10-Q

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

ý  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2008
OR

o  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                        to                         .

Commission File Number: 1-5742

RITE AID CORPORATION
(Exact name of registrant as specified in its charter)

Delaware	23-1614034
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
30 Hunter Lane, Camp Hill, Pennsylvania (Address of principal executive offices)	17011 (Zip Code)

Registrant's telephone number, including area code:
(717) 761-2633.

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report):
Not Applicable

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

        Indicate by check whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See the definition of "Accelerated Filer" and "Large Accelerated Filer" in Rule 12b-2 of the Exchange Act.

Large Accelerated ý                Accelerated Filer o                Non-Accelerated Filer o

        Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No ý

        Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

        The registrant had 843,614,282 shares of its $1.00 par value common stock outstanding as of July 7, 2008.

RITE AID CORPORATION
TABLE OF CONTENTS

	Cautionary Statement Regarding Forward-Looking Statements	3
PART I FINANCIAL INFORMATION
ITEM 1.	Financial Statements (unaudited):
	Condensed Consolidated Balance Sheets as of May 31, 2008 and March 1, 2008	4
	Condensed Consolidated Statements of Operations for the Thirteen Week Periods Ended May 31, 2008 and June 2, 2007	5
	Condensed Consolidated Statements of Cash Flows for the Thirteen Week Periods Ended May 31, 2008 and June 2, 2007	6
	Notes to Condensed Consolidated Financial Statements	7
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	35
ITEM 4.	Controls and Procedures	36
PART II OTHER INFORMATION
ITEM 1.	Legal Proceedings	37
ITEM 1A.	Risk Factors	37
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
ITEM 3.	Defaults Upon Senior Securities	38
ITEM 4.	Submission of Matters to a Vote of Security Holders	38
ITEM 5.	Other Information	38
ITEM 6.	Exhibits	39

2

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

        This report, as well as our other public filings or public statements, includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by terms and phrases such as "anticipate," "believe," "intend," "estimate," "expect," "continue," "should," "could," "may," "plan," "project," "predict," "will" and similar expressions and include references to assumptions and relate to our future prospects, developments and business strategies.

        Factors that could cause actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to:

•

our high level of indebtedness;



•

our ability to make interest and principal payments on our debt and satisfy the other covenants contained in our senior secured credit facility and other debt agreements;



•

our ability to improve the operating performance of our existing stores in accordance with our long term strategy;



•

our ability to successfully complete and realize the benefits of the acquisition of Brooks Eckerd including positive same store sales growth for Brooks Eckerd and cost savings;



•

our ability to manage our expenses, including integration expenses;



•

our ability to hire and retain pharmacists and other store personnel;



•

our ability to open or relocate stores according to our real estate development program;



•

the efforts of private and public third party payors to reduce prescription drug reimbursement and encourage mail order;



•

competitive pricing pressures and continued consolidation of the drugstore industry;



•

changes in state or federal legislation or regulations;



•

the outcome of lawsuits and governmental investigations;



•

general economic conditions and inflation, interest rate movements and access to capital; and



•

other risks and uncertainties described from time to time in our filings with the Securities and Exchange Commission ("the SEC").

        We undertake no obligation to update or revise the forward-looking statements included in this report, whether as a result of new information, future events or otherwise, after the date of this report. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. Factors that could cause or contribute to such differences are discussed in the section entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the fiscal year ended March 1, 2008 ("the Fiscal 2008 10-K"), which we filed with the SEC on April 29, 2008. This document is available on the SEC's website at www.sec.gov.

3

PART I. FINANCIAL INFORMATION

ITEM 1.    Financial Statements

RITE AID CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(unaudited)

			May 31, 2008			March 1, 2008
ASSETS
Current assets:
	Cash and cash equivalents		$	152,189		$	155,762
	Accounts receivable, net			645,592			665,971
	Inventories, net of LIFO reserve of $577,823 and $562,729			3,942,922			3,936,827
	Prepaid expenses and other current assets			157,584			163,334
		Total current assets		4,898,287			4,921,894
Property, plant and equipment, net				2,809,987			2,873,009
Goodwill				1,810,223			1,783,372
Other intangibles, net				1,168,774			1,187,327
Deferred tax assets				355,533			384,163
Other assets				359,878			338,258
		Total assets	$	11,402,682		$	11,488,023
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Current maturities of long-term debt and lease financing obligations		$	36,962		$	185,609
	Accounts payable			1,315,825			1,425,768
	Accrued salaries, wages and other current liabilities			1,083,708			1,110,288
	Deferred tax liabilities			47,744			76,374
		Total current liabilities		2,484,239			2,798,039
Long-term debt, less current maturities				5,952,423			5,610,489
Lease financing obligations, less current maturities				191,279			189,426
Other noncurrent liabilities				1,211,890			1,178,884
		Total liabilities		9,839,831			9,776,838
Commitments and contingencies				—			—
Stockholders' equity:
	Preferred stock—series G, par value $1 per share, liquidation value $100 per share; 2,000 shares authorized; shares issued 1,417 and 1,393			141,690			139,253
	Preferred stock—series H, par value $1 per share, liquidation value $100 per share; 2,000 shares authorized; shares issued 1,372 and 1,352			137,230			135,202
	Preferred stock—series I, par value $1 per share, liquidation value $25 per share; 5,200 shares authorized; shares issued and outstanding 2,416 and 4,820			58,358			116,415
	Common stock, par value $1 per share; 1,500,000 authorized; shares issued and outstanding 845,088 and 830,209			845,088			830,209
Additional paid-in capital				4,094,170			4,047,499
Accumulated deficit				(3,693,929	)		(3,537,276	)
Accumulated other comprehensive loss				(19,756	)		(20,117	)
	Total stockholders' equity			1,562,851			1,711,185
	Total liabilities and stockholders' equity		$	11,402,682		$	11,488,023

See accompanying notes to condensed consolidated financial statements.

4

RITE AID CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(unaudited)

		Thirteen Week Period Ended
		May 31, 2008			June 2, 2007
Revenues		$	6,612,856		$	4,430,413
Costs and expenses:
	Cost of goods sold		4,804,610			3,214,834
	Selling, general and administrative expenses		1,792,974			1,119,642
	Store closing and impairment charges		36,262			4,030
	Interest expense		118,240			68,725
	Loss on debt modifications and retirements, net		3,708			—
	Loss (gain) on sale of assets, net		5,340			(4,230	)
			6,761,134			4,403,001
(Loss) income from continuing operations before income taxes			(148,278	)		27,412
Income tax expense (benefit)			4,993			(900	)
	Net (loss) income from continuing operations	$	(153,271	)	$	28,312
Loss from discontinued operations			(3,369	)		(678	)
Net (loss) income		$	(156,640	)	$	27,634
Computation of (loss) income attributable to common stockholders:
	Net (loss) income	$	(156,640	)	$	27,634
	Accretion of redeemable preferred stock		(25	)		(25	)
	Cumulative preferred stock dividends		(6,122	)		(8,030	)
	Preferred stock beneficial conversion		—			(76	)
	(Loss) income attributable to common stockholders—basic and diluted	$	(162,787	)	$	19,503
	Basic and diluted (loss) income per share	$	(0.20	)	$	0.04

See accompanying notes to condensed consolidated financial statements.

5

RITE AID CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

					Thirteen Week Period Ended
					May 31, 2008			June 2, 2007
Operating activities:
	Net (loss) income				$	(156,640	)	$	27,634
	Adjustments to reconcile to net cash (used in) provided by operating activities:
		Depreciation and amortization				145,041			67,919
		Store closing and impairment charges				36,262			4,030
		LIFO charges				15,094			9,291
		Loss (gain) on sale of assets, net				5,388			(4,230	)
		Stock-based compensation expense				8,679			6,614
		Loss on debt modifications and retirements				3,708			—
		Changes in deferred taxes				—			1,161
		Proceeds from insured loss				—			7,258
		Changes in operating assets and liabilities:
			Net proceeds from accounts receivable securitization			70,000			30,000
			Accounts receivable			(48,842	)		(43,010	)
			Inventories			(51,103	)		9,109
			Accounts payable			(116,929	)		51,180
			Other assets and liabilities, net			(15,986	)		19,328
				Net cash (used in) provided by operating activities		(105,328	)		186,284
Investing activities:
	Payments for property, plant and equipment					(149,876	)		(117,500	)
	Intangible assets acquired					(36,122	)		(13,801	)
	Expenditures for business acquisition					(112	)		(1,237,512	)
	Proceeds from sale-leaseback transactions					87,620			—
	Proceeds from dispositions of assets and investments					4,676			4,711
	Proceeds from insured loss					—			5,542
				Net cash used in investing activities		(93,814	)		(1,358,560	)
Financing activities:
	Proceeds from issuance of long-term debt					158,000			1,201,005
	Net proceeds from (payments to) revolver					186,000			(39,000	)
	Principal payments on long-term debt					(154,965	)		(3,191	)
	Proceeds from financing secured by owned property					11,132			—
	Change in zero balance cash accounts					5,542			12,946
	Excess tax deduction on stock options					—			2,871
	Net proceeds from issuance of common stock					1,117			9,095
	Payments for preferred stock dividends					(1,657	)		(3,845	)
	Financing costs paid					(9,600	)		(2,063	)
				Net cash provided by financing activities		195,569			1,177,818
(Decrease) increase in cash and cash equivalents						(3,573	)		5,542
Cash and cash equivalents, beginning of period						155,762			106,148
Cash and cash equivalents, end of period					$	152,189		$	111,690
Supplementary cash flow data:
	Cash paid for interest (net of capitalized amounts of $377 and $314, respectively)				$	99,312		$	36,364
	Cash payments of income taxes, net of refunds				$	1,198		$	516
	Equipment financed under capital leases				$	1,231		$	1,398
	Equipment received for noncash consideration				$	2,001		$	290
	Reduction in lease financing obligation				$	6,728		$	6,284
	Preferred stock dividends paid in additional shares				$	4,465		$	4,185

See accompanying notes to condensed consolidated financial statements.

6

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Thirteen Week Periods Ended May 31, 2008 and June 2, 2007

(Dollars and share information in thousands, except per share amounts)
(unaudited)

1.    Basis of Presentation

        The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and therefore do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete annual financial statements. The accompanying financial information reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods. The results of operations for the thirteen week period ended May 31, 2008 are not necessarily indicative of the results to be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Fiscal 2008 10-K.

2.    Recent Accounting Pronouncements

        In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements". This standard establishes a standard definition for fair value, establishes a framework under generally accepted accounting principles for measuring fair value and expands disclosure requirements for fair value measurements. This standard is effective for financial statements issued for fiscal years beginning after November 15, 2007. In December 2007, a FASB Staff Position (FSP) was proposed, and subsequently approved, to delay the effective dates of SFAS No. 157 as it relates to all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis, or at least annually. The Company has adopted SFAS No. 157 as of March 2, 2008 as it relates to financial assets and liabilities and there was no impact on the financial statements. The Company is currently evaluating the impact of SFAS No. 157 on nonfinancial assets and liabilities.

        In December 2007, the FASB issued SFAS No. 141 (Revised) "Business Combinations". SFAS 141 (Revised) establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the assets acquired and liabilities assumed in a business combination and makes several changes to the method of accounting for business combinations previously set forth in SFAS No. 141. SFAS No. 141 (Revised) will become effective for acquisitions consummated in fiscal years beginning after December 15, 2008.

3.    Acquisition

        On June 4, 2007, the Company acquired of all of the membership interests of JCG (PJC) USA, LLC ("Jean Coutu USA"), the holding company for the Brooks Eckerd drugstore chain ("Brooks Eckerd"), from Jean Coutu Group (PJC) Inc. ("Jean Coutu Group"), pursuant to the terms of the Stock Purchase Agreement (the "Agreement") dated August 23, 2006. As consideration for the acquisition of Jean Coutu USA (the "Acquisition"), the Company paid $2,307,747 and issued 250,000 shares of Rite Aid common stock. The Company financed the cash payment via the establishment of a new term loan facility, issuance of senior notes and borrowings under its existing revolving credit facility. The consideration associated with the common stock was $1,090,000 based on a stock price of $4.36 per share, representing the average

7

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Thirteen Week Periods Ended May 31, 2008 and June 2, 2007

(Dollars and share information in thousands, except per share amounts)
(unaudited)

3.    Acquisition (Continued)

closing price of Rite Aid common stock beginning two days prior to the announcement of the Acquisition on August 24, 2006 and ending two days after the announcement.

        At May 31, 2008, the Jean Coutu Group owned approximately 28.1% of total Rite Aid voting power. The Company expanded its Board of Directors to 14 members, with four of the seats being held by members designated by the Jean Coutu Group. In connection with the Acquisition, the Company entered into a Stockholder Agreement (the "Stockholder Agreement") with Jean Coutu Group and certain Coutu family members. The Stockholder Agreement contains provisions relating to Jean Coutu Group's ownership interest in the Company, board and board committee composition, corporate governance, stock ownership, stock purchase rights, transfer restrictions, voting arrangements and other matters. The Company and Jean Coutu Group also entered into a Registration Rights Agreement giving Jean Coutu Group certain rights with respect to the registration under the Securities Act of 1933, as amended, of the shares of Rite Aid common stock issued to Jean Coutu Group or acquired by Jean Coutu Group pursuant to certain stock purchase rights or open market rights under the Stockholder Agreement.

        The Company's consolidated financial statements for the thirteen week period ended May 31, 2008 include Brooks Eckerd results of operations. The Company's financial statements reflect the final purchase accounting adjustments in accordance with SFAS No. 141 "Business Combinations", whereby the purchase price was allocated to the assets acquired and liabilities assumed based upon their estimated fair values on the acquisition date.

8

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Thirteen Week Periods Ended May 31, 2008 and June 2, 2007

(Dollars and share information in thousands, except per share amounts)
(unaudited)

3.    Acquisition (Continued)

        The following table reflects the final allocation of the purchase price:

Purchase price
Cash consideration		$	2,307,747
Stock consideration			1,090,000
Capitalized acquisition costs			43,376
	Total	$	3,441,123
Purchase price allocation
Cash and cash equivalents		$	25,838
Accounts receivable			427,234
Inventories			1,296,984
Other current assets			48,756
	Total current assets		1,798,812
Property and equipment			897,640
Intangible assets(1)			1,131,550
Goodwill			1,154,186
Other assets			122,740
	Total assets acquired		5,104,928
Accounts payable			579,302
Deferred tax liability			21,301
Other current liabilities(2)			401,522
	Total current liabilities		1,002,125
Deferred tax liability—non-current			278,990
Other long term liabilities(3)			382,690
	Total liabilities assumed		1,663,805
Net assets acquired		$	3,441,123

(1)

Included in intangible assets are prescription file intangibles of $693,500 and intangible assets for operating leases with favorable market terms of $438,050.



(2)

Included in other current liabilities is an accrual for severance payments to associates of Brooks Eckerd who were involuntarily terminated of $11,137.



(3)

Included in other long-term liabilities is an accrual of $29,504 to reserve for the remaining lease liability of Brooks Eckerd stores for which the Company entered into a formal plan to close. Also included in other long-term liabilities is an intangible liability of $143,100 for operating leases with unfavorable market terms.

        In connection with the Acquisition, the Company entered into a transition services agreement with the Jean Coutu Group. Under the terms of this agreement, Jean Coutu Group provides certain

9

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Thirteen Week Periods Ended May 31, 2008 and June 2, 2007

(Dollars and share information in thousands, except per share amounts)
(unaudited)

3.    Acquisition (Continued)

information technology, network and support services to the Company. This agreement will expire in September 2008. During the thirteen week period ended May 31, 2008, the Company recorded expense of $549 for services provided under this agreement.

        The following unaudited pro forma consolidated financial data gives effect to the Acquisition as if it had occurred as of the beginning of the periods presented.

	Thirteen Week Period Ended
	June 2, 2007
	Pro forma
Net revenues	$	6,823,181
Net loss		(1,329	)
Basic and diluted loss per share	$	(0.01	)

        The pro forma combined information assumes the acquisition of Brooks Eckerd occurred at the beginning of the period presented. These results have been prepared by combining the historical results of the Company and historical results of Brooks Eckerd. The pro forma financial data for the period presented include adjustments to reflect the incremental interest expense that results from the incurrence of the additional debt to finance the acquisition and additional depreciation and amortization expense resulting from the purchase price allocation described above. Pro forma results for periods prior to the acquisition do not include any incremental cost savings that may result from the integration. Additionally, pro forma results for periods prior to the acquisition have not been adjusted to reflect the divestiture of stores required by the FTC.

        The pro forma information does not purport to be indicative of the results that actually would have been achieved if the operations were combined during the period presented and is not intended to be a projection of future results or trends.

4.    (Loss) Income Per Share

        Basic (loss) income per share is computed by dividing (loss) income available to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted (loss) income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the income of the Company subject to anti-dilution limitations.

10

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Thirteen Week Periods Ended May 31, 2008 and June 2, 2007

(Dollars and share information in thousands, except per share amounts)
(unaudited)

4.    (Loss) Income Per Share (Continued)

		Thirteen Week Period Ended
		May 31, 2008			June 2, 2007
Numerator for (loss) income per share:
	Net (loss) income	$	(156,640	)	$	27,634
	Accretion of redeemable preferred stock		(25	)		(25	)
	Cumulative preferred stock dividends		(6,122	)		(8,030	)
	Preferred stock beneficial conversion		—			(76	)
	(Loss) income attributable to common stockholders, basic and diluted	$	(162,787	)	$	19,503
Denominator:
	Basic and diluted weighted average shares		823,086			531,039
	Outstanding options		—			19,299
Diluted weighted average shares			823,086			550,338
	Basic and diluted (loss) income per share:	$	(0.20	)	$	0.04

Due to their antidilutive effect, the following potential common shares have been excluded from the computation of diluted loss per share as of May 31, 2008 and June 2, 2007:

	Thirteen Week Period Ended
	May 31, 2008	June 2, 2007
Stock options	61,435	9,500
Convertible preferred stock	64,378	95,355
Convertible debt	61,045	—
	186,858	104,855

        Also excluded from the computation of diluted loss per share as of May 31, 2008 and June 2, 2007 are restricted shares of 8,977 and 6,838 which are included in shares outstanding.

5.    Store Closing and Impairment Charges

        Store closing and impairment charges consist of:

	Thirteen Week Period Ended
	May 31, 2008		June 2, 2007
Impairment charges	$	2,594	$	1,744
Store and equipment lease exit charges		33,668		2,286
	$	36,262	$	4,030

11

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Thirteen Week Periods Ended May 31, 2008 and June 2, 2007

(Dollars and share information in thousands, except per share amounts)
(unaudited)

5.    Store Closing and Impairment Charges (Continued)

Impairment charges

        Impairment charges include non-cash charges of $2,594 and $1,744 for the thirteen week periods ended May 31, 2008 and June 2, 2007, for the impairment of long-lived assets at 30 and 15 stores, respectively. These amounts include the write-down of long-lived assets at stores that were assessed for impairment because of management's intention to relocate or close the store or because of changes in circumstances that indicate the carrying value of an asset may not be recoverable.

Store and equipment lease exit charges

        During the thirteen week periods ended May 31, 2008 and June 2, 2007, the Company recorded charges for 49 and 11 stores closed or relocated under long term leases in each respective period. Charges to close a store, which principally consist of lease termination costs, are recorded at the time the store is closed and all inventory is liquidated, pursuant to the guidance set forth in SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities". The Company calculates its liability for closed stores on a store-by-store basis. The calculation includes the discounted effect of future minimum lease payments and related ancillary costs, from the date of closure to the end of the remaining lease term, net of estimated cost recoveries that may be achieved through subletting properties or through favorable lease terminations. The Company evaluates these assumptions each quarter and adjusts the liability accordingly.

        The following table reflects the closed store charges that relate to new closures, changes in assumptions and interest accretion.

		Thirteen Week Period Ended
		May 31, 2008			June 2, 2007
Balance—beginning of period		$	329,682		$	195,205
	Provision for present value of noncancellable lease payments of closed stores		35,546			6,006
	Changes in assumptions about future sublease income, terminations and changes in interest rates		(5,270	)		(5,596	)
	Interest accretion		4,220			2,180
	Cash payments, net of sublease income		(19,809	)		(8,682	)
Balance—end of period		$	344,369		$	189,113

        The Company's revenues and income before income taxes for the thirteen week periods ended May 31, 2008 and June 2, 2007 include results from stores that have been closed or are planned to be

12

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Thirteen Week Periods Ended May 31, 2008 and June 2, 2007

(Dollars and share information in thousands, except per share amounts)
(unaudited)

5.    Store Closing and Impairment Charges (Continued)

closed as of May 31, 2008. The revenue and operating losses of these stores for the periods are presented as follows:

	Thirteen Week Period Ended
	May 31, 2008			June 2, 2007
Revenues	$	76,666		$	86,785
(Loss) income from operations		(10,564	)		1,960

        Included in these stores' loss or income from operations for the thirteen week periods ended May 31, 2008 and June 2, 2007, are depreciation and amortization charges of $1,280 and $689 and closed store inventory liquidation charges of $1,528 and $0, respectively. Loss from operations does not include any allocation of corporate level overhead costs. The above results are not necessarily indicative of the impact that these closures will have on revenues and operating results of the Company in the future, as the Company often transfers the business of a closed store to another Company store, thereby retaining a portion of these revenues. The amounts indicated above do not include the results of operations for stores closed related to discontinued operations.

6.    Income Taxes

        The Company recorded an income tax expense from continuing operations of $4,993 and an income tax benefit from continuing operations of $900 for the thirteen week periods ended May 31, 2008 and June 2, 2007, respectively. The income tax expense for the thirteen week period ended May 31, 2008 is primarily attributable to the accrual of state and local taxes. The provision for income taxes for the thirteen week period ended June 2, 2007 was net of a benefit of $5,429 for the increase in deferred tax assets as a result of enacted state tax legislation as well as a net benefit of $2,351 for discrete items related to the recognition of previously unrecognized tax benefits. The discrete items associated with the previously unrecognized tax benefits included tax of $2,100 and related interest of $1,700 due to expiration of certain state statutes.

        Effective March 4, 2007, the Company adopted the provisions of FIN 48. As of May 31, 2008, and March 1, 2008 unrecognized tax benefits totaled $265,939 and $233,014, respectively. The Company recognizes interest and penalties related to tax contingencies as income tax expense. As of May 31, 2008 and March 1, 2008, the total amount of accrued income tax-related interest and penalties was $39,096 and $33,608, respectively.

        As of May 31, 2008 the total amount of unrecognized tax benefits that would be recorded as an adjustment to goodwill and not impact the effective tax rate in a future period was $237,017, which includes related interest and penalties. The remaining unrecognized tax benefits would impact the effective tax rate in a future period. Upon the adoption of SFAS 141(Revised) which applies to fiscal year 2010, changes in income tax uncertainties recorded in a business combination will also affect income tax expense and will no longer impact goodwill. Additionally, any impact on the effective rate

13

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Thirteen Week Periods Ended May 31, 2008 and June 2, 2007

(Dollars and share information in thousands, except per share amounts)
(unaudited)

6.    Income Taxes (Continued)

may be mitigated by the valuation allowance that is maintained against the Company's net deferred tax assets. While it is expected that the amount of unrecognized tax benefits will change in the next twelve months, management does not expect the change to have a significant impact on the results of operations or the financial position of the Company.

        The Company is indemnified by Jean Coutu Group for certain tax liabilities incurred for all years ended up to and including June 4, 2007. Although the Company is indemnified by Jean Coutu Group, the Company remains the primary obligor to the tax authorities with respect to any tax liability arising for the years prior to the acquisition. Accordingly, as of May 31, 2008 the Company had a corresponding recoverable indemnification asset from Jean Coutu Group, included in the 'Other Assets' line of the Consolidated Balance Sheets, to reflect the indemnification for such liabilities.

        The Company files U.S. federal income tax returns as well as income tax returns in those states where it does business. The federal income tax returns are closed to examination by the Internal Revenue Service (IRS) through fiscal 2002. However, any net operating losses that were generated in these closed years may be subject to adjustment by the IRS upon utilization. The IRS is currently examining the consolidated U.S. income tax return for Brooks Eckerd for fiscal years 2004 and 2005. Additionally, the IRS is examining the consolidated U.S. income tax return for Rite Aid Corporation and subsidiaries for fiscal years 2006 and 2007. State income tax returns are generally subject to examination for a period of three to five years after filing of the respective return. However, as a result of reporting IRS audit adjustments, the Company has statutes open in some states from 1996.

        The valuation allowances as of May 31, 2008 and March 1, 2008 apply to the net deferred tax assets of the Company. Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109") requires a company to evaluate its deferred tax assets on a regular basis to determine if a valuation allowance against the net deferred tax assets is required. According to SFAS No. 109, a cumulative loss in recent years is significant negative evidence in considering whether deferred tax assets are realizable. Based on the negative evidence, SFAS 109 precludes relying on projections of future taxable income to support the recognition of deferred tax assets. Accordingly, the valuation allowance on federal and state net deferred tax assets was increased during the fourth quarter of 2008. The Company had a valuation allowance against net deferred tax assets of $1,103,973 at March 1, 2008.

7.    Discontinued Operations

        During the fourth quarter of fiscal 2008, the Company entered into agreements to sell the prescription files of 28 of its stores in the Las Vegas Nevada area. The Company owned four of these stores and the remaining stores were leased. The Company has assigned the lease rights of 17 of these stores to other entities and closed the remaining leased stores. The Company has sold one of the owned stores and plans to sell the remaining three owned stores. The sale and transfer of the prescription files has been completed and the inventory at the stores has been liquidated.

14

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Thirteen Week Periods Ended May 31, 2008 and June 2, 2007

(Dollars and share information in thousands, except per share amounts)
(unaudited)

7.    Discontinued Operations (Continued)

        The Company has presented the operating results of Las Vegas as a discontinued operation in the statement of operations for the thirteen week periods ended May 31, 2008 and June 2, 2007. The following amounts have been segregated from continuing operations and included in discontinued operations:

		May 31, 2008			June 2, 2007
Revenues		$	267		$	27,397
Costs and expenses:
	Cost of goods sold		1,652			20,295
	Selling, general and administrative expenses		1,936			8,145
	Loss on sale of assets		48			—
Total costs and expenses			3,636			28,440
Loss from discontinued operations before income taxes			(3,369	)		(1,043	)
Income tax benefit			—			(365	)
	Net loss from discontinued operations	$	(3,369	)	$	(678	)

        The assets and liabilities of the divested stores as of May 31, 2008 and March 1, 2008 are not significant and have not been segregated in the consolidated balance sheets.

8.    Accounts Receivable

        The Company maintains securitization agreements with several multi-seller asset-backed commercial paper vehicles ("CPVs"). Under the terms of the securitization agreements, the Company sells substantially all of its eligible third party pharmaceutical receivables to a bankruptcy remote Special Purpose Entity ("SPE") and retains servicing responsibility. The assets of the SPE are not available to satisfy the creditors of any other person, including any of the Company's affiliates. These agreements provide for the Company to sell, and for the SPE to purchase these receivables. The SPE then transfers an interest in these receivables to various CPVs.

        Under the terms of the securitization agreements, the total amount of interest in receivables that can be transferred to the CPVs is $650,000. The amount of transferred receivables outstanding at any one time is dependent upon a formula that takes into account such factors as default history, obligor concentrations and potential dilution ("Securitization Formula"). Adjustments to this amount can occur on a weekly basis. At May 31, 2008 and March 1, 2008, the total outstanding receivables that have been

15

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Thirteen Week Periods Ended May 31, 2008 and June 2, 2007

(Dollars and share information in thousands, except per share amounts)
(unaudited)

8.    Accounts Receivable (Continued)

transferred to CPVs were $505,000 and $435,000, respectively. The following table details receivable transfer activity for the thirteen week periods ended May 31, 2008 and June 2, 2007:

	May 31, 2008		June 2, 2007
Average amount of outstanding receivables transferred	$	421,538	$	359,505
Total receivable transfers	$	1,624,000	$	1,289,000
Collections made by the Company as part of the servicing arrangement on behalf of the CPVs	$	1,554,000	$	1,259,000

        At May 31, 2008 and March 1, 2008, the Company retained an interest in the eligible third party pharmaceutical receivables not transferred to the CPVs of $479,338 and $493,833, respectively, inclusive of the allowance for uncollectible accounts, which was included in accounts receivable, net, on the consolidated balance sheet.

        The program fee under the securitization agreement is the CPVs' commercial paper rate plus 1.00%. The liquidity fee is 0.25%. The program and the liquidity fees are recorded as a component of selling, general and administrative expenses. Program and liquidity fees for the thirteen week periods ended May 31, 2008 and June 2, 2007 were $4,663 and $5,871 respectively.

        Rite Aid Corporation guarantees certain performance obligations of its affiliates under the securitization agreements, which includes the continued servicing of such receivables, but does not guarantee the collectibility of the receivables and obligor creditworthiness. The CPVs have a commitment to purchase that ends September 2008 with the option to annually extend the commitment to purchase. Should any of the CPVs fail to renew their commitment under these securitization agreements, the Company has access to a backstop credit facility, which is backed by the CPVs and which expires in September 2010, to provide liquidity to the Company.

        Proceeds from the collections under the receivables securitization agreements are submitted to an independent trustee on a daily basis. The trustee withholds any cash necessary to (1) fund amounts owed to the CPVs as a result of such collections and, (2) fund the CPVs when the Securitization Formula indicates a lesser amount of outstanding receivables transferred is warranted. The remaining collections are swept to the Company's corporate concentration account. At May 31, 2008 and March 1, 2008, the Company had $2,505 and $3,277 of cash, respectively, that is restricted for the payment of trustee fees.

        The Company has determined that the transactions meet the criteria for sales treatment in accordance with SFAS No. 140 "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". Additionally, the Company has determined that it does not hold a variable interest in the CPVs, pursuant to the guidance in FIN 46R, "Consolidation of Variable Interest Entities", and therefore has determined that the de-recognition of the transferred receivables is appropriate.

16

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Thirteen Week Periods Ended May 31, 2008 and June 2, 2007

(Dollars and share information in thousands, except per share amounts)
(unaudited)

9.    Sale Leaseback Transactions

        During the thirteen week period ended May 31, 2008, the Company sold a total of 35 owned stores to independent third parties. Net proceeds from these sales were $98,752. Concurrent with these sales, the Company entered into agreements to lease the stores back from the purchasers over minimum lease terms of 20 years. The Company accounted for 31 of these leases as operating leases and four are being accounted for under the financing method as these lease agreements contain a clause that allows the buyer to force the Company to repurchase the property under certain conditions. Gains on these transactions of $2,349 have been deferred and are being recorded over the related minimum lease terms. Losses of $36 which relate to certain stores in these transactions, were recorded as losses on the sale of assets. There were no sale leaseback transactions for the thirteen week period ended June 2, 2007.

10.    Goodwill and Other Intangibles

        The Company accounts for goodwill and other intangibles under the guidance set forth in SFAS No.142, which specifies that goodwill and indefinite-lived intangibles should not be amortized. The Company evaluates goodwill for impairment on an annual basis at the end of its fiscal year or more frequently if events or circumstances occur that would indicate a reduction in fair value of the Company. The Company's intangible assets other than goodwill are finite-lived and amortized over their useful lives. Following is a summary of the Company's amortizable intangible assets as of May 31, 2008 and March 1, 2008.

	May 31, 2008						March 1, 2008
	Gross Carrying Amount		Accumulated Amortization			Remaining Weighted Average Amortization Period	Gross Carrying Amount		Accumulated Amortization			Remaining Weighted Average Amortization Period
Favorable leases and other	$	742,721	$	(254,076	)	12 years	$	738,855	$	(240,079	)	12 years
Prescription files		1,181,741		(501,612	)	8 years		1,152,620		(464,069	)	9 years
Total	$	1,924,462	$	(755,688	)		$	1,891,475	$	(704,148	)

        Also included in other non-current liabilities as of May 31, 2008 and March 1, 2008 are unfavorable lease intangibles with a net carrying amount of $143,773 and $147,035 respectively. These intangible liabilities are amortized over their remaining lease terms.

        Amortization expense for these intangible assets and liabilities was $51,881 for the thirteen week period ended May 31, 2008. Amortization expense for these intangible assets and liabilities was $10,274 for the thirteen week period ended June 2, 2007. The anticipated annual amortization expense for these intangible assets and liabilities is 2009—$188,774; 2010—$171,893; 2011—$159,165; 2012—$125,198 and 2013—$101,117.

17

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Thirteen Week Periods Ended May 31, 2008 and June 2, 2007

(Dollars and share information in thousands, except per share amounts)
(unaudited)

11.    Indebtedness and Credit Agreements

        Following is a summary of indebtedness and lease financing obligations at May 31, 2008 and March 1, 2008:

		May 31, 2008			March 1 2008
Secured Debt:
	Senior secured revolving credit facility due September 2010	$	1,035,000		$	849,000
	Senior secured credit facility term loan due September 2010		145,000			145,000
	Senior secured credit facility term loan due June 2014		1,105,000			1,105,000
	8.125% senior secured notes due May 2010 ($360,000 face value less unamortized discount of $1,334 and $1,500)		358,666			358,500
	7.5% senior secured notes due January 2015		200,000			200,000
	7.5% senior secured notes due March 2017		500,000			500,000
	Other secured		2,699			2,740
			3,346,365			3,160,240
Guaranteed Unsecured Debt:
	9.25% senior notes due June 2013 ($150,000 face value less unamortized discount of $1,201 and $1,261)		148,799			148,739
	8.625% senior notes due March 2015		500,000			500,000
	9.375% senior notes due December 2015 ($410,000 face value less unamortized discount of $5,282 and $5,458)		404,718			404,542
	9.5% senior notes due June 2017 ($810,000 face value less unamortized discount of $11,708 and $12,033)		798,292			797,967
			1,851,809			1,851,248
Unsecured Debt:
	6.125% fixed-rate senior notes due December 2008		—			150,000
	6.875% senior debentures due August 2013		184,773			184,773
	8.5% convertible notes due May 2015		158,000			—
	7.7% notes due February 2027		295,000			295,000
	6.875% fixed-rate senior notes due December 2028		128,000			128,000
			765,773			757,773
Lease financing obligations			216,717			216,263
Total debt			6,180,664			5,985,524
Current maturities of long-term debt and lease financing obligations			(36,962	)		(185,609	)
Long-term debt and lease financing obligations, less current maturities		$	6,143,702		$	5,799,915

18

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Thirteen Week Periods Ended May 31, 2008 and June 2, 2007

(Dollars and share information in thousands, except per share amounts)
(unaudited)

11.    Indebtedness and Credit Agreements (Continued)

Refinancing Transactions

        On June 4, 2008, the Company commenced a tender offer and consent solicitation under which the Company offered to repurchase all outstanding amounts of its 8.125% senior secured notes due May 2010, its 7.5% senior secured notes due January 2015 and its 9.25% senior notes due June 2013. On July 8, 2008, the tender offer expired and on July 9, the Company repaid $348,883 of the outstanding balance of its 8.125% notes due May 2010, $199,584 of its 7.5% notes due January 2015 and $143,985 of the outstanding balance of its 9.25% notes due June 2013. In addition, on July 9, 2008, the Company sent a notice of redemption for the remaining outstanding 7.5% notes due 2015 and deposited funds with the trustee for such notes sufficient to discharge the indenture governing such notes. As a result of this tender and consent solicitation, the indentures governing these notes were amended to eliminate substantially all restrictions against the Company to enter into certain transactions, including to incur additional debt and liens against assets. In addition, the guarantees on each series were eliminated and the 8.125% notes and the 7.5% notes (until redeemed) are no longer secured. The transaction was done because these notes had restrictions on secured debt that prohibited the Company from fully drawing on its revolving credit facility under certain circumstances. The Company expects to incur a loss on debt modification related to this transaction of approximately $35,000, which it will record in the 13 week period ended August 30, 2008.

        This transaction was financed via the issuance, effective July 9, 2008, of a new senior secured term loan (Tranche 3 Term Loans) of $350,000 under the Company's existing senior secured credit facility and the issuance of a $470,000 10.375% senior secured notes due July, 2016. The Tranche 3 Term Loans were issued at a discount of 90% of par. The Tranche 3 Term Loans will mature on June 4, 2014 and will bear interest at LIBOR plus 3.00%, if the Company chooses to make LIBOR borrowings, or at Citibank's base rate plus 2.00%. The Company must make mandatory prepayments of the Tranche 3 Term Loans with the proceeds of asset dispositions (subject to certain limitations), with a portion of any excess cash flow generated by the Company and with the proceeds of certain issuances of equity and debt (subject to certain exceptions). If at any time there is a shortfall in the Company's borrowing base under the Company's revolving credit facility, prepayment of the Tranche 3 Term Loans may also be required.

        The Company's $470,000 10.375% senior secured notes due July 2016 are unsubordinated obligations of Rite Aid Corporation and rank equally in right of payment with all other unsubordinated indebtedness. The Company's obligations under the notes are guaranteed, subject to certain limitations, by subsidiaries that guarantee the obligations under its senior secured credit facility. The guarantees are secured, subject to the permitted liens, by shared second priority liens with holders of our 7.5% senior secured notes due 2017. The indenture that governs the 10.375% senior secured notes due 2016 contains covenant provisions that, among other things, include limitations on the Company's ability to pay dividends, make investments or other restricted payments, incur debt, grant liens, sell assets and enter into sale-leaseback transactions. The senior 10.375% secured notes due July 2016 were issued at a discount of 90.588% of par.

19

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Thirteen Week Periods Ended May 31, 2008 and June 2, 2007

(Dollars and share information in thousands, except per share amounts)
(unaudited)

11.    Indebtedness and Credit Agreements (Continued)

        The Company issued $158,000 of 8.5% convertible notes due May 2015 in May 2008. These notes are unsecured and are effectively subordinate to the secured debt of the Company. The notes are convertible, at the option of the holder, into shares of the Company's common stock at a conversion price of $2.59 per share, subject to adjustments to prevent dilution, at any time. Proceeds from the issuance of these notes were used to fund the redemption of the Company's 6.125% notes due December 2008, by deposit with the trustee for such notes. The Company recorded a loss on debt modification of $3,708 related to the early redemption of the 6.125% notes due 2008, which included payment of a make whole premium to the noteholders and unamortized debt issue costs on the notes.

        The table of outstanding debt presented above does not reflect the impact of the issuance of the Tranche 3 Term Loans, the issuance of our senior secured notes due July 2016 or the use of these proceeds to fund the tender of our 8.125% notes due May 2010, our 7.5% notes due January 2015 or our 9.25% notes due June 2013, as these transactions occurred subsequent to May 31, 2008. However, our disclosure of subsequent maturities of long term debt contained in this note reflects the impact of these transactions.

Credit Facility

        The Company has a senior secured credit facility that includes a $1,750,000 revolving credit facility. Borrowings under the revolving secured credit facility currently bear interest at LIBOR plus 1.50%, if the Company chooses to make LIBOR borrowings, or at Citibank's base rate plus 0.50%. The interest rate can fluctuate depending upon the amount of the revolver availability, as specified in the senior secured credit facility. The Company is required to pay fees of 0.25% per annum on the daily unused amount of the revolving credit facility. The amounts drawn on the revolving credit facility become due and payable in September 2010.

        The Company's ability to borrow under the revolving credit facility is based upon a specified borrowing base consisting of inventory and prescription files. At May 31, 2008, the Company had $1,035,000 of borrowings outstanding under the revolving credit facility. At May 31, 2008, the Company also had letters of credit outstanding against the revolving credit facility of $185,280 which gave the Company additional borrowing capacity of $529,720.

        In November 2006, the Company entered into an amendment of its senior secured credit facility and borrowed $145,000 under a senior secured term loan. Proceeds from the borrowings under this senior secured term loan (the "Tranche 1 Term Loans") were used to pay amounts outstanding under the revolving credit facility.

        The Tranche 1 Term Loans currently bear interest at LIBOR plus 1.50%, if the Company chooses to make LIBOR borrowings, or at Citibank's base rate plus 0.50%. The interest rate can fluctuate depending on the amount of availability under the Company's revolving credit facility, as specified in the senior secured credit facility. The amounts outstanding under the Tranche 1 Term Loans become due and payable on September 30, 2010, or earlier, if there is a shortfall in the Company's borrowing base under its revolving credit facility.

20

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Thirteen Week Periods Ended May 31, 2008 and June 2, 2007

(Dollars and share information in thousands, except per share amounts)
(unaudited)

11.    Indebtedness and Credit Agreements (Continued)

        On June 4, 2007, the Company amended its senior secured credit facility to establish a new senior secured term loan in the aggregate principal amount of $1,105,000 and borrowed the full amount thereunder. A portion of the proceeds from the borrowings under this senior secured term loan (the "Tranche 2 Term Loans") were used to fund the acquisition of Brooks Eckerd. The Tranche 2 Term Loans will mature on June 4, 2014 and currently bears interest at LIBOR plus 1.75%, if the Company chooses to make LIBOR borrowings, or at Citibank's base rate plus 0.75%. The Company must make mandatory prepayments of the Tranche 2 Term Loans with the proceeds of asset dispositions (subject to certain limitations), with a portion of any excess cash flow generated by the Company and with the proceeds of certain issuances of equity and debt (subject to certain exceptions). If at any time there is a shortfall in the Company's borrowing base under the Company's revolving credit facility, prepayment of the Tranche 2 Term Loans may also be required.

        The senior secured credit facility allows the Company to have outstanding, at any time, up to $1,500,000 in secured second priority debt and unsecured debt in addition to borrowings under the senior secured credit facility and existing indebtedness, provided that not in excess of $750,000 of such secured second priority debt and unsecured debt shall mature or require scheduled payment of principal prior to three months after September 30, 2014. The senior secured credit facility allows the Company to incur an unlimited amount of unsecured debt with a maturity beyond three months after September 30, 2014; however other debentures limit the amount of unsecured debt that can be incurred if certain interest coverage levels are not met at the time of incurrence of said debt. The senior secured facility also allows for the repurchase of any debt with a maturity on or before June 4, 2014, and for the repurchase of debt with a maturity after June 4, 2014, if the Company maintains availability on the revolving credit facility of at least $100,000.

        The senior secured credit facility contains covenants, which place restrictions on the incurrence of debt beyond the restrictions described above, the payments of dividends, mergers and acquisitions and the granting of liens. The senior secured credit facility also requires the Company to maintain a minimum fixed charge coverage ratio, but only if availability on the revolving credit facility is less than $100,000.

        The senior secured credit facility provides for events of default including nonpayment, misrepresentation, breach of covenants and bankruptcy. It is also an event of default if the Company fails to make any required payment on debt having a principal amount in excess of $50,000 or any event occurs that enables, or which with the giving of notice or the lapse of time would enable, the holder of such debt to accelerate the maturity of such debt.

        Substantially all of Rite Aid Corporation's wholly-owned subsidiaries guarantee the obligations under the senior secured credit facility. The subsidiary guarantees of the senior secured credit facility are secured by a first priority lien on, among other things the inventory and prescription files of the subsidiary guarantors. Rite Aid Corporation is a holding company with no direct operations and is dependent upon dividends, distributions and other payments from its subsidiaries to service payments due under the senior secured credit facility. The 7.5% senior secured notes due 2017 and, as of July 9, 2008, the Company's new 10.375% senior secured notes due 2016 are guaranteed by substantially all of the Company's wholly-owned subsidiaries, which are the same subsidiaries that guarantee the senior

21

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Thirteen Week Periods Ended May 31, 2008 and June 2, 2007

(Dollars and share information in thousands, except per share amounts)
(unaudited)

11.    Indebtedness and Credit Agreements (Continued)

secured credit facility and are secured on a second priority basis by the same collateral as the senior secured credit facility. The 8.625% senior notes due 2015, the 9.375% senior notes due 2015 and the 9.5% senior notes due 2017 are also guaranteed by substantially all of the same subsidiaries.

        The subsidiary guarantees related to the Company's senior secured credit facility and on an unsecured basis the guaranteed indentures are full and unconditional and joint and several, and there are no restrictions on the ability of the parent to obtain funds from its subsidiaries. Also, the parent company has no independent assets or operations, and subsidiaries not guaranteeing the credit facility and applicable indentures are minor. Accordingly, condensed consolidating financial information for the parent and subsidiaries is not presented.

Other

        After giving effect to the refinancing transactions described above, the aggregate annual principal payments of long-term debt for the remainder of fiscal 2009 and thereafter are as follows: 2009—$9,605; 2010—$14,722; 2011—$1,214,269; 2012—$14,765; 2013—$14,764 and $4,754,667 in 2014 and thereafter.

12.    Redeemable Preferred Stock

        The Company entered into agreements with several of the holders of the Series I preferred stock for the holders to convert 2,404 shares of the Series I preferred stock into 14,647 shares of the Company's common stock. This conversion occurred in May 2008, which was earlier than the mandatory conversion of November 2008.

13.    Retirement Plans

        Net periodic pension expense recorded in the thirteen week periods ended May 31, 2008 and June 2, 2007, for the Company's defined benefit plans includes the following components:

	Defined Benefit Pension Plan						Nonqualified Executive Retirement Plans
	Thirteen Week Period Ended
	May 31, 2008			June 2, 2007			May 31, 2008		June 2, 2007
Service cost	$	771		$	858		$	15	$	12
Interest cost		1,454			1,376			325		291
Expected return on plan assets		(1,345	)		(1,272	)		—		—
Amortization of unrecognized net transition obligation		—			—			—		23
Amortization of unrecognized prior service cost		249			249			—		—
Amortization of unrecognized net loss		108			235			7		24
Net pension expense	$	1,237		$	1,446		$	347	$	350

22

RITE AID CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Thirteen Week Periods Ended May 31, 2008 and June 2, 2007

(Dollars and share information in thousands, except per share amounts)
(unaudited)

13.    Retirement Plans (Continued)

        During the thirteen week period ended May 31, 2008 the Company contributed $446 to the Nonqualified Executive Retirement Plans. During the remainder of fiscal 2009, the Company expects to contribute $1,340 to the Nonqualified Executive Retirement Plans and $4,500 to the Defined Benefit Pension Plan.

14.    Commitments and Contingencies

        The Company is subject from time to time to lawsuits and governmental investigations arising in the ordinary course of business, including employment related lawsuits arising from alleged violations of certain state and federal laws. Some of these suits purport to have been determined to be class or collective actions and/or seek substantial damages. In the opinion of the Company's management, these matters are adequately covered by insurance or, if not so covered, are without merit or are of such nature or involve amounts that would not have a material adverse effect on the Company's financial condition, results of operations or cash flows if decided adversely.

23

ITEM 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

        Net loss for the thirteen week period ended May 31, 2008 was $156.6 million compared to net income of $27.6 million for the thirteen week period ended June 2, 2007. Although there was an increase in revenue related to the Brooks Eckerd acquisition, this item was more than offset primarily by a decrease in gross margin rate, an increase in selling, general and administrative expenses ("SG&A") as a percent of revenues, an increase in store closing and impairment charges, and an increase in interest expense. These items are described in further detail in the following sections.

Acquisition of Jean Coutu USA

        On June 4, 2007, we acquired all of the membership interests of JCG (PJC) USA, LLC ("Jean Coutu USA") from Jean Coutu Group (PJC) Inc. ("Jean Coutu Group"), pursuant to the terms of the Stock Purchase Agreement (the "Agreement") dated August 23, 2006. As consideration for the acquisition of Jean Coutu USA (the "Acquisition"), we paid $2.31 billion in cash and issued 250 million shares of Rite Aid common stock. We financed the cash payment via the establishment of a new term loan facility, issuance of notes and borrowings under our existing revolving credit facility.

        As of May 31, 2008 the Jean Coutu Group owns 251.9 million shares of Rite Aid common stock, which represents approximately 28.1% of the total Rite Aid voting power. We expanded our Board of Directors to 14 members, with four of the seats being held by members designated by the Jean Coutu Group. In connection with the Acquisition, we entered into a Stockholder Agreement (the "Stockholder Agreement") with Jean Coutu Group and certain Coutu family members. The Stockholder Agreement contains provisions relating to Jean Coutu Group's ownership interest in the Company, board and board committee composition, corporate governance, stock ownership, stock purchase rights, transfer restrictions, voting arrangements and other matters. We have also entered into a Registrations Rights Agreement with Jean Coutu Group giving Jean Coutu Group certain rights with respect to the registration under the Securities Act of 1933, as amended, of the shares of our common stock issued to Jean Coutu Group or acquired by Jean Coutu Group pursuant to certain stock purchase rights or open market rights under the Stockholder Agreement.

        The Brooks Eckerd stores and distribution centers are being integrated in phases. We have completed integrating the six distribution centers and completed system conversions on all acquired stores at the end of May 2008. We are currently in the minor remodel phase of the Brooks Eckerd stores, which we expect to complete by October 2008.

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Results of Operations

Revenues and Other Operating Data

		Thirteen Week Period Ended
		May 31, 2008			June 2, 2007
		(dollars in thousands)
Revenues		$	6,612,856		$	4,430,413
Revenue growth			49.3	%		2.8	%
Same store sales growth			1.5	%		2.3	%
Pharmacy sales growth			55.7	%		3.0	%
Same store pharmacy sales growth			1.4	%		2.7	%
Pharmacy sales as a % of total sales			67.6	%		64.4	%
Third party sales as a % of total pharmacy sales			96.2	%		95.7	%
Front-end sales growth			35.3	%		2.5	%
Same store front-end sales growth			1.7	%		1.6	%
Front-end sales as a % of total sales			32.4	%		35.6	%
Store data:
	Total stores beginning of period		5,059			3,333
	New stores		5			6
	Store acquisitions, net		8			7
	Closed stores		(68	)		(14	)
	Total stores end of period		5,004			3,332
	Relocated stores		6			7
	Remodeled stores		39			15

Revenues

        Revenue growth was 49.3% for the thirteen week period ended May 31, 2008. This revenue growth was driven primarily by the acquisition of Brooks Eckerd. Same store sales trends, which do not include the Brooks Eckerd stores, are described in the following paragraphs.

        Pharmacy same store sales increased by 1.4% in the thirteen week period ended May 31, 2008, primarily driven by an increase in price per prescription and by same store prescription growth of 0.2%. Our script growth was positively impacted by initiatives such as our focus on customer satisfaction, prescription file buys, our senior citizen loyalty program and the new and relocated store program. Partially offsetting these items was an increase in generic sales, slower growth in the Medicare Part D program, a growing number of 90 day prescriptions, switches of prescriptions to over-the-counter products and the economic environment.

        Front-end same store sales increased by 1.7% in the thirteen week period ended May 31, 2008. The increase was primarily due to a higher percentage of promotional sales and strong performance in our consumable and over-the-counter categories. These items were offset somewhat by weakness in the overall economic environment and decreases in photo sales, which were due to the continuing trend of consumers printing fewer images and the conversion of our photo technology to FUJI digital equipment.

        We include in same store sales all stores that have been open or owned at least one year. Relocated stores are not included in the same store sales for one year. Stores in liquidation are considered closed. Brooks Eckerd store sales are not included in same store sales, since we have not owned the Brooks Eckerd stores for one year. The Brooks Eckerd stores will be included in same store sales beginning in the thirteen week period ending August 30, 2008.

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        Front-end same store sales trends for the Brooks Eckerd stores were negative 13.7% for the third quarter of fiscal 2008, negative 10.0% for the fourth quarter of fiscal 2008 and negative 8.8% for the first quarter of fiscal 2009. Pharmacy same store sales trends for Brooks Eckerd were negative 4.7% in the third quarter of fiscal 2008, negative 6.0% in the fourth quarter of fiscal 2008 and negative 6.7% in the first quarter of fiscal 2009. These negative results were primarily due to changes in front-end promotion offers, removal of non-go-forward inventory, retro-fitting of planograms, prescription drug switches to over-the-counter medications, photo department conversions, the pharmacy systems integration, and the minor remodels. These sales trends are improving, after considering these negative factors, and we expect them to continue to improve as we complete integration activities and anniversary prior year activities. Positive same store sales in the Brooks Eckerd stores are expected beginning our third quarter of fiscal 2009.

Costs and Expenses

	Thirteen Week Period Ended
	May 31, 2008			June 2, 2007
	(dollars in thousands)
Cost of goods sold	$	4,804,610		$	3,214,834
Gross profit		1,808,246			1,215,579
Gross margin rate		27.3	%		27.4	%
Selling, general and administrative expenses		1,792,974			1,119,642
Selling, general and administrative expenses as a percentage of revenues		27.1	%		25.3	%
Store closing and impairment charges		36,262			4,030
Interest expense		118,240			68,725

Cost of Goods Sold

        Gross margin rate was 27.3% for the thirteen week period ended May 31, 2008 compared to 27.4% for the thirteen week period ended June 2, 2007. The decrease in gross margin rate is due to a decrease in front-end gross margin rate, caused by higher levels of promotional sales than in prior year and higher product handling and distribution costs. The increases in product handling and distribution costs are due to increased labor costs due to expanded product assortment and disruptions from minor store remodels and higher fuel costs. These items were mostly offset by an improvement in pharmacy gross margin rate, due to an increase in the mix of generic sales and improved generic purchasing costs that resulted from the Brooks Eckerd acquisition.

        We use the last-in, first-out (LIFO) method of inventory valuation, which is determined annually when inflation rates and inventory levels are finalized. Therefore, LIFO costs for interim period financial statements are estimated. Cost of sales includes LIFO charges of $15.1 million for the thirteen week period ended May 31, 2008 versus LIFO charges of $9.3 million for the thirteen week period ended June 2, 2007.

Selling, General and Administrative Expenses

        SG&A as a percentage of revenues was 27.1% in the thirteen week period ended May 31, 2008 compared to 25.3% in the thirteen week period ended June 2, 2007. The increase in SG&A as a percentage of revenues is due to an increase in expenses related to the integration of the Brooks Eckerd stores and distribution centers, an increase in depreciation and amortization expense related primarily to increased intangible assets resulting from the allocation of the purchase price of Brooks Eckerd, an increase in rent and occupancy expense from new and relocated stores and the sale and leaseback of owned stores and inflation in salaries and benefit costs.

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Store Closing and Impairment Charges

        Store closing and impairment charges consist of:

	Thirteen Week Period Ended
	May 31, 2008		June 2, 2007
	(dollars in thousands)
Impairment charges	$	2,594	$	1,744
Store and equipment lease exit charges		33,668		2,286
	$	36,262	$	4,030

        Impairment Charges:    Impairment charges include non-cash charges of $2.6 million and $1.7 million in the thirteen week periods ended May 31, 2008 and June 2, 2007, respectively, for the impairment of long- lived assets at 30 and 15 stores, respectively. These amounts include the write-down of long-lived assets at stores that were assessed for impairment because of management's intention to relocate or close the store or because of changes in circumstances that indicate the carrying value of an asset may not be recoverable.

        Store and Equipment Lease Exit Charges:    During the thirteen week periods ended May 31, 2008 and June 2, 2007, we recorded charges for 49 and 11 stores, respectively, closed or relocated under long-term leases. Charges to close a store, which principally consist of lease termination costs, are recorded at the time the store is closed and all inventory is liquidated, pursuant to the guidance set forth in SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities". We calculate our liability for closed stores on a store-by-store basis. The calculation includes the discounted effect of future minimum lease payments and related ancillary costs, from the date of closure to the end of the remaining lease term, net of estimated cost recoveries that may be achieved through subletting properties or favorable lease terminations. We evaluate these assumptions each quarter and adjust the liability accordingly. The increase in the store and equipment lease exit charge for the thirteen week period ended May 31, 2008 is primarily due to an increase in stores closed.

        As part of our ongoing business activities, we assess stores for potential closure. Decisions to close stores in future periods would result in charges for store lease exit costs and liquidation of inventory, as well as impairment of assets at these stores.

Interest Expense

        Interest expense was $118.2 million for the thirteen week period ended May 31, 2008, compared to $68.7 million for the thirteen week period ended June 2, 2007. The increase in interest expense for the thirteen week period ended May 31, 2008 was primarily due to increased borrowings to fund the Brooks Eckerd acquisition and related integration activities, offset somewhat by a decrease in the interest rate on the senior secured credit facility.

        The weighted average interest rates on our indebtedness for the thirteen week periods ended May 31, 2008 and June 2, 2007 were 7.0% and 7.9%, respectively.

