8-A12G 1 FORM 8-A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 ROSE'S STORES, INC. (Exact name of registrant as specified in its charter) Delaware 56-0382475 (State of incorporation (I.R.S. Employer or organization) Identification No.) 218 S. Garnett Street Henderson, North Carolina 27536 (Address of principal executive offices, including zip code) Securities to be registered pursuant to Section 12(b) of the Act: Title of each class to be so registered: None Name of each exchange on which each class is to be registered: N/A Securities to be registered pursuant to Section 12(g) of the Act: Title of class: Common Stock, no par value Title of class: Warrants (to purchase Common Stock) Item 1. Description of Registrant's Securities to be Registered. On September 5, 1993, Rose's Stores, Inc. (the "Registrant" or the "Company") filed a voluntary Petition for Relief under Chapter 11, Title 11 of the United States Code (the "Bankruptcy Code") with the United States Bankruptcy Court for the Eastern District of North Carolina, Raleigh Division(the"Court"). The Company's First Amended Joint Plan of Reorganization (the "Plan") was filed with the Court on October 4, 1994, was voted on and accepted by the various classes of creditors and equity holders entitled to vote thereon and was confirmed by the Court on December 14, 1994. Two technical amendments have been made to the Plan. The first amendment, which was approved by the Court on February 3, 1995, relates to the terms of a subscription offering to the holders of existing stock of the Company. The second amendment, which was approved by the Court on February 13, 1995, relates to the dates to be used for determina- tion of distributions to be made under the Plan. Under the terms of and in accordance with the Plan, as amended, the Company is to emerge from Chapter 11 no earlier than March 31, 1995 and no later than April 30, 1995 (the "Effective Date"). The Plan, as amended, provides that on the Effective Date, the Company shall be authorized to issue shares of Common Stock and Warrants to purchase Common Stock, which shares shall be issued and distributed, on and after the Effective Date, in accordance with the terms of the Plan, as amended. The Plan, as amended, provides that distributions of Common Stock or Warrants are to made to certain of the Company's management employees, to unsecured creditors who hold claims in Class 3, and to the holders of equity interests in the Voting Common Stock and Non-Voting Class B Stock (collectively, the "Old Stock") who hold claims in Class 5. The Old Stock is to be cancelled and extinguished as of the Effective Date. The following information will become effective upon the Effective Date. A. Common Stock Under its Amended and Restated Certificate of Incorporation, to be filed and to become effective as of the Effective Date (the "Restated Certificate"), the Registrant is authorized to issue up to 50,000,000 shares of Common Stock with no par value, under such terms and conditions as are set forth in the Plan, as amended. The Registrant has applied to have the Common Stock listed for quotation on the Nasdaq National Market System. There can be no assurance, however, that such application will be granted. Holders of Common Stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders; provided, however, that shares of Common Stock issued or reserved for issuance under the Plan, as amended, may not be voted in any election of directors of the Company, or any other matter requiring the vote of stockholders, by a holder of an Allowed Claim (as defined in the Plan, as amended), an equity interest in the Old Stock on the Effective Date or an employee of the Company entitled under the Plan, as amended, to receive shares of Common Stock under the incentive and retention program provided to certain of the Company's management employees, or by the holder of a Disputed Claim (as defined in the Plan, as amended), until such shares have [FN] Any discussion contained herein of provisions of the Plan, as amended, is qualified in its entirety by the Plan, as amended, to which reference is made for a more complete description of the provisions herein discussed. The emergence of the Company from bankruptcy and the discussion which follows assume that the Company will be able to comply satisfactorily with the conditions precedent to the effectiveness of the Plan, as amended. The Plan, as amended, provides that in the event that either the conditions precedent are not met or certain Alternative Treatment Events (as defined in the Plan, as amended) occur and are not waived, the Company's operations will cease and the assets of the Company will be sold and disposed of as provided in the Plan, as amended. [/FN] actually been distributed to such persons, or, with respect to holders of Disputed Claims, until such time as the Disputed Claim has become an Allowed Claim and the shares have been distributed to such persons. The right of holders of Common Stock to vote to select the initial directors of the Company is limited by the Plan, as amended, as described in the section entitled "Certain Charter and Bylaw Provisions" below, to which reference is hereby made. Holders of Common Stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors out of funds legally available therefor, subject to any preferential dividend rights of Preferred Stock that may be issued in the future. Delaware law prohibits the payment of dividends or other distributions to holders of shares of Common Stock out of its net profits if the capital of the corporation, computed in accordance with the Delaware General Corporation Law, has been diminished to an amount less than the aggregate amount of capital represented by the issued and outstanding stock having a preference on distribution of assets. In addition, the Company may be prohibited from paying dividends under the terms of loan agreements or other contracts. The Company expects that the loan required to enable the Company to emerge from bankruptcy will contain restrictions which directly or indirectly limit the Company's ability to pay dividends. Upon the liquidation, dissolution or winding up of the Company, the holders of Common Stock are entitled to receive ratably the net assets of the Company available after the payment of all debts and other liabilities and subject to the prior rights of any shares of Preferred Stock that may be issued in the future. Holders of Common Stock have no preemptive, subscription or conversion rights. The shares of Common Stock will, when issued and paid for (if payment is required under the terms of the Plan, as amended), be fully paid and nonassessable. The rights, preferences and privileges of holders of Common Stock are subject to the rights of the holders of shares of any class or series of Preferred Stock that the Company may designate and issue in the future, and except for such rights, preferences and privileges as the holders of Preferred Stock may have, the holders of Common Stock have all powers, preferences and rights conferred upon owners of shares of capital stock under the laws of the State of Delaware. Preferred Stock. Under the Restated Certificate, the Registrant has an authorized class of 10,000,000 shares of undesignated Preferred Stock with no par value. The Board of Directors is authorized, subject to any limitations prescribed by law or under the Plan, as amended, without further stockholder approval, to issue from time to time such shares of Preferred Stock, in one or more classes or series. Each class or series of Preferred Stock shall have such number of shares, designations, preferences, voting powers, qualifications and special or relative rights or privileges as shall be determined by the Board of Directors, which may include, among others, dividend rights, voting rights, redemption and sinking fund provisions, liquidation preferences, conversion rights and preemptive rights. If, upon the liquidation, dissolution or winding up of the Company, the assets available for distribution to holders of shares of Preferred Stock of all classes or series are insufficient to pay such holders the full preferential amount to which they are entitled, such assets are to be distributed ratably among the shares of all classes or series of Preferred Stock in accordance with their respective liquidation preferences. Notwithstanding the foregoing, to the extent and for so long as is required by Section 1123(a)(6) of the Bankruptcy Code, the Company may not issue any shares of non-voting equity securities and is required to provide, as to the several classes or series of securities possessing voting power, a distribution of such power among such classes and series determined by the Board of Directors to be appropriate for such classes and series. In the case of any class or series of Preferred Stock having a preference over any other class or series of Preferred Stock or over Common Stock with respect to dividends, the Company is required to provide for the election of directors representing such class or series in the event of default by the Company in the payment of such dividends. The stockholders of the Company have granted the Board of Directors authority to issue the Preferred Stock and to determine its rights and preferences to eliminate delays associated with a stockholder vote on specific issuances. The rights of the holders of Common Stock will be subject to the rights of holders of any Preferred Stock issued in the future. The issuance of Preferred Stock, while providing desirable flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from acquiring, or deterring a third party from paying a premium to acquire a majority of the outstanding voting stock of the Company. The Company has no present plans to issue any shares of Preferred Stock. Certain Charter and Bylaw Provisions. The Registrant's Restated Certificate includes provisions eliminating the personal liability of the Company's directors for monetary damages resulting from breaches of their fiduciary duty to the extent permitted by the Delaware General Corporation Law. The Registrant's Restated Certificate and Bylaws include provisions indemnifying the Company's directors and officers to the fullest extent permitted by Delaware law, including under circumstances in which indemnification is otherwise discretionary, and permitting the Board of Directors to grant indemnification to employees and agents to the fullest extent permitted by Delaware law. The Registrant's Restated Certificate and Bylaws contain provisions which provide for a classified Board of Directors consisting of three classes with directors serving staggered three-year terms. Therefore, only one third of the directors are subject to election by the stockholders each year. Under Delaware law, if a Board of Directors is classified, a director may not be removed except for cause unless the corporation's certificate of incorporation otherwise provides. The Registrant's Restated Certificate contains a provision permitting, in addition to removal for cause in accordance with Delaware law, the removal without cause of any director or the entire Board of Directors by the affirma- tive vote of the holders of at least 66 2/3% of the outstanding shares of capital stock entitled to vote in elections of directors. If a director is elected by a separate voting group representing the holders of any one or more classes or series of Preferred Stock, however, only the members of that voting group may participate in the vote to remove him or her. Such director or directors may be removed with or without cause by the affirmative vote of the holders of a majority of the outstanding shares of such class or series entitled to vote in the election of such director or directors. A super-majority vote of the holders of shares entitled to cast 66 2/3% of the votes entitled to be cast by all outstanding shares is required to change the provisions of the Restated Certificate and Bylaws relating to the classified Board of Directors. Notwithstanding the foregoing, the Restated Certificate and the terms of the Plan, as amended, provide that the committees representing the unsecured creditors (the "Unsecured Committee") and the equity holders ("the "Equity Committee") of the Registrant are entitled to select the directors to serve on the initial Board of Directors as of the Effective Date, with the directors to be divided into three classes with terms of office expiring at the first, second and third annual meetings of stockholders following their election, respective- ly. The Unsecured Committee has the right to designate each director as a member of one of the three classes of directors, except that the director selected by the Equity Committee must be a member of the third class having a term expiring at the third annual meeting of stockholders following the selection of such director. Under the Restated Certificate and the terms of the Plan, as amended, in the event the Company receives proceeds totalling $25 million or more from the Subscription Rights, the Equity Committee shall have the right to select a total of three directors to serve on the Board of Directors, one in class one and one in class two. These directors will either be additional directors, increasing the size of the Board (not to exceed a total of thirteen directors) or will replace two of the directors initially selected by the Unsecured Committee. In the event that the Company receives proceeds from the Subscription Rights totalling more than fifty percent (50%) of the amount of the subscription price per share times 10,000,000, the number of Effective Date Shares, the Unsecured Committee is required to cause a sufficient number of the directors it selected to resign in order to permit the Equity Committee to select a majority of the directors on the Board of Directors. In the event the Company receives proceeds totalling $25 million or more from the Subscription Rights, the Restated Certificate and the terms of the Plan, as amended, provide that an annual or special meeting of the stockholders be held within 180 days of the Effective Date, or as soon as practicable thereafter, for the purpose of electing a full new Board of Directors. As of the date of such meeting, should it be required, the terms of all of the initial directors selected as stated above will expire, and the Board of Directors will again be divided into three classes. The Registrant's Restated Certificate also provides that the stockholders may not take action by written consent as Delaware law would otherwise permit, but may act only at a meeting of the stockholders. A super-majority vote of the holders of shares entitled to cast 66 2/3% of the aggregate number of votes entitled to be cast by all holders of outstanding shares is required to change [FN] The Subscription Rights entitle the record holders of claims in Class 5 as of February 7, 1995, to purchase shares of Common Stock at a subscription price of $6.50 per share, with each record holder receiving one right for each 1.8758 shares owned as of February 7, 1995. [/FN] the provision of the Restated Certificate relating to the action of the stockholders by written consent. The Company's Bylaws include provisions requiring the vote of the holders of not less than 75% of the outstanding shares of stock of the Company entitled to vote to effect (i) any merger or consolidation of the Company with any person, corporation or entity which is the record or beneficial owner of more than five percent (5%) of the Company's outstanding voting securities (an "Affiliate"), (ii) any sale, lease or exchange or other disposition of a sub- stantial part of the assets of the Company to any Affiliate, (iii) any issuance of voting securities of the Company to any Affiliate, or (iv) any issuance of voting securities of the Company in exchange or payment for the securities or assets of any Affiliate. In addition, the provisions of the Bylaws with respect to rights of dissenting stockholders to receive compensation for their shares must be complied with in order for any Affiliate Transaction to be consummated, despite approval of such Affiliate Transaction by the stockholders of the Company as required above. The above provisions do not apply, and the provisions of Delaware law otherwise applicable do apply, to any Affiliate Transaction if the Merger Committee of the Board of Directors approves the Affiliate Transaction by majority vote. The provisions of the Restated Certificate and Bylaws discussed above would make more difficult or discourage a proxy contest or the acquisition of control by a holder of a substantial block of the Company's stock or the removal of the incumbent Board of Directors. Such provisions could also have the effect of discouraging a third party from making a tender offer or otherwise attempting to obtain control of the Company, even though such an attempt might be benefi- cial to the Company and its stockholders. In addition, since these provisions are designed to discourage accumulations of large blocks of the Company's stock by purchasers whose objective is to have such stock repurchased by the Company at a premium, such provisions could tend to reduce the temporary fluctuations in the market price of the Company's stock which are caused by such accumulations. Accordingly, stockholders could be deprived of certain opportunities to sell their stock at a temporarily higher market price. B. Warrants Under its Restated Certificate, the Registrant is authorized to issue 4,285,714 Warrants to purchase an aggregate of 4,285,714 shares of Common Stock. The Plan, as amended, provides that the Warrants are to be distributed on a pro-rata basis to all record holders of the Company's Old Stock as of the Effective Date. The Old Stock will be cancelled and extinguished on the Effec- tive Date, and the Warrants will be issued and distributed on or within thirty (30) days after the Effective Date, in accordance with the terms of the Plan, as amended. The Company and the warrant agent will execute, on or before the Effec- tive Date, a Warrant Agreement, a draft of which is attached as Exhibit I-3 hereto, which will detail the procedures for issuance, distribution, exchange and transfer of the Warrants. Each Warrant entitles the holder thereof to purchase one share of Common Stock from the date the Warrants are issued until the seventh anniversary of the Effective Date. No Warrants to purchase fractional shares will be issued. The Warrants are transferable. Prior to the exercise of the Warrants, the registered holders thereof are not entitled to vote or be deemed the holders of Common Stock for any purpose. The initial exercise price of the Warrants is equal to the amount of the unsecured creditors' allowed claims in Class 3 plus the total amount reserved for disputed Class 3 claims (the "Class 3 Full Recovery Target Amount") as of the Effective Date, divided by 10,000,000, the number of shares to be issued on the Effective Date. The exercise price will be adjusted on each of the first three anniversaries of the Effective Date to reflect the Class 3 Full Recovery Target Amount on each of these three dates. The exercise price will be adjusted on the fourth, fifth and sixth anniversaries of the Effective Date to equal 105%, 110% and 115%, respectively, of the Class 3 Full Target Recovery Amount divided by 10,000,000. In addition to the adjustments described above, the number of shares purchasable or assets or property payable upon the exercise of each Warrant and the exercise price of the Warrants are subject to adjustment, on the terms and conditions contained in the warrant agreement entered into between the Company and the warrant agent pursuant to the terms of the Plan, as amended, in the event of (i) a stock dividend or distribution to holders of Common Stock, (ii) a subdivision, combination or reclassification of the Common Stock, (iii) the issuance for no consideration, other than as required under the Plan as amended, of rights, options or warrants to holders of Common Stock, and (iv) a distribution, other than as required under the Plan, as amended, to holders of Common Stock or any other capital stock issued with respect to the Common Stock of any asset, property or security (other than cash dividends payable from current earnings and those distributions referred to in (i) through (iii) above). Item 2. Exhibits. I-1 Form of Common Stock Certificate. I-2 Form of Warrant Certificate. I-3 Form of Warrant Agreement between Rose's Stores, Inc. and the warrant agent, as filed with the United States Bankruptcy Court, Eastern District of North Carolina, Raleigh Division, on December 14, 1994. I-4 Form of Amended and Restated Certificate of Incorporation of the Registrant, to be filed and become effective upon the Registrant's emergence from Chapter 11. I-5 Form of Bylaws of the Registrant, as amended and restated, to be filed and become effective upon the Registrant's emergence from Chapter 11. I-6 First Amended Joint Plan of Reorganization dated October 14, 1994, filed as an exhibit to the Registrant's Form 8-K dated October 5, 1994, and incorporated herein by reference. I-7 First Amended Disclosure Statement Related to First Amended Joint Plan of Reorganization dated October 4, 1994, filed as an exhibit to the Registrant's Form 8-K dated October 5, 1994, and incorporated herein by reference. I-8 Order of United States Bankruptcy Court, Eastern District of North Carolina, Raleigh Division, dated December 14, 1994. I-9 Consent Order of United States Bankruptcy Court, Eastern District of North Carolina, Raleigh Division, Approving Motion of Debtor, Official Committee of Equity Security Holders and the Official Committee of Unsecured Creditors to Set Class 5 Subscription Price and Make Technical Modifications to Plan of Reorganization, dated February 3, 1995. I-10 Consent Order of United States Bankruptcy Court, Eastern District of North Carolina, Raleigh Division, Approving Motion for Order Authorizing Technical Modifications to Joint Plan of Reorganization Regarding Record Dates for Distributions to Class 5, dated February 13, 1995. SIGNATURE Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereto duly authorized, this the 27th day of March, 1995. Rose's Stores, Inc. By: _/s/Jeanette R. Peters________________ Jeanette R. Peters Senior Vice President and Chief Financial Officer EXHIBIT INDEX Exhibit Number Description I-1 Form of Common Stock Certificate. I-2 Form of Warrant Certificate. I-3 Form of Warrant Agreement between Rose's Stores, Inc. and the warrant agent, as filed with the United States Bankruptcy Court, Eastern District of North Carolina, Raleigh Division, on December 14, 1994. I-4 Form of Amended and Restated Certificate of Incorporation of the Registrant, to become effective upon the Registrant's emergence from Chapter 11. I-5 Form of Bylaws of the Registrant, as amended and restated, to become effective upon the Registrant's emergence from Chapter 11. I-6 First Amended Joint Plan of Reorganization dated October 14, 1994, filed as an exhibit to the Registrant's Form 8-K dated October 5, 1994, and incorporated herein by reference. I-7 First Amended Disclosure Statement Related to First Amended Joint Plan of Reorganization dated October 4, 1994, filed as an exhibit to the Registrant's Form 8-K dated October 5, 1994, and incorporated herein by reference. I-8 Order of United States Bankruptcy Court, Eastern District of North Carolina, Raleigh Division, dated December 14, 1994. I-9 Consent Order of United States Bankruptcy Court, Eastern District of North Carolina, Raleigh Division, Approving Motion of Debtor, Official Committee of Equity Security Holders and the Official Committee of Unsecured Creditors to Set Class 5 Subscription Price and Make Technical Modifications to Plan of Reorganization, dated February 3, 1995. I-10 Consent Order of United States Bankruptcy Court, Eastern District of North Carolina, Raleigh Division, Approving Motion for Order Authorizing Technical Modifications to Joint Plan of Reorganization Regarding Record Dates for Distributions to Class 5, dated February 13, 1995. TO BE PRINTED ON FRONT SIDE OF COMMON STOCK CERTIFICATE NO. RC SHARES COMMON STOCK SEE REVERSE FOR CERTAIN DEFINITIONS ROSE'S STORES, INC. CUSIP 777764 30 9 This certifies that is the owner of FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, NO PAR VALUE, OF ROSE'S STORES, INC. (hereinafter called the Corporation) transferable on the books of the Corporation in person, or by duly authorized attorney, upon surrender of the certificate, properly endorsed. The share represented hereby as issued and shall be held subject to all of the provisions of the Certificate of Incorporation of the Corporation, as amended and restated, to all of which the holder by acceptance hereof assents. This certificate is not valid unless countersigned by the Transfer Agent. WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated: (CORPORATE SEAL) Secretary President and Chief Executive Officer COUNTERSIGNED: By: Transfer Agent Authorized Signature TO BE PRINTED ON REVERSE SIDE OF COMMON STOCK CERTIFICATE ROSE'S STORES, INC. The Corporation shall furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian TEN ENT - as tenants by the entireties (Cust) (Minor) JT TEN - as joint tenants with right of under Uniform Gifts to Minors survivorship and not as tenants Act in common ( State) Additional abbreviations may also be used though not in the above list. For value received, hereby sell, assign and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE) Shares of the common stock represented by the within certificate, and do hereby irrevocably constitute and appoint Attorney to transfer the said stock on the books of the within-named Corporation with full power of substitution in the premises. Dated, NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. SIGNATURE(S) GUARANTEED: THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM) PURSUANT TO S.E.C. RULE 17Ad-15. KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, MUTILATED OR DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF A REPLACEMENT CERTIFICATE.
