or a holder of Senior Indebtedness or from any trustee or agent therefor; and, prior to the receipt of any such written notice, the Trustee, subject to the provisions of Section 7.1, shall be entitled in all respects to assume that no such facts exist; provided, however, that if a Trust Officer of the Trustee shall not have received, at least three Business Days prior to the date upon which by the terms hereof any such money may become payable for any purpose (including, without limitation, the payment of the Principal Amount at maturity, Issue Price plus accrued Original Issue Discount, Redemption Price, Purchase Price, Change in Control Purchase Price or interest, if any, as the case may be, in respect of any Security), the notice with respect to such money provided for in this Section 10.10, then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such money and to apply the same to the purpose for which such money was received and shall not be affected by any notice to the contrary which may be received by it within three Business Days prior to such date. Subject to the provisions of Section 7.1, the Trustee shall be entitled to rely on the delivery to it of a written notice by a person representing himself to be a holder of Senior Indebtedness (or a trustee or agent on behalf of such holder) to establish that such notice has been given by a holder of Senior Indebtedness (or a trustee or agent on behalf of any such holder). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article 10, the Trustee may request such person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such person, the extent to which such person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such person under this Article 10, and if such evidence is not furnished, the Trustee may defer any payment which it may be required to make for the benefit of such person pursuant to the terms of this Indenture pending judicial determination as to the right of such person to receive such 65 payment. Section 10.11. Reliance on Judicial Order or Certificate of Liquidating Agent. Upon any payment or distribution of assets of the Company referred to in this Article 10, the Trustee, subject to the provisions of Section 7.1, and the Holders of the Securities shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction in which such insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution, winding up or similar case or proceeding is pending, or a certificate of the trustee in bankruptcy, liquidating trustee, Custodian, receiver, assignee for the benefit of creditors, agent or other person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the persons entitled to participate in such payment or distribution, the holders of Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 10. SECTION 10.12. Trustee Not Fiduciary for Holders of Senior Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall not be liable to any such holders if the Trustee shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Company or to any other person cash, property or securities to which any holders of Senior Indebtedness shall be entitled by virtue of this Article 10 or otherwise. The Trustee shall not be charged with knowledge of the existence of Senior Indebtedness or of any facts that would prohibit any payment hereunder unless a Trust Officer of the Trustee shall have received notice to that effect at the address of the Trustee set forth in Section 12.2. With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants or obligations as are specifically set forth in this Article 10 and no implied covenants or obligations with respect to holders of Senior Indebtedness shall be read into this Indenture against the Trustee. SECTION 10.13. Rights of Trustee as Holder of Senior Indebtedness; Preservation of Trustee's Rights. The Trustee in its individual capacity shall be entitled 66 to all the rights set forth in this Article 10 with respect to any Senior Indebtedness which may at any time be held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. Nothing in this Article 10 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 7.7. SECTION 10.14. Article 10 Applicable to Paying Agents. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article 10 shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article 10 in addition to or in place of the Trustee; provided, however, that Sections 10.10 and 10.12 shall not apply to the Company or any Affiliate of the Company if it or such Affiliate acts as Paying Agent. ARTICLE 11 CONVERSION SECTION 11.1. Conversion Privilege. A Holder of a Security may convert such Security into Common Stock before the close of business on July 24, 2006; provided, however, that if such Security is called for redemption pursuant to this Indenture, the Holder may convert it only until the close of business on the Redemption Date. The number of shares of Common Stock issuable upon conversion of a Security per $1,000 of Principal Amount at Stated Maturity thereof (the "Conversion Rate") shall be that set forth in paragraph 9 in the Securities, subject to adjustment as herein set forth. A Holder may convert a portion of the Principal Amount of a Security if the portion is $1,000 or an integral multiple of $1,000. Provisions of this Indenture that apply to conversion of all of a Security also apply to conversion of a portion of a Security. A Security in respect of which a Holder has 67 delivered a Purchase Notice pursuant to Section 3.8 exercising the option of such Holder to require the Company to purchase such Security may be converted only if such Purchase Notice is withdrawn by a written notice of withdrawal delivered to the Paying Agent prior to the close of business on the Purchase Date in accordance with Section 3.10. "Average Sale Price" means the average of the Sale Price of the Common Stock for the shorter of: (i) 30 consecutive Trading Days ending on the last full Trading Day prior to the Time of Determination with respect to the rights, warrants or options or distribution in respect of which the Average Sale Price is being calculated, or (ii) the period (x) commencing on the date next succeeding the first public announcement of (a) the issuance of rights, warrants or options or (b) the distribution, in each case, in respect of which the Average Sale Price is being calculated and (y) proceeding through the last full Trading Day prior to the Time of Determination with respect to the rights, warrants or options or distribution in respect of which the Average Sale Price is being calculated, or (iii) the period, if any, (x) commencing on the date next succeeding the Ex-Dividend Time with respect to the next preceding (a) issuance of rights, warrants or options or (b) distribution, in each case, for which an adjustment is required by the provisions of Section 11.6(d), 11.7 or 11.8 and (y) proceeding through the last full Trading Day prior to the Time of Determination with respect to the rights, warrants or options or distribution in respect of which the Average Sale Price is being calculated. If the Ex-Dividend Time (or in the case of a subdivision, combination or reclassification, the effective date with respect thereto) with respect to a dividend, subdivision, combination or reclassification to which Section 11.6(a), (b), (c) or (e) applies occurs during the period applicable for calculating "Average Sale Price" pursuant to the definition in the preceding 68 sentence, "Average Sale Price" shall be calculated for such period in a manner determined by the Board of Directors to reflect the impact of such dividend, subdivision, combination or reclassification on the Sale Price of the Common Stock during such period. "Time of Determination" means the time and date of the earlier of (i) the determination of stockholders entitled to receive rights, warrants or options or a distribution, in each case, to which Sections 11.7 and 11.8 apply and (ii) the time ("Ex-Dividend Time") immediately prior to the commencement of "ex-dividend" trading for such rights, warrants or options or distribution on the New York Stock Exchange, Inc. or such other national or regional exchange or market on which the Common Stock is then listed or quoted. SECTION 11.2. Conversion Procedure. To convert a Security a Holder must (1) complete and manually sign the conversion notice on the back of the Security (or complete and manually sign a facsimile of such notice) and deliver such notice to the Conversion Agent, (2) surrender the Security to the Conversion Agent, (3) furnish appropriate endorsements and transfer documents if required by the Registrar, the Conversion Agent, the Company or the Trustee and (4) pay any transfer or similar tax, if required. The date on which the Holder satisfies all those requirements is the conversion date (the "Conversion Date"). As soon as practicable after the Conversion Date, the Company shall deliver to the Holders through the Conversion Agent, a certificate for the number of full shares of Common Stock issuable upon the conversion and cash in lieu of any fractional share pursuant to Section 11.3. The person in whose name the certificate is registered shall be treated as a stockholder of record on and after the Conversion Date; provided, however, that no surrender of a Security on any date when the stock transfer books of the Company shall be closed shall be effective to constitute the person or persons entitled to receive the shares of Common Stock upon such conversion as the record holder or holders of such shares of Common Stock on such date, but such surrender shall be effective to constitute the person or persons entitled to receive such shares of Common Stock as the record holder or holders thereof for all purposes at the close of business 69 on the next succeeding day on which such stock transfer books are open; provided, further, that such conversion shall be at the Conversion Rate in effect on the date that such Security shall have been surrendered for conversion, as if the stock transfer books of the Company had not been closed. Upon conversion of a Security, such person shall no longer be a Holder of such Security. No payment or adjustment will be made for dividends or other distributions with respect to any Common Stock except as provided in this Article 11. On conversion of a Security, that portion of accrued Original Issue Discount attributable to the period from the Issue Date of the Security through the Conversion Date with respect to the converted Security shall not be cancelled, extinguished or forfeited, but rather shall be deemed to be paid in full to the Holder thereof through delivery of the Common Stock (together with the cash payment, if any, in lieu of fractional shares) in exchange for the Security being converted pursuant to the provisions hereof; and the fair market value of such shares of Common Stock (together with any such cash payment in lieu of fractional shares) shall be treated as issued, to the extent thereof, first in exchange for Original Issue Discount accrued through the Conversion Date, and the balance, if any, of such fair market value of such Common Stock (and any such cash payment) shall be treated as issued in exchange for the Issue Price of the Security being converted pursuant to the provisions hereof. If the Holder converts more than one Security at the same time, the number of shares of Common Stock issuable upon the conversion shall be computed based on the total Principal Amount of the Securities converted. Upon surrender of a Security that is converted in part, the Company shall execute, and the Trustee shall authenticate and deliver to the Holder, a new Security in an authorized denomination equal in Principal Amount at Stated Maturity to the unconverted portion of the Security surrendered. If the last day on which a Security may be converted is a Legal Holiday in a place where a Conversion Agent is located, the Security may be surrendered to that Conversion Agent on the next succeeding day that is 70 not a Legal Holiday. SECTION 11.3. Fractional Shares. The Company will not issue a fractional share of Common Stock upon conversion of a Security. Instead, the Company will deliver cash for the current market value of the fractional share. The current market value of a fractional share shall be determined to the nearest 1/1,000th of a share by multiplying the Sale Price, on the last Trading Day prior to the Conversion Date, of a full share by the fractional amount and rounding the product to the nearest whole cent. SECTION 11.4. Taxes on Conversions. If a Holder converts a Security, the Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of shares of Common Stock upon such conversion. However, the Holder shall pay any such tax which is due because the Holder requests the shares to be issued in a name other than the Holder's name. The Conversion Agent may refuse to deliver the certificates representing the Common Stock being issued in a name other than the Holder's name until the Conversion Agent receives a sum sufficient to pay any tax which will be due because the shares are to be issued in a name other than the Holder's name. Nothing herein shall preclude any tax withholding required by law or regulations. SECTION 11.5. Company to Provide Stock. The Company shall, prior to issuance of any Securities hereunder, and from time to time as may be necessary, reserve out of its authorized but unissued Common Stock a sufficient number of shares of Common Stock to permit the conversion of the Securities for shares of Common Stock. All shares of Common Stock delivered upon conversion of the Securities shall be newly issued shares or treasury shares, shall be duly and validly issued and fully paid and nonassessable and shall be free from preemptive rights and free of any lien or adverse claim. The Company will endeavor promptly to comply with all Federal and state securities laws regulating the offer and delivery of shares of Common Stock upon conversion of Securities, if any, and will list or cause to have quoted such shares of Common Stock on each national securities exchange or in the over-the-counter market or 71 such other market on which the Common Stock is then listed or quoted. SECTION 11.6. Adjustment for Change in Capital Stock. If, after the Issue Date of the Securities, the Company: (a) pays a dividend or makes a distribution on its Common Stock in shares of its Common Stock; (b) subdivides its outstanding shares of Common Stock into a greater number of shares; (c) combines its outstanding shares of Common Stock into a smaller number of shares; (d) pays a dividend or makes