Income Taxes

        We recorded an income tax expense from continuing operations of $5.0 million and an income tax benefit from continuing operations of $0.9 million for the thirteen week periods ended May 31, 2008 and June 2, 2007, respectively. The expense for income taxes for the thirteen week period ended May 31, 2008 is primarily attributable to the accrual of state and local taxes. The provision for income

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taxes for the thirteen week period ended June 2, 2007 was net of a benefit of $5.4 million for the increase in deferred tax assets as a result of enacted state tax legislation as well as a net benefit of $2.4 million for discrete items related to the recognition of previously unrecognized tax benefits. The discrete items associated with the previously unrecognized tax benefits included $2.1 million and related interest of $1.7 million due to expiration of certain state statutes.

        As a result of the implementation of FIN 48, our tax contingencies decreased $6.6 million, and after the deferred tax impact of $2.2 million, the net effect was accounted for as an increase to retained earnings of $4.5 million. The decrease in unrecognized tax benefits would have decreased income tax expense in prior periods. As of May 31, 2008 the total amount of unrecognized tax benefits that would be recorded as an adjustment to goodwill and not impact the effective tax rate in a future period was $237.0 million. The remaining unrecognized tax benefits would impact the effective tax rate in a future period. Upon the adoption of SFAS 141(R) which applies to our fiscal year 2010, changes in income tax uncertainties recorded in a business combination will also affect income tax expense and will no longer impact goodwill. Additionally, any impact on the effective rate may be mitigated by the valuation allowance that is maintained against our net deferred tax assets. While it is expected that the amount of unrecognized tax benefits will change in the next twelve months, we do not expect the change to have a significant impact on the results of operations or the financial position of our company.

        We recognize tax liabilities in accordance with FIN 48 and management adjusts these liabilities with changes in judgment as a result of the evaluation of new information not previously available. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate of the tax liabilities.

        Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109") requires a company to evaluate its deferred tax assets on a regular basis to determine if a valuation allowance against the net deferred tax assets is required. In determining whether a valuation allowance is required, we take into account all available positive and negative evidence with regard to the recognition of a deferred tax asset including our past earnings history, expected future earnings, the character and jurisdiction of such earnings, unsettled circumstances that, if unfavorably resolved, would adversely affect recognition of a deferred tax asset, carryback and carryforward periods, and tax planning strategies that could potentially enhance the likelihood of realization of a deferred tax asset. According to SFAS No. 109, a cumulative loss in recent years is significant negative evidence in considering whether deferred tax assets are realizable. Based on the negative evidence, SFAS No. 109 precludes relying on projections of future taxable income to support the recognition of deferred tax assets. Accordingly, the valuation allowance on federal and state net deferred tax assets was increased during the fourth quarter of 2008. The ultimate realization of deferred tax assets is dependent upon the existence of sufficient taxable income generated in the carryforward periods.

Liquidity and Capital Resources

General

        We have five primary sources of liquidity: (i) cash and cash equivalents, (ii) cash provided by operating activities, (iii) the sale of accounts receivable under our receivable securitization agreements, (iv) the revolving credit facility under our senior secured credit facility and (v) sale-leasebacks of owned property. Our principal uses of cash are to provide working capital for operations, to service our obligations to pay interest and principal on debt, to provide funds for capital expenditures and to fund the costs of integrating the Brooks Eckerd stores and distribution centers.

Credit Facility

        Our senior credit facility includes a $1.75 billion revolving credit facility. Borrowings under the revolving credit facility currently bear interest at LIBOR plus 1.50%, if we choose to make LIBOR

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borrowings, or at Citibank's base rate plus 0.50%. The interest rate can fluctuate depending on the amount of revolver availability, as specified in the senior secured credit facility. We are required to pay fees of 0.25% per annum on the daily unused amount of the revolving credit facility. The amounts drawn on the revolving credit facility become due and payable in September 2010.

        Our ability to borrow under the revolving credit facility is based upon a specified borrowing base consisting of inventory and prescription files. At May 31, 2008, we had $1,035.0 million of borrowings outstanding under the revolving credit facility. At May 31, 2008, we also had letters of credit outstanding against the revolving credit facility of $185.2 million, which gave us additional borrowing capacity of $529.7 million.

        In November 2006, we entered into an amendment of our senior secured credit facility and borrowed $145.0 million under a senior term loan (the "Tranche 1 Term Loans"). The Tranche 1 Term Loans currently bear interest at LIBOR plus 1.50%, if we choose to make LIBOR borrowings, or at Citibank's base rate plus 0.50%. The interest rate can fluctuate depending on the amount of availability under our revolving credit facility, as specified in the senior secured credit facility. The amounts outstanding under the Tranche 1 Term Loans become due and payable on September 30, 2010, or earlier, if there is a shortfall in our borrowing base under our revolving credit facility.

        On June 4, 2007, we further amended our senior secured credit facility to establish a new senior secured term loan in the aggregate principal amount of $1,105.0 million and borrowed the full amount thereunder. A portion of the proceeds from the borrowings under this senior secured term loan (the "Tranche 2 Term Loans") were used to fund the acquisition of Brooks Eckerd. The Tranche 2 Term Loans will mature on June 4, 2014 and currently bear interest at LIBOR plus 1.75%, if we choose to make LIBOR borrowings, or at Citibank's base rate plus 0.75%. We must make mandatory prepayments of the Tranche 2 Term Loans with the proceeds of asset dispositions (subject to certain limitations), with a portion of any excess cash flow generated by us and with the proceeds of certain issuances of equity and debt (subject to certain exceptions). If at any time there is a shortfall in our borrowing base under our revolving credit facility, prepayment of the Tranche 2 Term Loans may also be required.

        The senior secured credit facility allows us to have outstanding, at any time, up to $1.5 billion in secured second priority debt and unsecured debt in addition to borrowings under the senior secured credit facility and existing indebtedness, provided that not in excess of $750.0 million of such secured second priority debt and unsecured debt shall mature or require scheduled payments of principal prior to three months after September 30, 2014. The senior secured credit facility allows us to incur an unlimited amount of unsecured debt with a maturity beyond three months after September 30, 2014; however other notes limit the amount of unsecured debt that can be incurred if certain interest coverage levels are not met at the time of incurrence of said debt. The senior secured facility also allows for the repurchase of any debt with a maturity on or before June 4, 2014 and for the repurchase of debt with a maturity after June 4, 2014 if we maintain availability on the revolving credit facility of at least $100.0 million.

        The senior secured credit facility contains covenants, which place restrictions on the incurrence of debt beyond the restrictions described above, the payment of dividends, mergers and acquisitions and the granting of liens. The senior secured credit facility also requires us to maintain a minimum fixed charge coverage ratio, but only if availability on the revolving credit facility is less than $100.0 million.

        The senior secured credit facility provides for events of default including nonpayment, misrepresentation, breach of covenants and bankruptcy. It is also an event of default if we fail to make any required payment on debt having a principal amount in excess of $50.0 million or any event occurs that enables, or which with the giving of notice or the lapse of time would enable, the holder of such debt to accelerate the maturity of such debt.

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Refinancing Transactions

        On June 4, 2008, we commenced a tender offer and consent solicitation under which we offered to repurchase all outstanding amounts of our 8.125% senior secured notes due May 2010, our 7.5% senior secured notes due January 2015 and our 9.25% notes due June 2013. In addition, on July 9, 2008, we sent a notice of redemption for the remaining outstanding 7.5% notes due 2015 and deposited funds with the trustee for such notes sufficient to discharge the indenture governing such notes. On July 8, 2008, the tender offer expired and we repaid $348.9 million of the outstanding balance of our 8.125% notes due May 2010, $199.6 million of our 7.5% notes due January 2015 and $144.0 million of the outstanding balance of our 9.25% senior notes due 2013. As a result of the tender offer and consent solicitation, the indentures governing these notes were amended to eliminate or modify substantially all restrictive covenants, certain events of default and other provisions contained in the indentures (other than, among other covenants, the covenants to pay interest and premium, if any, on, and principal of, the notes when due), release the subsidiary guarantees and release all the collateral securing the obligations of the subsidiary guarantors under the 8.125% notes and the 7.5% notes. The transaction was done because these notes had restrictions on secured debt that prohibited us from fully drawing on our revolving credit facility under certain circumstances.

        This transaction was financed via the issuance, effective July 9, 2008, of a new senior secured term loan (Tranche 3 Term Loans) of $350.0 million under our existing senior secured credit facility and the issuance of a $470.0 million 10.375% senior secured note due July 2016. The Tranche 3 Term Loans were issued at a discount of 90% of par. The Tranche 3 Term Loans will mature on June 4, 2014 and will bear interest at LIBOR plus 3.00%, if we choose to make LIBOR borrowings, or at Citibank's base rate plus 2.00%. We must make mandatory prepayments of the Tranche 3 Term Loans with the proceeds of asset dispositions (subject to certain limitations), with a portion of any excess cash flow generated by us and with the proceeds of certain issuances of equity and debt (subject to certain exceptions). If at any time there is a shortfall in our borrowing base under the revolving credit facility, prepayment of the Tranche 3 Term Loans may also be required.

        The 10.375% senior secured notes due 2016 were issued pursuant to an indenture, dated as of July 9, 2008, among Rite Aid, the subsidiary guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee and are unsecured, unsubordinated obligations of Rite Aid and will rank equally in right of payment with all of Rite Aid other unsecured, unsubordinated indebtedness. Rite Aid's obligations under the notes are guaranteed, subject to certain limitations, by all of our subsidiaries that guarantee our obligations under our existing senior secured credit facility, including the Tranche 3 Term Loan, and the 7.5% senior secured notes due 2017. These guarantees are secured, subject to permitted liens, by second priority liens granted by the subsidiary guarantors on all of the assets that secure Rite Aid's obligations under our existing senior secured credit facility, including the Tranche 3 Term Loan(subject to certain exceptions).

        At any time and from time to time, prior to July 15, 2011, we may redeem up to a maximum of 35% of the original aggregate principal amount of the notes with the proceeds of one or more equity offerings, at a redemption price equal to 110.375% of the principal amount thereof, plus accrued and unpaid interest thereon, if any, to, but not including, the redemption date; provided that: (i) at least 65% of the original aggregate principal amount of the notes remains outstanding; and (ii) the redemption occurs within 75 days of the completion of such equity offering upon not less than 30 nor more than 60 prior days notice. Prior to July 15, 2012, we may redeem some or all of the notes by paying a "make-whole" premium based on U.S. Treasury rates. On or after July 15, 2012, and on or after July 15 of the relevant year listed below, we may redeem some or all of the notes at the prices listed below, plus accrued and unpaid interest, if any, to, but not including, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date): 2012 at a redemption price of 105.188%; 2013 at a redemption price of 102.594% and 2014 and thereafter at a redemption price of 100%.

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        Each of the following constitutes an event of default under the indenture governing these notes: (1) failure to make the payment of any interest on the notes when the same becomes due and payable, and such failure continues for a period of 30 days; (2) failure to make the payment of any principal of, or premium, if any, on, any of the notes when the same becomes due and payable at its stated maturity, upon acceleration, redemption, optional redemption, required repurchase or otherwise; (3) failure to comply with the covenant described under "—Merger, Consolidation and Sale of Property" in the indenture; (4) failure to comply with any other covenant or agreement in the notes or in the indenture (other than a failure that is the subject of the foregoing clause (1), (2) or (3)) and such failure continues for 30 days after written notice is given to us in accordance with the Indenture; (5) a default under any debt by Rite Aid or any restricted subsidiary that results in acceleration of the final maturity of such debt, or failure to pay any such debt at final maturity (giving effect to applicable grace periods), in an aggregate amount greater than $35.0 million or its foreign currency equivalent at the time; (6) any judgment or judgments for the payment of money in an aggregate amount in excess of $35.0 million (or its foreign currency equivalent at the time) that shall be rendered against Rite Aid or any restricted subsidiary and that shall not be waived, satisfied or discharged for any period of 30 consecutive days during which a stay of enforcement shall not be in effect; (7) certain events involving bankruptcy, insolvency or reorganization of Rite Aid or any significant subsidiary; (8) any subsidiary guarantee ceases to be in full force and effect (other than in accordance with the terms of such subsidiary guarantee and the indenture) and such default continues for 20 days after notice or any subsidiary guarantor denies or disaffirms its obligations under its subsidiary guarantee; and (9) the material impairment of the security interests or any security interest created thereunder shall be declared invalid or unenforceable or Rite Aid or any subsidiary asserting, in any pleading in any court of competent jurisdiction, that any such security interest is invalid or unenforceable. A default under clause (4), (8) or (9) is not an event of default until the trustee or the holders of not less than 25% in aggregate principal amount of the notes then outstanding notify the Company of the default and we do not cure such default within the time specified after receipt of such notice.

        We issued $158.0 million of 8.5% convertible notes due May 2015 in May 2008. These notes are unsecured and are effectively subordinate to the secured debt of the Company. The notes are convertible, at the option of the holder, into shares of our common stock at a conversion price of $2.59 per share, subject to adjustments to prevent dilution, at any time. Proceeds from the issuance of these notes were used to fund the redemption of our 6.125% notes due December 2008, by deposit with the trustee for such notes.

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        The following table shows our debt outstanding as of May 31, 2008, with pro-forma adjustments to reflect the refinancing:

		May 31, 2008
		Actual		As Adjusted
Secured debt
	Senior secured revolving credit facility	$	1,035,000	$	1,043,414
	Tranche 1 Term Loan		145,000		145,000
	Tranche 2 Term Loan		1,105,000		1,105,000
	Tranche 3 Term Loan		—		315,000
	8.125% senior secured notes due 2010		358,666		11,117	(1)
	7.5% senior secured notes due 2015		200,000		—
	10.375% senior secured notes due 2016		—		425,764
	7.5% senior secured notes due 2017		500,000		500,000
	Other		2,699		2,699
			3,346,365		3,547,994
Guaranteed Unsecured Debt
	9.25% senior notes due 2013		148,799		6,015	(2)
	8.625% senior notes due 2015		500,000		500,000
	9.375% senior notes due 2015		404,718		404,718
	9.5% senior notes due 2017		798,292		798,292
			1,851,809		1,709,025
Unsecured Debt
	6.875% senior debentures due 2013		184,773		184,773
	8.5% convertible notes due 2015		158,000		158,000
	7.7% notes due 2027		295,000		295,000
	6.875% fixed-rate senior notes due 2028		128,000		128,000
			765,773		765,773
Lease Financing Obligations			216,717		216,717
Total debt		$	6,180,664	$	6,239,509

(1)

The remaining 8.125% notes are no longer secured or guaranteed.

(2)

The remaining 9.25% notes no longer have the benefit of subsidiary guarantees.

        After giving effect to the refinancing transactions described above, the aggregate annual principal payments of long-term debt as of May 31, 2008 for the remainder of fiscal 2009 and thereafter are as follows: 2009—$9.6 million; 2010—$14.7 million; 2011—$1,214.3 million; 2012—$14.8 million; 2013—$14.8 million; and $4,754.7 million in 2014 and thereafter. At May 31, 2008 we were in compliance with restrictions and limitations included in the provisions of various loan and credit agreements.

Sale Leaseback Transactions

        During the thirteen week period ended May 31, 2008, we sold a total of 35 owned stores to independent third parties. Net proceeds from these sales were $98.8 million. Concurrent with these sales, we entered into agreements to lease the stores back from the purchasers over minimum lease terms of 20 years. We accounted for 31 of these leases as operating leases and four are being accounted for under the financing method as these lease agreements contain a clause that allows the buyer to force us to repurchase the property under certain conditions. Gains on these transactions of $2.3 million have been deferred and are being recorded over the related minimum lease terms. Losses of $0.1 million which relate to certain stores in these transactions, were recorded as losses on the sale of assets and investments. There were no sale leaseback transactions for the thirteen week period ended June 2, 2007.

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Off Balance Sheet Obligations

        We maintain receivables securitization agreements with several multi-seller asset-backed commercial paper vehicles ("CPVs"). Under the terms of the securitization agreements, we sell substantially all of our eligible third party pharmaceutical receivables to a bankruptcy remote Special Purpose Entity ("SPE") and retain servicing responsibility. The assets of the SPE are not available to satisfy the creditors of any other person, including any of our affiliates. These agreements provide for us to sell, and for the SPE to purchase these receivables. The SPE then transfers an interest in these receivables to various CPVs.

        Under the terms of the securitization agreements, the amount of interest in receivables that can be transferred to the CPVs is $650.0 million. The amount of transferred receivables outstanding at any one time is dependent upon a formula that takes into account such factors as default history, obligor concentrations and potential dilution ("Securitization Formula"). Adjustments to this amount can occur on a weekly basis. At May 31, 2008 and March 1, 2008, the total of outstanding receivables that had been transferred to the CPVs were $505.0 million and $435.0 million, respectively. The following table details receivable transfer activity for the thirteen week periods presented (in thousands):

	May 31, 2008		June 2, 2007
Average amount of outstanding receivables transferred	$	421,538	$	359,505
Total receivable transfers	$	1,624,000	$	1,289,000
Collections made by the Company as part of the servicing arrangement on behalf of the CPVs	$	1,554,000	$	1,259,000

        At May 31, 2008 and March 1, 2008, we retained an interest in the eligible third party pharmaceutical receivables not transferred to the CPVs of $479.3 million and $493.8 million, respectively, inclusive of the allowance for uncollectible accounts, which was included in accounts receivable, net, on the consolidated balance sheet.

        The program fee under the securitization agreement is the CPVs' commercial paper rate (which often approximates 1-month LIBOR) plus 1.00%. The liquidity fee is 0.25%. The program and the liquidity fees are recorded as a component of selling, general and administrative expenses. Program and liquidity fees for the thirteen weeks ended May 31, 2008 and June 2, 2007 were $4.7 million and $5.9 million, respectively. We guarantee certain performance obligations of our affiliates under the securitization agreements, which includes continued servicing of such receivables, but do not guarantee the collectibility of the receivables and obligor creditworthiness. The CPVs have a commitment to purchase that ends September 2008 with the option to annually extend the commitment to purchase. Should any of the CPVs fail to renew their commitment under these securitization agreements, we have access to a backstop credit facility, which is backed by the CPVs which expire in September 2010. It is our intent to renew our receivables securitization agreements with the CPVs.

        Proceeds from the collections under the receivables securitization agreements are submitted to an independent trustee on a daily basis. The trustee withholds any cash necessary to (1) fund amounts owed to the CPVs as a result of such collections and, (2) fund the CPVs when the Securitization Formula indicates a lesser amount of outstanding receivables transferred is warranted. The remaining collections are swept to our corporate concentration account. At May 31, 2008 and March 1, 2008, we had $2.5 million and $3.3 million of cash, respectively, that was restricted for the payment of trustee fees.

        As of May 31, 2008, we had no material off balance sheet arrangements, other than the receivables securitization agreements described above and operating leases.

Net Cash Provided by/Used in Operating, Investing and Financing Activities

        Our operating activities used $105.3 million of cash in the thirteen week period ended May 31, 2008. The use of cash from operations was primarily due to increases in inventory and accounts

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receivable, a decrease in accounts payable, and an increase in integration and interest expense. The changes in inventory, accounts receivable and accounts payable are not indicative of changes in business terms or practices and we believe these changes to be temporary.

        Operating cash flow for the thirteen week period ended June 2, 2007 of $186.3 million was provided by net income of $27.6 million, proceeds of $30.0 million from the accounts receivable securitization facility, increases in accounts payable and decreases in inventory, which were partially offset by increases in accounts receivable.

        Cash used in investing activities was $93.8 million and $1,358.6 million for the thirteen week periods ended May 31, 2008 and June 2, 2007, respectively. Cash used in investing activities in the thirteen week period ended May 31, 2008 was for purchases of property, plant and equipment—$149.9 million, the purchase of prescription files—$36.1 million and capitalizable acquisition costs of $0.1 million. Proceeds of $87.6 million from sale-leaseback transactions offset these expenditures. Included in cash used for investing activities for the thirteen week period ended June 2, 2007 is the investment of proceeds from the issuance of our 9.375% senior notes due 2015 and our 9.5% senior notes due 2017 into an escrow account which was used subsequent to period end to fund the Acquisition. Other uses of cash for investing activities for the 13 week period ended June 2, 2007 were for the purchase of property, plant and equipment—$117.5 million, the purchase of prescription files—$13.8 million and capitalizable direct acquisition costs related to our pending acquisition of Jean Coutu USA—$5.3 million. Cash of $4.7 million was provided by proceeds from asset dispositions and cash of $5.5 million was provided by recoveries related to our Hurricane Katrina settlement.

        Cash provided by financing activities was $195.6 million and $1,177.8 million for the thirteen week periods ended May 31, 2008 and June 2, 2007, respectively. Cash provided by financing activities for the thirteen week period ending May 31, 2008 was due to borrowings on our revolving credit facility to fund the negative cash flow from operations. Cash provided by financing activities for the thirteen week period ended June 2, 2007 was primarily due to proceeds from the issuance of our private placement notes to fund the Acquisition.

Capital Expenditures

        During the thirteen week period ended May 31, 2008, we spent $186.0 million on capital expenditures, consisting of $76.9 million related to new store construction, store relocation and store remodel projects, $32.9 million related to technology enhancements, improvements to distribution centers and other corporate requirements, $40.0 million related to the integration of Brooks Eckerd and $36.2 million related to the purchase of prescription files from independent pharmacists. We plan on making total capital expenditures of approximately $600 million during fiscal 2009, consisting of approximately 40% related to new store construction, store relocation, store remodel and store improvement projects, 30% related to the integration of Brooks Eckerd, 10% related to the purchase of prescription files from independent pharmacies and 20% related to technology enhancements, improvements in distribution centers and other corporate requirements. Management expects that these capital expenditures will be financed primarily with cash flow from operating activities, proceeds from sale-leaseback transactions and use of the revolving credit facility. We plan to open or relocate approximately 85 stores in fiscal 2009, with at least 50% being relocated or expanded stores. These relocations and openings will be focused in our strongest existing markets. We also expect to continue remodeling stores.

Future Liquidity

        We are highly leveraged. Our high level of indebtedness: (i) limits our ability to obtain additional financing; (ii) limits our flexibility in planning for, or reacting to, changes in our business and the industry; (iii) places us at a competitive disadvantage relative to our competitors with less debt; (iv) renders us more vulnerable to general adverse economic and industry conditions; and (v) requires us to dedicate a substantial portion of our cash flow to service our debt, including additional debt

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incurred for the acquisition of Brooks Eckerd. Based upon our current levels of operations, planned improvements in our operating performance and the opportunities that we believe the acquisition of Brooks Eckerd provides, we believe that cash flow from operations together with available borrowings under the senior secured credit facility, sales of accounts receivable under our securitization agreements and other sources of liquidity will be adequate to meet our requirements for working capital, debt service and capital expenditures for the next twelve months. We will continue to assess our liquidity position and potential sources of supplemental liquidity in light of our operating performance, and other relevant circumstances. Should we determine, at any time, that it is necessary to obtain additional short-term liquidity, we will evaluate our alternatives and take appropriate steps to obtain sufficient additional funds. There can be no assurance that any such supplemental funding, if sought, could be obtained or if obtained, would be on terms acceptable to us.

Recent Accounting Pronouncements

        In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements". This standard establishes a standard definition for fair value, establishes a framework under generally accepted accounting principles for measuring fair value and expands disclosure requirements for fair value measurements. This standard is effective for financial statements issued for fiscal years beginning after November 15, 2007. In December 2007, a FASB Staff Position (FSP) was proposed to delay the effective dates of SFAS No. 157 as it relates to all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis, or at least annually. We have adopted SFAS No. 157 as of March 2, 2008 as it relates to financial assets and liabilities and there was no impact on the financial statements. We are currently evaluating the impact of SFAS No. 157 on nonfinancial assets and liabilities.

        In December 2007, the FASB issued SFAS No. 141 (Revised) "Business Combinations". SFAS 141 (Revised) establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the assets acquired and liabilities assumed in a business combination and makes several changes to the method of accounting for business combinations previously set forth in SFAS No. 141. SFAS No. 141 (Revised) will become effective for acquisitions consummated in fiscal years beginning after December 15, 2008.

Critical Accounting Policies and Estimates

        For a description of the critical accounting policies that require the use of significant judgments and estimates by management, refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates" included in our fiscal 2008 10-K report.

Factors Affecting Our Future Prospects

        For a discussion of risks related to our financial condition, operations and industry, refer to "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our fiscal 2008 10-K.

ITEM 3.    Quantitative and Qualitative Disclosures About Market Risk

        Our future earnings, cash flow and fair values relevant to financial instruments are dependent upon prevalent market rates. Market risk is the risk of loss from adverse changes in market prices and interest rates. Our major market risk exposure is changing interest rates. Increases in interest rates would increase our interest expense. We enter into debt obligations to support capital expenditures, acquisitions, working capital needs and general corporate purposes. Our policy is to manage interest rates through the use of a combination of variable-rate credit facilities, fixed-rate long-term obligations and derivative transactions. We currently do not have any derivative transactions outstanding.

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        The table below provides information about our financial instruments that are sensitive to changes in interest rates. The table presents principal payments and the related weighted average interest rates by expected maturity dates as of May 31, 2008, with pro-forma adjustments to reflect the refinancing.

	2009		2010		2011		2012		2013		Thereafter		Total		Fair Value at 05/31/08
	(dollars in thousands)
Long-term debt, including current portion
Fixed Rate	442		172		11,305		215		214		3,402,030		3,414,378		3,074,726
Average Interest Rate	7.68	%	7.09	%	8.11	%	7.00	%	7.00	%	8.79	%	8.79	%
Variable Rate	9,163		14,550		1,202,964		14,550		14,550		1,352,637		2,608,414		2,145,608
Average Interest Rate	4.32	%	4.47	%	4.46	%	4.47	%	4.47	%	4.59	%	4.53	%
Totals	9,605		14,722		1,214,269		14,765		14,764		4,754,667		6,022,792		5,220,334

        As of July 9, 2008, 43.3% of our total debt is exposed to fluctuations in variable interest rates.

        Our ability to satisfy interest payment obligations on our outstanding debt will depend largely on our future performance, which, in turn, is subject to prevailing economic conditions and to financial, business and other factors beyond our control. If we do not have sufficient cash flow to service our interest payment obligations on our outstanding indebtedness and if we cannot borrow or obtain equity financing to satisfy those obligations, our business and results of operations will be materially adversely affected. We cannot assure you that any such borrowing or equity financing could be successfully completed.

        In addition to the financial instruments listed above, the program fees incurred on proceeds from the sale of receivables under our receivables securitization agreements are determined based on LIBOR.

ITEM 4.    Controls and Procedures

(a)

Disclosure Controls and Procedures

        Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective.

(b)

Changes in Internal Control over Financial Reporting

        There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1.    Legal Proceedings

        Not applicable.

ITEM 1A.    Risk Factors

        In addition to the amended and restated risk factor set forth below and the other information set forth in this Quarterly Report, you should carefully consider the factors discussed below and in "Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K", for the year ended March 1, 2008, which could materially affect our business, financial condition or future results.

We are subject to governmental regulations, procedures and requirements; our noncompliance or a significant regulatory change could adversely affect our business, the results of our operations or our financial condition.

        Our business is subject to federal, state and local government laws, regulations and administrative practices. We must comply with numerous provisions regulating health and safety, equal employment opportunity, minimum wage and licensing for the sale of drugs, alcoholic beverages, tobacco and other products. In addition, we must comply with regulations pertaining to product labeling, dating and pricing. We have in the past and are currently the subject of investigations and legal proceedings in various states regarding some of our stores that have been found to sell front end products past their expiration date. Our pharmacy business is also subject to local registrations in the states where our pharmacies are located, applicable Medicare and Medicaid regulations and prohibitions against paid referrals of patients. Failure to properly adhere to these and other applicable regulations could result in the imposition of civil and criminal penalties, including suspension of payments from government programs; injunctions affecting the sales of our products; loss of required government certifications; loss of authorizations to participate in or exclusion from government reimbursement programs, such as the Medicare and Medicaid programs; loss of licenses; and significant fines or monetary penalties for anti-kickback law violations, submission of false claims or other failures to meet reimbursement program requirements. The imposition of any such penalties could adversely affect the continued operation of our business and any public statements surrounding these matters, including those that we have recently experienced, could adversely affect our reputation and brand.

        Our pharmacy business is subject to patient privacy and other obligations, including corporate, pharmacy and associate responsibility, imposed by the Health Insurance Portability and Accountability Act. As a covered entity, we are required to implement privacy standards, train our associates on the permitted use and disclosures of protected health information, provide a notice of privacy practice to our pharmacy customers and permit pharmacy health customers to access and amend their records and receive an accounting of disclosures of protected health information. Failure to properly adhere to these requirements could result in the imposition of civil as well as criminal penalties.

        Federal and state reform programs, such as healthcare reform and enforcement initiatives of federal and state governments, may also affect our pharmacy business. These initiatives include:

•

proposals designed to significantly reduce spending on Medicare, Medicaid and other government programs;



•

changes in programs providing for reimbursement for the cost of prescription drugs by third party plans;



•

increased scrutiny of, and litigation relating to, prescription drug manufacturers' pricing and marketing practices; and



•

regulatory changes relating to the approval process for prescription drugs.

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        These initiatives could lead to the enactment of, or changes to, federal regulations and state regulations that could adversely impact our prescription drug sales and, accordingly, our results of operations, financial condition or cash flows. It is uncertain at this time what additional healthcare reform initiatives, if any, will be implemented, or whether there will be other changes in the administration of governmental healthcare programs or interpretations of governmental policies or other changes affecting the healthcare system. Future healthcare or budget legislation or other changes, including those referenced above, may materially adversely impact our pharmacy sales.

        On June 25, 2008, a putative class action lawsuit was filed in the United States District Court for the Eastern District of Pennsylvania against Rite Aid for allegedly selling expired products to consumers. The action seeks class certification, injunctive relief, refunds for expired products purchased and monetary damages. We have not yet been served with this matter and cannot estimate or predict any potential liability to us or other relief that could be granted at this time. Although the class has not been certified and we do not currently believe that this action will have a material adverse effect on our business, financial condition or results of operations, we cannot assure you that a judgment against us pursuant to this or any other similar suits that may be filed would not have a material adverse effect on our business, financial condition or results of operations.

ITEM 2.    Unregistered Sales of Equity Securities and Use of Proceeds

        On May 20, 2008, we exchanged, pursuant to Section 3(a)(9) under the Securities Act, a total of 2,404,020 shares of its 5.50% Series I Mandatory Convertible Preferred Stock (the "Series I Preferred Stock") for a total of 14,647,085 shares of our common stock, par value $1.00 per share. The exchanges took place in the form of individually negotiated transactions between the Company and each of four holders of the Series I Preferred Stock. Of the shares of common stock issued upon conversion, 13,597,378 shares were issued based upon a conversion ratio of 5.6561 shares of common stock per share of Series I Preferred Stock pursuant to the conversion formula specified in the certificate of designations with respect to the Series I Preferred Stock, and 1,049,707 shares were issued in lieu of future dividends and as an inducement for the conversion. The remaining shares of Series I Preferred Stock will automatically convert into shares of the our common stock on November 17, 2008. The conversion ratio will be no fewer than 4.7134 shares and no more than 5.6561 shares of common stock per share of Series I Preferred Stock, and will depend on the market value of the our common stock at the time of conversion.

ITEM 3.    Defaults Upon Senior Securities

        Not applicable.

ITEM 4.    Submission of Matters to a Vote of Security Holders

        No matters were submitted to a vote of the security holders during the thirteen week period ended May 31, 2008.

ITEM 5.    Other Information

        Not applicable.

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ITEM 6.    Exhibits

(a)

The following exhibits are filed as part of this report.

Exhibit Numbers	Description	Incorporation By Reference To
2.1	Stock Purchase Agreement, dated as of August 23, 2006, between Rite Aid Corporation and The Jean Coutu Group (PJC) Inc.	Exhibit 2 to Form 8-K, filed on August 24, 2006
3.1	Restated Certificate of Incorporation dated December 12, 1996	Exhibit 3(i) to Form 8-K, filed on November 2, 1999
3.2	Certificate of Amendment to the Restated Certificate of Incorporation dated February 22, 1999	Exhibit 3(ii) to Form 8-K, filed on November 2, 1999
3.3	Certificate of Amendment to the Restated Certificate of Incorporation dated June 27, 2001	Exhibit 3.4 to Registration Statement on Form S-1, File No. 333-64950, filed on July 12, 2001
3.4	Certificate of Amendment to the Restated Certificate of Incorporation dated June 4, 2007	Exhibit 4.4 to Registration Statement on Form S-8, filed on October 5, 2007
3.5	7% Series G Cumulative Convertible Pay-in-Kind Preferred Stock Certificate of Designation dated January 28, 2005	Exhibit 3.2 to Form 8-K, filed on February 2, 2005
3.6	6% Series H Cumulative Convertible Pay-in-Kind Preferred Stock Certificate of Designation dated January 28, 2005	Exhibit 3.3 to Form 8-K, filed on February 2, 2005
3.7	5.50% Series I Mandatory Convertible Preferred Stock Certificate of Designation dated August 2, 2005	Exhibit 3.1 to Form 8-K, filed on August 24, 2005
3.8	Amended and Restated By-laws	Exhibit 3.1 to Form 8-K, filed on April 13, 2007
3.9	Amendment to Sections 1, 3 and 4 of Article 4 of Amended and Restated By-laws	Exhibit 3.1 to Form 8-K, filed on December 21, 2000.
4.1	Indenture, dated August 1, 1993 by and between Rite Aid Corporation, as issuer, and Morgan Guaranty Trust Company of New York, as trustee, related to the Company's 7.70% Notes due 2027 and 6.875% Notes due 2013	Exhibit 4A to Registration Statement on Form S-3, File No. 333-63794, filed on June 3, 1993
4.2	Supplemental Indenture dated as of February 3, 2000, between Rite Aid Corporation, as issuer, and U.S. Bank Trust National Association as successor to Morgan Guaranty Trust Company of New York, to the Indenture dated as of August 1, 1993, relating to the Company's 7.70% Notes due 2027 and 6.875% Notes due 2013	Exhibit 4.1 to Form 8-K filed on February 7, 2000

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4.3	Indenture, dated as of December 21, 1998, between Rite Aid Corporation, as issuer, and Harris Trust and Savings Bank, as trustee, related to the Company's 6.875% Notes due 2028	Exhibit 4.1 to Registration Statement on Form S-4, File No. 333-74751, filed on March 19, 1999
4.4	Supplemental Indenture, dated as of February 3, 2000, between Rite Aid Corporation and Harris Trust and Savings Bank, to the Indenture dated December 21, 1998, between Rite Aid Corporation and Harris Trust and Savings Bank, related to the Company's 6.875% Notes due 2028	Exhibit 4.4 to Form 8-K filed on February 7, 2000
4.5	Indenture, dated as of April 22, 2003, between Rite Aid Corporation, as issuer, and BNY Midwest Trust Company, as trustee, related to the Company's 8.125% Senior Secured Notes due 2010	Exhibit 4.11 to Form 10-K, filed on May 2, 2003
4.6	Supplemental Indenture, dated as of June 4, 2007, between Rite Aid Corporation, the subsidiaries named therein and The Bank of New York Trust Company, N.A. to the Indenture dated as of April 22, 2003 between Rite Aid Corporation and BNY Midwest Trust Company, related to the Company's 8.125% Senior Secured Notes due 2010	Exhibit 4.6 to Form 10-Q, filed on July 12, 2007
4.7	Second Supplemental Indenture, dated as of June 17, 2008, between Rite Aid Corporation, the subsidiaries named therein and The Bank of New York Trust Company, N.A., to the Indenture dated as of April 22, 2003 between Rite Aid Corporation and BNY Midwest Trust Company, related to the Company's 8.125% Senior Secured Notes due 2010.	Filed herewith
4.8	Indenture, dated as of May 20, 2003, between Rite Aid Corporation, as issuer, and BNY Midwest Trust Company, as trustee, related to the Company's 9.25% Senior Notes due 2013	Exhibit 4.12 to Form 10-Q, filed on July 3, 2003
4.9	Supplemental Indenture, dated as of June 4, 2007, between Rite Aid Corporation, the subsidiaries named therein and The Bank of New York Trust Company, N.A. to the Indenture dated as of May 20, 2003 between Rite Aid Corporation and BNY Midwest Trust Company, related to the Company's 9.25% Senior Secured Notes due 2013	Exhibit 4.8 to Form 10-Q, filed on July 12, 2007

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4.10	Second Supplemental Indenture, dated as of June 17, 2008, between Rite Aid Corporation, the subsidiaries named therein and The Bank of New York Trust Company, N.A., as successor trustee, to the Indenture dated as of May 20, 2003 between Rite Aid Corporation and BNY Midwest Trust Company, related to the Company's 9.25% Senior Secured Notes due 2013	Filed herewith
4.11	Indenture, dated as of February 15, 2007, between Rite Aid Corporation, as issuer, the subsidiary guarantors named therein and The Bank of New York Trust Company, N.A., as trustee, related to the Company's 7.5% Senior Secured Notes due 2017	Exhibit 99.1 to Form 8-K, filed on February 26, 2007
4.12	Supplemental Indenture, dated as of June 4, 2007, between Rite Aid Corporation, the subsidiaries named therein and The Bank of New York Trust Company, N.A. to the Indenture dated as of February 21, 2007 between Rite Aid Corporation and The Bank of New York Trust Company, N.A., related to the Company's 7.5% Senior Secured Notes due 2017	Exhibit 4.12 to Form 10-Q, filed on July 12, 2007
4.13	Second Supplemental Indenture, dated as of July 9, 2008, among Rite Aid Corporation, the subsidiaries named therein and The Bank of New York Mellon Trust Company, N. A., as successor trustee, to the Indenture, dated as of February 21, 2007, between Rite Aid Corporation and The Bank of New York Trust Company, N.A., related to the Company's 7.5% Senior Secured Notes due 2017	Filed herewith
4.14	Indenture, dated as of February 15, 2007, between Rite Aid Corporation, as issuer, and The Bank of New York Trust Company, N.A., as trustee, related to the Company's 8.625% Senior Notes due 2015	Exhibit 99.2 to Form 8-K, filed on February 26, 2007
4.15	Supplemental Indenture, dated as of June 4, 2007, between Rite Aid Corporation, the subsidiaries named therein and The Bank of New York Trust Company, N.A. to the Indenture dated as of February 21, 2007 between Rite Aid Corporation and The Bank of New York Trust Company, N.A., related to the Company's 8.625% Senior Secured Notes due 2015	Exhibit 4.14 to Form 10-Q, filed on July 12, 2007

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4.16	Second Supplemental Indenture, dated as of July 9, 2008, among Rite Aid Corporation, the subsidiaries named therein and The Bank of New York Mellon Trust Company, N. A., as successor trustee, to the Indenture, dated as of February 15, 2007, between Rite Aid Corporation and The Bank of New York Trust Company, N. A., related to the Company's 8.625% Senior Notes due 2015	Filed herewith
4.17	Amended and Restated Indenture, dated as of June 4, 2007 among Rite Aid Corporation (as successor to Rite Aid Escrow Corp.), the subsidiary guarantors named therein and The Bank of New York Trust Company, N.A., as Trustee, related to the Company's 9.375% Senior Notes due 2015	Exhibit 4.1 to Form 8-K, filed on June 7, 2007
4.18	First Supplemental Indenture, dated as of July 9, 2008, among Rite Aid Corporation, the subsidiaries named therein and The Bank of New York Mellon Trust Company, N. A. to the Amended and Restated Indenture, dated as of June 4, 2007, among Rite Aid Corporation (as successor to Rite Aid Escrow Corp.), the subsidiary guarantors named therein and The Bank of New York Trust Company, N.A., related to the Company's 9.375% Senior Notes due 2015	Filed herewith
4.19	Amended and Restated Indenture, dated as of June 4, 2007 among Rite Aid Corporation (as successor to Rite Aid Escrow Corp.), the subsidiary guarantors named therein and The Bank of New York Trust Company, N.A., as Trustee, related to the Company's 9.5% Senior Notes due 2017	Exhibit 4.2 to Form 8-K, filed on June 7, 2007
4.20	First Supplemental Indenture, dated as of July 9, 2008, among Rite Aid Corporation, the subsidiaries named therein and The Bank of New York Mellon Trust Company, N. A., as successor trustee, to the Amended and Restated Indenture, dated as of June 4, 2007, among Rite Aid Corporation (as successor to Rite Aid Escrow Corp.), the subsidiary guarantors named therein and The Bank of New York Trust Company, N.A., related to the Company's 9.5% Senior Notes due 2017	Filed herewith

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4.21	Indenture, dated as of May 29, 2008, between Rite Aid Corporation, as issuer, and The Bank of New York Trust Company, N.A., as trustee, related to the Company's Senior Debt Securities	Exhibit 4.1 to Form 8-K, filed on June 2, 2008
4.22	First Supplemental Indenture, dated as of May 29, 2008, between Rite Aid Corporation, the subsidiaries named therein and The Bank of New York Trust Company, N.A. to the Indenture dated as of May 29, 2008 between Rite Aid Corporation and The Bank of New York Trust Company, N.A., related to the Company's Senior Debt Securities	Exhibit 4.2 to Form 8-K, filed on June 2, 2008
4.23	Indenture, dated as of July 9, 2008, between Rite Aid Corporation, as issuer, and The Bank of New York Mellon Trust Company, N.A., as trustee, related to the Company's 10.375% Senior Secured Notes due 2016	Filed herewith
4.24	Amended and Restated Stockholder Agreement, dated August 23, 2006, amended and restated as of June 4, 2007, by and between Rite Aid Corporation, The Jean Coutu Group (PJC) Inc., Jean Coutu, Marcelle Coutu, Francois J. Coutu, Michel Coutu, Louis Coutu, Sylvie Coutu and Marie-Josee Coutu	Exhibit 2.2 to Form 10-Q, filed on July 12, 2007
4.25	Registration Rights Agreement, dated August 23, 2006, by and between Rite Aid Corporation and The Jean Coutu Group (PJC) Inc.	Exhibit 10.2 to Form 8-K, filed on August 24, 2006
10.1	Amendment and Restatement Agreement, dated as of July 9, 2008, relating to the Credit Agreement dated as of June 27, 2001, as amended and restated as of June 4, 2007, among Rite Aid Corporation, the lenders from time to time party thereto, Citicorp North America, Inc., as administrative agent and collateral processing agent and Bank of America, N.A., as syndication agent and the Credit Agreement, dated as of June 27, 2001, as amended and restated as of July 9, 2008, among Rite Aid Corporation, the lenders party thereto, Citicorp North America, Inc., as administrative agent and collateral processing agent, and Bank of America, N.A., as syndication agent.	Filed herewith

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11	Statement regarding computation of earnings per share. (See Note 4 to the condensed consolidated financial statements)	Filed herewith
31.1	Certification of CEO pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended	Filed herewith
31.2	Certification of CFO pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended	Filed herewith
32	Certification of CEO and CFO pursuant to 18 United States Code, Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith

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SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: July 10, 2008	RITE AID CORPORATION
	By:	/s/  ROBERT B. SARI Robert B. Sari Executive Vice President and General Counsel
Date: July 10, 2008	By:	/s/  KEVIN TWOMEY Kevin Twomey Chief Financial Officer and Executive Vice President

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QuickLinks

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

RITE AID CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts) (unaudited)
RITE AID CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (unaudited)
RITE AID CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (unaudited)
RITE AID CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Thirteen Week Periods Ended May 31, 2008 and June 2, 2007 (Dollars and share information in thousands, except per share amounts) (unaudited)

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
ITEM 4. Controls and Procedures

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings
ITEM 1A. Risk Factors
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
ITEM 3. Defaults Upon Senior Securities
ITEM 4. Submission of Matters to a Vote of Security Holders
ITEM 5. Other Information
ITEM 6. Exhibits

SIGNATURES

EX-4.7

Exhibit 4.7

SECOND SUPPLEMENTAL INDENTURE

dated as of June 17, 2008

between

RITE AID CORPORATION,

THE SUBSIDIARY GUARANTORS NAMED HERETO

and

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

successor to BNY Midwest Trust Company

as Trustee

to the

INDENTURE

dated as of April 22, 2003

between

RITE AID CORPORATION,

THE SUBSIDIARY GUARANTORS NAMED THEREIN

and

BNY MIDWEST TRUST COMPANY

as Trustee

8.125% SENIOR SECURED NOTES DUE 2010

THIS SECOND SUPPLEMENTAL INDENTURE (the “Second Supplemental Indenture”), dated as of  June 17, 2008, among Rite Aid Corporation, a Delaware corporation (the “Company”), each of the subsidiary guarantors of the Company listed on Schedule I hereto (the “Subsidiary Guarantors”) and The Bank of New York Trust Company, N.A. (the “Trustee”), as successor trustee to BNY Midwest Trust Company under the Indenture referred to below.

W I T N E S S E T H :

WHEREAS, the Company has heretofore executed and delivered an indenture dated as of April 22, 2003, as amended by the First Supplemental Indenture thereto, dated as of June 4, 2007 (as amended, the “Indenture”), between the Company, each of the Subsidiary Guarantors and the Trustee, pursuant to which the Company has issued its 8.125% Senior Secured Notes due 2010 (the “Notes”) and the Subsidiary Guarantors have provided subsidiary guarantees (the Notes together with the subsidiary guarantees, the “Securities”);

WHEREAS, Section 9.02 of the Indenture provides that, subject to certain conditions, the Company, the Subsidiary Guarantors and the Trustee may amend the Indenture or the Securities with the consent of the Holders of at least a majority in aggregate principal amount of the Securities then outstanding;

WHEREAS, the Company and each of the Subsidiary Guarantors are undertaking to execute and deliver this Second Supplemental Indenture to amend certain terms and covenants in the Indenture in connection with the Offer to Purchase and Consent Solicitation Statement of the Company, dated as of June 4, 2008, and any amendments, modifications or supplements thereto (the “Tender Offer and Solicitation”); and

WHEREAS, the Board of Directors of the Company and the Boards of Directors, Boards of Managers or Partners of the Subsidiary Guarantors have authorized and approved the execution and delivery of this Second Supplemental Indenture.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company, the Subsidiary Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

ARTICLE I

CAPITALIZED TERMS

Section 1.01   Amendments to the Indenture.  Capitalized terms used herein but not defined shall have the meanings assigned to them in the Indenture.

ARTICLE II

AMENDMENTS AND WAIVERS

Section 2.01   Amendments to the Indenture.  Effective at the time of payment or deposit with DTC (the “Payment Date”) of an amount of money sufficient to pay for all Notes validly tendered and accepted pursuant to the Tender Offer and Solicitation (or at least a majority of outstanding Notes if payment is being made pursuant to any early settlement under the Tender Offer and Solicitation) and to make all consent payments required under the Tender Offer and Solicitation:

(i)The Indenture is hereby amended to delete Section 4.02 (SEC Reports), Section 4.03 (Limitation on Debt), Section 4.04 (Limitation on Restricted Payments), Section 4.05 (Limitations on Liens), Section 4.06 (Limitation on Asset Sales and Specified Collateral Dispositions), Section 4.07  (Limitation on Restrictions on Distributions from Restricted Subsidiaries), Section 4.08 (Limitation on Transactions with Affiliates), Section 4.09 (Guarantees by Subsidiaries), Section 4.10 (Limitation on Sale and Leaseback Transactions), Section 4.11 (Designation of Restricted and Unrestricted Subsidiaries), Section 4.12 (Additional Security Documents), Section 4.13 (Change of Control), and clauses (a)(4), (a)(5) and (b) of Section 5.01 (When Company May Merge or Transfer Assets);

(ii)The failure to comply with the terms of any of the Sections of the Indenture set forth in clause (i) above shall no longer constitute a Default or an Event of Default under the Indenture and shall no longer have any other consequence under the Indenture;

(iii)The Indenture is hereby amended to delete clauses (d), (e), (h), (i), (j) and (k) of Section 6.01 (Events of Default) in their entirety and all references thereto contained in Section 6.01 and elsewhere in the Indenture in their entirety, and the occurrence of the events described in (d), (e), (h), (i), (j) and (k) of Section 6.01 shall no longer constitute Events of Default;

(iv)All definitions set forth in Section 1.01 of the Indenture that relate to defined terms used solely in sections deleted by this Second Supplemental Indenture are hereby deleted in their entirety; and

(v)All references to Sections 5.01 and 6.01 of the Indenture shall mean Sections 5.01 and 6.01 as amended by this Second Supplemental Indenture.

ARTICLE III

RELEASE OF SUBSIDIARY GUARANTEES AND COLLATERAL

Section 3.01   Release of Subsidiary Guarantees and Collateral.  Upon the operative date of this Second Supplemental Indenture in accordance with Section 2.01 hereof, (i) each of the Subsidiary Guarantors shall be fully and unconditionally released from its Subsidiary Guarantee, (ii) all collateral securing any such Subsidiary Guarantee shall be fully and unconditionally released without any further action on behalf of the Holders, the Company or any Subsidiary Guarantor (and notwithstanding any other consent that may be required under any Second Priority Collateral Document), (iii) the Holders consent (including for purposes of determining actions of the Second Priority Instructing Group) to an amendment to any of the Second Priority Collateral Documents to evidence the foregoing and (iv) the Notes will no longer constitute a Second Priority Debt Obligation.

ARTICLE IV

MISCELLANEOUS

Section 4.01   Ratification of Indenture; Second Supplemental Indenture Part of Indenture.

(i)Except as expressly supplemented hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect.  This Second Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of the Securities heretofore or hereafter authenticated and delivered shall be bound hereby.  In the event of a conflict between the terms and conditions of the Indenture and the terms and conditions of this Second Supplemental Indenture, then the terms and conditions of this Second Supplemental Indenture shall prevail.

(ii)The Notes include certain of the foregoing provisions from the Indenture. Upon the operative date of this Second Supplemental Indenture, such provisions from the Notes shall be deemed deleted or amended as applicable.

(iii)Notwithstanding an earlier execution date, the provisions of this Supplemental Indenture shall not become operative until the time and date upon which the Company pays the Consent Fee (as such term is defined in the Offer to Purchase and Consent Solicitation Statement) to all Holders who have validly delivered and not validly revoked consents pursuant to the terms of the Offer to Purchase and Consent Solicitation Statement.

Section 4.02   Governing Law.

THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SECOND SUPPLEMENTAL INDENTURE WITHOUT GIVING EFFECT TO

APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

Section 4.03   Trustee Makes No Representation.

The recitals contained herein are those of the Company and the Subsidiary Guarantors and not the Trustee, and the Trustee assumes no responsibility for the correctness of same. The Trustee makes no representations as to the validity or sufficiency of this Second Supplemental Indenture. All rights, protections, privileges, indemnities and benefits granted or afforded to the Trustee under the Indenture shall be deemed incorporated herein by this reference and shall be deemed applicable to all actions taken, suffered or omitted by the Trustee under this Second Supplemental Indenture.

Section 4.04   Counterparts.

The parties may sign any number of copies of this Second Supplemental Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.

Section 4.05   Effect of Headings.

The section headings herein are for convenience only and shall not effect the construction thereof.

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

RITE AID CORPORATION
By:	/s/ Robert B. Sari
	Name:	Robert B. Sari
	Title:	Executive Vice President, Secretary and General Counsel
EACH OF THE SUBSIDIARY GUARANTORS
LISTED ON SCHEDULE I HERETO
By:	/s/ Robert B. Sari
	Name:	Robert B. Sari
	Title:	Authorized Person
THE BANK OF NEW YORK TRUST
COMPANY, N.A., as Trustee
By:	/s/ D.G. Donovan
	Name:	D.G. Donovan
	Title:	Vice President

SCHEDULE I

SUBSIDIARY GUARANTORS

1515 West State Street Boise, Idaho, LLC

Ann & Government Streets- Mobile, Alabama, LLC

Brooks Pharmacy, Inc.

Central Avenue and Main Street-Petal, MS, LLC

Eagle Managed Care Corp.

Eckerd Corporation

EDC Licensing, Inc.

Eighth and Water Streets-Urichsville, Ohio, LLC

Genovese Drug Stores, Inc.

JCG (PJC) USA, LLC

JCG Holdings (USA), Inc.

K&B, Incorporated

Maxi Drug North, Inc.

Maxi Drug South, L.P.

Maxi Drug, Inc.

Munson & Andrews, LLC

Name Rite, L.L.C.

P.J.C. Distribution, Inc.

P.J.C. Realty Co., Inc.

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

PJC Dorchester Realty LLC

PJC East Lyme Realty LLC

PJC Haverhill Realty LLC

PJC Hermitage Realty LLC

PJC Hyde Park Realty LLC

PJC Lease Holdings, Inc.

PJC Manchester Realty LLC

PJC Mansfield Realty LLC

PJC New London Realty LLC

PJC Peterborough Realty LLC

PJC Providence Realty LLC

PJC Realty N.E. LLC

PJC Revere Realty LLC

PJC Special Realty Holdings, Inc.

Rite Aid Drug Palace, Inc.

Rite Aid Hdqtrs. Corp.

Rite Aid Hdqtrs. Funding, Inc.

Rite Aid Services, L.L.C.

Rite Aid of Delaware, Inc.

Rite Aid of New York, Inc.

Rite Aid Rome Distribution Center, Inc.

Rite Aid Realty Corp.

Rite Aid Transport, Inc.

Rite Fund, Inc.

Rite Investments Corp.

Rx Choice, Inc.

Silver Springs Road-Baltimore, Maryland/One, LLC

Silver Springs Road-Baltimore, Maryland/Two, LLC

State & Fortification Streets-Jackson, Mississippi, LLC

State Street and Hill Road-Gerard, Ohio, LLC

The Jean Coutu Group (PJC) USA, Inc.

Thrift Drug Services, Inc.

Thrift Drug, Inc.

Tyler and Sanders Roads, Birmingham-Alabama, LLC

112 Burleigh Avenue Norfolk, LLC

1740 Associates, LLC

3581 Carter Hill Road-Montgomery Corp.

4042 Warrensville Center Road-Warrensville Ohio, Inc.

5277 Associates, Inc.

537 Elm Street Corp.

5600 Superior Properties, Inc.

657-659 Broad St. Corp.

764 South Broadway-Geneva, Ohio, LLC

Apex Drug Stores, Inc.

Broadview and Wallings-Broadview Heights Ohio, Inc.

Eckerd Fleet, Inc.

EDC Drug Stores, Inc.

England Street-Asheland Corporation

Fairground, L.L.C.

GDF, Inc.

Gettysburg and Hoover-Dayton, Ohio, LLC

Harco, Inc.

K&B Alabama Corporation

K&B Louisiana Corporation

K&B Mississippi Corporation

K&B Services, Incorporated

K&B Tennessee Corporation

K&B Texas Corporation

Keystone Centers, Inc.

Lakehurst and Broadway Corporation

Maxi Green, Inc.

Mayfield & Chillicothe Roads-Chesterland, LLC

MC Woonsocket, Inc.

Northline & Dix-Toledo-Southgate, LLC

P.J.C. of West Warwick, Inc.

Patton Drive and Navy Boulevard Property Corporation

PDS-1 Michigan, Inc.

Perry Distributors, Inc.

Perry Drug Stores, Inc.

PJC of Cranston, Inc.

PJC of East Providence, Inc.

PJC of Massachusetts, Inc.

PJC of Rhode Island, Inc.

PJC of Vermont, Inc.

PJC Realty MA, Inc.

RDS Detroit, Inc.

Ram-Utica, Inc.

READ’s Inc.

Rite Aid of Alabama, Inc.

Rite Aid of Connecticut, Inc.

Rite Aid of Florida, Inc.

Rite Aid of Georgia, Inc.

Rite Aid of Illinois, Inc.

Rite Aid of Indiana, Inc.

Rite Aid of Kentucky, Inc.

Rite Aid of Maine, Inc.

Rite Aid of Maryland, Inc.

Rite Aid of Massachusetts, Inc.

Rite Aid of Michigan, Inc.

Rite Aid of New Hampshire, Inc.

Rite Aid of New Jersey, Inc.

Rite Aid of North Carolina, Inc.

Rite Aid of Ohio, Inc.

Rite Aid of Pennsylvania, Inc.

Rite Aid of South Carolina, Inc.

Rite Aid of Tennessee, Inc.

Rite Aid of Vermont, Inc.

Rite Aid of Virginia, Inc.

Rite Aid of Washington, D.C., Inc.

Rite Aid of West Virginia, Inc.