TO BE PRINTED ON FRONT SIDE OF WARRANT CERTIFICATE NO. A- WARRANTS CUSIP 777764 11 9 WARRANT CERTIFICATE FOR PURCHASE OF COMMON STOCK OF ROSE'S STORES, INC. VOID AFTER 5:00 P.M. NEW YORK CITY TIME, ON ,2002 This certifies that, for value received, , or registered assigns, is the owner of the number of Warrants set forth above, each of which entities the owner to purchase, subject to the terms and conditions hereof and of the Warrant Agreement mentioned below, at any time after the date hereof and prior to the Expiration Date (as herein defined), one share of the common stock, no par value per share (the "Common Stock"), of Rose's Stores, Inc., a Delaware corporation (the "Company"), at the exercise price determined pursuant to 6.2.5 of the Plan (the "Exercise Price") payable in lawful money of the United States of America by money order or certified or official bank check payable to the Company, upon surrender of this Warrant Certificate with the form of Election to Exercise on the reverse hereof duly completed and executed together with payment of the Exercise Price at the office or agency of the Warrant Agent (as defined in the Warrant Agreement referred to below) in the City of ______________, State of ___________. This Warrant Certificate and each Warrant represented hereby are issued pursuant to, and are subject to all of the terms, provisions and conditions of, that certain Warrant Agreement dated as of _________________, 1995 (hereinafter called the "Warrant Agreement"), between the Company and the Warrant Agent, to all of which terms, provisions and conditions the registered holder of this Warrant Certificate consents by acceptance hereof. The Warrant Agreement and the summary of its terms set forth on the reverse side of this Warrant Certificate are hereby incorporated into this Warrant Certificate by reference and made a part of this Warrant Certificate. The Warrant Agreement sets forth the terms and conditions under which the exercise price of a Warrant, the type of shares or other consideration to be received upon exercise of the Warrant, and/or the number of shares to be received upon exercise of a Warrant are or may be adjusted. Reference is hereby made to the Warrant Agreement for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Warrant Agent, the Company and the holders of the Warrant Certificates or Warrants. In the event of any conflict between the provisions of this Warrant Certificate and the Warrant Agreement, the provisions of the Warrant Agreement shall control. In the event of any conflict between the provisions of the Plan and the Warrant Agreement, the provisions of the Plan shall control. Copies of the Plan and the Warrant Agreement are available for inspection at the ____________ office of the Warrant Agent, ___________________________________, or may be obtained upon written request addressed to the Secretary, Rose's Stores, Inc., _____________________, Henderson, North Carolina 27536. The Company shall not be required upon the exercise of the Warrants evidenced by this Warrant Certificate to issue fractions of Warrants or shares, but shall round such fractional share to the nearest whole share (up or down), with half shares being rounded down, and will deliver the additional share if rounded up. The Warrants evidenced by this Warrant Certificate shall expire at 5:00 p.m., New York City time, on _________________, 2002. The day and time of expiration are referred to herein as the "Expiration Date". This Warrant Certificate shall not be valid unless countersigned by the Warrant Agent. Witness the facsimile seal of the Company and the facsimile signatures of its duly authorized officers. ROSE'S STORES, INC. DATED: (CORPORATE SEAL) By: COUNTERSIGNED: By: President and Chief Executive Officer as Warrant Agent Attest: Secretary Authorized Signature TO BE PRINTED ON REVERSE SIDE OF WARRANT CERTIFICATE THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ISSUED PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY 11 U.S.C. Section 1145, UNDER AN ORDER DATED DECEMBER 14, 1994 CONFIRMING THE FIRST AMENDED JOINT PLAN OF REORGANIZATION OF ROSE'S STORES, INC. DATED OCTOBER 4, 1994 (THE "PLAN"). THE HOLDER OF THIS CERTIFICATE IS REFERRED TO 11 U.S.C. Section 1145 FOR GUIDANCE AS TO THE SALE OF THESE SECURITIES OR THE NEW ROSE'S COMMON STOCK ISSUABLE UPON THE EXERCISE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE. Summary of Terms of Warrant Agreement The Warrant Agreement provides that if the purchase price as determined pursuant to Section 6.2.5 of the Plan is adjusted from time to time for reasons enumerated in the Warrant Agreement, the number of shares purchasable upon the exercise of each Warrant represented by this Warrant Certificate are subject to modification or adjustment. The Warrants evidenced by this Warrant Certificate shall be exercisable until 5:00 p.m., New York City time, on ________, 2002. In the event that upon any exercise the number of Warrants exercised shall be fewer than the total number of Warrants represented hereby, there shall be issued to the holder hereof or his assignee a new Warrant certificate evidencing the Warrants not so exercised. No payment or adjustment shall be made for any cash dividends, whether paid or declared, on any shares issuable upon exercise of a Warrant. The Company shall not be required to issue fractions of shares or any certificates which evidence fractional shares. In lieu of a fractional share the Company shall round such fractional share to the nearest whole share (up or down), with half shares being rounded down, and will deliver the additional share if rounded up. The Company and the Warrant Agent may deem and treat the registered holder of this Warrant Certificate as the absolute owner hereof and of the Warrants represented by this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone) for the purpose of any exercise of such Warrants and for all other purposes. Neither the Company nor the Warrant Agent shall be affected by any notice to the contrary or be bound to recognize, or make any inquiries with respect to, any equitable or other claim to or interest in this Warrant Certificate on the part of any other person and shall not be liable for any registration or transfer of a Warrant Certificate which is registered or to be registered in the name of a fiduciary or the nominee of a fiduciary unless made with the actual knowledge that a fiduciary or nominee is committing a breach of trust in requesting such registration or transfer, or with knowledge of such facts such that its participation therein amounts to bad faith. Prior to the exercise of the Warrants represented hereby, the registered holder of this Warrant Certificate, as such, shall not be entitled to vote on or be deemed the holder of Common Stock or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose, and nothing contained in the Warrant Agreement or herein shall be construed to confer upon the holder of this Warrant Certificate, as such, any of the rights of a stockholder of the Company, including, without limitation, the right to vote, or to receive dividends or to consent to or receive notice as stockholders in respect of any meeting of stockholders for the election of directors of the Company or in any other matter or to receive notice of any proceedings of the Company (except as provided in the Warrant Agreement). Each Warrant entitles the holder thereof to purchase one share at any time during hours of regular business operations from the date the Warrants are issued until 5:00 P.M., New York City time, on the seventh anniversary of the Effective Date (the "Expiration Date") at the exercise price per Warrant determined pursuant to Section 6.2.5 of the Plan, subject to adjustment as set forth here- in (the "Exercise Price"). Each Warrant not exercised prior to the Expiration Date shall expire. The Exercise Price and the number and kind of shares purchasable upon the exercise of each Warrant are subject to adjustment upon the occurrence of certain events pursuant to the provisions of Section 11 of the Warrant Agreement. Each holder of a Warrant Certificate shall have the right to exercise the Warrants evidenced thereby in whole or in part at any time prior to the Expiration Date upon surrender of the Warrant Certificate, with the form of Election to Exercise below duly completed, to the Warrant Agent at the office of the Warrant Agent designated for such purpose, together with payment of the Exercise Price, as adjusted in accordancewith the provi- sions of this Agreement, for the number of shares in respect of which such Warrants are then exercised. Payment of such Exercise Price may be made by money order or by certified or official bank check in lawful money of the United States of America. In case the holder of any Warrant Certificate shall exercise fewer than all the Warrants evidenced thereby, a new Warrant Certificate evidencing Warrants equivalent to the Warrants remaining unexercised shall be issued by the Warrant Agent and delivered to the holder of such Warrant Certificate. Upon surrender of this Warrant Certificate with the form of Assignment below duly completed, accompanied by payment of an amount equal to any applicable transfer tax, at the office or agency of the Warrant Agent indicated on the face of this Warrant Certifi- cate, a new Warrant Certificate or Certificates representing the Warrants represented by this Warrant Certificate shall be issued to the transferee; provided, however, that if the registered holder of this Warrant Certificate elects to transfer fewer than all of the Warrants represented by this Warrant Certificate, a new Warrant Certificate for the Warrants not so transferred shall be issued to such registered holder. This Warrant Certificate, together with other Warrant Certificates, may be exchanged by the registered holder for another Warrant Certificate or Certificates of different denominations, of like tenor and representing in the aggregate Warrants equal in number to the same full number of Warrants represented by this Warrant Certificate and any other Warrant Certificate so exchanged with the form of Assignment duly completed and executed. Certificates for fractions of a Warrant will not be issued upon any exchange or transfer. If the day of receipt of this Warrant Certificate with the form of Election to Exercise duly filled in and executed, accompanied by payment of the Exercise Price for the shares specified in the form of Election to Exercise and of an amount equal to any applicable taxes or governmental charges), shall occur within any period during, which the transfer books for the Company's Common Stock or other class of stock purchasable upon the exercise of the Warrants evidenced by this Warrant Certificate are closed for any purpose, the Warrant Agent and the Company shall not be required to make delivery of certificates for shares purchasable upon such exercise, and the person entitled to receive delivery of such certificates shall not be deemed to have become a holder of record of such shares, until the next succeeding business day on which the transfer books of the Company are open. FORM OF ELECTION TO EXERCISE The undersigned hereby irrevocably elects to exercise _________ Warrants evidenced by this Warrant Certificate, and to purchase an equal number of full shares (the "Shares") of the common stock, no par value per share (the "Common Stock"), of Rose's Stores, Inc., a Delaware corporation (the "Company"), issuable upon exercise of such Warrants, and herewith tenders payment for such Shares in the amount of $________________ in accordance with the terms hereof. The undersigned requests that a certificate for such Shares be registered in the name of______________________________________________________________________________________ whose address is _____________________________________________________________________________________________ and whose social security number of other identifying number is __________________________________________________, and that such certificate be delivered to _______________________________________________________________________ whose address is ________________________. If said number of Shares is less than all of the Shares purchasable hereunder, the undersigned requests that a new Warrant Certificate evidencing the right to purchase the remaining balance of the Shares of Rose's Common Stock for which this Warrant Certificate is exercisable be registered in the name of ___________________________________ whose address is _____________________________________________________________________________________________________________ and whose social security number or other identifying number is _______________________________________________________________, and that such certificate be delivered to _____________________________________________________________________________________ whose address is ______________________________________________________________________________________________________________ Name of registered holder of Warrant:__________________________________________________________________________________________ Address:_______________________________________________________________________________________________________________________ (Please print) Signature:___________________________________________________________________________________________ NOTE: The above signature(s) must correspond with the name written upon the face of this Warrant Certificate in every particular, without alteration or enlargement or any change whatever. If this Warrant is held of record by two or more joint owners, all such owners must sign. Dated:________________________________ Signature Guarantee: ________________________________________________________________ (Signature must be guaranteed by an eligible guarantor institution which is a participant in a Securities Transfer Association recognized program.)
Warrant Agreement between Rose's Stores, Inc. and _____________________________________, as Warrant Agent ______________ Dated as of , 1995 ______________ TABLE OF CONTENTS PAGE 1. Appointment of Warrant Agent; Issuance of Warrants; Form of Warrants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2. Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3. Exchange of Warrant Certificates. . . . . . . . . . . . . . . . . . 2 4. Registration of Transfers and Exchanges of Warrants . . . . . . . . 2 5. Term of Warrants; Exercise of Warrants; Compliance with Government Regulations. . . . . . . . . . . . . . . . . . . . . . . 3 5.1 Term of Warrants; Exercise of Warrants . . . . . . . . . . . 3 5.2 Compliance with Government Regulations . . . . . . . . . . . 4 6. Cancellation and Destruction of Warrant Certificates. . . . . . . . 4 7. Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 5 8. Mutilated or Missing Warrants . . . . . . . . . . . . . . . . . . . 5 9. Reservation and Availability of Shares; Purchase of Warrants. . . . 5 9.1 Reservation and Availability of Shares . . . . . . . . . . . 5 9.2 Purchase of Warrants by the Company. . . . . . . . . . . . . 5 10. New Rose's Common Stock Record Date . . . . . . . . . . . . . . . . 5 11. Adjustment of Exercise Price and Number of Shares . . . . . . . . . 6 11.1 Mechanical Adjustments . . . . . . . . . . . . . . . . . . . 6 11.2 Voluntary Adjustment by the Company. . . . . . . . . . . . . 8 11.3 Notice of Exercise Price and Adjustment. . . . . . . . . . . 8 11.4 No Other Adjustment for Dividends. . . . . . . . . . . . . . 8 11.5 Preservation of Purchase Rights Upon Merger, Consolidation, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 11.6 Statement on Warrant Certificates. . . . . . . . . . . . . . 8 12. Fractional Interests. . . . . . . . . . . . . . . . . . . . . . . . 9 13. Agreements of Holders . . . . . . . . . . . . . . . . . . . . . . . 9 14. Concerning the Warrant Agent. . . . . . . . . . . . . . . . . . . . 9 15. Merger or Consolidation or Change of Name of Warrant Agent. . . . . 10 PAGE 16. Duties of Warrant Agent . . . . . . . . . . . . . . . . . . . . . . 10 17. Change of Warrant Agent . . . . . . . . . . . . . . . . . . . . . . 12 18. Issuance of New Warrant Certificates. . . . . . . . . . . . . . . . 13 19. Notice of Certain Events. . . . . . . . . . . . . . . . . . . . . . 13 20. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 21. Supplements and Amendments. . . . . . . . . . . . . . . . . . . . . 15 22. Determination and Actions by the Board of Directors, etc. . . . . . 15 23. No Rights as Stockholders . . . . . . . . . . . . . . . . . . . . . 16 24. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 25. Benefits of this Agreement. . . . . . . . . . . . . . . . . . . . . 16 26. Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 16 27. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 28. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 29. Descriptive Headings. . . . . . . . . . . . . . . . . . . . . . . . 16 30. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 31. Conflict. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 WARRANT AGREEMENT, dated as of ___________________, 1995, between Rose's Stores, Inc., a Delaware corporation (the "Company"), and _________________________________, as Warrant Agent (the "Warrant Agent"). WHEREAS, the Company proposes to issue 4,285,714 New Rose's Warrants as hereinafter described (the "Warrants") to purchase up to an aggregate of 4,285,714 shares (the "Shares"), subject to adjustment as hereinafter provided, of the Company's common stock, no par value per share ("New Rose's Common Stock"). The Warrants are being issued pursuant to Sections 5.4 and 6.2.5 of the Joint Plan of Reorganization of Rose's Stores dated October 4, 1994 (the "Plan"). Each Warrant entitles the holder thereof to purchase one share of New Rose's Common Stock, subject to adjustment as hereinafter provided. As used herein, "Shares" shall include any asset, property or other security of the Company or any successor to which each Holder (as hereinafter defined) shall be entitled upon exercise of the Warrants. Capitalized terms not defined herein have the meanings given them in the Plan. WHEREAS, the Company wishes the Warrant Agent to act as Warrant Agent on behalf of the Company in connection with the issuance, division, transfer, exchange and exercise of the Warrants, and the Warrant Agent is willing to so act. NOW, THEREFORE, in consideration of the premises and the mutual agreements set forth herein and for good and valuable consideration, the parties hereto agree as follows: 1. Appointment of Warrant Agent; Issuance of Warrants; Form of Warrants. The Company hereby appoints the Warrant Agent to act as agent for the Company in accordance with the instructions set forth in this Agreement, and the Warrant Agent hereby accepts such appointment. The Warrant Agent shall maintain the Warrant Register described in Section 2 and shall countersign, issue and deliver the Warrants under the terms of this Agreement and the written instructions of the Chairman of the Board, the President, the Chief Executive Officer, any Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company. The Warrants shall be issued to the Holders within thirty days of the Effective Date (as defined in the Plan). The Warrants shall be evidenced by certificates ("Warrant Certificates" or "Certificates") substantially in the form attached hereto as Exhibit A. The Warrants shall be executed on behalf of the Company by the manual or facsimile signature of the Chairman of the Board, the President, the Chief Executive Officer, any Vice President, the Treasurer or any Assistant Treasurer of the Company, under its corporate seal, affixed or in facsimile and attested by the manual or facsimile signature of the Secretary or any Assistant Secretary of the Company. Each Warrant shall be countersigned by the manual signature of the Warrant Agent (or any successor to the Warrant Agent then acting as warrant agent under this Agreement) and shall not be valid for any purpose unless so countersigned. Warrants shall be dated as of the date of countersignature thereof by the Warrant Agent upon initial issuance and upon division, exchange, substitution or transfer. In case any officer of the Company who shall have signed any of the Warrant Certificates shall cease to be such officer of the Company before countersignature by the Warrant Agent, such Warrant Certificates may, nevertheless, be issued and delivered with the same force and effect as though the person who signed such Warrant Certificates had not ceased to be such officer of the Company. Any Warrant Certificates may be signed on behalf of the Company by any person who, at the actual date of execution of such Warrant Certificates, shall be a proper officer of the Company to sign such Warrant Certificates, even if such person did not hold such office on the date of this Agreement. 2. Registration. The Warrants shall be numbered and shall be registered in a warrant register (the "Warrant Register") as they are issued, which register shall be kept at one of the Warrant Agent's offices in ___________________. The Warrant Register shall show the names and addresses of the respective Holders of the Warrants, the number of Shares purchasable on the face of each Warrant so held and the date of such Warrant. The Company and the Warrant Agent may deem and treat the registered holder of any Warrant on the Warrant Register (the "Holder," which term shall also refer to the registered holder of any shares) as the absolute owner thereof(notwithstanding any notation of ownership or other writing thereon made by anyone) for the purpose of any exercise of such Warrants and for all other purposes. Neither the Company nor the Warrant Agent shall be affected by any notice to the contrary or be bound to recognize, or make any inquiries with respect to, any equitable or other claim to or interest in such Warrant on the part of any other person and shall not be liable for any registration or transfer of Warrants which are registered or are to be registered in the name of a fiduciary or the nominee of a fiduciary unless made with the actual knowledge that a fiduciary or nominee is committing a breach of trust in requesting such registration or transfer, or with knowledge of such facts such that its participation therein amounts to bad faith. 3. Exchange of Warrant Certificates. Subject to any restriction upon transfer set forth in this Agreement, each Warrant Certificate may be exchanged for another Certificate or Certificates entitling the Holder thereof to purchase a like aggregate number of Shares as the Certificate or Certificates surrendered then entitle such Holder to purchase. No fractional Warrant Certificates shall be issued. Any Holder desiring to exchange a Warrant Certificate or Certificates shall make such request in writing delivered to the Warrant Agent and shall surrender, properly endorsed, the Certificate or Certificates to be so exchanged at the office of the Warrant Agent designated for such purpose. Thereupon, the Warrant Agent shall countersign and deliver to the person entitled thereto a new Warrant Certificate or Certificates, as the case may be, as so requested. 4. Registration of Transfers and Exchanges of Warrants. The Warrants shall be transferable only on the Warrant Register upon delivery thereof duly endorsed by the Holder or by his duly authorized attorney or representative, or accompanied by proper evidence of succession, assignment or authority to transfer. In all cases of transfer by an attorney, the original power of attorney, duly approved, or copy thereof, duly certified, shall be deposited and remain with the Warrant Agent. In case of transfer by executors, administrators, guardians or other legal representatives, duly authenticated evidence of their authority shall be produced, and may be required to be deposited with the Warrant Agent in its discretion. Upon any registration of transfer, the Warrant Agent shall countersign and deliver a new Warrant or Warrants to the persons entitled thereto. Subject to the provisions of this Agreement, including the payment of any tax or governmental charge that may be imposed on a Holder pursuant to Section 7 in connection with any exchange of Warrant Certificates, the Warrants may thereafter be exchanged at the option of the Holder thereof for another Warrant, or other Warrants of different denomina- tions, of like tenor and representing in the aggregate the right to purchase a like number of Shares upon surrender to the Warrant Agent. The Holder of such Warrants shall pay any tax or governmental charge that may be imposed on a Holder pursuant to Section 7 of this Agreement and other reasonable charges as the Company may prescribe, in connection with such transfer. 5. Term of Warrants; Exercise of Warrants; Compliance with Government Regulations. 5.1 Term of Warrants; Exercise of Warrants. (a) Each Warrant entitles the Holder thereof to purchase one Share at any time during hours of regular business operations from the date the Warrants are issued to Holders under the Plan until 5:00 P.M., New York City time, on the seventh anniversary of the Effective Date (the "Expiration Date") at the exercise price per Warrant determined pursuant to Section 6.2.5 the Plan, subject to adjustment as set forth herein (the "Exercise Price"). Each Warrant not exercised prior to the Expiration Date shall expire without recourse, and shall no longer be of any force or effect. (b) The Exercise Price and the number and kind of Shares purchas- able upon the exercise of each Warrant are subject to adjustment upon the occurrence of certain events, pursuant to the provisions of Section 11 of this Agreement. Subject to the provisions of this Agreement, each Holder of a Warrant Certificate shall have the right to exercise the Warrants evidenced thereby in whole or in part at any time and from time to time prior to 5:00 p.m. New York City time, on the Expiration Date upon surrender of the Warrant Certi- ficate, with the form of election to exercise on the reverse side thereof duly executed, to the Warrant Agent at the office of the Warrant Agent designated for such purpose, together with payment of the Exercise Price, as adjusted in accordance with the provisions of this Agreement, for the number of Shares in respect of which such Warrants are then exercised. Payment of such Exercise Price may be made by money order or by certified or official bank check in lawful money of the United States of America in accordance with paragraph (c) below. The date and time of exercise of any Warrant shall be deemed to be the date and time of its receipt by the Warrant Agent duly filled in and signed and accompanied by proper payment as herein provided. The method of delivery of any Warrant Certificates to the Warrant Agent is at the option and risk of the Holder thereof. (c) Upon receipt of a Warrant Certificate representing an exercisable Warrant, with the appropriate form of election to exercise duly executed, accompanied by payment of the Exercise Price for the Shares to be purchased and an amount equal to any applicable transfer tax (as determined by the Warrant Agent) in cash, or by certified or official bank check or money order payable to the order of the Company, the Warrant Agent shall thereupon promptly (i) requisition from any transfer agent of the Shares (or make available, if the Warrant Agent is the transfer agent) certificates for the number of Shares to be purchased, and the Company hereby irrevocably authorizes its transfer agent to comply with all such requests, (ii) after receipt of such Exercise Price, deliver such amount paid upon exercise to the Company and (iii) after receipt of such certificates, cause the same to be delivered to or upon the order of the Holder of such Warrant Certificate, registered in such name or names as may be designated by such Holder. In the event that the Company is obligated to issue other securities of the Company upon the exercise of a Warrant, the Company shall make all arrangements necessary so that such other securities are avail- able for distribution by the Warrant Agent, if and when appropriate. (d) In case the Holder of any Warrant Certificate shall exercise fewer than all the Warrants evidenced thereby, a new Warrant Certificate evidencing Warrants equivalent to the Warrants remaining unexercised shall be issued by the Warrant Agent and delivered to the Holder of such Warrant Certificate or to his duly authorized assigns. (e) In case any Holder desiring to exercise a Warrant Certificate or Certificates makes such request to exercise within any period during which the transfer books for the Company's New Rose's Common Stock or other class of stock purchasable upon the exercise of the Warrants evidenced by such Warrant Certificate or Certificates are closed for any purpose, the Warrant Agent and the Company shall not be required to make delivery of certificates for Shares purchasable upon such exercise, and the person entitled to receive delivery of such certificates shall not be deemed to have become a holder of record of such Shares, until the next succeeding business day on which the transfer books of the Company are open. 5.2 Compliance with Government Regulations. The Company covenants that if any Shares require, under any United States federal or state law or applicable governing rule or regulation of any national securities exchange, registration with or approval of any United States federal or state governmental authority, or listing on any such national securities exchange before such Shares may be issued to a Holder upon exercise, the Company shall in good faith and as promptly as practicable endeavor to cause such stock to be duly register- ed, approved or listed on the relevant national securities exchange, as the case may be; provided, however, that, in no event shall any Shares be issued, and the Company is hereby authorized to suspend the exercise of all Warrants, for the period during which such registration, approval or listing is required but not in effect, in which event the Expiration Date shall be extended for any such period of suspension. 6. Cancellation and Destruction of Warrant Certificates. All Warrant Certificates surrendered for the purpose of exercise, transfer or exchange shall be surrendered and delivered to the Warrant Agent for cancelation and shall be canceled by it, or delivered to the Warrant Agent in canceled form, and no Warrant Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Agreement. The Company shall deliver to the Warrant Agent for cancellation and retirement, and the Warrant Agent shall so cancel and retire, any other Warrant Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Warrant Agent shall deliver all canceled Warrant Certificates to the Company, or shall, at the written request of the Company, destroy such canceled Warrant Certificates, and in such case shall deliver a certificate of destruction thereof to the Company, or, if required by law, shall retain such canceled Warrant Certificates in the manner required by law. 7. Payment of Taxes. The Company shall pay all federal and state transfer taxes, documentary stamp taxes, and charges, if any, attributable to the initial issuance of Warrants and of Shares initially issued upon the exer- cise of Warrants; provided, however, that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issue or delivery of any Warrant Certificates or any certificates for Shares in a name other than that of the Holder of such Warrants or to issue or deliver any certificates for Shares in a name other than that of the Holder upon the exercise of any Warrants until such tax shall have been paid (any such tax being payable by the Holder of such Warrant Certificate at the time of surrender) or until it has been established to the Company's satisfaction that no such tax is due. 8. Mutilated or Missing Warrants. Upon receipt by the Company and the Warrant Agent of evidence reasonably satisfactory to them of the loss,theft, destruction or mutilation of a Warrant Certificate and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to the Company, and reimbursement to the Company and the Warrant Agent of all reasonable expenses incidental thereto, and upon surrender to the Warrant Agent and cancel- lation of the Warrant Certificate if mutilated, the Company shall execute and deliver a new Warrant Certificate of like tenor to the Warrant Agent for countersignature and delivery to the Holder in lieu of the Warrant Certificate so lost, stolen, destroyed or mutilated. 9. Reservation and Availability of Shares; Purchase of Warrants. 9.1 Reservation and Availability of Shares. The Company covenants and agrees that it shall at all times cause to be reserved and kept available, free from preemptive rights, out of the authorized and unissued Shares, a number of Shares that shall be sufficient to permit the exercise in full of the rights of purchase represented by the Warrants. The Company covenants and agrees that it shall take all such action as may be necessary to ensure that all Shares that may be issued upon exercise of Warrants shall, at the time of delivery of the certificates for such Shares (subject to the payment of the Exercise Price and any applicable transfer taxes), be duly and validly authorized and issued, fully paid and nonassessable outstanding Shares of the Company. 9.2 Purchase of Warrants by the Company. The Company shall have the right, except as limited by law, other agreements, or herein, to purchase, or otherwise acquire, Warrants at such times, in such manner and for such consideration as it may deem appropriate. 10. New Rose's Common Stock Record Date. Each person in whose name any certificate for Shares is issued upon the exercise of Warrants shall for all purposes be deemed to have become the holder of the Shares represented thereby on, and such certificate shall be dated, the date upon which the Warrant Certificate evidencing such Warrants was duly presented and payment of the Exercise Price (and any applicable transfer taxes) was made; provided, however, that if the date of such presentation and payment is a date upon which the transfer books of the Company are closed, such person shall be deemed to have become the record holder of such Shares on, and such certificate shall be dated, the next succeeding business day on which the transfer books of the Company are open; provided further, that unless otherwise provided by law or as contemplated by Section 5.2, such transfer books shall not be closed at any one time for a period of longer than five calendar days. Except as provided elsewhere herein, prior to the date a Holder of Warrants becomes a Holder of Shares pursuant to the exercise of such Warrants, the Holder of a Warrant Certificate, as such, shall not be entitled to any rights of a stockholder of the Company with respect to Shares for which the Warrants shall be exercisable, including, without limitation, the right to vote upon any matter submitted to the stockholders of the Company, to receive dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company. 