a distribution on its Common Stock in shares of its Capital Stock (other than Common Stock or rights, warrants, or options for its Capital Stock); or (e) issues by reclassification of its Common Stock any shares of its Capital Stock (other than rights, warrants, or options for its Capital Stock), then the conversion privilege and the Conversion Rate in effect immediately prior to such action shall be adjusted so that the Holder of a Security thereafter converted may receive the number of shares of Capital Stock of the Company which such Holder would have owned immediately following such action if such Holder had converted the Security immediately prior to such action. The adjustment shall become effective immediately after the record date in the case of a dividend or distribution and immediately after the effective date in the case of subdivision, combination or reclassification. If after an adjustment a Holder of a Security upon conversion of such Security may receive shares of two or more classes of Capital Stock of the Company, the Conversion Rate shall thereafter be subject to adjustment upon the occurrence of an action taken with respect to any such class of Capital Stock as is contemplated by this Article 11 with respect to the Common Stock, on terms comparable to those applicable to Common Stock in this Article 11. 72 SECTION 11.7. Adjustment for Rights Issue. If, after the Issue Date, the Company distributes any rights, warrants or options to all holders of its Common Stock entitling them, for a period expiring within 60 days after the record date for such distribution, to purchase shares of Common Stock at a price per share less than the Sale Price as of the Time of Determination, the Conversion Rate shall be adjusted in accordance with the formula: R' = R x (O + N) --------------- (O + (N x P)/M) where: R' = the adjusted Conversion Rate. R = the current Conversion Rate. O = the number of shares of Common Stock outstanding on the record date for the distribution to which this Section 11.7 is being applied. N = the number of additional shares of Common Stock offered pursuant to the distribution. P = the offering price per share of the additional shares. M = the Average Sale Price, minus, in the case of (i) a distribution to which Section 11.6(d) applied or (ii) a distribution to which Section 11.8 applies, for which, in each case, (x) the record date shall occur on or before the record date for the distribution to which this Section 11.7 applies and (y) the Ex-Dividend Time shall occur on or after the date of the Time of Determination for the distribution to which this Section 11.7 applies, the fair market value (on the record date for the distribution to which this Section 11.7 applies) of (1) the Capital Stock of the Company distributed in respect of each share of Common Stock in such Section 11.6(d) distribution and (2) the assets of the Company or debt securities or any rights, warrants or options to purchase securities of the Company distributed in respect of each shares 73 of Common Stock in such Section 11.8 distribution. The Board of Directors shall determine fair market values for the purposes of this Section 11.7. The adjustment shall become effective immediately after the record date for the determination of stockholders entitled to receive the rights, warrants or options to which this Section 11.7 applies. No adjustment shall be made under this Section 11.7 if the application of the formula sated above in this Section 11.7 would result in a value of R' that is less than the value of R. SECTION 11.8. Adjustment for Other Distributions. If, after the Issue Date of the Securities, the Company distributes to all holders of its Common Stock any of its assets or debt securities or any rights, warrants or options to purchase securities of the Company (including securities or cash, but excluding (x) distributions of Capital Stock referred to in Section 11.6 and distributions of rights, warrants or options referred to in Section 11.7 and (y) cash dividends or other cash distributions that are paid out of consolidated current net earnings or earnings retained in the business as shown on the books of the Company unless such cash dividends or other cash distributions are Extraordinary Cash Dividends) the Conversion Rate shall be adjusted, subject to the provisions of the last paragraph of this Section 11.8, in accordance with the formula: R' = R x M --- M-F where: R' = the adjusted Conversion Rate. R = the current Conversion Rate. M = the Average Sale Price, minus, in the case of a distribution to which Section 11.6(d) applies, for which (i) the record date shall occur on or before the record date for the distribution to which this Section 11.8 applies and (ii) the 74 Ex-Dividend Time shall occur on or after the date of the Time of Determination for the distribution to which this Section 11.8 applies, the fair market value (on the record date for the distribution to which this Section 11.8 applies) of any Capital Stock of the Company distributed in respect of each share of Common Stock in such Section 11.6(d) distribution. F = the fair market value (on the record date for the distribution to which this Section 11.8 applies) of the assets, securities, rights, warrants or options to be distributed in respect of each share of Common Stock in the distribution to which this Section 11.8 is being applied (including, in the case of cash dividends or other cash distributions giving rise to an adjustment, all such cash distribut- ed concurrently). The Board of Directors shall determine fair market values for the purposes of this Section 11.8. The adjustment shall become effective immediately after the record date for the determination of stockholders entitled to receive the distribution to which this Section 11.8 applied. For purposes of this Section 11.8, the term "Extraordinary Cash Dividend" shall mean any cash dividend with respect to the Common Stock the amount of which, together with the aggregate amount of cash dividends on the Common Stock to be aggregated with such cash dividend in accordance with the provisions of this paragraph, equals or exceeds the threshold percentages set forth in item (i) or (ii) below: (1) If, upon the date prior to the Ex-Dividend Time with respect to a cash dividend on the Common Stock, the aggregate amount of such cash dividend together with the amounts of all cash dividends on the Common Stock with Ex-Dividend Times occurring in the 85 consecutive day period ending on the date prior to the Ex-Dividend Time, with respect to the cash dividend to which this provision is being applied, equals or exceeds 12.5% on a per share basis of 75 the average of the Sale Prices during the period beginning on the date after the first such Ex-Dividend Time in such period and ending on the date prior to the Ex-Dividend Time, with respect to the cash dividend to which this provision is being applied (except that if no other cash dividend has had an Ex-Dividend Time occurring in such period, the period for calculating the average of the Sale Prices shall be the period commencing 85 days prior to the date prior to the Ex-Dividend Time with respect to the cash dividend to which this provision is being applied), such cash dividend together with each other cash dividend with an