Seven Mile and Evergreen-Detroit, LLC

The Lane Drug Company

Thrifty Corporation

Thrifty PayLess, Inc.

EX-4.10

Exhibit 4.10

SECOND SUPPLEMENTAL INDENTURE

dated as of June 17, 2008

between

RITE AID CORPORATION,

THE SUBSIDIARY GUARANTORS NAMED HERETO

and

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

successor to BNY Midwest Trust Company

as Trustee

to the

INDENTURE

dated as of May 20, 2003

between

RITE AID CORPORATION,

THE SUBSIDIARY GUARANTORS NAMED THEREIN

and

BNY MIDWEST TRUST COMPANY

as Trustee

9.25% SENIOR NOTES DUE 2013

THIS SECOND SUPPLEMENTAL INDENTURE (the “Second Supplemental Indenture”), dated as of June 17, 2008, among Rite Aid Corporation, a Delaware corporation (the “Company”), each of the subsidiary guarantors of the Company listed on Schedule I hereto (the “Subsidiary Guarantors”) and The Bank of New York Trust Company, N.A. (the “Trustee”), as successor trustee to BNY Midwest Trust Company under the Indenture referred to below.

W I T N E S S E T H:

WHEREAS, the Company has heretofore executed and delivered an indenture dated as of May 20, 2003, as amended by the First Supplemental Indenture thereto, dated as of June 4, 2007 (as amended, the “Indenture”), between the Company, each of the Subsidiary Guarantors and the Trustee, pursuant to which the Company has issued its 9.25% Senior Notes due 2013 (the “Notes”) and the Subsidiary Guarantors have provided subsidiary guarantees (the Notes together with the subsidiary guarantees, the “Securities”);

WHEREAS, Section 9.02 of the Indenture provides that, subject to certain conditions, the Company, the Subsidiary Guarantors and the Trustee may amend the Indenture or the Securities with the consent of the Holders of at least a majority in aggregate principal amount of the Securities then outstanding;

WHEREAS, the Company and each of the Subsidiary Guarantors are undertaking to execute and deliver this Second Supplemental Indenture to amend certain terms and covenants in the Indenture in connection with the Offer to Purchase and Consent Solicitation Statement of the Company, dated as of June 4, 2008, and any amendments, modifications or supplements thereto (the “Tender Offer and Solicitation”); and

WHEREAS, the Board of Directors of the Company and the Boards of Directors, Boards of Managers or Partners of the Subsidiary Guarantors have authorized and approved the execution and delivery of this Second Supplemental Indenture.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company, the Subsidiary Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

ARTICLE I

CAPITALIZED TERMS

Section 1.01Amendments to the Indenture.  Capitalized terms used herein but not defined shall have the meanings assigned to them in the Indenture.

ARTICLE II

AMENDMENTS AND WAIVERS

Section 2.01Amendments to the Indenture.  Effective at the time of payment or deposit with DTC (the “Payment Date”) of an amount of money sufficient to pay for all Notes validly tendered and accepted pursuant to the Tender Offer and Solicitation (or at least a majority of outstanding Notes if payment is being made pursuant to any early settlement under the Tender Offer and Solicitation) and to make all consent payments required under the Tender Offer and Solicitation:

(i)The Indenture is hereby amended to Section 4.02 (SEC Reports), Section 4.03 (Limitation on Debt), Section 4.04 (Limitation on Restricted Payments), Section 4.05 (Limitations on Liens), Section 4.06 (Limitation on Asset Sales), Section 4.07  (Limitation on Restrictions on Distributions from Restricted Subsidiaries), Section 4.08 (Limitation on Transactions with Affiliates), Section 4.09 (Limitation on Guarantees by Restricted Subsidiaries), Section 4.10 (Limitation on Sale and Leaseback Transactions), Section 4.11 (Designation of Restricted and Unrestricted Subsidiaries), and Section 4.12 (Change of Control), and clauses (d) and (e) of Section 5.01 (When Company May Merger or Transfer Assets);

(ii)The failure to comply with the terms of any of the Sections of the Indenture set forth in clause (i) above shall no longer constitute a Default or an Event of Default under the Indenture and shall no longer have any other consequence under the Indenture;

(iii)The Indenture to delete clauses (4), (5) and (8) of Section 6.01 (Events of Default) in their entirety and all references thereto contained in Section 6.01 and elsewhere in the Indenture in their entirety, and the occurrence of the events described in clauses (4), (5) and (8) of Section 6.01 shall no longer constitute Events of Default;

(iv)All definitions set forth in Section 1.01 of the Indenture that relate to defined terms used solely in sections deleted by this Second Supplemental Indenture are hereby deleted in their entirety; and

(v)All references to Sections 5.01 and 6.01 of the Indenture shall mean Sections 5.01 and 6.01 as amended by this Second Supplemental Indenture.

ARTICLE III

RELEASE OF SUBSIDIARY GUARANTEES

Section 3.01Release of Subsidiary Guarantees.  Upon the operative date of this Second Supplemental Indenture in accordance with Section 2.01 hereof, each subsidiary shall be fully and unconditionally released from its guarantee of the Securities, the Indenture and all other obligations (as such term is defined in the First Supplemental Indenture to the Indenture, dated as of June 4, 2007).

ARTICLE IV

MISCELLANEOUS

Section 4.01Ratification of Indenture; Second Supplemental Indenture Part of Indenture.

(i)Except as expressly supplemented hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect.  This Second Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of the Securities heretofore or hereafter authenticated and delivered shall be bound hereby.  In the event of a conflict between the terms and conditions of the Indenture and the terms and conditions of this Second Supplemental Indenture, then the terms and conditions of this Second Supplemental Indenture shall prevail.

(ii)The Notes include certain of the foregoing provisions from the Indenture. Upon the operative date of the Supplemental Indenture, such provisions from the Notes shall be deemed deleted or amended as applicable.

(iii)Notwithstanding an earlier execution date, the provisions of this Supplemental Indenture shall not become operative until the time and date upon which the Company pays the Consent Fee (as such term is defined in the Offer to Purchase and Consent Solicitation Statement) to all Holders who have validly delivered and not validly revoked consents pursuant to the terms of the Offer to Purchase and Consent Solicitation Statement.

Section 4.02Governing Law.

THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SECOND SUPPLEMENTAL INDENTURE WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

Section 4.03Trustee Makes No Representation.

The recitals contained herein are those of the Company and the Subsidiary Guarantors and not the Trustee, and the Trustee assumes no responsibility for the correctness of same. The Trustee makes no representations as to the validity or sufficiency of this Second Supplemental Indenture. All rights, protections, privileges, indemnities and benefits granted or afforded to the Trustee under the Indenture shall be deemed incorporated herein by this reference and shall be deemed applicable to all actions taken, suffered or omitted by the Trustee under this Second Supplemental Indenture.

Section 4.04Counterparts.

The parties may sign any number of copies of this Second Supplemental Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.

Section 4.05Effect of Headings.

The section headings herein are for convenience only and shall not effect the construction thereof.

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

RITE AID CORPORATION
By:	/s/ Robert B. Sari
	Name:	Robert B. Sari
	Title:	Executive Vice President, Secretary and General Counsel
EACH OF THE SUBSIDIARY GUARANTORS
LISTED ON SCHEDULE I HERETO
By:	/s/ Robert B. Sari
	Name:	Robert B. Sari
	Title:	Authorized Person
THE BANK OF NEW YORK TRUST
COMPANY, N.A., as Trustee
By:	/s/ D.G. Donovan
	Name:	D.G. Donovan
	Title:	Vice President

SCHEDULE I

SUBSIDIARY GUARANTORS

1515 West State Street Boise, Idaho, LLC

Ann & Government Streets- Mobile, Alabama, LLC

Brooks Pharmacy, Inc.

Central Avenue and Main Street-Petal, MS, LLC

Eagle Managed Care Corp.

Eckerd Corporation

EDC Licensing, Inc.

Eighth and Water Streets-Urichsville, Ohio, LLC

Genovese Drug Stores, Inc.

JCG (PJC) USA, LLC

JCG Holdings (USA), Inc.

K&B, Incorporated

Maxi Drug North, Inc.

Maxi Drug South, L.P.

Maxi Drug, Inc.

Munson & Andrews, LLC

Name Rite, L.L.C.

P.J.C. Distribution, Inc.

P.J.C. Realty Co., Inc.

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

PJC Dorchester Realty LLC

PJC East Lyme Realty LLC

PJC Haverhill Realty LLC

PJC Hermitage Realty LLC

PJC Hyde Park Realty LLC

PJC Lease Holdings, Inc.

PJC Manchester Realty LLC

PJC Mansfield Realty LLC

PJC New London Realty LLC

PJC Peterborough Realty LLC

PJC Providence Realty LLC

PJC Realty N.E. LLC

PJC Revere Realty LLC

PJC Special Realty Holdings, Inc.

Rite Aid Drug Palace, Inc.

Rite Aid Hdqtrs. Corp.

Rite Aid Hdqtrs. Funding, Inc.

Rite Aid Services, L.L.C.

Rite Aid of Delaware, Inc.

Rite Aid of New York, Inc.

Rite Aid Rome Distribution Center, Inc.

Rite Aid Realty Corp.

Rite Aid Transport, Inc.

Rite Fund, Inc.

Rite Investments Corp.

Rx Choice, Inc.

Silver Springs Road-Baltimore, Maryland/One, LLC

Silver Springs Road-Baltimore, Maryland/Two, LLC

State & Fortification Streets-Jackson, Mississippi, LLC

State Street and Hill Road-Gerard, Ohio, LLC

The Jean Coutu Group (PJC) USA, Inc.

Thrift Drug Services, Inc.

Thrift Drug, Inc.

Tyler and Sanders Roads, Birmingham-Alabama, LLC

112 Burleigh Avenue Norfolk, LLC

1740 Associates, LLC

3581 Carter Hill Road-Montgomery Corp.

4042 Warrensville Center Road-Warrensville Ohio, Inc.

5277 Associates, Inc.

537 Elm Street Corp.

5600 Superior Properties, Inc.

657-659 Broad St. Corp.

764 South Broadway-Geneva, Ohio, LLC

Apex Drug Stores, Inc.

Broadview and Wallings-Broadview Heights Ohio, Inc.

Eckerd Fleet, Inc.

EDC Drug Stores, Inc.

England Street-Asheland Corporation

Fairground, L.L.C.

GDF, Inc.

Gettysburg and Hoover-Dayton, Ohio, LLC

Harco, Inc.

K&B Alabama Corporation

K&B Louisiana Corporation

K&B Mississippi Corporation

K&B Services, Incorporated

K&B Tennessee Corporation

K&B Texas Corporation

Keystone Centers, Inc.

Lakehurst and Broadway Corporation

Maxi Green, Inc.

Mayfield & Chillicothe Roads-Chesterland, LLC

MC Woonsocket, Inc.

Northline & Dix-Toledo-Southgate, LLC

P.J.C. of West Warwick, Inc.

Patton Drive and Navy Boulevard Property Corporation

PDS-1 Michigan, Inc.

Perry Distributors, Inc.

Perry Drug Stores, Inc.

PJC of Cranston, Inc.

PJC of East Providence, Inc.

PJC of Massachusetts, Inc.

PJC of Rhode Island, Inc.

PJC of Vermont, Inc.

PJC Realty MA, Inc.

RDS Detroit, Inc.

Ram-Utica, Inc.

READ’s Inc.

Rite Aid of Alabama, Inc.

Rite Aid of Connecticut, Inc.

Rite Aid of Florida, Inc.

Rite Aid of Georgia, Inc.

Rite Aid of Illinois, Inc.

Rite Aid of Indiana, Inc.

Rite Aid of Kentucky, Inc.

Rite Aid of Maine, Inc.

Rite Aid of Maryland, Inc.

Rite Aid of Massachusetts, Inc.

Rite Aid of Michigan, Inc.

Rite Aid of New Hampshire, Inc.

Rite Aid of New Jersey, Inc.

Rite Aid of North Carolina, Inc.

Rite Aid of Ohio, Inc.

Rite Aid of Pennsylvania, Inc.

Rite Aid of South Carolina, Inc.

Rite Aid of Tennessee, Inc.

Rite Aid of Vermont, Inc.

Rite Aid of Virginia, Inc.

Rite Aid of Washington, D.C., Inc.

Rite Aid of West Virginia, Inc.

Seven Mile and Evergreen-Detroit, LLC

The Lane Drug Company

Thrifty Corporation

Thrifty PayLess, Inc.

EX-4.13

Exhibit 4.13

SECOND SUPPLEMENTAL INDENTURE

dated as of July 9, 2008

between

RITE AID CORPORATION,

THE SUBSIDIARY GUARANTORS NAMED HERETO

and

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

successor to BNY Midwest Trust Company

as Trustee

to the

INDENTURE

dated as of February 21, 2007

between,

RITE AID CORPORATION,

THE SUBSIDIARY GUARANTORS NAMED THEREIN

and

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

as Trustee

7.5% SENIOR SECURED NOTES DUE 2017

THIS SECOND SUPPLEMENTAL INDENTURE (the “Second Supplemental Indenture”), dated as of July 9, 2008, among Rite Aid Corporation, a Delaware corporation (the “Company”), each of the subsidiary guarantors of the Company listed on Schedule I hereto (the “Subsidiary Guarantors”) and The Bank of New York Mellon Trust Company, N.A. (the “Trustee”), as successor Trustee under the Indenture referred to below.

W I T N E S S E T H:

WHEREAS, the Company has heretofore executed and delivered an indenture dated as of February 21, 2007, as amended by the First Supplemental Indenture thereto, dated as of June 4, 2007 (as amended, the “Indenture”), between the Company, each of the Subsidiary Guarantors and the Trustee, pursuant to which the Company has issued its 7.5% Senior Secured Notes due 2017 (the “Notes”) and the Subsidiary Guarantors have provided subsidiary guarantees (the Notes together with the subsidiary guarantees, the “Securities”);

WHEREAS, Section 9.01(a) of the Indenture provides that without the consent of any Holders, the Company, when authorized by a Board Resolution, the Subsidiary Guarantors and the Trustee may amend this Indenture or the Securities and, subject to any other consent required under the terms of the applicable Second Priority Collateral Documents, the Second Priority Collateral Documents, in each case without notice to cure any ambiguity, omission, defect or inconsistency;

WHEREAS, “Subsidiary Guarantor” is defined in the Indenture to mean a party to the Second Priority Subsidiary Guarantee Agreement as of the Issue Date and any other Person that Guarantees the Securities pursuant to the Indenture;

WHEREAS, PJC Essex Realty LLC, PJC Norwich Realty LLC and PJC Peterborough Realty II LLC are not a party to the Second Priority Subsidiary Guarantee Agreement and were included in error on Schedule I to the Indenture;

WHEREAS, the Company desires to amend the Indenture to correct this error by replacing Schedule I of the Indenture with the corrected Schedule I attached hereto;

WHEREAS, the Board of Directors of the Company and the Boards of Directors, Boards of Managers or Partners of the Subsidiary Guarantors have authorized and approved the execution and delivery of this Second Supplemental Indenture;

WHEREAS, the Company has heretofore delivered or is delivering contemporaneously herewith to the Trustee (i) an Officers’ Certificate and (ii) an Opinion of Counsel, in accordance with Sections 9.01, 10.04 and 10.05 of the Indenture; and

WHEREAS, all conditions necessary to authorize the execution and delivery of this Second Supplemental Indenture and to make this Second Supplemental Indenture valid and binding have been complied with or have been done or performed.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company, the Subsidiary Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

ARTICLE I

CAPITALIZED TERMS

Section 1.01General.  Capitalized terms used herein but not defined shall have the meanings assigned to them in the Indenture.

ARTICLE II

AMENDMENTS AND WAIVERS

Section 2.01Amendment to the Indenture. The Indenture is hereby amended by replacing Schedule I of the First Supplemental Indenture with the corrected Schedule I attached hereto.

Section 2.02Effect of Amendments. For the avoidance of doubt, from and after the effectiveness of this Second Supplemental Indenture, all references to the Subsidiary Guarantors in the Indenture shall mean the Subsidiary Guarantors as defined in the Indenture, but shall not include PJC Essex Realty LLC, PJC Norwich Realty LLC and PJC Peterborough Realty II LLC.

ARTICLE III

MISCELLANEOUS

Section 3.01Ratification of Indenture; Second Supplemental Indenture Part of Indenture.

(i)Except as expressly supplemented hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect.  This Second Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of the Securities heretofore or hereafter authenticated and delivered shall be bound hereby.  In the event of a conflict between the terms and conditions of the Indenture and the terms and conditions of this Second Supplemental Indenture, then the terms and conditions of this Second Supplemental Indenture shall prevail.

(ii)This Second Supplemental Indenture shall become effective upon its execution and delivery by the Company, the Subsidiary Guarantors and the Trustee.

(iii)The Notes include certain of the foregoing provisions from the Indenture.  Upon the operative date of this Second Supplemental Indenture, such provisions from the Notes shall be deemed deleted or amended as applicable.

Section 3.02Governing Law.

THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SECOND SUPPLEMENTAL INDENTURE WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

Section 3.03Trustee Makes No Representation.

The recitals contained herein are those of the Company and the Subsidiary Guarantors and not the Trustee, and the Trustee assumes no responsibility for the correctness of same. The Trustee makes no representations as to the validity or sufficiency of this Second Supplemental Indenture. All rights, protections, privileges, indemnities and benefits granted or afforded to the Trustee under the Indenture shall be deemed incorporated herein by this reference and shall be deemed applicable to all actions taken, suffered or omitted by the Trustee under this Second Supplemental Indenture.

Section 3.04Counterparts.

The parties may sign any number of copies of this Second Supplemental Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.

2

Section 3.05Effect of Headings.

The section headings herein are for convenience only and shall not effect the construction thereof.

3

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

RITE AID CORPORATION
By:	/s/ Robert B. Sari
	Name:	Robert B. Sari
	Title:	Executive Vice President,
		Secretary and General Counsel
EACH OF THE SUBSIDIARY GUARANTORS
LISTED ON SCHEDULE I HERETO
By:	/s/ Robert B. Sari
	Name:		Robert B. Sari
	Title:		Authorized Person
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Trustee
By:	/s/ D.G. Donovan
	Name:	D.G. Donovan
	Title:	Vice President

4

SCHEDULE I

1515 West State Street Boise, Idaho, LLC

Ann & Government Streets–Mobile, Alabama, LLC

Central Avenue & Main Street Petal-MS, LLC

Eighth and Water Streets–Urichsville, Ohio, LLC

Munson & Andrews, LLC

Name Rite, L.L.C.

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

Rite Aid Services, L.L.C.

Silver Springs Road–Baltimore, Maryland/One, LLC

Silver Springs Road–Baltimore, Maryland/Two, LLC

State & Fortification Streets–Jackson, Mississippi, LLC

State Street and Hill Road–Gerard, Ohio, LLC

Tyler and Sanders Roads, Birmingham–Alabama, LLC

1740 Associates, LLC

Northline & Dix–Toledo–Southgate, LLC

Seven Mile and Evergreen–Detroit, LLC

764 South Broadway–Geneva, Ohio, LLC

Gettysburg and Hoover–Dayton, Ohio, LLC

Mayfield & Chillicothe Roads–Chesterland, LLC

112 Burleigh Avenue Norfolk, LLC

Fairground, L.L.C.

3581 Carter Hill Road–Montgomery Corp.

Harco, Inc.

K&B Alabama Corporation

Rite Aid of Alabama, Inc.

Thrifty Corporation

Thrifty PayLess, Inc.

Rite Aid of Connecticut, Inc.

Eagle Managed Care Corp.

K&B, Incorporated

Rite Aid Corporation

Rite Aid Drug Palace, Inc.

Rite Aid Hdqtrs. Corp.

Rite Aid Hdqtrs. Funding, Inc.

Rite Aid of Delaware, Inc.

Rite Aid Transport, Inc.

Rite Fund, Inc.

Rite Investments Corp.

Rx Choice, Inc.

Rite Aid Realty Corp.

Patton Drive and Navy Boulevard Property Corporation

Rite Aid of Florida, Inc.

Rite Aid of Georgia, Inc.

Rite Aid of Illinois, Inc.

Rite Aid of Indiana, Inc.

Rite Aid of Kentucky, Inc.

K&B Louisiana Corporation

K&B Services, Incorporated

Rite Aid of Maine, Inc.

Rite Aid of Massachusetts, Inc.

GDF, Inc.

READ’s Inc.

Rite Aid of Maryland, Inc.

Apex Drug Stores, Inc.

5

PDS-1 Michigan, Inc.

Perry Distributors, Inc.

Perry Drug Stores, Inc.

Ram–Utica, Inc.

RDS Detroit, Inc.

Rite Aid of Michigan, Inc.

K&B Mississippi Corporation

Rite Aid of New Hampshire, Inc.

657–659 Broad St. Corp.

Lakehurst and Broadway Corporation

Rite Aid of New Jersey, Inc.

Rite Aid of New York, Inc.

Rite Aid Rome Distribution Center, Inc.

Rite Aid of North Carolina, Inc.

4042 Warrensville Center Road–Warrensville Ohio, Inc.

5600 Superior Properties, Inc.

Broadview and Wallings–Broadview Heights Ohio, Inc.

Rite Aid of Ohio, Inc.

The Lane Drug Company

Keystone Centers, Inc.

Rite Aid of Pennsylvania, Inc.

537 Elm Street Corporation

Rite Aid of South Carolina, Inc.

K&B Tennessee Corporation

Rite Aid of Tennessee, Inc.

K&B Texas Corporation

Rite Aid of Vermont, Inc.

England Street–Asheland Corporation

Rite Aid of Virginia, Inc.

5277 Associates, Inc.

Rite Aid of Washington, D.C., Inc.

Rite Aid of West Virginia, Inc.

JCG (PJC) USA, LLC

Jean Coutu Group Holdings (USA), LLC

PJC Dorchester Realty LLC

PJC East Lyme Realty LLC

PJC Haverhill Realty LLC

PJC Hermitage Realty LLC

PJC Hyde Park Realty LLC

PJC Manchester Realty LLC

PJC Mansfield Realty LLC

PJC New London Realty LLC

PJC Peterborough Realty LLC

PJC Providence Realty LLC

PJC Realty N.E. LLC

PJC Revere Realty LLC

Maxi Drug South, L.P.

Brooks Pharmacy, Inc.

Eckerd Corporation

EDC Licensing, Inc.

Genovese Drug Stores, Inc.

JCG Holdings (USA), Inc.

Maxi Drug North, Inc.

Maxi Drug, Inc.

P.J.C. Distribution, Inc.

P.J.C. Realty Co., Inc.

6

PJC Lease Holdings, Inc.

PJC Special Realty Holdings, Inc.

The Jean Coutu Group (PJC) USA, Inc.

Thrift Drug Services, Inc.

Thrift Drug, Inc.

Eckerd Fleet, Inc.

PJC of Massachusetts, Inc.

PJC Realty MA, Inc.

EDC Drug Stores, Inc.

MC Woonsocket, Inc.

PJC of Cranston, Inc.

PJC of East Providence, Inc.

PJC of Rhode Island, Inc.

P.J.C. of West Warwick, Inc.

Maxi Green Inc.

PJC of Vermont, Inc.

7

EX-4.16

Exhibit 4.16

SECOND SUPPLEMENTAL INDENTURE

dated as of July 9, 2008

between

RITE AID CORPORATION

and

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

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

to the

INDENTURE

dated as of February 21, 2007

between

RITE AID CORPORATION

and

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

as Trustee

8.625% Senior Notes due 2015

THIS SECOND SUPPLEMENTAL INDENTURE (the “Second Supplemental Indenture”), dated as of July 9, 2008, among Rite Aid Corporation, a Delaware corporation (the “Company”), each of the subsidiary guarantors of the Company listed on Schedule I hereto (the “Subsidiary Guarantors”) and The Bank of New York Mellon Trust Company, N.A. (the “Trustee”), as successor Trustee, under the Indenture referred to below.

W I T N E S S E T H:

WHEREAS, the Company has heretofore executed and delivered an indenture dated as of February 21, 2007, as amended by the First Supplemental Indenture thereto, dated as of June 4, 2007 (such supplemental indenture, the “First Supplemental Indenture” and the indenture as amended by the First Supplemental Indenture, the “Indenture”), between the Company, each of the Subsidiary Guarantors and the Trustee, pursuant to which the Company has issued its 8.625% Senior Notes due 2015 (the “Notes”) and the Subsidiary Guarantors have provided subsidiary guarantees (the Notes together with the subsidiary guarantees, the “Securities”);

WHEREAS, Section 9.01(1) of the Indenture provides that, subject to certain conditions, the Company, the Subsidiary Guarantors and the Trustee may amend the Indenture or the Securities without notice to or consent of any Holder to cure any ambiguity, omission, defect or inconsistency;

WHEREAS, the Company and each of the Subsidiary Guarantors are undertaking to execute and deliver this Second Supplemental Indenture to cure an omission and defect in Section 4.03(2)(s) of the Indenture and to cure a defect in Schedule I to the First Supplemental Indenture; and

WHEREAS, the Board of Directors of the Company and the Boards of Directors, Boards of Managers or Partners of the Subsidiary Guarantors have authorized and approved the execution and delivery of this Second Supplemental Indenture.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company, the Subsidiary Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

ARTICLE I

CAPITALIZED TERMS

Section 1.01           Amendments to the Indenture.  Capitalized terms used herein but not defined shall have the meanings assigned to them in the Indenture.

ARTICLE II

AMENDMENTS AND WAIVERS

Section 2.01           Amendments to Section 4.03(2)(s).  Section 4.03(2)(s) is amended in its entirety to read as follows:

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

Section 2.02           Amendment to the Indenture.  The Indenture is hereby amended by replacing Schedule 1 of the First Supplemental Indenture with the corrected Schedule 1 attached hereto.

Section 2.03           Effect of Amendments.  For the avoidance of doubt, from and after the effectiveness of this Second Supplemental Indenture, all references to the Subsidiary Guarantors in the Indenture shall mean the Subsidiary Guarantors as defined in the Indenture, but shall not include PJC Essex Realty LLC, PJC Norwich Realty LLC and PJC Peterborough Realty II LLC.

ARTICLE III

MISCELLANEOUS

Section 3.01           Ratification of Indenture; Second Supplemental Indenture Part of Indenture.  (i)  Except as expressly supplemented hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect.  This Second Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of the Securities heretofore or hereafter authenticated and delivered shall be bound hereby.  In the event of a conflict between the terms and conditions of the Indenture and the terms and conditions of this Second Supplemental Indenture, then the terms and conditions of this Second Supplemental Indenture shall prevail.

(ii)           This Second Supplemental Indenture shall become effective upon its execution and delivery by the Company, the Subsidiary Guarantors and the Trustee.

(iii)          The Notes include certain of the foregoing provisions from the Indenture.  Upon the operative date of this Second Supplemental Indenture, such provisions from the Notes shall be deemed deleted or amended as applicable.

Section 3.02           Governing Law.

THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SECOND SUPPLEMENTAL INDENTURE WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

Section 3.03           Trustee Makes No Representation.

The recitals contained herein are those of the Company and the Subsidiary Guarantors and not the Trustee, and the Trustee assumes no responsibility for the correctness of same.  The Trustee makes no representations as to the validity or sufficiency of this Second Supplemental Indenture.  All rights, protections, privileges, indemnities and benefits granted or afforded to the Trustee under the Indenture shall be deemed incorporated herein by this reference and shall be deemed applicable to all actions taken, suffered or omitted by the Trustee under this Second Supplemental Indenture.

Section 3.04           Counterparts.

The parties may sign any number of copies of this Second Supplemental Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.

Section 3.05           Effect of Headings.

The section headings herein are for convenience only and shall not effect the construction thereof.

3

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

RITE AID CORPORATION
By:	/s/ Robert B. Sari
	Name:	Robert B. Sari
	Title:	Executive Vice President,
		Secretary and General Counsel
EACH OF THE SUBSIDIARY GUARANTORS LISTED ON SCHEDULE I HERETO
By:	/s/ Robert B. Sari
	Name:		Robert B. Sari
	Title:		Authorized Person
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Trustee
By:	/s/ D.G. Donovan
	Name:	D.G. Donovan
	Title:	Vice President

4

SCHEDULE I

Subsidiary Guarantors

1515 West State Street Boise, Idaho, LLC

Ann & Government Streets- Mobile, Alabama, LLC

Brooks Pharmacy, Inc.

Central Avenue and Main Street-Petal, MS, LLC

Eagle Managed Care Corp.

Eckerd Corporation

EDC Licensing, Inc.

Eighth and Water Streets-Urichsville, Ohio, LLC

Genovese Drug Stores, Inc.

JCG (PJC) USA, LLC

JCG Holdings (USA), Inc.

K&B, Incorporated

Maxi Drug North, Inc.

Maxi Drug South, L.P.

Maxi Drug, Inc.

Munson & Andrews, LLC

Name Rite, L.L.C.

P.J.C. Distribution, Inc.

P.J.C. Realty Co., Inc.

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

PJC Dorchester Realty LLC

PJC East Lyme Realty LLC

PJC Haverhill Realty LLC

PJC Hermitage Realty LLC

PJC Hyde Park Realty LLC

PJC Lease Holdings, Inc.

PJC Manchester Realty LLC

PJC Mansfield Realty LLC

PJC New London Realty LLC

PJC Peterborough Realty LLC

PJC Providence Realty LLC

PJC Realty N.E. LLC

PJC Revere Realty LLC

PJC Special Realty Holdings, Inc.

Rite Aid Drug Palace, Inc.

Rite Aid Hdqtrs. Corp.

Rite Aid Hdqtrs. Funding, Inc.

Rite Aid Services, L.L.C.

Rite Aid of Delaware, Inc.

Rite Aid of New York, Inc.

Rite Aid Rome Distribution Center, Inc.

Rite Aid Realty Corp.

Rite Aid Transport, Inc.

Rite Fund, Inc.

Rite Investments Corp.

Rx Choice, Inc.

Silver Springs Road-Baltimore, Maryland/One, LLC

Silver Springs Road-Baltimore, Maryland/Two, LLC

State & Fortification Streets-Jackson, Mississippi, LLC

State Street and Hill Road-Gerard, Ohio, LLC

The Jean Coutu Group (PJC) USA, Inc.

5

Thrift Drug Services, Inc.

Thrift Drug, Inc.

Tyler and Sanders Roads, Birmingham-Alabama, LLC

112 Burleigh Avenue Norfolk, LLC

1740 Associates, LLC

3581 Carter Hill Road-Montgomery Corp.

4042 Warrensville Center Road-Warrensville Ohio, Inc.

5277 Associates, Inc.

537 Elm Street Corp.

5600 Superior Properties, Inc.

657-659 Broad St. Corp.

764 South Broadway-Geneva, Ohio, LLC

Apex Drug Stores, Inc.

Broadview and Wallings-Broadview Heights Ohio, Inc.

Eckerd Fleet, Inc.

EDC Drug Stores, Inc.

England Street-Asheland Corporation

Fairground, L.L.C.

GDF, Inc.

Gettysburg and Hoover-Dayton, Ohio, LLC

Harco, Inc.

K&B Alabama Corporation

K&B Louisiana Corporation

K&B Mississippi Corporation

K&B Services, Incorporated

K&B Tennessee Corporation

K&B Texas Corporation

Keystone Centers, Inc.

Lakehurst and Broadway Corporation

Maxi Green, Inc.

Mayfield & Chillicothe Roads-Chesterland, LLC

MC Woonsocket, Inc.

Northline & Dix-Toledo-Southgate, LLC

P.J.C. of West Warwick, Inc.

Patton Drive and Navy Boulevard Property Corporation

PDS-1 Michigan, Inc.

Perry Distributors, Inc.

Perry Drug Stores, Inc.

PJC of Cranston, Inc.

PJC of East Providence, Inc.

PJC of Massachusetts, Inc.

PJC of Rhode Island, Inc.

PJC of Vermont, Inc.

PJC Realty MA, Inc.

RDS Detroit, Inc.

Ram-Utica, Inc.

READ’s Inc.

Rite Aid of Alabama, Inc.

Rite Aid of Connecticut, Inc.

Rite Aid of Florida, Inc.

Rite Aid of Georgia, Inc.

Rite Aid of Illinois, Inc.

Rite Aid of Indiana, Inc.

Rite Aid of Kentucky, Inc.

Rite Aid of Maine, Inc.

Rite Aid of Maryland, Inc.

6

Rite Aid of Massachusetts, Inc.

Rite Aid of Michigan, Inc.

Rite Aid of New Hampshire, Inc.

Rite Aid of New Jersey, Inc.

Rite Aid of North Carolina, Inc.

Rite Aid of Ohio, Inc.

Rite Aid of Pennsylvania, Inc.

Rite Aid of South Carolina, Inc.

Rite Aid of Tennessee, Inc.

Rite Aid of Vermont, Inc.

Rite Aid of Virginia, Inc.

Rite Aid of Washington, D.C., Inc.

Rite Aid of West Virginia, Inc.

Seven Mile and Evergreen-Detroit, LLC

The Lane Drug Company

Thrifty Corporation

Thrifty PayLess, Inc.

7

EX-4.18

Exhibit 4.18

FIRST SUPPLEMENTAL INDENTURE

dated as of July 9, 2008

between

RITE AID CORPORATION,

THE SUBSIDIARY GUARANTORS NAMED HERETO

and

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

successor to BNY Midwest Trust Company

as Trustee

to the

INDENTURE

dated as of June 4, 2007

between,

RITE AID CORPORATION,

THE SUBSIDIARY GUARANTORS NAMED THEREIN

and

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

as Trustee

9.375% SENIOR NOTES DUE 2015

THIS FIRST SUPPLEMENTAL INDENTURE (the “First Supplemental Indenture”), dated as of July 9, 2008, among Rite Aid Corporation, a Delaware corporation (the “Company”), each of the subsidiary guarantors of the Company listed on Schedule I hereto (the “Subsidiary Guarantors”) and The Bank of New York Mellon Trust Company, N.A. (the “Trustee”), as successor Trustee under the Indenture referred to below.

W I T N E S S E T H:

WHEREAS, the Company has heretofore executed and delivered an amended and restated indenture dated as of June 4, 2007 (as amended, the “Indenture”), between the Company, each of the Subsidiary Guarantors and the Trustee, pursuant to which the Company has issued its 9.375% Senior Notes due 2015 (the “Notes”) and the Subsidiary Guarantors have provided subsidiary guarantees (the Notes together with the subsidiary guarantees, the “Securities”);

WHEREAS, Section 9.01(a) of the Indenture provides that without the consent of any Holders, the Company, when authorized by a Board Resolution, the Subsidiary Guarantors and the Trustee may amend this Indenture or the Securities and, subject to any other consent required under the terms of the applicable Second Priority Collateral Documents, the Second Priority Collateral Documents, in each case without notice to cure any ambiguity, omission, defect or inconsistency;

WHEREAS, “Subsidiary Guarantor” is defined in the Indenture to mean a party to the Second Priority Subsidiary Guarantee Agreement as of the Issue Date and any other Person that Guarantees the Securities pursuant to the Indenture;

WHEREAS, PJC Essex Realty LLC, PJC Norwich Realty LLC and PJC Peterborough Realty II LLC are not a party to the Second Priority Subsidiary Guarantee Agreement and were included in error on Schedule A to the Indenture;

WHEREAS, the Company desires to amend the Indenture to correct this error by replacing Schedule A of the Indenture with the corrected Schedule I attached hereto;

WHEREAS, the Board of Directors of the Company and the Boards of Directors, Boards of Managers or Partners of the Subsidiary Guarantors have authorized and approved the execution and delivery of this First Supplemental Indenture;

WHEREAS, the Company has heretofore delivered or is delivering contemporaneously herewith to the Trustee (i) an Officers’ Certificate and (ii) an Opinion of Counsel, in accordance with Sections 9.01, 10.04 and 10.05 of the Indenture; and

WHEREAS, all conditions necessary to authorize the execution and delivery of this First Supplemental Indenture and to make this First Supplemental Indenture valid and binding have been complied with or have been done or performed.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company, the Subsidiary Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

ARTICLE I

CAPITALIZED TERMS

Section 1.01General.  Capitalized terms used herein but not defined shall have the meanings assigned to them in the Indenture.

ARTICLE II

AMENDMENTS AND WAIVERS

Section 2.01Amendment to the Indenture. The Indenture is hereby amended by replacing Schedule A of the Indenture with the corrected Schedule I attached hereto.

Section 2.02Effect of Amendments. For the avoidance of doubt, from and after the effectiveness of this First Supplemental Indenture, all references to the Subsidiary Guarantors in the Indenture shall mean the Subsidiary Guarantors as defined in the Indenture, but shall not include PJC Essex Realty LLC, PJC Norwich Realty LLC and PJC Peterborough Realty II LLC.

ARTICLE III

MISCELLANEOUS

Section 3.01Ratification of Indenture; First Supplemental Indenture Part of Indenture.

(i)Except as expressly supplemented hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect.  This First Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of the Securities heretofore or hereafter authenticated and delivered shall be bound hereby.  In the event of a conflict between the terms and conditions of the Indenture and the terms and conditions of this First Supplemental Indenture, then the terms and conditions of this First Supplemental Indenture shall prevail.

(ii)This First Supplemental Indenture shall become effective upon its execution and delivery by the Company, the Subsidiary Guarantors and the Trustee.

(iii)The Notes include certain of the foregoing provisions from the Indenture.  Upon the operative date of this First Supplemental Indenture, such provisions from the Notes shall be deemed deleted or amended as applicable.

Section 3.02Governing Law.

THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS FIRST SUPPLEMENTAL INDENTURE WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

Section 3.03Trustee Makes No Representation.

The recitals contained herein are those of the Company and the Subsidiary Guarantors and not the Trustee, and the Trustee assumes no responsibility for the correctness of same. The Trustee makes no representations as to the validity or sufficiency of this First Supplemental Indenture. All rights, protections, privileges, indemnities and benefits granted or afforded to the Trustee under the Indenture shall be deemed incorporated herein by this reference and shall be deemed applicable to all actions taken, suffered or omitted by the Trustee under this First Supplemental Indenture.

Section 3.04Counterparts.

The parties may sign any number of copies of this First Supplemental Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.

2

Section 3.05Effect of Headings.

The section headings herein are for convenience only and shall not effect the construction thereof.

3

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

RITE AID CORPORATION
By:	/s/ Robert B. Sari
	Name:	Robert B. Sari
	Title:	Executive Vice President, Secretary and General Counsel
EACH OF THE SUBSIDIARY GUARANTORS LISTED ON SCHEDULE I HERETO
By:	/s/ Robert B. Sari
	Name:	Robert B. Sari
	Title:	Authorized Person
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Trustee
By:	/s/ D.G. Donovan
	Name:	D.G. Donovan
	Title:	Vice President

4

SCHEDULE I

1515 West State Street Boise, Idaho, LLC

Ann & Government Streets–Mobile, Alabama, LLC

Central Avenue & Main Street Petal-MS, LLC

Eighth and Water Streets–Urichsville, Ohio, LLC

Munson & Andrews, LLC

Name Rite, L.L.C.

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

Rite Aid Services, L.L.C.

Silver Springs Road–Baltimore, Maryland/One, LLC

Silver Springs Road–Baltimore, Maryland/Two, LLC

State & Fortification Streets–Jackson, Mississippi, LLC

State Street and Hill Road–Gerard, Ohio, LLC

Tyler and Sanders Roads, Birmingham–Alabama, LLC

1740 Associates, LLC

Northline & Dix–Toledo–Southgate, LLC

Seven Mile and Evergreen–Detroit, LLC

764 South Broadway–Geneva, Ohio, LLC

Gettysburg and Hoover–Dayton, Ohio, LLC

Mayfield & Chillicothe Roads–Chesterland, LLC

112 Burleigh Avenue Norfolk, LLC

Fairground, L.L.C.

3581 Carter Hill Road–Montgomery Corp.

Harco, Inc.

K&B Alabama Corporation

Rite Aid of Alabama, Inc.

Thrifty Corporation

Thrifty PayLess, Inc.

Rite Aid of Connecticut, Inc.

Eagle Managed Care Corp.

K&B, Incorporated

Rite Aid Corporation

Rite Aid Drug Palace, Inc.

Rite Aid Hdqtrs. Corp.

Rite Aid Hdqtrs. Funding, Inc.

Rite Aid of Delaware, Inc.

Rite Aid Transport, Inc.

Rite Fund, Inc.

Rite Investments Corp.

Rx Choice, Inc.

Rite Aid Realty Corp.

Patton Drive and Navy Boulevard Property Corporation

Rite Aid of Florida, Inc.

Rite Aid of Georgia, Inc.

Rite Aid of Illinois, Inc.

Rite Aid of Indiana, Inc.

Rite Aid of Kentucky, Inc.

K&B Louisiana Corporation

K&B Services, Incorporated

Rite Aid of Maine, Inc.

Rite Aid of Massachusetts, Inc.

GDF, Inc.

READ’s Inc.

Rite Aid of Maryland, Inc.

Apex Drug Stores, Inc.

5

PDS-1 Michigan, Inc.

Perry Distributors, Inc.

Perry Drug Stores, Inc.

Ram–Utica, Inc.

RDS Detroit, Inc.

Rite Aid of Michigan, Inc.

K&B Mississippi Corporation

Rite Aid of New Hampshire, Inc.

657–659 Broad St. Corp.

Lakehurst and Broadway Corporation

Rite Aid of New Jersey, Inc.

Rite Aid of New York, Inc.

Rite Aid Rome Distribution Center, Inc.

Rite Aid of North Carolina, Inc.

4042 Warrensville Center Road–Warrensville Ohio, Inc.

5600 Superior Properties, Inc.

Broadview and Wallings–Broadview Heights Ohio, Inc.

Rite Aid of Ohio, Inc.

The Lane Drug Company

Keystone Centers, Inc.

Rite Aid of Pennsylvania, Inc.

537 Elm Street Corporation

Rite Aid of South Carolina, Inc.

K&B Tennessee Corporation

Rite Aid of Tennessee, Inc.

K&B Texas Corporation

Rite Aid of Vermont, Inc.

England Street–Asheland Corporation

Rite Aid of Virginia, Inc.

5277 Associates, Inc.

Rite Aid of Washington, D.C., Inc.

Rite Aid of West Virginia, Inc.

JCG (PJC) USA, LLC

Jean Coutu Group Holdings (USA), LLC

PJC Dorchester Realty LLC

PJC East Lyme Realty LLC

PJC Haverhill Realty LLC

PJC Hermitage Realty LLC

PJC Hyde Park Realty LLC

PJC Manchester Realty LLC

PJC Mansfield Realty LLC

PJC New London Realty LLC

PJC Peterborough Realty LLC

PJC Providence Realty LLC

PJC Realty N.E. LLC

PJC Revere Realty LLC

Maxi Drug South, L.P.

Brooks Pharmacy, Inc.

Eckerd Corporation

EDC Licensing, Inc.

Genovese Drug Stores, Inc.

JCG Holdings (USA), Inc.

Maxi Drug North, Inc.

Maxi Drug, Inc.

P.J.C. Distribution, Inc.

P.J.C. Realty Co., Inc.

6

PJC Lease Holdings, Inc.

PJC Special Realty Holdings, Inc.

The Jean Coutu Group (PJC) USA, Inc.

Thrift Drug Services, Inc.

Thrift Drug, Inc.

Eckerd Fleet, Inc.

PJC of Massachusetts, Inc.

PJC Realty MA, Inc.

EDC Drug Stores, Inc.

MC Woonsocket, Inc.

PJC of Cranston, Inc.

PJC of East Providence, Inc.

PJC of Rhode Island, Inc.

P.J.C. of West Warwick, Inc.

Maxi Green Inc.

PJC of Vermont, Inc.

7

EX-4.20

Exhibit 4.20

FIRST SUPPLEMENTAL INDENTURE

dated as of July 9, 2008

between

RITE AID CORPORATION,

THE SUBSIDIARY GUARANTORS NAMED HERETO

and

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

successor to BNY Midwest Trust Company

as Trustee

to the

INDENTURE

dated as of June 4, 2007

between,

RITE AID CORPORATION,

THE SUBSIDIARY GUARANTORS NAMED THEREIN

and

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

as Trustee

9.5% SENIOR NOTES DUE 2017

THIS FIRST SUPPLEMENTAL INDENTURE (the “First Supplemental Indenture”), dated as of July 9, 2008, among Rite Aid Corporation, a Delaware corporation (the “Company”), each of the subsidiary guarantors of the Company listed on Schedule I hereto (the “Subsidiary Guarantors”) and The Bank of New York Mellon Trust Company, N.A. (the “Trustee”), as successor Trustee under the Indenture referred to below.

W I T N E S S E T H:

WHEREAS, the Company has heretofore executed and delivered an amended and restated indenture dated as of June 4, 2007 (as amended, the “Indenture”), between the Company, each of the Subsidiary Guarantors and the Trustee, pursuant to which the Company has issued its 9.5% Senior Notes due 2017 (the “Notes”) and the Subsidiary Guarantors have provided subsidiary guarantees (the Notes together with the subsidiary guarantees, the “Securities”);

WHEREAS, Section 9.01(a) of the Indenture provides that without the consent of any Holders, the Company, when authorized by a Board Resolution, the Subsidiary Guarantors and the Trustee may amend this Indenture or the Securities and, subject to any other consent required under the terms of the applicable Second Priority Collateral Documents, the Second Priority Collateral Documents, in each case without notice to cure any ambiguity, omission, defect or inconsistency;

WHEREAS, “Subsidiary Guarantor” is defined in the Indenture to mean a party to the Second Priority Subsidiary Guarantee Agreement as of the Issue Date and any other Person that Guarantees the Securities pursuant to the Indenture;

WHEREAS, PJC Essex Realty LLC, PJC Norwich Realty LLC and PJC Peterborough Realty II LLC are not a party to the Second Priority Subsidiary Guarantee Agreement and were included in error on Schedule A to the Indenture;

WHEREAS, the Company desires to amend the Indenture to correct this error by replacing Schedule A of the Indenture with the corrected Schedule I attached hereto;

WHEREAS, the Board of Directors of the Company and the Boards of Directors, Boards of Managers or Partners of the Subsidiary Guarantors have authorized and approved the execution and delivery of this First Supplemental Indenture;

WHEREAS, the Company has heretofore delivered or is delivering contemporaneously herewith to the Trustee (i) an Officers’ Certificate and (ii) an Opinion of Counsel, in accordance with Sections 9.01, 10.04 and 10.05 of the Indenture; and

WHEREAS, all conditions necessary to authorize the execution and delivery of this First Supplemental Indenture and to make this First Supplemental Indenture valid and binding have been complied with or have been done or performed.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company, the Subsidiary Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

ARTICLE I

CAPITALIZED TERMS

Section 1.01          General.  Capitalized terms used herein but not defined shall have the meanings assigned to them in the Indenture.

ARTICLE II

AMENDMENTS AND WAIVERS

Section 2.01           Amendment to the Indenture. The Indenture is hereby amended by replacing Schedule A of the Indenture with the corrected Schedule I attached hereto.

Section 2.02           Effect of Amendments. For the avoidance of doubt, from and after the effectiveness of this First Supplemental Indenture, all references to the Subsidiary Guarantors in the Indenture shall mean the Subsidiary Guarantors as defined in the Indenture, but shall not include PJC Essex Realty LLC, PJC Norwich Realty LLC and PJC Peterborough Realty II LLC.

ARTICLE III

MISCELLANEOUS

Section 3.01           Ratification of Indenture; First Supplemental Indenture Part of Indenture.

(i)Except as expressly supplemented hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect.  This First Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of the Securities heretofore or hereafter authenticated and delivered shall be bound hereby.  In the event of a conflict between the terms and conditions of the Indenture and the terms and conditions of this First Supplemental Indenture, then the terms and conditions of this First Supplemental Indenture shall prevail.

(ii)This First Supplemental Indenture shall become effective upon its execution and delivery by the Company, the Subsidiary Guarantors and the Trustee.

(iii)The Notes include certain of the foregoing provisions from the Indenture.  Upon the operative date of this First Supplemental Indenture, such provisions from the Notes shall be deemed deleted or amended as applicable.

Section 3.02           Governing Law.

THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS FIRST SUPPLEMENTAL INDENTURE WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

Section 3.03           Trustee Makes No Representation.

The recitals contained herein are those of the Company and the Subsidiary Guarantors and not the Trustee, and the Trustee assumes no responsibility for the correctness of same. The Trustee makes no representations as to the validity or sufficiency of this First Supplemental Indenture. All rights, protections, privileges, indemnities and benefits granted or afforded to the Trustee under the Indenture shall be deemed incorporated herein by this reference and shall be deemed applicable to all actions taken, suffered or omitted by the Trustee under this First Supplemental Indenture.

Section 3.04           Counterparts.

The parties may sign any number of copies of this First Supplemental Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.

2

Section 3.05           Effect of Headings.

The section headings herein are for convenience only and shall not effect the construction thereof.

3

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

RITE AID CORPORATION
By:	/s/ Robert B. Sari
	Name:	Robert B. Sari
	Title:	Executive Vice President, Secretary and General Counsel
EACH OF THE SUBSIDIARY GUARANTORS
LISTED ON SCHEDULE I HERETO
By:	/s/ Robert B. Sari
	Name:	Robert B. Sari
	Title:	Authorized Person
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Trustee
By:	/s/ D.G. Donovan
	Name:	D.G. Donovan
	Title:	Vice President

4

SCHEDULE I

1515 West State Street Boise, Idaho, LLC

Ann & Government Streets—Mobile, Alabama, LLC

Central Avenue & Main Street Petal-MS, LLC

Eighth and Water Streets—Urichsville, Ohio, LLC

Munson & Andrews, LLC

Name Rite, L.L.C.

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

Rite Aid Services, L.L.C.

Silver Springs Road—Baltimore, Maryland/One, LLC

Silver Springs Road—Baltimore, Maryland/Two, LLC

State & Fortification Streets—Jackson, Mississippi, LLC

State Street and Hill Road—Gerard, Ohio, LLC

Tyler and Sanders Roads, Birmingham—Alabama, LLC

1740 Associates, LLC

Northline & Dix—Toledo—Southgate, LLC

Seven Mile and Evergreen—Detroit, LLC

764 South Broadway—Geneva, Ohio, LLC

Gettysburg and Hoover—Dayton, Ohio, LLC

Mayfield & Chillicothe Roads—Chesterland, LLC

112 Burleigh Avenue Norfolk, LLC

Fairground, L.L.C.

3581 Carter Hill Road—Montgomery Corp.

Harco, Inc.

K&B Alabama Corporation

Rite Aid of Alabama, Inc.

Thrifty Corporation

Thrifty PayLess, Inc.

Rite Aid of Connecticut, Inc.

Eagle Managed Care Corp.

K&B, Incorporated

Rite Aid Corporation

Rite Aid Drug Palace, Inc.

Rite Aid Hdqtrs. Corp.

Rite Aid Hdqtrs. Funding, Inc.

Rite Aid of Delaware, Inc.

Rite Aid Transport, Inc.

Rite Fund, Inc.

Rite Investments Corp.

Rx Choice, Inc.

Rite Aid Realty Corp.

Patton Drive and Navy Boulevard Property Corporation

Rite Aid of Florida, Inc.

Rite Aid of Georgia, Inc.

Rite Aid of Illinois, Inc.

Rite Aid of Indiana, Inc.

Rite Aid of Kentucky, Inc.

K&B Louisiana Corporation

K&B Services, Incorporated

Rite Aid of Maine, Inc.

Rite Aid of Massachusetts, Inc.

GDF, Inc.

READ’s Inc.

Rite Aid of Maryland, Inc.

Apex Drug Stores, Inc.

5

PDS-1 Michigan, Inc.

Perry Distributors, Inc.

Perry Drug Stores, Inc.

Ram–Utica, Inc.

RDS Detroit, Inc.

Rite Aid of Michigan, Inc.

K&B Mississippi Corporation

Rite Aid of New Hampshire, Inc.

657–659 Broad St. Corp.

Lakehurst and Broadway Corporation

Rite Aid of New Jersey, Inc.

Rite Aid of New York, Inc.

Rite Aid Rome Distribution Center, Inc.

Rite Aid of North Carolina, Inc.

4042 Warrensville Center Road—Warrensville Ohio, Inc.

5600 Superior Properties, Inc.

Broadview and Wallings—Broadview Heights Ohio, Inc.

Rite Aid of Ohio, Inc.

The Lane Drug Company

Keystone Centers, Inc.

Rite Aid of Pennsylvania, Inc.

537 Elm Street Corporation

Rite Aid of South Carolina, Inc.

K&B Tennessee Corporation

Rite Aid of Tennessee, Inc.

K&B Texas Corporation

Rite Aid of Vermont, Inc.

England Street—Asheland Corporation

Rite Aid of Virginia, Inc.

5277 Associates, Inc.

Rite Aid of Washington, D.C., Inc.

Rite Aid of West Virginia, Inc.

JCG (PJC) USA, LLC

Jean Coutu Group Holdings (USA), LLC

PJC Dorchester Realty LLC

PJC East Lyme Realty LLC

PJC Haverhill Realty LLC

PJC Hermitage Realty LLC

PJC Hyde Park Realty LLC

PJC Manchester Realty LLC

PJC Mansfield Realty LLC

PJC New London Realty LLC

PJC Peterborough Realty LLC

PJC Providence Realty LLC

PJC Realty N.E. LLC

PJC Revere Realty LLC

Maxi Drug South, L.P.

Brooks Pharmacy, Inc.

Eckerd Corporation

EDC Licensing, Inc.

Genovese Drug Stores, Inc.

JCG Holdings (USA), Inc.

Maxi Drug North, Inc.

Maxi Drug, Inc.

P.J.C. Distribution, Inc.

P.J.C. Realty Co., Inc.

6

PJC Lease Holdings, Inc.

PJC Special Realty Holdings, Inc.

The Jean Coutu Group (PJC) USA, Inc.

Thrift Drug Services, Inc.

Thrift Drug, Inc.

Eckerd Fleet, Inc.

PJC of Massachusetts, Inc.

PJC Realty MA, Inc.

EDC Drug Stores, Inc.

MC Woonsocket, Inc.

PJC of Cranston, Inc.

PJC of East Providence, Inc.

PJC of Rhode Island, Inc.

P.J.C. of West Warwick, Inc.

Maxi Green Inc.

PJC of Vermont, Inc.