11. Adjustment of Exercise Price and Number of Shares. The number and kind of securities or other property purchasable upon the exercise of each Warrant and the Exercise Price shall be subject to adjustment from time to time as set forth in this Section 11. 11.1 Mechanical Adjustments. The number of Shares purchasable upon the exercise of each Warrant and the Exercise Price shall be subject to adjustment as follows: (a) In case the Company shall at any time after the date of this Agreement and prior to the Expiration Date (i) declare or pay a dividend, or make a distribution, in shares of New Rose's Common Stock to holders of New Rose's Common Stock, (ii) subdivide the outstanding New Rose's Common Stock into a greater number of shares, (iii) combine the outstanding New Rose's Common Stock into a smaller number of shares, (iv) issue any shares of its capital stock in a reclassification of the New Rose's Common Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing entity) or (v) make a distribution on its New Rose's Common Stock in shares of its capital stock other than New Rose's Common Stock, then the kind and number of Shares purchasable upon exercise of each Warrant immediately prior thereto shall be adjusted so that the Holder of each Warrant shall be entitled to receive the kind and number of Shares or other securities of the Company which he would have owned or have been entitled to receive after the happening of any of the events described above, had such Warrants been exercised immediately prior to the happening of such event or any record date with respect thereto and at a time when the transfer books of the Company were open. An adjustment made pursuant to this paragraph (a) shall become effective immediately after the effective date of such event. Notwithstanding the foregoing, no distribution of New Rose's Common Stock required to be made pursuant to the Plan will require an adjustment pursuant to this Section 11.1(a). (b) In case the Company at any time after the date of this Agreement and prior to the Expiration Date shall issue other than as required pursuant to the Plan (without payment of consideration) rights, options or warrants to holders of its outstanding New Rose's Common Stock entitling them to subscribe for or purchase shares of New Rose's Common Stock or securities convertible into or exchangeable for New Rose's Common Stock, then the Company shall reserve for distribution, and shall distribute upon payment of the Exercise Price, such rights, options, warrants or securities to the Holders of the Warrants as if the Warrants had been exercised immediately prior to the record date for such distribution; provided, that no such rights, options, warrants or securities shall be reserved after the expiration date, if any, of any such rights, options, warrants or securities. (c) In case the Company at any time after the date of this Agreement and prior to the Expiration Date shall make a distribution other than as required pursuant to the Plan to all holders of New Rose's Common Stock or any other capital stock issued with respect to the New Rose's Common Stock of any asset, property or security (other than (i) cash dividends payable out of current earnings and (ii) those distributions referred to in subsection (a) or (b) above), then, and in each such case, the Holders, upon the exercise of the Warrants, shall be entitled to receive in addition to the Shares, the amount of assets, property or securities to which such Holder would have been entitled as a Holder of New Rose's Common Stock if such Holder had exercised his Warrant immediately prior to the record date for such distribution. At the time of any such distribution, the Company shall, at its election, either (x) deposit the assets, property or securities payable to Holders pursuant hereto in trust for the Holders with the Warrant Agent or an institution eligible to act as trustee under an indenture qualified under the Trust Indenture Act of 1939, as amended, with instructions as to the investment of such property and any proceeds therefrom so as to protect the value of such property for the Holders or (y) distribute to the Holders the assets, property or securities to which they would be entitled upon exercise. Such election by the Company shall be made by the Company by giving written notice thereof to the Holders. In the event that the Company elects to deposit the assets, property or securities payable to Holders pursuant hereto in trust for the Holders, the trust indenture shall provide that any assets, property or securities deposited in such trust shall revert to the Company upon the expiration of the term of the Warrants. (d) No adjustment in the number of Shares purchasable hereunder shall be required unless such adjustments would require an increase or decrease of at least one percent (1%) in the number of Shares purchasable upon the exercise of each Warrant; provided, however, that any adjustments which by reason of this paragraph (d) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations shall be made to the nearest one thousandth (.001) of a share. (e) Whenever the number of Shares purchasable upon the exercise of each Warrant is adjusted, as herein provided, the Exercise Price payable upon exercise of each Warrant shall be adjusted by multiplying such Exercise Price immediately prior to such adjustment by a fraction, of which the numerator shall be the number of Shares purchasable upon the exercise of each Warrant immediately prior to such adjustment, and of which the denominator shall be the number of Shares so purchasable immediately thereafter. 11.2 Voluntary Adjustment by the Company. The Company may at its option, at any time during the term of the Warrants, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company or extend the Expiration Date of the Warrants. 11.3 Notice of Exercise Price and Adjustment. Whenever the initial Exercise Price is set or the number of Shares purchasable upon the exercise of each Warrant or the Exercise Price is adjusted, as herein provided, the Company shall (a) promptly prepare a certificate setting forth such initial Exercise Price or adjustment and a brief statement of the facts accounting for such adjustment, (b) promptly file with the Warrant Agent and with each transfer agent for the New Rose's Common Stock a copy of such certificate and (c) mail or, at its option, cause the Warrant Agent to mail, a brief summary thereof to each Holder of a Warrant Certificate in accordance with Section 20 hereof. The Warrant Agent shall be fully protected in relying on any such certificate and on any adjustment therein contained and shall not be deemed to have knowledge of any such adjustment unless and until it shall have received such certificate. 11.4 No Other Adjustment for Dividends. Except as provided in subsection 11.1, no adjustment or payment in respect of any dividends shall be made during the term of a Warrant or upon the exercise or conversion of a Warrant. 11.5 Preservation of Purchase Rights Upon Merger, Consolidation, etc. In case of any consolidation of the Company with, or merger of the Company into, any other person (including, without limitation, any corporation, partnership, joint venture or association) or merger of any other person with or into the Company or in case of any sale, transfer or lease to any other person of all or substantially all the property of the Company, the Company or such successor or purchasing person, as the case may be, shall execute with the Warrant Agent an agreement that each Holder shall have the right thereafter upon payment of the Exercise Price in effect immediately prior to such action to purchase upon exercise of each Warrant solely the kind and amount of shares or other securi- ties and property and any proceeds therefrom which he would have owned or have been entitled to receive after the happening of such consolidation, merger, sale, transfer or lease had such Warrant been exercised immediately prior to such action. Such agreement shall provide for adjustments, which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 11. The provisions of this subsection 11.5 shall similarly apply to successive consolidations, mergers, sales, transfers or leases. 11.6 Statement on Warrant Certificates. Irrespective of any adjustments in the Exercise Price or the number or kind of securities purchas- able upon the exercise of the Warrants, Warrant Certificates theretofore or thereafter issued may continue to express the same price and number and kind of Shares as are stated in the Warrant Certificates initially issuable pursuant to this Agreement. 12. Fractional Interests. The Company shall not be required to issue fractional Shares on the exercise of Warrants. If more than one Warrant shall be presented for exercise in full at the same time by the same Holder, the number of full Shares which shall be issuable upon the exercise thereof shall be computed on the basis of the aggregate number of Shares purchasable on exercise of the Warrants so presented. If any fraction of a Share would, except for the provisions of this Section 12, be issuable on the exercise of any Warrant (or specified portion thereof), the Company shall round such fraction to the nearest whole Share (up or down), with half Shares being rounded down, and will deliver the additional Share if rounded up. 13. Agreements of Holders. Every Holder of a Warrant by accepting the same consents and agrees with the Company and the Warrant Agent and with every other holder of a Warrant that: (a) the Warrant Certificates are transferable only on the Warrant Register if surrendered at the office of the Warrant Agent designated for such purpose, duly endorsed or accompanied by a proper instrument of transfer, and (b) the Company and the Warrant Agent may deem and treat the person in whose name a Warrant Certificate is registered as the absolute owner thereof and of the Warrants evidenced thereby (notwithstanding any notations of owner- ship or writing on the Warrant Certificates made by anyone other than the Company or the Warrant Agent) for all purposes whatsoever, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. 14. Concerning the Warrant Agent. The Company agrees to pay to the Warrant Agent reasonable compensation as set forth in an agreement between the parties for all services rendered by it hereunder and, from time to time, on demand of the Warrant Agent, its reasonable expenses and counsel fees and disbursements and other reasonable disbursements incurred in the administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Company also agrees to indemnify the Warrant Agent for, and to hold it harmless against, any liability incurred without negligence, bad faith or willful misconduct on the part of the Warrant Agent, for anything done or omitted by the Warrant Agent in connection with the acceptance and administra- tion of this Agreement, including the reasonable costs and expenses of defending against any claim of liability arising therefrom, directly or indirectly. The indemnification provided for hereunder shall survive the expiration of the Warrants and the termination of this Agreement. The Warrant Agent shall be protected and shall incur no liability for, or in respect of, any action taken, suffered or omitted by it in connection with its administration of this Agreement in reliance upon any Warrant Certificate or certificate for New Rose's Common Stock or for other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document believed by it, after proper inquiry or examination, to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper person or persons. 15. Merger or Consolidation or Change of Name of Warrant Agent. Any corporation into which the Warrant Agent or any successor Warrant Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Warrant Agent or any successor Warrant Agent shall be a party, or any corporation succeeding to the corporate trust or stock transfer business of the Warrant Agent or any successor Warrant Agent, shall be the successor to the Warrant Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such corporation would be eligible for appointment as a successor Warrant Agent under the provisions of Section 17 hereof. In case at the time such successor Warrant Agent shall succeed to the agency created by this Agreement any of the Warrant Certificates shall have been countersigned but not delivered, any such successor Warrant Agent may adopt the countersignature of the predecessor Warrant Agent and deliver such Warrant Certificates so countersigned; and, in case at that time any of the Warrant Certificates shall not have been countersigned, any successor Warrant Agent may countersign such Warrant Certificate either in the name of the predecessor or in the name of the successor Warrant Agent; and in all such cases such Warrant Certificates shall have the full force provided in the Warrant Certificates in this Agreement. In case at any time the name of the Warrant Agent shall be changed, and at such time any of the Warrant Certificates shall have been countersigned but not delivered, the Warrant Agent may adopt the countersignature under its prior name and deliver Warrant Certificates so countersigned; and, in case at that time any of the Warrant Certificates shall not have been countersigned, the Warrant Agent may countersign such Warrant Certificates either in its prior name or in its changed name; and in all such cases such Warrant Certificates shall have the full force provided in the Warrant Certificates and in this Agreement. 16. Duties of Warrant Agent. The Warrant Agent undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions, all of which the Company, by its acceptance hereof, and the Holders of Warrant Certificates, by their acceptance thereof, shall be bound: (a) The Warrant Agent may consult with legal counsel selected by it (who may be legal counsel for the Company), and the opinion of such counsel shall be full and complete authorization and protection to the Warrant Agent as to any action taken or omitted by it in good faith and in accordance with such opinion, provided that such counsel, if not legal counsel for the Company, shall be reasonably acceptable to the Company. (b) Whenever in the performance of its duties under this Agreement the Warrant Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed on behalf of the Company by a person reasonably believed by the Warrant Agent to be the Chairman of the Board, the President, any Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and delivered to the Warrant Agent; and such certificate shall be full authorization to the Warrant Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate. (c) The Warrant Agent shall be liable hereunder only for its own negligence, bad faith or willful misconduct. (d) The Warrant Agent shall not be liable for, or by reason of, any of the statements of fact or recitals contained in this Agreement or in the Warrant Certificates (except as to the fact that it has countersigned the Warrant Certificates) or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Company only. (e) The Warrant Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Warrant Agent) or in respect of the validity or execution of any Warrant Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Warrant Certificate; nor shall it be responsible for any adjustment required under the provisions of Section 11 hereof or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Warrants evidenced by Warrant Certificates after receipt of the certificate described in Section 11. 3 hereof); nor shall it by any act hereunder be deemed to make any representa- tion or warranty as to the authorization or reservation of any shares of New Rose's Common Stock or other securities to be issued under this Agreement or any Warrant Certificate or as to whether any shares of New Rose's Common Stock or other securities shall, when so issued, be validly authorized and issued, fully paid and nonassessable. (f) The Warrant Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder and certificates delivered pursuant to any provision hereof from any person reasonably believed by the Warrant Agent to be the Chairman of the Board, the President, the Chief Executive Officer, any Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company, and is authorized to apply to such officers for advice or instructions in connection with its duties, and it shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with instructions of any such person. Any application by the Warrant Agent for written instructions from the Company may, at the option of the Warrant Agent, set forth in writing any action proposed to be taken or omitted by the Warrant Agent under this Agreement and the date on and/or after which such action shall be taken or such omission shall be effective. The Warrant Agent shall not be liable for any action taken by, or omission of, the Warrant Agent in accordance with a proposal included in such application on or after the date specified in such application (which date shall not be less than five (5) business days after the date any officer of the Company actually receives such application, unless any such officer shall have consented in writing to any earlier date) unless, prior to taking any such action (or the effective date in the case of an omission), the Warrant Agent shall have received written instructions in response to such application specifying the action to be taken or omitted. (g) The Warrant Agent and any stockholder, director, officer or employee of the Warrant Agent may buy, sell or deal in any of the Warrants or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Warrant Agent under this Agreement to the extent lawfully permitted to so act. Nothing herein shall preclude the Warrant Agent from acting in any other capacity for the Company or for any other legal entity. (h) The Warrant Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents (which shall not include its employees), and the Warrant Agent shall not be answerable or accountable for any act, omission, default, neglect or misconduct of any such attorneys or agents or for any loss to the Company or to the holders of the Warrants resulting from any such act, omission, default, neglect or misconduct, provided reasonable care was exercised in the selection and continued employment thereof. (i) No provision of this Agreement shall require the Warrant Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of its rights if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it. (j) If, with respect to any Warrant Certificate surrendered to the Warrant Agent for exercise or transfer, the form of election to purchase or transfer, as the case may be, has not been completed, the Warrant Agent shall not take any further action with respect to such requested exercise or transfer without first consulting with the Company. (k) The Warrant Agent shall not be required to take notice of, or be deemed to have notice of, any fact, event or determination under this Agreement unless and until the Warrant Agent shall be specifically notified in writing by the Company of such fact, event or determination. 17. Change of Warrant Agent. The Warrant Agent or any successor Warrant Agent may resign and be discharged from its duties under this Agreement upon thirty (30) days' notice in writing mailed to the Company and to each transfer agent of the New Rose's Common Stock by registered or certified mail. The Company may remove the Warrant Agent or any successor Warrant Agent upon thirty (30) days' notice in writing mailed to the Warrant Agent or successor Warrant Agent, as the case may be, and to each transfer agent of the New Rose's Common Stock by registered or certified mail. If the Warrant Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Warrant Agent. If the Company shall fail to make such appointment within a period of thirty (30) days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Warrant Agent, then the Holder of any Warrant Certificate may apply to any court of competent jurisdiction for the appointment of a new Warrant Agent. Notwithstanding any provision to the contrary contained herein, the removal or resignation of the Warrant Agent will not be effective until such time as a successor Warrant Agent has been appointed in accordance with the terms of this Agreement. Any successor Warrant Agent, whether appointed by the Company or by such a court, shall be (a) a corporation organized and doing business under the laws of the United States or of any state thereof, in good standing, which is authorized under such laws to exercise corporate trust or stock transfer powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Warrant Agent a combined capital and surplus of at least fifty million dollars ($50,000,000) or (b) an affiliate of a corporation described in clause (a) of this sentence. After appointment, the successor Warrant Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Warrant Agent without further act or deed; but the predecessor Warrant Agent shall deliver and transfer to the successor Warrant Agent any property at the time held by it hereunder and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment, the Company shall file notice thereof in writing with the predecessor Warrant Agent and each transfer agent of the New Rose's Common Stock and mail a notice thereof in writing to the Holders of the Warrant Certificates. Failure to give any notice provided for in this Section 17, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Warrant Agent or the appointment of the successor Warrant Agent, as the case may be. 18. Issuance of New Warrant Certificates. Notwithstanding any of the provisions of this Agreement or of the Warrants to the contrary, the Company may, at its option, issue new Warrant Certificates evidencing Warrants in such form as may be approved by its Board of Directors to reflect any adjustment or change in the Exercise Price per Share and the number or kind or class of shares or other securities or property purchasable under the Warrant Certificates made in accordance with the provisions of this Agreement. 19. Notice of Certain Events. In case the Company shall propose, except as contemplated by the Plan, (a) to declare or pay a dividend, or make a distribution, to Holders of New Rose's Common Stock in shares of New Rose's Common Stock, to subdivide the outstanding New Rose's Common Stock, to combine the outstanding New Rose's Common Stock into a smaller number of shares, to issue any shares of its capital stock in a reclassification of the New Rose's Common Stock or to make a distribution on its New Rose's Common Stock in shares of its capital stock other than New Rose's Common Stock or (b) to issue (without payment of consideration), or sell, rights, options or warrants to all holders of New Rose's Common Stock entitling them to subscribe for or to purchase shares of New Rose's Common Stock or securities convertible into or exchangeable for New Rose's Common Stock, or (c) to make a distribution to all holders of New Rose's Common Stock of any asset, property or security (other than (1) cash dividends payable out of current earnings, (2) distributions referred to in (a) or (b) above and (3) in connection with the total liquidation, dissolution or winding up of the Company), or (d) to effect any consolidation or merger into or with, or to effect any sale or other transfer, in one or more transactions, of all or substantially all of the assets of the Company and its subsidiaries taken as a whole to any other person, or (e) to effect the liquidation, dissolution or winding up of the Company, then, in each such case, the Company shall give to each Holder of a Warrant Certificate, in accordance with Section 20 hereof, a notice of such proposed action, which shall specify the record date for the purposes of such stock dividend, subdivision, reclassification, distribution of rights, options, warrants, assets, property or security, or the date on which such consolidation, merger, sale, transfer, liquidation, dissolution, or winding up is to take place and the date of participation therein by the Holders of the Shares, if any such date is to be fixed, and such notice shall be so given in the case of any action covered by clause (a) or (b) above at least ten (10) days prior to the record date for determining Holders of the Shares for purposes of such action, and in the case of any such other action, at least ten (10) days prior to the date of the taking of such proposed action or the date of partici- pation therein by the Holders of the Shares, whichever shall be the earlier. Failure to publish, mail or receive such notice or any defect therein or in the publication or mailing thereof shall not affect the validity of any action taken in connection with such stock dividend, subdivision, reclassification, distribu- tion, consolidation, merger, sale, transfer, liquidation, dissolution, or winding up. Except as specifically required herein, the Company shall not be required to provide notice to Holders of Warrant Certificates of any events of which it is not required to provide notice to Holders of New Roses Common Stock. Where the Company is required to give notice of an event to its stockholders, it shall not be required to give greater notice of such event to Warrant Holders. 20. Notices. Notices or demands authorized by this Agreement to be given or made by the Warrant Agent or by the Holder of any Warrant Certificate to or on the Company shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Warrant Agent) as follows: Rose's Stores, Inc. _____________________ Henderson, North Carolina 27536 Attn: ______________ with a copy to: _____________________ _____________________ _____________________ _____________________ Subject to the provisions of Section 15, any notice or demand authorized by this Agreement to be given or made by the Company or by the Holder of any Warrant Certificate to or on the Warrant Agent shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Company) as follows: _____________________ _____________________ _____________________ Attn: _______________ Notices or demands authorized by this Agreement to be given or made by the Company or the Warrant Agent to the Holder of any Warrant Certificate shall be sufficiently given or made if sent by mail, postage prepaid, addressed to such Holder at the address of such Holder as shown on the registry books of the Company or the Warrant Register maintained by the Warrant Agent. 21. Supplements and Amendments. (a) The Company and the Warrant Agent may from time to time supplement or amend this Agreement without approval of any Holders of Warrant Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement any provision contained herein which may be defective or inconsistent with any provisions of the Plan or any other provisions herein or (iii) to change or supplement the provisions hereunder in any manner which the Company may deem necessary or desirable, provided, in each case described in clauses (i) through (iii), the addition or amendment does not adversely affect the interests of the holders of Warrant Certificates. (b) In addition, this Warrant Agreement may be supplemented or amended to the extent provided in paragraph (a) of this Section 21 by the written consent of the Company and the Holders of Warrant Certificates representing more than 50% of the Shares obtainable upon the exercise of the Warrants outstanding at the time of such consent. (c) Upon the delivery of a certificate from an appropriate officer of the Company and an opinion of counsel reasonably acceptable to the Warrant Agent which states that the proposed supplement or amendment is in compliance with the terms of this Section 21, the Warrant Agent shall execute such supplement or amendment unless the Warrant Agent shall have determined in good faith that such supplement or amendment would adversely affect its interests under this Agreement. 22. Determination and Actions by the Board of Directors, etc. The Board of Directors of the Company shall have the exclusive power and authority (which may be delegated to any committee of such Board or to the appropriate officers of the Company) to administer this Agreement and to exercise all rights and powers specifically granted to the Board of Directors, or the Company, or as may be necessary or advisable in the administration of this Agreement, including, without limitation, the right and power to (i) interpret the provisions of this Agreement, and (ii) make all determinations deemed necessary or advisable for the administration of this Agreement (including a determination to amend this Agreement). All such actions, calculations, interpretations and determinations (including, for purposes of clause (y) below, all omissions with respect to the foregoing) which are done or made by the Board of Directors (or its delegates) in good faith, shall (x) be final, conclusive and binding on the Company, the Warrant Agent, the Holders of the Warrant Certificates and all other parties, and (y) not subject the Board of Directors (or its delegates) to any liability to the Holders of the Warrant Certificates. In exercising its power and authority to administer this Agreement, in connection with any amend- ment to this Agreement or through reorganization, consolidation, merger, dis- solution, reclassification, issue or sale of securities, sale of assets or any other voluntary action, the Board of Directors shall at all times act in good faith in performance of its fiduciary duties to Holders of Warrants. 