Ex-Dividend Time occurring in such 85 day period shall be deemed to be an Extraordinary Cash Dividend and for the purposes of applying the formula set forth above in this Section 11.8, the value of "F" shall be equal to (w) the aggregate amount of such cash Dividend together with the amounts of the other cash dividends with Ex-Dividend Times occurring in such period minus (x) the aggregate amount of such other cash dividends with Ex-Dividend Times occurring in such period for which a prior adjustment in the Conversion Rate was previously made under this Section 11.8. (2) If, upon the date prior to the Ex-Dividend Time with respect to a cash dividend on the Common Stock, the aggregate amount of such cash Dividend together with the amounts of all cash dividends on the Common Stock with Ex-Dividend Times occurring in the 365 consecutive day period ending on the date prior to the Ex-Dividend Time with respect to the cash dividend to which this provision is being applied equals or exceeds on a per share basis 25% of the average of the Sale Prices during the period beginning on the date after the first such Ex-Dividend Time in such period and ending on the date prior to the Ex-Dividend Time with respect to the cash dividend to which this provision is being applied (except that if no other cash dividend has had an Ex-Dividend Time occurring in such period, the period for calculating the average of the Sale Prices shall be the period 76 commencing 365 days prior to the date prior to the Ex-Dividend Time with respect to the cash dividend to which this provision is being applied), such cash dividend together with each other cash dividend with an Ex-Dividend Time occurring in such 365 day period shall be deemed to be an Extraordinary Cash Dividend and for purposes of applying the formula set forth above in this Section 11.8, the value of "F" shall be equal to (y) the aggregate amount of such cash dividend together with amounts of the other cash dividends with Ex-Dividend Times occurring in such period minus (z) the aggregate amount of such other cash dividends with Ex-Dividend Times occurring in such period for which a prior adjustment in the Conversion Rate was previously made under this Section 11.8. In making the determinations required by items (i) and (ii) above, the amount of cash dividends paid on a per share basis and the average of the Sale Prices, in each case during the period specified in item (i) or (ii) above, as applicable, shall be appropriately adjusted to reflect the occurrence during such period of any event described in Section 11.6. In the event that, with respect to any distribution to which this Section 11.8 would otherwise apply, the difference "M-F" as defined in the above formula is less than $1.00 or "F" is equal to or greater than "M", then the adjustment provided by this Section 11.8 shall not be made and in lieu thereof the provisions of Section 11.14 shall apply to such distribution. SECTION 11.9. When Adjustment May Be Deferred. No adjustment in the Conversion Rate need be made unless the adjustment would require an increase or decrease of at least 1% in the Conversion Rate. Any adjustments that are not made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Article 11 shall be made to the nearest cent or to the nearest 1/1,000th of a share, as the case may be. SECTION 11.10. When No Adjustment Required. No adjustment need be made for a transaction referred to 77 in Section 11.6, 11.7, 11.8 or 11.14 if Securityholders are to participate in the transaction on a basis and with notice that the Board of Directors determines to be fair and appropriate in light of the basis and notice on which holders of Common Stock participate in the transaction. No adjustment need be made for rights to purchase Common Stock pursuant to a Company plan for reinvestment of dividends or interest. No adjustment need be made for a change in the par value or no par value of the Common Stock. SECTION 11.11. Notice of Adjustment. Whenever the Conversion Rate is adjusted, the Company shall promptly mail to Securityholders a notice of the adjustment. The Company shall file with the Trustee and the Conversion Agent such notice and a certificate from the Company's independent public accountants briefly stating the facts requiring the adjustment and the manner of computing it. The certificate shall be conclusive evidence that the adjustment is correct. Neither the Trustee nor any Conversion Agent shall be under any duty or responsibility with respect to any such certificate except to exhibit the same to any Holder desiring inspection thereof. SECTION 11.12. Voluntary Increase. The Company from time to time may increase the Conversion Rate by any amount and for any period of time (provided, that such period is not less than 20 Business Days). Whenever the Conversion Rate is increased, the Company shall mail to Securityholders and file with the Trustee and the Conversion Agent a notice of the increase. The Company shall mail the notice at least 15 days before the date the increased Conversion Rate takes effect. The notice shall state the increased Conversion Rate and the period it will be in effect. A voluntary increase of the Conversion Rate does not change or adjust the Conversion Rate otherwise in effect for purposes of Section 11.6 or 11.8. SECTION 11.13. Notice of Certain Transactions. If: (a) the Company takes any action that would 78 require an adjustment in the Conversion Rate pursuant to Section 11.6, 11.7 or 11.8 (unless no adjustment is to occur pursuant to Section 11.10); or (b) the Company takes any action that would require a supplemental indenture pursuant to Section 11.14; or (c) there is a liquidation or dissolution of the Company; then the Company shall mail to Securityholders and file with the Trustee and the Conversion Agent a notice stating the proposed record date for a dividend or distribution or the proposed effective date of a subdivision, combination, reclassification, consolidation, merger, binding share exchange, transfer, liquidation or dissolution. The Company shall file and mail the notice at least 15 days before such date. Failure to file or mail the notice or any defect in it shall not affect the validity of the transaction. SECTION 11.14. Reorganization of Company; Special Distributions. If the Company is a party to a transaction subject to Section 5.1 (other than a sale of all or substantially all of the assets of the Company in a transaction in which the holders of Common Stock immediately prior to such transaction do not receive securities, cash, or other assets of the Company or any other person) or a merger or binding share exchange which reclassifies or changes its outstanding Common Stock, the person obligated to deliver securities, cash or other assets upon conversion of Securities shall enter into a supplemental indenture. If the issuer of securities deliverable upon conversion of Securities is an Affiliate of the successor Company, that issuer shall join in the supplemental indenture. The supplemental indenture shall provide that the Holder of a Security may convert it into the kind and amount of securities, cash or other assets which such Holder would have received immediately after the consolidation, merger, binding share exchange or transfer if such Holder had converted