7

EX-4.23

Exhibit 4.23

EXECUTION COPY

RITE AID CORPORATION

10.375% Senior Secured Notes due 2016

INDENTURE

Dated as of July 9, 2008

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

as Trustee

TABLE OF CONTENTS

	ARTICLE I Definitions and Incorporation by Reference
SECTION 1.01. Definitions		1
SECTION 1.02. Other Definitions		36
SECTION 1.03. Incorporation by Reference of Trust Indenture Act		37
SECTION 1.04. Rules of Construction		37
	ARTICLE II The Securities
SECTION 2.01. Amount of Securities; Issuable in Series		38
SECTION 2.02. Form and Dating		39
SECTION 2.03. Execution and Authentication		39
SECTION 2.04. Registrar and Paying Agent		39
SECTION 2.05. Paying Agent To Hold Money in Trust		40
SECTION 2.06. Holder Lists		40
SECTION 2.07. Replacement Securities		40
SECTION 2.08. Outstanding Securities		41
SECTION 2.09. Temporary Securities		41
SECTION 2.10. Cancellation		41
SECTION 2.11. Defaulted Interest		41
SECTION 2.12. CUSIP Numbers		41
	ARTICLE III Redemption
SECTION 3.01. Notices to Trustee		42
SECTION 3.02. Selection of Securities To Be Redeemed		42
SECTION 3.03. Notice of Redemption		42
SECTION 3.04. Effect of Notice of Redemption		43
SECTION 3.05. Deposit of Redemption Price		43
SECTION 3.06. Securities Redeemed in Part		43
	ARTICLE IV Covenants
SECTION 4.01. Payment of Securities		44
SECTION 4.02. SEC Reports		44
SECTION 4.03. Limitation on Debt		44
SECTION 4.04. Limitation on Restricted Payments		48

i

SECTION 4.05. Limitation on Liens		51
SECTION 4.06. Limitation on Asset Sales and Specified Collateral Dispositions		51
SECTION 4.07. Limitation on Restrictions on Distributions from Restricted Subsidiaries		55
SECTION 4.08. Limitation on Transactions with Affiliates		56
SECTION 4.09. Guarantees by Subsidiaries		58
SECTION 4.10. Limitation on Sale and Leaseback Transactions		59
SECTION 4.11. Designation of Restricted and Unrestricted Subsidiaries		60
SECTION 4.12. Additional Security Documents		61
SECTION 4.13. Change of Control		61
SECTION 4.14. Further Instruments and Acts		62
SECTION 4.15. Covenant Suspension		63
	ARTICLE V Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets		64
	ARTICLE VI Defaults and Remedies
SECTION 6.01. Events of Default		66
SECTION 6.02. Acceleration		68
SECTION 6.03. Other Remedies		69
SECTION 6.04. Waiver of Past Defaults		69
SECTION 6.05. Control by Majority		69
SECTION 6.06. Limitation on Suits		69
SECTION 6.07. Rights of Holders to Receive Payment		70
SECTION 6.08. Collection Suit by Trustee		70
SECTION 6.09. Trustee May File Proofs of Claim		70
SECTION 6.10. Priorities		70
SECTION 6.11. Undertaking for Costs		71
SECTION 6.12. Waiver of Stay or Extension Laws		71
SECTION 6.13. Enforcement of Remedies		71
	ARTICLE VII Trustee
SECTION 7.01. Duties of Trustee		71
SECTION 7.02. Rights of Trustee		73
SECTION 7.03. Individual Rights of Trustee		74
SECTION 7.04. Trustee’s Disclaimer		74
SECTION 7.05. Notice of Defaults		74
SECTION 7.06. Reports by Trustee to Holders		74

ii

SECTION 7.07. Compensation and Indemnity		74
SECTION 7.08. Replacement of Trustee		75
SECTION 7.09. Successor Trustee by Merger		76
SECTION 7.10. Eligibility; Disqualification		76
SECTION 7.11. Preferential Collection of Claims Against Company		77
	ARTICLE VIII Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance		77
SECTION 8.02. Conditions to Defeasance		78
SECTION 8.03. Application of Trust Money		79
SECTION 8.04. Repayment to Company		79
SECTION 8.05. Indemnity for Government Obligations		79
SECTION 8.06. Reinstatement		79
	ARTICLE IX Amendments
SECTION 9.01. Without Consent of Holders		80
SECTION 9.02. With Consent of Holders		81
SECTION 9.03. Compliance with Trust Indenture Act		86
SECTION 9.04. Revocation and Effect of Consents and Waivers		86
SECTION 9.05. Notation on or Exchange of Securities		86
SECTION 9.06. Trustee To Sign Amendments		86
SECTION 9.07. Payment for Consent		86
	ARTICLE X Miscellaneous
SECTION 10.01. Trust Indenture Act Controls		87
SECTION 10.02. Notices		87
SECTION 10.03. Communication by Holders with Other Holders		87
SECTION 10.04. Certificate and Opinion as to Conditions Precedent		88
SECTION 10.05. Statements Required in Certificate or Opinion		88
SECTION 10.06. When Securities Disregarded		88
SECTION 10.07. Rules by Trustee, Paying Agent and Registrar		89
SECTION 10.08. Legal Holidays		89
SECTION 10.09. Governing Law		89
SECTION 10.10. No Recourse Against Others		89
SECTION 10.11. Successors		89
SECTION 10.12. Multiple Originals		89
SECTION 10.13. Table of Contents; Headings		89
SECTION 10.14. Waiver of Jury Trial		89

iii

SECTION 10.15. Force Majeure 90

Schedule A – Subsidiary Guarantors

Exhibit A – Form of Security

iv

CROSS-REFERENCE TABLE

TIA Section		Indenture Section
310	(a)(1)		7.10
	(a)(2)		7.10
	(a)(3)		N.A.
	(a)(4)		N.A.
	(b)		7.08;
			7.10
	(c)		N.A.
311	(a)		7.11
	(b)		7.11
	(c)		N.A.
312	(a)		2.06
	(b)		10.03
	(c)		10.03
313	(a)		7.06
	(b)(1)		7.06;
			10.02
	(b)(2)		7.06
	(c)		7.06;
			10.02
	(d)		7.06
314	(a)		4.02;
			4.09;
			7.06;
			10.02
	(b)		4.09;
			7.02;
			10.02
	(c)(1)		7.02
	(c)(2)		7.02
	(c)(3)		N.A.
	(d)		1.03;
			7.02
	(e)		10.05
	(f)		4.14
315	(a)		7.01
	(b)		7.05;
			10.02
	(c)		7.01
	(d)		7.01
	(e)		6.11
316	(a)
	(last sentence)		10.06

v

	(a)(1)(A)	6.05
	(a)(1)(B)	6.04
	(a)(2)	N.A.
	(b)	6.07
317	(a)(1)	6.08
	(a)(2)	6.09
	(b)	2.05
318	(a)	10.01

N.A. Means Not Applicable.

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

vi

INDENTURE dated as of July 9, 2008, among RITE AID CORPORATION, a Delaware corporation (the “Company”), each of the SUBSIDIARY GUARANTORS named in Schedule A hereto and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association, as Trustee (the “Trustee”).

Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Company’s 10.375% Senior Secured Notes due 2016, to be issued from time to time, in one or more series as provided in this Indenture (the “Securities”):

ARTICLE I

Definitions and Incorporation by Reference

SECTION 1.01.  Definitions.

“Additional Assets” means:

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

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

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

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

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

“Additional Senior Debt Obligations” means, with respect to any series, issue or class of Additional Senior Debt, (a) all principal of and interest (including,

without limitation, any interest which accrues after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency or reorganization of the Company, whether or not allowed or allowable as a claim in any such proceeding) payable with respect to such Additional Senior Debt, (b) all other amounts payable by the Company to the related Additional Senior Debt Parties under the related Additional Senior Debt Documents and (c) any renewals, extensions or Refinancings of the foregoing.

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

“Affiliate” of any specified Person means:

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

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

(1) such specified Person;

(2) any Subsidiary of such specified Person; or

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

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

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

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

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

2

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

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

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

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

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

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

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

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

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

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

3

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

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

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

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

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

(b) the sum of all such payments.

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

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

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

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

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

“Capital Stock” means, with respect to any Person, any shares or other equivalents (however designated) of any class of corporate stock or partnership interests

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or any other participations, rights, warrants, options or other interests in the nature of an equity interest in such Person, including Preferred Stock, but excluding any debt security convertible or exchangeable into such equity interest.

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

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

(a) if any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act or any successor provisions to either of the foregoing), including any group acting for the purpose of acquiring, holding, voting or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act (other than one or more Permitted Holders), becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 40% or more of the total voting power of the Voting Stock of the Company (for purposes of this clause (a), such person or group shall be deemed to beneficially own any Voting Stock of a corporation held by any other corporation (the “parent corporation”) so long as such person or group beneficially owns, directly or indirectly, in the aggregate a majority of the total voting power of the Voting Stock of such parent corporation); or

(b) the sale, transfer, assignment, lease, conveyance or other disposition, directly or indirectly, of all or substantially all the assets of the Company and the Restricted Subsidiaries, considered as a whole (other than a disposition of such assets as an entirety or virtually as an entirety to a Wholly Owned Restricted Subsidiary) shall have occurred, or the Company merges, consolidates or amalgamates with or into any other Person or any other Person merges, consolidates or amalgamates with or into the Company, in any such event pursuant to a transaction in which the outstanding Voting Stock of the Company is reclassified into or exchanged for cash, securities or other Property, other than any such transaction where:

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

(2) the holders of the Voting Stock of the Company immediately prior to such transaction own, directly or indirectly, not less than a majority of the Voting Stock of the Company or the surviving corporation

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immediately after such transaction and in substantially the same proportion as before the transaction; or

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

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

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

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

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

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

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

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

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

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

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successor Person and, for purposes of any provision contained herein and expressly required by the TIA, each other obligor on the indenture securities.

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

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

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

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

provided, however, that:

(1) if

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

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

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

(2) if

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

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

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

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

“Consolidated Interest Expense” means, for any period, the total interest expense of the Company and its consolidated Restricted Subsidiaries (excluding the non-cash interest expense related to (x) litigation reserves, (y) closed store liability reserves and (z) self-insurance reserves), plus, to the extent not included in such total interest expense, and to the extent Incurred by the Company or its Restricted Subsidiaries, and without duplication:

(a) interest expense attributable to Capital Lease Obligations;

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

(c) capitalized interest;

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

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

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

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(g) Disqualified Stock Dividends;

(h) Preferred Stock Dividends;

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

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

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

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

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

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

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

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

(b) [Intentionally omitted];

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

(1) subject to the exclusion contained in clause (d) below, the Company’s equity in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the

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aggregate amount of cash distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to another Restricted Subsidiary, to the limitation contained in this clause); and

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

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

(e) any extraordinary gain or loss;

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

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

(h) store closing costs;

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

(j) loss on debt modifications.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(3) depreciation;

(4) amortization of intangibles;

(5) non-cash impairment charges;

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

(7) the amount of any restructuring charges, integration costs or other business optimization expenses or reserves deducted (and not added back) in such period in computing Consolidated Net Income, including any one-time costs (including costs related to the closure and/or

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

(8) the amount of net cost savings projected by the Company in good faith to be realized as a result of specified actions taken or initiated during or prior to such period (calculated on a pro forma basis as though such cost savings had been realized on the first day of such period), net of the amount of actual benefits realized during such period from such actions; provided that (x) such cost savings are reasonably identifiable and factually supportable, (y) such actions are taken no later than 36 months after June 4, 2007 and (z) the aggregate amount of cost savings added pursuant to this clause (8) shall not exceed $150.0 million for any four consecutive quarter period (which adjustments may be incremental to pro forma cost savings adjustments made pursuant to the definition of “Consolidated Interest Coverage Ratio”); and

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

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

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

“8.125% Notes” means the Company’s 8.125% Senior Secured Notes due 2010 issued under the Indenture dated as of April 22, 2003, as supplemented, among the Company, the Subsidiary Guarantors and The Bank of New York Trust Company, N.A., as successor trustee, and outstanding on the Issue Date.

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

“Equity Offering” means (a) an underwritten offering of common stock of the Company by the Company pursuant to an effective registration statement under the Securities Act or (b) so long as the Company’s common stock is, at the time, listed or

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quoted on a national securities exchange (as such term is defined in the Exchange Act), an offering of common stock by the Company in a transaction exempt from or not subject to the registration requirements of the Securities Act.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“Intercreditor Agreement” means the Amended and Restated Collateral Trust and Intercreditor Agreement, dated as of June 27, 2001, as amended and restated as of May 28, 2003, as amended as of September 22, 2004, as amended as of September 30, 2005, as amended as of November 8, 2006, as amended as of June 4, 2007, among the Company, the Subsidiary Guarantors, the Second Priority Collateral Trustee, the Senior Collateral Agent and each Second Priority Representative, as the same may be amended, restated, supplemented or otherwise modified from time to time.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(c) cash and Temporary Cash Investments;

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

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

(f) loans and advances to employees made in the ordinary course of business in accordance with applicable law consistent with past practices of the

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Company or such Restricted Subsidiary, as the case may be; provided that such loans and advances do not exceed $25.0 million at any one time outstanding;

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

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

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

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

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

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

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

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

“Permitted Liens” means:

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

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

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securing only letter of credit obligations under Credit Facilities following a default under such Credit Facilities; and

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

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

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

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

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

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

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transaction or series of transactions pursuant to which such Property was acquired by the Company or any Restricted Subsidiary;

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

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

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

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

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

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

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

(n) Liens on the Property of the Company or any Restricted Subsidiary to secure any Refinancing, in whole or in part, of any Debt secured by Liens referred to in clause (a) (but only to the extent it relates to clause (a) or (d) referred to therein), (b) (other than Liens securing Debt Incurred pursuant to clause (r) referred to therein), (f), (g), or (m) above; provided, however, that (1) in the case of clause (a) or (b) above, the proviso to such clause remains satisfied and (2) any such Lien shall be limited to all or part of the same Property that secured the original Lien (together with improvements and accessions to such Property) and the aggregate principal amount of Debt that is secured by such Lien shall not be increased to an amount greater than the sum of:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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“Qualified Consideration” means, with respect to any Asset Sale (or any other transaction or series of related transactions required to comply with clause (b) of the first paragraph of Section 4.06), any one or more of (a) cash or cash equivalents, (b) notes or obligations that are converted into cash (to the extent of the cash received) within 180 days of such Asset Sale, (c) equity securities listed on a national securities exchange (as such term is defined in the Exchange Act) and converted into cash (to the extent of the cash received) within 180 days of such Asset Sale, (d) the assumption by the purchaser of liabilities of the Company or any Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Securities) as a result of which the Company and the Restricted Subsidiaries are no longer obligated with respect to such liabilities, (e) Additional Assets or (f) other Property; provided that the aggregate Fair Market Value of all Property received since the Issue Date by the Company and its Restricted Subsidiaries pursuant to Asset Sales (or such other transactions) that is used to determine Qualified Consideration pursuant to this clause (f) does not exceed the greater of $100.0 million and 5% of Total Assets.

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

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

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

or may grant a security interest in, any accounts receivable (whether now existing or arising in the future) of the Company or any of its Subsidiaries, and any assets related thereto including, without limitation, all collateral securing those accounts receivable, all contracts and all Guarantees or other obligations in respect of those accounts receivable, proceeds of those accounts receivable and other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable; provided that:

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

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

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

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“Rating Agencies” means Moody’s and S&P.

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

“Receivables Entity” means a Wholly Owned Subsidiary of the Company (or another Person formed for the purposes of engaging in a Qualified Receivables Transaction with the Company in which the Company or any Subsidiary of the Company makes an Investment and to which the Company or any Subsidiary of the Company transfers accounts receivable and related assets) which engages in no activities other than in connection with the financing of accounts receivable of the Company and its Subsidiaries, all proceeds thereof and all rights (contractual or other), collateral and other assets relating thereto, and any business or activities incidental or related to that business, and (with respect to any Receivables Entity formed after the Issue Date) which is designated by the Board of Directors (as provided below) as a Receivables Entity and:

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

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

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

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

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

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

Any designation of this kind by the Board of Directors shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to the

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designation and an Officers’ Certificate certifying that the designation complied with the foregoing conditions.  For the avoidance of doubt, Rite Aid Funding I and Rite Aid Funding II are designated Receivables Entities without any further action on the part of the Company.

“Receivables Facility” means the Receivables Financing Agreement dated as of September 21, 2004 (as such may be further amended, modified, supplemented or Refinanced from time to time),  among Rite Aid Funding II, the Investors named therein, the Banks named therein, Citicorp North America Inc., as Program Agent, Rite Aid Headquarters Funding Inc., as Collection Agent, the Originators named therein and JPMorgan Chase Bank, as trustee. For the avoidance of doubt, the Receivables Facility, as in effect on the Issue Date, constitutes a Qualified Receivables Transaction without any further action on behalf of the Company.

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

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

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

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

“Restricted Payment” means:

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

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

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

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

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

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

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

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

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

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

“Second Priority Collateral Documents” means the Second Priority Subsidiary Security Agreement, the Second Priority Subsidiary Guarantee Agreement, the Second Priority Indemnity, Subrogation and Contribution Agreement, the Intercreditor Agreement and each of the mortgages, security agreements and other instruments and documents executed and delivered by any Subsidiary Guarantor pursuant to any of the foregoing for purposes of providing collateral security or credit support for any Second Priority Debt Obligation or obligation under the Second Priority Subsidiary Guarantee Agreement (including, in each case, any schedules, exhibits or annexes

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thereto), in each case as the same may be amended, restated, supplemented or otherwise modified from time to time.

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

“Second Priority Debt” means the Securities, the 7.5% Notes due 2017 and any other Debt of the Company Guaranteed by the Subsidiary Guarantors pursuant to the Second Priority Subsidiary Guarantee Agreement with such Guarantee secured on a pari passu basis by the Second Priority Collateral; provided, however, that such Debt is permitted to be incurred, secured and guaranteed on such basis by each Senior Debt Document and each Second Priority Debt Document.

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

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

“Second Priority Debt Obligations” means, with respect to any series, issue or class of Second Priority Debt, (a) all principal of and interest (including, without limitation, any interest which accrues after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency or reorganization of the Company, whether or not allowed or allowable as a claim in any such proceeding) payable with respect to such Second Priority Debt, (b) all other amounts payable by the Company to the related Second Priority Debt Parties under the related Second Priority Debt Documents and (c) any renewals, extensions or Refinancings thereof of the foregoing.

“Second Priority Debt Parties” means, with respect to any series, issue or class of Second Priority Debt, the holders of such indebtedness from time to time, any trustee or agent therefor under any related Second Priority Debt Documents and the beneficiaries of each indemnification obligation undertaken by the Company or any Obligor under any related Second Priority Debt Documents, but shall not include the Obligors or any controlled Affiliates thereof (unless any such Obligor or controlled Affiliate is a holder of such Second Priority Debt, a trustee or agent therefor or beneficiary of such an indemnification obligation named as such in a Second Priority Debt Document).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“Senior Credit Facility” means the Senior Credit Agreement dated as of June 27, 2001, as amended and restated as of August 4, 2003, as amended and restated as

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

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

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

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

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

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

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

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

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

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

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

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

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

“Standard Securitization Undertakings” means representations, warranties, covenants and indemnities entered into by the Company or any Subsidiary of the Company which are customary in an accounts receivable securitization transaction involving a comparable company, including those in the Receivables Facility as in effect on the Issue Date.

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

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

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

(a) such Person;

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

(c) one or more Subsidiaries of such Person.

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

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

“Temporary Cash Investments” means any of the following:

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

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

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

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

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

(d) Investments in commercial paper, maturing not more than 90 days after the date of acquisition, issued by a corporation (other than an Affiliate of the Company) organized and in existence under the laws of the United States of America with a rating at the time as of which any Investment therein is made of “P-1” (or higher) according to Moody’s or “A-1” (or higher) according to S&P (or such similar equivalent rating by at least one “nationally recognized statistical rating organization” (as defined in Rule 436 under the Securities Act));

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

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

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

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

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

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

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

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

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

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

“Unrestricted Subsidiary” means:

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

(b) any Subsidiary of an Unrestricted Subsidiary.

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

“Voting Stock” of any Person means all classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding and normally

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entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.

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

SECTION 1.02.  Other Definitions.

Term	Defined in Section
“Affiliate Transaction”	4.08
“Asset Sales Prepayment Offer”	4.06
“Bankruptcy Law”	6.01
“Change of Control Offer”	4.13(a)
“Change of Control Payment Date”	4.13(b)
“Change of Control Purchase Price”	4.13(a)
“covenant defeasance option”	8.01(b)
“Custodian”	6.01
“Global Security”	Appendix A
“legal defeasance option”	8.01(b)
“Legal Holiday”	10.08
“Offer Amount”	4.06
“Offer Period”	4.06
“OID”	2.01
“Original Securities”	2.01
“Paying Agent”	2.04
“Registrar”	2.04
“Reversion Date”	4.15(b)
“Securities Custodian”	Appendix A
“Shelf Registration Statement	Appendix A
“Surviving Person”	5.01(a)(1)
“Suspension Period”	4.15(b)

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

“Commission” means the SEC.

“indenture securities” means the Securities.

“indenture security holder” means a Holder.

“indenture to be qualified” means this Indenture.

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

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

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

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

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

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

(3) “or” is not exclusive;

(4) “including” means including without limitation;

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

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

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

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

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ARTICLE II

The Securities

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

Subject to Section 2.03, the Trustee shall authenticate Securities for original issue on the Issue Date in the aggregate principal amount of $470,000,000 (the “Original Securities”).  With respect to any Securities issued after the Issue Date (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, Original Securities pursuant to Section 2.07, 2.08, 2.09 or 3.06), there shall be established in or pursuant to a Board Resolution, and subject to Section 2.03, set forth, or determined in the manner provided in an Officers’ Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of such Securities:

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

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

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

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

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may be registered in the name or names of Persons other than the depository for such Global Security or a nominee thereof.

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

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

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

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

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

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

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

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

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

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

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

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

Every replacement Security is an additional obligation of the Company.

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

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

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

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

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

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

SECTION 2.12.  CUSIP Numbers.  The Company in issuing the Securities may use “CUSIP” numbers (if then generally in use) and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption as a convenience to Holders; provided,

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however, that neither the Company nor the Trustee shall have any responsibility for any defect in the “CUSIP” number that appears on any Security, check, advice of payment or redemption notice, and any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers.

ARTICLE III

Redemption

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

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

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

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

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

(1) the redemption date;

(2) the redemption price;

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

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

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

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

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

At the Company’s request, the Trustee shall give the notice of redemption in the Company’s name and at the Company’s expense.  In such event, the Company shall provide the Trustee with the information required by this Section 3.03 at least 40 days before the redemption date and at least five days prior to the Trustee giving the notice of redemption.

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

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

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

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ARTICLE IV

Covenants

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

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

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

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

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

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(2) such Debt is Permitted Debt.

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

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

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

(c) [Intentionally omitted];

(d) Debt of the Company outstanding on the Issue Date and evidenced by the 7.5% Notes due 2017 and of Subsidiary Guarantors, including any future Guarantor, evidenced by guarantees relating to the 7.5% Notes due 2017;

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

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

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

45

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

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

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

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

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

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

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

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

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

(p) [Intentionally omitted];

(q) Debt in respect of Sale and Leaseback Transactions or Real Estate Financing Transactions involving only real property (and the related personal property) owned by the Company or a Subsidiary Guarantor on or after the Issue Date in an

46

aggregate principal amount outstanding at any one time not to exceed $150.0 million; provided that such Sale and Leaseback Transactions or Real Estate Financing Transactions may involve Property other than real property (and the related personal property) owned on or after the Issue Date to the extent the portion of the Debt related to such Property is permitted by another provision of this Section 4.03 at the time of Incurrence;

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

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

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

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

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

47

described herein and (3) with respect to Debt permitted under clause (k) of this Section 4.03 in respect of Sale and Leaseback Transactions that are not Capital Lease Obligations on the Issue Date, any reclassification of such Debt as a Capital Lease Obligation shall not be deemed an Incurrence of such Debt; provided, however, that (A) $250 million of the Securities will be deemed to have been Incurred pursuant to clause (b) of the second paragraph of this Section 4.03 and any Permitted Refinancing Debt in respect of such portion of the Securities that is Secured Debt will be deemed to be Incurred pursuant to either clause (b) or (l) of the second paragraph of this Section 4.03, (B) all outstanding Debt evidenced by the 8.125% Notes will be deemed to have been Incurred pursuant to clause (b) of the second paragraph of this Section 4.03, (C) all outstanding Debt evidenced by the Receivables Facility will be deemed to have been Incurred pursuant to clause (b) of the second paragraph of this Section 4.03, (D) [intentionally omitted], (E) all outstanding Debt under the Senior Credit Facility immediately following the Issue Date will be deemed to have been Incurred pursuant to clause (b) of the second paragraph of this Section 4.03, (F) any Permitted Debt that is not Secured Debt may later be reclassified as having been Incurred pursuant to clause (1) of the first paragraph of this Section 4.03, to the extent such Debt could be Incurred pursuant to such clause at the time of such reclassification, and (G) any Permitted Debt may later be reclassified as having been Incurred pursuant to any other clause in the definition of Permitted Debt to the extent such Debt could be Incurred pursuant to such clause at the time of such reclassification.

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

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

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

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

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

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

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(3) the sum of:

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

(B) the aggregate amount by which Debt (other than Subordinated Obligations) of the Company or any Restricted Subsidiary is reduced on the Company’s consolidated balance sheet after February 12, 2003 upon the conversion or exchange of any Debt (other than convertible or exchangeable debt issued or sold after February 12, 2003) for Capital Stock (other than Disqualified Stock) of the Company;

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

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

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

plus

(4) an amount equal to the sum of:

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

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

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

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Notwithstanding the foregoing limitation, the Company may:

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

(b) purchase, repurchase, redeem, legally defease, acquire or retire for value Capital Stock of the Company or Subordinated Obligations on or after February 12, 2003 in exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary of the Company or an employee stock ownership plan or trust established by the Company or any such Subsidiary for the benefit of their employees); provided, however, that:

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

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

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

(d) [intentionally omitted];

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

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

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

SECTION 4.05.  Limitation on Liens.  The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, Incur or suffer to exist, any Lien (other than Permitted Liens) upon any of its Property (including Capital Stock of a Restricted Subsidiary), whether owned on the Issue Date or thereafter acquired, or any interest therein or any income or profits therefrom.  If the Company or any Subsidiary Guarantor creates any additional Lien upon any Property to secure any Secured Obligations, it must concurrently grant a second priority Lien (subject to Permitted Liens) upon such Property as security for the Securities or Subsidiary Guarantees of the Securities such that the Property subject to such Lien becomes Second Priority Collateral subject to the Second Priority Liens, except to the extent such Property constitutes cash or cash equivalents required to secure only letter of credit obligations under Credit Facilities following a default under such Credit Facilities.

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

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

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

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

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

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

(a) to Repay the Secured Obligations or any other Debt of the Company or any Restricted Subsidiary secured by a Lien on Property of the Company or any Restricted Subsidiary of the Company (excluding, in any such case, any Debt owed to the Company or an Affiliate of the Company); provided, however, that to the extent the proceeds from a Specified Collateral Disposition will be allocated pursuant to the terms of any other Second Priority Debt Obligations to Repay or provide for the Repayment of such Second Priority Debt Obligations, a pro rata portion of such proceeds must, to the extent not inconsistent with the terms of such other Second Priority Debt Obligations, be allocated to Repay the Securities pursuant to an Asset Sales Prepayment Offer and the full amount of such allocated portion (1) will be deemed Excess Proceeds and (2) will, upon such Asset Sales Prepayment Offer, be deemed Allocable Excess Proceeds; or

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

Pending application of Net Available Cash pursuant to this Section 4.06, which shall not be required in respect of an Asset Sale that is not a Specified Collateral Disposition if the Net Available Cash from such Asset Sale is less than $1 million, such Net Available Cash shall be invested in Temporary Cash Investments or applied to temporarily reduce revolving credit indebtedness.  If the Net Available Cash from an Asset Sale that is not a Specified Collateral Disposition equals or exceeds $1 million, any Net Available Cash from such Asset Sale not applied in accordance with the preceding paragraph within 270 days from the date of the receipt of such Net Available Cash or that

52

is not segregated from the general funds of the Company for investment in identified Additional Assets in respect of a project that shall have been commenced, and for which binding contractual commitments have been entered into, prior to the end of such 270-day period and that shall not have been completed or abandoned shall constitute “Excess Proceeds”; provided, however, that the amount of any Net Available Cash that ceases to be so segregated as contemplated above and any Net Available Cash that is segregated in respect of a project that is abandoned or completed shall also constitute “Excess Proceeds” at the time any such Net Available Cash ceases to be so segregated or at the time the relevant project is so abandoned or completed, as applicable; provided further, however, that the amount of any Net Available Cash that continues to be segregated for investment and that is not actually reinvested within 24 months from the date of the receipt of such Net Available Cash shall also constitute “Excess Proceeds”.

When the aggregate amount of Excess Proceeds exceeds $50.0 million (taking into account income earned on such Excess Proceeds, if any), the Company will be required to make an offer to purchase (the “Asset Sales Prepayment Offer”) the Securities which offer shall be in the amount of the Allocable Excess Proceeds, on a pro rata basis according to principal amount at maturity, at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the purchase date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), in accordance with the procedures (including prorating in the event of oversubscription) set forth herein.  To the extent that any portion of the amount of Net Available Cash remains after compliance with the preceding sentence and provided that all Holders have been given the opportunity to tender their Securities for purchase in accordance with this Indenture, the Company or such Restricted Subsidiary may use such remaining amount for any purpose permitted by this Indenture and the amount of Excess Proceeds will be reset to zero.

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

(a) the Excess Proceeds; and

(b) a fraction,

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

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

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

Not later than the date upon which written notice of an Asset Sales Prepayment Offer is delivered to the Trustee as provided above, the Company shall deliver to the Trustee an Officers’ Certificate as to (a) the amount of the Asset Sales Prepayment Offer (the “Offer Amount”), (b) the allocation of the Net Available Cash from the Asset Sales pursuant to which such Prepayment Offer is being made and (c) the compliance of such allocation with the provisions of clause (b) of the second paragraph of this Section 4.06.  On or before the Purchase Date, the Company shall also irrevocably deposit with the Trustee or with the Paying Agent (or, if the Company or a Wholly Owned Subsidiary is the Paying Agent, shall segregate and hold in trust) in Temporary Cash Investments (other than in those enumerated in such clause (b) of the definition of Temporary Cash Investments), maturing on the last day prior to the Purchase Date or on the Purchase Date if funds are immediately available by open of business, an amount equal to the Offer Amount to be held for payment in accordance with the provisions of this Section 4.06.  Upon the expiration of the period for which the Prepayment Offer remains open (the “Offer Period”), the Company shall deliver to the Trustee for cancellation the Securities or portions thereof that have been properly tendered to and are to be accepted by the Company.  The Trustee or the Paying Agent shall, on the Purchase Date, mail or deliver payment to each tendering Holder in the amount of the purchase price.  In the event that the aggregate purchase price of the Securities delivered by the Company to the Trustee is less than the Offer Amount, the Trustee or the Paying Agent shall deliver the excess to the Company immediately after the expiration of the Offer Period for application in accordance with this Section 4.06.

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

54

only in part shall be issued new Securities equal in principal amount to the unpurchased portion of the Securities surrendered.

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

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

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

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

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

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

The foregoing limitations will not apply:

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

(A) in effect on the Issue Date;

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

(C) that result from the Refinancing of Debt Incurred pursuant to an agreement referred to in clause (1)(A) or (B) above or in clause (2)(A) or (B) below; provided that such restriction is no less

55

favorable to the Holders in any material respect, as reasonably determined by the Board of Directors (as evidenced by a Board Resolution), than those under the agreement evidencing the Debt so Refinanced;

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

(E) existing by reason of applicable law; or

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

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

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

(B) encumbering Property at the time such Property was acquired by the Company or any Restricted Subsidiary, so long as such restriction relates solely to the Property so acquired and was not created in connection with or in anticipation of such acquisition;

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

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

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

56

(a) the terms of such Affiliate Transaction are:

(1) set forth in writing;

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

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

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

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

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

(a) any transaction or series of transactions between the Company and one or more Restricted Subsidiaries or between two or more Restricted Subsidiaries; provided that no more than 5% of the total voting power of the Voting Stock (on a fully diluted basis) of any such Restricted Subsidiary is owned by an Affiliate of the Company (other than a Restricted Subsidiary);

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

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

(d) loans and advances to employees made in the ordinary course of business in accordance with applicable law and consistent with the past practices

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of the Company or such Restricted Subsidiary, as the case may be; provided that such loans and advances do not exceed $25.0 million in the aggregate at any one time outstanding;

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

(f) payments of customary fees by the Company or any of its Restricted Subsidiaries to Leonard Green & Partners L.P. or any of its Affiliates made for any corporate advisory services or financial advisory, financing, underwriting or placement services or in respect of other investment banking activities including, without limitation, in connection with acquisitions or divestitures, which are approved by a majority of the Board of Directors in good faith;

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

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

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

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

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

(2) such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture to this Indenture providing for a Guarantee of

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payment of the Securities by such Restricted Subsidiary and such Guarantee of Debt of the Company:

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

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

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

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

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

In addition, no Subsidiary Guarantor shall Guarantee, directly or indirectly, (1) any Debt of the Company that is subordinate or junior in right of payment (without regard to any security interest) to any other Debt of the Company unless such Guarantee is expressly subordinate in right of payment to the Subsidiary Guarantee of such Subsidiary Guarantor or (2) any Debt of the Company other than Senior Obligations unless such Guarantee is expressly subordinate in right of payment (without regard to any security interest) to or ranks pari passu with, the Subsidiary Guarantee of such Subsidiary Guarantor.

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

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

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

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

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

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

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

(b) either:

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

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

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

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

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

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

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

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

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

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

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

(b) Within 30 days following any Change of Control, the Company shall (1) cause a notice of the Change of Control Offer to be sent at least once to the Dow Jones News Service or similar business news service in the United States and (2) send, by first-class mail, with a copy to the Trustee, to each Holder, at such Holder’s address appearing in the Security Register, a notice stating:  (A) that a Change of Control Offer is

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being made pursuant to this Section 4.13 and that all Securities timely tendered will be accepted for payment; (B) the Change of Control Purchase Price and the purchase date, which shall be, subject to any contrary requirements of applicable law, a Business Day no earlier than 30 days nor later than 60 days from the date such notice is mailed (the “Change of Control Payment Date”); (C) the circumstances and relevant facts regarding the Change of Control (including, to the extent reasonably practicable, information with respect to pro forma historical income, cash flow and capitalization after giving effect to the Change of Control); and (D) the procedures that Holders must follow in order to tender their Securities (or portions thereof) for payment and the procedures that Holders must follow in order to withdraw an election to tender Securities (or portions thereof) for payment.

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

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

(e) The Company will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the purchase of Securities pursuant to this Section 4.13.  To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 4.13, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section 4.13 by virtue thereof.

SECTION 4.14.  Further Instruments and Acts.  Upon request of the Trustee or as necessary, the Company shall execute and deliver such further instruments

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and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.

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

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

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

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

(b) Solely for the purpose of determining the amount of permitted Liens under Section 4.05 during any Suspension Period (as defined below) and without limiting the Company’s or any Restricted Subsidiary’s ability to Incur Indebtedness during any Suspension Period, to the extent that calculations in Section 4.05 refer to Section 4.03, such calculations shall be made as though Section 4.03 remains in effect during the Suspension Period.  In the event that the Company and the Restricted Subsidiaries are not subject to the Suspended Covenants for any period of time as a result of paragraph (a) of this Section 4.15 and, on any subsequent date (the “Reversion Date”), one or both of the Rating Agencies withdraws its ratings or downgrades the ratings assigned to the Securities below the required Investment Grade Ratings or a Default or Event of Default occurs and is continuing, then the Company and the Restricted Subsidiaries will thereafter again be subject to the Suspended Covenants. The period of time between the Suspension Date and the Reversion Date is referred to as the “Suspension Period.”  Notwithstanding that the Suspended Covenants may be reinstated, no Default will be deemed to have occurred as a result of a failure to comply with the Suspended Covenants during the Suspension Period. On the Reversion Date, all Debt Incurred during the Suspension Period will be classified to have been Incurred pursuant to clause (1) of the first paragraph or one of the clauses set forth in the second paragraph of Section 4.03 (to the extent such Debt would be permitted to be Incurred thereunder as of the Reversion Date and after giving effect to Debt Incurred prior to the Suspension Period and outstanding on the Reversion Date).  To the extent such Debt would not be permitted to be Incurred pursuant to clause (1) of the first paragraph or one of the clauses set forth in the second paragraph of Section 4.03, such Debt will be deemed to have been outstanding on the Issue Date, so that it is classified as permitted under clause (k) of the second paragraph of Section 4.03.  Calculations made after the Reversion Date of the amount available to be made as Restricted Payments under Section 4.04 will be made as though Section 4.04 had been in effect during the entire period of time from February 12, 2003.  Accordingly, Restricted Payments made during the Suspension Period will reduce the amount available to be made as Restricted Payments under the first paragraph of Section 4.04 following any Reversion Date, and the items specified in clauses

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(c)(1) through (c)(4) of the first paragraph of Section 4.04 will increase the amount available to be made under the first paragraph thereof following any Reversion Date. For purposes of determining compliance with the first five paragraphs of Section 4.06, on the Reversion Date, the Net Available Cash from all Asset Sales not applied in accordance with the covenant will be deemed to be reset to zero.

ARTICLE V

Successor Company

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

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

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

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

(4) immediately before and after giving effect to such transaction or series of transactions on a pro forma basis (and treating, for purposes of this clause (4) and clause (5) below, any Debt that becomes, or is anticipated to become, an obligation of the Surviving Person or any Restricted Subsidiary as a result of such transaction or series of transactions as having been Incurred by the Surviving Person or such Restricted Subsidiary at the time of such transaction or series of transactions), no Default or Event of Default shall have occurred and be continuing;

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

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

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

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

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

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

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

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

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

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

(b) a lease,

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

ARTICLE VI

Defaults and Remedies

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

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

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

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

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(d) the Company fails to comply with any covenant or agreement in the Securities or in this Indenture (other than a failure that is the subject of the foregoing clause (a), (b) or (c)) and such failure continues for 30 days after written notice is given to the Company as provided below;

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

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

(1) commences a voluntary case;

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

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

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

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

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

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

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

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

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

(h) any judgment or judgments for the payment of money in an aggregate amount in excess of $35.0 million or its foreign currency equivalent at the time is rendered against the Company or any Restricted Subsidiary and shall not be waived, satisfied or discharged for any period of 30 consecutive days during which a stay of enforcement shall not be in effect;

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

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

The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.

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

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

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

SECTION 6.02.  Acceleration.  If an Event of Default with respect to the Securities (other than an Event of Default specified in Section 6.01(f) or 6.01(g) with respect to the Company) shall have occurred and be continuing, the Trustee by notice to the Company, or the Holders of not less than 25% in aggregate principal amount of the Securities then outstanding by notice to the Company and the Trustee, may declare to be immediately due and payable the principal amount at maturity of all the Securities then outstanding, plus accrued but unpaid interest to the date of acceleration on all the Securities to be due and payable.  Upon such a declaration, such principal and interest shall be due and payable immediately.  If an Event of Default specified in

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Section 6.01(f) or 6.01(g) with respect to the Company occurs, the principal of and accrued and unpaid interest on all the Securities shall, automatically and without any action by the Trustee or any Holder, become and be immediately due and payable.  The Holders of a majority in aggregate principal amount of the outstanding Securities by notice to the Trustee and the Company may rescind and annul such declaration of acceleration if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of principal, premium or interest that has become due solely because of the acceleration.  No such rescission shall affect any subsequent Default or impair any right consequent thereto.

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

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

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

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

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

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

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

(3) the Trustee has failed to institute such proceeding and has not received from the Holders of at least a majority in aggregate principal amount of the Securities outstanding a direction inconsistent with such request, within 60 days after such notice, request and offer.

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

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

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

SECTION 6.09.  Trustee May File Proofs of Claim.  The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Holders allowed in any judicial proceedings relative to the Company, its creditors or its property and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders (it being understood it shall be under no obligation to do so), to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.07.

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

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

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

THIRD:  to the Company.

The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10.  At least 15 days before such record date, the Company shall mail to each Holder and the Trustee a notice that states the record date, the payment date and amount to be paid.

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

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

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

ARTICLE VII

Trustee

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

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

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

(2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture.  However, in the case of certificates or opinions specifically required by any provision hereof to be furnished to it, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations stated therein).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SECTION 7.06.  Reports by Trustee to Holders.  Within 60 days after February 1 each year beginning with February 1, 2009, the Trustee shall mail to each Holder a brief report dated as of such February 1 that complies with TIA § 313(a), if and to the extent required by such subsection.  The Trustee shall also comply with TIA § 313(b).

A copy of each report at the time of its mailing to Holders shall be filed with the Commission and each stock exchange (if any) on which the Securities are listed.

The Company agrees to notify promptly the Trustee whenever the Securities become listed on any stock exchange and of any delisting thereof.

SECTION 7.07.  Compensation and Indemnity.  The Company and the Guarantors, jointly and severally, shall pay to the Trustee from time to time reasonable compensation for its services.  The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust.  The Company and the Guarantors, jointly and severally, shall reimburse the Trustee upon request for all reasonable out-of-

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

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

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

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

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

(2) the Trustee is adjudged bankrupt or insolvent;

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

(4) the Trustee otherwise becomes incapable of acting.

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

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

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

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

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

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

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

SECTION 7.10.  Eligibility; Disqualification.  The Trustee shall at all times satisfy the requirements of TIA
§ 310(a).  The Trustee shall have (or, in the case of

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a corporation included in a bank holding company system, the related bank holding company shall have) a combined capital and surplus of at least $50,000,000 as set forth in its (or its related bank holding company’s) most recent published annual report of condition.  The Trustee shall comply with TIA § 310(b), subject to the penultimate paragraph thereof; provided, however, that there shall be excluded from the operation of TIA § 310(b)(1) any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Company are outstanding if the requirements for such exclusion set forth in TIA § 310(b)(1) are met.

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

ARTICLE VIII

Discharge of Indenture; Defeasance

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

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

If the Company exercises its legal defeasance option, payment of the Securities may not be accelerated because of an Event of Default.  If the Company exercises its covenant defeasance option, payment of the Securities may not be accelerated because of an Event of Default specified in Sections 6.01(d) (with respect to the covenants of Article IV identified in the immediately preceding paragraph), 6.01(e), 6.01(f), 6.01(g), 6.01(h), 6.01(i) or 6.01(j) (with respect only to Significant Subsidiaries in the case of Sections 6.01(f) and 6.01(g)) or because of the failure of the Company to

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comply with the limitations contained in Section 5.01(a)(5).  If the Company exercises its legal defeasance option or its covenant defeasance option, the Second Priority Lien, as it pertains to the Securities, will be released and each Subsidiary Guarantor will be released from all its obligations under its Subsidiary Guarantee, as it pertains to the Securities.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SECTION 8.06.  Reinstatement.  If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Article VIII by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application,

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the Company’s obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to this Article VIII until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article VIII; provided, however, that, if the Company has made any payment of interest on or principal of any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent.

ARTICLE IX

Amendments

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

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

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

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

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

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

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

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

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

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

After an amendment under this Section 9.01 becomes effective, the Company shall mail to Holders a notice briefly describing such amendment.  The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.01.

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

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

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

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

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

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

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

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

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

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

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

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

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

(3) an amendment to the Second Priority Subsidiary Guarantee Agreement to subordinate, on comparable terms to those provided therein with respect to Senior Bank Obligations, the obligations of the Subsidiary Guarantors under the Second Priority Subsidiary Guarantee Agreement to

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the prior payment when due of the guarantees by such Subsidiary Guarantor of any Additional Senior Debt; provided that such amendment applies equally with respect to all Second Priority Debt;

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

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

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

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

(8) with respect to any amendment, waiver or modification agreed to by the Senior Collateral Agent or the holders of the Senior Obligations under any provision of any Senior Collateral Documents, a comparable amendment, waiver or modification to the comparable provision of the comparable Second Priority Collateral Document; provided that such amendment, waiver or modification applies equally with respect to all Second Priority Debt;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SECTION 9.06.  Trustee To Sign Amendments.  The Trustee shall sign any amendment or release authorized pursuant to this Article IX if the amendment or release does not adversely affect the rights, duties, liabilities or immunities of the Trustee.  If such amendment or release does adversely affect the rights, duties, liabilities or immunities of the Trustee, the Trustee may but need not sign it.  In signing such amendment or release the Trustee shall be entitled to receive indemnity reasonably satisfactory to it and to receive, and (subject to Section 7.01) shall be fully protected in relying upon, an Officers’ Certificate and an Opinion of Counsel stating that such amendment or release is authorized or permitted by this Indenture.

SECTION 9.07.  Payment for Consent.  Neither the Company nor any Affiliate of the Company shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this

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Indenture or the Securities unless such consideration is offered to be paid to all Holders that so consent, waive or agree to amend in the time frame set forth in solicitation documents relating to such consent, waiver or agreement.

ARTICLE X

Miscellaneous

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

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

if to the Company:

Rite Aid Corporation

30 Hunter Lane

Camp Hill, Pennsylvania 17011

facsimile: 717-760-7867

Attention of:  Robert B. Sari, Esq.

if to the Trustee:

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

2 North LaSalle Street, Suite 1020

Chicago, IL 60602

facsimile: 312-827-8542

Attention of:  Corporate Trust Administration

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

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

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

SECTION 10.03.  Communication by Holders with Other Holders.  Holders may communicate pursuant to TIA § 312(b) with other Holders with respect to

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their rights under this Indenture or the Securities.  The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA § 312(c).

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

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

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

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

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

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

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

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

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

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

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direction, waiver or consent, only Securities that the Trustee knows are so owned shall be so disregarded.  Also, subject to the foregoing, only Securities outstanding at the time shall be considered in any such determination.

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

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

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

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

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

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

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

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

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

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

RITE AID CORPORATION,
By	/s/ Robert B. Sari
	Name:	Robert B. Sari
	Title:	Executive Vice President,
		Secretary and General Counsel
EACH OF THE SUBSIDIARY
GUARANTORS LISTED ON SCHEDULE
A HERETO,
By	/s/ Robert B. Sari
	Name:	Robert B. Sari
	Title:	Authorized Person

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee,
By	/s/ D.G. Donovan
	Name:	D.G. Donovan
	Title:	Vice President

SCHEDULE A

Subsidiary Guarantors

Corporations

3581 Carter Hill Road–Montgomery Corp.

Harco, Inc.

K&B Alabama Corporation

Rite Aid of Alabama, Inc.

Thrifty Corporation

Thrifty PayLess, Inc.

Rite Aid of Connecticut, Inc.

Eagle Managed Care Corp.

K&B, Incorporated

Rite Aid Drug Palace, Inc.

Rite Aid Hdqtrs. Corp.

Rite Aid Hdqtrs. Funding, Inc.

Rite Aid of Delaware, Inc.

Rite Aid Transport, Inc.

Rite Fund, Inc.

Rite Investments Corp.

Rx Choice, Inc.

Rite Aid Realty Corp.

Patton Drive and Navy Boulevard Property Corporation

Rite Aid of Florida, Inc.

Rite Aid of Georgia, Inc.

Rite Aid of Illinois, Inc.

Rite Aid of Indiana, Inc.

Rite Aid of Kentucky, Inc.

K&B Louisiana Corporation

K&B Services, Incorporated

Rite Aid of Maine, Inc.

Rite Aid of Massachusetts, Inc.

GDF, Inc.

READ’s Inc.

Rite Aid of Maryland, Inc.

Apex Drug Stores, Inc.

PDS-1 Michigan, Inc.

Perry Distributors, Inc.

Perry Drug Stores, Inc.

Ram–Utica, Inc.

RDS Detroit, Inc.

Rite Aid of Michigan, Inc.

K&B Mississippi Corporation

Rite Aid of New Hampshire, Inc.

657–659 Broad St. Corp.

Lakehurst and Broadway Corporation

Rite Aid of New Jersey, Inc.

Rite Aid of New York, Inc.

Rite Aid Rome Distribution Center, Inc.

Rite Aid of North Carolina, Inc.

4042 Warrensville Center Road–Warrensville Ohio, Inc.

5600 Superior Properties, Inc.

Broadview and Wallings–Broadview Heights Ohio, Inc.

Rite Aid of Ohio, Inc.

The Lane Drug Company

Keystone Centers, Inc.

Rite Aid of Pennsylvania, Inc.

537 Elm Street Corporation

Rite Aid of South Carolina, Inc.

K&B Tennessee Corporation

Rite Aid of Tennessee, Inc.

K&B Texas Corporation

Rite Aid of Vermont, Inc.

England Street–Asheland Corporation

Rite Aid of Virginia, Inc.

5277 Associates, Inc.

Rite Aid of Washington, D.C., Inc.

Rite Aid of West Virginia, Inc.

Brooks Pharmacy, Inc.

Eckerd Corporation

EDC Licensing, Inc.

Genovese Drug Stores, Inc.

JCG Holdings (USA), Inc.

Maxi Drug North, Inc.

Maxi Drug, Inc.

P.J.C. Distribution, Inc.

P.J.C. Realty Co., Inc.

PJC Lease Holdings, Inc.

PJC Special Realty Holdings, Inc.

The Jean Coutu Group (PJC) USA, Inc.

Thrift Drug Services, Inc.

Thrift Drug, Inc.

Eckerd Fleet, Inc.

PJC of Massachusetts, Inc.

PJC Realty MA, Inc.

EDC Drug Stores, Inc.

MC Woonsocket, Inc.

PJC of Cranston, Inc.

PJC of East Providence, Inc.

PJC of Rhode Island, Inc.

P.J.C. of West Warwick, Inc.

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Maxi Green Inc.

PJC of Vermont, Inc.

Limited Liability Companies

1515 West State Street Boise, Idaho, LLC

Ann & Government Streets–Mobile, Alabama, LLC

Central Avenue & Main Street Petal-MS, LLC

Eighth and Water Streets–Urichsville, Ohio, LLC

Munson & Andrews, LLC

Name Rite, L.L.C.

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

Rite Aid Services, L.L.C.

Silver Springs Road–Baltimore, Maryland/One, LLC

Silver Springs Road–Baltimore, Maryland/Two, LLC

State & Fortification Streets–Jackson, Mississippi, LLC

State Street and Hill Road–Gerard, Ohio, LLC

Tyler and Sanders Roads, Birmingham–Alabama, LLC

1740 Associates, LLC

Northline & Dix–Toledo–Southgate, LLC

Seven Mile and Evergreen–Detroit, LLC

764 South Broadway–Geneva, Ohio, LLC

Gettysburg and Hoover–Dayton, Ohio, LLC

Mayfield & Chillicothe Roads–Chesterland, LLC

112 Burleigh Avenue Norfolk, LLC

Fairground, L.L.C.

JCG (PJC) USA, LLC

PJC Dorchester Realty LLC

PJC East Lyme Realty LLC

PJC Haverhill Realty LLC

PJC Hermitage Realty LLC

PJC Hyde Park Realty LLC

PJC Manchester Realty LLC

PJC Mansfield Realty LLC

PJC New London Realty LLC

PJC Peterborough Realty LLC

PJC Providence Realty LLC

PJC Realty N.E. LLC

PJC Revere Realty LLC

Limited Partnerships

Maxi Drug South, L.P.

3

Exhibit A

[FORM OF FACE OF SECURITY]

[Global Securities Legend]

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

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

[Definitive Securities Legend]

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

[FORM OF FACE OF SECURITY]

No.: [up to]**

10.375% Senior Secured Note due 2016

CUSIP No. 767754BV5

ISIN No. US7677554BV53

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

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

Record Dates: July 1 and January 1.

*  Insert for Definitive Securities.

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

2

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

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

RITE AID CORPORATION,

By

Name:

Title:

TRUSTEE’S CERTIFICATE OF
AUTHENTICATION

Dated:

THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Trustee, certifies that this is
one of the Securities referred to in the Indenture.

By:

Authorized Signatory

3

[FORM OF REVERSE SIDE OF SECURITY]

10.375% Senior Secured Note due 2016

1.  Interest

RITE AID CORPORATION, a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay interest on the principal amount of this Security at the rate per annum shown above.  The Company will pay interest semiannually on July 15 and January 15 of each year, commencing January 15, 2009.  Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from July 9, 2008.  Interest shall be computed on the basis of a 360-day year of twelve 30-day months.  The Company shall pay interest on overdue principal at the rate per annum borne by the Securities plus 1% per annum, and it shall pay interest on overdue installments of interest at the rate per annum borne by the Securities to the extent lawful.

2.  Method of Payment

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

3.  Paying Agent and Registrar

Initially, The Bank of New York Mellon Trust Company, N.A., a banking association organized and existing under the laws of the United States of America (the “Trustee”), will act as Paying Agent and Registrar.  The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice.  The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar.

4

4.  Indenture

The Company issued the Securities under an Indenture dated as of  July 9, 2008 (the “Indenture”), among the Company, the Subsidiary Guarantors named therein and the Trustee.  The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the date of the Indenture (the “TIA”).  Terms defined in the Indenture and not defined in the Securities have the meanings ascribed thereto in the Indenture.  The Securities are subject to all such terms, and Holders are referred to the Indenture and the TIA for a statement of those terms.

The Securities are unsecured, unsubordinated obligations of the Company.  The Company’s obligations under the Securities are Guaranteed, subject to certain limitations, by the Subsidiary Guarantors pursuant to Subsidiary Guarantees, subject to release of the Subsidiary Guarantees as provided in the Indenture or such Subsidiary Guarantee.  This Security is one of the Original Securities referred to in the Indenture issued in an aggregate principal amount of $470,000,000.  The Securities include the Original Securities and an unlimited aggregate principal amount of additional Securities that may be issued under the Indenture.  The Original Securities and such additional Securities are treated as a single class of securities under the Indenture.  The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to, among other things, make certain Investments and other Restricted Payments, pay dividends and other distributions, incur Debt, enter into consensual restrictions upon the payment of certain dividends and distributions by such Restricted Subsidiaries, enter into or permit certain transactions with Affiliates, create or incur Liens and make Asset Sales.  The Indenture also imposes limitations on the ability of the Company and each Subsidiary Guarantor to consolidate or merge with or into any other Person or sell, transfer, assign, lease, convey or otherwise dispose of all or substantially all of the Property of the Company or such Subsidiary Guarantor.

5.  Optional Redemption

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

To redeem the Securities prior to July 15, 2012, the Company must pay a redemption price equal to 100% of the principal amount of the Securities to be redeemed plus the Applicable Premium as of, and accrued and unpaid interest, if any, to, but not including, the Redemption Date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant Interest Payment Date that is on or prior to the Redemption Date).  Any notice to Holders of such a redemption shall include the appropriate calculation of the Redemption Price, but need not include the Redemption Price itself.  The actual redemption price must be set forth in an Officers’ Certificate delivered to the Trustee no later than two Business Days prior to the Redemption Date.

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“Applicable Premium” means, with respect to any Security on any Redemption Date, the greater of (i) 1.0% of the principal amount of such Security and (ii) the excess of (A) the present value at such Redemption Date of (1) the Redemption Price of such Security at July 15, 2012 (such Redemption Price being set forth in the table below) plus (2) all required interest payments due on such Security through July 15, 2012 (excluding accrued but unpaid interest), computed using a discount rate equal to the Treasury Rate on such Redemption Date plus 75 basis points over (B) the principal amount of such Security.

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

On and after July 15, 2012, the Company may redeem the Securities in whole at any time or in part from time to time at the following Redemption Prices (expressed in percentages of principal amount), plus accrued and unpaid interest, if any, to, but not including, the Redemption Date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant Interest Payment Date that is on or prior to the Redemption Date), if redeemed during the 12-month period beginning on July 15 of the years set forth below:

Redemption Period	Price
2012	105.188	%
2013	102.594	%
2014 and thereafter	100.000	%

Notwithstanding the foregoing, at any time and from time to time prior to July 15, 2011, the Company may redeem up to 35% of the original aggregate principal amount of the Securities (including Securities issued after July 9, 2008, if any) with the proceeds from one or more Equity Offerings by the Company, at a Redemption Price equal to 110.375% of the principal amount thereof, plus accrued and unpaid interest thereon, if any, to, but not including, the Redemption Date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant Interest Payment Date that is on or prior to the Redemption Date); provided, however, that after giving effect to any such redemption, at least 65% of the original aggregate principal amount of the Securities (including Securities issued after July 9, 2008, if any) remains outstanding.  Any such redemption shall be made within 75 days of such Equity Offering upon not less than 30 nor more than 60 days’ prior notice.

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

6.  Sinking Fund

The Securities are not subject to any sinking fund.

7.  Notice of Redemption

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

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

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

8.  (b)  Prepayment Offer Upon Asset Sale

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

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for any purpose permitted by the Indenture and the amount of Excess Proceeds will be reset to zero.

9.  Guarantees; Security

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

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

10.  Denominations; Transfer; Exchange

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

11.  Persons Deemed Owners

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

12.  Unclaimed Money

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

13.  Discharge and Defeasance

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

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14.  Amendment, Waiver, Deemed Consents, Releases

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

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

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

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

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

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

15.  Defaults and Remedies

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

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

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except nonpayment of principal, premium or interest that has become due solely because of the acceleration.

16.  Trustee Dealings with the Company

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

17.  No Recourse Against Others

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

18.  Successors

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

19.  Authentication

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

20.  Abbreviations

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

21.  Governing Law

THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW.

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22.  CUSIP Numbers

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

The company will furnish to any holder upon written request and without charge to the holder a copy of the indenture which has in it the text of this security.

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ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to:

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

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

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

Date:	Your Siganture:
Sign exactly as your name appears on the other side of this Security.