23. No Rights as Stockholders. Nothing contained in this Agreement or in any of the Warrants shall be construed as conferring upon the Holders or their transferees any rights whatsoever as stockholders of the Company, including, without limitation, the right to vote or to receive dividends (except as specifically provided herein) or to consent to or to receive notice as stockholders in respect of any meeting of stockholders for the election of directors of the Company or on any other matter. 24. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company, the Warrant Agent or the Holders shall bind and inure to the benefit of their respective successors and assigns here- under, whether by transfer, merger or otherwise. Upon becoming a successor to the Company, such successor shall be deemed to be the Company for purposes of this Agreement. 25. Benefits of this Agreement. Nothing in this Agreement shall be construed to give to any person or corporation other than the Company, the Warrant Agent and the Holders of the Warrants any legal or equitable right, remedy or claim under this Agreement, and this Agreement shall be for the sole and exclusive benefit of the Company, the Warrant Agent and such Holders. 26. Attorneys' Fees. In any action or proceeding brought to enforce any provision of this Agreement, the successful party shall be entitled to recover reasonable attorneys' fees in addition to its costs and expenses and any other available remedy. 27. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 28. Governing Law. This Agreement, each Warrant and each Warrant Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and to be performed entirely within such State. 29. Descriptive Headings. Descriptive headings of the several Sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. 30. Counterparts. This Agreement may be executed in any number of counterparts each of which so executed shall be deemed to be an original; but such counterparts together shall constitute but one and the same instrument. 31. Conflict. In the event of any conflict between the provisions of the Plan and the Warrant Agreement, the provisions of the Plan shall control. SIGNATURES IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day, month and year first above written. ROSE'S STORES, INC. By: Name: Title: _____________________, as Warrant Agent By: Name: Title: EXHIBIT A THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ISSUED PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY 11 U.S.C. Section 1145, UNDER AN ORDER DATED ________, 1994 CONFIRMING THE JOINT PLAN OF REORGANIZATION OF ROSE'S STORES, INC. DATED OCTOBER 4, 1994 (THE "PLAN"). THE HOLDER OF THIS CERTIFICATE IS REFERRED TO 11 U.S.C. Section 1145 FOR GUIDANCE AS TO THE SALE OF THESE SECURITIES OR THE NEW ROSE'S COMMON STOCK ISSUABLE UPON THE EXERCISE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE. VOID AFTER 5:00 P.M. NEW YORK CITY TIME, ON _____________, 2002 No. A- Warrants WARRANT CERTIFICATE FOR PURCHASE OF NEW COMMON STOCK OF ROSE'S STORES, INC. This certifies that, for value received, _________________, or registered assigns, is the owner of the number of Warrants set forth above, each of which entities the owner to purchase, subject to the terms and conditions hereof and of the Warrant Agreement mentioned below, at any time after the date hereof and prior to the Expiration Date (as herein defined), one share of the common stock, no par value per share (the "New Common Stock"), of Rose's Stores, Inc., a Delaware corporation (the "Company"), at the exercise price determined pursuant to 6.2.5 of the Plan (the "Exercise Price") payable in lawful money of the United States of America by money order or certified or official bank check payable to the Company, upon surrender of this Warrant Certificate with the form of Election to Exercise on the reverse hereof duly completed and executed together with payment of the Exercise Price at the office or agency of the Warrant Agent (as defined in the Warrant Agreement referred to below) in the City of ______________, State of ___________. This Warrant Certificate and each Warrant represented hereby are issued pursuant to, and are subject to all of the terms, provisions and conditions of, that certain Warrant Agreement dated as of _________________, 1995 (hereinafter called the "Warrant Agreement"), between the Company and the Warrant Agent, to all of which terms, provisions and conditions the registered holder of this Warrant Certificate consents to by acceptance hereof. The Warrant Agreement and the summary of its terms set forth on the reverse side of this Warrant Certificate are hereby incorporated into this Warrant Certificate by reference and made a part of this Warrant Certificate. The Warrant Agreement sets forth the terms and conditions under which the exercise price of a Warrant, the type of shares or other consideration to be received upon exercise of the Warrant, and/or the number of shares to be received upon exercise of a Warrant are or may be adjusted. Reference is hereby made to the Warrant Agreement for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Warrant Agent, the Company and the holders of the Warrant Certificates or Warrants. In the event of any conflict between the provisions of this Warrant Certificate and the Warrant Agreement, the provisions of the Warrant Agreement shall control. In the event of any conflict between the provisions of the Plan and the Warrant Agreement, the provisions of the Plan shall control. Copies of the Plan and the Warrant Agreement are available for inspection at the ____________ office of the Warrant Agent, ___________________________________, or may be obtained upon written request addressed to the Secretary, Rose's Stores, Inc., _____________________, Henderson, North Carolina 27536. The Company shall not be required upon the exercise of the Warrants evidenced by this Warrant Certificate to issue fractions of Warrants or shares, but shall round such fractional share to the nearest whole share (up or down), with half shares being rounded down, and will deliver the additional share if rounded up. The Warrants evidenced by this Warrant Certificate shall expire at 5:00 p.m., New York City time, on _________________, 2002. The day and time of expiration are referred to herein as the "Expiration Date". This Warrant Certificate shall not be valid unless countersigned by the Warrant Agent. Witness the facsimile seal of the Company and the facsimile signatures of its duly authorized officers. DATED: ROSE'S STORES, INC. By: President Attest: Secretary COUNTERSIGNED: ____________________________________, as Warrant Agent By: Authorized Signature Attest: Secretary Summary of Terms of Warrant Agreement The Warrant Agreement provides that if the purchase price as determined pursuant to Section 6.2.5 of the Plan is adjusted from time to time for reasons enumerated in the Warrant Agreement, the number of shares purchasable upon the exercise of each Warrant represented by this Warrant Certificate are subject to modification or adjustment. The Warrants evidenced by this Warrant Certificate shall be exercisable until 5:00 p.m., New York City time, on _________________, 2002. In the event that upon any exercise the number of Warrants exercised shall be fewer than the total number of Warrants represented hereby, there shall be issued to the holder hereof or his assignee a new Warrant Certificate evidencing the Warrants not so exercised. No payment or adjustment shall be made for any cash dividends, whether paid or declared, on any shares issuable upon exercise of a Warrant. The Company shall not be required to issue fractions of shares or any certificates which evidence fractional shares. In lieu of a fractional share the Company shall round such fractional share to the nearest whole share (up or down), with half shares being rounded down, and will deliver the additional share if rounded up. The Company and the Warrant Agent may deem and treat the registered holder of this Warrant Certificate as the absolute owner hereof and of the Warrants represented by this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone) for the purpose of any exer- cise of such Warrants and for all other purposes. Neither the Company nor the Warrant Agent shall be affected by any notice to the contrary or be bound to recognize, or make any inquiries with respect to, any equitable or other claim to or interest in this Warrant Certificate on the part of any other person and shall not be liable for any registration or transfer of a Warrant Certificate which is registered or to be registered in the name of a fiduciary or the nominee of a fiduciary unless made with the actual knowledge that a fiduciary or nominee is committing a breach of trust in requesting such registration or transfer, or with knowledge of such facts such that its participation therein amounts to bad faith. Prior to the exercise of the Warrants represented hereby, the registered holder of this Warrant Certificate, as such, shall not be entitled to vote on or be deemed the holder of New Common Stock or any other securities of the Company which may at any time be issuable on the exercise hereof for any pur- pose, and nothing contained in the Warrant Agreement or herein shall be con- strued to confer upon the holder of this Warrant Certificate, as such, any of the rights of a stockholder of the Company, including, without limitation, the right to vote, or to receive dividends or to consent to or receive notice as stockholders in respect of any meeting of stockholders for the election of directors of the Company or in any other matter or to receive notice of any proceedings of the Company (except as provided in the Warrant Agreement). Each Warrant entitles the holder thereof to purchase one share at any time during hours of regular business operations from the date the Warrants are issued until 5:00 P.M., New York City time, on the seventh anniversary of the Effective Date (the "Expiration Date") at the exercise price per Warrant determined pursuant to Section 6.2.5 of the Plan, subject to adjustment as set forth herein (the "Exercise Price"). Each Warrant not exercised prior to the Expiration Date shall expire. The Exercise Price and the number and kind of shares purchasable upon the exercise of each Warrant are subject to adjustment upon the occurrence of certain events pursuant to the provisions of Section 11 of the Warrant Agreement. Each holder of a Warrant Certificate shall have the right to exercise the Warrants evidenced thereby in whole or in part at any time prior to the Expiration Date upon surrender of the Warrant Certificate, with the form of Election to Exercise below duly completed, to the Warrant Agent at the office of the Warrant Agent designated for such purpose, together with payment of the Exercise Price, as adjusted in accordance with the provisions of this Agreement, for the number of shares in respect of which such Warrants are then exercised. Payment of such Exercise Price may be made by money order or by certified or official bank check in lawful money of the United States of America. In case the holder of any Warrant Certificate shall exercise fewer than all the Warrants evidenced thereby, a new Warrant Certificate evidencing Warrants equivalent to the Warrants remaining unexercised shall be issued by the Warrant Agent and delivered to the holder of such Warrant Certificate. Upon surrender of this Warrant Certificate with the form of Assignment below duly completed, accompanied by payment of an amount equal to any applic- able transfer tax, at the office or agency of the Warrant Agent indicated on the face of this Warrant Certificate, a new Warrant Certificate or Certificates representing the Warrants represented by this Warrant Certificate shall be issued to the transferee; provided, however, that if the registered holder of this Warrant Certificate elects to transfer fewer than all of the Warrants represented by this Warrant Certificate, a new Warrant Certificate for the Warrants not so transferred shall be issued to such registered holder. This Warrant Certificate, together with other Warrant Certificates, may be exchanged by the registered holder for another Warrant Certificate or Certificates of different denominations, of like tenor and representing in the aggregate Warrants equal in number to the same full number of Warrants represented by this Warrant Certificate and any other Warrant Certificate so exchanged with the form of Assignment duly completed and executed. Certificates for fractions of a Warrant will not be issued upon any exchange or transfer. If the day of receipt of this Warrant Certificate with the form of Election to Exercise duly filled in and executed, accompanied by payment of the Exercise Price for the shares specified in the form of Election to Exercise (and of an amount equal to any applicable taxes or governmental charges), shall occur with- in any period during,which the transfer books for the Company's New Common Stock or other class of stock purchasable upon the exercise of the Warrants evidencedby this Warrant Certificate are closed for any purpose, the Warrant Agent and the Company shall not be required to make delivery of certificates for shares purchasable upon such exercise, and the person entitled to receive delivery of such certificates shall not be deemed to have become a holder of record of such shares, until the next succeeding business day on which the transfer books of the Company are open. To be printed on reverse side of Warrant Certificate FORM OF ELECTION TO EXERCISE The undersigned hereby irrevocably elects to exercise _________ Warrants evidenced by this Warrant Certificate, and to purchase an equal number of full shares (the "Shares") of the common stock, no par value per share (the "New Common Stock"), of Rose's Stores, Inc., a Delaware corporation (the "Company"), issuable upon exercise of such Warrants, and herewith tenders payment for such Shares in the amount of $_________________ in accordance with the terms hereof. The undersigned requests that a certificate for such Shares be registered in the name of ___________________ whose address is _________________________ and whose social security number of other identifying number is _________, and that such certificate be delivered to _________________ whose address is ________________________. If said number of Shares is less than all of the Shares purchasable hereunder, the undersigned requests that a new Warrant Certificate evidencing the right to purchase the remaining balance of the Shares of New Rose's Common Stock for which this Warrant Certificate is exercisable be registered in the name of _________________________ whose address is _______________________ and whose social security number or other identifying number is ___________________, and that such certificate be delivered to ___________________ whose address is ________________________. Name of registered holder of Warrant:_______________________________________ Address:____________________________________________________________________ (Please print) Signature:_____________________________________________ NOTE: The above signature(s) must correspond with the name written upon the face of this Warrant Certificate in every particular, without alteration or enlargement or any change whatever. If this Warrant is held of record by two or more joint owners, all such owners must sign. Dated:________________________________ Signature Guarantee: _____________________________________ (Signature must be guaranteed by an eligible guarantor institution which is a participant in a Securities Transfer Association recognized program.) FORM OF ASSIGNMENT (To be signed only upon assignment of Warrant Certificate) FOR VALUE RECEIVED, ____________________________ hereby sells and transfers unto _________________________ whose address is ____________________ and whose social security number of other identifying number is ___________________, the within Warrant Certificate, together with all right, title and interest therein and to the Warrants represented thereby, and does hereby irrevocably constitute and appoint __________________, attorney, to transfer said Warrant Certificate on the books of the within-named Company, with full power of substitution in the premises. Signature:__________________________________ NOTE: The above signature(s) must correspond with the name written upon the face of this Warrant Certificate in every particular, without alteration or enlargement or any change whatever. If this Warrant is held of record by two or more joint owners, all such owners must sign. Dated:________________________________ Signature Guarantee: _____________________________________ (Signature must be guaranteed by an eligible guarantor institution which is a participant in a Securities Transfer Association recognized program.) AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF ROSE'S STORES, INC. ROSE'S STORES, INC., a corporation duly incorporated on the 5th day of May, 1927 (the "Corporation") and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify that the Restated Certificate of Incorporation of the Corporation, as amended, is hereby amended and restated in its entirety as herein set forth in full: FIRST: The name of the Corporation is: ROSE'S STORES, INC. SECOND: The address of the Corporation's registered office in the State of Delaware is 1209 Orange Street, Wilmington, County of New Castle, Delaware 19801, and the name of its registered agent at such address is Corporation Trust Company. THIRD: The nature of the business to be conducted or promoted and the purposes of the Corporation are to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. FOURTH: The Corporation shall have the authority to issue an aggregate of Sixty Million (60,000,000) shares of capital stock. The authorized capital shall be divided into common stock (the "Common Stock") and preferred stock (the "Preferred Stock"). The Common Stock of the Corporation shall consist of Fifty Million (50,000,000) shares with no par value. The Preferred Stock of the Corporation shall consist of Ten Million (10,000,000) shares with no par value. FIFTH: The Corporation shall have the authority to issue secured promissory notes (the "Secured Notes") on such terms and conditions as set forth in the Corporation's Plan of Reorganization (the "Plan") under Chapter 11 of the Bankruptcy Code and the Disclosure Statement related to such Plan (the "Disclosure Statement") approved by the United States Bankruptcy Court or United States District Court for the Eastern District of North Carolina to the Pre-Petition Lenders. Capitalized terms used herein that are not otherwise defined in this Certificate of Incorporation shall have the meanings ascribed to them in the Plan and/or the Disclosure Statement. The Secured Notes shall not be deemed to be shares of stock of the Corporation for any purpose. With respect to the Secured Notes, the holders of the Secured Notes shall not be deemed to be stockholders for any purpose and shall not be entitled to any rights or incidents of stock ownership, including but not limited to, voting, dividends and distributions on stock, or the right of inspection. SIXTH: The Common Stock and Preferred Stock shall each have the powers, preferences, rights, qualifications, limitations and restrictions set forth below. (a) Common Stock. (i) Powers. The Corporation shall issue shares of Common Stock and New Rose's Warrants on such terms and conditions as set forth in the Plan and the Disclosure Statement and pursuant to the Management Incentive and Retention Program. The Board of Directors is authorized, subject to limitations prescribed by law and the provisions of Article FOURTH, to provide for the issuance of the shares of Common Stock in one or more classes or series, and by filing a certificate pursuant to the applicable law of the State of Delaware, to establish from time to time the number of shares to be included in each such series, and subject to the provisions of this Article SIXTH, to fix the designation, powers, preferences and rights of the shares of each such class or series and the qualifications, limitations or restrictions thereof. (ii) Voting Rights. The holders of shares of Common Stock shall be entitled to one vote for each share so held with respect to all matters voted on by the stockholders of the Corporation; provided, however, that shares of Common Stock issued or reserved for issuance under the Plan shall not be voted in any election of directors of the Corporation, or any other matter requiring the vote of stockholders, by a holder of an Allowed Claim or Common Stock Interest, or by an employee of the Corporation entitled to receive shares of Common Stock under the Management Incentive and Retention Program, until such shares of Common Stock shall have actually been distributed to such person; provided, further, that a holder of a Disputed Claim shall not be entitled to vote in any election of directors of the Corporation, or any other matter requiring the vote of stockholders, until such time as the Disputed Claim has become an Allowed Claim, and until the holder of such Allowed Claim has received its distribution and become a stockholder of record of the Corporation. (iii) Dividends. Dividends may be paid on the Common Stock as and when declared by the Board of Directors. (iv) Liquidation Rights. Subject to the prior and superior right of the Preferred Stock, upon any voluntary or involuntary liquidation, dissolution or winding up of affairs of the Corporation, the holders of Common Stock shall be entitled to receive of the funds to be distributed such amount as remains after distribution of all amounts, if any, required to be distributed to holders of any Preferred Stock. Such funds shall be paid to the holders of Common Stock on the basis of the number of shares of Common Stock held by each of them. (v) Reserve Powers. The holders of shares of Common Stock shall have all other powers, preferences and rights conferred upon owners of shares of capital stock under the laws of the State of Delaware, except insofar as such powers, preferences and rights are expressly restricted by the provisions of Paragraph 1(b) of this Article SIXTH. (b) Preferred Stock. (i) Powers. The Board of Directors is authorized, subject to limitations prescribed by law and the provisions of Article FOURTH, to provide for the issuance of the shares of Preferred Stock in one or more classes or series, and by filing a certificate pursuant to the applicable law of the State of Delaware, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such class or series and the qualifications, limitations or restrictions thereof. (ii) Liquidation Rights. If upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the assets available for distribution to holders of shares of Preferred Stock of all classes or series shall be insufficient to pay such holders the full preferential amount to which they are entitled, then such assets shall be distributed ratably among the shares of all classes or series of Preferred Stock in accordance with the respective liquidation preferences (including unpaid cumulative dividends, if any) payable with respect thereto. (c) Notwithstanding anything to the contrary contained herein, to the extent, and only for so long as is, required by Section 1123(a)(6) of Title 11, United States Code, 11 U.S.C. Sections 101 et seq. (the "Bankruptcy Code"), the Corporation (i) shall not issue any shares of non- voting equity securities, (ii) shall provide, as to the several classes or series of securities having voting power, a distribution of such power determined by the Board of Directors to be appropriate for such classes and series, and (iii) in the case of any class or series of Preferred Stock having a preference over any other class or series of Preferred Stock or over Common Stock with respect to dividends, shall provide, in a manner determined by the Board of Directors to be adequate, for the election of directors representing such class or series in the event of default by the Corporation in the payment of such dividends. (d) No stockholder of the Corporation shall by reason of his holding of shares of any class or series have any preemptive or preferential right to purchase or subscribe to any shares of any class or series of stock of the Corporation, now or hereafter authorized, or any securities convertible into or carrying options or warrants to purchase any shares of any class or series of stock of the Corporation, now or hereafter authorized, other than such rights, if any, as the Board of Directors, in its discretion from time to time may grant and at such price as the Board of Directors may fix. SEVENTH: (a) The number of directors constituting the entire Board of Directors shall be not less than seven nor more than thirteen, the exact number to be fixed from time to time by vote of a majority of the entire Board of Directors; provided, however, that the number of directors shall not be reduced so as to shorten the term of any director at the time in office. (b) The Board of Directors, excluding directors elected by the holders of shares of any class or series of stock having a preference over the Common Stock of the Corporation as to dividends or upon liquidation as provided in Article SIXTH hereto, shall be divided into three classes, as nearly equal in numbers as the then total number of directors constituting the entire Board of Directors permits, with the term of office of one class expiring each year. Except as otherwise provided in Paragraphs (c) and (d) below, directors in the first class shall hold office for a term expiring at the first annual meeting of stockholders following their election, directors in the second class shall hold office for a term expiring at the second annual meeting of stockholders following their election, and directors in the third class shall hold office for a term expiring at the third annual meeting of stockholders following their election, and, in each case, until their successors shall be elected and qualified. Subject to the foregoing, at each annual meeting of stockholders the successors to the class of directors whose term shall then expire shall be elected to hold office for a term expiring at the third succeeding annual meeting. Voting for directors shall not be cumulative. Except as otherwise provided in this Article SEVENTH, any vacancies in the Board of Directors for any reason, and any directorships resulting from any increase in the number of directors, may be filled by the Board of Directors, acting by a majority of the directors then in office, although less than a quorum. Any director chosen to fill a vacancy shall hold office until the next election of the class for which such director shall have been chosen and until his successor shall be elected and qualified. Notwithstanding the foregoing, and except as otherwise required by law, whenever the holders of any one or more series of Preferred Stock shall have the right, voting separately as a class, to elect one or more directors of the Corporation, the terms of the director or directors elected by such holders shall expire at the next succeeding annual meeting of stockholders. (c) Pursuant to and as of the effective date (the "Effective Date") of the Plan, the Unsecured Committee shall have, in its sole discretion, the right to select all but one director to serve on the initial Board of Directors of the Corporation (the "Initial Board") and the Equity Committee shall have, in its sole discretion, the right to select one director to serve on the Initial Board. The Unsecured Committee in its sole discretion shall divide the Initial Board into three classes and designate each director as a member of one such class; provided, that, the director selected by the Equity Committee shall be a member of the third class having a term expiring at the third annual meeting of stockholders following the selection of such director by the Equity Committee. In the event that Subscription Proceeds total $25 million or more, the Equity Committee in its sole discretion immediately shall have the right to elect one director in class one and one director in class two (in addition to the directors elected by it in class three), and such directors will either be additional directors and the total number of directors shall automatically be increased (subject to there not being more than thirteen directors) or shall fill vacancies created by the resignation or removal of two directors selected by the Unsecured Committee. In the event that Subscription Proceeds total more than 50% of the amount of the Class 5 Subscription Price times 10,000,000, the number of Effective Date Shares, as of March 31, 1995, within five (5) business days thereafter, the Unsecured Committee shall select and cause such number of directors originally selected by it to resign so as to permit the Equity Committee in its sole discretion to fill a majority (including all directors previously selected by the Equity Committee) of the positions on the Initial Board as equally distributed among the three classes as possible. After appointment of the Initial Board as provided in this Paragraph (c), the election of directors shall be pursuant to the vote of the stockholders of the Corporation at an annual or special meeting called for such purpose. (d) In the event that Subscription Proceeds total $25 million or more, the Chairman of the Board or the President of the Corporation shall call an annual or special meeting of the stockholders to be held within one hundred eighty (180) days of the Effective Date, or as soon as practicable thereafter, for the purpose of electing a new Board of Directors. As of the date of such annual or special meeting, the terms of all of the Initial Directors selected pursuant Paragraph (c) above, as well as all directors subsequently elected to fill vacancies, shall expire when such directors' successors are elected and qualified. At such annual or special meeting, the Board of Directors again shall be divided into three classes as provided in Paragraph (b) of this Article SEVENTH, each nominee for directorship shall be designated to be a member of one such class, and the stockholders shall elect a new full Board of Directors. (e) Except as otherwise provided in Paragraph (c) of this Article SEVENTH and notwithstanding any other provision of this Certificate of Incorporation