the Security immediately before the effective date of the transaction, assuming (to the extent applicable) that such Holder (i) was not a constituent person or an Affiliate of a constituent person 79 to such transaction; (ii) made no election with respect thereto; and (iii) was treated alike with the plurality of non-electing Holders. The supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practical to the adjustments provided for in this Article 11. The successor Company shall mail to Securityholders a notice briefly describing the supplemental indenture. If this Section applies, neither Section 11.6 nor 11.7 applies. If the Company makes a distribution to all holders of its Common Stock of any of its assets, or debt securities or any rights, warrants or options to purchase securities of the Company that, but for the provisions of the last paragraph of Section 11.8, would otherwise result in an adjustment in the Conversion Rate pursuant to the provisions of Section 11.8, then, from and after the record date for determining the holders of Common Stock entitled to receive the distribution, a Holder of a Security that converts such Security in accordance with the provisions of this Indenture would upon such conversion be entitled to receive, in addition to the shares of Common Stock into which the Security is convertible, the kind and amount of securities, cash or other assets comprising the distribution that such Holder would have received if such Holder had converted the Security immediately prior to the record date for determining the holders of Common Stock entitled to receive the distribution. SECTION 11.15. Company Determination Final. Any determination that the Company or the Board of Directors must make pursuant to this Article 11 is conclusive. SECTION 11.16. Trustee's Adjustment Disclaimer. The Trustee has no duty to determine when an adjustment under this Article 11 should be made, how it should be made or what it should be. The Trustee has no duty to determine whether a supplemental indenture under Section 11.14 need be entered into or whether any provisions of any supplemental indenture are correct. The Trustee shall not be accountable for and makes no representation as to the validity or value of any securities or assets issued upon conversion of Securities. The Trustee shall not be responsible for the Company's failure to comply 80 with this Article 11. Each Conversion Agent (other than a Company or Affiliate of the Company) shall have the same protection under this Section 11.16 as the Trustee. SECTION 11.17. Simultaneous Adjustments. If this Article 11 requires adjustments to the Conversion Rate under more than one of Sections 11.6(d), 11.7 or 11.8, and the record dates for the distributions giving rise to such adjustments shall occur on the same date, then such adjustments shall be made by applying, first the provisions of Section 11.6, second, the provisions of Section 11.8 and, third, the provisions of Section 11.7. SECTION 11.18. Successive Adjustments. After an adjustment to the Conversion Rate under this Article 11, any subsequent event requiring an adjustment under this Article 11 shall cause an adjustment to the Conversion Rate as so adjusted. SECTION 11.19. Rights Issued in Respect of Common Stock Issued Upon Conversion. Each share of Common Stock issued upon conversion of Securities pursuant to this Article 11 shall be entitled to receive the appropriate number of Rights, if any, and the certificates representing the Common Stock issued upon such conversion shall bear such legends, if any, in each case as provided by the terms of the Rights Agreement, as in effect at the time of such conversion. Notwithstanding anything else to the contrary in this Article 11, there shall not be any adjustment to the conversion privilege or Conversion Rate as a result of (i) the distribution of separate certificates representing the Rights, (ii) the occurrence of certain events entitling holders of Rights to receive, upon exercise thereof, Common Stock of the Company or Capital Stock of another corporation, or (iii) the exercise of such Rights in accordance with the Rights Agreement. ARTICLE 12 MISCELLANEOUS SECTION 12.1. Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by operation of subsection (c) of Section 318 of the TIA, the imposed duties 81 shall control. The provisions of Sections 310 to 317, inclusive, of the TIA that impose duties on any person (including provisions automatically deemed included in an indenture unless the indenture provides that such provisions are excluded) are a part of and govern this Indenture, except as, and to the extent, expressly excluded from this Indenture, as permitted by the TIA. SECTION 12.2. Notices. Any notice or communication shall be in writing and delivered in person or mailed by first-class mail, postage prepaid, addressed as follows: if to the Company: Rite Aid Corporation 431 Railroad Avenue Shiremanstown, Pennsylvania 17011 Attention: Franklin C. Brown if to the Trustee: Harris Trust and Savings Bank P. 0. Box Chicago, Illinois 60690 Attention: Indenture Trust Division 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 given to a Securityholder shall be mailed to the Securityholder at the Securityholder'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 Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not received by the addressee. If the Company mails a notice or communication 82 to the Securityholders, it shall mail a copy to the Trustee and each Registrar, Paying Agent, Conversion Agent or co-registrar. SECTION 12.3. Communication by Holders with Other Holders. Securityholders may communicate pursuant to TIA Section 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, the Trustee, the Registrar, the Paying Agent, the Conversion Agent and anyone else shall have the protection of TIA Section 312(c). SECTION 12.4. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take any action under this indenture, the Company shall furnish to the Trustee: (a) an Officers' Certificate 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 (b) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with. SECTION 12.5. Statements Required in Certificate or Opinion. Each Officers' Certificate or Opinion of Counsel with respect to compliance with a covenant or condition provided for in this Indenture shall include: (a) a statement that each person making such Officers' Certificate or Opinion of Counsel has read such covenant or condition; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such Officers' Certificate or Opinion of Counsel are based; (c) a statement that, in the opinion of each such person, he has made such examination or investigation as is necessary to enable such person to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement that, in the opinion of such 83 person, such covenant or condition has been complied with. SECTION 12.6. Separability Clause. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 12.7. Rules by Trustee, Paying Agent, Conversion Agent and Registrar. The Trustee may make reasonable rules for action by or a meeting of Securityholders. The Registrar, Conversion Agent and Paying Agent may make reasonable rules for their functions. SECTION 12.8. Legal Holidays. A "Legal Holiday" is any day other than a Business Day. If any specified date (including a date for giving notice) is a Legal Holiday, the action shall be taken on the next succeeding day that is not a Legal Holiday, and, if the action to be taken on such date is a payment in respect of the Securities, no Original Issue Discount or interest, if any, shall accrue for the intervening period. SECTION 12.9. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. SECTION 12.10. 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 Securityholder shall waive and release all such liability. The waiver and release shall be part of the consideration for the issue of the Securities. SECTION 12.11. Successors. All agreements of the Company in this Indenture and the Securities shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successor. 84 SECTION 12.12. 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. 85 SIGNATURES IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed this Indenture on behalf of the respective parties hereto as of the date first above written. RITE AID CORPORATION By _________________________ Name: Franklin C. Brown Title: Sr. Vice President Attest: __________________________ Name: Frank Bergonzi Title: Sr. Vice President HARRIS TRUST AND SAVINGS BANK Trustee By _________________________ Name: Title: Attest: __________________________ Name: Title: 86 SIGNATURES IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed this Indenture on behalf of the respective parties hereto as of the date first above written. RITE AID CORPORATION By _________________________ Name: Title: Attest: __________________________ Name: Title: HARRIS TRUST AND SAVINGS BANK Trustee By _________________________ Name: J. BARTOLINI Title: VICE PRESIDENT Attest: __________________________ Name: C. POTTER Title: ASSISTANT SECRETARY 86 EXHIBIT A [FORM OF FACE OF NOTE] TEMPORARY NOTE EXCHANGEABLE FOX DEFINITIVE NOTE WHEN READY FOR DELIVERY. FOR PURPOSES OF SECTIONS 1272 ET SEQ. OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, THE AMOUNT AT MATURITY OF ORIGINAL ISSUE DISCOUNT WITH RESPECT TO EACH $1,000 OF PRINCIPAL AMOUNT OF THIS SECURITY IS $630.57, THE ISSUE DATE IS July 24, 1991, AND THE YIELD TO MATURITY IS 6.75%. Rite Aid Corporation Zero Coupon Convertible Subordinated Note due 2006 No. Issue Date: July 24, 1991 Issue Price: $369.43 (for each $1,000 Principal Amount at Maturity) Original Issue Discount: $630.57 (for each $1,000 Principal Amount at Maturity) RITE AID CORPORATION, a Delaware corporation, promises to pay to ___________ or registered assigns, the Principal Amount of __________ Dollars on July 24, 2006. This Security shall not bear interest except as specified on the other side of this Security. Original Issue Discount will accrue as specified on the other side of this Security. This Security is convertible as specified on the other side of this Security. A-1 Additional provisions of this Security are set forth on the other side of this Security. Dated: July 24, 1991 RITE AID CORPORATION By ______________________ Name: Title: [SEAL] By ______________________ Name: Title: TRUSTEE'S CERTIFICATE OF AUTHENTICATION HARRIS TRUST AND SAVINGS BANK as Trustee, certifies that this is one of the Securities referred to in the within-mentioned Indenture. By _________________________ Authorized Signatory A-2 [FORM OF REVERSE SIDE OF NOTE] Zero Coupon Convertible Subordinated Note due 2006 1. Interest This Security shall not bear interest, except that if the Principal Amount hereof or any portion of such Principal Amount is not paid when due (whether upon acceleration pursuant to Section 6.2 of the Indenture, upon the date set for payment of the Redemption Price pursuant to paragraph 5 hereof, upon the date set for payment of a Purchase Price or Change in Control Purchase Price pursuant to paragraph 6 hereof or upon the Stated Maturity of this Security), then in each such case the overdue amount shall bear interest at the rate of 6.75% per annum, compounded semiannually (to the extent that the payment of such interest shall be legally enforceable), which interest shall accrue from the date such overdue amount was due to the date payment of such amount, including interest thereon, has been made or duly provided for. All such interest shall be payable on demand. Original Issue Discount (the difference between the Issue Price and the Principal Amount of the Security), in the period during which a Security remains outstanding, shall accrue at 6.75% per annum, on a semiannual bond equivalent basis using a 360-day year composed of twelve 30-day months, commencing on the Issue Date of this Security. 2. Method of Payment Subject to the terms and conditions of the Indenture, Rite Aid Corporation (the "Company") will make payments in respect of Redemption Prices, Purchase Prices, Change in Control Purchase Prices and at Stated Maturity to Holders who surrender Securities to a Paying Agent to collect such payments in respect of the Securities. The Company will pay cash amounts in money of The United States of America that at the time of payment is legal tender for payment of public and private debts. However, the Company may make such cash payments by check payable in such money. A-3 3. Paying Agent, Conversion Agent and Registrar Initially, the Trustee will act as Paying Agent, Conversion Agent and Registrar. The Company may appoint and change any Paying Agent, Conversion Agent, Registrar or co-registrar, upon notice to the Trustee and the Holders. The Company or any of its Subsidiaries or any of their Affiliates may act as Paying Agent, Conversion Agent, Registrar or co-registrar 4. Indenture The Company issued the Securities under an Indenture, dated as of July 15, 1991 (the "Indenture"), between the Company and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended by the Trust Indenture Reform Act of 1990, and, as in effect on the date of the Indenture (the "TIA"), except as provided in Section 9.3 of the Indenture. Capitalized terms used herein or on the face hereof and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the TIA for a statement of those terms. The Securities are general unsecured obligations of the Company limited to $460,000,000 aggregate Principal Amount at Maturity (subject to Section 2.7 of the Indenture). The Indenture does not limit other Debt of the Company, secured or unsecured, including Senior indebtedness. 