Signature Guarantee:

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

[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

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

Date of
Exchange Amount of decrease in
Principal Amount of
this Global Security Amount of increase in
Principal Amount of this
Global Security Principal amount of this
Global Security following
such decrease or increase Signature of authorized
signatory of Trustee or
Securities Custodian

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OPTION OF HOLDER TO ELECT PURCHASE

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

o

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

$

Date:    Your Signature:

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

Signature Guarantee:

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

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EX-10.1

Exhibit 10.1

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

RECITALS

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

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

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

AGREEMENTS

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

ARTICLE I

Amendment and Restatement

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE II

Miscellaneous

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

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

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

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

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

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

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

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

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

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

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

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

RITE AID CORPORATION,
by
	/s/ Kevin Twomey
	Name:  Kevin Twomey
	Title: Executive Vice President and Chief Financial Officer

EACH OF THE SUBSIDIARIES LISTED ON PART I OF SCHEDULE A HERETO:
by
	/s/ Robert B. Sari
	Name:  Robert B. Sari
	Title:  Executive Vice President and Secretary

EACH OF THE SUBSIDIARIES LISTED ON PART II OF SCHEDULE A HERETO:
by
	/s/ Darrell K. Lane
	Name:  Darrell K. Lane
	Title:  Vice President and Secretary

EACH OF THE SUBSIDIARIES LISTED ON PART III OF SCHEDULE A HERETO:
by
	/s/ James J. Comitale
	Name:  James J. Comitale
	Title:  Vice President and Secretary

THRIFTY PAYLESS, INC.,
by
	/s/ I. Lawrence Gelman
	Name:  I. Lawrence Gelman
	Title:  Vice President and Secretary

CITICORP NORTH AMERICA, INC., as Administrative Agent,
by
	/s/ David Leland
	Name: David Leland
	Title:   Vice President

Tranche 3 Term Lender signature page to
the Amendment and Restatement Agreement dated as of July 9, 2008
to the Rite Aid Credit Agreement

To approve the Amendment and Restatement:		Tranche 3 Term Commitment:
Name of Tranche 3 Term Lender,		$330,000,000
Citicorp North America, Inc.
by
	/s/ David Leland
	Name:David Leland
	Title: Vice President

Tranche 3 Term Lender signature page to
the Amendment and Restatement Agreement dated as of July 9, 2008
to the Rite Aid Credit Agreement

To approve the Amendment and Restatement:		Tranche 3 Term Commitment:
Name of Tranche 3 Term Lender,		$20,000,000
Bank of America, N.A.
by
	/s/ Richard D. Hill, Jr.
	Name:Richard D. Hill, Jr.
	Title:  Managing Director

9

SCHEDULE A

SUBSIDIARIES

Part I
1.	112 Burleigh Avenue Norfolk, LLC
2.	1515 West State Street Boise, Idaho, LLC
3.	1740 Associates, L.L.C.
4.	3581 Carter Hill Road–Montgomery Corp.
5.	4042 Warrensville Center Road – Warrensville Ohio, Inc.
6.	5277 Associates, Inc.
7.	537 Elm Street Corp.
8.	5600 Superior Properties, Inc.
9.	657-659 Broad St. Corp.
10.	764 South Broadway-Geneva, Ohio, LLC
11.	Ann & Government Streets - Mobile, Alabama, LLC
12.	Apex Drug Stores, Inc.
13.	Broadview and Wallings-Broadview Heights Ohio, Inc.
14.	Brooks Pharmacy, Inc.
15.	Central Avenue and Main Street - Petal, MS, LLC
16.	Eagle Managed Care Corp.
17.	Eckerd Corporation
18.	Eckerd Fleet, Inc.
19.	EDC Drug Stores, Inc.
20.	Eighth and Water Streets – Urichsville, Ohio, LLC
21.	England Street-Asheland Corporation
22.	Fairground, L.L.C.
23.	GDF, Inc.
24.	Genovese Drug Stores, Inc.
25.	Gettysburg and Hoover-Dayton, Ohio, LLC
26.	Harco, Inc.
27.	K & B Alabama Corporation
28.	K & B Louisiana Corporation
29.	K & B Mississippi Corporation
30.	K & B Services, Incorporated
31.	K & B Tennessee Corporation
32.	K&B Texas Corporation
33.	K & B, Incorporated
34.	Keystone Centers, Inc.
35.	Lakehurst and Broadway Corporation
36.	Maxi Drug North, Inc.
37.	Maxi Drug South, L.P.
38.	Maxi Drug, Inc.
39.	Maxi Green Inc.
40.	Mayfield & Chillicothe Roads – Chesterland, LLC
41.	MC Woonsocket, Inc.
42.	Munson & Andrews, LLC
43.	Name Rite, L.L.C.
44.	Northline & Dix – Toledo – Southgate, LLC

45.	P.J.C. Distribution, Inc.
46.	P.J.C. of West Warwick, Inc.
47.	P.J.C. Realty Co., Inc.
48.	Patton Drive and Navy Boulevard Property Corporation
49.	Paw Paw Lake Road & Paw Paw Avenue – Coloma, Michigan, LLC
50.	PDS-1 Michigan, Inc.
51.	Perry Distributors, Inc.
52.	Perry Drug Stores, Inc.
53.	PJC Dorchester Realty LLC
54.	PJC East Lyme Realty LLC
55.	PJC Haverhill Realty LLC
56.	PJC Hermitage Realty LLC
57.	PJC Hyde Park Realty LLC
58.	PJC Lease Holdings, Inc.
59.	PJC Manchester Realty LLC
60.	PJC Mansfield Realty LLC
61.	PJC New London Realty LLC
62.	PJC of Cranston, Inc.
63.	PJC of East Providence, Inc.
64.	PJC of Massachusetts, Inc.
65.	PJC of Rhode Island, Inc.
66.	PJC of Vermont, Inc.
67.	PJC Peterborough Realty LLC
68.	PJC Providence Realty LLC
69.	PJC Realty MA, Inc.
70.	PJC Realty N.E. LLC
71.	PJC Revere Realty LLC
72.	PJC Special Realty Holdings, Inc.
73.	Ram-Utica, Inc.
74.	RDS Detroit, Inc.
75.	Read's, Inc.
76.	Rite Aid Drug Palace, Inc.
77.	Rite Aid Hdqtrs. Corp.
78.	Rite Aid of Alabama, Inc.
79.	Rite Aid of Connecticut, Inc.
80.	Rite Aid of Delaware, Inc.
81.	Rite Aid of Florida, Inc.
82.	Rite Aid of Georgia, Inc.
83.	Rite Aid of Illinois, Inc.
84.	Rite Aid of Indiana Inc.
85.	Rite Aid of Kentucky, Inc.
86.	Rite Aid of Maine, Inc.
87.	Rite Aid of Maryland, Inc.
88.	Rite Aid of Massachusetts, Inc.
89.	Rite Aid of Michigan, Inc.
90.	Rite Aid of New Hampshire, Inc.

91.	Rite Aid of New Jersey, Inc.
92.	Rite Aid of New York, Inc.
93.	Rite Aid of North Carolina, Inc.
94.	Rite Aid of Ohio, Inc.
95.	Rite Aid of Pennsylvania, Inc.
96.	Rite Aid of South Carolina, Inc.
97.	Rite Aid of Tennesssee, Inc.
98.	Rite Aid of Vermont, Inc.
99.	Rite Aid of Virginia, Inc.
100.	Rite Aid of Washington, D.C., Inc.
101.	Rite Aid of West Virginia, Inc.
102.	Rite Aid Realty Corp.
103.	Rite Aid Rome Distribution Center, Inc.
104.	Rite Aid Services, L.L.C.
105.	Rite Aid Transport, Inc.
106.	RX Choice, Inc.
107.	Seven Mile and Evergreen – Detroit, LLC
108.	Silver Springs Road – Baltimore, Maryland/One, LLC
109.	Silver Springs Road – Baltimore, Maryland/Two, LLC
110.	State & Fortification Streets – Jackson, Mississippi, LLC
111.	State Street and Hill Road – Gerard, Ohio, LLC
112.	The Jean Coutu Group (PJC) USA, Inc.
113.	The Lane Drug Company
114.	Thrift Drug Services, Inc.
115.	Thrift Drug, Inc.
116.	Thrifty Corporation
117.	Tyler and Sanders Roads, Birmingham - Alabama, LLC

Part II
1.	Rite Aid Hdqtrs. Funding, Inc.
2.	Rite Fund, Inc.
3.	Rite Investments Corp.

Part III
1.	EDC Licensing, Inc.
2.	JCG (PJC) USA, LLC
3.	JCG Holdings (USA) Inc.

Exhibit A

CREDIT AGREEMENT

dated as of June 27, 2001,

as amended and restated as of July 9, 2008,

among

RITE AID CORPORATION,

The Lenders Party Hereto,

CITICORP NORTH AMERICA, INC.,

as Administrative Agent and Collateral Processing Agent,

BANK OF AMERICA, N.A.,

as Syndication Agent,

JPMORGAN CHASE BANK , N.A.,

as Co-Documentation Agent,

WELLS FARGO FOOTHILL, LLC,

as Co-Documentation Agent

and

GENERAL ELECTRIC CAPITAL CORPORATION,

as Co-Documentation Agent

CITIGROUP GLOBAL MARKETS INC.,

as Joint Lead Arranger and Joint Bookrunner

and

BANC OF AMERICA SECURITIES LLC,

as Joint Lead Arranger and Joint Bookrunner

TABLE OF CONTENTS

		Page
ARTICLE I
Definitions
SECTION 1.01.	Defined Terms	2
SECTION 1.02.	Classification of Loans and Borrowings	36
SECTION 1.03.	Terms Generally	36
SECTION 1.04.	Accounting Terms; GAAP	37
SECTION 1.05.	Terms Defined in Definitions Annex	37
ARTICLE II
The Credits
SECTION 2.01.	Commitments	37
SECTION 2.02.	Loans and Borrowings	38
SECTION 2.03.	Requests for Borrowings	39
SECTION 2.04.	Swingline Loans	40
SECTION 2.05.	Letters of Credit	41
SECTION 2.06.	Funding of Borrowings	47
SECTION 2.07.	Interest Elections	47
SECTION 2.08.	Termination and Reduction of Commitments	49
SECTION 2.09.	Repayment of Loans; Evidence of Indebtedness	49
SECTION 2.10.	Amortization and Repayment of Term Loans	50
SECTION 2.11.	Prepayment of Loans	51
SECTION 2.12.	Fees	53
SECTION 2.13.	Interest	54
SECTION 2.14.	Alternate Rate of Interest	55
SECTION 2.15.	Increased Costs	56
SECTION 2.16.	Break Funding Payments	57
SECTION 2.17.	Taxes	57
SECTION 2.18.	Payments Generally; Pro Rata Treatment; Sharing of Setoffs	58
SECTION 2.19.	Mitigation Obligations; Replacement of Lenders	60
SECTION 2.20.	Adjustments to Borrowing Base Advance Rates	61
SECTION 2.21.	Incremental Loans	61
ARTICLE III
Representations and Warranties
SECTION 3.01.	Organization; Powers	63
SECTION 3.02.	Authorization; Enforceability	63

SECTION 3.03.	Governmental Approvals; No Conflicts	63
SECTION 3.04.	Financial Condition; No Material Adverse Change	63
SECTION 3.05.	Properties	64
SECTION 3.06.	Litigation and Environmental Matters	64
SECTION 3.07.	Compliance with Laws and Agreements	65
SECTION 3.08.	Investment and Holding Company Status	65
SECTION 3.09.	Taxes	65
SECTION 3.10.	ERISA	65
SECTION 3.11.	Disclosure; Accuracy of Information	65
SECTION 3.12.	Subsidiaries	66
SECTION 3.13.	Insurance	66
SECTION 3.14.	Labor Matters	66
SECTION 3.15.	Solvency	66
SECTION 3.16.	Federal Reserve Regulations	67
SECTION 3.17.	Security Interests	67
SECTION 3.18.	Use of Proceeds	68
ARTICLE IV
Conditions
SECTION 4.01.	Second Restatement Effective Date	68
SECTION 4.02.	Each Credit Event	68
SECTION 4.03.	Borrowing Base Date	69
ARTICLE V
Affirmative Covenants
SECTION 5.01.	Financial Statements and Other Information	70
SECTION 5.02.	Notices of Material Events	73
SECTION 5.03.	Information Regarding Collateral	73
SECTION 5.04.	Existence; Conduct of Business	74
SECTION 5.05.	Payment of Obligations	74
SECTION 5.06.	Maintenance of Properties	74
SECTION 5.07.	Insurance	74
SECTION 5.08.	Books and Records; Inspection and Audit Rights; Collateral and Borrowing Base Reviews	76
SECTION 5.09.	Compliance with Laws	77
SECTION 5.10.	Use of Proceeds and Letters of Credit	77
SECTION 5.11.	Additional Subsidiaries	78
SECTION 5.12.	Further Assurances	78
SECTION 5.13.	Subsidiaries	79
SECTION 5.14.	Intercompany Transfers	79
SECTION 5.15.	Inventory Purchasing	79
SECTION 5.16.	Cash Management System	80

SECTION 5.17.	Termination of Factoring Transactions	80
ARTICLE VI
Negative Covenants
SECTION 6.01.	Indebtedness; Certain Equity Securities	80
SECTION 6.02.	Liens	83
SECTION 6.03.	Fundamental Changes	85
SECTION 6.04.	Investments, Loans, Advances, Guarantees and Acquisitions	86
SECTION 6.05.	Asset Sales	87
SECTION 6.06.	Sale and Leaseback Transactions	89
SECTION 6.07.	Hedging Agreements	89
SECTION 6.08.	Restricted Payments; Certain Payments of Indebtedness	89
SECTION 6.09.	Transactions with Affiliates	91
SECTION 6.10.	Restrictive Agreements	93
SECTION 6.11.	Amendment of Material Documents	94
SECTION 6.12.	Consolidated Fixed Charge Coverage Ratio	95
SECTION 6.13.	Restrictions on Asset Holdings by the Borrower	96
SECTION 6.14.	Corporate Separateness	96
ARTICLE VII
Events of Default
ARTICLE VIII
The Agents
ARTICLE IX
Miscellaneous
SECTION 9.01.	Notices	102
SECTION 9.02.	Waivers; Amendments	103
SECTION 9.03.	Expenses; Indemnity; Damage Waiver	105
SECTION 9.04.	Successors and Assigns	106
SECTION 9.05.	Survival	110
SECTION 9.06.	Integration; Effectiveness	110
SECTION 9.07.	Severability	111
SECTION 9.08.	Right of Setoff	111
SECTION 9.09.	Governing Law; Jurisdiction; Consent to Service of Process	111
SECTION 9.10.	WAIVER OF JURY TRIAL	112
SECTION 9.11.	Headings	112

SECTION 9.12.	Confidentiality	112
SECTION 9.13.	Interest Rate Limitation	113
SECTION 9.14.	Collateral Trust and Intercreditor Agreement	113
SECTION 9.15.	Cash Sweep	113
SECTION 9.16.	Electronic Communications	114
SECTION 9.17.	USA Patriot Act	115
SECTION 9.18.	Release of Interim Collateral; Termination of Interim Collateral Documents	116

ANNEXES:

Annex 1 – Definitions Annex

Annex 2 – Subordination Terms

SCHEDULES:

Schedule 1.01	-	Subsidiary Loan Parties
Schedule 2.01	-	Commitments
Schedule 3.04	-	Undisclosed Liabilities
Schedule 3.05 (a)	-	Properties
Schedule 3.05(c)	-	Leased Warehouses and Distribution Centers
Schedule 3.06(a)	-	Litigation
Schedule 3.06(b)	-	Environmental Matters
Schedule 3.07	-	Compliance with Laws
Schedule 3.09	-	Taxes
Schedule 3.12	-	Subsidiaries
Schedule 3.13	-	Insurance
Schedule 3.14	-	Labor
Schedule 5.11	-	Subsidiaries
Schedule 6.01(a)(xii)	-	Existing Indebtedness
Schedule 6.01(b)	-	Equity Issuances
Schedule 6.02(xi)	-	Liens
Schedule 6.04	-	Investments
Schedule 6.08(a)	-	Restricted Payments
Schedule 6.09	-	Affiliate Transactions
EXHIBITS:
Exhibit A-1	-	Form of Term Note
Exhibit A-2	-	Form of Revolving Credit Note
Exhibit B	-	Form of Borrowing Base Certificate
Exhibit C	-	Form of Assignment and Acceptance Agreement
Exhibit D-1	-	Form of Senior Subsidiary Guarantee Agreement
Exhibit D-2	-	Form of Interim Collateral and Guarantee Agreement
Exhibit E	-	Form of Senior Subsidiary Security Agreement
Exhibit F-1	-	Form of Senior Indemnity, Subrogation and Contribution Agreement
Exhibit F-2	-	Form of Interim Indemnity, Subrogation and Contribution Agreement
Exhibit G	-	Form of Second Priority Subsidiary Guarantee Agreement
Exhibit H	-	Form of Second Priority Subsidiary Security Agreement
Exhibit I	-	Form of Second Priority Indemnity, Subrogation and Contribution Agreement
Exhibit J-1	-	Form of Opinion of Skadden, Arps, Slate, Meagher & Flom LLP, Special New York Counsel to the Borrower

Exhibit J-2 - Form of Opinion of Robert Sari, General Counsel of the Borrower

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

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

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

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

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

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

ARTICLE I

Definitions

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

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

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

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

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

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

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

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

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

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

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

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

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

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

2

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

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

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

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

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

RATING:	ABR Spread (bps)	Eurodollar Spread (bps)
Category 1 Average Revolver Availability greater than $1,250,000,000	25	125
Category 2 Average Revolver Availability greater than $500,000,000 but less than or equal to $1,250,000,000	50	150

3

Category 3
Average Revolver Availability less than or equal to $500,000,000 75 175

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

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

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

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

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

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

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

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

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

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

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

4

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“Collateral and Guarantee Requirement” means the requirement that:

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

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

(c)  each Loan Party shall have obtained all consents and approvals required to be obtained by it in connection with the execution and delivery of all

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Senior Collateral Documents to which it is a party, the performance of its obligations thereunder and the granting by it of the Liens thereunder.

“Commitment” means the Revolving Commitments, the Tranche 1 Term Commitments, the Tranche 2 Term Commitments and the Tranche 3 Term Commitments, or any combination thereof (as the context requires).

“Communications” has the meaning assigned to such term in Section 9.16(a).

“Consolidated Capital Expenditures” means, for any period, the aggregate amount of expenditures by the Borrower and its Consolidated Subsidiaries for plant, property and equipment and prescription files during such period (including any such expenditure by way of acquisition of a Person or by way of assumption of Indebtedness or other obligations of a Person, to the extent reflected as plant, property and equipment or as prescription file assets) minus the aggregate amount of Net Cash Proceeds received by the Borrower and its Consolidated Subsidiaries from the sale of Stores to third parties pursuant to Sale and Leaseback Transactions; provided that the aggregate amount of expenditures by the Borrower and its Consolidated Subsidiaries referred to above shall exclude, without duplication, (i) any such expenditures made for the replacement or restoration of assets to the extent financed by Casualty/Condemnation Proceeds relating to the asset or assets being replaced or restored, (ii) any amounts paid to any party under a lease entered into in connection with a Sale and Leaseback Transaction with respect to the termination of such lease and the reacquisition by the Borrower or any of the Subsidiaries of the property subject to such lease and (iii) any such expenditures made for the purchase or other acquisition from a third party of Stores, leases and prescription files, but only to the extent that an equivalent or greater amount is received from such third party as consideration for the sale or other disposition to such third party of Stores, leases and/or prescription files of a substantially equivalent value closed at substantially the same time as, and entered into as part of a single related transaction with, such purchase or acquisition (and if a lesser amount is received from such third party as consideration for such sale or other disposition, then the amount of Consolidated Capital Expenditures for purposes hereof shall be the expenditures made net of the consideration received); provided further that Consolidated Capital Expenditures shall in no case be less than zero.

“Consolidated EBITDA” means, for any period, without duplication, Consolidated Net Income for such period, plus (a) to the extent deducted in determining Consolidated Net Income for such period, the aggregate amount of (i) consolidated interest expenses, whether cash or non-cash, and charges, commissions, discounts, yield and other similar fees and charges incurred pursuant to Factoring Transactions or by Securitization Vehicles in connection with Securitizations which are payable to any Person other than a Loan Party, and any other amounts comparable to or in the nature of interest under any Securitization or Factoring Transaction, including losses on the sale of Securitization Assets in a Securitization accounted for as a “true sale” or Factoring Assets in a Factoring Transaction accounted for as a “true sale,” (ii) provision for income taxes, (iii) depreciation and amortization, (iv) LIFO Adjustments which reduced such

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Consolidated Net Income, (v) store closing and non-cash impairment expenses, (vi) any other nonrecurring charge to the extent such nonrecurring charge does not involve any cash expenditure during such period, (vii) non-cash compensation expenses related to stock option and restricted stock employee benefit plans, (viii) the non-cash interest component, as adjusted from time to time, in respect of reserves, (ix) all costs, fees, charges and expenses incurred in connection with the Transactions, (x) all charges incurred relating to the investigation of the Borrower by the United States Attorney’s Office and the United States Department of Labor and all amounts paid in satisfaction of any judgment, fine or settlement resulting therefrom, (xi) all costs and litigation expenses incurred in connection with litigation, investigations and other proceedings relating to the business conduct and practices of the former management of the Borrower and (xii) all Integration Expenses, and minus (b) to the extent not deducted in determining Consolidated Net Income for such period, the aggregate amount of (i) any cash expenditure during such period in connection with which a nonrecurring charge was taken and added back to Consolidated Net Income pursuant to clause (a) above in calculating Consolidated EBITDA in any prior period and (ii) LIFO Adjustments which increased such Consolidated Net Income.

“Consolidated Fixed Charge Coverage Ratio” means, for any period, the ratio of (i) Consolidated EBITDA plus Consolidated Rent less Consolidated Capital Expenditures plus Integration Capital Expenditures to (ii) Consolidated Interest Charges plus Consolidated Rent plus cash dividends paid pursuant to Section 6.08(a), in each case for such period and determined in accordance with GAAP.

“Consolidated Interest Charges” means, for any period, the aggregate amount of interest charges, whether expensed or capitalized, incurred or accrued during such period by the Borrower and its Consolidated Subsidiaries, solely to the extent paid or payable (whether during or after such period) in cash (i) minus non-cash interest expenses during such period related to (x) litigation reserves, (y) closed store liability reserves, if any, and (z) self-insurance reserves and (ii) plus, to the extent not otherwise included in such interest charges, commissions, discounts, yield and other similar fees and charges incurred pursuant to Factoring Transactions or by Securitization Vehicles in connection with Securitizations which are payable to any Person other than a Loan Party, and any other amounts comparable to or in the nature of interest under any Securitization or Factoring Transaction, including losses on the sale of Securitization Assets in a Securitization accounted for as a “true sale” or Factoring Assets in a Factoring Transaction accounted for as a “true sale”.

“Consolidated Net Income” means, for any period, the net income (or loss) of the Borrower and its Consolidated Subsidiaries (exclusive of (a) extraordinary items of gain or loss during such period or gains or losses from Indebtedness modifications during such period, (b) any gain or loss in connection with any Asset Sale during such period, other than sales of inventory in the ordinary course of business, but in the case of any loss only to the extent that such loss does not involve any current or future cash expenditure, (c) the cumulative effect of accounting changes during such period and (d) net income or loss attributable to any Investments in Persons other than Affiliates of

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the Borrower), determined on a consolidated basis for such period in accordance with GAAP.

“Consolidated Rent” means, for any period, the consolidated rental expense of the Borrower and its Consolidated Subsidiaries for such period, and including in any event rental costs of closed stores for such period whether or not reflected as an expense in the determination of Consolidated Net Income for such period.

“Consolidated Subsidiary” means, with respect to any Person, at any date, any Subsidiary or other entity the accounts of which would, in accordance with GAAP, be consolidated with those of such Person in its consolidated financial statements if such statements were prepared as of such date.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have meanings correlative thereto.

“CNAI” means Citicorp North America, Inc.

“Direct Delivery Vendor” has the meaning assigned to such term in the Intercompany Inventory Purchase Agreement.

“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

“Definitions Annex” means the definitions annex attached hereto as Annex 1 (as the same may be amended, supplemented or otherwise modified from time to time).

“Deposit Account” shall have the meaning assigned to such term in the Senior Subsidiary Security Agreement.

“dollars” or “$” refers to lawful money of the United States of America.

“Eligible Accounts Receivable” means, at any date of determination, all Accounts that satisfy at the time of creation and continue to meet the same at the time of such determination the criteria established from time to time by the Collateral Agent in its reasonable judgment to reflect Borrowing Base Factors.  On the Second Restatement Effective Date, those criteria are:

(a)  such Account constitutes an “account” or “chattel paper” within the meaning of the Uniform Commercial Code of the state in which the Account is located;

(b)  all payments on such Account are by the terms of such Account due not later than 90 days after the date of service (i.e., the transaction date) and are

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otherwise on terms that are normal and customary in the business of the Borrower and the Subsidiaries;

(c)  such Account has been billed and has not remained unpaid for more than 120 days following the date of service;

(d)  such Account is denominated in dollars;

(e)  such Account arose from a completed, outright and lawful sale of goods or the completed performance of services by the applicable Subsidiary Loan Party and accepted by the applicable Account Debtor, and the amount of such Account has been properly recognized as revenue on the books of the applicable Subsidiary Loan Party;

(f)  such Account is owned solely by a Subsidiary Guarantor (and has not been transferred pursuant to a Securitization or a Factoring Transaction);

(g)  the proceeds of such Account are payable solely to a Deposit Account which (A) is under the control of the Collateral Agent and (B) has not been released or transferred in accordance with Section 5.16 or otherwise;

(h)  such Account arose in the ordinary course of business of the applicable Subsidiary Loan Party;

(i)  not more than 50% of the aggregate amount of Accounts from the same Account Debtor and any Affiliates thereof remain unpaid for more than 120 days following the date of service;

(j)  to the knowledge of the Borrower and the Subsidiaries, no event of death, bankruptcy, insolvency or inability to pay creditors generally of the Account Debtor of such Account has occurred, and no notice thereof has been received;

(k)  payment of such Account is not being disputed by the Account Debtor thereof;

(l)  such Account complies in all material respects with the requirements of all applicable laws and regulations, whether Federal, state or local, including the Federal Consumer Credit Protection Act, the Federal Truth in Lending Act and Regulation Z of the Federal Reserve Board;

(m)  with respect to such Account, the Account Debtor (i) is organized in the United States (or, if such Account Debtor is not organized in the United States, such Account is supported by a letter of credit approved by the Collateral Agent in favor of the applicable Subsidiary Loan Party) and (ii) is not an Affiliate or Subsidiary or an Affiliate of any of the Subsidiaries;

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(n)  such Account is subject to a perfected first priority security interest in favor of the Collateral Agent for the benefit of the Lenders pursuant to the Senior Collateral Documents and is not subject to any other Lien (other than the Second Priority Lien);

(o)  with respect to any such Account for an amount greater than $5,000,000, the Account Debtor has not been disapproved by the Required Lenders (based, on the Required Lenders’ reasonable judgment, upon the creditworthiness of such Account Debtor);

(p)  the representations and warranties contained in the Senior Loan Documents with respect to such Account are true and correct in all material respects; and

(q)  such Account is in full force and effect and constitutes a legal, valid and binding obligation of the Account Debtor, enforceable against such Account Debtor in accordance with its terms.

“Eligible Inventory” means, at any date of determination, all inventory (as defined in the Uniform Commercial Code) owned by any Subsidiary Loan Party that satisfies at the time of such determination the criteria established from time to time by the Collateral Agent in its reasonable judgment to reflect Borrowing Base Factors.  On the Second Restatement Effective Date, Eligible Inventory shall exclude, without duplication, the following:

(a)  any such inventory that has been shipped to a customer, even if on a consignment or “sale or return” basis, or is otherwise not in the possession or control of or any Subsidiary Loan Party or a warehouseman or bailee of any Subsidiary Loan Party;

(b)  any inventory against which any Subsidiary Loan Party has taken a reserve, to the extent of such reserve, to the extent specified by the Collateral Agent from time to time in its reasonable judgment to reflect Borrowing Base Factors;

(c)  any inventory that has been discontinued or is otherwise of a type (SKU) not currently offered for sale on a regular basis by the Subsidiary Loan Parties (including any such inventory obtained in connection with a Business Acquisition) to the extent specified by the Collateral Agent from time to time in its reasonable judgment to reflect Borrowing Base Factors;

(d)  any inventory not located in the United States or otherwise not subject to a valid and perfected Lien under the Senior Collateral Documents, subject to no prior or equal Lien;

(e)  any supply, scrap or obsolete inventory or inventory that is otherwise unsaleable;

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(f)  any inventory that is past its expiration date, is damaged or not in good condition, is a sample used for marketing purposes or does not meet all material standards imposed by any governmental authority having regulatory authority over such inventory, except in each case to the extent of its net realizable value as determined by the Collateral Agent from time to time in its reasonable judgment;

(g)  any inventory that is subject to any licensing, patent, royalty, trademark, trade name or copyright agreement with any third Person from whom the Borrower or any of its Subsidiaries has received notice of a dispute in respect of such agreement, to the extent that the Collateral Agent determines, in its reasonable judgment, that such dispute could be expected to prevent the sale of such inventory;

(h)  any inventory which is subject to a negotiable document of title which has not been delivered to the Administrative Agent;

(i)  any inventory to the extent that such inventory is not comprised of readily marketable materials of a type manufactured, consumed or held for resale by the Subsidiary Loan Parties in the ordinary course of business;

(j)  any inventory to the extent that such inventory consists of raw materials, component parts and/or work-in-progress;

(k)  any inventory in respect of which the applicable representations and warranties in the Senior Loan Documents are not true and correct in all material respects;

(l)  any inventory to which the Subsidiary Loan Parties do not have good title or any inventory which a Subsidiary Loan Party holds on consignment or on a “sale or return” basis; and

(m)  any inventory (as notified by the Collateral Agent to the Borrower) that the Collateral Agent has, in its reasonable judgment, deemed ineligible in order to reflect Borrowing Base Factors;

provided, however, that no inventory which is stored at a distribution center leased by the Borrower or any other Person shall be considered “Eligible Inventory” unless each of the waivers obtained pursuant to the Original Agreement from the lessor of each leased distribution center of the Subsidiary Loan Parties of any statutory, common law or contractual landlord’s lien with respect to any inventory of any Subsidiary Loan Party (other than with respect to inventory located at leased warehouses having a value in the aggregate not to exceed $40,000,000) shall be in full force and effect (or the Collateral Agent shall have granted a waiver to such compliance).

“Eligible Other Inventory Value” means, at any date of determination, an amount equal to (i) the cost of Eligible Inventory that is Other Inventory (less any appropriate reserve for obsolete Other Inventory and any profits accrued in connection with transfers of Other Inventory between the Borrower and the Subsidiaries or between

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Subsidiaries) at such date, in dollars, determined in accordance with GAAP consistently applied and on a basis consistent with that used in the preparation of the most recent audited consolidated financial statements of the Borrower and its Consolidated Subsidiaries delivered to the Lenders pursuant to Section 5.01(a) multiplied by (ii) the Net Orderly Liquidation Rate with respect to such Other Inventory.

“Eligible Pharmaceutical Inventory Value” means, at any date of determination, an amount equal to (i) the cost of Eligible Inventory that is Pharmaceutical Inventory (less any appropriate reserve for obsolete Pharmaceutical Inventory and any profits accrued in connection with transfers of Pharmaceutical Inventory between the Borrower and the Subsidiaries or between Subsidiaries) at such date, in dollars, determined in accordance with GAAP consistently applied and on a basis consistent with that used in the preparation of the most recent audited consolidated financial statements of the Borrower and its Consolidated Subsidiaries delivered to the Lenders pursuant to Section 5.01(a) multiplied by (ii) the Net Orderly Liquidation Rate with respect to such Pharmaceutical Inventory.

“Eligible Script Lists” means, at any date of determination, all lists owned and maintained on such date by the Subsidiary Loan Parties setting forth Persons (and addresses, telephone numbers or other contact information therefor) who currently purchase or otherwise obtain, in any Store owned or operated by any Subsidiary Loan Party, medication required to be dispensed by a licensed professional.

“Eligible Script Lists Value” means, at any date of determination, the liquidation value of the Eligible Script Lists in dollars, as most recently determined in connection with an appraisal performed for purposes of this Agreement by Washburn & Associates or such other appraisal firm satisfactory to the Collateral Agent.

“Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters.

“Environmental Liability” means all liabilities, obligations, damages, losses, claims, actions, suits, judgments, orders, fines, penalties, fees, expenses and costs, (including administrative oversight costs, natural resource damages and remediation costs), whether contingent or otherwise, arising out of or relating to: (a) compliance or non-compliance with any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person.

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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA; or (h) the existence of any event or condition that could reasonably be expected to constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Plan.

“Estimated Borrowing Base Amount” means the Borrowing Base Amount; provided that for this purpose the assets and properties of Holdings and its subsidiaries shall be deemed to have been pledged, on a first priority basis, to the Collateral Agent for the benefit of the Lenders pursuant to the Senior Collateral Documents.

“Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

“Event of Default” has the meaning assigned to such term in Article VII.

“Excess Cash Flow” means, for any fiscal year, without duplication, of:

(a)  net cash proceeds from operating activities adjusted by net (repayments to) proceeds from accounts receivable securitization as reflected in the statement of cash flows to the financial statements of the Borrower filed with the SEC for the applicable fiscal year; minus

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(b)  the sum of (i) Consolidated Capital Expenditures for such fiscal year (except to the extent attributable to the incurrence of Capital Lease Obligations or synthetic lease obligations or otherwise financed by incurring Long-Term Indebtedness (exclusive of Revolving Loans), by issuing Equity Interests (exclusive of any issuance of Equity Interests to the Borrower or any of the Subsidiaries and any amounts prepaid pursuant to Section 2.11(c)(ii)), through the receipt of capital contributions (other than capital contributions made by the Borrower or any of the Subsidiaries) or using the proceeds of any disposition of assets outside the ordinary course of business or other proceeds not included in Consolidated Net Income) plus (ii) cash consideration paid during such fiscal year to make acquisitions or other capital investments (except to the extent financed by incurring Long-Term Indebtedness (exclusive of Revolving Loans), by issuing Equity Interests (other than to the Borrower or any of the Subsidiaries), through the receipt of capital contributions (other than capital contributions made by the Borrower or any of the Subsidiaries) or using the proceeds of any disposition of assets outside the ordinary course of business or other proceeds not included in Consolidated Net Income); minus

(c)  the aggregate principal amount of Long-Term Indebtedness repaid or prepaid (other than Refinancing Indebtedness) by the Borrower and its Consolidated Subsidiaries during such fiscal year, excluding Indebtedness in respect of Revolving Loans (except to the extent accompanied by a corresponding reduction in Revolving Commitments pursuant to Section 2.08) and Letters of Credit.

“Excluded Taxes” means, with respect to any Agent, any Lender, any Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction described in clause (a) above and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 2.19(b)), any withholding tax that (i) is in effect and would apply to amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to any withholding tax pursuant to Section 2.17(a), or (ii) is attributable to such Foreign Lender’s failure to comply with Section 2.17(e).

“Existing Guaranteed Unsecured Indebtedness” means Indebtedness outstanding as of the Second Restatement Effective Date under the 9.25% Notes and the 8.625% Notes.

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“Existing Non-Guaranteed Indebtedness” means Indebtedness outstanding as of the Second Restatement Effective Date under the Borrower’s 6.125% Notes due 2008, the Borrower’s 6.875% Senior Debentures due 2013, the Borrower’s 7.70% Notes due 2027 and the Borrower’s 6.875% Notes due 2028.

“Existing Second Priority Debt” means Indebtedness outstanding as of the Second Restatement Effective Date under the 8.125% Notes, the 7.5% Notes and the 2017 7.5% Notes.

“Factoring Assets” means any accounts receivable owed to the Borrower or any Subsidiary (whether now existing or arising or acquired in the future) arising in the ordinary course of business from the sale of goods or services, all collateral securing such accounts receivable, all contracts and contract rights and all guarantees or other obligations in respect of such accounts receivable, all proceeds of such accounts receivable and other assets (including contract rights) which are of the type customarily transferred in connection with the factoring of accounts receivable and which are sold, transferred or otherwise conveyed by the Borrower or a Subsidiary pursuant to a Factoring Transaction permitted by this Agreement.

“Factoring Notice” means a written notice delivered by the Borrower to the Administrative Agent at least 30 days after the termination of any Securitization program indicating that the Borrower or its Subsidiaries intend to engage in a Factoring Transaction.

“Factoring Transaction” means any transaction or series of transactions entered into by the Borrower and any Subsidiaries pursuant to which the Borrower or such Subsidiaries sells, conveys or otherwise transfers (or purports to sell, convey or  otherwise transfer) Factoring Assets of the Borrower or such Subsidiaries to a non-related third party factor on market terms as determined in good faith by the senior management of the Borrower; provided that (i) no portion of any Indebtedness deemed to exist as a result of such Factoring Transaction (x) is incurred or Guaranteed by the Borrower or any other Subsidiary (in each case, other than as permitted pursuant to Section 6.01(a)(xvi)), (y) is recourse to the Borrower or any other Subsidiary (in each case, other than as permitted pursuant to Section 6.01(a)(xvi)) and (z) is secured (contingently or otherwise) by any Lien on assets of the Borrower or any other Subsidiary (other than by the Factoring Assets to be sold, conveyed or transferred to the third party factor), (ii) such Factoring Transaction is consummated pursuant to customary contracts, arrangements or agreements entered into with respect to the sale, purchase and servicing of Factoring Assets on market terms for similar factoring, and (iii) in connection with such Factoring Transaction, the third party factor enters into an intercreditor arrangement reasonably acceptable to the Collateral Agent.

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a

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Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

“Financial Covenant Effectiveness Period” means each period on or after the Second Restatement Effective Date commencing on and including any date on which Revolver Availability is less than $100,000,000 and ending on and excluding the first day thereafter, if any, which is the 30th consecutive calendar day on which Revolver Availability is equal to or greater than $100,000,000.

“Financial Officer” means the chief financial officer, principal accounting officer, treasurer, vice president of financial accounting or controller of the Borrower.

“Financial Statement Delivery Date” means the first date after the Second Restatement Effective Date on which a consolidated balance sheet of the Borrower including the assets of Holdings and its subsidiaries is filed with the SEC.

“First Amendment to the Amendment and Restatement” means the First Amendment dated as of June 4, 2007 to the Amendment and Restatement Agreement.

“First Amendment Effective Date” shall have the meaning assigned to such term in the First Amendment to the Amendment and Restatement.

“Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is located.  For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

“GAAP” means generally accepted accounting principles in the United States of America.

“Government Lockbox Account” shall have the meaning assigned to such term in the Senior Subsidiary Security Agreement.

“Government Lockbox Account Agreement” shall have the meaning assigned to such term in the Senior Subsidiary Security Agreement.

“Government Lockbox Account Bank” shall have the meaning assigned to such term in the Senior Subsidiary Security Agreement.

“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“Grantor” shall have the meaning assigned to such term in the Senior Subsidiary Security Agreement.

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“Hazardous Materials” means (a) petroleum products and byproducts, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, radon gas, chlorofluorocarbons and all other ozone-depleting substances, or (b) any chemical, material, substance, waste, pollutant or contaminant that is prohibited, limited or regulated by or pursuant to any Environmental Law.

“Hedging Agreement” means any rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of the foregoing transactions) or any combination of the foregoing transactions.

“Holdings” means The Jean Coutu Group (PJC) USA, Inc., a corporation organized under the laws of the State of Delaware or, if the Reorganization (as defined in the Stock Purchase Agreement dated as of August 23, 2006, pursuant to which the Borrower intends to acquire all the outstanding Equity Interests in Holdings) is consummated prior to the Second Restatement Effective Date, JCG (PJC) USA, LLC, a limited liability company organized under the laws of the State of Delaware.

“HIPAA” has the meaning assigned to such term in Section 3.07.

“Incremental Commitment” has the meaning assigned to such term in Section 2.21.

“Incremental Facility” has the meaning assigned to such term in Section 2.21.

“Incremental Facility Amendment” has the meaning assigned to such term in Section 2.21.

“Indemnified Taxes” means Taxes other than Excluded Taxes.

“Inside Indebtedness” means Indebtedness of the Borrower or any Subsidiary (other than intercompany Indebtedness permitted by Section 6.01(a)(iii)) which matures on or before the Tranche 2/Tranche 3 Term Maturity Date and any portion of any other Indebtedness subject to scheduled amortization on or before the Tranche 2/Tranche 3 Term Maturity Date.

“Integration Capital Expenditures” means, for any period, all capital expenditures that (a) are directly attributable to the integration of the acquisition of Holdings and its subsidiaries and (b) will not recur once the integration of such acquisition of Holdings and its subsidiaries is complete.

“Integration Expenses” means, for any period, all expenses that (a) are directly attributable to the integration of the acquisition of Holdings and its subsidiaries

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and (b) will not recur once the integration of such acquisition of Holdings and its subsidiaries is complete.

“Interest Election Request” means a request by the Borrower to convert or continue a Revolving Borrowing or a Term Borrowing in accordance with Section 2.07.

“Interest Payment Date” means (a) with respect to any ABR Loan (other than a Swingline Loan), the last day of each March, June, September and December, (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period, and (c) with respect to any Swingline Loan, the day that such Loan is required to be repaid.

“Interest Period” means, with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending (x) on the numerically corresponding day in the calendar month that is one, two, three or six and, if agreed to by all Lenders in the applicable Class, nine or 12 months thereafter, (y) in the case of Revolving Loans, seven days thereafter or (z) in the case of Revolving Loans, six weeks thereafter if, at the time of the relevant Borrowing, all Lenders participating therein agree to make an interest period of such duration available, in each case as the Borrower may elect; provided that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day (unless, in the case of Interest Periods of one, two, three or six months, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day), (ii) any Interest Period of one, two, three or six months that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period and (iii) there shall be no more than two Revolving Loans with a seven day Interest Period at any time outstanding.  For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

“Interim Collateral and Guarantee Requirement” means the requirement that:

(a) the Administrative Agent shall have received from each of Holdings and its domestic subsidiaries either (i) a counterpart of, or a supplement to, each Interim Collateral Document duly executed and delivered on behalf of such party or (ii) in the case of any Person that becomes a domestic subsidiary of Holdings after the Second Restatement Effective Date but before the Borrowing Base Date, a supplement to each applicable Interim Collateral Document, in the form specified therein, duly executed and delivered on behalf of such party;

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(b) the Administrative Agent shall have received from each Subsidiary Loan Party either (i) a counterpart of, or a supplement to, the Interim Subsidiary Loan Party Guarantee Agreement duly executed and delivered on behalf of such party or (ii) in the case of any Person that becomes a Subsidiary Loan Party after the Second Restatement Effective Date but before the Borrowing Base Date, a supplement to the Interim Subsidiary Loan Party Guarantee Agreement, in the form specified therein, duly executed and delivered on behalf of such party;

(c) all outstanding Equity Interests in each domestic subsidiary of Holdings shall have been pledged pursuant to the Interim Collateral and Guarantee Agreement and the Collateral Agent shall have received certificates or other instruments representing all such Equity Interests (to the extent certificated), together with undated stock powers or other instruments of transfer with respect thereto endorsed in blank;

(d) (i) all documents and instruments, including Uniform Commercial Code financing statements, required by law or reasonably requested by the Administrative Agent to be filed, registered or recorded to create the Liens intended to be created by the Interim Collateral Documents and perfect such Liens to the extent required by, and with the priority required by, this Agreement and the Interim Collateral Documents, shall have been filed, registered or recorded or delivered to the Administrative Agent for filing, registration or recording or (ii) the Administrative Agent shall have been provided with all authorizations, consents and approvals from each of Holdings and its domestic subsidiaries, Governmental Authority and other Person reasonably requested by it to file, record or register all documents and instruments referred to in clause (d)(i) of this definition; and

(e) each of Holdings and its domestic subsidiaries shall have obtained all consents and approvals required to be obtained by it in connection with the execution and delivery of all Interim Collateral Documents to which it is a party, the performance of its obligations thereunder and the granting by it of the Liens thereunder.

“Inventory” has the meaning assigned to such term in the Intercompany Inventory Purchase Agreement.

“Investment” by any Person in any other Person means (i) any direct or indirect loan, advance or other extension of credit or capital contribution to or for the account of such other Person (by means of any transfer of cash or other property to any Person or any payment for property or services for the account or use of any Person, or otherwise), (ii) any direct or indirect purchase or other acquisition of any Equity Interests, bond, note, debenture or other debt or equity security or evidence of Indebtedness, or any other ownership interest (including, any option, warrant or any other right to acquire any of the foregoing), issued by such other Person, whether or not such acquisition is from such or any other Person, (iii) any direct or indirect payment by such Person on a Guarantee of any obligation of or for the account of such other Person or any direct or

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indirect issuance by such Person of such a Guarantee (provided, however, that for purposes of Section 6.04, payments under Guarantees not exceeding the amount of the Investment attributable to the issuance of such Guarantee will not be deemed to result in an increase in the amount of such Investment) or (iv) any other investment of cash or other property by such Person in or for the account of such other Person.  Any repurchase by the Borrower of its own Equity Interests or Indebtedness shall not constitute an Investment for purposes of this Agreement.  The amount of any Investment shall be the original principal or capital amount thereof less all returns of principal or equity thereon (and without adjustment by reason of the financial condition of such other Person) and shall, if made by the transfer or exchange of property other than cash, be deemed to have been made in an original principal or capital amount equal to the fair market value of such property at the time of such transfer or exchange.

“Issuing Bank Agreement” has the meaning assigned to such term in Section 2.05(i).

“Issuing Banks” means CNAI, JPMorgan Chase Bank, N.A., Bank of America, N.A. and any other Lender designated as an Issuing Bank in accordance with the provisions of Section 2.05(k), in each case in its capacity as an issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.05(i).  An Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of such Issuing Bank, in which case the term “Issuing Banks” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.

 “Joint Venture” means, with respect to any Person, at any date, any other Person in whom such Person directly or indirectly holds an Investment consisting of an Equity Interest, and whose financial results would not be consolidated under GAAP with the financial results of such Person on the consolidated financial statements of such Person, if such statements were prepared in accordance with GAAP as of such date.

“LC Commitment” means, with respect to each Issuing Bank, the commitment of such Issuing Bank to issue Letters of Credit pursuant to Section 2.05.  The initial amount of each Issuing Bank’s LC Commitment is set forth on Schedule 2.01 or in such Issuing Bank’s Issuing Bank Agreement.

“LC Disbursement” means a payment made by an Issuing Bank pursuant to a Letter of Credit.

“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time.  The LC Exposure of any Revolving Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time.

“Lenders” means the Persons listed on Schedule 2.01 as having a Revolving Commitment, a Tranche 1 Term Commitment, a Tranche 2 Term Commitment or a Tranche 3 Term Commitment and any other Person that shall have

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become a party hereto pursuant to an Assignment and Acceptance, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Acceptance.  Unless the context otherwise requires, the term “Lenders” includes the Swingline Lender.

“Letter of Credit” means any letter of credit issued pursuant to this Agreement.

“Leverage Ratio” means, on any date, the ratio of (a) Total Indebtedness as of such date to (b) Consolidated EBITDA for the period of the four fiscal quarters most recently completed on or prior to such date.

“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period.  In the event that such rate is not available at such time for any reason, then the “LIBO Rate” with respect to such Eurodollar Borrowing for such Interest Period shall be the rate rounded upwards, if necessary, to the next 1/100 of 1% at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period.  Notwithstanding the foregoing, solely for purposes of calculating interest in respect of any Tranche 3 Term Loan that is a Eurodollar Loan, the LIBO Rate in respect of any applicable Interest Period will be deemed to be 3.00% per annum if the LIBO Rate for such Interest Period calculated pursuant to the foregoing provisions would otherwise be less than 3.00% per annum.

“LIFO Adjustments” means, for any period, the net adjustment to costs of goods sold for such period required by the Borrower’s LIFO inventory method, determined in accordance with GAAP.

“Loan Parties” means the Borrower and the Subsidiary Loan Parties.

“Loans” means the loans made by the Lenders to the Borrower pursuant to this Agreement.

“Lockbox Account” shall have the meaning assigned to such term in the Senior Subsidiary Security Agreement.

“Long-Term Indebtedness” means any Indebtedness that, in accordance with GAAP, constitutes (or, when incurred, constituted) a long-term liability.

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“Margin Stock” means “margin stock”, as such term is defined in Regulation U of the Board.

“Material Adverse Effect” means a material adverse effect on (a) the business, assets, operations, properties, condition (financial or otherwise), or prospects of the Borrower and the Subsidiaries, taken as a whole, (b) the ability of any Loan Party to perform any of its material obligations under any Senior Loan Document to which it is a party or (c) the legality, validity or enforceability of the Senior Loan Documents (including, without limitation, the validity, enforceability or priority of security interests granted thereunder) or the rights of or benefits available to the Lenders under any Senior Loan Document.

“Material Indebtedness” means Indebtedness (other than the Loans and Letters of Credit), or obligations in respect of one or more Hedging Agreements, of any one or more of the Borrower and the Subsidiaries in an aggregate principal amount exceeding $50,000,000.  For purposes of this definition, the “principal amount” of the obligations of the Borrower or any Subsidiary in respect of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Subsidiary would be required to pay if such Hedging Agreement were terminated at such time.

“Maximum Rate” has the meaning assigned to such term in Section 9.13.

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

“Net Proceeds” means, with respect to any event (a) the cash proceeds received in respect of such event including (i) any cash received in respect of any non-cash proceeds, but only as and when received, (ii) in the case of a casualty, insurance proceeds and (iii) in the case of a condemnation or similar event, condemnation awards and similar payments, net of (b) the sum of (i) all reasonable fees and out-of-pocket expenses paid by the Borrower and the Subsidiaries to third parties (other than Affiliates) in connection with such event, (ii) in the case of a sale, transfer or other disposition of an asset (including pursuant to a sale and leaseback transaction or a casualty or a condemnation or similar proceeding), the amount of all payments required to be made by the Borrower and the Subsidiaries as a result of such event to repay Indebtedness (other than Loans) secured by such asset and (iii) the amount of all taxes paid (or reasonably estimated to be payable) by the Borrower and the Subsidiaries, and the amount of any reserves established by the Borrower and the Subsidiaries to fund contingent liabilities reasonably estimated to be payable, in each case during the year that such event occurred or the next succeeding year and that are directly attributable to such event (as determined reasonably and in good faith by a Financial Officer).

“Net Orderly Liquidation Rate” means, with respect to any type of inventory, at any date of determination, the net orderly liquidation rate with respect to such type of inventory, expressed as a percentage of carrying cost after giving effect to reserves, as determined by Hilco Appraisal Services, LLC (or another appraisal firm

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chosen by the Collateral Agent) in connection with the most recent appraisal of inventory of the Borrower and the Subsidiaries.

“New Notes” means one or more tranches of the Borrower’s notes issued or sold on or about the Second Restatement Effective Date in one or more public offerings or Rule 144A/Regulation S offerings or other private placements.

“Offer Period” has the meaning assigned to such term in Section 2.21.

“Operating Subsidiary” has the meaning assigned to such term in the Intercompany Inventory Purchase Agreement.

“Optional Debt Repurchase” means any optional or voluntary repurchase, redemption, retirement or defeasance for cash by the Borrower or any Subsidiary of any publicly-traded Indebtedness of the Borrower.

“Original Agreement” means this Agreement, including all amendments hereto and waivers hereof effective prior to the 2008 Restatement Effective Date, as in effect immediately prior to the 2008 Restatement Effective Date.

“Other Inventory” means all inventory other than Pharmaceutical Inventory.

“Other Inventory Advance Rate” means the other inventory advance rate determined in accordance with Section 2.20.

“Other Taxes” means any and all present or future recording, stamp, documentary, excise, transfer, sales, property or similar taxes, charges or levies arising from any payment made under any Senior Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Senior Loan Document.

“Outside Indebtedness” means Indebtedness of the Borrower or any Subsidiary (other than intercompany Indebtedness permitted by Section 6.01(a)(iii)) that matures after the Tranche 2/Tranche 3 Term Maturity Date, including the amount of any scheduled amortization after the Tranche 2/Tranche 3 Term Maturity Date.

“Parent Undertaking” means an agreement by the Borrower to cause a Subsidiary other than a Securitization Vehicle to perform its obligations under the instruments governing a Securitization which agreement (a) contains terms that are customarily included in securitizations of accounts receivable involving comparable companies and (b) does not provide for any Guarantee of payment or other credit support in respect of Securitization Assets or Third Party Interests.

“Participant” has the meaning assigned to such term in Section 9.04(c)(i).

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

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“Perfection Certificate” means a certificate in the form of Schedule 8 to the Senior Subsidiary Security Agreement or any other form approved by the Agents.

“Permitted Encumbrances” means:

(a)  Liens imposed by law for taxes that are not yet due or are being contested in compliance with Section 5.05;

(b)  carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than 60 days or are being contested in compliance with Section 5.05;

(c)  pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations;

(d)  deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business;

(e)  judgment liens in respect of judgments that do not constitute an Event of Default under clause (k) of Article VII;

(f)  easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere with the ordinary conduct of business of the Borrower or any Subsidiary;

(g)  licenses, sublicenses, leases or subleases granted in the ordinary course of business with respect to real property; and

(h)  landlord Liens arising by law securing obligations not overdue by more than 60 days or being contested in good faith;

provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness.

“Permitted Second Priority Debt” means Second Priority Debt of the Borrower; provided that (a) the terms of any such Indebtedness, and of any agreement entered into and of any instrument issued in connection therewith, are otherwise permitted by the Senior Loan Documents, (b) if such Indebtedness is issued or incurred to refinance existing Indebtedness, such Indebtedness has a later maturity and a longer weighted average life than such existing Indebtedness, (c) such Indebtedness bears an interest rate not in excess of the market interest rate with respect to such type of Indebtedness as of the time of its issuance or incurrence, (d) at the option of the Borrower, such Indebtedness may contain market call and make-whole provisions as of

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the time of its issuance or incurrence, (e) the senior management of the Borrower determines in good faith that such Indebtedness contains covenants (including with respect to amortization and convertibility) and events of default on market terms and (f) notwithstanding clause (ii) of the definition of “Second Priority Debt”, such Indebtedness may mature prior to the date that is three months after the Tranche 2/Tranche 3 Term Maturity Date.

“Permitted Unsecured Indebtedness” means unsecured Indebtedness of the Borrower; provided that (a) the terms of any such Indebtedness, and of any agreement entered into and of any instrument issued in connection therewith, are otherwise permitted by the Senior Loan Documents, (b) if such Indebtedness is issued or incurred to refinance existing Indebtedness, such Indebtedness has a later maturity and a longer weighted average life than such existing Indebtedness, (c) such Indebtedness bears an interest rate not in excess of the market interest rate with respect to such type of Indebtedness as of the time of its issuance or incurrence, (d) at the option of the Borrower, such Indebtedness may contain market call and make-whole provisions as of the time of its issuance or incurrence and (e) the senior management of the Borrower determines in good faith that such Indebtedness contains covenants (including with respect to amortization and convertibility) and events of default on market terms.

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“Pharmaceutical Inventory” means all inventory consisting of products that can be dispensed only on order of a licensed professional.

“Pharmaceutical Inventory Advance Rate” means the pharmaceutical inventory advance rate determined in accordance with Section 2.20.

“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate has any liability or is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Platform” has the meaning assigned to such term in Section 9.16(b).

“Preferred Stock” means, with respect to any corporation, capital stock issued by such corporation that is entitled to a preference or priority, in respect of dividends or distributions upon liquidation, over some other class of capital stock issued by such corporation.

“Prepayment Event” means:

(a)  any sale, transfer or other disposition (including pursuant to a sale and leaseback transaction) of any property or asset of the Borrower or any Subsidiary,

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other than (i) sales, transfers or other dispositions described in clauses (i), (iii), (iv), (vi) and (vii) of Section 6.05, (ii) sales, transfers or other dispositions described in clause (v) of Section 6.05 to the extent the resulting aggregate Net Proceeds from all such sales, transfers or other dispositions do not exceed $50,000,000 and (iii) other sales, transfers or dispositions resulting in aggregate Net Proceeds not exceeding $10,000,000 during any fiscal year of the Borrower; or

(b)  any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any property or asset of the Borrower or any Subsidiary; or

(c)  the issuance by the Borrower or any Subsidiary of any Equity Interests, or the receipt by the Borrower or any Subsidiary of any capital contribution, other than (i) any such issuance of Equity Interests to, or receipt of any such capital contribution from, the Borrower or a Subsidiary or (ii) any such issuance of Equity Interests to the extent the proceeds of such issuance are used to fund a Business Acquisition; or

(d)  the incurrence by the Borrower or any Subsidiary of any Indebtedness, other than (i) Indebtedness described in clauses (i), (ii), (iii), (iv), (v), (vi), (ix), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi), (xvii) and (xviii) of Section 6.01(a), (ii) extensions, renewals, refinancings or replacements of Indebtedness described in clauses (vii) and (viii) of Section 6.01(a) and (iii) Indebtedness described in clauses (vii) and (viii) of Section 6.01(a) to the extent the proceeds of such Indebtedness are used to fund a Business Acquisition.