or the by-laws of the Corporation (and notwithstanding the fact that some lesser percentage may be specified by law, this Certificate of Incorporation or the by-laws of the Corporation for stockholder action), any director or the entire Board of Directors of the Corporation may be removed at any time (i) without cause by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) cast at an annual or special meeting of the stockholders called for that purpose, and (ii) for cause by such vote as is permissible under the General Corporation Law of the State of Delaware. Notwithstanding the foregoing, and except as otherwise required by law, whenever the holders of any one or more classes or series of Preferred Stock shall have the right, voting separately as a class, to elect one or more directors of the Corporation, the provisions of this Paragraph (e) shall not apply with respect to the director or directors elected by such holders of Preferred Stock which directors may be removed with or without cause by the affirmative vote of the holders of a majority of the outstanding shares of such class or series entitled to vote in the election of such director(s). (f) This Article SEVENTH may not be altered, amended or repealed except by the affirmative vote of the holders of shares of capital stock of the Corporation entitled to cast sixty-six and two-thirds percent (66-2/3%) or more of the aggregate number of votes entitled to be cast by all holders of outstanding shares of the capital stock of the Corporation. EIGHTH: In furtherance of and not in limitation of powers conferred by statute, it is further provided that: (a) Subject to the limitations and exceptions, if any, contained in the by-laws of the Corporation, the Board of Directors is expressly authorized to make, alter, amend or repeal the by-laws of the Corporation by the affirmative vote of a majority or more of the number of directors then holding office; provided, however, that the Board of Directors shall not have the power to alter, amend or repeal any by-law provision which by its terms requires a vote of the stockholders of the Corporation, such provision(s) to be so designated in the by-laws of the Corporation; and (b) Elections of directors need not be by written ballot unless, and only to the extent, otherwise provided in the by-laws. NINTH: All action by the stockholders shall be taken at a duly called special or annual meeting of the stockholders of the Corporation at which a quorum is present, and the stockholders of the Corporation shall not have the right to act by written consent as provided by Section 228 of the General Corporation Law of the State of Delaware. This Article NINTH may not be altered, amended or repealed except by the affirmative vote of the holders of shares of capital stock of the Corporation entitled to cast sixty-six and two-thirds percent (66-2/3%) or more of the aggregate number of votes entitled to be cast by all holders of outstanding shares of the capital stock of the Corporation. TENTH: (a) The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interest of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. (b) The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court of Chancery or such other court shall deem proper. (c) To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in paragraphs (a) and (b) of this Article TENTH, or in defense of any claim, issue or matter therein, including the dismissal of an action without prejudice, he shall, without limiting the provisions of paragraph (a) above, be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. (d) Any indemnification under paragraphs (a) and (b) of this Article TENTH (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in paragraphs (a) and (b) of this Article TENTH. Such determination shall be made (i) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceedings, or (ii) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders. (e) Expenses (including attorneys' fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation pursuant to this Article TENTH or as otherwise authorized by law. Such expenses (including attorneys' fees) incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the board of directors deems appropriate. (f) The indemnification and advancement of expenses provided by, or granted pursuant to, the other paragraphs of this Article TENTH shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any by- law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. (g) The Corporation, at its expense, may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article TENTH or under the provisions of the General Corporation Law of the State of Delaware. (h) The indemnification and advancement of expenses provided by, or granted pursuant to, this Article TENTH shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such person. (i) All rights to indemnification and advancement of expenses under this Article TENTH shall be deemed to be provided by contract between the Corporation and the director, officer, employee or agent who serves in such capacity at any time while this Certificate of Incorporation and other relevant provisions of the General Corporation Law of the State of Delaware and other applicable law, if any, are in effect. (j) Any repeal or modification of the foregoing paragraphs by the stockholders of the Corporation shall not adversely affect any right or protection of a director, officer, employee or agent of the Corporation existing at the time of such repeal or modification. (k) If the General Corporation Law of the State of Delaware is amended to authorize corporate action permitting the Corporation to further indemnify or advance expenses to directors, officers, employees or agents, then such person, in addition to the circumstances in which he is now entitled to indemnification and advancement of expenses, shall be entitled to be indemnified and have expenses advanced to the fullest extent permitted by the General Corporation Law of the State of Delaware, as so amended. (l) For purposes of this Article TENTH, references to "Corporation" shall include, in addition to the resulting Corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article TENTH with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. (m) For purposes of this Article TENTH, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent by the Corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation," as referred to in this Article TENTH. (n) If this Article TENTH or any portion thereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each person as provided above as to expenses (including attorneys' fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, including a grand jury proceeding and an action by the Corporation, to the fullest extent permitted by any applicable portion of this Article TENTH that shall not have been invalidated or by any other applicable law. ELEVENTH: Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation. TWELFTH: No director of the Corporation shall be personally liable to the Corporation or to any of its stockholders for monetary damages arising out of such director's breach of fiduciary duty as a director of the Corporation, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for unlawful payment of dividends or unlawful stock purchase or redemption under Section 174 of the General Corporation Law of the State of Delaware or any successor provision, or (iv) for any transaction from which such director derived an improper personal benefit. If the General Corporation Law of the State of Delaware is amended after the effective date of this Restated Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law of the State of Delaware, as so amended. Any amendment to or repeal or modification of this Article TWELFTH (i) by the stockholders of the Corporation or (ii) by an amendment to the General Corporation Law of the State of Delaware (unless such statutory amendment specifically provides to the contrary) shall not adversely affect any right or protection, existing at the time of such repeal or modification with respect to any acts or omissions occurring either before or after such repeal or modification, or a person serving as a director at the time of such repeal or modification. THIRTEENTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation in the manner now or hereafter prescribed by statute and this Certificate of Incorporation, and all rights conferred upon stockholders herein are granted subject to this reservation. FOURTEENTH: Notwithstanding anything to the contrary in this Certificate of Incorporation, as provided in Section 7.5 of the Plan, until such time as all obligations owing to the Pre-Petition Lenders shall be satisfied in full, neither the Corporation, nor any director, officer, agent or professional thereof on behalf of the Corporation, shall have the power or authority to cause the Corporation to be subject to or to seek or obtain relief or file or commence any proceeding under any chapter of the Bankruptcy Code other than in Case No. 93-01365-5 (ATS) in the United States Bankruptcy Court for the Eastern District of North Carolina to effectuate the provisions of the Plan on and after the Effective Date. This Certificate of Incorporation shall not be amended to abrogate the foregoing without the consent of the Pre-Petition Lenders, until such time as all obligations owing to the Pre- Petition Lenders have been satisfied in full. FIFTEENTH: All shares of stock of the Corporation issued and outstanding pursuant to the Certificate of Incorporation of the Corporation in effect prior to the effective date of this Certificate of Incorporation, including all options, warrants and other rights to acquire such shares, shall be cancelled, annulled and extinguished pursuant to the Plan. This Restated Certificate of Incorporation and the amendments contained herein were duly adopted in accordance with the provisions of Sections 103 and 303 of the General Corporation Law of the State of Delaware pursuant to the Plan of Reorganization of the Corporation which Plan was approved on ___________, 19__ by the United States Bankruptcy Court or United States District Court for the Eastern District of North Carolina with jurisdiction over proceedings related to the reorganization of the Corporation pursuant to Chapter 11 of the Bankruptcy Code. IN WITNESS WHEREOF, said Rose's Stores, Inc. has caused this Amended and Restated Certificate of Incorporation to be signed by its Vice President and attested to by its Assistant Secretary this _____ day of_________________, 19__. ROSE'S STORES, INC. By:______________________ R. Edward Anderson, President Attest: By:________________________ George T. Blackburn, II, Secretary BY-LAWS OF ROSE'S STORES, INC. (As Amended and Restated as of ________________, 1995) ROSE'S STORES, INC. AMENDED AND RESTATED BY-LAWS ARTICLE I - OFFICES SECTION 1. PRINCIPAL EXECUTIVE OFFICE. The principal office of the corporation for the transaction of its business shall be in the City of Henderson, State of North Carolina. The board of directors is hereby granted the power and authority to change the principal business and executive office from one location to another. SECTION 2. REGISTERED OFFICE. The registered office of the corporation required by law to be maintained in the State of Delaware shall be at Corpora- tion Trust Center, 1209 Orange Street, in the City of Wilmington, County New Castle, State of Delaware, or such other place in the State of Delaware as designated by the board of directors. SECTION 3. OTHER OFFICES. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II - MEETINGS OF STOCKHOLDERS SECTION 1. ANNUAL MEETING. The annual meeting of the stockholders, for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting, shall be held at such place on such date and at such time as the board of directors shall each year fix; provided, however, that, if so required by Para- graph (d) of Article SEVENTH of the certificate of incorporation, the chairman of the board or the president of the corporation shall call an annual or special meeting of the stockholders to be held within one hundred eighty (180) days of the Effective Date of the Plan of Reorganization of the corporation, or as soon thereafter as practicable, for the purpose of electing a new board of directors as provided in Article SEVENTH of the certificate of incorporation. Failure by the corporation to hold an annual or special meeting within such period shall not cause any action of the corporation, or any of its officers, directors or agents to become void, voidable or otherwise invalid. SECTION 2. SPECIAL MEETINGS. Special meetings of the stockholders, for any purpose or purposes prescribed in the notice of the meeting, unless other- wise prescribed by statute, may be called by the board of directors, the chair- man of the board or the president of the Corporation and shall be held at such place, date and time as the board of directors, the chairman of the board or the president shall fix. SECTION 3. NOTICE OF MEETINGS. Written notice of stockholder meetings stating the place, date and time of the meeting shall be delivered either personally or by mail to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meet- ing. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the stockholder at his address as it appears on the record of stockholders of the corporation, with postage prepaid thereon. In the case of an annual meeting, the notice of meeting need not specifically state the business to be transacted thereat unless it is a matter, other than election of directors, on which the vote of the stockholders is expressly required by statute. In the case of a special meeting, the notice of meeting shall specifically state the purpose or purposes for which the meeting is called. SECTION 4. VOTING. Unless otherwise provided in the certificate of incorporation, each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder at the close of business on the record date for the meeting fixed by the board of directors in advance of the record date. Except as otherwise provided in the certificate of incorporation, all elections for directors shall be decided by a plurality of the votes cast and such vote will be by ballot. All other questions shall be decided by the vote of a majority of the shares voted on any matter except as otherwise provided by the certificate of incorporation, these bylaws, or by statute. Shares of its own stock owned by a corporation, directly or indirectly, through a subsidiary or otherwise, shall not be voted and shall not be counted in determining the total number of shares entitled to vote; except that shares held in a fiduciary capacity may be voted and shall be counted to the extent provided by law. SECTION 5. STOCKHOLDER LIST. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stock- holder who is present. SECTION 6. QUORUM. At any meeting of the stockholders, the holders of a majority of all of the shares of the stock entitled to vote at the meeting, present in person or by proxy, shall constitute a quorum for all purposes, unless or except to the extent that the presence of a larger number may be required by statute, these bylaws, or the certificate of incorporation. The stockholders at a meeting at which a quorum is present may continue to do busi- ness until adjournment notwithstanding the withdrawal of sufficient stockholders to leave less than a quorum. In case a quorum shall not be present or re- presented at any meeting, the board of directors or a majority in interest of the stockholders entitled to vote thereat, present in person or by proxy, shall have the power to adjourn the meeting from time to time, until a quorum shall be present or represented. At any such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. When a meeting is adjourned for thirty (30) days or more, or when a new record date is fixed for the adjourned meeting after the adjournment, notice of the adjourned meeting shall be given as in the case of an original meeting. When a meeting is adjourned for less than thirty (30) days in any one adjournment, it is not necessary to give any notice of the time and place of the adjourned meeting or of the business to be transacted thereat other than by announcement at the meeting at which the adjournment is taken. SECTION 7. PROXIES. Shares may be voted in person or by one or more agents authorized by a written proxy executed by the stockholder or by his duly authorized attorney-in-fact. A proxy shall be valid for thirty-six (36) months from the date of its execution, unless the person executing it specifies therein the length of time for which it is to continue in force or limits its use to a particular meeting or meetings. SECTION 8. INSPECTORS OF ELECTION. (a) In advance of any meeting of stockholders, the board of directors may appoint any persons, other than nominees for office, as inspectors of election to act at such meeting or any adjournment thereof. If inspectors of election are not so appointed, the chairman of any such meeting may appoint inspectors of election at the meeting. The number of inspectors shall be either one or three. In case any person appointed as inspector fails to appear or fails or refuses to act, the vacancy may be filled by appointment by the board of directors in advance of the meeting or at the meeting by the person acting as chairman. (b) The inspectors of election shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, the authenticity, validity and effect of proxies, receive votes, ballots or consents, hear and determine all challenges and questions in any way arising in connection with the right to vote, count and tabulate all votes or consents, determine the result and do such acts as may be proper to conduct the election or vote with fairness to all stockholders. The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. (c) If there are three inspectors of election, the decision, act or certificate of a majority shall be effective in all respects as the decision, act or certificate of all. (d) On request of the chairman of the meeting, the inspectors shall make a report in writing of any challenge or question or matter determined by them and shall execute a certificate of any fact found by them. Any report or certificate made by them shall be a prima facie evidence of the facts stated therein. SECTION 9. NOTICE OF NOMINATIONS. (a) Notwithstanding any language in this Section 9 to the contrary, the initial Board of Directors (the "Initial Board") shall be elected as provided in Paragraph (c) of Article SEVENTH of the certificate of incorpora- tion, and the board of directors may, in its sole discretion, prescribe alterna- tive nomination notice requirements for any meeting called pursuant to Paragraph (d) of Article SIXTH of the certificate of incorporation. (b) Nominations for the election of directors may be made by the board of directors or by any stockholder entitled to vote for the election of directors. Nominations by stockholders shall be made by notice in writing, delivered by certified or registered mail, postage and fees prepaid, with a return receipt addressed to the Secretary of the corporation not later than January 1 of the calendar year in which the election is to be held and not earlier than November 1 of the year preceding the calendar year in which the election is to be held or within such time periods required by the Securities and Exchange Commission or any national securities exchange or similar organization to which the corporation is subject. No notice of nominations which are proposed by the board of directors need be given. (c) The notice under subsection (b) shall set forth (i) the name, age, business address and residence address of each nominee proposed in such notice, (ii) the principal occupation or employment of each such nominee, (iii) the number of shares of stock of the corporation which are beneficially owned by each such nominee, and (iv) information required by the rules and regulations of the Securities and Exchange Commission or any national securities exchange or similar organization to which the corporation is subject governing the solicitation of proxies. (d) The chairman of the meeting may, if the facts warrant, determine and declare to the meeting that a nomination was not made in accord- ance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. SECTION 10. REMOVAL OF OFFICERS. Stockholders shall have no right or power to remove officers of the corporation or change their duties. Stock- holders shall have no right or power to elect or appoint officers of the corp- oration or to specify their duties. SECTION 11. TRANSACTIONS WITH AFFILIATES. (a) For purposes of this Section 11, the term "affiliate" shall mean any person, corporation or entity (including any other person, other corporation, or other entity, controlling, controlled by, under common control with, or acting in concert with or under an agreement or understanding with, the affiliate) which owns, of record or beneficially, directly or indirectly, (including the right to acquire pursuant to any agreement or upon exercise of conversion rights, warrants or options, or otherwise), more than five percent (5%) of the corporation's outstanding voting securities. (b) Any merger or consolidation of this corporation with any affiliate, or any sale, lease, or exchange or other disposition of a substantial part of the assets of this corporation to any affiliate or any issuance of voting securities of this corporation to any affiliate or any issuance of voting securities of this corporation in exchange or payment for the securities or assets of any affiliate, may not be effected (except as provided in sub- paragraph (e) of this Section 11), unless a meeting of stockholders of this corporation is held to act thereon and there is obtained the approval from the holders of a percentage of all the shares entitled to be voted thereon equal to seventy-five percent (75%). (c) There shall be a committee (the "Merger Committee") of the board of directors composed of (1) all directors holding office on the date on which the clerk of the United States Bankruptcy Court or United States District court for the Eastern District of North Carolina with jurisdiction over proceedings relating to the reorganization of the corporation pursuant to Chap- ter 11 of the United States Bankruptcy Code enters an order confirming the plan of reorganization of the corporation pursuant to said Chapter 11 on the legal docket for such proceedings, (2) those directors subsequently elected who have held the office of director for a period of at least three years prior to the date of the stockholders meeting called to vote on any transaction referred to in subsection (b) of this Section 11, and (3) any other directors that the fore- going directors by majority vote shall choose. The Merger Committee shall have the power and duty to determine for the purposes of this Section 11 whether (i) any corporation, person or other entity or group is an affiliate of the corpora- tion, and (ii) any proposed sale, lease, exchange or other disposition of part of the assets of the corporation involves a "substantial part" of the assets of the corporation; provided that assets involved in any single transaction or series of related transactions having an aggregate fair market value of more than fifteen percent (15%) of the total consolidated assets of the corporation shall always be deemed to constitute a "substantial part" solely for purposes of this Article II, Section 11. (d) In the event any transaction referred to in subsection (b) of this Section 11 which requires the vote of the stockholders of the corporation provided for therein is approved by the stockholders in accordance with the provisions thereof, such transaction shall not be consummated unless each of the corporation's stockholders who did not vote for such transaction and who, after twenty (20) days written notice of such approval, shall have notified the corporation in writing that such stockholder dissents from the consummation of such transaction and elects the benefits of this subsection (d), shall receive, incident to the consummation of such transaction, an amount in cash for the shares of stock of the corporation owned by such stockholder which shall not be less than the higher of (i) the highest price previously paid by the affiliate referred to in subsection (b) for any of its shares of the corporation's stock, or (ii) a price which includes the same or greater percentage premium over the market price of the corporation's stock immediately prior to the announcement of the subject transaction as the greatest percentage premium over market price ever paid by such affiliate in the purchase of any shares of the corporation's stock, or (iii) a price determined by the highest multiple of earnings per share that the affiliate's stock sold for during the twelve (12) months immediately preceding the effective date of such merger, consolidation or sale, based upon the affiliate's most recently reported full year results, and applying said multiple to this corporation's earnings for the preceding four quarters; or (iv) book value per share of this corporation's stock. The benefits of this subsection (d) may be elected by stockholders as set forth herein in lieu of any dissenter's rights or appraisal rights provided by law. At the time of submission of any transaction referred to in subsection (b) for stockholder consideration, all stockholders shall be advised of the provisions of this subsection (d). (e) Notwithstanding any language herein to the contrary, the provisions of this Article II, Section 11 shall not apply to any transaction described in subsection (b) of this Section 11 if such transaction has been approved by majority vote of the Merger Committee of the board of directors. ARTICLE III - DIRECTORS SECTION 1. NUMBER AND TERM. Except as otherwise provided in the certificate of incorporation or by applicable law, the number of directors which shall constitute the entire board shall be no less than seven or more than thirteen, the exact number to be determined from time to time by a vote of the majority of the entire board of directors. The election of the Initial Board as of the Effective Date of the corporation's Plan of Reorganization, and the filling of any vacancies in the Initial Board, shall be governed by the provisions of Article SEVENTH of the certificate of incorporation. Subject to the provisions of the certificate of incorporation, the directors, other than those who may be elected by the holders of shares of any class or series of stock having a preference over the common stock of the corporation as to divi- dends or upon liquidation pursuant to the terms of Article SIXTH of the certifi- cate of incorporation, shall be classified, with respect to the time for which they severally hold office, into three classes as nearly equal in number as possible, with each class to hold office until its successors are elected and qualified. Subject to the provisions of Article SEVENTH of the certificate of incorporation, if the number of directors is changed, any newly created directorships or any decrease in directorships shall be so apportioned among the classes as to make all classes as nearly equal as possible; provided, however, that no decrease in the number of directors shall shorten the term of any incum- bent director. Subject to the foregoing and the provisions of the certificate of incorporation, at each such annual meeting of the stockholders, the successors of the class of directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election; provided, however, that, except as otherwise required by law, whenever the holders of any one or mores classes or series having a preference over the common stock of the corporation as to dividends or upon liquidation, shall have the right, voting as a separate class, to elect one or more directors of the corporation, the terms of the director or directors elected by such holders shall expire at the next succeeding annual meeting of stockholders. SECTION 2. VACANCIES. Except as otherwise provided in Article SEVENTH of the certificate of incorporation, subject to the rights of the holders of any class or series of stock having a preference over the common stock of the corporation as to dividends or upon liquidation, any vacancies on the board of directors resulting from death, resignation, removal or other cause, and the creation of new directorships resulting from an increase in the number of directors, may be filled by the board of directors by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the board of directors, or by a sole remaining director. If any vacancy is not filled by the board of directors, the stockholders may elect a director to fill the vacancy at the next annual or special meeting of the stockholders. Any director elected in accordance with the preceding sentence of this Section 2 shall hold office for the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred and until such director's successor shall have been elected and qualified. SECTION 3. POWERS. The properties and business of the corporation shall be managed by or under the direction of the board of directors, which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. The corporation may keep its books and records outside of the State of Delaware at the Executive Office of the corporation, or at such other place as the board of directors may from time to time direct. SECTION 4. REGULAR MEETINGS. Regular meetings of the board of directors shall be held at such place or places, on such date or dates, and at such time or times as shall have been established by the board of directors and publicized among all directors. A notice of each regular meeting shall not be required. SECTION 5. SPECIAL MEETINGS. Special meetings of the board of directors may be called by any two of the directors then in office, by the chairman of the board or by the president of the corporation and shall be held at such place, on such date, and at such time as such directors, the chairman of the board or the president shall fix. Notice of the place, date, and time of each such special meeting shall be sent by overnight delivery service, mail, telegraph, facsimile transmission, telex or similar means, or be personally delivered, to each director or to a location designated by each director for such notice not later than 48 hours prior to the time at which the meeting is to be held, but notice need not be given to any director who shall, either before or after the meeting, submit a signed waiver of such notice or who shall attend such meeting without protesting, prior to or at its commencement, the lack of such notice to such director. Unless otherwise indicated in the notice thereof, any and all business may be transacted at a special meeting. SECTION 6. QUORUM AND ACTION. (a) At any meeting of the board of directors, a majority of the entire board of directors in office immediately before the meeting shall constitute a quorum for all purposes. The vote of a majority of those directors present at any meeting at which a quorum is present shall be necessary for the passage of any resolution or act of the board of directors, unless a greater number is otherwise required by law, the certificate of incorporation or these by-laws. (b) In the absence of a quorum for any such meeting, the chairman of the board or a majority of the directors present thereat may adjourn such meeting from time to time, without notice other than announcement at such meeting, until a quorum shall be present. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally noticed. Notice of an adjourned meeting need not be given if the time and place are fixed at the meeting adjourning and if the period of adjournment does not exceed ten (10) days in any one adjournment. (c) A director of the corporation, who is present at a meeting of the board of directors at which action on any corporate matter is taken, shall be presumed to have assented to the action taken unless his contrary vote is recorded or his dissent is otherwise entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the secretary of the corporation immediately after the adjournment of the meeting. Such right of dissent shall not apply to a director who voted in favor of such action. (d) The vote of a majority of the number of directors then in office shall be required to adopt a resolution constituting a committee of the board. The vote of a majority of the directors then holding office shall be required to adopt, amend or repeal a by-law, or to adopt a resolution dissolving the corporation without action by the stockholders, in circumstances authorized by law. SECTION 7. ACTION BY WRITTEN CONSENT. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or a committee thereof may be taken without a meeting, if all members of the board of directors or commit- tee consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board of directors or committee, whether before or after the action so taken. SECTION 8. PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Members of the board of directors or a committee thereof may participate in a meeting of such board of directors or committee by means of conference telephone or similar communications equipment that enables all persons participating in the meeting to hear each other. Such participation shall constitute presence in person at such meeting. SECTION 9. CONDUCT OF BUSINESS. At any meeting of the board of directors, business shall be transacted in such order and manner as the board may from time to time determine, and all matters shall be determined by the vote of a majority of the directors present, except as otherwise provided herein or as required by law. SECTION 10. REMOVAL OF DIRECTORS. Subject to the rights of the holders of any class or series of stock having a preference over the common stock of the corporation as to dividends or upon liquidation, unless otherwise provided in the certificate of incorporation, directors may be removed without cause by the affirmative vote of the holders of a not less than sixty-six and two-thirds percent (66-2/3%) of all the shares of stock outstanding and entitled to vote in the election of directors at an annual or special meeting of the stockholders called for such purpose. Notwithstanding the foregoing, directors may be re- moved for cause by such vote as is permissible under the General Corporation Law of the State of Delaware. Vacancies created by removal of directors may be filled at the stockholders meeting held for the purpose of removal. SECTION 11. COMPENSATION. The board of directors shall have the authority to fix the compensation, if any, of the directors for their services as such and may provide for the payment of any and all expenses incurred by the directors in connection with such services. SECTION 12. CHAIRMAN OF THE BOARD. The chairman of the board of directors, if one is elected by the board of directors, shall, if present, preside at meetings of the board of directors and, if present, preside at meetings of the stockholders. The chairman of the board shall, when requested, counsel with and advise the officers of the corporation and shall perform such other duties as may from time to time be determined by the board of directors. In the absence of a chairman of the board of directors, the president of the corporation shall preside at the meetings of the board of directors and stockholders. ARTICLE IV - COMMITTEES OF THE BOARD OF DIRECTORS SECTION 1. ESTABLISHMENT OF COMMITTEES OF THE BOARD OF DIRECTORS. The board of directors may, in accordance with and subject to the General Corpora- tion Law of the State of Delaware, from time to time establish committees of the board of directors to exercise such powers and authorities of the board of directors and to perform such other functions, as the board of directors may from time to time determine. SECTION 2. PROCEDURE; MEETINGS; QUORUM. (a) Regular meetings of committees of the board of directors, of which no notice shall be necessary, may be held at such times and places as shall be fixed by resolution adopted by a majority of the members of such committee. (b) Special meetings of any committee of the board of directors shall be called at the request of any member of such committee. Notice of each special meeting of any committee of the board of directors shall be sent by overnight delivery service, mail, telegraph, facsimile transmission, telex or telephone, or be delivered personally, to each member thereof or to a location designated by each member for such notice not later than 48 hours prior to the time at which the meeting is to be held, but notice need not be given to any member who shall, either before or after the meeting, submit a signed waiver of such notice or who shall attend such meeting without protesting, prior to or at its commencement, the lack of such notice to such member. Any special meeting of any committee of the board of directors shall be a legal meeting without any notice thereof having been given, if all the members thereof shall be present thereat. Notice of any adjourned meeting of any committee of the board of directors need not be given. (c) Any such committee shall elect a presiding officer from among its members and may adopt such rules and regulations not inconsistent with the provisions of law, the certificate of incorporation, these by-laws or the resolutions of the board of directors establishing such committee for the conduct of its meetings as such committee of the board of directors may deem proper. (d) A majority of the members of any committee of the board of directors shall constitute a quorum for the transaction of business at any meeting, and the vote of a majority of the members thereof present at any meeting at which a quorum is present shall be the act of such committee. (e) Each committee of the board of directors shall keep written minutes of its proceedings and shall report on such proceedings to the board of directors. (f) Any resolutions adopted or other action taken by any such committee within the scope of the authority delegated to it by the board of directors shall be deemed for all purposes to be adopted or taken by the board of directors. The designation of any committee and the delegation thereto of authority shall not operate to relieve the board of directors, or any member thereof, of any responsibility or liability imposed upon it or him by law. (g) If a committee member is absent or disqualified, the qualified members present at a meeting, even if not a quorum, may unanimously appoint another board of directors member to act in the absent or disqualified member's place. (h) Any member of any such committee may be removed at any time with or without cause by resolution adopted by a majority of the Board of Directors. ARTICLE V - OFFICERS SECTION 1. OFFICERS. The officers of the corporation shall consist of a president, one or more vice presidents (any of whom may be designated as an executive vice president, senior vice president or assistant vice president and any of whom may be designated as a vice president with particular functions or responsibilities), a treasurer, a secretary and such other officers as may from time to time be elected by the board of directors or pursuant to its delegated power. Officers shall be elected by the board of directors and shall hold office until their successors are elected and qualified or until their earlier death, resignation, retirement, removal or disqualification. None of the officers of the corporation need be directors. The officers may be elected at any regular or special meeting of the board of directors. Any number of offices may be held by the same person; provided, however, that no officer may act in more than one capacity where action of two or more officers is required. The salaries of all officers of the corporation shall be fixed by the board of directors. Any officer elected by the board of directors may be removed by the board with or without cause; but such removal shall be without prejudice to the contract rights, if any, of the person so removed. SECTION 2. OTHER OFFICERS AND AGENTS. The board of directors may appoint such other officers and agents as it shall deem necessary, who shall hold their offices for such terms and shall exercise such power and perform such duties as shall be determined from time to time by the board of directors. SECTION 3. DELEGATED POWERS. The board of directors may delegate to the president the power to grant titles of office in the corporation to employees holding responsible positions in the corporation. SECTION 4. PRESIDENT. The president shall have the general powers and duties of supervision and management usually vested in the office of president of a corporation, subject to the control of the board of directors. The president shall, if present and in the absence of the chairman of the board, preside at all meetings of the stockholders and, if a director and present, and in the absence of the chairman of the board, preside at meetings of the board of directors. The president shall have general supervision, direction and control of all of the other officers and agents of the corporation and of the business of the corporation. The president shall have the power to sign and execute in the name of the corporation deeds, mortgages, bonds, stock certificates, contracts and other instruments of the corporation as authorized by the board of directors. SECTION 5. VICE-PRESIDENT. Each vice-president shall have such powers and shall perform such duties as shall be assigned to him by the board of directors. SECTION 6. TREASURER. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate account of receipts and disbursements in books belonging to the corporation. The treasurer shall deposit all moneys and other valuables in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. The treasurer shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements. The treasurer shall render to the president and board of directors at the regular meetings of the board of directors, or whenever they may request it, an account of all his transactions as treasurer and of the financial condition of the corporation. He shall keep full and accurate accounts of the finances of the corporation in books especially provided for that purpose, which may be consolidated or combined statements of the corporation and one or more of its subsidiaries as appropriate, that include a balance sheet as of the end of the fiscal year, an income statement for that year, and a statement of cash flows for the year unless that information appears elsewhere in the financial statements. The treasurer shall, in general, perform all duties incident to his office and such other duties as may be assigned to him from time to time by the president or by the board of directors. SECTION 7. SECRETARY. The secretary shall keep accurate records of the acts and proceedings of all meetings of stockholders, directors and committees. He shall give all notices required by law and by these by-laws. He shall have general charge of the corporate books and records and of the corporate seal, and he shall affix the corporate seal to any lawfully executed instrument requiring it. He shall have general charge of the stock transfer books of the corporation and shall keep, at the registered or principal office of the corporation, a record of stockholders showing the name and address of each stockholder and the number and class of the shares held by each. He shall sign such instruments as may require his signature, and, in general, attest the signature or certify the incumbency or signature of any other officer of the corporation and shall perform all duties incident to the office of secretary and such other duties as may be assigned him from time to time by the president or by the board of directors. SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. Assistant treasurers and assistant secretaries, if any, shall be elected and shall have such powers and shall perform such duties as shall be assigned to them, respectively, by the board of directors. SECTION 9. BONDS. The board of directors, by resolution, may require any or all officers, agents and employees of the corporation to give bond to the corporation, with sufficient sureties, conditioned on the faithful performance of the duties of their respective offices or positions, and to comply with such other conditions as may from time to time be required by the board of directors. ARTICLE VI - CONTRACTS, LOANS AND DEPOSITS SECTION 1. CONTRACTS. The board of directors may authorize any officer or officers, or agent or agents, to enter into any contract or execute and deliver any instrument on behalf of the corporation, and such authority may be general or confined to specific instances. SECTION 2. LOANS. No loans shall be contracted on behalf of the corporation and no evidence of indebtedness shall be issued in its name unless authorized by a resolution of the board of directors. Such authority may be general or confined to specific instances. SECTION 3. CHECKS AND DRAFTS. All checks, drafts or other orders for the payment of money issued in the name of the corporation shall be signed by such officer or officers, or agent or agents, of the corporation and in such manner as shall from time to time be determined by resolution of the board of directors. SECTION 4. DEPOSITS. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such depository or depositories as the board of directors shall direct. ARTICLE VII - STOCK SECTION 1. CERTIFICATES OF STOCK. The shares of the corporation shall be represented by a certificate, in such form or forms as the board of directors shall direct, or shall be uncertificated and shall be issued to every stock- holder for the fully paid shares owned by him. Certificates shall be signed by, or in the name of the corporation by, the chairman of the board of directors, or the president or any vice-president of the corporation, and the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation, and sealed with the seal of the corporation or a facsimile there- of. The certificates shall be consecutively numbered or otherwise identified; and the name and address of the persons to whom they are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the corporation. Any of or all the signatures on a certificate may be facsimile, or may be engraved or printed or omitted if the certificate is countersigned by a transfer agent, or registered by a registrar, other than the corporation itself or an employee of the corporation. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. SECTION 2. TRANSFER OF STOCK. Transfers of stock shall be made only upon the transfer books of the corporation kept at an office of the corporation or by transfer agents designated to transfer shares of the stock of the corpora- tion. Except where a certificate is issued in accordance with Section 5 of this Article VII of these by-laws, an outstanding certificate for the number of shares involved shall be surrendered for cancellation before a new certificate is issued therefor. SECTION 3. TRANSFER AGENT AND REGISTRAR. The Board of Directors may appoint one or more transfer agents and one or more registrars of transfer and may require all stock certificates to be signed or countersigned by the transfer agent and registered by the registrar of transfers. SECTION 4. RECORD DATE. (a) For the purpose of determining the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which record date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If no record date is fixed by the board of directors, such record date shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. Such determination of stockholders of record shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. (b) For the purpose of determining the stockholders (iii) classifying and entitled to receive payment of any dividend or other distri- bution or allotment of any rights, or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto. SECTION 5. LOST CERTIFICATES. The board of directors may authorize the issuance of a new share certificate in place of a certificate claimed to have been lost or destroyed, upon receipt of an affidavit of such fact from the person claiming the loss or destruction. When authorizing such issuance of a new certificate, the board may require the claimant to give the corporation a bond in such sum as it may direct to indemnify the corporation against loss from any claim with respect to the certificate claimed to have been lost or destroyed; or the board may, by resolution reciting that the circumstances justify such action, authorize the issuance of the new certificate without requiring such a bond. SECTION 6. HOLDER OF RECORD. The corporation may treat as absolute owner of the shares the person in whose name the shares stand of record on its books just as if that person had full competency, capacity, and authority to exercise all rights of ownership irrespective of any knowledge or notice to the contrary or any description indicating a representative, pledge or other fiduciary relation or any reference to any other instrument or to the rights of any other person appearing upon its record or upon the share certificate; except that any person furnishing to the corporation proof of his appointment as a fiduciary shall be treated as if he were a holder of record of the corporation's shares. SECTION 7. REGULATIONS. The issue, transfer, conversion and registration of certificates of stock shall be governed by such other regulations as the board of directors may establish. SECTION 8. DIVIDENDS. Subject to the provisions of the certificate of incorporation, the board of directors may, out of funds legally available therefor at any regular or special meeting, declare dividends upon the capital stock of the corporation as and when they deem expedient. Dividends may be paid in cash, in property, or in shares of capital stock. SECTION 9. TREASURY SHARES. Treasury shares of the corporation shall consist of such shares as have been issued and thereafter acquired but not cancelled by the corporation. Treasury shares shall not carry voting or divi- dend rights, except rights in share dividends. ARTICLE VIII - GENERAL PROVISIONS SECTION 1. SEAL. The corporate seal shall have the name of the corporation inscribed thereon and shall be in such form of as may be approved from time to time by the Board of Directors. Such seal may be an impression or stamp and may be used by the officers of the corporation by causing it, or a facsimile thereof, to be impressed or affixed or in any other manner reproduc- ed. In addition to any form of seal adopted by the board of directors, the officers of the corporation may use as the corporate seal a seal in the form of a circle containing the name of the Corporation and the state of its incorpora- tion (or an abbreviation thereof) on the circumference and the word "Seal" in the center. SECTION 2. FISCAL YEAR. The fiscal year of the corporation shall be determined by resolution of the board of directors. SECTION 3. FORM OF RECORDS. Any records maintained by the corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or be in the form of, punch cards, magnetic tape, photographs, microphotographs, or any other information storage device; provided that the records so kept can be converted into clearly legible form within a reasonable time. The corporation shall so convert any records so kept upon the request of any person entitled to inspect the same. The directors shall determine from time to time whether, and if allowed, when and under what conditions and regulations the accounts and books of the corporation (except such as may by statute be specifically open for inspection) or any of them shall be open to the inspection of the stockholders, and the stockholders' rights in this respect are and shall be restricted and limited accordingly. SECTION 4. NOTICE AND WAIVER OF NOTICE. Whenever notice is required to be given to any stockholder, director, officer or agent, such requirement shall not be construed to mean personal notice. Any notice so required may in every instance be effectively given by depositing the same in the United States mail, postage prepaid, or by sending the same by overnight delivery service,telegraph, facsimile transmission, telex or personal delivery, addressed to the person entitled thereto at his address as it appears on the records of the corporation, and such notice shall be deemed to have been given on the day of such mailing, delivery or transmission. Stockholders not entitled to vote shall not be entitled to receive notice of any meetings except as otherwise provided by statute. Whenever any notice is required to be given under the provisions of any law, or under the provisions of the certificate of incorporation of the corporation or these by-laws, a written waiver thereof signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed proper notice. Neither the business nor the purpose of any meeting need be specified in such a waiver. SECTION 5. INDEMNIFICATION. (a) The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interest of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. (b) The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudica- tion of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court of Chancery or such other court shall deem proper. (c) To the extent that a director, officer, employee or agent of the corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in paragraphs (a) and (b) of this Section 5, or in defense of any claim, issue or matter therein, including the dismissal of an action without prejudice, he shall, without limiting the provisions of paragraph (a) above, be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. (d) Any indemnification under paragraphs (a) and (b) of this Section 5 (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in paragraphs (a) and (b) of this Section 5. Such determination shall be made (i) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceedings, or (ii) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders. (e) Expenses (including attorneys' fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the corporation pursuant to this Section 5 or as otherwise authorized by law. Such expenses (including attorneys' fees) incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the board of directors deems appropriate. (f) The indemnification and advancement of expenses provided by, or granted pursuant to, the other paragraphs of this Section 5 shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. (g) The corporation, at its expense, may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this Section 5 or under the provisions of the General Corporation Law of the State of Delaware. (h) The indemnification and advancement of expenses provided by, or granted pursuant to, this Section 5 shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such person. (i) All rights to indemnification and advancement of expenses under this Section 5 shall be deemed to be provided by contract between the corpora- tion and the director, officer, employee or agent who serves in such capacity at any time while these by-laws and other relevant provisions of the General Corp- oration Law of the State of Delaware and other applicable law, if any, are in effect. (j) Any repeal or modification of the foregoing paragraphs by the stockholders of the corporation shall not adversely affect any right or protection of a director, officer, employee or agent of the corporation existing at the time of such repeal or modification. (k) If the General Corporation Law of the State of Delaware is amended to authorize corporate action permitting the Corporation to further indemnify or advance expenses to directors, officers, employees or agents, then such person, in addition to the circumstances in which he is now entitled to indemnification and advancement of expenses, shall be entitled to be indemnified and have expenses advanced to the fullest extent permitted by the General Corporation Law of the State of Delaware, as so amended. (l) For purposes of this Section 5, references to "the corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Section 5 with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. (m) For purposes of this Section 5, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to an employee bene- fit plan; and references to "serving at the request of the corporation" shall include any service as a director, officer, employee or agent by the corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he reason- ably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the corporation," as referred to in this Section 5. (n) If this Section 5 or any portion thereof shall be invalidated on any ground by any court of competent jurisdiction, then the corporation shall nevertheless indemnify each person as provided above as to expenses (including attorneys' fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, including a grand jury proceeding and an action by the corporation, to the fullest extent permitted by any applicable portion of this Section 5 that shall not have been invalidated or by any other applicable law. ARTICLE IX - AMENDMENTS SECTION 1. AMENDMENTS. Except as otherwise provided herein, these by- laws may be altered, amended or rescinded and new by-laws may be adopted by the affirmative vote of stockholders entitled to exercise a majority of voting power of the corporation, or, if the certificate of incorporation of the corporation so permits, by the affirmative vote of a majority of the directors then holding office at any regular or special meeting of the board of directors, provided that notice of such proposed alteration, amendment or rescission was given to each director or to a location designated by each director for such notice at least 48 hours prior to said meeting, or by unanimous written consent of the directors. Notwithstanding anything herein to the contrary, the board of directors shall have no power to adopt a by-law: (i) changing the statutory requirement for a quorum of directors or action by directors or changing the statutory requirement for a quorum of stockholders or action by stockholders; (ii) providing for the management of the corporation otherwise than by the board of directors or the committees thereof; (iii) increasing or decreasing the number of directors above or below the range provided in Section 1, Article III hereof, or (iv) classifying and staggering, or declassifying and unstaggering, the election of directors. The foregoing by-laws were adopted by the corporation pursuant to Section 303 of the General Corporation Law of the State of Delaware effective as of _____________, 19__. ___________________________________ Secretary UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA RALEIGH DIVISION -----------------------------------X : In re: : : Case No. 93-01365-5-ATS ROSE'S STORES, INC., : : Chapter 11 Debtor. : : -----------------------------------X ORDER CONFIRMING DEBTOR'S FIRST AMENDED JOINT PLAN OF REORGANIZATION UNDER CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE Rose's Stores, Inc., debtor and debtor-in-possession (the "Debtor"), having proposed and filed its First Amended Joint Plan of Reorganization dated October 4, 1994 (the "Plan") and First Amended Disclosure Statement Relating to the Plan dated October 4, 1994 (the "Disclosure Statement") with the Bankruptcy Court (the "Court") pursuant to Section 1121 of Chapter 11 of Title 11, United States Code, 11 U.S.C. Sections 101 et seq. (the "Bankruptcy Code"); and the Disclosure Statement having been approved as containing "adequate information", as such term is defined in Section 1125 of the Bankruptcy Code, by Order of this Court dated October 5, 1994 (the "Disclosure Statement Approval Order"); and the Disclosure Statement Approval Order having, inter alia: (i) authorized the Debtor to solicit acceptances or rejections of the Plan; (ii) approved the forms of ballot to be transmitted with the Plan and Disclosure Statement for voting purposes; (iii) authorized [FN] Capitalized terms not otherwise defined in the Order shall have the same meaning ascribed to them in the Plan, first, or the Disclosure Statement, second. [/FN] the Debtor to retain Federated Claims Services Group ("Federated") as ballot agent; (iv) scheduled the hearing on confirmation of the Plan for December 13, 1994 at 10:30 a.m. or as soon thereafter as counsel can be heard (the "Confirmation Hearing"); (v) directed that objections to confirmation of the Plan be filed with the Court and served on certain specified parties no later than 5:00 p.m. Eastern Standard Time on December 5, 1994; and (vi) directed that all ballots be received on or before 5:00 p.m. Eastern Standard Time on December 5, 1994 to be eligible to be counted in determining whether the Plan is accepted or rejected; and the Debtor having transmitted: (i) copies of the Disclosure Statement (including the Plan); (ii) a ballot (where applicable); (iii) a copy of the Disclosure Statement Approval Order; (iv) letters from the Debtor's management and the Committees and (v) a notice of (w) this Court's approval of the Disclosure Statement, (x) the time within which acceptances or rejections of the Plan must be received by Federated, (y) the Confirmation Hearing and (z) the time within which to object to confirmation of the Plan upon (i) every entity that was listed in the Debtor's schedules as a creditor, or as a party to a pre-petition executory contract or unexpired lease with the Debtor, (ii) every entity that, as of October 5, 1994, had filed a proof of claim or interest with the Court against the Debtor (which proof of claim or interest had not been disallowed as of October 5, 1994 by Order of this Court), (iii) every holder of record of securities of the Debtor determined as of the close of business on October 5, 1994, (iv) the Bankruptcy Administrator, (v) the Securities and Exchange Commission, (vi) the District Director, Internal Revenue Service, and (vii) the United States Attorney for the Eastern District of North Carolina; and it appearing that notice has been given in accordance with the Disclosure Statement Approval Order except to the limited extent set forth in the Declaration Of Linda B. Nestor Concerning Service Of Solicitation Materials (the "Nestor Declaration") with respect to Notice provided to 162 retirees and certain banks and brokers with respect to holders in Class 5; and affidavits of service having been filed with the Clerk of this Court with respect thereto; and a statement in support of confirmation of the Plan having been filed by the Bankruptcy Administrator; and objections to confirmation of the Plan having been filed (i) collectively by North Hills Properties, Inc., Cummings & Park Development Company and CumPark Plaza, L.L.C., (ii) by Seaford Properties, Inc., (iii) collectively by a group of lessors of non-residential real property under leases with the Debtor, (iv) by Boney Wilson & Sons, Inc. and (v) Lee A. Gifford, t/a Haygood Shopping Center; and all objections to confirmation of the Plan having been resolved or overruled by this Court; and a Certification of Ballots Accepting or Rejecting the Plan prepared by Federated, as the Debtor's ballot agent, having been filed with this Court; and the acceptances and rejections of the Plan of those holders of Allowed Claims that voted having been duly received and tabulated; and upon the entire record of the Debtor's Chapter 11 case and the testimony of Mr. R. Edward Anderson, the Debtor's Chairman, President and Chief Executive Officer, at the Confirmation Hearing held before this Court on December 13, 1994; and after due deliberation; and sufficient cause appearing therefor; and IT HAVING BEEN FOUND AND DETERMINED by this Court, that: A. Jurisdiction. This Court has jurisdiction over this reorganization case pursuant to 28 U.S.C. Section 1334. Confirmation of the Plan and the granting of all relief herein related thereto is a "core proceeding" pursuant to 28 U.S.C. Section 157(b)(2), and this Court has jurisdiction to enter this Final Order with respect thereto. B. Notice and Solicitation. 