5. Redemption at the Option of the Company No sinking fund is provided for the Securities. The Securities are redeemable as a whole, or from time to time in part, at any time at the option of the Company at the Redemption Prices set forth below; provided that the Securities are not redeemable prior to July 24, 1993 unless the Sale Price of the Common Stock has equaled or exceeded $34.65 per share (subject to adjustment in accordance with Section 3.3 of the Indenture) for at least 20 Trading Days within a period of 30 consecutive Trading Days ending within five Trading Days prior to the date of the notice of redemption mailed to each Holder of Securi- A-4 ties as provided in paragraph 7 below. The table below shows the Redemption Prices of a Security per $1,000 Principal Amount (i) at the Issue Date, (ii) on the dates shown below and (iii) at Stated Maturity, which prices reflect accrued Original Issue Discount calculated to each such date. The Redemption Price of a Security redeemed between such dates would include an additional amount reflecting the additional Original Issue Discount accrued from and including the next preceding date in the table to, but excluding, the Redemption Date. (1) (2) (3) Accrued Original Note Issue Redemption Issue Discount Price Redemption Date Price at 6.75% (1) + (2) - --------------- ----- -------- ----------- At issuance.......... $369.43 $ 0.00 $369.43 July 24, 1992...... $369.43 25.36 394.79 July 24, 1993...... $369.43 52.46 421.89 July 24, 1994...... $369.43 81.42 450.85 July 24, 1995...... $369.43 112.36 481.79 July 24, 1996...... $369.43 145.43 514.86 July 24, 1997...... $369.43 180.77 550.20 July 24, 1998...... $369.43 218.54 587.97 July 24, 1999...... $369.43 258.89 628.32 July 24, 2000...... $369.43 302.02 671.45 July 24, 2001...... $369.43 348.11 717.54 July 24, 2002...... $369.43 397.36 766.79 July 24, 2003...... $369.43 449.99 819.42 July 24, 2004...... $369.43 506.23 875.66 July 24, 2005...... $369.43 566.34 935.77 At Stated Maturity... $369.43 630.57 1,000.00 6. Purchase by the Company at the Option of the Holder Subject to the terms and conditions of the Indenture, the Company shall become obligated to purchase, at the option of the Holder, the Securities held by such Holder on the following Purchase Dates and at the following Purchase Prices per $1,000 Principal Amount at Stated Maturity of such Securities, upon delivery of a A-5 Purchase Notice containing the information set forth in the Indenture, at any time from the opening of business on the date that is 20 Business Days prior to such Purchase Date until the close of business on such Purchase Date and upon delivery of the Securities to the Paying Agent by the Holder as set forth in the Indenture. Such Purchase Price may be paid, at the option of the Company, in cash or by the issuance and delivery of shares of Common Stock of the Company, or in any combination thereof. Purchase Date Purchase Price ------------- -------------- July 24, 1996 $514.86 July 24, 2001 $717.54 Subject to the terms and conditions of the Indenture, if any Change in Control occurs on or prior to July 24, 1996, the Company shall, at the option of the Holders, purchase all Securities for which a Change in Control Purchase Notice shall have been delivered as provided in the Indenture and not withdrawn, on the date that is 35 Business Days after the occurrence of such Change in Control, for a Change in Control Purchase Price equal to the Issue Price plus accrued Original Issue Discount to the Change in Control Purchase Date, which Change in Control Purchase price shall be paid in cash. Holders have the right to withdraw any Purchase Notice or Change in Control Purchase Notice, as the case may be, by delivering to the Paying Agent a written notice of withdrawal in accordance with the provisions of the Indenture. If cash (or securities if permitted under the Indenture) sufficient to pay the Purchase Price or Change in Control Purchase Price, as the case may be, of all Securities or portions thereof to be purchased as of the Purchase Date or the Change in Control Purchase Date, as the case may be, is deposited with the Paying Agent on the Business Day following the Purchase Date or the Change in Control Purchase Date, as the case may be, Original Issue Discount ceases to accrue on such Securities (or portions thereof) on and after such date, and the Holders thereof shall have no other rights as such (other than the right to receive the Purchase Price or Change in Control Purchase Price, as the case may be, upon surrender of such Security). A-6 7. Notice of Redemption Notice of redemption will be mailed at least 15 days but not more than 60 days before the Redemption Date to each Holder of Securities to be redeemed at the Holder's registered address. If money sufficient to pay the Redemption Price of all Securities (or portions thereof) to be redeemed on the Redemption Date is deposited with the Paying Agent prior to or on the Redemption Date, on and after such date Original Issue Discount ceases to accrue on such Securities or portions thereof. Securities in denominations larger than $1,000 of Principal Amount may be redeemed in part but only in integral multiples of $1,000 of Principal Amount. 8. Subordination The Securities are subordinated to all existing and future Senior Indebtedness. To the extent provided in the Indenture, Senior Indebtedness must be paid before the Securities may be paid. The Indenture does not limit the present or future amount of Senior Indebtedness the Company may have. The Company agrees, and each Securityholder by accepting a Security agrees, to the subordination and authorizes the Trustee to give it effect and appoints the Trustee as attorney-in-fact for such purpose. 9. Conversion Subject to the next two succeeding sentences, a Holder of a Security may convert it into Common Stock of the Company at any time before the close of business on July 24, 2006; provided however, that if a Security is called for redemption, the Holder may convert it only until the close of business on the Redemption Date. The number of shares of Common Stock to be delivered upon conversion of a Security into Common Stock per $1,000 of Principal Amount shall be equal to the Conversion Rate. A Security in respect of which a Holder has delivered a Purchase Notice or Change in Control Purchase Notice exercising the option of such Holder to require the Company to purchase such Security may be converted only if the notice of exercise is withdrawn in accordance with the terms of the Indenture. The initial Conversion Rate is 15.993 shares of A-7 Common Stock per $1,000 Principal Amount, subject to adjustment in certain events described in the Indenture. The Company will deliver cash or a check in lieu of any fractional share of Common Stock. To convert a Security a Holder must (i) complete and manually sign the conversion notice on the back of the Security (or complete and manually sign a facsimile of such notice) and deliver such notice to the Conversion Agent, (ii) surrender the Security to a Conversion Agent, (iii) furnish appropriate endorsements and transfer documents if required by the Conversion Agent, the Company or the Trustee and (iv) pay any transfer or similar tax, if required. A Holder may convert a portion of a Security if the Principal Amount of such portion is $1,000 or an integral multiple of $1,000. No payment or adjustment will be made for dividends on the Common Stock except as provided in the Indenture. On conversion of a Security, that portion of the accrued Original Issue Discount attributable to the period from the Issue Date to the Conversion Date with respect to the converted Security shall not be cancelled, extinguished or forfeited, but rather shall be deemed paid in full to the Holder thereof through the delivery of the Common Stock (together with the cash payment, if any, in lieu of fractional shares) in exchange for the Security being converted pursuant to the terms hereof. The Conversion Rate will be adjusted for dividends or distributions on Common Stock payable in Common Stock or other Capital Stock; subdivisions, combinations or certain reclassifications of Common Stock; distributions to all holders of Common Stock of certain rights to purchase Common Stock for a period expiring within 60 days at less than the Sale Price at the Time of Determination; and distributions to such holders of assets or debt securities of the Company or certain rights to purchase securities of the Company (excluding certain cash dividends or distributions). However, no adjustment need be made if Securityholders may participate in the transaction or in certain other cases. The Company from time to time may voluntarily increase the Conversion Rate. If the Company is a party to a consolidation, merger or binding share exchange of the type specified in A-8 the Indenture, or certain transfers of all or substantially all of its assets to another person, or in certain other circumstances described in the Indenture, the right to convert a Security into Common Stock may be changed into a right to convert it into securities, cash or other assets of the Company or another person. 