“Qualified Preferred Stock” means Preferred Stock of the Borrower that does not require any cash payment (including in respect of redemptions or repurchases), other than in respect of cash dividends, before the date that is six months after the Tranche 2/Tranche 3 Term Maturity Date.

“Refinancing Indebtedness” means Indebtedness (which shall be deemed to include Attributable Debt solely for the purposes of this definition) issued or incurred (including by means of the extension or renewal of existing Indebtedness) to extend, renew or refinance existing Indebtedness or Attributable Debt (“Refinanced Debt”); provided that (i) the terms of any such Indebtedness, and of any agreement entered into and of any instrument issued in connection therewith, are otherwise permitted by the Senior Loan Documents, (ii) such extending, renewing or refinancing Indebtedness is in an original aggregate principal amount not greater than the aggregate principal amount of, and unpaid interest on, the Refinanced Debt plus the amount of any premiums paid thereon and fees and expenses associated therewith, (iii) such Indebtedness (x) does not mature or require scheduled payments of principal prior to the date that is three months after the Tranche 2/Tranche 3 Term Maturity Date and (y) has a later maturity and a longer weighted average life than the Refinanced Debt, (iv) such Indebtedness bears an interest rate not in excess of the market interest rate with respect to such type of Indebtedness as of the time of its issuance or incurrence, (v) at the option of the

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Borrower, such Indebtedness may contain market call and make-whole provisions as of the time of its issuance or incurrence, (vi) if the Refinanced Debt or any Guarantees thereof are subordinated to the Senior Obligations (or prior to the Borrowing Base Date the Interim Obligations), such Indebtedness shall be subordinated to the Senior Obligations or the Interim Obligations, as the case may be, on terms no less favorable, taken as a whole, to the holders of the Senior Obligations or the Interim Obligations, as the case may be, than the subordination terms of such Refinanced Debt or Guarantees thereof (and no Loan Party, Holdings, nor any of its subsidiaries that has not guaranteed such Refinanced Debt guarantees such Indebtedness), (vii) the senior management of the Borrower determines in good faith that such Indebtedness contains covenants (including with respect to amortization and convertibility) and events of default on market terms, (viii) such Indebtedness is benefited by Guarantees (if any) which, taken as a whole, are not materially less favorable to the Lenders than the Guarantees (if any) in respect of such Refinanced Debt, (ix) if such Refinanced Debt or any Guarantees thereof are secured, such Indebtedness and any Guarantees thereof are either unsecured or secured only by such property or assets as secured the Refinanced Debt and Guarantees thereof and not any additional property or assets of the Borrower or any Subsidiary (other than (A) property or assets acquired after the issuance or incurrence of such Refinancing Indebtedness that would have been subject to the Lien securing refinanced Indebtedness if such Indebtedness had not been refinanced, (B) additions to the property or assets subject to the Lien and (C) the proceeds of the property or assets subject to the Lien), (x) if such Refinanced Debt and any Guarantees thereof are unsecured, such Indebtedness and Guarantees thereof are also unsecured and (xi) any Net Cash Proceeds of such Indebtedness are used no later than 45 days following receipt thereof to repay the Refinanced Debt and pay any accrued interest, fees, premiums (if any) and expenses in connection therewith.

“Register” has the meaning set forth in Section 9.04.

“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the directors, officers, employees, agents, trustees and advisors of such Person and such Person’s Affiliates.

“Repurchase Expenditures” means, with respect to any Optional Debt Repurchase, the aggregate amount of expenditures made or required to be made to effect such Optional Debt Repurchase, including without limitation payments on account of principal, premium and fees payable to holders of the Indebtedness purchased or reacquired in connection with such Optional Debt Repurchase, but excluding payments representing accrued interest to the date of such Optional Debt Repurchase and excluding fees and expenses paid to third parties in connection therewith.

“Required Lenders” means, at any time, Lenders having Revolving Exposures, outstanding Term Loans and unused Commitments representing more than 50% of the sum of the total Revolving Exposures, outstanding Term Loans and unused Commitments at such time.

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“Requirement of Law” means, with respect to any Person, the charter and by-laws or other organizational or governing documents of such Person, and any law, rule or regulation (including Environmental Laws, the Code and ERISA) or order, decree or other determination of an arbitrator or a court or other Governmental Authority applicable to or binding upon such Person or any of its property or assets or to which such Person or any of its property or assets is subject.

“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property, except dividends payable solely in shares of the Borrower’s common stock or Qualified Preferred Stock) with respect to any Equity Interests in the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property, except payments made solely with common equity), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Equity Interests in the Borrower or any Subsidiary or any option, warrant or other right to acquire any such Equity Interests in the Borrower or any Subsidiary; provided that in no event shall any exchange of Qualified Preferred Stock with other Qualified Preferred Stock be deemed a Restricted Payment.

“Revolver Availability” means, on any date of determination, the maximum amount of Revolving Loans that could be made to the Borrower on such date pursuant to Section 2.01(b) pursuant to the use of unused Commitments on such date.

“Revolving Availability Period” means the period from and including the Second Restatement Effective Date to but excluding the earlier of the Revolving/Tranche 1 Term Maturity Date and the date of termination of the Revolving Commitments.

“Revolving Commitment” means, with respect to each Lender, the commitment, if any, of such Lender to make Revolving Loans and to acquire participations in Letters of Credit and Swingline Loans hereunder, expressed as an amount representing the maximum aggregate amount of such Lender’s Revolving Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04.  The initial amount of each Lender’s Revolving Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Revolving Commitment, as applicable.  The aggregate amount of the Lenders’ Revolving Commitments on the Second Restatement Effective Date is $1,750,000,000.

“Revolving Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Revolving Loans and its LC Exposure and Swingline Exposure at such time.

“Revolving Lender” means a Lender with a Revolving Commitment or, if the Revolving Commitments have terminated or expired, a Lender with a Revolving Exposure.

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“Revolving Loan” means a Loan made pursuant to clause (b) of Section 2.01.

“Revolving/Tranche 1 Term Maturity Date” means September 30, 2010.

“Script Lists Advance Rate” means the Script Lists advance rate determined in accordance with Section 2.20.

“Second Priority Debt” means any Indebtedness (including the 8.125% Notes, 7.5% Notes and the 2017 7.5% Notes) incurred by Rite Aid and Guaranteed by the Subsidiary Guarantors on or after the Effective Date pursuant to the Second Priority Subsidiary Guarantee Agreement (i) which is secured by the Second Priority Collateral on a pari passu basis (other than as provided by the terms of the applicable Second Priority Debt Documents) with the other Second Priority Debt Obligations and (ii) if issued on or after the Second Restatement Effective Date, matures after the date that is three months after the Tranche 2/Tranche 3 Term Maturity Date; provided, however, that (A) such Indebtedness is permitted to be incurred, secured and Guaranteed on such basis by each Senior Loan Document and each Second Priority Debt Document and (B) the Representative for the holders of such Second Priority Debt shall have become party to the Collateral Trust and Intercreditor Agreement pursuant to, and by satisfying the conditions set forth in, Section 8.12 thereof.  Second Priority Debt shall include any Registered Equivalent Notes issued in exchange thereof.

“Second Restatement Date Amount” means the aggregate principal amount of Tranche 2 Loans that the Borrower is permitted under instruments governing its Indebtedness to, on the Second Restatement Effective Date, borrow and secure by the Liens created under the Interim Collateral Documents.

“Securitization” means any transaction or series of transactions entered into by the Borrower and any Subsidiaries pursuant to which the Borrower or such Subsidiaries sell, convey or otherwise transfer (or purport to sell, convey or otherwise transfer) Securitization Assets to a Securitization Vehicle or another Subsidiary which sells, conveys or otherwise transfers (or purports to sell, convey or otherwise transfer) Securitization Assets to a Securitization Vehicle, and such Securitization Vehicle finances the acquisition of such Securitization Assets (i) with proceeds from the issuance of Third Party Interests, (ii) with Sellers’ Retained Interests, (iii) with proceeds from the sale or collection of Securitization Assets previously purchased by such Securitization Vehicle or (iv) with proceeds from the sale of Securitization Assets to another Securitization Vehicle.  For purposes of this Agreement, the “amount” or “principal amount” of any Securitization shall be deemed at any time to be (1) the aggregate principal or stated amount of the Third Party Interests (which stated amount may be described as a “net investment”, “capital”, “invested amount” or similar term reflecting the amount invested in any beneficial interest constituting a Third Party Interest) incurred or issued pursuant to such Securitization, in each case outstanding at such time, or (2) in the case of any Securitization in respect of which no such principal or stated amount is determinable, the cash purchase price paid by the buyer in connection with its purchase of Third Party Interests less the amount of collections received in respect of such Third

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Party Interests and paid to such buyer, excluding any amounts applied to purchase fees or discount or in the nature of interest.

“Securitization Assets” means any accounts receivable owed to the Borrower or any Subsidiary (whether now existing or arising or acquired in the future) arising in the ordinary course of business from the sale of goods or services, all collateral securing such accounts receivable, all contracts and contract rights and all guarantees or other obligations in respect of such accounts receivable, all proceeds of such accounts receivable and other assets (including contract rights) which are the type customarily transferred in connection with securitizations of accounts receivable and which are sold, transferred or otherwise conveyed (or purported to be sold, transferred or otherwise conveyed) by the Borrower or a Subsidiary to a Securitization Vehicle in connection with a Securitization permitted by Sections 6.01 and 6.05.

“Securitization Vehicle” means a Person that is a direct or indirect wholly owned Subsidiary used solely for the purpose of effecting one or more Securitizations to which the Borrower and/or Subsidiaries and/or another Securitization Vehicle transfer Securitization Assets and which, in connection with such Securitization either issues Third Party Interests or transfers such Securitization Assets to another Securitization Vehicle that issues Third Party Interests; provided, in each case, that (i) each such Person shall engage in no business other than the purchase of Securitization Assets pursuant to Securitizations permitted by Sections 6.01 and 6.05, the issuance of Third Party Interests and any activities reasonably related thereto, (ii) no portion of the Indebtedness or other obligations (contingent or otherwise) of such Person (x) is Guaranteed by the Borrower or any other Subsidiary, other than any Guarantee of obligations (other than of principal of, or interest on, Indebtedness) that may be deemed to exist solely by virtue of Standard Securitization Undertakings, (y) is recourse to the Borrower or any other Subsidiary other than by virtue of Standard Securitization Undertakings and (z) is secured (contingently or otherwise) by any Lien on assets of the Borrower or any other Subsidiary other than by virtue of Standard Securitization Undertakings, (iii) such Person has no contract, agreement, arrangement or understanding with the Borrower or any other Subsidiary other than (A) customary contracts, arrangements or agreements entered into with respect to the sale, purchase and servicing of Securitization Assets on market terms for similar securitization transactions and (B) Guarantees and pledges of security as required by the Senior Loan Documents and the Second Priority Debt Documents and (iv) neither the Borrower nor any Subsidiary has any obligations to maintain or preserve such Person’s financial condition or cause it to achieve certain levels of operating results other than pursuant to Standard Securitization Undertakings.

“Seller” means The Jean Coutu Group (PJC) Inc., a corporation organized under the laws of Quebec.

“Sellers’ Retained Interests” means the debt or equity interests held by the Borrower or any Subsidiary in a Securitization Vehicle to which Securitization Assets have been transferred (or purported to have been transferred) in a Securitization permitted by Sections 6.01 and 6.05, including any such debt or equity received in consideration for the Securitization Assets transferred.

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“Series E Preferred Stock” means the Borrower’s 7% Series E mandatory convertible preferred stock issued prior to the Second Restatement Effective Date.

“Series G Preferred Stock” means the Borrower’s 7% Series G cumulative, convertible pay-in-kind preferred stock held by Green Equity Investors III, L.P. or one of its Affiliates on the Second Restatement Effective Date.

“Series H Preferred Stock” means the Borrower’s 6% Series H cumulative, convertible pay-in-kind preferred stock held by Green Equity Investors III, L.P. or one of its Affiliates on the Second Restatement Effective Date.

“Series I Preferred Stock” means the Borrower’s 5.5% Series I mandatory convertible preferred stock issued prior to the Second Restatement Effective Date.

“Standard Securitization Undertakings” means representations, warranties, covenants and indemnities made by the Borrower or a Subsidiary in connection with Securitizations permitted by Sections 6.01 and 6.05 which representations, warranties, covenants and indemnities are customarily included in securitizations of accounts receivable involving comparable companies.

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages expressed as a decimal (including any marginal, special, emergency or supplemental reserves) established by the Board to which the Administrative Agent is subject with respect to eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board).  Such reserve percentages shall include those imposed pursuant to such Regulation D.  Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation.  The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

“Store” means any retail store (which may include any real property, fixtures, equipment, inventory and script files related thereto) operated, or to be operated, by any Subsidiary Loan Party (and, prior to the Borrowing Base Date, Holdings or any of its subsidiaries).

“subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity of which securities or other ownership interests representing more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date,

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owned, controlled or held by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

“Subsidiary” means any subsidiary of the Borrower.

“Subsidiary Loan Party” means each Subsidiary set forth on Schedule 1.01 hereto and any wholly-owned Domestic Subsidiary, including any Securitization Vehicle that is a Domestic Subsidiary, that owns any assets consisting of inventory, accounts receivable, intellectual property, or script lists; provided that (a) no Subsidiary that engages solely in the Borrower’s pharmacy benefits management business shall be deemed a Subsidiary Loan Party and (b) Holdings and its subsidiaries shall not be Subsidiary Loan Parties prior to the Borrowing Base Date.

“Supermajority Lenders” means, at any time, Lenders having Revolving Exposures, outstanding Term Loans and unused Commitments representing more than 66-2/3% of the aggregate Revolving Exposures, outstanding Term Loans and unused Commitments of all Lenders at such time.

“Swingline Exposure” means, at any time, the aggregate principal amount of all Swingline Loans outstanding at such time.  The Swingline Exposure of any Lender at any time shall be its Applicable Percentage of the total Swingline Exposure at such time.

“Swingline Lender” means CNAI, in its capacity as the lender of Swingline Loans hereunder.

“Swingline Loan” means a Loan made pursuant to Section 2.04.

“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.

“Term Loans” means the Tranche 1 Term Loans, the Tranche 2 Term Loans and the Tranche 3 Term Loans, or any combination thereof (as the context requires).

“Third Party Interests” means, with respect to any Securitization, notes, bonds or other debt instruments, beneficial interests in a trust, ownership interests (including any fractional undivided interests) in a pool or pools of accounts receivable or other interests or securities issued or sold for cash consideration by a Securitization Vehicle to banks, investors or other financing sources (other than the Borrower or its Subsidiaries) the proceeds of which are used to finance, in whole or in part, the purchase by such Securitization Vehicle of accounts receivables or other Securitization Assets in a Securitization.

“Total Indebtedness” means, as of any date, the sum of the aggregate principal amount of Indebtedness of the Borrower and its Consolidated Subsidiaries outstanding as of such date, in the amount that would be reflected on a balance sheet prepared as of such date on a consolidated basis in accordance with GAAP plus, without

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duplication, the aggregate outstanding amount of Third Party Interests (which amount may be described as a “net investment”, “capital”, “invested amount”, “principal amount” or similar term reflecting the aggregate amount invested in beneficial interests constituting Third Party Interests).

“Tranche 1 Term Lender” means a Lender with a Tranche 1 Term Commitment or an outstanding Tranche 1 Term Loan.

“Tranche 2 Term Lender” means a Lender with a Tranche 2 Term Commitment or an outstanding Tranche 2 Term Loan.

“Tranche 3 Term Lender” means a Lender with a Tranche 3 Term Commitment or an outstanding Tranche 3 Term Loan.

“Tranche 1 Term Loans” means Loans made or deemed made under clause (a) of Section 2.01.

“Tranche 2 Term Loans” means Loans made or deemed made under clause (c) of Section 2.01.

“Tranche 3 Term Loans” means Loans made or deemed made under clause (d) of Section 2.01.

“Tranche 1 Term Commitment” means, with respect to each Lender, the commitment, if any, of such Lender to make a Tranche 1 Term Loan hereunder on the First Restatement Effective Date, expressed as an amount representing the maximum principal amount of the Tranche 1 Term Loans to be made by such Lender hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04.  The initial amount of each Lender’s Tranche 1 Term Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Tranche 1 Term Commitment, as applicable.  The aggregate amount of the Lenders’ Tranche 1 Term Commitments on the First Restatement Effective Date is $145,000,000.

“Tranche 2 Term Commitment” means, with respect to each Lender, the commitment, if any, of such Lender to make a Tranche 2 Term Loan hereunder on the Second Restatement Effective Date, expressed as an amount representing the maximum principal amount of the Tranche 2 Term Loans to be made by such Lender hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04.  The initial amount of each Lender’s Tranche 2 Term Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Tranche 2 Term Commitment, as applicable.  The aggregate amount of the Lenders’ Tranche 2 Term Commitments on the Second Restatement Effective Date is $1,105,000,000.

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“Tranche 3 Term Commitment” means, with respect to each Lender, the commitment, if any, of such Lender to make a Tranche 3 Term Loan hereunder on the 2008 Restatement Effective Date, expressed as an amount representing the maximum principal amount of the Tranche 3 Term Loans to be made by such Lender hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04.  The initial amount of each Lender’s Tranche 3 Term Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Tranche 3 Term Commitment, as applicable.  The aggregate amount of the Lenders’ Tranche 3 Term Commitments on the 2008 Restatement Effective Date is $350,000,000.

“Tranche 2/Tranche 3 Term Maturity Date” means June 4, 2014.

“Transactions” means the execution, delivery and performance by the Borrower, the Subsidiary Loan Parties and Holdings and its subsidiaries, as applicable, of the Amendment and Restatement Agreement and each other document contemplated thereby to be executed on the Second Restatement Effective Date or the Borrowing Base Date to which it is a party, the borrowing of Tranche 2 Term Loans, the use of proceeds thereof and the other transactions to be effected on the Second Restatement Effective Date (including the Acquisition).

“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

“USA Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001.

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Title IV of ERISA.

SECTION 1.02.  Classification of Loans and Borrowings.  For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a “Eurodollar Revolving Loan”).  Borrowings also may be classified and referred to by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a “Eurodollar Borrowing”) or by Class and Type (e.g., a “Eurodollar Revolving Borrowing”).

SECTION 1.03.  Terms Generally.  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other

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document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein); provided, however, that amendments to the Indentures and the Second Priority Debt Documents after the Second Restatement Effective Date shall be effective for purposes of references thereto in this Agreement and the other Senior Loan Documents only if such amendments are permitted hereunder or are consented to in writing for such purpose by the Required Lenders (or such other percentage of the Lenders as may be specified herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

SECTION 1.04.  Accounting Terms; GAAP.  Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the Second Restatement Effective Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.

SECTION 1.05.  Terms Defined in Definitions Annex.  Capitalized terms used in this Agreement that are not defined in Section 1.01 shall have the meanings assigned to such terms in the Definitions Annex (but any definition of such a term in the Definitions Annex shall be disregarded for purposes hereof if such term is also defined in Section 1.01).

ARTICLE II

The Credits

SECTION 2.01.  Commitments.  (a)  Subject to the terms and conditions set forth herein, each Lender made a Tranche 1 Term Loan to the Borrower on the First Restatement Effective Date in an aggregate principal amount not exceeding its Tranche 1 Term Commitment.  Amounts repaid or prepayed in respect of Tranche 1 Term Loans may not be reborrowed.

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(b)  Subject to the terms and conditions set forth herein, each Lender agrees to make Revolving Loans to the Borrower from time to time during the Revolving Availability Period in an aggregate principal amount that will not result in such Lender’s Revolving Exposure exceeding the lesser of (i) such Lender’s Revolving Commitment and (ii) such Lender’s Applicable Percentage of an amount equal to (A) the Borrowing Base Amount in effect at such time minus (B) the sum of (1) the outstanding Tranche 1 Term Loans at such time, (2) prior to the Borrowing Base Date, zero and from and after the Borrowing Base Date, the outstanding Tranche 2 Term Loans at such time and (3) the outstanding Tranche 3 Term Loans at such time.  Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans.

(c)  Subject to the terms and conditions set forth herein, each Lender made a Tranche 2 Term Loan to the Borrower on the Second Restatement Effective Date in an aggregate principal amount not exceeding its Tranche 2 Term Commitment.  Amounts repaid or prepayed in respect of Tranche 2 Term Loans may not be reborrowed.

(d)  Subject to the terms and conditions set forth herein, each Lender agrees to make its pro rata share of the Tranche 3 Term Loans to be made to the Borrower on the 2008 Restatement Effective Date (determined based upon the relative amount such Tranche 3 Term Lender’s Tranche 3 Term Commitment).  The aggregate principal amount of Tranche 3 Term Loans of any Lender shall not exceed such Lender’s Tranche 3 Term Commitment.  Amounts repaid or prepayed in respect of Tranche 3 Term Loans may not be reborrowed.  Notwithstanding anything to the contrary contained herein (and without affecting any other provisions hereof), the funded portion of each Tranche 3 Term Loan to be made on the 2008 Restatement Effective Date (i.e., the amount advanced to the Borrower on the 2008 Restatement Effective Date) shall be equal to 90.00% of the principal amount of such Loan (it being agreed that the full principal amount of each such Loan will be deemed outstanding on the 2008 Restatement Effective Date and the Borrower shall be obligated to repay 100% of the principal amount of each such Loan as provided hereunder).

SECTION 2.02.  Loans and Borrowings.  (a)  Each Loan (other than a Swingline Loan) shall be made as part of a Borrowing consisting of Loans of the same Class and Type made by the Lenders ratably in accordance with the amounts of their Commitments of the applicable Class.  The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.

(b)  Subject to Section 2.14, each Revolving Borrowing and Term Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith.  Each Swingline Loan shall be an ABR Loan.  Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.

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(c)  At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $5,000,000.  At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $5,000,000; provided that an ABR Revolving Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total Revolving Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.05(e).  Each Swingline Loan shall be in an amount that is an integral multiple of $1,000,000.  Borrowings of more than one Class and Type may be outstanding at the same time; provided that there shall not at any time be more than a total of 10 Eurodollar Borrowings outstanding.

(d)  Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Revolving Borrowing, Tranche 1 Term Borrowing, Tranche 2 Term Borrowing or Tranche 3 Term Borrowing if the Interest Period requested with respect thereto would end after the Revolving/Tranche 1 Term Maturity Date or the Tranche 2/Tranche 3 Term Maturity Date, as the case may be.

SECTION 2.03.  Requests for Borrowings.  To request a Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than (1) 10:30 a.m., New York City time, on the Business Day of the proposed Borrowing, in the case of Borrowings to be made on the same day as such notice is given or (2) 12:00 noon, New York City time, on the Business Day before the proposed Borrowing, in the case of all other Borrowings.  Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Borrowing Request in a form approved by the Administrative Agent and signed by the Borrower.  Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:

(i) whether the requested Borrowing is to be a Revolving Borrowing, a Tranche 1 Term Borrowing, a Tranche 2 Term Borrowing or a Tranche 3 Term Borrowing;

(ii) the aggregate amount of such Borrowing;

(iii) the date of such Borrowing, which shall be a Business Day;

(iv) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

(v) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”; and

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(vi) the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.06.

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing.  If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.  Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.

SECTION 2.04.  Swingline Loans.  (a)  Subject to the terms and conditions set forth herein, the Swingline Lender may, in its sole discretion, make Swingline Loans to the Borrower from time to time during the Revolving Availability Period in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline Loans exceeding $100,000,000 or (ii) the sum of the total Revolving Exposures exceeding the lesser of (A) the total Revolving Commitments at such time and (B) the Borrowing Base Amount in effect at such time minus the sum of (1) the outstanding Tranche 1 Term Loans at such time, (2) prior to the Borrowing Base Date, zero and from and after the Borrowing Base Date, the outstanding Tranche 2 Term Loans at such time and (3) the outstanding Tranche 3 Term Loans at such time; provided that (i) the Swingline Lender shall not be required to make a Swingline Loan to refinance an outstanding Swingline Loan and (ii) the Swingline Lender shall not have any obligation, under this Agreement or otherwise, to make any Swingline Loan requested by the Borrower hereunder and may, in its sole discretion, decline to make a requested Swingline Loan.  Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Swingline Loans.

(b)  To request a Swingline Loan, the Borrower shall notify the Administrative Agent of such request by telephone (confirmed by telecopy), not later than 1:00 p.m., New York City time, on the day of a proposed Swingline Loan.  Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day) and amount of the requested Swingline Loan.  The Administrative Agent will promptly advise the Swingline Lender of any such notice received from the Borrower.  The Swingline Lender shall make each Swingline Loan available to the Borrower by means of a wire transfer to an account designated by the Borrower (or, in the case of a Swingline Loan made to finance the reimbursement of an LC Disbursement as provided in Section 2.05(e), by remittance to the relevant Issuing Bank) by 3:00 p.m., New York City time, on the requested date of such Swingline Loan.

(c)  Interest on each Swingline Loan shall be payable on the Interest Payment Date with respect thereto.

(d)  The Administrative Agent shall (i) at any time when Swingline Loans in an aggregate principal amount of $10,000,000 or more are outstanding, at the request of the Swingline Lender in its sole discretion, or (ii) on the date that is seven days after

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the date on which a Swingline Loan was made, deliver on behalf of the Borrower a Borrowing Request pursuant to Section 2.03 for an ABR Revolving Borrowing in the amount of such Swingline Loans; provided, however, that the obligations of the Lenders to fund such Borrowing shall not be subject to the conditions set forth in Section 4.02.

(e)  The Swingline Lender may by written notice given to the Administrative Agent not later than 12:00 noon, New York City time, on any Business Day require the Revolving Lenders to acquire participations on such Business Day in all or a portion of the Swingline Loans outstanding.  Such notice shall specify the aggregate amount of Swingline Loans in which Revolving Lenders will participate.  Promptly upon receipt of such notice (but no later than 2:00 p.m., New York City time, on such Business Day), the Administrative Agent will give notice thereof to each Revolving Lender, specifying in such notice such Lender’s Applicable Percentage of such Swingline Loan or Loans.  Each Revolving Lender hereby absolutely and unconditionally agrees, upon timely receipt of notice as provided above, to pay to the Administrative Agent, for the account of the Swingline Lender, such Lender’s Applicable Percentage of such Swingline Loan or Loans.  Each Revolving Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.  Each Revolving Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the Swingline Lender the amounts so received by it from the Revolving Lenders.  The Administrative Agent shall notify the Borrower of any participations in any Swingline Loan acquired pursuant to this paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the Swingline Lender.  Any amounts received by the Swingline Lender from the Borrower (or other Person on behalf of the Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent, and any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Revolving Lenders that shall have made their payments pursuant to this paragraph and to the Swingline Lender, as their interests may appear.  The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve the Borrower of any default in the payment thereof.

SECTION 2.05.  Letters of Credit.  (a)  General.  Subject to the terms and conditions set forth herein, the Borrower may request the issuance of (and the applicable Issuing Bank, as specified by the Borrower, will issue) Letters of Credit for its own account, in a form reasonably acceptable to the Administrative Agent and the relevant Issuing Bank, at any time and from time to time during the Revolving Availability Period.  In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, an

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Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.

(b)  Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.  To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the applicable Issuing Bank) to the relevant Issuing Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit.  If requested by an Issuing Bank, the Borrower also shall submit a letter of credit application on such Issuing Bank’s standard form in connection with any request for a Letter of Credit.  A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the total LC Exposure shall not exceed $450,000,000, (ii) the amount of the LC Exposure attributable to Letters of Credit issued by the applicable Issuing Bank will not exceed the LC Commitment of such Issuing Bank and (iii) the total Revolving Exposures shall not exceed the lesser of (A) the total Revolving Commitments at such time and (B) the Borrowing Base Amount in effect at such time minus the sum of (1) the outstanding Tranche 1 Term Loans at such time, (2) prior to the Borrowing Base Date, zero and from and after the Borrowing Base Date, the outstanding Tranche 2 Term Loans at such time and (3) the outstanding Tranche 3 Term Loans at such time.

(c)  Expiration Date.  Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date that is one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is five Business Days prior to the Revolving/Tranche 1 Term Maturity Date.

(d)  Participations.  By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the applicable Issuing Bank or the Lenders, such Issuing Bank hereby grants to each Revolving Lender, and each Revolving Lender hereby acquires from such Issuing Bank, a participation in such Letter of Credit in an amount equal to such Lender’s Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit.  In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the applicable Issuing Bank, such Lender’s Applicable Percentage of each LC Disbursement made by such Issuing Bank and not reimbursed by the Borrower on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment

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required to be refunded to the Borrower for any reason.  Each Revolving Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

(e)  Reimbursement.  If any Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 3:30 p.m., New York City time, on the date that such LC Disbursement is made, if the Borrower shall have received notice of such LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such notice has not been received by the Borrower prior to such time on such date, then not later than 1:00 p.m., New York City time, on the Business Day immediately following the day that the Borrower receives such notice; provided that, if such LC Disbursement is not less than $5,000,000, the Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 or 2.04 that such payment be financed with an ABR Revolving Borrowing or Swingline Loan in an equivalent amount and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Borrowing or Swingline Loan.  If the Borrower fails to make such payment when due, the Administrative Agent shall notify each Revolving Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Lender’s Applicable Percentage thereof.  Promptly following receipt of such notice, each Revolving Lender shall pay to the Administrative Agent its Applicable Percentage of the payment then due from the Borrower, in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the relevant Issuing Bank the amounts so received by it from the Revolving Lenders.  Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to such Issuing Bank or, to the extent that Revolving Lenders have made payments pursuant to this paragraph to reimburse such Issuing Bank, then to such Lenders and such Issuing Bank as their interests may appear.  Any payment made by a Revolving Lender pursuant to this paragraph to reimburse an Issuing Bank for any LC Disbursement (other than the funding of ABR Revolving Loans or a Swingline Loan as contemplated above) shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement.

(f)  Obligations Absolute.  The Borrower’s obligation to reimburse LC Disbursements as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein or herein, (ii) any draft or other document presented under a

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Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by any Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder.  None of the Administrative Agent, any Lender or any Issuing Bank, or any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the relevant Issuing Bank; provided that the foregoing shall not be construed to excuse such Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the fullest extent permitted by applicable law) suffered by the Borrower that are caused by such Issuing Bank’s gross negligence or willful misconduct (as determined by a court of competent jurisdiction by a final and non-appealable judgment) in determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof.  The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of an Issuing Bank (as determined by a court of competent jurisdiction by a final and non-appealable judgment), such Issuing Bank shall be deemed to have exercised care in each such determination.  In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, an Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

(g)  Disbursement Procedures.  The applicable Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit.  The applicable Issuing Bank shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed by telecopy) of such demand for payment and whether such Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement.

(h)  Interim Interest.  If an Issuing Bank shall make any LC Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that

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the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Revolving Loans; provided that, if the Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section, then Section 2.13(c) shall apply.  Interest accrued pursuant to this paragraph shall be for the account of the applicable Issuing Bank, except that interest accrued on and after the date of payment by any Revolving Lender pursuant to paragraph (e) of this Section to reimburse such Issuing Bank shall be for the account of such Lender to the extent of such payment.

(i)  Resignation or Replacement of the Issuing Bank.  An Issuing Bank may resign at any time by giving 180 days’ prior written notice to the Administrative Agent, the Borrower and the Lenders, and an Issuing Bank may be replaced at any time by written agreement (an “Issuing Bank Agreement”) among the Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank, which shall set forth the LC Commitment of such Issuing Bank.  The Administrative Agent shall notify the Lenders of any such replacement of an Issuing Bank.  At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.12(b).  From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require.  After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.

(j)  Cash Collateralization.  If any Event of Default shall occur and be continuing, on the Business Day that the Borrower receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this paragraph, the Borrower shall (or shall cause Subsidiary Loan Parties to) deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders, an amount in cash equal to the total LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower or any Subsidiary Loan Party described in clause (h) or (i) of Article VII.  The Borrower also shall (or shall cause Subsidiary Loan Parties and, prior to the Borrowing Base Date, Holdings and its subsidiaries to) deposit cash collateral pursuant to this paragraph as and to the extent required by Section 2.11(b), and any such cash collateral so deposited and held by the Administrative Agent hereunder shall constitute part of the Borrowing Base Amount for purposes of determining compliance with Section 2.11(b).  Each such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the obligations of the Borrower under this Agreement.  The Administrative Agent shall have

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exclusive dominion and control, including the exclusive right of withdrawal, over such account.  The Administrative Agent shall, at the Borrower’s risk and expense, invest all such deposits in Permitted Investments chosen in the sole discretion of the Administrative Agent after consultation with the Borrower, provided that no consultation shall be required if a Default has occurred and is continuing.  Other than any interest earned in respect of the investment of such deposits, such deposits shall not bear interest.  Interest or profits, if any, on such investments shall accumulate in such account.  Moneys in such account shall be applied by the Administrative Agent to reimburse each Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure), be applied to satisfy the Senior Obligations.  If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all Events of Default have been cured or waived (or, during a Cash Sweep Period, paid into the Citibank Concentration Account).  If the Borrower is required to provide an amount of cash collateral hereunder pursuant to Section 2.11(b), such amount (to the extent not applied as aforesaid) shall be returned to the Borrower as and to the extent that, after giving effect to such return, the Borrower would remain in compliance with Section 2.11(b) and no Default shall have occurred and be continuing.  Unless and except to the extent that the deposit of cash collateral directly by the Borrower would not result in an obligation to grant a security interest in such cash collateral to the holders of other outstanding Indebtedness of the Borrower, the Borrower will cause Subsidiary Loan Parties (and, prior to the Borrowing Base Date, Holdings and its subsidiaries) to deposit all cash collateral required to be deposited pursuant to this Section 2.05(j) or Section 2.11(b).

(k)  Additional Issuing Banks  The Borrower may, at any time and from time to time with the consent of the Administrative Agent (which consent shall not be unreasonably withheld) and such Lender, designate one or more additional Lenders to act as an issuing bank under the terms of this Agreement.  Any Lender designated as an issuing bank pursuant to this clause (k) shall be deemed to be an “Issuing Bank” (in addition to being a Lender) in respect of Letters of Credit issued or to be issued by such Lender, and, with respect to such Letters of Credit, such term shall thereafter apply to the other Issuing Banks and such Lender in its capacity as an Issuing Bank.

(l)  Reporting by Issuing Banks to the Administrative Agent.  At the end of each week and otherwise upon request of the Administrative Agent, each Issuing Bank shall provide the Administrative Agent with a certificate identifying the Letters of Credit issued by such Issuing Bank and outstanding on such date, the amount and expiration date of each such Letter of Credit, the beneficiary thereof, the amount, if any, drawn under each such Letter of Credit and any other information reasonably requested by the Administrative Agent with respect to such Letters of Credit.  The Administrative Agent shall promptly enter all such information received by it pursuant to this Section 2.05(l) in the Register.

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SECTION 2.06.  Funding of Borrowings.  (a)  Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon, New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders; provided that Swingline Loans shall be made as provided in Section 2.04.  The Administrative Agent will make such Loans available to the Borrower by wire transfer, in like funds, to an account designated by the Borrower in the applicable Borrowing Request.  Wire transfers to the Borrower of all Loans (other than Swingline Loans and same-day ABR Revolving Borrowings) shall be made no later than 1:00 p.m., New York City time.  Wire transfers to the Borrower of Swingline Loans and same-day ABR Revolving Borrowings shall be made no later than 4:00 p.m., New York City time.

(b)  Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Borrower, the interest rate applicable to ABR Revolving Loans.  If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.

SECTION 2.07.  Interest Elections.  (a)  Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request.  Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section.  The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.  This Section shall not apply to Swingline Borrowings, which may not be converted or continued.

(b)  To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required to be made under Section 2.03 if the Borrower were requesting a Revolving Borrowing of the Type resulting from such election to be made on the effective date of such election.  Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or

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telecopy to the Administrative Agent of a written Interest Election Request in a form approved by the Administrative Agent and signed by the Borrower.

(c)  Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02 and paragraph (f) of this Section:

(i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);

(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.

If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.

(d)  Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

(e)  If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing.  Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.

(f)  A Revolving Borrowing, Tranche 1 Term Borrowing, Tranche 2 Term Borrowing or Tranche 3 Term Borrowing may not be converted to or continued as a Eurodollar Borrowing if after giving effect thereto the Interest Period therefor would end after the Revolving/Tranche 1 Term Maturity Date or the Tranche 2/Tranche 3 Term Maturity Date, as the case may be.

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SECTION 2.08.  Termination and Reduction of Commitments.   (a)  Unless previously terminated in accordance with the terms of this Agreement, (i) the Tranche 1 Term Commitments shall terminate at 5:00 p.m., New York City time on the First Restatement Effective Date, (ii) the Revolving Commitments shall terminate on the Revolving/Tranche 1 Term Maturity Date, (iii) the Tranche 2 Term Commitments shall terminate at 5:00 p.m., New York City time on the Second Restatement Effective Date and (iv) the Tranche 3 Term Commitments shall terminate at 5:00 p.m., New York City time on the 2008 Restatement Effective Date.

(b)  The Borrower may at any time terminate, or from time to time reduce, the Commitments of any Class; provided that (i) each reduction of the Commitments of any Class shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000 and (ii) the Borrower shall not terminate or reduce the Revolving Commitments if, after giving effect to any concurrent prepayment of the Revolving Loans in accordance with Section 2.11, the total Revolving Exposures would exceed the total Revolving Commitments.

(c)  The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section at least one Business Day prior to the effective date of such termination or reduction, specifying such election and the effective date thereof.  Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof.  Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a notice of voluntary termination of the Revolving Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.  Any termination or reduction of the Commitments of any Class shall be permanent.  Each reduction of the Commitments of any Class shall be made ratably among the Lenders in accordance with their Commitments of such Class.

SECTION 2.09.  Repayment of Loans; Evidence of Indebtedness.   (a)  The Borrower hereby unconditionally promises to pay (i) to the Administrative Agent for the account of each Tranche 1 Term Lender the then unpaid principal amount of the Tranche 1 Term Loan of such Lender as provided in Section 2.10, (ii) to the Administrative Agent for the account of each Revolving Lender the then unpaid principal amount of each Revolving Loan of such Lender on the Revolving/Tranche 1 Term Maturity Date, (iii) to the Swingline Lender the then unpaid principal amount of each Swingline Loan on the earlier of (A) the Revolving/Tranche 1 Term Maturity Date and (B) the date that is seven days after the date on which such Swingline Loan was made; provided that on each date that a Revolving Borrowing is made, the Borrower shall repay all Swingline Loans that were outstanding on the date such Borrowing was requested, (iv) to the Administrative Agent for the account of each Tranche 2 Term Lender the then unpaid principal amount of the Tranche 2 Term Loan of such Lender as provided in Section 2.10 and (v) to the Administrative Agent for the account of each Tranche 3 Term Lender the then unpaid principal amount of the Tranche 3 Term Loan of such Lender as provided in Section 2.10.

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(b)  Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the Indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.

(c)  The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class and Type thereof and the Interest Period, if any, applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.

(d)  The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.

(e)  Any Lender may request that Loans of any Class made by it be evidenced by a promissory note.  In such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in the form attached hereto as Exhibit A-1 or A-2, as applicable, or in such other form approved by the Administrative Agent and the Borrower.  Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

SECTION 2.10.  Amortization and Repayment of Term Loans.  (a)  The Borrower shall repay to the Administrative Agent for the ratable account of the Tranche 2 Term Lenders 0.25% of the initial aggregate principal amount of the Tranche 2 Term Loans on the last Business Day of each March, June, September and December, commencing on the first such date to occur on or after the first anniversary of the Second Restatement Effective Date (which installments shall be reduced as a result of the application of prepayments in accordance with the order of priority set forth in paragraph (d) of this Section).

(b)  The Borrower shall repay to the Administrative Agent for the ratable account of the Tranche 3 Term Lenders 0.25% of the initial aggregate principal amount of the Tranche 3 Term Loans on the last Business Day of each March, June, September and December, commencing on December 31, 2008 (which installments shall be reduced as a result of the application of prepayments in accordance with the order of priority set forth in paragraph (d) of this Section).

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(c)  To the extent not previously paid, all Tranche 1 Term Loans shall be due and payable on the Revolving/Tranche 1 Term Maturity Date.  To the extent not previously paid, all Tranche 2 Term Loans shall be due and payable on the Tranche 2/Tranche 3 Term Maturity Date.  To the extent not previously paid, all Tranche 3 Term Loans shall be due and payable on the Tranche 2/Tranche 3 Term Maturity Date.

(d)  Any prepayment of a Tranche 2 Term Borrowing or a Tranche 3 Term Borrowing pursuant to Section 2.11(b), (c) or (d) shall be applied to reduce the subsequent scheduled repayments of such Borrowings to be made pursuant to this Section as follows: first, in order of their maturity for the next fiscal year after such prepayment and second, to the extent of any excess, on a pro rata basis to the remaining scheduled repayments.

(e)  Prior to any repayment of any Term Borrowing hereunder, the Borrower shall select the Borrowing or Borrowings to be repaid and shall notify the Administrative Agent by telephone (confirmed by telecopy) of such selection not later than 11:00 a.m., New York City time, three Business Days before the scheduled date of such repayment.  Each repayment of a Borrowing shall be applied ratably to the Loans included in the repaid Borrowing.  Repayments of Term Borrowings shall be accompanied by accrued interest on the amount repaid.

SECTION 2.11.  Prepayment of Loans.  (a)  The Borrower shall have the right, at any time and from time to time, to prepay any Borrowing in whole or in part, subject to the requirements of this Section; provided, however, that any partial prepayment made pursuant to this Section 2.11(a) shall be in a principal amount that is a multiple of $1,000,000 and not less than $5,000,000.

(b)  (i)    In the event and on each date that the sum of (A) the total Revolving Exposures on such date, (B) the outstanding Tranche 1 Term Loans on such date, (C) if such date is prior to the Borrowing Base Date, zero and, if such date is on or after the Borrowing Base Date, the outstanding Tranche 2 Term Loans on such date and (D) the outstanding Tranche 3 Term Loans on such date exceed the then-current Borrowing Base Amount, the Borrower shall on each such date apply an amount equal to such excess as follows: first, to prepay Revolving Borrowings or Swingline Loans, second, to the extent of any remaining excess or, if no Revolving Borrowings or Swingline Loans are outstanding, to make a deposit in a cash collateral account maintained by the Administrative Agent pursuant to Section 2.05(j) to be held as security for the Borrower’s obligations in respect of Letters of Credit and third, to the extent of any remaining excess, to prepay Term Borrowings on a pro rata basis (determined based upon the sum of the outstanding Term Loans at such time).

(ii)  In the event and on each date that the total Revolving Exposures exceed the total Revolving Commitments, the Borrower shall on such date apply an amount equal to such excess first, to prepay Revolving Borrowings or Swingline Borrowings and second, to the extent of any remaining excess, or if no Revolving Borrowings or Swingline Loans are outstanding, to a cash collateral account maintained

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by the Administrative Agent pursuant to Section 2.05(j) to be held as security for the Borrower’s obligations in respect of Letters of Credit.

(c)  In the event and on each occasion that any Net Proceeds are received by or on behalf of the Borrower or any Subsidiary in respect of any Prepayment Event, the Borrower shall, within three Business Days after such Net Proceeds are received, prepay Tranche 2 Term Borrowings and Tranche 3 Term Borrowings, on a pro rata basis, in an aggregate amount equal to (i) 100% of the Net Proceeds resulting from prepayment events described in clauses (a), (b) and (d) of the definition of “Prepayment Event” and (ii) 50% of the Net Proceeds resulting from prepayment events described in clause (c) of the definition of “Prepayment Event”; provided that if at the time any (x) Net Proceeds resulting from prepayment events described in clause (a) of the definition of “Prepayment Events” are received and the Revolver Availability is less than $900,000,000 (or, if such time is prior to the Borrowing Base Date, $475,000,000) or (y) Net Proceeds resulting from any Prepayment Event are received during a Cash Sweep Period, such Net Proceeds will be applied as follows: first, to prepay Revolving Borrowings or Swingline Loans and second, to the extent of any remaining excess, to prepay Tranche 2 Term Borrowings and Tranche 3 Term Borrowings, on a pro rata basis; provided further that, in the case of any prepayment event described in clause (a) or (b) of the definition of “Prepayment Event”, if the Borrower shall elect to apply the Net Proceeds from such event (or a portion thereof specified in such certificate), within 365 days after receipt of such Net Proceeds, to acquire real property, equipment or other tangible assets to be used in the business of the Borrower and the Subsidiaries, and certifying that no Default has occurred and is continuing, then no prepayment shall be required pursuant to this paragraph in respect of the Net Proceeds in respect of such event (or the portion of such Net Proceeds specified in such certificate, if applicable), except to the extent of any such Net Proceeds therefrom that have not been so applied by the end of such 365 day period, at which time a prepayment shall be required in an amount equal to such Net Proceeds that have not been so applied.

(d)  Following the end of each fiscal year of the Borrower, commencing with the fiscal year ending February 29, 2008, the Borrower shall prepay Tranche 2 Term Borrowings and Tranche 3 Term Borrowings, on a pro rata basis, in an aggregate amount equal to (i) if on the last day of such fiscal year the Leverage Ratio is greater than or equal to 4.50 to 1.00, 50% of the Excess Cash Flow for such fiscal year, (ii) if on the last day of such fiscal year the Leverage Ratio is greater than or equal to 4.00 to 1.00 but less than 4.50 to 1.00, 25% of the Excess Cash Flow for such fiscal year and (iii) if on the last day of such fiscal year the Leverage Ratio is less than 4.00 to 1.00, 0% of the Excess Cash Flow for such fiscal year.  Each prepayment pursuant to this paragraph shall be made on or before the date on which financial statements are delivered pursuant to Section 5.01 with respect to the fiscal year for which Excess Cash Flow is being calculated (and in any event within 90 days after the end of such fiscal year).

(e)  Prior to any optional or mandatory prepayment of Borrowings hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid and shall specify such selection in the notice of such prepayment pursuant to paragraph (f) of this Section.

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(f)  The Borrower shall notify the Administrative Agent (and, in the case of prepayment of a Swingline Loan, the Swingline Lender) by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of prepayment, (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, one Business Day before the date of prepayment or (iii) in the case of prepayment of a Swingline Loan, not later than 12:00 noon, New York City time, on the date of prepayment.  Each such notice shall be irrevocable and shall specify the prepayment date, the Borrowings to be prepaid and the principal amount of each Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment; provided that, if a notice of optional prepayment is given in connection with a conditional notice of termination of the Revolving Commitments as contemplated by Section 2.08, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.08.  Promptly following receipt of any such notice (other than a notice relating solely to Swingline Loans), the Administrative Agent shall advise the Lenders of the contents thereof.  Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02, except as necessary to apply fully the required amount of a mandatory prepayment.  Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing.  Prepayments shall be accompanied by accrued interest to the extent required by Section 2.13.

SECTION 2.12.  Fees.  (a)  The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender a commitment fee, which shall accrue at the rate of 0.25% per annum on the daily unused amount of the Revolving Commitment of such Lender during the period from and including the Original Restatement Effective Date to but excluding the date on which such Commitment terminates.  Accrued commitment fees shall be payable in arrears on the last day of March, June, September and December of each year and on the date on which the Revolving Commitments terminate, commencing on the first such date to occur after the Original Restatement Effective Date.  All commitment fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).  For purposes of computing commitment fees pursuant to this Section 2.12(a), a Revolving Commitment of a Lender shall be deemed to be used to the extent of the outstanding Revolving Loans and LC Exposure of such Lender (and the Swingline Exposure of such Lender shall be disregarded for such purpose).

(b)  The Borrower agrees to pay (i) to the Administrative Agent for the account of each Revolving Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the same Applicable Rate as in effect from time to time for interest on Eurodollar Revolving Loans on the daily amount of such Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Original Restatement Effective Date to but excluding the later of the date on which such Lender’s Revolving Commitment terminates and the date on which such Lender ceases to have any LC Exposure, and (ii) 

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to each Issuing Bank a fronting fee, which shall accrue at the rate of 0.25% per annum on the daily outstanding amount of such Issuing Bank’s Letters of Credit during the period from and including the Original Restatement Effective Date to but excluding the later of the date of termination of the Revolving Commitments and the date on which there ceases to be any LC Exposure, as well as such Issuing Bank’s standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder.  Participation fees and fronting fees accrued through and including the last day of March, June, September and December of each year shall be payable on the third Business Day following such last day, commencing on the first such date to occur after the Original Restatement Effective Date; provided that all such fees shall be payable on the date on which the Revolving Commitments terminate and any such fees accruing after the date on which the Revolving Commitments terminate shall be payable on demand.  Any other fees payable to an Issuing Bank pursuant to this paragraph shall be payable within 10 days after demand.  All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

(c)  The Borrower agrees to pay to the Administrative Agent and the Collateral Agent, for their own accounts, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent or the Collateral Agent, as the case may be.

(d)  All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent (or to the relevant Issuing Bank, in the case of fees payable to it) for distribution, in the case of commitment fees and participation fees, to the Lenders entitled thereto.  Fees paid shall not be refundable under any circumstances.

SECTION 2.13.  Interest.  (a)  The Loans comprising each ABR Borrowing (including each Swingline Loan) shall bear interest at the Alternate Base Rate plus the Applicable Rate.

(b)  The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate.

(c)  Notwithstanding the foregoing, upon the occurrence and during the continuation of an Event of Default, at the option of the Administrative Agent or at the request of the Required Lenders, the Borrower shall pay interest on all of the Senior Obligations (and, prior to the Borrowing Base Date, the Interim Obligations) to but excluding the date of actual payment, after as well as before judgment, (i) in the case of principal, at a rate per annum equal to 2% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section and (ii) in the case of any other amount, at a rate per annum equal to 2% plus the rate applicable to ABR Revolving Loans as provided in paragraph (a) of this Section.

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(d)  Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and (i) in the case of Tranche 1 Term Loans, on the Revolving/Tranche 1 Term Maturity Date, (ii) in the case of Revolving Loans, the earlier of the Revolving/Tranche 1 Term Maturity Date and the date on which all Revolving Commitments hereunder are terminated, (iii) in the case of Tranche 2 Term Loans, on the Tranche 2/Tranche 3 Term Maturity Date and (iv) in the case of Tranche 3 Term Loans, on the Tranche 2/Tranche 3 Term Maturity Date; provided that (i) interest accrued pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of the Revolving Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion, together with any amounts due and payable pursuant to Section 2.16.

(e)  All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Citibank Base Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day).  The applicable Alternate Base Rate or Adjusted LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

SECTION 2.14.  Alternate Rate of Interest.  If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

(a)  the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or

(b)  the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing.

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SECTION 2.15.  Increased Costs.  (a)  If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or any Issuing Bank; or

(ii) impose on any Lender or any Issuing Bank or the London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or such Issuing Bank of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or such Issuing Bank hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender or such Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or such Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered.

(b)  If any Lender or any Issuing Bank determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s or such Issuing Bank’s capital or on the capital of such Lender’s or such Issuing Bank’s holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by such Issuing Bank, to a level below that which such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or such Issuing Bank’s policies and the policies of such Lender’s or such Issuing Bank’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or such Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company for any such reduction suffered.  Each Lender will promptly notify the Borrower and the Administrative Agent of any event of which it has knowledge that will entitle such Lender to compensation pursuant to this Section 2.15; provided that the failure to provide such notification will not affect such Lender’s rights to compensation hereunder.

(c)  A certificate of a Lender or an Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or such Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error.  The Borrower shall pay such Lender or such Issuing Bank, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.

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(d)  Failure or delay on the part of any Lender or any Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or such Issuing Bank’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or an Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than 270 days prior to the date that such Lender or such Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or such Issuing Bank’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 270-day period referred to above shall be extended to include the period of retroactive effect thereof.

SECTION 2.16.  Break Funding Payments.  In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.11(f) and is revoked in accordance therewith), or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.19, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event.  In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to consist of an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the eurodollar market.  A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error.  The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

SECTION 2.17.  Taxes.  (a)  Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Senior Loan Document shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the

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Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

(b)  In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c)  The Borrower shall indemnify the Administrative Agent, each Lender and each Issuing Bank, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender or such Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrower hereunder or under any other Senior Loan Document (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or an Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a Lender or an Issuing Bank, shall be conclusive absent manifest error.

(d)  As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e)  Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate, provided that such Foreign Lender has received written notice from the Borrower advising it of the availability of such exemption or reduction and supplying all applicable documentation.

SECTION 2.18.  Payments Generally; Pro Rata Treatment; Sharing of Setoffs.  (a)  The Borrower shall make each payment required to be made by it hereunder or under any other Senior Loan Document (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to the time expressly required hereunder or under such other Senior Loan Document for such payment (or, if no such time is expressly required, prior to 2:00 p.m., New York City time), on the date when due, in immediately available funds, without setoff or counterclaim.  Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon.  All such

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payments shall be made to the Administrative Agent at its offices at 388 Greenwich Street, New York, NY 10013, except payments to be made directly to an Issuing Bank or Swingline Lender as expressly provided herein and except that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto and payments pursuant to other Senior Loan Documents shall be made to the Persons specified therein.  The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof.  If any payment under any Senior Loan Document shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension.  All payments under each Senior Loan Document shall be made in dollars.

(b)  If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties.

(c)  If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or participations in LC Disbursements or Swingline Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and participations in LC Disbursements and Swingline Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans and participations in LC Disbursements and Swingline Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate relative amounts of principal of and accrued interest on their Loans and participations in LC Disbursements and Swingline Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply).  The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

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(d)  Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or an Issuing Bank, as the case may be, the amount due.  In such event, if the Borrower has not in fact made such payment, then each of the Lenders or such Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or such Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

(e)  If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.04(c), 2.05(d) or (e), 2.06(b), 2.18(d) or 9.03(c), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

SECTION 2.19.  Mitigation Obligations; Replacement of Lenders.  (a)  If any Lender requests compensation under Section 2.15, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(b)  If (i) any Lender requests compensation under Section 2.15, (ii) the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, (iii) any Lender defaults in its obligation to fund Loans hereunder or (iv) any Lender refuses to consent to any amendment or waiver of any Senior Loan Document requested by the Borrower that requires the consent of all Lenders, and such amendment or waiver is consented to by the Supermajority Lenders, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have received the prior written consent of the Administrative Agent (and, if a Revolving Commitment is being

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assigned, the Issuing Banks and the Swingline Lender), which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.15 or payments required to be made pursuant to Section 2.17, such assignment will result in a material reduction in such compensation or payments.  A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such  assignment and delegation cease to apply.

SECTION 2.20.  Adjustments to Borrowing Base Advance Rates.  (a)  As of the Second Restatement Effective Date, the Accounts Receivable Advance Rate will be 85%, the Pharmaceutical Inventory Advance Rate will be 85%, the Other Inventory Advance Rate will be 80% and the Scripts List Advance Rate will be 30%.

(b)  Any increase in the Pharmaceutical Inventory Advance Rate, the Other Inventory Advance Rate, the Accounts Receivable Advance Rate or the Script Lists Advance Rate above that would result in any rate in excess of the initially applicable rate set forth in Section 2.20(a) will in each case require the consent of all the Lenders.

(c)  The Collateral Agent, in the exercise of its reasonable judgment to reflect Borrowing Base Factors, may (i) reduce the Accounts Receivable Advance Rate, the Pharmaceutical Inventory Advance Rate, the Other Inventory Advance Rate and the Script Lists Advance Rate from time to time and (ii) thereafter increase such rate to a rate not in excess of the applicable rate set forth in Section 2.20(a).

(d)  The Administrative Agent will give prompt written notice to the Borrower and the Lenders of any adjustments effected pursuant to this Section 2.20.