1. On or about October 26, 1994, the Debtor mailed to all parties-in-interest except those specified in the Nestor Declaration a notice advising them of the time and place of the Confirmation Hearing and the procedure for objecting to the Plan. The persons specified in the Nestor Declaration were mailed such Notice as specified therein, so as to provide such persons with no less than 30 days notice of the Confirmation Hearing. 2. All outstanding objections to confirmation of the Plan are hereby overruled. 3. Any party-in-interest required to receive notice of the Confirmation Hearing has received due, proper and adequate notice thereof. All parties-in-interest had the opportunity to appear and be heard at the Confirmation Hearing. C. Reasonable Classification of Claims (Section 1122(a)). The classification of Claims and Interests in Articles IV and V of the Plan places Claims or Interests in a particular Class where such Claim or Interest is substantially similar to the other Claims or Interests of such Class, and therefore the Plan satisfies the requirements of Section 1122(a) of the Bankruptcy Code. D. Designation of Classes (Section 1123(a)(1)). Article II of the Plan designates all Classes of Claims and Interests in accordance with the requirements of Section 1123(a)(1) of the Bankruptcy Code. E. Specific Unimpaired Classes (Section 1123(a)(2)). Article IV of the Plan specifies those Classes of Claims which are not impaired under the Plan in accordance with the requirements of Section 1123(a)(2). F. Specification of Treatment of Impaired Classes (Section 1123(a)(3)). Article V of the Plan specifies the Classes of Claims and Interests which are impaired and the treatment of each such Class, and therefore the Plan satisfies the requirements of Section 1123(a)(3). G. No Discrimination (Section 1123(a)(4)). The Plan provides the same treatment for each Claim or Interest in a particular Class, and therefore the Plan satisfies the requirements of Section 1123(a)(4) of the Bankruptcy Code. H. Implementation of the Plan (Section 1123(a)(5)). Articles VI and VII of the Plan provide adequate means for implementing the Plan, and therefore the Plan satisfies the requirements of Section 1123(a)(5) of the Bankruptcy Code. I. Equity Securities (Section 1123(a)(6)). The Plan provides for the inclusion of a provision prohibiting the issuance of non-voting equity securities in the charter of Reorganized Rose's, and therefore the Plan satisfies the requirements of Section 1123(a)(6) of the Bankruptcy Code. J. Selection of Officers and Directors (Section 1123(a)(7)). The Plan provides for the management and governance through a Reconstituted Board of Directors of Reorganized Rose's in a manner that is consistent with the interests of creditors and equity security holders and with public policy, and therefore the Plan satisfies the requirements of Section 1123(a)(7) of the Bankruptcy Code. K. The Plan Complies with the Bankruptcy Code (Section 1129(a)(1)). The Plan complies with all applicable provisions of the Bankruptcy Code and, as required pursuant to Rule 3016(b) of the Federal Rules of Bankruptcy Procedure, is dated and identifies the proponents of the Plan, and therefore the Plan satisfies the requirements of Section 1129(a)(1) of the Bankruptcy Code. L. The Plan Proponents have Complied with the Provisions of the Bankruptcy Code (Section 1129(a)(2)). The Plan Proponents have complied with the applicable provisions of the Bankruptcy Code, and therefore have satisfied the requirements of Section 1129(a)(2) of the Bankruptcy Code. M. Plan Proposed in Good Faith (Section 1129(a)(3)). The Plan has been proposed in good faith and not by any means forbidden by law, and therefore the Plan satisfies the requirements of Section 1129(a)(3) of the Bankruptcy Code. N. Payment of Costs and Expenses (Section 1129(a)(4)). Any payment made or to be made by the Plan Proponents or any person issuing securities or acquiring property under the Plan, for services or for costs and expenses in, or in connection with, this Chapter 11 case, or in connection with the Plan and incident to the Chapter 11 case, has been approved by, or is subject to the approval of the Court as reasonable, and therefore the Plan satisfies the requirements of Section 1129(a)(4) of the Bankruptcy Code. O. Disclosure of Identities of Insiders (Section 1129(a)(5)). The Plan Proponents have or will disclose the identity, affiliation and compensation of all individuals, including insiders, proposed to serve, after confirmation of the Plan, as a director, officer or voting trustee of the Debtor, pursuant to the statement respecting officers and directors and the terms of their employment, that will be filed by the Debtor or Reorganized Rose's on or before March 31, 1995, and the appointment to, or continuance in, such office of each such individual is consistent with the interests of creditors and equity security holders and with public policy, and therefore the Plan satisfies the requirements of Section 1129(a)(5) of the Bankruptcy Code. P. No Rate Change (Section 1129(a)(6)). Section 1129(a)(6) is inapplicable to the Plan since there are no rate changes provided for in the Plan for which a governmental regulatory commission will have jurisdiction over the Debtor after confirmation. Q. Best Interests of Creditors (Section 1129(a)(7)). With respect to each impaired Class of Claims and Interests, (i) each holder of a Claim or Interest of such Class has accepted the Plan, or will receive or retain under the Plan, on account of such Claim or Interest, property of a value, as of the Effective Date of the Plan, that is not less than the amount that such holder would so receive or retain if the Debtor was liquidated under Chapter 7 of the Bankruptcy Code on such date, and (ii) there are no holders of Allowed Secured Claims who are entitled to make elections under Section 1111(b)(2) of the Bankruptcy Code, and therefore the Plan satisfies the requirements of Section 1129(a)(7) of the Bankruptcy Code. R. Plan Acceptance (Section 1129(a)(8)). Ballots accepting the Plan have been timely received from the holders of Claims in Classes 2B (pursuant to the Plan Support Consent Order), 3 and 5. Holders of Allowed Claims in Classes 1 and 2A are unimpaired within the meaning of Section 1124 of the Bankruptcy Code, and are conclusively presumed to have accepted the Plan under Section 1126(f) of the Bankruptcy Code such that solicitation of acceptances or rejections with respect to such Classes is not required pursuant to Section 1129(a)(8) of the Bankruptcy Code. The sole holder of a Claim in Class 4 has indicated its support for the Plan. Accordingly, the Plan satisfies the requirements of Section 1129(a)(8) of the Bankruptcy Code except with respect to Classes 6, 7 and 8 Interests. The Plan provides for no distributions to Classes 6, 7 and 8 and therefore, Classes 6, 7 and 8 are deemed to have rejected the Plan. S. Plan Treatment of Administrative and Tax Claims (Section 1129(a)(9)). The Plan satisfies the requirements of Section 1129(a)(9) of the Bankruptcy Code since, except to the extent that the holder of a particular Claim has agreed to a different treatment of such Claim, the Plan provides that: (1) With respect to a Claim of a kind specified in Sections 507(a)(1) or (2) of the Bankruptcy Code, upon the later of the Effective Date or upon entry of a Final Order of this Court, the holder of such Claim will receive on account of such Claim Cash equal to the allowed amount of such Claim; (2) Section 1129(a)(9)(B) of the Bankruptcy Code is inapplicable since there are no Claims of the kind specified in Sections 507(a)(3), (4), (5) or (6) of the Bankruptcy Code; and (3) With respect to a Claim of a kind specified in Section 507(a)(7) of the Bankruptcy Code, the holder of such Claim will receive, upon the later of the Effective Date or upon entry of a Final Order of this Court, on account of such Claim, Cash equal to the allowed amount of such Claim or deferred Cash payments, over a period not exceeding six years after the date of assessment of such Claim, of a value, as of the Effective Date of the Plan, equal to the allowed amount of such Claim. T. At Least One Impaired Class Accepted the Plan (Section 1129(a)(10)). At least one Class of Claims that is impaired under the Plan has accepted the Plan, determined without including any acceptance of the Plan by any insider holding a Claim in such Class, and therefore the Plan satisfies the requirements of Section 1129(a)(10) of the Bankruptcy Code. U. Feasibility (Section 1129(a)(11)). Liquidation of the Debtor is provided for under the Alternative Treatment Provisions of the Plan in the event said provisions are effective, and, after the Effective Date, under certain terms and provisions of the New Rose's Secured Notes in the event certain circumstances occur. Confirmation and the consummation of the Plan by the occurrence of the Effective Date is not likely to be followed by the need for further financial reorganization of the Debtor or Reorganized Rose's, as applicable. Therefore, the Plan satisfies the requirements of Section 1129(a)(11) of the Bankruptcy Code. V. Fees (Section 1129(a)(12)). The Debtor has or will pay on or prior to the Effective Date all amounts due under 28 U.S.C. Section 1930, and therefore the Plan satisfies the requirements of Section 1129(a)(12) of the Bankruptcy Code. W. Retiree Benefits (Section 1129(a)(13)). The Plan provides for the continuation after its Effective Date of payment of all retiree benefits (as such term is defined in the Bankruptcy Code), at the level established or modified pursuant to subsection (e)(1)(B) or (g) of Section 1114 of the Bankruptcy Code, at any time prior to the Effective Date of the Plan, for the duration of the period the Debtor has obligated itself or Reorganized Rose's, as the case may be, to provide such benefits, and therefore the Plan satisfies the requirements of Section 1129(a)(13) of the Bankruptcy Code. X. Cramdown (Section 1129(b)). The Plan does not discriminate unfairly, and is fair and equitable, with respect to Classes 6, 7 and 8, since no holder of an Interest junior to the Interests of such Classes will receive or retain under the Plan any payment on account of such junior Interest, and therefore the Plan satisfies the requirements of Section 1129(b) of the Bankruptcy Code. Y. No Other Plan (Section 1129(c)). No other plan has been filed with respect to the Debtor's Chapter 11 Case. Z. Avoidance of Taxes (Section 1129(d)). No party- in-interest that is a governmental unit has requested that the Plan not be confirmed on the grounds that the principal purpose of the Plan is the avoidance of taxes or the avoidance of the application of Section 5 of the Securities Act of 1933, and therefore the Plan satisfies the requirements of Section 1129(d) of the Bankruptcy Code. AA. Releases and Injunctions. 1. The release and injunction provisions set forth in Article IX of the Plan: a. are within the jurisdiction of this Court under 28 U.S.C. SectionSection 1334(a), (b) and (d); b. are each an essential means of implementing the Plan pursuant to Section 1123(a)(5) of the Bankruptcy Code; c. are integral elements of the settlements and compromises incorporated in the Plan; d. confer material benefits on, and thus are in the best interests of, the Debtor's estate; and e. are consistent with and permitted pursuant to Sections 105, 524, 1129 and all other applicable provisions of the Bankruptcy Code. 2. All parties released under the Plan contributed value to the Debtor's estate. AB. Notice of the Confirmation Hearing. Proper, timely, adequate and sufficient notice of the Confirmation Hearing has been provided in accordance with the Disclosure Statement Approval Order. AC. Solicitation and Tabulation of Acceptances. The solicitation and tabulation of acceptances was accomplished in a proper and fair manner and the Plan has been duly accepted by the holders of Claims and Interests whose acceptance is required in accordance with the provisions of Section 1126 of the Bankruptcy Code. AD. Debtor's Duties. The Debtor has completed all of its obligations and duties with respect to its estate pursuant to Section 1107 of the Bankruptcy Code. THEREFORE, NOW, upon the motion of the Debtor and after due deliberation, the Court hereby ORDERS, ADJUDGES AND DECREES THAT: 1. Confirmation. The Plan shall be, and hereby is confirmed, having met the requirements of Section 1129 of the Bankruptcy Code. 2. Record Date. Pursuant to Rule 3021 of the Federal Rules of Bankruptcy Procedure, the record date for the purpose of determining those holders of Common Stock Interests entitled to distributions under the Plan shall be February 7, 1995, and the record date for the purpose of determining holders of Claims in Classes 1, 2A, 2B and 3 entitled to distributions under the Plan shall be the Effective Date. 3. New Agreements. All agreements and other documents that are contemplated to be executed and implemented in connection with the Plan, including, among other things, the Class 5 Rights Notice, the New Rose's Common Stock Trust Agreement, the New Rose's Secured Notes Documents, the New Rose's Charter and By-Laws, the New Rose's Warrant Agreement and documents relating to the Post- Effective Date Financing Facility are in the best interests of the Debtor's estate, and the Debtor, Reorganized Rose's, the Collateral Agent, the Post-Effective Date Lender and every holder of a Claim or Interest, their successors, transferees and assigns, as applicable, are hereby authorized and directed to take any and all actions that may be reasonable or necessary to consummate the agreements and any related agreements, subject to any requirements in the Plan that any such agreements and documents be filed with and/or approved by this Court prior to or on the Effective Date. 4. Approval of Agreements. Except for the New Rose's Charter and By-Laws, the Class 5 Rights Notice and the New Rose's Warrant Agreement, each of which have been filed simultaneously herewith in accordance with the Plan, notwithstanding any provision of the Plan to the contrary, all other agreements requiring this Court's approval under the Plan shall be filed on or before March 1, 1995. The New Rose's Charter and By-Laws, the Class 5 Rights Notice and the New Rose's Warrant Agreement are each hereby approved substantially in their respective forms as filed simultaneously herewith. The Debtor shall perform, and is hereby authorized, empowered and directed to perform its obligations pursuant to all such agreements as part of the Plan. 5. Effective Date. The Effective Date of the Plan shall be, and hereby is, fixed at the first Business Day, or as soon as practicable thereafter, upon which all conditions set forth in Section 8.2 of the Plan have been either satisfied or waived. In the event any of the Alternative Treatment Provisions are effective, the Effective Date shall not occur unless and until the GE Obligations and the Pre-Petition Lenders' Allowed Secured Claims have been satisfied in full in accordance with the Second Supplemental Adequate Protection Consent Order. [FN] All references to the Second Supplemental Adequate Protection Consent Order refer to such Order as modified by Orders of the Court dated August 30 and November 30, 1994 respectively. [/FN] 6. Effect of Withdrawal or Revocation. In the event that the Effective Date does not or cannot occur as agreed in writing by all Plan Proponents, then the Plan shall be deemed null and void, and in such event, nothing contained in the Plan shall be deemed to constitute a waiver or release of any Claims or Interests by or against any Plan Proponent or any other Person or to prejudice in any manner the rights of any Plan Proponent or any Person in any further proceedings involving the Debtor; provided, however, that nothing in the Plan shall prejudice or affect the rights of any Person under the Second Supplemental Adequate Protection Consent Order or the Plan Support Consent Order. 7. Treatment of GE Capital. On or prior to the Effective Date, all of the GE Obligations shall be fully and finally satisfied pursuant to the Plan, the Second Supplemental Adequate Protection Consent Order and the DIP Facility. Until all GE Obligations are fully satisfied, all liens, claims, interests, rights, remedies and protections granted to GE Capital pursuant to the DIP Facility shall remain in full force and effect with priority over all liens, claims and interests except as, and only to the extent, otherwise specifically set forth in the DIP Facility. Notwithstanding anything to the contrary set forth herein or in the Plan, on and after the Effective Date, and unless the Alternative Treatment Provisions of the Plan are effective, Reorganized Rose's shall be deemed to have assumed, without any action or the execution of any document, any and all GE Obligations which remain outstanding and unsatisfied as of the Effective Date, including, without limitation, any indemnification obligations of the Debtor under or pursuant to the DIP Facility or the Second Supplemental Adequate Protection Consent Order; provided however, that such assumption shall not for any purpose constitute or be deemed to constitute a satisfaction or novation of the GE Obligations. Notwithstanding anything to the contrary contained herein or implied hereby, nothing contained in this Order shall alter, limit or otherwise modify or amend the rights, remedies or treatment of GE Capital or the GE Capital Obligations under the DIP Facility, the Second Supplemental Adequate Protection Consent Order or the Plan in a manner which would impair or diminish any right or benefit of GE Capital thereunder. 8. Post-Effective Date Financing Facility. Notwithstanding anything to the contrary contained herein or implied hereby, nothing contained in this Order shall alter, limit or otherwise modify or amend the provisions, terms or conditions of the Plan with respect to the Post-Effective Date Financing Lender or the Post-Effective Date Financing Facility. 9. Cancellation of Common Stock, Pre-Petition Warrants and Stock Options and Pre-Petition Secured Notes. As of the Effective Date, all Common Stock Interests, Pre-Petition Warrants, Pre-Petition Stock Options and all promissory notes under all agreements with the Pre-Petition Lenders, including, without limitation, Pre-Petition Secured Notes, shall be, without any further action by the Debtor, Reorganized Rose's or any holder thereof, canceled, annulled and extinguished. Notwithstanding the foregoing, the right to receive distributions pursuant to Section 6.2 of the Plan, if any, shall survive such cancellation, annulment and extinguishment. 10. Distributions. In accordance with Article VI of the Plan, either the Debtor or Reorganized Rose's, as applicable, or its designee, as Distribution Agent, shall, and hereby is, authorized and directed to, on the applicable Distribution Date or such other date as is specified in the Plan or the Supplemental Adequate Protection Orders (i) make the required Cash payments, and, unless the Alternative Treatment Provisions are effective, (ii) deliver to the Collateral Agent the New Rose's Secured Notes, (iii) make the required distributions of the New Rose's Common Stock and Subscription Proceeds to the holders of Allowed Claims in Class 3 (and into the Reserves established on account of Disputed Claims in Class 3), (iv) make the required distributions of the New Rose's Common Stock, New Rose's Warrants and the New Rose's Common Stock Secondary Distribution to the holders of Allowed Common Stock Interests in Class 5, and (v) make the required distributions of New Rose's Common Stock in accordance with the Management Incentive and Retention Program, if and to the extent approved by the Court, or by operation or exercise of the New Rose's Warrants. Distributions of Cash, Subscription Proceeds, New Rose's Secured Notes, New Rose's Common Stock and New Rose's Warrants pursuant to the Plan shall be effectuated when the Debtor or Reorganized Rose's, as applicable, or any designee thereof receives all applicable documentation requested of holders of Allowed Claims and Common Stock Interests pursuant to the Plan. 11. Exemption from Securities Laws. The exemption from securities laws set forth in Section 1145 of the Bankruptcy Code is applicable to the issuance of all securities to be distributed under the Plan, including, without limitation, the New Rose's Secured Notes, the New Rose's Common Stock, the New Rose's Warrants, the rights to participate in the Class 5 Subscription issued under the Plan, and the New Rose's Common Stock issued upon the exercise of the New Rose's Warrants or upon exercise of the rights to participate in the Class 5 Subscription. 12. Merger of RSI. The Debtor is hereby authorized and directed to cause RSI to be merged with and into the Debtor on or prior to January 22, 1995, without any further action of the Boards of Director or Shareholders of either the Debtor or RSI, respectively. To effect such merger, the Debtor and RSI are directed to promptly execute all instruments or documents necessary or desirable in connection with such merger, and the Debtor is hereby directed to cause to be filed with the Office of the Secretary of State of the State of Delaware no later than December 31, 1994 a Certificate of Ownership and Merger of RSI Trading, Inc. into Rose's Stores, Inc., with such Certificate to be effective as of January 20, 1995. The reversal, modification, vacatur or revocation of the Confirmation Order shall not affect the validity of the merger, unless such merger is the subject of a stay pending appeal at the time of the merger otherwise is to be effectuated. 13. Perfection of Post-Effective Date Collateral. Reorganized Rose's shall take such action, at its own expense, as is reasonably necessary and appropriate and requested by the Collateral Agent regarding the filing of the Perfection Instruments in any jurisdiction or take any other action in order to validate or perfect the liens and security interests granted to the Pre- Petition Lenders pursuant to the Plan, in the event that the Pre- Petition Lenders or any of their agents, may, at their sole discretion, choose to file such Perfection Instruments or otherwise confirm perfection of such liens and security interests, and all such Perfection Instruments shall be deemed to have been filed or recorded at the time and on the date of such filing or recording unless permitted under applicable law to relate back to the Effective Date. In lieu of filing the Perfection Instruments, the Pre-Petition Lenders or any of their agents, may, at their sole discretion, file certified copies of the Plan, this Confirmation Order and the Consummation Certificate in any place at which such Perfection Instruments would or could otherwise be filed, together with a description of Post-Effective Date Collateral located within the geographic area covered by such place of filing as the Pre- Petition Lenders may determine, and such filing shall have the effect as if all such Perfection Instruments had been filed or recorded at the time and on the date of such filing or recording unless permitted under applicable law to relate back to the Effective Date. 14. Executory Contracts and Unexpired Leases. Unless specifically assumed by Order of the Bankruptcy Court, the subject of a motion to assume pending as of the Effective Date, or the subject of a motion for an order seeking additional time to assume or reject pending as of the Effective Date, on the Effective Date, all executory contracts and unexpired leases of the Debtor shall be deemed rejected by the Debtor or Reorganized Rose's as of the Effective Date or as otherwise provided for by Order of the Bankruptcy Court. Notwithstanding anything to the contrary contained herein or implied hereby, no deadline for the filing of claims set forth in Section 10.1 of the Plan shall affect in any manner any deadline established by any prior or subsequent order of this Court respecting the filing of claims resulting from the rejection of contracts or leases as authorized by an order of this Court. The Employee Stock Option Plan and the Pre-Petition Secured Noteholder Warrant Agreement are hereby rejected as of the Effective Date, and Claims arising prior to the Filing Date from these and other executory contracts and leases shall be treated in accordance with the terms of the Plan. 15. Consummation of the Amended Plan. In accordance with Section 1142 of the Bankruptcy Code, the implementation and consummation of the Plan in accordance with its terms shall be, and hereby is, authorized and approved, and the Debtor, Reorganized Rose's (and their officers and directors) or any other Person shall be, and they hereby are, in their own discretion or upon the reasonable request of the Plan Proponents or GE Capital (as the case may be), authorized, empowered and directed to issue, execute, deliver, file and record any document, whether or not any such document is specifically referred to in the Plan or any exhibit thereto, and to take any action necessary or appropriate to implement, effectuate and consummate the Plan in accordance with its terms, except to the extent that further Court authorization is required pursuant to this Order or the Plan. 16. Post-Effective Date Effectuation of the Plan's Terms. From and after the Effective Date, the Chairman of the Board, President, any Executive Vice President, Senior Vice President or Vice President of Reorganized Rose's or the Debtor, as applicable, shall be authorized to execute, deliver, file or record such contracts, instruments, releases, indentures and other agreements or documents and take such actions as may be necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan. 17. Discharge. (a) Except as otherwise expressly provided in Section 1141 of the Bankruptcy Code, the Plan or this Order, and except in the event the Alternative Treatment Provisions are effective pursuant to Section 8.1 of the Plan, the distributions made pursuant to and in accordance with the Plan will be in full and final satisfaction, settlement, release and discharge as against the Debtor, of any debt that arose before the Effective Date and any debt of a kind specified in Section 502(g), 502(h) or 502(i) of the Bankruptcy Code and all Claims and Interests of any nature, including, without limitation, any interest accrued thereon from and after the Filing Date, whether or not (i) a proof of Claim or Interest based on such debt, obligation or interest is filed or deemed filed under Section 501 of the Bankruptcy Code, (ii) such Claim or Interest is allowed under Section 502 of the Bankruptcy Code or (iii) the holder of such allowed Claim or Interest has accepted the Plan. Therefore, upon the Effective Date, except as otherwise provided in the Plan or this Order, all Persons which are or could have been holders of Claims against, or Interests in, the Debtor shall be precluded from asserting against the Debtor or Reorganized Rose's, or any of their assets or properties, any other or further Claims or Interests based upon any act or omission, transaction or other activity of any kind or nature that occurred prior to the Effective Date, and this Order shall permanently enjoin said holders of Claims and Interests, their successors and assigns, from enforcing or seeking to enforce any such Claims or Interests, subject to and upon the occurrence of the Effective Date. (b) In addition, upon the Effective Date, except as otherwise provided in the Plan or by Order entered by this Court and with respect to the Debtor's obligations under the Plan, the commencement or continuation of any action, the employment of process or any act to collect, recover or offset any debt discharged under this Order and the Plan and pursuant to Section 1141(d)(1) of the Bankruptcy Code as a liability of the Debtor, or from property of the Debtor, is forever stayed, restrained and enjoined. 