10. Conversion Arrangement on Call for Redemption Any Securities called for redemption, unless surrendered for conversion before the close of business on the Redemption Date, may be deemed to be purchased from the Holders of such Securities at an amount not less than the Redemption Price, together with accrued interest, if any, to the Redemption Date, by one or more investment bankers or other purchasers who may agree with the Company to purchase such Securities from the Holders to convert them into Common Stock and to make payment for such Securities to the Paying Agent in trust for such Holders. 11. Denominations; Transfer; Exchange The Securities are in fully registered form, without coupons, in denominations of $1,000 of Principal Amount and integral multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not transfer 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 any Securities in respect of which a Purchase Notice or Change in Control Purchase Notice has been given and not withdrawn (except, in the case of a Security to be purchased in part, the portion of the Security not to be purchased) or any Securities for a period of 15 days before a selection of Securities to be redeemed. 12. Persons Deemed Owners The registered Holder of this Security may be treated as the owner of this Security for all purposes. A-9 13. Unclaimed Money or Securities The Trustee and the Paying Agent shall return to the Company upon written request any money or securities held by them for the payment of any amount with respect to the Securities that remains unclaimed for two years, provided, however, that the Trustee or such Paying Agent, before being required to make any such return, may at the expense of the Company cause to be published once in a newspaper of national circulation or mail to each such Holder notice that such money or securities remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing, any unclaimed money or securities then remaining will be returned to the Company. After return to the Company, Holders entitled to the money or securities must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person. 14. Amendment; Waiver Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in aggregate Principal Amount of the Securities at the time outstanding and (ii) certain defaults or noncompliance with certain provisions may be waived with the written consent of the Holders of a majority in aggregate Principal Amount of the Securities at the time outstanding. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company and the Trustee may amend the Indenture or the Securities to cure any ambiguity, defect or inconsistency, or to comply with Article 5 or Section 11.14 of the Indenture, or to provide for uncertificated Securities in addition to certificated securities, or to comply with any requirements of the SEC in connection with the qualification of the Indenture under the TIA, or to make any change that does not adversely affect the rights of any Securityholder. 15. Defaults and Remedies Under the Indenture, Events of Default include (i) default in payment of the Principal Amount, Issue Price, accrued Original Issue Discount, Redemption Price, A-10 Purchase Price or Change in Control Purchase Price, as the case may be, in respect of the Securities when the same becomes due and payable; (ii) failure by the Company to comply with other agreements in the Indenture or the Securities, subject to notice and lapse of time; or (iii) certain events of bankruptcy or insolvency. 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 at the time outstanding, may declare all the Securities to be due and payable immediately. Certain events of bankruptcy or insolvency are Events of Default which will result in the Securities becoming due and payable immediately upon the occurrence of such Events of Default. Securityholders 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 at the time outstanding may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing Default (except a Default in payment of amounts specified in clause (i) above) if it determines that withholding notice is in their interests. 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 A-11 releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 18. Authentication This Security shall not be valid until an authorized officer of the Trustee manually signs the Certificate of Authentication on the other side of this Security. 19. Abbreviations Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=Joint tenants with right of survivorship and not as tenants in common) and CUST (=custodian), and UNIF TRANS MIN ACT (=Uniform Transfers to Minors Act). 20. GOVERNING LAW THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND TO BE PERFORMED WITHIN THE STATE Of NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. A-12 ASSIGNMENT FORM To assign this Security, fill in the form below: I or we assign and transfer this Security to - ------------------------- (Insert assignee's soc. sec. or tax ID no.) - -------------------------- - -------------------------- - -------------------------- - -------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint _______________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. CONVERSION NOTICE To convert this Security into Common Stock of the Company, check the box: ---- : : : : ---- To convert only part of this Security, state the Principal Amount to be converted (which must be $1,000 or an integral multiple of $1,000): ------------------ :$ : ------------------ If you want the stock certificate made out in another person's name, fill in the form below: ------------------ :$ : ------------------ (Insert person's soc. sec. or tax ID no.) - -------------------------- - -------------------------- - -------------------------- - -------------------------- (Print or type person's name, address and zip code) - ----------------------------------------------------------------- Date:________________Your Signature:____________________________* _________________________________________________________________ (Sign exactly as your name appears on the other side of this Security) * Your signature must be guaranteed by a commercial bank or trust company or by a member or members' organization of the New York Stock Exchange or American Stock Exchange. A-13 -----END PRIVACY-ENHANCED MESSAGE-----