SECTION 2.21.  Incremental Loans.  At any time after the Second Restatement Effective Date prior to the Tranche 2/Tranche 3 Term Maturity Date, the Borrower may, by notice to the Administrative Agent (which shall promptly deliver a copy to each of the Lenders), request the addition to this Agreement of a new tranche of term loans, or an incremental revolving credit facility or any combination thereof (the “Incremental Facilities”); provided, however, that both (x) at the time of any such request and (y) upon the effectiveness of any such Incremental Facility, no Default shall exist and the Borrower shall, if a Financial Covenant Effectiveness Period is then occurring, be in compliance with Section 6.12 (calculated, in the case of clause (y), on a pro forma basis to give effect to any borrowing under the Incremental Facility and any substantially simultaneous repayments of Revolving Loans).  The Incremental Facilities shall (i) be in an aggregate principal amount not in excess of $350,000,000 minus the initial aggregate principal amount of Tranche 3 Term Loans made on the 2008 Restatement Effective Date, (ii) rank pari passu in right of payment and of security with the other Loans, (iii) if

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such Incremental Facility is a term loan facility, amortize in a manner, and be subject to mandatory prepayments (if any) on terms, acceptable to the Agents, and mature no earlier than the Tranche 2/Tranche 3 Term Maturity Date, (iv) bear interest at the market interest rate, as determined at the time such Incremental Facility becomes effective, (v) have such other pricing as may be agreed by the Borrower and the Administrative Agent and (vi) otherwise be treated hereunder no more favorably than the Revolving Loans (or, after the Revolving/Tranche 1 Term Maturity Date, the Tranche 2 Term Loans and the Tranche 3 Term Loans); provided, that the terms and provisions applicable to the Incremental Facilities may provide for additional or different financial or other covenants applicable only during periods after the Tranche 2/Tranche 3 Term Maturity Date.  At no time shall the sum of (i) the aggregate amount of loans outstanding under the Incremental Facilities at such time, (ii) the total Revolving Exposure at such time, (iii) the outstanding Tranche 1 Term Loans at such time, (iv) the outstanding Tranche 2 Term Loans at such time and (v) the outstanding Tranche 3 Term Loans at such time exceed the Borrowing Base Amount (or, if prior to the Borrowing Base Date, the Estimated Borrowing Base Amount) in effect at such time, and the proceeds of the Incremental Facilities shall be used solely for the purposes set forth in Section 5.10 and the preamble.  Such notice shall set forth the requested amount and class of Incremental Facilities, and shall offer each Lender the opportunity to offer a commitment (the “Incremental Commitment”) to provide a portion of the Incremental Facility by giving written notice of such offered commitment to the Administrative Agent and the Borrower within a time period (the “Offer Period”) to be specified in the Borrower’s notice; provided, however, that no existing Lender will be obligated to subscribe for any portion of such commitments.  In the event that, at the expiration of the Offer Period, Lenders shall have provided commitments in an aggregate amount less than the total amount of the Incremental Facility initially requested by the Borrower, the Borrower may request that Incremental Facility commitments be made in a lesser amount equal to such commitments and/or shall have the right to arrange for one or more banks or other financial institutions (any such bank or other financial institution being called an “Additional Lender”) to extend commitments to provide a portion of the Incremental Facility in an aggregate amount equal to the unsubscribed amount of the initial request; provided that each Additional Lender shall be subject to the approval of the Administrative Agent (such consent not to be unreasonably withheld); and provided further that the Additional Lenders shall be offered the opportunity to provide the Incremental Facility only on terms previously offered to the existing Lenders pursuant to the immediately preceding sentence.  Commitments in respect of Incremental Facilities will become Commitments under this Agreement pursuant to an amendment to this Agreement (such an amendment, an “Incremental Facility Amendment”) executed by each of the Borrower and each Subsidiary Loan Party (and, prior to the Borrowing Base Date, Holdings and each of its subsidiaries), each Lender agreeing to provide such Commitment, if any, each Additional Lender, if any, and the Administrative Agent.  The effectiveness of any Incremental Facility Amendment shall be subject to the satisfaction on the date thereof of each of the conditions set forth in Section 4.02 of the Original Agreement as in effect immediately prior to the First Restatement Effective Date.

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ARTICLE III

Representations and Warranties

The Borrower represents and warrants to the Lenders that:

SECTION 3.01.  Organization; Powers.  Each of the Borrower and the Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required.

SECTION 3.02.  Authorization; Enforceability.  The Transactions to be entered into by each Loan Party are within such Loan Party’s corporate powers and have been duly authorized by all necessary corporate and, if required, stockholder action.  This Agreement has been duly executed and delivered by the Borrower and constitutes, and each other Senior Loan Document to which any Loan Party is to be a party, when executed and delivered by such Loan Party, will constitute, a legal, valid and binding obligation of the Borrower or such Loan Party (as the case may be), enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

SECTION 3.03.  Governmental Approvals; No Conflicts.  The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect and except filings necessary to perfect Liens created under the Senior Loan Documents, (b) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of the Borrower or any of the Subsidiaries or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture, agreement or other instrument evidencing or governing Indebtedness or any other material agreement binding upon the Borrower or any Subsidiary or its assets, or give rise to a right thereunder to require any payment to be made by the Borrower or any Subsidiary, and (d) will not result in the creation or imposition of any Lien on any asset of the Borrower or any Subsidiary, except Liens created under the Senior Loan Documents and the Second Priority Collateral Documents.

SECTION 3.04.  Financial Condition; No Material Adverse Change.   (a)  The Borrower has heretofore furnished to the Lenders its consolidated balance sheet and statements of income, stockholders equity and cash flows as of and for the fiscal year ended March 3, 2007, reported on by Deloitte & Touche LLP.  Such financial statements present fairly the financial position and results of operations and cash flows of the Borrower and its Consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP.

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(b)  Except as disclosed (i) in the financial statements referred to in paragraph (a) above or the notes thereto, (ii) in the Borrower’s report or Form 10-K for the fiscal year ended March 3, 2007 or (iii) on Schedule 3.04, after giving effect to the Transactions, none of the Borrower or the Subsidiaries has, as of the Second Restatement Effective Date, any material contingent liabilities, unusual long-term loan commitments or unrealized losses.

(c)  Since March 3, 2007, there has been no material adverse change in the business, assets, operations, properties, condition (financial or otherwise), or prospects of the Borrower and the Subsidiaries, taken as a whole.

SECTION 3.05.  Properties.  (a)  Each of the Borrower and the Subsidiaries has good and marketable title to, or valid leasehold interests in, all its real and personal property material to its business, except (i) for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes and (ii) as set forth on Schedule 3.05(a).  All such real and personal property are free and clear of all Liens, other than Liens permitted by Section 6.02.

(b)  Each of the Borrower and the Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by the Borrower and the Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

(c)  Schedule 3.05(c) sets forth the address of every leased warehouse or distribution center in which inventory owned by the Borrower or any Subsidiary is located as of the Second Restatement Effective Date.

SECTION 3.06.  Litigation and Environmental Matters.  (a)  Except as set forth on Schedule 3.06(a), there are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any of the Subsidiaries (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect or (ii) that involve any of the Senior Loan Documents or the Transactions.

(b)  Except as set forth on Schedule 3.06(b) and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, neither the Borrower nor any of the Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability.

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SECTION 3.07.  Compliance with Laws and Agreements.  Except as set forth on Schedule 3.07, each of the Borrower and the Subsidiaries is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property (including, without limitation, the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and all other material healthcare laws and regulations) and all indentures, agreements and other instruments binding upon it or its property or assets, except where the failure to be so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.  No Default has occurred and is continuing.

SECTION 3.08.  Investment and Holding Company Status.  Neither the Borrower nor any of the Subsidiaries is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.

SECTION 3.09.  Taxes.  Each of the Borrower and the Subsidiaries has timely filed or caused to be filed all United States Federal income tax returns and reports and all other material tax returns and reports required to have been filed and has paid or caused to be paid all material Taxes due pursuant to such returns or pursuant to any assessment received by the Borrower or any Subsidiary, except (i) where the payment of any such Taxes is being contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary, as applicable, has set aside on its books adequate reserves and (ii) as set forth on Schedule 3.09.  The charges, accruals and reserves on the books of the Borrower and its Consolidated Subsidiaries in respect of Taxes or charges imposed by a Governmental Authority are, in the opinion of the Borrower, adequate.

SECTION 3.10.  ERISA.  No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other ERISA Events for which liability is reasonably expected to result, could reasonably be expected to result in liability exceeding $50,000,000.  The minimum funding standards of ERISA and the Code with respect to each Plan have been satisfied.  The present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $50,000,000 the fair market value of the assets of such Plan, and the present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $50,000,000 the fair market value of the assets of all such underfunded Plans.

SECTION 3.11.  Disclosure; Accuracy of Information.  (a)  As of the Second Restatement Effective Date, none of the reports, financial statements, certificates or other information furnished by or on behalf of any Loan Party to any Agent or any Lender in connection with the negotiation of this Agreement or any other Senior Loan Document or delivered hereunder or thereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected

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financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

(b)  Each Borrowing Base Certificate that has been or will be delivered to the Collateral Agent, the Administrative Agent or any Lender is and will be complete and correct in all material respects.

SECTION 3.12.  Subsidiaries.  Schedule 3.12 sets forth the name of, and the ownership interest of the Borrower in, each Subsidiary and identifies each Subsidiary that is a Subsidiary Loan Party, in each case as of the Second Restatement Effective Date.  As of the Second Restatement Effective Date, each of the Subsidiaries is an “Unrestricted Subsidiary” as defined in, and for all purposes of, the Indentures.

SECTION 3.13.  Insurance.  Schedule 3.13 sets forth a description of all liability, property and casualty insurance maintained by or on behalf of the Borrower and the Subsidiaries as of the Second Restatement Effective Date.  As of the Second Restatement Effective Date, all premiums in respect of such insurance have been paid.  The Borrower and the Subsidiaries have insurance in such amounts and covering such risks and liabilities as are in accordance with normal industry practice and as required by the Senior Loan Documents.  The Borrower reasonably believes that the insurance maintained by or on behalf of the Borrower and the Subsidiaries is adequate.

SECTION 3.14.  Labor Matters.  Except as set forth on Schedule 3.14, as of the Second Restatement Effective Date, there are no strikes, lockouts or slowdowns against the Borrower or any Subsidiary pending or, to the knowledge of the Borrower, threatened which could reasonably be expected to result in a Material Adverse Effect.  Except as set forth on Schedule 3.14, the hours worked by and payments made to employees of the Borrower and the Subsidiaries have not been in violation in any material respect of the Fair Labor Standards Act or any other applicable Federal, state, local or foreign law dealing with such matters.  Except as set forth on Schedule 3.14, all payments due from the Borrower or any Subsidiary, or for which any claim may be made against the Borrower or any Subsidiary, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of the Borrower or such Subsidiary.  Except as set forth on Schedule 3.14, the consummation of the Transactions will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which the Borrower or any Subsidiary is bound.

SECTION 3.15.  Solvency.  Immediately after the consummation of the Transactions to occur on the Second Restatement Effective Date (including the making of each Loan made on the Second Restatement Effective Date and after giving effect to the application of the proceeds of such Loans), (a) the fair value of the assets of the Borrower and the other Loan Parties, taken as a whole, at a fair valuation, will exceed their debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the property of the Borrower and the other Loan Parties, taken as a whole, will be greater than the amount that will be required to pay the probable liability of their debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities

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become absolute and matured; (c) the Borrower and the other Loan Parties taken as a whole, will be able to pay their debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d) the Borrower and the other Loan Parties will not have unreasonably small capital with which to conduct the business in which they are engaged as such business is now conducted and is proposed to be conducted following the Second Restatement Effective Date.

SECTION 3.16.  Federal Reserve Regulations.  (a)  Neither the Borrower nor any Subsidiary is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying Margin Stock.

(b)  No part of the proceeds of any Loan or any Letter of Credit will be used by the Borrower or any Subsidiary, whether directly or indirectly, and whether immediately, incidentally or ultimately, for any purpose that entails a violation of, or that is inconsistent with, the provisions of Regulation T, U or X of the Board.

SECTION 3.17.  Security Interests.  (a)  The Senior Subsidiary Security Agreement is effective to create in favor of the Collateral Agent, for the ratable benefit of the Senior Secured Parties, a legal, valid and enforceable security interest in the Senior Collateral subject to such agreement and, when financing statements in appropriate form are filed in the offices specified on Schedule 6 to the Perfection Certificate, such security interest shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the grantors thereunder in the Senior Collateral, to the extent perfection can be obtained by filing Uniform Commercial Code financing statements, in each case prior and superior in right to any other Person to the extent perfection can be obtained by filing Uniform Commercial Code financing statements, other than with respect to the rights of Persons pursuant to Liens expressly permitted by Section 6.02.

(b)  The Interim Collateral and Guarantee Agreement is effective to create in favor of the Collateral Agent, for the ratable benefit of the Interim Secured Parties, a legal, valid and enforceable security interest in the Interim Collateral subject to such agreement and (i) when the Interim Collateral constituting certificated securities (as defined in the Uniform Commercial Code) is delivered to the Collateral Agent thereunder together with instruments of transfer duly endorsed in blank, the security interest of the Collateral Agent therein will constitute a fully perfected Lien on, and security interest in, all right, title and interest of the pledgors in such Interim Collateral, prior and superior in right to any other Person subject only to Permitted Encumbrances and (ii) when financing statements in appropriate form are filed in the offices specified in the Perfection Certificate delivered on the Second Restatement Effective Date, the security interest of the Collateral Agent will constitute a fully perfected Lien on and security in all right, title and interest of the Grantors (as defined in the Interim Collateral Agreement) in the remaining Interim Collateral to the extent perfection can be obtained by filing Uniform Commercial Code financing statements, prior and superior in right to any other Person subject only to Permitted Encumbrances.

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SECTION 3.18.  Use of Proceeds.  The Borrower will use the proceeds of the Loans and will request the issuance of Letters of Credit only for the purposes specified in the preamble to this Agreement and set forth in Section 5.10.

ARTICLE IV

Conditions

SECTION 4.01.  2008 Restatement Effective Date.  Without affecting the rights of the Borrower or any Subsidiary under the Original Agreement at all times prior to the 2008 Restatement Effective Date, the amendment and restatement in the form hereof of the Original Agreement and the obligations of the Lenders to make Loans and acquire participations in Letters of Credit and Swingline Loans and of the Issuing Banks to issue Letters of Credit hereunder shall not become effective until the date on which the conditions set forth in Sections 1.2(b) and 1.3 of the 2008 Amendment and Restatement Agreement shall have been satisfied.

It is understood and agreed that no term of the amendment and restatement contemplated hereby shall be effective until the 2008 Restatement Effective Date occurs, and that the Original Agreement shall continue in full force and effect without regard to the amendment and restatement contemplated hereby until the 2008 Restatement Effective Date.

SECTION 4.02.  Each Credit Event.  The obligation of each Revolving Lender to make a Revolving Loan on the occasion of any Revolving Borrowing after the 2008 Restatement Effective Date, and of each Issuing Bank to issue, amend, renew or extend any Letter of Credit after the 2008 Restatement Effective Date, is subject to receipt of the request therefore in accordance herewith and to the satisfaction of the following conditions (each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit (for purposes of this Section, an “issuance”) shall be deemed to constitute a representation and warranty by Borrower on the date thereof as to the matters specified in paragraphs (a), (b) and (c) of this Section):

(a)  the representations and warranties of the Loan Parties contained in each Senior Loan Document are true and correct in all material respects on and as of the date of such Borrowing or issuance, before and after giving effect to such Borrowing or issuance and to the application of the proceeds therefrom, as though made on and as of such date (except to the extent any such representation or warranty expressly relates to an earlier date, in which case such representation and warranty shall have been true and correct in all material respects as of such earlier date);

(b)  no event has occurred and is continuing, or would result from such Borrowing or issuance or from the application of the proceeds therefrom, that constitutes a Default or an Event of Default and such Borrowing or issuance would not result in a violation of the amount of secured Indebtedness permitted under the Second Priority Debt Documents; and

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(c)  after giving effect to such Borrowing or issuance the Borrowing Base Amount shall be equal to or greater than the sum of (i) the total Revolving Exposures, (ii) the outstanding Tranche 1 Term Loans, (iii) if prior to the Borrowing Base Date, zero and, if on or after the Borrowing Base Date, the outstanding Tranche 2 Term Loans and (iv) the outstanding Tranche 3 Term Loans.

SECTION 4.03.  Borrowing Base Date.  The “Borrowing Base Date” will occur on the first date on which the following conditions have been satisfied:

(a)  The Financial Statement Delivery Date shall have occurred.

(b)  The Administrative Agent shall have received a favorable legal opinion of each of (i) Skadden, Arps, Slate, Meagher & Flom LLP, counsel to the Borrower and (ii) Robert Sari, General Counsel of the Borrower, in each case addressed to the Administrative Agent and the Lenders and dated as of such date, covering such matters relating to the Loan Parties, this Agreement, the other Senior Loan Documents and the Senior Collateral as the Administrative Agent may reasonably request, and otherwise reasonably satisfactory to the Administrative Agent.  The Borrower hereby requests such counsel to deliver such opinions.

(c)  The Collateral and Guarantee Requirement shall have been satisfied in respect of Holdings and its subsidiaries and the Administrative Agent shall have received (i) a completed Perfection Certificate dated as of such date and signed by an executive officer or Financial Officer together with all attachments contemplated thereby, including the results of a search of the Uniform Commercial Code (or equivalent) filings made with respect to Holdings and its subsidiaries in the jurisdictions contemplated by the Perfection Certificate and copies of the financing statements (or similar documents) disclosed by such search and (ii) evidence reasonably satisfactory to the Administrative Agent that the Liens disclosed by such search are permitted by Section 6.02 or have been released.

(d)  Each Subsidiary Loan Party shall have entered into a written instrument reasonably satisfactory to the Administrative Agent pursuant to which it confirms that the Senior Collateral Documents to which it is party will continue to apply in respect of this Agreement and the Senior Obligations (as such term is defined in respect of the period after the Borrowing Base Date).

(e)  After the satisfaction of the Collateral and Guarantee Requirement in respect of Holdings and its subsidiaries on the Borrowing Base Date, the Borrowing Base Amount on such date shall be no less than the sum of (i) the total Revolving Exposures on such date, (ii) the outstanding Tranche 1 Term Loans on such date and (iii) the outstanding Tranche 2 Term Loans on such date.  The Administrative Agent shall have received a completed Borrowing Base Certificate dated as of such date and signed by a Financial Officer.

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(f)  To the extent invoiced, the Administrative Agent shall have received payment or reimbursement of its reasonable out-of-pocket expenses, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent.

ARTICLE V

Affirmative Covenants

Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit shall have expired, terminated or been cash collateralized and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that:

SECTION 5.01.  Financial Statements and Other Information.  The Borrower will furnish to the Administrative Agent and each Lender:

(a)  as soon as available and in any event within 105 days (or such earlier date that is 10 days after the then-current filing deadline for the Borrower’s Annual Report on Form 10-K) after the end of each fiscal year of the Borrower, its audited consolidated balance sheet and related statements of income and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by Deloitte & Touche LLP or another registered independent public accounting firm of recognized national standing (without a “going concern” or like qualification or exception and without any material qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial position, results of operations and cash flows of the Borrower and its Consolidated Subsidiaries on a consolidated basis in accordance with GAAP;

(b)  as soon as available and in any event within 50 days (or such earlier date that is five days after the then-current filing deadline for the Borrower’s Quarterly Report on Form 10-Q) after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, its consolidated balance sheet as of the end of such fiscal quarter and related statements of income for such fiscal quarter and of income and cash flows for the then elapsed portion of such fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year;

(c)  concurrently with any delivery of financial statements under clause (a) or (b) above, a certificate of a Financial Officer (i) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations demonstrating (x) compliance with Section 6.08(c) and (y) the Borrower’s ratio under Section 6.12, (iii) stating

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whether any change in GAAP or in the application thereof has occurred since the date of the Borrower’s audited financial statements referred to in Section 3.04 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate, (iv) identifying any Subsidiary formed or acquired since the end of the fiscal quarter immediately preceding the most recent fiscal quarter covered by such financial statements, (v) identifying any change in a Subsidiary Loan Party’s (and, prior to the Borrowing Base Date, Holding’s and any of its subsidiaries’) name, form of organization or jurisdiction of organization, including as a result of any merger transaction, since the end of the fiscal quarter immediately preceding the most recent fiscal quarter covered by such financial statements, (vi) setting forth the aggregate amount of Optional Debt Repurchases made by the Borrower during the most recent fiscal quarter covered by such financial statements, identifying the Indebtedness repurchased, redeemed, retired or defeased and specifying the provisions of Section 6.08(b) or (c) pursuant to which each such Optional Debt Repurchase was effected and quantifying the amounts effected under each such provision, (vii) setting forth the amount and type of Indebtedness issued or incurred and Securitizations (or increases in the amounts thereof) and Factoring Transactions consummated during the most recent fiscal quarter covered by such financial statements, (viii) identifying, with respect to all Indebtedness of the Borrower and the Subsidiaries outstanding on the date of the most recent balance sheet included in such financial statements, the clause of Section 6.01(a) pursuant to which such Indebtedness is then permitted to be outstanding, (ix) setting forth the amount of Restricted Payments made during the most recent fiscal quarter covered by such financial statements and the provision of Section 6.08(a) pursuant to which such Restricted Payments were made, and (x) setting forth the aggregate sale price of Eligible Script Lists sold since the most recent date on which the Eligible Script Lists Value was provided to the Lenders in the event aggregate sale price for all Eligible Script Lists sold since such date of determination exceeds 5% of the most recently determined Eligible Script Lists Value;

(d)  concurrently with any delivery of financial statements under clause (a) above, a certificate of the accounting firm that reported on such financial statements (i) stating whether they obtained knowledge during the course of their examination of such financial statements of any Default and (ii) confirming the calculations set forth in the officer’s certificate delivered simultaneously therewith pursuant to clause (c)(ii) above (which certificate may be limited to the extent required by accounting rules or guidelines);

(e)  within three Business Days after the end of each fiscal month of the Borrower, a certificate of a Financial Officer setting forth in reasonable detail a description of each disposition of assets not in the ordinary course of business for which the book value or fair market value of the assets of the Borrower or the Subsidiaries disposed or the consideration received therefor was greater than $10,000,000;

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(f)  within 14 Business Days after the end of each fiscal month of the Borrower, a Borrowing Base Certificate showing the Borrowing Base Amount as of the close of business on the last day of such fiscal month, certified as complete and correct by a Financial Officer; provided that a Borrowing Base Certificate shall be delivered by the Borrower to the Administrative Agent and each Lender within four Business Days after the end of a fiscal week of the Borrower if at any time during such fiscal week the Revolver Availability is less than or equal to $200,000,000 (with the amount with respect to Eligible Inventory stored at distribution centers included in the Borrowing Base Amount shown on such Borrowing Base Certificate delivered under this proviso being the amount computed as of the close of business on the last day of the Borrower’s most recent fiscal month for which such amount is available, which computation shall be completed within 14 Business Days after the end of each fiscal month of the Borrower);

(g)  no later than 60 days following the end of each fiscal year of the Borrower (or, in the reasonable discretion of the Administrative Agent, no later than 30 days thereafter), forecasts for the Borrower and its Consolidated Subsidiaries of (i) quarterly consolidated balance sheet data and related consolidated statements of income and cash flows for each quarter in the next succeeding fiscal year and (ii) consolidated balance sheet data and related consolidated statements of income and cash flows for each of the five fiscal years immediately following such fiscal year (but excluding any fiscal year ending after 2013);

(h)  promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Borrower or any Subsidiary with the SEC, or with any national securities exchange, or distributed by the Borrower to its shareholders generally, as the case may be; and

(i)  promptly following any request therefor, such other information regarding the financial condition, business or identity of the Borrower or any Subsidiary, or compliance with the terms of any Senior Loan Document, as any Agent, at the request of any Lender, may reasonably request, including any information to be provided pursuant to Section 9.17.

Information required to be delivered pursuant to clauses (a), (b) and (h) shall be deemed to have been delivered on the date on which the Borrower provides notice to the Lenders that such information has been posted on the Borrower’s website on the Internet at www.riteaid.com, at www.sec.gov/edgar/searchedgar/webusers.htm or at another website identified in such notice and accessible by the Lenders without charge; provided that (i) such notice may be included in a certificate delivered pursuant to clause (c) and (ii) the Borrower shall deliver paper copies of the information referred to in clauses (a), (b) and (h) to any Lender which requests such delivery.

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SECTION 5.02.  Notices of Material Events.  The Borrower will furnish to the Administrative Agent and each Lender prompt written notice after any officer of the Borrower obtains knowledge of any of the following:

(a)  the occurrence of any Default;

(b)  the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting the Borrower or any Affiliate thereof that could reasonably be expected to result in a Material Adverse Effect;

(c)  the occurrence of any ERISA Event;

(d)  any Lien (other than security interests created under any Senior Loan Document or Second Priority Debt Document or Permitted Encumbrances) on any material portion of the Senior Collateral (or, prior to the Borrowing Base Date, the Interim Collateral);

(e)  the occurrence of any other event which could reasonably be expected to have a material adverse effect on the security interests created by the Senior Loan Documents or on the aggregate value of the Senior Collateral (or, prior to the Borrowing Base Date, the Interim Collateral); and

(f)  any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

SECTION 5.03.  Information Regarding Collateral.  (a)  The Borrower will furnish to the Administrative Agent prompt written notice of any change (i) in any Loan Party’s corporate name, (ii) in the location of any Loan Party’s jurisdiction of incorporation or organization, (iii) in any Loan Party’s form of organization or (iv) in any Loan Party’s Federal Taxpayer Identification Number or other identification number assigned by such Loan Party’s jurisdiction of incorporation or formation.  The Borrower agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the Uniform Commercial Code or otherwise that are required in order for the Administrative Agent to continue at all times following such change to have a valid, legal and perfected security interest in all the Senior Collateral (and, prior to the Borrowing Base Date, the Interim Collateral).  The Borrower also agrees promptly to notify the Agents if any material portion of the Senior Collateral is damaged or destroyed.

(b)  Each year, at the time of delivery of annual financial statements with respect to the preceding fiscal year pursuant to clause (a) of Section 5.01, the Borrower shall deliver to the Agents a certificate of the chief legal officer of the Borrower

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(i) setting forth the information required pursuant to Section 1 of the Perfection Certificate or confirming that there has been no change in such information since the date of the Perfection Certificate delivered on the Second Restatement Effective Date or the date of the most recent certificate delivered pursuant to this Section and (ii) certifying that all Uniform Commercial Code financing statements (including fixture filings, as applicable) or other appropriate filings, recordings or registrations, including all refilings, rerecordings and reregistrations, containing a description of the Senior Collateral have been filed of record in each governmental, municipal or other appropriate office in each jurisdiction identified pursuant to clause (i) above to the extent necessary to protect and perfect the security interests under the Senior Subsidiary Security Agreement for a period of not less than 18 months after the date of such certificate (except as noted therein with respect to any continuation statements to be filed within such period).

SECTION 5.04.  Existence; Conduct of Business.  Except as otherwise permitted by this Agreement, the Borrower will continue, and will cause each Subsidiary to continue, to engage in business of the same general type as now conducted by the Borrower and the Subsidiaries.  The Borrower will, and will cause each of the Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges, franchises, patents, copyrights, trademarks and trade names, in each case material to the conduct of its business; provided that the foregoing shall not prohibit any merger, consolidation, liquidation, dissolution or sale of assets permitted under Section 6.03.

SECTION 5.05.  Payment of Obligations.  The Borrower will, and will cause each of the Subsidiaries to, pay its Indebtedness and other obligations, including Tax liabilities, which, if unpaid, could result in a material Lien on any of their properties or assets, before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect.

SECTION 5.06.  Maintenance of Properties.  The Borrower will, and will cause each of the Subsidiaries to, keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted.

SECTION 5.07.  Insurance.  (a)  The Borrower will, and will cause each of the Subsidiaries to, maintain (either in the name of the Borrower or in such Subsidiary’s own name), with financially sound and reputable insurance companies insurance in such amounts (with no greater risk retention) and against such risks as are customarily maintained by companies of established repute engaged in the same or similar businesses operating in the same or similar locations.  The Borrower will furnish to the Lenders, upon request of the Agents, information in reasonable detail as to the insurance so maintained.

(b)  The Borrower will, and will cause each of the Subsidiaries to, maintain such insurance in a coverage amount of not less than 90% of the coverage

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amount as of the Original Restatement Effective Date, with deductibles, risks covered and other provisions (other than the amount of premiums) not materially less favorable to the Borrower and the Subsidiaries as of the Original Restatement Effective Date.

(c)  The Borrower will, and will cause each of the Subsidiary Loan Parties (and, prior to or on the Borrowing Base Date, Holdings and its subsidiaries) to, (i) cause all such policies to be endorsed or otherwise amended to include a “standard” or “New York” lender’s loss payable endorsement, in form and substance satisfactory to the Agents, which endorsement shall provide that, from and after the Original Restatement Effective Date if the insurance carrier shall have received written notice from the Administrative Agent of the occurrence of an Event of Default, the insurance carrier shall pay all proceeds otherwise payable to the Borrower and any other Loan Party under such policies directly to the Collateral Agent for application pursuant to the Collateral Trust and Intercreditor Agreement; (ii) cause all such policies to provide that neither the Borrower, the Administrative Agent, either Collateral Agent nor any other party shall be a coinsurer thereunder and to contain a “Replacement Cost Endorsement”, without any deduction for depreciation, and such other provisions as the Agents may reasonably require from time to time to protect their interests; (iii) deliver broker’s certificates to the Collateral Agent; (iv) cause each such policy to provide that it shall not be canceled or not renewed by reason of nonpayment of premium upon not less than 10 days’ prior written notice thereof by the insurer to the Administrative Agent (giving the Administrative Agent the right to cure defaults in the payment of premiums) or for any other reason upon not less than 30 days’ prior written notice thereof by the insurer to the Administrative Agent; and (v) deliver to the Administrative Agent, before the cancellation or nonrenewal of any such policy of insurance, a copy of a renewal or replacement policy (or other evidence of renewal of a policy previously delivered to the Administrative Agent), together with evidence reasonably satisfactory to the Agents of payment of the premium therefor.

(d)  In connection with the covenants set forth in this Section, it is agreed that:

(i) none of the Agents, the Lenders, or their agents or employees shall be liable for any loss or damage insured by the insurance policies required to be maintained under this Section, and (A) the Borrower and each Subsidiary Loan Party (and, prior to the Borrowing Base Date, Holdings and each of its subsidiaries) shall look solely to their insurance companies or any other parties other than the aforesaid parties for the recovery of such loss or damage and (B) such insurance companies shall have no rights of subrogation against the Agents, the Lenders or their agents or employees.  If, however, the insurance policies do not provide waiver of subrogation rights against such parties, as required above, then the Borrower hereby agrees, to the extent permitted by law, to waive its right of recovery, if any, against the Agents, the Lenders and their agents and employees; and

(ii) the designation of any form, type or amount of insurance coverage by the Agents or the Required Lenders under this Section shall in no event be

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deemed a representation, warranty or advice by the Agents or the Lenders that such insurance is adequate for the purposes of the business of the Borrower and the Subsidiaries or the protection of their properties.

(e)  The Borrower will, and will cause each of the Subsidiaries to, permit any representatives that are designated by a Collateral Agent to inspect the insurance policies maintained by or on behalf of the Borrower and the Subsidiaries and inspect books and records related thereto and any properties covered thereby.  The Borrower shall pay the reasonable fees and expenses of any representatives retained by a Collateral Agent to conduct any such inspection.

SECTION 5.08.  Books and Records; Inspection and Audit Rights; Collateral and Borrowing Base Reviews.  (a)  The Borrower will, and will cause each of the Subsidiaries to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities.  The Borrower will, and will cause each of the Subsidiaries to, permit any representatives designated by any Lender (at such Lender’s expense, unless a Default has occurred and is continuing, in which case at the Borrower’s expense), and after such Lender has consulted the Administrative Agent with respect thereto, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested.

(b)  The Borrower will, and will cause each of the Subsidiaries to, permit any representatives designated by any Collateral Agent (including any consultants, field examiners, accountants, lawyers and appraisers retained by such Collateral Agent) to conduct (i) a field examination of the Senior Collateral at or about the end of each fiscal quarter of the Borrower, (ii) an appraisal of the Borrower’s computation of the assets included in the Borrowing Base Amount and the Estimated Borrowing Base at or about the end of each fiscal year of the Borrower, (iii) an appraisal of the Eligible Script Lists at or about the end of the fiscal quarter ending August 31 of each fiscal year of the Borrower and (iv) other evaluations and appraisals of the Borrower’s computation of the Borrowing Base Amount and the Estimated Borrowing Base Amount and the assets included in therein, all at such reasonable times and as often as reasonably requested.  The Borrower shall pay the reasonable fees and expenses of any representatives retained by any Collateral Agent to conduct any such evaluation or appraisal.  The Administrative Agent shall promptly deliver to the Lenders copies of all such appraisals and other information provided to the Borrower in connection with such evaluations and appraisals.

(c)  The Borrower will, and will cause each of the Subsidiaries to, in connection with any evaluation and appraisal relating to the computation of the Borrowing Base Amount or the Estimated Borrowing Base Amount, maintain such additional reserves (for purposes of computing the Borrowing Base Amount or the Estimated Borrowing Base Amount) in respect of Eligible Accounts Receivable and Eligible Inventory and make such other adjustments to its parameters for including Eligible Accounts Receivable, Eligible Inventory and Eligible Script Lists in the Borrowing Base Amount and the Estimated Borrowing Base Amount as the Collateral

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Agent shall require based upon the results of such evaluation and appraisal in its reasonable judgment to reflect Borrowing Base Factors.

SECTION 5.09.  Compliance with Laws.  The Borrower will, and will cause each of the Subsidiaries to, comply in all material respects with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property, including all Environmental Laws, HIPAA and all other material healthcare laws and regulations, except where the necessity of compliance therewith is contested in good faith by appropriate proceedings or to the extent that any failures so to comply, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

SECTION 5.10.  Use of Proceeds and Letters of Credit.  (a)  The proceeds of the Tranche 3 Term Loans will be used by the Borrower for the purposes set forth in the preamble hereto.

(b)  The proceeds of the Revolving Loans, Swingline Loans and loans under the Incremental Facilities made on or after the Second Restatement Effective Date will be used by the Borrower as set forth in the preamble and for general corporate purposes, including:

(i) payment of part of the consideration due to the Seller in connection with the Acquisition;

(ii) payment of fees and expenses (including any premiums and amendment fees) incurred in connection with the Transactions;

(iii) loans or other transfers to Rite Aid Hdqtrs. Corp. for purposes of financing inventory purchases pursuant to the Intercompany Inventory Purchase Agreement and advancing funds to Subsidiary Loan Parties for their general corporate purposes, including working capital, Consolidated Capital Expenditures and Business Acquisitions permitted pursuant to Section 6.04;

(iv) transfers to an operating account for the payment of operating expenses (including rent, utilities, taxes, wages, repair and similar expenses) of, and intercompany Investments permitted under Section 6.04 in, the Borrower or any Subsidiary Loan Party;

(v) payment by the Borrower of principal, interest, fees and expenses with respect to its Indebtedness when due (including associated costs, fees and expenses) and payment of the Borrower’s taxes, administrative, operating and other expenses;

(vi) dividends permitted to be made in respect of the Equity Interests listed on Schedule 6.08(a) or described in Section 6.08(a);

(vii) repurchase shares of the Borrower’s Preferred Stock pursuant to Section 6.08(a);

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(viii) payment of principal, interest, fees and expenses with respect to Third Party Interests in accordance with the terms thereof; and

(ix) the financing of Optional Debt Repurchases, permitted capital expenditures, the repurchase of the Borrower’s and/or its Subsidiaries’ (including Rite Aid Lease Management Company’s) Preferred Stock and permitted Restricted Payments.

(c)  Letters of Credit will be used solely to support payment obligations of the Borrower and the Subsidiaries incurred in the ordinary course of business.

(d)  No proceeds of Loans will be used to prepay commercial paper prior to the maturity thereof and no such proceeds will be used, directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of buying or carrying any Margin Stock.  The Borrower will ensure that no such use of Loan proceeds and no issuance of Letters of Credit will entail any violation of Regulation T, U or X of the Board.

SECTION 5.11.  Additional Subsidiaries.  If any additional wholly-owned Domestic Subsidiary is formed or acquired after the Second Restatement Effective Date, and (i) if such Subsidiary is required to become a Subsidiary Loan Party hereunder, the Borrower will, within three Business Days after such Subsidiary is formed or acquired, notify the Administrative Agent and the Lenders thereof and cause the Collateral and Guarantee Requirement to be satisfied with respect to such Subsidiary, including each Securitization Vehicle which is a Domestic Subsidiary, but excluding any Subsidiary that engages solely in the pharmacy benefits management business, and (ii) if such Subsidiary is a subsidiary of Holdings and such Subsidiary is formed or acquired prior to the Borrowing Base Date, the Borrower will, within three Business Days after such Subsidiary is formed or acquired, notify the Administrative Agent and the Lenders thereof and cause the Interim Collateral and Guarantee Requirement to be satisfied with respect to such Subsidiary, including each Securitization Vehicle which is a Domestic Subsidiary, but excluding any Subsidiary that engages solely in the pharmacy benefits management business.  Notwithstanding any other provision of this Agreement, (i) no Domestic Subsidiary listed on Schedule 5.11 shall be required to become a Subsidiary Loan Party (it being understood and agreed that Schedule 5.11 shall not include any Securitization Vehicle that is a Domestic Subsidiary), (ii) no Domestic Subsidiary shall be required to become a Subsidiary Loan Party unless and until such time as such Subsidiary has assets in excess of $1,000,000 or acquires assets in excess of $1,000,000 or has revenue in excess of $500,000 per annum and (iii) neither Holdings nor any of its subsidiaries shall be required to become a Subsidiary Loan Party until the Borrowing Base Date.

SECTION 5.12.  Further Assurances.  (a)  The Borrower will, and will cause each Subsidiary Loan Party to, execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, deeds of trust and other documents), which may be required under any applicable law, or which any Collateral Agent or the Required Lenders may reasonably request, to cause the Collateral and

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Guarantee Requirement to be and remain satisfied, all at the expense of the Loan Parties.  The Borrower also agrees to provide to the Collateral Agent, from time to time upon request, evidence reasonably satisfactory to the Collateral Agent as to the perfection and priority of the Liens created or intended to be created by the Senior Collateral Documents.

(b)  The Borrower will cause Holdings and each of its domestic subsidiaries to execute any and all further documents, agreements and instruments, and take all such further actions, which may be required under any applicable law, or which any Collateral Agent or the Required Lenders may reasonably request, to cause the Interim Collateral and Guarantee Requirement to be and remain satisfied at all times prior to the Borrowing Base Date, all at the expense of the Borrower.  The Borrower also agrees to provide to the Collateral Agent, from time to time upon request, evidence reasonably satisfactory to the Collateral Agent as to the perfection and priority of the Liens created or intended to be created by the Interim Collateral Documents.

SECTION 5.13.  Subsidiaries.  The Borrower will cause all of the Subsidiaries that own Eligible Accounts Receivable, Eligible Inventory or Eligible Script Lists (and, prior to the Borrowing Base Date, Holdings and its subsidiaries) to be and at all times remain “Unrestricted Subsidiaries” as defined in, and for all purposes of, each of the Effective Date Indentures and will deliver such documents to the trustees under each such Effective Date Indenture and take such actions thereunder as may be necessary to effect the foregoing.

SECTION 5.14.  Intercompany Transfers.  The Borrower shall maintain accounting systems capable of tracing intercompany transfers of funds and other assets.

SECTION 5.15.  Inventory Purchasing.  (a)  The Borrower shall, and shall cause each Subsidiary party to the Intercompany Inventory Purchase Agreement to, at all times maintain in all material respects the vendor inventory purchasing system and the intercompany inventory purchasing system in accordance with the terms of the Intercompany Inventory Purchase Agreement.  The Borrower shall cause each Subsidiary which owns or acquires any Senior Collateral consisting of inventory to be party to the Intercompany Inventory Purchase Agreement.  Notwithstanding the foregoing, the Borrower shall only be required to cause Holdings and its subsidiaries to comply with the foregoing as soon as reasonably practicable after the Second Restatement Effective Date (but in any event by the Borrowing Base Date).

(b)  The Borrower shall not permit any Operating Subsidiary to purchase any Inventory from any Direct Delivery Vendor other than (i) the acquisition of inventory from McKesson Corporation (or any Persons that replace McKesson Corporation, in whole or in part, and sell or otherwise provide inventory substantially similar to inventory sold or otherwise provided by McKesson Corporation) consistent with past practice and (ii) food-stuffs, beverages, periodicals, greeting cards and similar items which are either paid for in cash substantially concurrently with the time of delivery or otherwise consistent with past practice.

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SECTION 5.16.  Cash Management System.  (a)  The Borrower will cause each Subsidiary Loan Party to at all times maintain a Cash Management System that complies with Schedule 3 of the Senior Subsidiary Security Agreement.  The Borrower will cause each Subsidiary Loan Party to comply with each obligation thereof under the Cash Management System.  The Borrower will cause each Subsidiary Loan Party to comply with each of its obligations under the Cash Management System, and shall cause each Subsidiary Loan Party to use its best efforts to cause any applicable third party to effectuate the Cash Management System.  Notwithstanding the foregoing, the Borrower shall only be required to cause Holdings and its subsidiaries to comply with the foregoing as soon as reasonably practicable after the Second Restatement Effective Date (but in any event by the Borrowing Base Date).

(b)  Each party hereto authorizes the Administrative Agent and the Collateral Agent to (i) permit the creation by the Grantors of accounts that receive payments in respect of the Securitization Assets and/or Factoring Assets (but not other payments) and (ii) release the security interest of the Collateral Agent for the ratable benefit of the Senior Secured Parties in the Lockbox Account, the Governmental Lockbox Account and/or any accounts created pursuant to clause (i) of this paragraph from the Cash Management System and transfer control of the Lockbox Account, the Governmental Lockbox Account and/or any accounts created pursuant to clause (i) of this paragraph to (A) any Person in connection with a Factoring Transaction permitted by this Agreement for so long as a Factoring Transaction is ongoing or (B) any Person for the benefit of holders of Third Party Interests in respect of a Securitization permitted by this Agreement for as long as any Third Party Interests are outstanding.

SECTION 5.17.  Termination of Factoring Transactions.  If an Event of Default has occurred and the Collateral Agent has elected to exercise any remedies under the Senior Collateral Documents as a result thereof, the Borrower shall, and shall cause each of its Subsidiaries to, terminate all existing Factoring Transactions and cease to engage in any further Factoring Transactions; provided, however, that neither the Borrower nor any such Subsidiary shall be required hereby to repurchase any Factoring Assets previously sold, transferred or otherwise conveyed pursuant to any such Factoring Transaction.

ARTICLE VI

Negative Covenants

Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full and all Letters of Credit have expired, terminated or been cash collateralized and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that:

SECTION 6.01.  Indebtedness; Certain Equity Securities.  (a)  The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or permit

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to exist any Indebtedness, any Attributable Debt in respect of any Sale and Leaseback Transaction or any Third Party Interests except:

(i) Indebtedness under the Senior Loan Documents;

(ii) unsecured Indebtedness of the Borrower that is not Guaranteed by any Subsidiary, that does not mature or require scheduled payments of principal prior to the date that is three months after the Tranche 2/Tranche 3 Term Maturity Date, and that has covenants and events of default which are determined in good faith by the senior management of the Borrower to be on market terms, and Refinancing Indebtedness issued in respect of such Indebtedness;

(iii) Indebtedness of the Borrower and the Subsidiaries in respect of intercompany Investments permitted under Section 6.04; provided that such Indebtedness is subordinated to the Senior Obligations (and, prior to the Borrowing Base Date, the Interim Obligations) pursuant to terms substantially the same as those forth on Annex 2 hereto;

(iv) Existing Non-Guaranteed Indebtedness;

(v) Existing Second Priority Debt;

(vi) Existing Guaranteed Unsecured Indebtedness;

(vii) Permitted Second Priority Debt incurred after the Second Restatement Effective Date in an aggregate principal amount, together with the aggregate principal amount of Indebtedness incurred pursuant to clause (viii) of this Section 6.01(a), not in excess of $1,500,000,000 at any time outstanding; provided that the aggregate principal amount of Permitted Second Priority Debt incurred under this clause which matures or requires scheduled payments of principal prior to the date that is three months after the Tranche 2/Tranche 3 Term Maturity Date, together with the aggregate principal amount of any Permitted Unsecured Indebtedness incurred under clause (viii) of this Section 6.01(a) which matures or requires schedule payments of principal prior to the date that is three months after the Tranche 2/Tranche 3 Term Maturity Date, shall not exceed $750,000,000 at any time outstanding;

(viii)  Permitted Unsecured Indebtedness incurred after the Second Restatement Effective Date in an aggregate principal amount, together with the aggregate principal amount of Indebtedness incurred pursuant to clause (vii) of this Section 6.01(a), not in excess of $1,500,000,000 at any time outstanding; provided that the aggregate principal amount of Permitted Unsecured Indebtedness incurred under this clause which matures or requires scheduled payments of principal prior to the date that is three months after the Tranche 2/Tranche 3 Term Maturity Date, together with the aggregate principal amount of any Permitted Second Priority Debt incurred under clause (vii) of this Section 6.01(a) which matures or requires schedule payments of principal prior to the date

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that is three months after the Tranche 2/Tranche 3 Term Maturity Date, shall not exceed $750,000,000 at any time outstanding;

(ix) Indebtedness secured by Liens on real property or Attributable Debt incurred in connection with Sale and Leaseback Transactions involving real property; provided that any such Indebtedness, or any such lease entered into in connection with the Sale and Leaseback Transaction giving rise to such Attributable Debt, shall have a maturity date or termination date, as the case may be, after the date that is three months after the Tranche 2/Tranche 3 Term Maturity Date; and provided further that the aggregate principal amount of Indebtedness and Attributable Debt incurred pursuant to this clause (ix) shall not exceed $600,000,000 at any time outstanding;

(x) Refinancing Indebtedness issued in respect of Indebtedness or Attributable Debt permitted under clauses (iv), (v), (vi), (xv) and (xviii);

(xi) endorsements of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business;

(xii) Indebtedness for borrowed money and Capital Lease Obligations existing on the Second Restatement Effective Date (other than Second Priority Debt and Indebtedness referred to in clauses (ii), (iv), (v) and (vi) above) and set forth on Schedule 6.01(a)(xii), but not any extensions, renewals, refinancings or replacements of such Indebtedness;

(xiii) Capital Lease Obligations with respect to leases existing on the Second Restatement Effective Date that were accounted for as operating leases on the Original Restatement Effective Date and thereafter reclassified as Capital Lease Obligations;

(xiv) Indebtedness (including Capital Lease Obligations) and Attributable Debt in respect of Sale and Leaseback Transactions in respect of equipment financing or leasing in the ordinary course of business of the Borrower and the Subsidiaries consistent with past practices;

(xv) purchase money Indebtedness (including Capital Lease Obligations) and Attributable Debt in respect of Sale and Leaseback Transactions in each case incurred to finance the acquisition, development, construction or opening of any Store after the Second Restatement Effective Date; provided that such Indebtedness or Attributable Debt (A) is incurred not later than 24 months following the completion of the acquisition, development, construction or opening of such Store, (B) any Lien securing such Indebtedness or Attributable Debt is limited to the Store financed with the proceeds thereof, and (C) is incurred in connection with a transaction that is substantially consistent with the business plan of the Borrower provided to the Lenders prior to the Second Restatement Effective Date;

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(xvi) (A) Third Party Interests issued by Securitization Vehicles in Securitizations permitted by Section 6.05, and Indebtedness represented by such Third Party Interests and (B) Indebtedness of the Borrower or its Subsidiaries that may be deemed to exist solely by virtue of a Factoring Transaction permitted by this Agreement; provided that the aggregate amount of all Securitizations plus the aggregate amount of Indebtedness permitted by clause (B) shall not exceed $950,000,000 at any time outstanding;

(xvii) Indebtedness of Subsidiaries other than Securitization Vehicles that may be deemed to exist solely by virtue of Standard Securitization Undertakings entered into by such Subsidiaries as sellers of Securitization Assets in Securitizations permitted by paragraph (xvi) above;

(xviii) Indebtedness under the New Notes and/or the Bridge Facility, in an aggregate principal amount not in excess of the amount equal to $1,220,000,000, and Guarantees by Subsidiaries of such Indebtedness (and Refinancing Indebtedness of such Indebtedness);

(xix) Guarantees by Subsidiaries of the Existing Second Priority Debt (and Refinancing Indebtedness of Existing Second Priority Debt), the Existing Guaranteed Unsecured Indebtedness (and Refinancing Indebtedness of Existing Guaranteed Unsecured Indebtedness) and any Indebtedness under clause (vii) or (viii) of this Section 6.01(a); and

(xx) Indebtedness of Holdings in respect of letters of credit assumed in connection with the Acquisition in an aggregate principal amount not in excess of (A) $75,000,000 at any time outstanding prior to any date that is 60 days after the Second Restatement Effective Date and (B) $10,000,000 at any time outstanding on or after any date that is 60 days after the Second Restatement Effective Date but prior to 120 days after the Second Restatement Effective Date.

(b)  The Borrower will not, nor will it permit any Subsidiary to, issue any Preferred Stock or other preferred Equity Interests, other than Qualified Preferred Stock of the Borrower, Third Party Interests issued by Securitization Vehicles, and other preferred Equity Interests issued and outstanding on the Second Restatement Effective Date and set forth on Schedule 6.01(b).

SECTION 6.02.  Liens.  (a)  The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except:

(i) Liens created under the Senior Loan Documents;

(ii) Permitted Encumbrances;

(iii) any Lien created or permitted by the Second Priority Collateral Documents with respect to the Second Priority Debt Obligations in favor of the

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Second Priority Debt Parties; provided that (A) such Lien is created simultaneously with or after an equivalent Lien under the Senior Collateral Documents on the applicable Senior Collateral, (B) such Lien is subject to the Collateral Trust and Intercreditor Agreement, (C) any Lien on the proceeds of such Senior Collateral is permitted by the Collateral Trust and Intercreditor Agreement and (D) such Second Priority Debt Obligations are permitted to be incurred under Section 6.01(a);

(iv) intentionally omitted;

(v) any Lien securing Indebtedness of a Subsidiary owing to a Subsidiary Loan Party;

(vi) any Lien securing Attributable Debt and other payment obligations under leases incurred in connection with a Sale and Leaseback Transaction permitted pursuant to Section 6.01(a)(xiv) or (xv) and Section 6.06; provided that such Liens attach only to the equipment, real property or other assets subject to such Sale and Leaseback Transaction;

(vii) any Lien on real property securing Indebtedness permitted and incurred under Section 6.01(a)(ix);

(viii) any Lien securing Capital Lease Obligations permitted and incurred under Section 6.01(a)(xiii), provided that such Lien is limited to the equipment or other property subject to leases existing on the Original Restatement Effective Date that were subsequently reclassified as Capital Lease Obligations;

(ix) any Lien on equipment securing Indebtedness incurred to finance such equipment pursuant to Section 6.01(a)(xiv);

(x) Liens securing Indebtedness permitted and incurred under Section 6.01(a)(xv), provided that such Liens apply only to the property or other assets acquired, developed or constructed, as the case may be, with the proceeds of such Indebtedness;

(xi) Liens existing on the Second Restatement Effective Date and identified on Schedule 6.02(xi); provided, that such Liens do not attach to any property other than the property identified on such Schedule and secure only the obligations they secured on the Second Restatement Effective Date;

(xii) any Lien (A) on Net Cash Proceeds that are required to be applied to the repayment of Second Priority Debt Obligations in accordance with the Collateral Trust and Intercreditor Agreement or (B) that arises pursuant to any provisions in any Second Priority Debt Document equivalent to Section 10.14 of the 12.5% Note Indenture;

(xiii) Liens securing Refinancing Indebtedness permitted under Section 6.01(a), to the extent that the Indebtedness being refinanced was

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originally secured in accordance with this Section 6.02; provided that such Lien does not apply to any additional property or assets of the Borrower or any Subsidiary (other than (i) property or assets acquired after the issuance or incurrence of such Refinancing Indebtedness that would have been subject to the Lien securing refinanced Indebtedness if such Indebtedness had not been refinanced, (ii) additions to the property or assets subject to the Lien and (iii) the proceeds of the property or assets subject to the Lien);

(xiv) Liens on property or assets acquired pursuant to Section 6.04(vi), (x) or (xiii); provided that (A) such Liens apply only to the property or other assets subject to such Liens at the time of such acquisition and (B) such Liens existed at the time of such acquisition and were not created in contemplation thereof;

(xv) put and call agreements with respect to Equity Interests acquired or created in connection with Joint Ventures permitted pursuant to Section 6.04(x) or (xiii); provided that neither the Borrower nor any Subsidiary shall be permitted to enter into any such agreement that requires or, upon the occurrence of any event or condition, contingent or otherwise, may require the Borrower or any Subsidiary Loan Party (or, prior to the Borrowing Base Date, Holdings or any of its subsidiaries) to repurchase Equity Interests, Indebtedness or otherwise expend any amounts on or prior to the Tranche 2/Tranche 3 Term Maturity Date (other than as permitted under Section 6.04(x) or (xiii));

(xvi) (A) Liens on Securitization Assets transferred or purported to be transferred to Securitization Vehicles securing Third Party Interests issued in Securitizations permitted by Sections 6.01 and 6.05, (B) Liens on account receivables not purchased by a Securitization Vehicle, which Liens (i) are granted in connection with Securitizations permitted by Sections 6.01 and 6.05, (ii) are granted pursuant to Standard Securitization Undertakings, (iii) are perfected prior to an Event of Default and (iv) secure Third Party Interests issued in Securitizations permitted by Sections 6.01 and 6.05 and (C) Liens on Factoring Assets transferred or purported to be transferred in Factoring Transactions permitted by this Agreement; and

(xvii) Liens (other than Liens securing Indebtedness) that are not otherwise permitted under any other provision of this Section 6.02(a); provided, that the fair market value of the property and assets with respect to which such Liens are granted shall not at any time exceed $40,000,000.

(b)  Notwithstanding anything in clause (a) of this Section 6.02, the Borrower may not grant or otherwise permit to exist Liens on any cash or cash equivalents that secure the Senior Obligations or are otherwise held by the Lenders or the Administrative Agent pursuant to Section 2.05(k) or 9.15.

SECTION 6.03.  Fundamental Changes.  Without limiting the restrictions on Business Acquisitions set forth in Section 6.04, the Borrower will not, and will not permit any Subsidiary Loan Party (or, prior to the Borrowing Base Date, Holdings or any

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of its subsidiaries) to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing (i) any Person may merge into the Borrower in a transaction in which the Borrower is the surviving corporation, provided, that if such other Person is a Subsidiary Loan Party, it shall have no assets that constitute Senior Collateral, (ii) any Person may merge into a Subsidiary Loan Party in a transaction in which such Subsidiary Loan Party is the surviving corporation and (iii) any Subsidiary Loan Party may liquidate or dissolve if such liquidation or dissolution is not materially disadvantageous to the Lenders; provided that (A) any such merger involving a Person that is not a wholly-owned Subsidiary immediately prior to such merger shall not be permitted to engage in such merger unless also permitted by Section 6.04 and (B) the Borrower and the applicable Subsidiary Loan Party shall comply with the provisions of Section 5.11 with respect to any Subsidiary acquired pursuant to this Section 6.03.

SECTION 6.04.  Investments, Loans, Advances, Guarantees and Acquisitions.  The Borrower will not, and will not permit any of the Subsidiaries to, make any Investment in, or Guarantee any obligations of, any other Person, or purchase or otherwise acquire (in one transaction or a series of transactions) any assets of any other Person constituting a business unit, except:

(i) Permitted Investments;

(ii) Investments of the Borrower, the Subsidiary Loan Parties and Holdings and its subsidiaries set forth on Schedule 6.04;

(iii) Guarantees of Indebtedness and/or Guarantees consisting of Indebtedness permitted by Section 6.01;

(iv) Investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business;

(v) Investments by (A) the Borrower or any Subsidiary Loan Party in Subsidiary Loan Parties and (B) prior to the Borrowing Base Date, Holdings in its subsidiaries and subsidiaries of Holdings in Holdings or any other subsidiary of Holdings; provided that the Borrower and such Subsidiary Loan Party or Holdings and such subsidiary of Holdings, as the case may be, shall comply with the applicable provisions of Section 5.11 with respect to any newly formed Subsidiary;

(vi) Investments consisting of non-cash consideration received in connection with any Asset Sale permitted by Section 6.05;

(vii) Investments by the Subsidiaries in the Borrower; provided that the proceeds of such Investments are used for a purpose set forth in Section 5.10(b);

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(viii) prior to the Borrowing Base Date, Investments by the Borrower or any Subsidiary Loan Party in Holdings and its subsidiaries;

(ix) usual and customary loans and advances to employees, officers and directors of the Borrower and the Subsidiaries;

(x) Investments by the Borrower or any of the Subsidiaries in Joint Ventures in an amount not to exceed $15,000,000 in the aggregate in any fiscal year of the Borrower;

(xi) Investments in charitable foundations organized under Section 501(c) of the Code in an amount not to exceed $7,500,000 in the aggregate in any calendar year;

(xii) any Investment consisting of a Hedging Agreement permitted by Section 6.07;

(xiii) Business Acquisitions and Investments that are not otherwise permitted under any other provision of this Section 6.04; provided that (A) at the time of such Business Acquisition or Investment no Default has occurred and is continuing or would result therefrom and (B) immediately after giving effect to any such Business Acquisition or Investment, the Revolver Availability is greater than $100,000,000;

(xiv) Investments consisting of Sellers’ Retained Interests in Securitizations permitted by Sections 6.01 and 6.05; and

(xv) (A) Investments by the Borrower or a Subsidiary in connection with a Securitization permitted pursuant to this Agreement and (B) any Investment or other Guarantee that may be deemed made by the Borrower due to the fact that a Parent Undertaking has been entered into in respect of a Securitization permitted pursuant to the Agreement.

SECTION 6.05.  Asset Sales.  The Borrower will not, and will not permit any of the Subsidiary Loan Parties (and, prior to the Borrowing Base Date, Holdings or any of its subsidiaries) to, conduct any Asset Sale, including any sale of any Equity Interest owned by it and any sale of Securitization Assets in connection with a Securitization, nor will the Borrower permit any of the Subsidiary Loan Parties (and, prior to the Borrowing Base Date, Holdings or any of its subsidiaries) to issue any additional Equity Interest in such Subsidiary, except:

(i) Permitted Dispositions;

(ii) any Asset Sale (other than a Sale and Leaseback Transaction, the issuance of Equity Interests, sales or contributions of Securitization Assets in a Securitization or sales of Factoring Assets in Factoring Transactions) for fair value not in the ordinary course of business;

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(iii) any sale, transfer or disposition to a third party of Stores, leases and prescription files closed at substantially the same time as, and entered into as part of a single related transaction with, the purchase or other acquisition from such third party of Stores, leases and prescription files of a substantially equivalent value;

(iv) any issuance of (A) Equity Interests of any Subsidiary Loan Party by such Subsidiary Loan Party to the Borrower or any other Subsidiary Loan Party and (B) prior to the Borrowing Base Date, any issuance of Equity Interests of Holdings by Holdings to the Borrower and any issuance of Equity Interests of any subsidiary of Holdings by such subsidiary to Holdings or any other subsidiary of Holdings;

(v) any Sale and Leaseback Transaction permitted pursuant to Section 6.01(a)(ix), (xiv) or (xv) and Section 6.06;

(vi) sales or contributions of Securitization Assets to Securitization Vehicles in connection with Securitizations, provided that (a) each such Securitization is effected on market terms as determined in good faith by the senior management of the Borrower, (b) the aggregate amount of all such Securitizations plus the aggregate amount of Indebtedness permitted by Section 6.01(a)(xvi)(B) does not exceed $950,000,000 at any time outstanding, (c) the aggregate amount of the Sellers’ Retained Interests in such Securitizations does not exceed an amount at any time outstanding that is customary for similar transactions and (d) the proceeds to each such Securitization Vehicle from the issuance of Third Party Interests are applied substantially simultaneously with receipt thereof to the purchase from Subsidiary Loan Parties of Securitization Assets; provided that, in the case of clause (d), the Securitization Vehicle may use a portion of such proceeds to pay a customary collection agent fee in connection with such Securitization to the extent such fee is permitted pursuant to Section 6.09(f);

(vii) unless otherwise restricted by Section 5.17, sales of Factoring Assets in connection with Factoring Transactions; provided that (i) a Factoring Notice with respect to such Factoring Transaction has been delivered by the Borrower to the Administrative Agent and (ii) each such Factoring Transaction is effected on market terms as determined in good faith by the senior management of the Borrower; and

(viii) the sale, transfer or other disposition of assets or properties of Holdings and its subsidiaries required by any Governmental Authority as a condition to its consent or forbearance from opposing the consummation of the Transactions.

provided that, with respect to sales, transfers or dispositions under clause (ii), (v) or (viii), and with respect to any net consideration received from any transaction described in clause (iii), (1) at least 75% of the consideration therefor shall consist of cash and (2) the

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aggregate fair market value of all assets sold, transferred or disposed of in reliance upon clauses (ii) and (v) shall not exceed $200,000,000 in any fiscal year of the Borrower; provided further that subject to the condition set forth in clause (1) above, additional assets with an aggregate fair market value not in excess of $450,000,000 may be sold, transferred or disposed of in any fiscal year of the Borrower in reliance upon clauses (ii) and (v) if the Borrower reinvests, or causes the applicable Subsidiary Loan Party (or, prior to the Borrowing Base Date, if applicable, Holdings or any of its subsidiaries) to reinvest, Net Cash Proceeds received in connection therewith in Business Acquisitions or the purchase of Stores or prescription files within 365 days after the receipt thereof.

SECTION 6.06.  Sale and Leaseback Transactions.  The Borrower will not, and will not permit any of the Subsidiaries to, enter into any Sale and Leaseback Transaction, except for Sale and Leaseback Transactions permitted by and effected pursuant to Section 6.01(a)(ix), (xiv) or (xv) which do not result in Liens other than Liens permitted pursuant to Section 6.02(a).

SECTION 6.07.  Hedging Agreements.  The Borrower will not, and will not permit any of the Subsidiaries to, incur or at any time be liable with respect to any monetary liability under any Hedging Agreements, unless such Hedging Agreements (i) are entered into for bona fide hedging purposes of the Borrower, any Subsidiary Loan Party or, prior to the Borrowing Base Date, Holdings or any of its subsidiaries (as determined in good faith by the senior management of the Borrower), (ii) correspond in terms of notional amount, duration, currencies and interest rates, as applicable, to Indebtedness of the Borrower or any Subsidiary Loan Party (or, prior to the Borrowing Base Date, Holdings or any of its subsidiaries) permitted to be incurred under Section 6.01(a) or to business transactions of the Borrower and the Subsidiary Loan Parties (and, prior to the Borrowing Base Date, Holdings and its subsidiaries) on customary terms entered into in the ordinary course of business and (iii) do not exceed an amount equal to the aggregate principal amount of the Senior Obligations and the Second Priority Debt Obligations (and, prior to the Borrowing Base Date, the Interim Obligations).

SECTION 6.08.  Restricted Payments; Certain Payments of Indebtedness.  (a)  The Borrower will not, nor will it permit any Subsidiary to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except (i) the Borrower may declare and pay dividends with respect to its common stock or Qualified Preferred Stock payable solely in additional shares of its common stock or Qualified Preferred Stock, (ii) Subsidiaries (other than those directly owned, in whole or part, by the Borrower) may declare and pay dividends ratably with respect to their common stock, (iii) the Borrower may declare and pay cash dividends with respect to its common stock and effect repurchases, redemptions or other Restricted Payments with respect to its common stock, together in an aggregate amount in any fiscal year of the Borrower not to exceed 50% of Consolidated Net Income (if positive) for the immediately preceding fiscal year of the Borrower; provided that immediately prior and after giving effect to any such payment no Default or Event of Default shall have occurred and be continuing and, immediately after giving effect to any such payment, the Borrower shall have Revolver Availability of more than $100,000,000, (iv) the Borrower may pay cash dividends in an amount not to exceed $60,000,000 in any

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fiscal year of the Borrower with respect to the Series E Preferred Stock, Series I Preferred Stock or any other Qualified Preferred Stock; provided that (x) immediately prior and after giving effect to any such payment, no Default or Event of Default shall have occurred and be continuing and (y) only so long as a Financial Covenant Effectiveness Period is then occurring, the Consolidated Fixed Charge Coverage Ratio for the period of four consecutive fiscal quarters most recently ended on or prior to the date of such payment, calculated on a pro forma basis as if such payment were made on the last day of such period (and excluding any such payments previously made pursuant to this clause during such four quarter period but attributed for purposes of this calculation to the last day of a prior period which day does not occur in such four quarter period) is not less than the ratio applicable to such period of four fiscal quarters under Section 6.12, (v) the Borrower and the Subsidiaries may make Restricted Payments consisting of the repurchase or other acquisition of shares of, or options to purchase shares of, capital stock of the Borrower or any of its Subsidiaries from employees, former employees, directors or former directors of the Borrower or any Subsidiary (or their permitted transferees), in each case pursuant to stock option plans, stock plans, employment agreements or other employee benefit plans approved by the board of directors of the Borrower; provided that no Default has occurred and is continuing; and provided further that the aggregate amount of such Restricted Payments made after the Original Restatement Effective Date shall not exceed $10,000,000, (vi) the Subsidiaries may declare and pay cash dividends to the Borrower; provided that the Borrower shall, within a reasonable time following receipt of any such payment, use all of the proceeds thereof for a purpose set forth in Section 5.10(b) (including the payment of dividends required or permitted pursuant to this Section 6.08(a)), (vii) the Borrower and the Subsidiaries may declare and pay cash dividends with respect to the Equity Interests set forth on Schedule 6.08(a) to the extent, and only to the extent, required pursuant to the terms of such Equity Interests or any other agreement in effect on the Effective Date and (viii) so long as no Default or Event of Default has occurred and is continuing or would result therefrom, the Borrower may redeem or repurchase shares of the Borrower’s and/or its Subsidiaries’ (including Rite Aid Lease Management Company’s) Preferred Stock (A) solely with Net Cash Proceeds received by the Borrower from issuances of its common stock after the Original Restatement Effective Date, provided that any such repurchase or redemption is effected within 150 days after the receipt of such proceeds or (B) with other funds available to the Borrower if, immediately after giving effect to any such redemption or repurchase, the Borrower shall have Revolver Availability of more than $100,000,000.

(b)  The Borrower will not, nor will it permit any Subsidiary to, make or agree to pay or make, directly or indirectly, any payment or other distribution (whether in cash, securities or other property) of or in respect of principal of or interest on any Indebtedness, or any payment or other distribution (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Indebtedness, except:

(i) payments or prepayments of Indebtedness created under the Senior Loan Documents;

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(ii) payments of regularly scheduled interest and principal payments as and when due in respect of any Indebtedness permitted pursuant to Section 6.01(a);

(iii) prepayments of Indebtedness permitted pursuant to clause (vii), (viii) or (ix) of Section 6.01(a) with the proceeds of Indebtedness permitted pursuant to clause (vii), (viii) or (ix) of Section 6.01(a);

(iv) payments of secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness;

(v) provided no Default has occurred and is continuing or would result therefrom, Optional Debt Repurchases of Inside Indebtedness and, to the extent permitted by paragraph (c) of this Section, Optional Debt Repurchases of Outside Indebtedness;

(vi) repurchases, exchanges or redemptions of Indebtedness for consideration consisting solely of common stock of the Borrower or Qualified Preferred Stock;

(vii) prepayments of Capital Lease Obligations in connection with the sale, closing or relocation of Stores;

(viii) prepayments of Indebtedness in connection with the incurrence of Refinancing Indebtedness permitted pursuant to Section 6.01(a)(ii) or (x);

(ix) prepayments of Indebtedness permitted pursuant to Section 6.01(a)(iii), if permitted by the subordination provisions applicable to such Indebtedness; and

(x) unless an Event of Default shall have occurred and be continuing, mandatory prepayments of Indebtedness and interest under the New Notes and/or the Bridge Facility.

(c)  The Borrower and the Subsidiaries will not effect Optional Debt Repurchases of Outside Indebtedness unless immediately prior and after giving effect to any such Optional Debt Repurchases, (x) no Default or Event of Default shall have occurred and be continuing and (y) the Borrower shall have Revolver Availability of more than $100,000,000.

SECTION 6.09.  Transactions with Affiliates.  The Borrower will not, and will not permit any Subsidiary to, directly or indirectly, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except:

(a)  payment of compensation to directors, officers, and employees of the Borrower and the Subsidiaries in the ordinary course of business;

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(b)  payments in respect of transactions required to be made pursuant to agreements or arrangements in effect on the Second Restatement Effective Date and set forth on Schedule 6.09;

(c)  transactions involving the acquisition of inventory in the ordinary course of business; provided that (i) the terms of such transaction are (A) set forth in writing, (B) in the best interests of the Borrower or such Subsidiary, as the case may be, and (C) no less favorable to the Borrower or such Subsidiary, as the case may be, than those that could be obtained in a comparable arm’s length transaction with a Person that is not an Affiliate of the Borrower or a Subsidiary and, (ii) if such transaction involves aggregate payments or value in excess of $75,000,000, the board of directors of the Borrower (including a majority of the disinterested members of the board of directors) approves such transaction and, in its good faith judgment, believes that such transaction complies with clauses (i)(B) and (C) of this paragraph;

(d)  (i) transactions between or among the Borrower and/or one or more Subsidiary Loan Parties, (ii) sales of Securitization Assets to Securitization Vehicles in Securitizations permitted by Sections 6.01 and 6.05, (iii) prior to the Borrowing Base Date, transactions between or among (A) the Borrower or any Subsidiary Loan Party, on one hand, and Holdings or any of its subsidiaries, on the other hand, (B) Holdings, on one hand, and any subsidiary of Holdings, on the other hand, and (C) any subsidiary of Holdings, on one hand, and any other subsidiary of Holdings, on the other hand, (iv) transactions under, involving, related to and/or in connection with the Acquisition and documents related thereto including, (A) the Stock Purchase Agreement, dated as of August 23, 2006, by and between the Borrower and The Jean Coutu Group (PJC) Inc., (B) the Stockholder Agreement, dated as of August 23, 2006, between the Borrower, The Jean Coutu Group (PJC) Inc., Jean Coutu, Marcelle Coutu, Francois J. Coutu, Michel Coutu, Louis Coutu, Sylvie Coutu and Marie-Josée Coutu and (C) the Registration Rights Agreement, dated as of August 23, 2006, by and between the Borrower and The Jean Coutu Group (PJC) Inc. and (v) the Transition Services Agreement, dated as of June 4, 2007, by and between the Borrower and the Seller; provided that the terms of the transactions referred to in clauses (iii), (iv) and (v) above are in the best interest of the Borrower, such Subsidiary Loan Party or Holdings or any such subsidiary of Holdings which is a party thereto, as the case may be;

(e)  issuances of Preferred Stock of the Borrower (and transactions that are necessary to effect such issuances) in respect of pay-in-kind obligations of the Borrower relating to Series G Preferred Stock or Series H Preferred Stock; and

(f)  any other Affiliate transaction not otherwise permitted pursuant to this Section 6.09; provided that (i) the terms of such transaction are (A) set forth in writing, (B) in the best interests of the Borrower or such Subsidiary, as the case may be, and (C) no less favorable to the Borrower or such Subsidiary, as the case may be, than those that could be obtained in a comparable arm’s length

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transaction with a Person that is not an Affiliate of the Borrower or a Subsidiary, (ii) if such transaction involves aggregate payments or value in excess of $25,000,000 in any consecutive 12-month period, the board of directors of the Borrower (including a majority of the disinterested members of the board of directors) approves such transaction and, in its good faith judgment, believes that such transaction complies with clauses (i)(B) and (C) of this paragraph and (iii) if such transaction (other than any transaction necessary for the redemption or exchange of the Borrower’s Series G Preferred Stock or Series H Preferred Stock) involves aggregate payments or value in excess of $50,000,000 in any consecutive 12-month period, the Borrower obtains a written opinion from an independent investment banking firm or appraiser of national prominence, as appropriate, to the effect that such transaction is fair to the Borrower or such Subsidiary, as the case may be, from a financial point of view.

SECTION 6.10.  Restrictive Agreements.  (a)  The Borrower will not, and will not permit any Subsidiary to, enter into any agreement which imposes a limitation on the incurrence by the Borrower and the Subsidiaries of Liens that (i) would restrict any Subsidiary from granting Liens on any of its assets (including assets in addition to the then-existing Senior Collateral and, prior to the Borrowing Base Date, the then-existing Interim Collateral, to secure the Senior Obligations, the Second Priority Obligations and, prior to the Borrowing Base Date, the Interim Obligations) or (ii) is more restrictive, taken as a whole, than the limitation on Liens set forth in this Agreement except, in each case, (A)(u) the Senior Loan Documents, (w) agreements with respect to Indebtedness secured by Liens permitted by Section 6.02(a) restricting the ability to transfer or grant Liens on the assets securing such Indebtedness, (x) agreements with respect to Second Priority Debt (1) containing provisions described in clauses (i) and/or (ii) above that are not materially more restrictive, taken as a whole, than those of the 8.125% Note Indenture as in effect on the Second Restatement Effective Date or (2) requiring that such Indebtedness be secured by assets in respect of which Liens are granted to secure other Indebtedness (provided that in the case of any such assets subject to a Senior Lien, such Indebtedness will be required to be secured only with a Second Priority Lien); provided, however, that the Second Priority Debt Documents relating to any such Indebtedness may not contain terms requiring any Liens be granted with respect to Senior Collateral consisting of cash or Permitted Investments pledged pursuant to Section 2.05(j) of this Agreement or Section 5 of the Senior Subsidiary Guarantee Agreement or otherwise required to be provided upon the occurrence of a default under any bank credit facility to secure obligations in respect of letters of credit issued thereunder, (y) agreements with respect to unsecured Indebtedness governed by indentures or by credit agreements or note purchase agreements with institutional investors permitted by this Agreement containing terms that are not materially more restrictive, taken as a whole, than those of the 9.25% Note Indenture as in effect on the Second Restatement Effective Date and (z) the New Notes and/or the Bridge Facility, (B) customary restrictions contained in purchase and sale agreements limiting the transfer of the subject assets pending closing, (C) customary non-assignment provisions in leases and other contracts entered into in the ordinary course of business, (D) pursuant to applicable law, (E) agreements in effect as of the Second Restatement Effective Date and not entered into in contemplation of the transactions effected in connection with the closing of the Original Agreement, (F) the

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Indentures, in each case when originally entered into, (G) any restriction existing under agreements relating to assets acquired by the Borrower or a Subsidiary in a transaction permitted hereby; provided that such agreements existed at the time of such acquisition, were not put into place in anticipation of such acquisition and are not applicable to any assets other than assets so acquired, (H) any restriction existing under any agreement of a Person acquired as a Subsidiary pursuant to Section 6.03 or Section 6.04(a)(xiii); provided that any such agreement existed at the time of such acquisition, was not put into place in anticipation of such acquisition and was not applicable to any Person or assets other than the Person or assets so acquired and (I) customary restrictions and conditions contained in agreements relating to Securitizations permitted hereunder, provided that such restrictions and conditions apply only to Securitization Vehicles and to the Securitization Assets that are subject to such Securitizations.

(b)  The Borrower will not, and will not permit any Subsidiary to, enter into or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Subsidiary to (i) make Restricted Payments in respect of any Equity Interests of such Subsidiary held by, or pay any Indebtedness owed to, the Borrower or any other Subsidiary, (ii) make any Investment in the Borrower or any other Subsidiary, or (iii) transfer any of its assets to the Borrower or any other Subsidiary, except for (A) any restriction existing under (1) the Senior Loan Documents or existing on the Second Restatement Effective Date under the Indentures, (2) the indenture or agreement governing any Refinancing Indebtedness in respect of Indebtedness set forth in clause (1) above or (3) agreements with respect to Indebtedness permitted by this Agreement containing provisions described in clauses (i), (ii) and (iii) above that are not materially more restrictive, taken as a whole, than those of the 8.125% Note Indenture or, alternatively, the 9.25% Note Indenture, in each case as in effect on the Second Restatement Effective Date, (B) customary non-assignment provisions in leases and other contracts entered into in the ordinary course of business, (C) as required by applicable law, (D) customary restrictions contained in purchase and sale agreements limiting the transfer of the subject assets pending closing, (E) any restriction existing under agreements relating to assets acquired by the Borrower or a Subsidiary in a transaction permitted hereby; provided that such agreements existed at the time of such acquisition, were not put into place in anticipation of such acquisition and are not applicable to any assets other than assets so acquired, (F) any restriction existing under any agreement of a Person acquired as a Subsidiary pursuant to Section 6.03 or Section 6.04(a)(xiii); provided any such agreement existed at the time of such acquisition, was not put into place in anticipation of such acquisition and was not applicable to any Person or assets other than the Person or assets so acquired, (G) agreements with respect to Indebtedness secured by Liens permitted by Section 6.02 that restrict the ability to transfer the assets securing such Indebtedness, (H) customary restrictions and conditions contained in agreements relating to Securitizations permitted hereunder, provided that such restrictions and conditions apply only to Securitization Vehicles and to the Securitization Assets that are subject to such Securitizations and (I) any restriction existing under the New Notes and/or the Bridge Facility.

SECTION 6.11.  Amendment of Material Documents.  (a)  The Borrower will not, nor will it permit any Subsidiary to, amend, modify or waive any Second

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Priority Security Document or any of its rights thereunder without the consent of the Collateral Agent, other than modifications to such agreements in connection with (i) the joinder of additional Subsidiary Loan Parties effected by the execution of supplements to such agreements and (ii) the inclusion of additional Second Priority Debt permitted pursuant to Section 6.01(a)(vii) constituting Secured Obligations (as defined in the Second Priority Security Agreement) under such agreements.  The Borrower will not, nor will it permit any Subsidiary to, amend, modify or waive any instrument governing the New Notes or the Bridge Facility and any related security documents, or any of its rights under any of the foregoing without the consent of the Collateral Agent, other than amendments, modifications and waivers that are not material and adverse to the interests of the Lenders.

(b)  The Borrower will not, and will not permit any Subsidiary party to the Intercompany Inventory Purchase Agreement to, amend, terminate, or otherwise modify the Intercompany Inventory Purchase Agreement in any manner materially adverse to the Lenders or their interests under the Senior Loan Documents without the prior written approval of the Collateral Agent; provided, however, that the foregoing shall not limit the Borrower’s responsibilities pursuant to Section 3.2 of the Intercompany Inventory Purchase Agreement.

SECTION 6.12.  Consolidated Fixed Charge Coverage Ratio.  The Borrower will not permit the Consolidated Fixed Charge Coverage Ratio for the period of four consecutive fiscal quarters most recently ended on or prior to any day during a Financial Covenant Effectiveness Period to be less than the ratio set forth below opposite the period that includes the last day of such four quarter period:

Four Fiscal Quarter Period Ending	Ratio
December 3, 2006 through March 3, 2007	1.00 to 1.00
March 4, 2007 through June 2, 2007	1.00 to 1.00
June 3, 2007 through September 1, 2007	1.00 to 1.00
September 2, 2007 through December 1, 2007	1.00 to 1.00
December 2, 2007 through March 1, 2008	1.00 to 1.00
March 2, 2008 through May 31, 2008	1.00 to 1.00
June 1, 2008 through August 30, 2008	1.00 to 1.00
August 31, 2008 through November 29, 2008	1.05 to 1.00
November 30, 2008 through February 28, 2009	1.05 to 1.00
March 1, 2009 through May 30, 2009	1.05 to 1.00
May 31, 2009 through August 29, 2009	1.05 to 1.00
August 30, 2009 through November 28, 2009	1.05 to 1.00
November 29, 2009 through February 27, 2010	1.15 to 1.00

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February 28, 2010 through May 29, 2010	1.15 to 1.00
May 30, 2010 through August 28, 2010	1.15 to 1.00
August 29, 2010 through November 27, 2010	1.15 to 1.00
November 28, 2010 through February 26, 2011	1.15 to 1.00
February 27, 2011 through May 28, 2011	1.15 to 1.00
May 29, 2011 through the Tranche 2/Tranche 3 Term Maturity Date	1.25 to 1.00

SECTION 6.13.  Restrictions on Asset Holdings by the Borrower.  The Borrower will not at any time:

(i) make or hold any Investments other than investments in the Equity Interests of the Subsidiaries (including any distributions or other assets received in respect thereto), intercompany advances to Subsidiaries and Investments permitted by clause (iii) below;

(ii) acquire or hold any Stores, other capital assets, inventory or accounts receivable, other than any real estate which the Borrower holds only as lessor and which is leased and operated by another Person; or

(iii) acquire or hold cash, cash equivalents, Permitted Investments or balances in bank accounts, other than such amounts as are reasonably anticipated (at the time so acquired or held) to be utilized within five Business Days to pay costs, expenses and other obligations of the Borrower referred to in Section 5.10(b).

SECTION 6.14.  Corporate Separateness.  The Borrower will, and will cause each Subsidiary to, take all necessary steps to maintain its identity as a separate legal entity from other Persons and to make it manifest to third parties that it is an entity with assets and liabilities distinct from those of each of other Person.

ARTICLE VII

Events of Default

If any of the following events (“Events of Default”) shall occur:

(a)  the Borrower shall fail to pay any principal of any Loan or any reimbursement obligation in respect of any LC Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;

(b)  the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in clause (a) of this Article) payable under this Agreement or any other Senior Loan Document, when and as

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the same shall become due and payable, and such failure shall continue unremedied for a period of five days;

(c)  any representation or warranty made or deemed made by or on behalf of the Borrower or any Subsidiary in or in connection with any Senior Loan Document or any amendment or modification thereof or waiver thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with any Senior Loan Document or any amendment or modification thereof or waiver thereunder, shall prove to have been incorrect in any material respect when made or deemed made;

(d)  the Borrower shall fail to observe or perform any covenant, condition or agreement contained in Section 5.02(a), 5.10, 5.11, 5.15 or 5.16 or in Article VI;

(e)  any Loan Party (and, prior to the Borrowing Base Date, Holdings or any of its subsidiaries) shall fail to observe or perform any covenant, condition or agreement contained in any Senior Loan Document (other than those specified in clause (a), (b) or (d) of this Article), and such failure shall continue unremedied (i) in the case of covenants contained in Section 5.08, for five days, (ii) in the case of covenants contained in Sections 5.01 and 5.02(b), (c) and (f), for 10 days and (iii) in the case of any other covenant, for a period of 20 days after notice thereof has been delivered by the Administrative Agent to the Borrower (which notice shall be given promptly at the request of any Lender);

(f)  the Borrower or any Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness, including any obligation to reimburse letter of credit obligations or to post cash collateral with respect thereto, when and as the same shall become due and payable or within any applicable grace period;

(g)  any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that this clause (g) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness;

(h)  an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any Subsidiary or its Indebtedness, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the

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Borrower or any Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;

(i)  the Borrower or any Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (h) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;

(j)  the Borrower or any Subsidiary shall become unable to, or admits in writing its inability or fails to, generally pay its debts as they become due;

(k)  one or more judgments for the payment of money in an aggregate amount in excess of $75,000,000 shall be rendered against the Borrower, any Subsidiary or any combination thereof and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Borrower or any Subsidiary to enforce any such judgment;

(l)  (i) the Borrower or any ERISA Affiliate shall fail to pay when due an amount or amounts aggregating in excess of $15,000,000 which it shall have become liable to pay under Section 302 or Title IV of ERISA; or notice of intent to terminate a Plan shall be filed under Title IV of ERISA by the Borrower or any ERISA Affiliate, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer, any Plan; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Plan must be terminated; or there shall occur a complete or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which could cause the Borrower and/or one or more ERISA Affiliates to incur a current payment obligation in excess of $75,000,000; or (ii) any other ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all other ERISA Events that have occurred, could reasonably be expected to result in liability of the Borrower, the ERISA Affiliates and the Subsidiaries in an aggregate amount exceeding $75,000,000;

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(m)  (i) any Lien purported to be created under any Senior Collateral Document or Interim Collateral Document shall cease to be a valid and perfected Lien on any material portion of the Senior Collateral or, prior to the Borrowing Base Date, the Interim Collateral, as the case may be, with the priority required by the Senior Loan Documents, except as a result of the sale or other disposition of the applicable Collateral in a transaction permitted under the Senior Loan Documents, or the Borrower or any Subsidiary shall so assert in writing, or (ii) any Senior Loan Document shall become invalid, or the Borrower or any Subsidiary shall so assert in writing;

(n)  a Change in Control shall occur; or

(o)  any Subsidiary Loan Party shall amend or revoke any instruction in the Government Lockbox Account Agreement to any Government Lockbox Account Bank in respect of a Government Lockbox Account unless (i) the Administrative Agent shall have given its prior written consent or (ii) the Government Lockbox Account is then under the control of any other Person pursuant to Section 5.16;

then, and in every such event (other than an event with respect to the Borrower or any Subsidiary Loan Party (or, prior to the Borrowing Base Date, Holdings or any of its subsidiaries) described in clause (h) or (i) of this Article), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times:  (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become  due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with respect to the Borrower or any Subsidiary Loan Party (and, prior to the Borrowing Base Date, Holdings or any of its subsidiaries) described in clause (h) or (i) of this Article, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.

ARTICLE VIII

The Agents

Each of the Lenders and each Issuing Bank hereby irrevocably appoints (i) the Administrative Agent as its agent and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the

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Administrative Agent by the terms of the Senior Loan Documents, together with such actions and powers as are reasonably incidental thereto and (ii) the Collateral Agent as its agent and authorizes the Collateral Agent to take such actions on its behalf and to exercise such powers as are delegated to the Collateral Agent by the terms of the Senior Loan Documents, together with such actions and powers as are reasonably incidental thereto.

The financial institutions serving as the Agents hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent, and such financial institutions and their Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or any Affiliate of any of the foregoing as if they were not Agents hereunder.

No Agent shall have any duties or obligations except those expressly set forth in the Senior Loan Documents.  Without limiting the generality of the foregoing, (a) no Agent shall be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) no Agent shall have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Senior Loan Documents that such Agent is required to exercise in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 2.20 or 9.02) and (c) except as expressly set forth in the Senior Loan Documents, no Agent shall have any duty to disclose, and no Agent shall be liable for the failure to disclose, any information relating to the Borrower or any of the Subsidiaries that is communicated to or obtained by the financial institution serving as such Agent or any of its Affiliates in any capacity.  No Agent shall be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 2.20 or 9.02) or in the absence of its own gross negligence or willful misconduct (as determined by a court of competent jurisdiction by final and non-appealable judgment).  No Agent shall be deemed to have knowledge of any Default unless and until written notice thereof is given to such Agent by the Borrower or a Lender, as applicable, and no Agent shall be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Senior Loan Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Senior Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Senior Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Senior Loan Document, other than to confirm receipt of items expressly required to be delivered to such Agent.

Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person.  Each Agent also may rely upon any statement made to it orally or by

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telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon.  Any Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

Each Agent may perform any and all of its duties and exercise any and all of its rights and powers by or through any one or more sub-agents appointed by such Agent.  Any Agent and any such sub-agent may perform any and all of its duties and exercise any and all of its rights and powers through their Related Parties.  The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of any Agent and any such sub-agent, and shall apply to their activities in connection with the syndication of the credit facilities provided for herein as well as activities as an Agent.

Subject to the appointment and acceptance of a successor Agent as provided in this paragraph, any Agent may resign at any time by notifying the Lenders, the Issuing Banks and the Borrower.  Upon any such resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor.  If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may, on behalf of the Lenders and the Issuing Banks, appoint a successor Agent (which shall be a financial institution with an office in New York, New York, or an Affiliate of any such financial institution).  Upon the acceptance of its appointment as an Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder.  The fees payable by the Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor.  After an Agent’s resignation hereunder, the provisions of this Article and Section 9.03 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Agent.

Each Lender acknowledges that it has, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Senior Loan Document or related agreement or any document furnished hereunder or thereunder.

Each party hereto authorizes the Administrative Agent to enter into customary intercreditor agreements in connection with Securitizations and Factoring Transactions permitted under this Agreement.

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ARTICLE IX

Miscellaneous

SECTION 9.01.  Notices.  Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

(a)  Rite Aid Corporation, 30 Hunter Lane Camp Hill, PA 17011, Attention of General Counsel (Telecopy No. 717-760-7867; email address: rsari@riteaid.com);

(b)  if to the Administrative Agent, (i) in respect of matters of an operational nature, to Citicorp North America, Inc., 388 Greenwich Street, New York, NY 10013, Attention of Dana Fuski Dugan (Telecopy No. 212-994-0894; email address: dana.a.fuskidugan@citigroup.com, with a copy to oploanswebadmin@citigroup.com) and (ii) in respect of all other matters, to Citicorp North America, Inc., 388 Greenwich Street, New York, NY 10013, Attention of Jeffrey Nitz (Telecopy No. 646-375-1663; email address: jeffrey.nitz@citigroup.com, with a copy to oploanswebadmin@citigroup.com);

(c)  if to the Syndication Agent, to Bank of America, N.A., Bank of America Retail Group, 40 Broad Street, Boston, MA 02109, Attention of Christine Hutchinson (Telecopy No. 617-434-4339; email address: christine.hutchinson@bankofamerica.com);

(d)  if to the Issuing Banks, to (i)  Citicorp North America, Inc., 388 Greenwich Street, New York, NY 10013, Attention of Jeffrey Nitz (Telecopy No. 646-375-1663; email address: jeffrey.nitz@citigroup.com) and (ii) JPMorgan Chase Bank, N.A., 270 Park Avenue, New York, NY 10017, Attention of Teri Streusand (Telecopy No. 212-270-6637; email address: teri.streusand@jpmorgan.com);

(e)  if to the Swingline Lender, to it at Citicorp North America, Inc., 388 Greenwich Street, New York, NY 10013, Attention of Jeffrey Nitz (Telecopy No: 646-375-1663; email address: jeffrey.nitz@citigroup.com); and

(f)  if to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire.

Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto.  All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.

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SECTION 9.02.  Waivers; Amendments.  (a)  No failure or delay by any Agent, any Issuing Bank or any Lender in exercising any right or power hereunder or under any other Senior Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Agents, the Issuing Banks and the Lenders hereunder and under the other Senior Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have.  No waiver of any provision of any Senior Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether any Agent, any Lender or any Issuing Bank may have had notice or knowledge of such Default at the time.

(b)  Neither this Agreement nor any other Senior Loan Document nor any provision hereof or thereof may be waived, amended or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or, in the case of any other Senior Loan Document, pursuant to an agreement or agreements in writing entered into by the Administrative Agent and the Loan Party or Loan Parties that are parties thereto, in each case with the consent of the Required Lenders; provided that (i) no such agreement shall change any provision of any Senior Loan Document in a manner that by its terms adversely affects the rights of Lenders holding Loans of any Class differently than those holding Loans of any other Class, without the written consent of Lenders holding a majority in interest of the outstanding Loans and unused Commitments of each affected Class and (ii) any waiver, amendment or modification of this Agreement that by its terms affects the rights or duties under this Agreement of one or more Classes of Lenders (but not the other Class or Classes of Lenders) may be effected by an agreement or agreements in writing entered into by the Borrower and requisite percentage in interest of the affected Class or Classes of Lenders that would be required to consent thereto under this Section if such Class or Classes of Lenders were the only Class or Classes of Lenders hereunder at the time; and provided further that no such agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce or forgive the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby, (iii) postpone the maturity of any Loan, or any scheduled date of payment of the principal amount of any Term Loan under Section 2.10, or the required date of reimbursement of any LC Disbursement, or any date for the payment of any interest or fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender affected thereby, (iv) amend Section 2.18(b) or (c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender, (v) amend the proviso of the definition of “Borrowing Base Amount” or the definition of “Account Receivable Advance Rate”, “Pharmaceutical Inventory Advance

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Rate”, “Other Inventory Advance Rate” or “Script Lists Advance Rate” without the written consent of each Lender, (vi) subordinate the priority of the Lien granted to the Collateral Agent pursuant to the Senior Loan Documents without the written consent of each Lender, (vii) change any of the provisions of this Section or the percentage set forth in the definition of “Required Lenders”, “Supermajority Lenders” or any other provision of any Senior Loan Document specifying the number or percentage of Lenders (or Lenders of any Class) required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder, without the written consent of each Lender (or each Lender of such Class, as the case may be), (viii) release the Borrower or any Subsidiary Loan Party from its Guarantee under the Senior Subsidiary Guarantee Agreement (except as expressly provided in the Senior Subsidiary Guarantee Agreement or in Section 9.18), or limit its liability in respect of such Guarantee, without the written consent of each Lender, (ix) prior to the Borrowing Base Date, release any Subsidiary Loan Party from its Guarantee under the Interim Subsidiary Loan Party Guarantee Agreement (except as expressly provided in the Interim Subsidiary Loan Party Guarantee Agreement), or limit its liability in respect of such Guarantee, without the written consent of each Lender, (x) prior to the Borrowing Base Date, release Holdings or any of its subsidiaries from its Guarantee under the Interim Collateral and Guarantee Agreement (except as expressly provided in the Interim Collateral and Guarantee Agreement), or limit its liability in respect of such Guarantee, without the written consent of each Lender (xi) release all or substantially all of the Senior Collateral from the Liens under the Senior Collateral Documents, without the written consent of each Lender, (xii) prior to the Borrowing Base Date, release all or substantially all of the Interim Collateral from the Liens under the Interim Collateral Documents, without the written consent of each Lender or (xiii) amend Section 2.21 to increase the permitted amount of the Incremental Facilities to in excess of $350,000,000 minus the initial aggregate payment amount of the Tranche 3 Term Loans made on the 2008 Restatement Effective Date, without the written consent of the Supermajority Lenders; and provided further, that no such agreement shall amend, modify or otherwise affect the rights or duties of any Agent, the Issuing Banks or the Swingline Lender without the prior written consent of such Agent, the Issuing Banks or the Swingline Lender, as the case may be.  Notwithstanding the foregoing, any provision of this Agreement may be amended by an agreement in writing entered into by the Borrower, the Required Lenders and the Administrative Agent (and, if their rights or obligations are affected thereby, the Issuing Banks and the Swingline Lender) if (i) by the terms of such agreement the Commitment of each Lender not consenting to the amendment provided for therein shall terminate upon the effectiveness of such amendment and (ii) at the time such amendment becomes effective, each Lender not consenting thereto receives payment in full of the principal of and interest accrued on each Loan made by it and all other amounts owing to it or accrued for its account under this Agreement.

(c)  Notwithstanding the foregoing, (i) Senior Collateral shall be released from the Lien under the Senior Collateral Documents from time to time as necessary to effect any sale of Senior Collateral permitted by the Senior Loan Documents, and the Administrative Agent shall execute and deliver all release documents reasonably requested to evidence such release; provided that arrangements satisfactory to the Administrative Agent shall have been made for application of the cash proceeds thereof

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in accordance with Section 2.11, if required, and for the pledge of any non-cash proceeds thereof pursuant to the Senior Collateral Documents, (ii) the accounts created pursuant to clause (i) of Section 5.16(b), the Lockbox Account and/or the Governmental Lockbox Account may be released by the Administrative Agent and transferred in accordance with Section 5.16, (iii) if a Subsidiary Loan Party ceases to be a Subsidiary in accordance with this Agreement, or ceases to own any property that constitutes Senior Collateral, at the request of and at the expense of the Borrower, such Subsidiary Loan Party shall be released from the Senior Subsidiary Guarantee Agreement, the Senior Subsidiary Security Agreement and each other Senior Loan Document to which it is a party and (iv) prior to the Borrowing Base Date, if Holdings or any of its subsidiaries ceases to be a Subsidiary in accordance with this Agreement or ceases to own any property that constitutes Interim Collateral, at the request of and at the expense of the Borrower, such party shall be released from the Interim Collateral Documents and the Senior Loan Documents to which it is a party.

SECTION 9.03.  Expenses; Indemnity; Damage Waiver.  (a)  The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Agents and their Affiliates, including the reasonable fees, charges and disbursements of counsel for the Agents, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of the Senior Loan Documents or any amendments, modifications or waivers of the provisions thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by any Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all out-of-pocket expenses incurred by any Agent, any Issuing Bank or any Lender, including the fees, charges and disbursements of counsel for any Agent, any Issuing Bank or any Lender, in connection with the enforcement or protection of its rights under or in connection with the Senior Loan Documents, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

(b)  The Borrower shall indemnify each Agent, each Issuing Bank and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of any Senior Loan Document, the performance by the parties to the Senior Loan Documents of their respective obligations thereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by an Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property currently or formerly owned or operated by the Borrower or any of the Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of

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the Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee.

(c)  To the extent that the Borrower fails to pay any amount required to be paid by it to any Agent, any Issuing Bank or any Lender under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to such Agent, such Issuing Bank or such Lender, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against such Agent, such Issuing Bank or such Lender in its capacity as such.  For purposes hereof, a Lender’s “pro rata share” shall be determined based upon its share of the sum of the total Revolving Exposures, outstanding Term Loans and unused Commitments at the time.

(d)  To the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Senior Loan Document or any other agreement or instrument contemplated hereby or thereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.

(e)  All amounts due under this Section shall be payable not later than 10 Business Days after written demand therefor.

SECTION 9.04.  Successors and Assigns.  (a)  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of any Issuing Bank that issues any Letter of Credit), except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void).  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their successors and assigns permitted hereby (including any Affiliate of any Issuing Bank that issues any Letter of Credit) and, to the extent expressly contemplated hereby, the Related Parties of each of the Agents, the Issuing Banks and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b)  (i)    Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans at the time owing to it), with the prior written consent (such consent not to be unreasonably withheld or delayed) of:

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(A) the Borrower; provided that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an Event of Default under clause (a), (b), (h), or (i) of Article VII has occurred and is continuing, any other assignee; and

(B) the Administrative Agent; provided that no consent of the Administrative Agent shall be required for an assignment to an assignee that is a Lender, an Affiliate of a Lender or an Approved Fund.

(ii)  Assignments shall be subject to the following additional conditions:

(A) except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than (1) with respect to Revolving Commitments and Revolving Loans, $5,000,000 and (2) with respect to Tranche 1 Term Loan Commitments, Tranche 2 Term Commitments, Tranche 3 Term Commitments, Tranche 1 Term Loans, Tranche 2 Term Loans and Tranche 3 Term Loans, $1,000,000 or, in each case, if smaller, the entire remaining amount of the assigning Lender’s Commitment or Loans, unless each of the Borrower and the Administrative Agent shall otherwise consent; provided that (i) no such consent of the Borrower shall be required if an Event of Default has occurred and is continuing and (ii) in the event of concurrent assignments to two or more assignees that are Affiliates of one another, or to two or more Approved Funds managed by the same investment advisor or by affiliated investment advisors, all such concurrent assignments shall be aggregated in determining compliance with this subsection;

(B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement;

(C) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500; provided that, in the event of concurrent assignments to two or more assignees that are Affiliates of one another, or by or to two or more Approved Funds managed by the same investment advisor or by affiliated investment advisors, only one such fee shall be payable; and

(D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

(iii)  Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this Section, from and after the effective date specified in each Assignment and Acceptance the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and

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obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 9.03).  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section.

(iv)  The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive, and the Borrower, the Agents, the Issuing Banks and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Borrower, any other Agent, any Issuing Bank and any Lender at any reasonable time and from time to time upon reasonable prior notice.

(v)  Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Acceptance and record the information contained therein in the Register.  No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

(vi)  By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows: (A) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim and that its Commitment and the outstanding balances of its Loans, in each case without giving effect to assignments thereof that have not become effective, are as set forth in such Assignment and Acceptance; (B) except as set forth in clause (A) above, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or any other Senior Loan Document or any other instrument or document furnished pursuant hereto or thereto, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of any of the foregoing, or the financial condition of the Loan Parties or the performance or observance by the Loan Parties of any of their obligations under this Agreement or under

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any other Senior Loan Document or any other instrument or document furnished pursuant hereto or thereto; (C) each of the assignee and the assignor represents and warrants that it is legally authorized to enter into such Assignment and Acceptance; (D) such assignee confirms that it has received a copy of this Agreement, together with copies of any amendments or consents entered into prior to the date of such Assignment and Acceptance and copies of the most recent financial statements delivered pursuant to Section 5.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (E) such assignee will independently and without reliance upon the Agents, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (F) such assignee appoints and authorizes the Agents to take such action as agents on its behalf and to exercise such powers under this Agreement and the other Senior Loan Documents as are delegated to them by the terms hereof and thereof, together with such powers as are reasonably incidental thereto; and (G) such assignee agrees that it will perform in accordance with their terms all the obligations that by the terms of this Agreement are required to be performed by it as a Lender.

(c)  (i)  Any Lender may, without the consent of or notice to the Borrower, the Agents, the Issuing Banks or the Swingline Lender, sell participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Agents, the Issuing Banks and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.  Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b)(i), (ii) or (iii) that affects such Participant.  Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender, provided such Participant agrees to be subject to Section 2.18(c) as though it were a Lender.

(ii)  A Participant shall not be entitled to receive any greater payment under Section 2.15 or 2.17 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent.  A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.17 unless the Borrower is notified of the participation sold to such

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Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.17(e) as though it were a Lender.

(d)  Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including, without limitation, any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(e)  In the case of any Lender that is a fund that invests in bank loans, such Lender may, without the consent of the Borrower or the Administrative Agent, assign or pledge all or any portion of its rights under the Senior Loan Documents, including the Loans and promissory notes or any other instrument evidencing its rights as a Lender under the Senior Loan Documents, to any holder of, trustee for, or any other representative of holders of obligations owed or securities issued by such fund, as security for such obligations or securities; provided that any foreclosure or similar action by such trustee or representative shall be subject to the provisions of this Section 9.04 concerning assignments.

SECTION 9.05.  Survival.  All covenants, agreements, representations and warranties made by the Loan Parties in the Senior Loan Documents and in the certificates or other instruments  delivered in connection with or pursuant to this Agreement or any other Senior Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Senior Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, any Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated.  The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof.

SECTION 9.06.  Integration; Effectiveness.  This Agreement, the other Senior Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  This Agreement shall become effective as provided in Section 4.01.

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SECTION 9.07.  Severability.  Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

SECTION 9.08.  Right of Setoff.  If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured.  The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.

SECTION 9.09.  Governing Law; Jurisdiction; Consent to Service of Process.  (a)  This Agreement shall be construed in accordance with and governed by the law of the State of New York.

(b)  The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to any Senior Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Agreement or any other Senior Loan Document shall affect any right that any Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Senior Loan Document against the Borrower or its properties in the courts of any jurisdiction.

(c)  The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Senior Loan Document in any court referred to in paragraph (b) of this Section.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

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(d)  Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01.  Nothing in this Agreement or any other Senior Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

SECTION 9.10.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN  ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER SENIOR LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 9.11.  Headings.  Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

SECTION 9.12.  Confidentiality.  Each of the Agents, the Issuing Banks and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, trustees, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or any other Senior Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (g) with the consent of the Borrower, (h) to any pledgee referred to in Section 9.04(d) or any direct or indirect contractual counterparty in any Hedging Agreement (or to any such contractual counterparty’s professional advisor), so long as such pledgee or contractual counterparty (or such professional advisor) agrees to be bound by the provisions of this Section 9.12, or (i) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to any Agent, any Issuing Bank or any Lender on a nonconfidential basis from a source other than the Borrower.  For the purposes of this Section, “Information” means all information received from the

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Borrower relating to the Borrower or its business, other than any such information that is available to any Agent, any Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by the Borrower.  Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.  Notwithstanding anything in this Agreement or in any other Senior Loan Document to the contrary, the Borrower and each Lender (and each employee, representative or other agent of the Borrower) may disclose to any and all persons, without limitation of any kind, the U.S. tax treatment and U.S. tax structure of the Transactions and all materials of any kind (including opinions or other tax analyses) that are provided to the Borrower relating to such U.S. tax treatment and U.S. tax structure.

SECTION 9.13.  Interest Rate Limitation.  Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

SECTION 9.14.  Collateral Trust and Intercreditor Agreement.  Each Lender, each Issuing Bank and each Agent hereby authorizes each Agent to enter into the Collateral Trust and Intercreditor Agreement, each other Senior Collateral Document and each other Interim Collateral Document on its behalf, and agrees that the Administrative Agent and the Collateral Agent may enforce the rights and remedies of the Lenders under each Senior Loan Document to the extent provided in the Collateral Trust and Intercreditor Agreement, each other Senior Collateral Document and each other Interim Collateral Document.

SECTION 9.15.  Cash Sweep.  (a)  On any day on which (i) an Event of Default exists or (ii) the lesser of (x) the average Revolving Commitments (after deducting the average total Revolving Exposure) over any 30-day period and (y) the average Borrowing Base Amount (after deducting the sum of (1) the average total Revolving Exposure, (2) the average outstanding Tranche 1 Term Loans, (3) if prior to the Borrowing Base Date, zero, or if on or after the Borrowing Base Date, the average outstanding Tranche 2 Term Loans and (4) the average outstanding Tranche 3 Term Loans) over any 30-day period, in each case, together with all amounts then on deposit in the Cash Sweep Cash Collateral Account, is less than $75,000,000, then the

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Administrative Agent, upon its determination or upon request by the Required Lenders, shall immediately be entitled to deliver Cash Sweep Notices.

(b)  During a Cash Sweep Period, if (i) there is no Event of Default and (ii) the lesser of (x) the average Revolving Commitments (after deducting the average total Revolving Exposure) over any 30-day period and (y)  the average Borrowing Base Amount (after deducting the sum of (1) the average total Revolving Exposure, (2) the average outstanding Tranche 1 Term Loans, (3) if prior to the Borrowing Base Date, zero, or if on or after the Borrowing Base Date, the average outstanding Tranche 2 Term Loans and (4) the average outstanding Tranche 3 Term Loans) over any 30-day period, in each case, together with all amounts then on deposit in the Cash Sweep Cash Collateral Account, is greater than $100,000,000, then the Administrative Agent shall automatically rescind any Cash Sweep Notice and shall be prohibited from delivering any other Cash Sweep Notice (unless and until the occurrence of the events set forth in paragraph (a) of this Section).

(c)  The Administrative Agent reserves the right to send a Cash Sweep Notice on each occasion of the occurrence of the events set forth in Section 9.15(a).

SECTION 9.16.  Electronic Communications. (a)  Notwithstanding anything in any Senior Loan Document to the contrary, the Borrower hereby agrees that it will use its reasonable best efforts to provide to the Administrative Agent all information, documents and other materials that it is obligated to furnish to the Administrative Agent pursuant to the Senior Loan Documents, including, without limitation, all notices, requests, financial statements, financial and other reports, certificates and other information materials, but excluding any such communication that (i) relates to a request for a new, or a conversion of an existing, Borrowing or other extension of credit (including any election of an interest rate or Interest Period relating thereto), (ii) relates to the payment of any principal or other amount due under any Senior Loan Document prior to the scheduled date therefor, (iii) provides notice of any Default or Event of Default under any Senior Loan Document or (iv) is required to be delivered to satisfy any condition set forth in Section 4.01 and/or 4.02 (all such non-excluded communications being referred to herein collectively as the “Communications”), by transmitting the Communications in an electronic/soft medium in a format acceptable to the Administrative Agent to oploanswebadmin@citigroup.com, with a copy to jeffrey.nitz@citigroup.com.  In addition, the Borrower agrees to continue to provide the Communications to the Administrative Agent in the manner specified in the Senior Loan Documents, but only to the extent requested by the Administrative Agent.

(b)  The Borrower further agrees that the Administrative Agent may make the Communications available to the Lenders by posting the Communications on Intralinks, Fixed Income Direct or a substantially similar electronic transmission system (each such system, a “Platform”).  The Borrower acknowledges that the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution.

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(c)  EACH PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”.  THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS,  OR THE ADEQUACY OF ANY PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS.  NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE AGENT PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR ANY PLATFORM.  IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS AFFILIATES OR ANY OF THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES (COLLECTIVELY, THE “AGENT PARTIES”) HAVE ANY LIABILITY TO THE BORROWER, ANY OTHER LOAN PARTY, ANY LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF THE BORROWER’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY AGENT PARTY IS FOUND IN A FINAL NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH AGENT PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

(d)  The Administrative Agent agrees that the receipt of the Communications by it at its e-mail address set forth in Section 9.01 shall constitute effective delivery of the Communications to the Administrative Agent for purposes of this Section.  Each Lender agrees that notice to it (as provided in the next sentence) specifying that the Communications have been posted to a Platform shall constitute effective delivery of the Communications to such Lender for purposes of this Section.  Each Lender agrees (i) to notify the Administrative Agent in writing (including by electronic communication) from time to time of such Lender’s e-mail address to which the foregoing notice may be sent by electronic transmission and (ii) that the foregoing notice may be sent to such e-mail address.

(e)  Nothing in this Section 9.16 shall prejudice the right of the Administrative Agent or any Lender to give any notice or other communication pursuant to any Senior Loan Document in any other manner specified in such Senior Loan Document.

SECTION 9.17.  USA Patriot Act.  Each Lender and each Issuing Bank hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that

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will allow such Lender or Issuing Bank to identify the Borrower in accordance with its requirements.  The Borrower shall promptly, following a request by the Administrative Agent, any Lender or any Issuing Bank, provide all documentation and other information that the Administrative Agent, such Lender or such Issuing Bank reasonably requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the USA Patriot Act.

SECTION 9.18.  Release of Interim Collateral; Termination of Interim Collateral Documents.  Upon the occurrence of the Borrowing Base Date, the security interests granted in the Interim Collateral, and the guarantees made, under the Interim Collateral Documents shall be automatically released, and the Interim Collateral Documents shall automatically terminate in accordance with their terms.  In connection with the release of security interests granted in the Interim Collateral, and the guarantees made, under the Interim Collateral Documents, the Tranche 2 Lenders hereby authorize the Borrower (or its counsel) to file, register or record all documents and instruments, including amendments to Uniform Commercial Code financing statements, required by law, advisable or reasonably requested by the Borrower, and agree to execute and deliver all further instruments and documents and take all further action that may be necessary or that the Borrower may reasonably request in order to effectuate such release, all at the expense of the Borrower.  For the avoidance of doubt, the foregoing does not authorize the Borrower to take any action that would result in the release of the security interests granted in the Interim Collateral under the Interim Collateral Documents prior to the Borrowing Base Date.

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EXHIBIT A

Schedule 2.01:  Commitments

Lender	Commitment
Citicorp North America, Inc.	$	330,000,000
Bank of America, N.A.	$	20,000,000
Total:	$	350,000,000

EX-31.1

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Exhibit 31.1

Certification of CEO

I, Mary F. Sammons, Chief Executive Officer, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Rite Aid Corporation (the "Registrant");

2.

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4.

The Registrant's other certifying officer and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;  

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.

Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.

Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and  

5.

The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors:  

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.

Date: July 10, 2008

By:
/s/  MARY F. SAMMONS Mary F. Sammons
President and Chief Executive Officer

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Exhibit 31.1

Certification of CEO

EX-31.2

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Exhibit 31.2

Certification of CFO

I, Kevin Twomey, Executive Vice President and Chief Financial Officer, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Rite Aid Corporation (the "Registrant");

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4.

The Registrant's other certifying officer and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:  

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.

Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

d.

Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and  

5.

The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors:  

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.

Date: July 10, 2008

By:
/s/  KEVIN TWOMEY Kevin Twomey
Executive Vice President and
Chief Financial Officer

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Exhibit 31.2

Certification of CFO

EX-32

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Exhibit 32

Certification of CEO and CFO Pursuant to
18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

        In connection with the Quarterly Report on Form 10-Q of Rite Aid Corporation (the "Company") for the quarterly period ended May 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Mary F. Sammons, as Chief Executive Officer of the Company, and Kevin Twomey as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of her/his knowledge:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/  MARY F. SAMMONS
Name:	Mary F. Sammons
Title:	Chief Executive Officer
Date:	July 10, 2008
/s/  KEVIN TWOMEY
Name:	Kevin Twomey
Title:	Chief Financial Officer
Date:	July 10, 2008

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Exhibit 32

Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002