18. Releases. (a) Releases of Released Parties. As of the Effective Date, each of the Released Parties are hereby released from any and all claims asserted or that could be asserted against such Released Party which arise out of such Released Party's relationship with or work performed for the Debtor on or prior to the Effective Date, other than claims which constitute (i) claims preserved against such Released Party pursuant to the Plan, (ii) claims that arise from obligations created under or in connection with the Plan, (iii) rights pursuant to the Plan or any agreement provided for or contemplated in the Plan, or (iv) claims which may be asserted against such Released Party by an insurance carrier or the issuer of a bond in connection with any insurance contract, reinsurance contract, surety bond, fidelity bond, or other type of insured or bonded obligation; provided, however, that the foregoing release provisions (i) shall not apply to any such Released Party's gross negligence or willful misconduct, and (ii) shall not apply to (a) any Released Party who is the subject of any action or proceeding pending as of the Effective Date to recover property or money for the benefit of the Estate, or (b) any claims asserted by or against any of the Debtor's present or former officers or directors in any action or proceeding pending as of the Effective Date; and provided, further, that (i) in the case of the Pre- Petition Lenders, the scope of the foregoing release as and to the extent given by the Pre-Petition Lenders shall extend only to claims of the Pre-Petition Lenders arising on or prior to the Effective Date against any of the Released Parties solely in the Pre-Petition Lenders' capacity as the holders of the Pre-Petition Secured Notes and not to the extent of any other claims arising out of any other relationship which any of the Pre-Petition Lenders may have with the Debtor or any of the Released Parties, including, without limitation, any insurance, fidelity bond or suretyship relationship; and (ii) in the case of GE Capital, the scope of the foregoing release in favor of any Released Party other than GE Capital given by GE Capital shall extend only to certain claims (as provided in the Plan) of GE Capital arising on or prior to the Effective Date against any of the Released Parties solely in GE Capital's capacity as the lender under the DIP Facility and shall not extend to any other claims of GE Capital arising out of any other relationship which GE Capital may have with the Debtor or any of the Released Parties. Nothing in the Plan or this Order shall be construed as a release by GE Capital or otherwise of any of the GE Obligations. (b) Releases by the Debtor and Reorganized Rose's. Except as, and only to the extent, provided otherwise in the Plan, as of the Effective Date, the Debtor, the Estate and Reorganized Rose's shall be deemed to forever release, waive and discharge all known and unknown claims of any nature that the Debtor, its Estate, or Reorganized Rose's has, had or may have against any Released Party for all acts and omissions through the Effective Date other than (i) claims preserved against such Released Party pursuant to the Plan, (ii) claims that arise from obligations created under or in connection with the Plan, (iii) any claims asserted against any of the Debtor's present or former officers or directors in any action or proceeding pending as of the Effective Date or (iv) claims which may be asserted against such Released Party through subrogation or otherwise by an insurance carrier or the issuer of a bond in connection with any insurance contract, reinsurance contract, surety bond, fidelity bond, or other type of bonded obligation. Except in the event that the Alternative Treatment Provisions are effective pursuant to Section 8.1 of the Plan, as of the Effective Date, and notwithstanding anything to the contrary contained in Sections 7.14 and 9.3 of the Plan, the Debtor and Reorganized Rose's shall also be deemed to forever release, waive and discharge all Avoiding Power Actions not commenced prior to the Effective Date. (c) Releases by Recipients of New Rose's Common Stock, New Rose's Secured Notes, New Rose's Warrants and Cash, or Available Cash (as applicable), and by All Other Persons. Except as, and only to the extent, otherwise provided in the Plan, each Person receiving Cash, New Rose's Secured Notes, New Rose's Warrants, the right to participate in the Class 5 Subscription and/or New Rose's Common Stock, Available Cash (as applicable), or other distribution or payment pursuant to the Plan on account of its Allowed Claim, Administrative Claim or Common Stock Interest, as the case may be, shall be deemed, as of the Effective Date, to forever release, waive and discharge all known and unknown claims of any nature arising on or prior to the Effective Date against each of the Released Parties to the extent that such claims arise out of such Released Party's actions or failure to act in connection with the Debtor, the Committees, the Chapter 11 Case, or claims otherwise treated and discharged under the Plan, other than claims which constitute (i) claims preserved against such Released Party pursuant to the Plan, (ii) claims that arise from obligations created under or in connection with the Plan, (iii) such Person's rights pursuant to the Plan or any agreement provided for or contemplated in the Plan or (iv) claims which may be asserted against such Released Party by an insurance carrier or the issuer of a bond in connection with any insurance contract, reinsurance contract, surety bond, fidelity bond, or other type of insured or bonded obligation; provided, however, that the foregoing release provisions (i) shall not apply to any such Released Party's gross negligence or willful misconduct, and (ii) shall not apply to (a) any Released Party who is the subject of any action or proceeding pending as of the Effective Date to recover property or money for the benefit of the Estate, or (b) any claims asserted by or against any of the Debtor's present or former officers or directors in any action or proceeding pending as of the Effective Date; and provided, further, that (i) in the case of the Pre- Petition Lenders, the scope of the foregoing release as and to the extent given by the Pre-Petition Lenders shall extend only to claims of the Pre-Petition Lenders arising on or prior to the Effective Date against any of the Released Parties solely in the Pre-Petition Lenders' capacity as the holders of the Pre-Petition Secured Notes and not to the extent of any other claims arising out of any other relationship which any of the Pre-Petition Lenders may have with the Debtor or any of the Released Parties, including, without limitation, any insurance, fidelity bond or suretyship relationship; and (ii) in the case of GE Capital, the scope of the foregoing release in favor of any Released Party other than GE Capital by GE Capital shall extend only to certain claims (as provided in the Plan) of GE Capital arising on or prior to the Effective Date against any of the Released Parties solely in GE Capital's capacity as the lender under the DIP Facility and shall not extend to any other claims of GE Capital arising out of any other relationship which GE Capital may have with the Debtor or any of the Released Parties. Nothing in the Plan or this Order shall be construed as a release by GE Capital or otherwise of any of the GE Obligations. 19. Injunctions. (a) Injunction Related to Claims Released by the Debtor and Reorganized Rose's (if applicable), Recipients of Cash, New Rose's Common Stock, New Rose's Secured Notes and New Rose's Warrants, or Available Cash (if applicable), and All Other Persons. As of the Effective Date and subject to its occurrence, all Persons that have held, currently hold or may have asserted a Claim or other debt, or liability or an interest or other right of a holder of an Interest, that is released or terminated pursuant to Sections 9.1 (if applicable), 9.2, 9.3, 9.4 or 9.6 of the Plan are, except as provided in or with respect to the New Rose's Secured Notes, the New Rose's Secured Notes Documents, the Supplemental Adequate Protection Orders, the New Rose's Common Stock and the New Rose's Warrants, permanently enjoined from taking any of the following actions on account of such released Claims, debts or liabilities or Interests: (a) commencing or continuing, in any manner or in any place, any action or other proceeding; (b) enforcing, attaching, collecting or recovering in any manner any judgment, award, decree or order; (c) creating, perfecting or enforcing any lien or encumbrance except as is necessary to ensure continuous perfection of any lien as provided in the Plan; (d) asserting a set-off, right of subrogation or recoupment of any kind against any debt, liability or obligation due to any such releasing Person; and (e) commencing or continuing any action, in any manner or in any place, that does not comply with or is inconsistent with the provisions of the Plan. (b) Injunction Relating to the Plan. As of the Effective Date, except as otherwise provided in the Plan, all Persons are permanently enjoined from commencing or continuing, in any manner or in any place, any action or other proceeding, whether directly, derivatively or otherwise against any or all of the Released Parties, on account of or respecting any claims, debts, rights, causes of action or liabilities released or discharged pursuant to the Plan or this Order, except to the extent permitted under the Plan. (c) Consent By Holders of Claims and Interests to Entry of Injunctive Relief. Without limitation to the scope, extent, validity or enforceability of the injunctive relief set forth in Section 9.7 of the Plan and in this Confirmation Order, by accepting distributions pursuant to the Plan, each holder of an Allowed Claim or Interest receiving distributions pursuant to the Plan shall be deemed to have specifically consented to the releases and injunctions set forth in Article IX of the Plan. (d) Injunction Against Subsequent Bankruptcy Proceedings. From and after the Effective Date, pursuant to Sections 105 and 1141 of the Bankruptcy Code, until such time as obligations owing pursuant to the New Rose's Secured Notes Documents shall be satisfied in full, all creditors (including creditors holding claims entitled to administrative priority), all equity security holders, the Debtor, Reorganized Rose's, and any officer, director, professional or agent of the Debtor or Reorganized Rose's, together with their respective successors and assigns, are hereby enjoined from (a) causing the Debtor or Reorganized Rose's to be subject to or to seek or obtain relief under any chapter of the Bankruptcy Code or (b) in connection with an Event of Default or event of default under the New Rose's Secured Notes Documents or the Post-Effective Date Financing Facility, taking any action (including seeking the appointment of a trustee or an examiner or seeking conversion of this case to any other case under the Bankruptcy Code) inconsistent with or that would delay, hinder or interfere with the rights and remedies of the Pre-Petition Lenders or the Post-Effective Date Lender or both, as the case may be, as set forth in Section 5.1.4 and other provisions of the Plan. The foregoing shall not be construed as limiting the ability of any party-in-interest from seeking to enforce any provision of the Plan or any Order of the Bankruptcy Court related thereto or the DIP Facility, the Plan Support Consent Order, the Second Supplemental Adequate Protection Consent Order, the New Rose's Secured Notes, the New Rose's Secured Notes Documents, or the Post-Effective Date Financing Facility, in the Bankruptcy Court or other appropriate forum. 20. Jurisdiction from Confirmation through the Effective Date. Upon Confirmation and through the Effective Date, the Bankruptcy Court shall retain full jurisdiction over the Chapter 11 Case notwithstanding that Confirmation has occurred, pursuant to Section 11.1 of the Plan. 21. Jurisdiction from and after the Effective Date. From and after the Effective Date, and until such time as all payments and distributions required to be made under the Plan have been made, all events required under the Plan to have occurred have occurred, and all other obligations required to be performed under the Plan have been made and performed by the Debtor or Reorganized Rose's, the Bankruptcy Court shall retain such jurisdiction as is legally permissible, including, but not limited to, the following: (a) To hear and determine any and all objections to the allowance of a Claim or Interest or any controversy as to the classification of Claims or Interests or Reserves; (b) To hear and determine any and all applications by Professionals for compensation and reimbursement of expenses; (c) To hear and determine any and all pending applications for the rejection and disaffirmance of executory contracts and unexpired leases and fix and allow any Claims resulting therefrom; (d) To enable the Debtor, or Reorganized Rose's, to prosecute any and all proceedings which have been or may be brought prior to the Effective Date, to set aside liens or encumbrances and to recover any transfers, assets, properties or damages to which the Debtor or Reorganized Rose's may be entitled under applicable provisions of the Bankruptcy Code or any other federal, state or local laws except as may be waived pursuant to the Plan or this Order; (e) To liquidate any disputed, contingent or unliquidated Claims or Interests; (f) To enforce the provisions of the Plan and the injunction and releases provided for in Article IX of the Plan; (g) To correct any defect, cure any omission, or reconcile any inconsistency in the Plan or in this Confirmation Order as may be necessary to carry out its purpose and the intent of the Plan, provided, however, that no such proposed correction, cure or reconciliation shall modify, alter or amend the express provisions of the Plan without the express written consent of the Plan Proponents and GE Capital; (h) To hear and determine any and all Avoiding Power Actions; (i) To determine any Tax Claim which the Debtor or Reorganized Rose's, as applicable, may incur as a result of the transactions contemplated in the Plan; (j) To determine such other matters as may be provided for in this Confirmation Order or as may be authorized under the provisions of the Bankruptcy Code; (k) To resolve any and all disputes that may arise under the Plan; (l) To hear and determine any and all administrative matters that may arise in closing the Chapter 11 Case, including the entry of the Final Decree; (m) To enforce any rights and remedies pursuant to the New Rose's Secured Notes and the New Rose's Secured Notes Documents, and to resolve and adjudicate any and all issues arising under the New Rose's Secured Notes and the New Rose's Secured Notes Documents, and if any obligations then remain outstanding under the New Rose's Secured Notes, to enforce any rights and remedies and to resolve and adjudicate any and all issues arising under the Post-Effective Date Financing Facility, including any rights or remedies of the Collateral Agent, any Pre-Petition Lender or the Post-Effective Date Lender upon an Event of Default or an event of default under the New Rose's Secured Notes Documents or the Post- Effective Date Financing Facility, as the case may be (including issues relating to Section 5.1.4 of the Plan); and (n) All other matters with respect to which the Bankruptcy Court's retention of jurisdiction over the Chapter 11 Case is legally permissible, including without limitation, jurisdiction as is necessary to ensure that the provisions of the Plan are implemented. 22. Claims Involving Debtor and GOB2 Landlords. Confirmation of the Plan and the entry of this Order shall not affect the rights of the Debtor or the landlords who held leases of the GOB2 Stores (as such term is defined in Section III.F.2 of the Disclosure Statement) (collectively, the "GOB2 Landlords") concerning the claims each may have against the other, if any, and all remedies each may have are hereby preserved notwithstanding confirmation or any provision of the Plan reciting the purported status of such claims or the Debtor's performance of its obligations under the leases with the GOB2 Landlords, including Article X (Section 10.3) of the Plan regarding the Debtor's compliance with the leases with the GOB2 Landlords and relevant provisions of the Bankruptcy Code. 23. Modification or Amendment. The Plan may be modified or amended before or after Confirmation as provided in Section 1127 of the Bankruptcy Code and in Section 12.7 of the Plan if, in the opinion of the Bankruptcy Court, the modification does not materially and adversely affect the interests of holders of Claims and Interests; provided, however, that any such altered or amended plan shall not be binding on GE Capital without the prior written consent of GE Capital. The Plan may be modified or amended before or after the Confirmation Date in a manner which, in the opinion of the Bankruptcy Court, materially and adversely affects holders of Claims and Interests, only on consent of all Plan Proponents and GE Capital and after a further hearing and acceptance of the Plan as so altered or modified as provided in Section 1126 of the Bankruptcy Code. 24. Payment of Professional Fees and Expenses. During the period from the Confirmation Date through and including the Effective Date, Professionals employed by the Debtor or the Committees may be paid compensation and reimbursement of expenses monthly in arrears in full in Cash upon the submission of invoices to the Debtor and the Committees. All Professional Fees for services rendered after the Effective Date in connection with the Debtor or Reorganized Rose's, as the case may be, the Chapter 11 Case and/or the Plan shall be paid by the Debtor or Reorganized Rose's, as the case may be, pursuant to the provisions of the Plan or upon such other terms as agreed to by the Debtor (or Reorganized Rose's, as the case may be) and the particular Professional without further Bankruptcy Court review or authorization. In all circumstances, the fees of the professionals of the Pre-Petition Lenders shall be paid in accordance with the Second Supplemental Adequate Protection Consent Order. 25. Final Fee Application. All final applications relating to Professional Fees for the period up to and including the Confirmation Date shall be filed with the Bankruptcy Court within sixty (60) days after the Confirmation Date. Each such application shall comply with the applicable provisions of the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure and the Local Bankruptcy Rules, and shall set forth, among other things, (a) the name and address of the applicant; (b) the nature of the professional or other services rendered and expenses for which reimbursement is requested for all periods from the date the particular applicant was retained through the date of the application, including the nature of services contemplated to be rendered by the applicant from the date of the application to and including the final fee hearing; (c) the amount of compensation and reimbursement of expenses requested for the period commencing October 1, 1994 (or such earlier date as may be applicable for a particular professional) through and including the Confirmation Date; (d) whether any payments have been received on account and, if so, the amount thereof; and (e) the amounts of compensation and reimbursement of expenses previously allowed by the Court, if any. 26. Failure to Claim Undeliverable Distributions. Except upon a showing of (a) excusable neglect and (b) no prejudice to any Persons who have received a distribution under the Plan (as determined by the Bankruptcy Court), any holder of an Allowed Claim or Common Stock Interest that does not assert a right to receive a distribution of Cash or shares of New Rose's Common Stock pursuant to the Plan within one year after the first distribution shall have its right to receive such undeliverable distribution discharged and shall be forever barred from asserting any such right for an undeliverable distribution against the applicable Distribution Agent and Reorganized Rose's or the Debtor, as applicable, or its property. 27. Taxes. All transactions or transfers of property by the Debtor and Reorganized Rose's that are contemplated by, made pursuant to, or in connection with the Plan shall be, and hereby are, deemed to be transfers under the Plan and therefore free from the imposition of taxes of the kind specified in Section 1146(c) of the Bankruptcy Code. 28. Treatment of Taxes. Notwithstanding anything to the contrary in the Plan or this Order: (a) Sections 9.1 and 9.7 of the Plan shall apply only to those federal taxes that arose prior to the Confirmation Date, (b) Section 9.2 of the Plan shall not pertain to the collection of any potential trust fund taxes pursuant to I.R.C. Section 6672, (c) Section 11.2(i) of the Plan shall be limited (only as it applies to federal taxes) such that it shall only apply to those federal taxes incurred as of the Confirmation Date and (d) payments to the Internal Revenue Service, with respect to priority taxes pursuant to Section 1129(a)(9)(C) of the Bankruptcy Code, shall be made in equal quarterly payments with interest at 8% per annum, accruing from the Confirmation Date until full payment is made, and the first such quarterly payment shall be made within fifteen (15) days after the Effective Date. 29. Full and Final Satisfaction. Except as expressly provided in the Plan, all payments and all distributions under the Plan shall be in full and final satisfaction, settlement, release and discharge of all Claims and Interests against the Debtor. 30. Conflicts. In the event of any conflict between the provisions of this Order, the Second Supplemental Adequate Protection Consent Order, the Plan or any other order that may be entered in this case after entry of the Second Supplemental Adequate Protection Consent Order or any succeeding case or proceeding, the provisions of the Second Supplemental Adequate Protection Consent Order shall govern with regard to the matters addressed therein, unless otherwise agreed to in writing by each of the Plan Proponents and GE Capital; and, provided, further, that except as expressly set forth in this Order or the Plan, nothing herein shall modify, alter or amend the DIP Financing Orders and the Supplemental Adequate Protection Orders in a manner which would impair or diminish any right or benefit of the Pre-Petition Lenders thereunder. 31. Ratification of Actions. All transactions effected pursuant to order of the Bankruptcy Court by the Debtor and/or any successors to, or designees of, the Debtor, including Reorganized Rose's (if applicable), during the period commencing on the Filing Date and ending on the Confirmation Date and such other transactions as of the Effective Date which have been taken pursuant to the Plan and this Order in implementation thereof are hereby ratified. 32. Notice. Notice of entry of this Order, shall be, and hereby is, deemed sufficient if served by first class mail upon all persons having (a) filed a notice of appearance herein within twenty (20) days from the date hereof, and (b) appeared at the Confirmation Hearing. Dated: Raleigh, North Carolina December 14, 1994 /s/ Judge A. Thomas Small UNITED STATES BANKRUPTCY JUDGE IN THE UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA RALEIGH DIVISION In Re: CASE NO. 93-01365-5-ATS ROSE'S STORES, INC., (CHAPTER 11) (Tax ID #56-0382475), Debtor. ___________________________ CONSENT ORDER APPROVING JOINT MOTION OF DEBTOR, OFFICIAL COMMITTEE OF EQUITY SECURITY HOLDERS AND THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS TO SET CLASS 5 SUBSCRIPTION PRICE AND MAKE TECHNICAL MODIFICATIONS TO PLAN OF REORGANIZATION THIS MATTER coming on before the undersigned Bankruptcy Judge upon the joint motion of Rose's Stores, Inc. (the "Debtor"), the Official Committee of Equity Security Holders of the Debtor (the "Equity Committee") and the Official Committee of Unsecured Creditors of the Debtor (the "Unsecured Committee") (collectively, the "Movants"), for the entry of an ex parte order establishing a Class 5 Subscription Price and permitting technical modifications to the First Amended Joint Plan of Reorganization (the "Joint Plan"), and following a review of the Joint Motion and notice as required by the Court, the Court finds as follows: 1. The Movants have requested that this Court enter an order pursuant to Section 1.33 of the Joint Plan confirmed on December 14, 1994, and sections 1127 and 105 of the Bankruptcy Code, (a) establishing the Class 5 Subscription Price, as that term is defined in the Joint Plan, at $6.50 per share, and (b) making technical modifications to the Joint Plan to reflect the establishment of the Class 5 Subscription Price. 2. The Debtor filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code on September 5, 1993 (the "Petition Date") and is operating as a debtor-in-possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. 3. The Debtor owns and operates a chain of 113 retail discount stores located in the mid-Atlantic and Southeastern United States. 4. On December 14, 1994, this Court confirmed the Joint Plan. The Joint Plan was a product of intense negotiation between the Debtor, the Unsecured' Committee, the Equity Committee and the Debtor's secured lenders. 5. If the Joint Plan becomes effective, and if the Alternative Treatment provisions thereof are not effective, holders of Common Stock Interests as of February 7, 1995 will have the collective right to purchase up to 10 million shares of New Rose's Common Stock to be issued by Reorganized Rose's on the Effective Date of the Joint Plan. This offering is referred to in the Joint Plan as the "Rights Offering." The per share price of the New Rose's Common Stock to be purchased in the Rights Offering will be determined either (a) by calculating 50% of the Full Recovery Target Amount divided by 10 million (the number of shares of New Rose's Common Stock available in the Rights Offering) or, (b) by agreement between the Equity Committee and the Creditors' Committee (hereinafter the "Committees") pursuant to Section 1.33 of the Joint Plan. [FN] All capitalized terms not defined herein have the meanings given them in the Joint Plan. The Full Recovery Target Amount is defined in Section 1.70 of the Joint Plan as the amount of Allowed Claims in Class 3 (except for those to be satis- fied by Cash payment pursuant to this Plan or order of the Bankruptcy Court) plus the total Reserve Amount as of such date, if any, determined pursuant to Section 7.12 of the Plan for all Disputed Claims in Class 3. Section 1.33 of the Joint Plan provides that "the Class 5 Subscription Price may be fixed by order of the Bankruptcy Court entered upon Joint Motion of the Committees and on appropriate notice and hearing." [/FN] 6. The Joint Plan contemplates that, in the absence of an agreement on the Class 5 Subscription Price, the Debtor will send on or about February 12, 1995, a Class 5 Rights Notice to holders of Common Stock Interests. The Class 5 Rights Notice will contain the Class 5 Subscription Price based upon the current Full Recovery Target Amount. Pursuant to Section 7.10(b) of the Joint Plan, beginning on March 24, 1995 and continuing for not more than three consecutive Business Days thereafter, the Debtor must cause to be published in the Wall Street Journal, at a cost of no more than $40,000, notice of the Class 5 Subscription Price as adjusted as of March 24, 1995. 7. A determination of the Full Recovery Target Amount on or about February 7, 1995 for use on February 12, 1995 would not be reflective of the ultimate amount of Allowed Claims in Class 3. At this time, the Debtor has filed numerous omnibus objections to claims. The Court is in the process of entering orders allowing the objections where no responses have been filed, and the Debtor is trying to determine appropriate settlements, where possible, with creditors which have filed responses. The allowability of many landlord claims may be delayed pending rulings by this Court on the "recoupment issue." Therefore, the Full Recovery Target Amount could equal approximately $200,000,000 as of February 7, 1995. This would require a Class 5 Subscription Price of approximately $10.00 per share in a Class 5 Rights Notice sent on February 12, 1995. 8. By March 24, 1995, the Debtor believes most objections to claims will be resolved such that the reserves for Disputed Claims will primarily include amounts for claims in the Alternative Dispute Resolution Procedure. A much more accurate Full Recovery Target Amount would then be available for publication. 9. After negotiations between the Committees regarding only the claims filed, the objections pending, and the likelihood of success of such objections, the Committees have reached an agreement on a Class 5 Subscription Price at $6.50 per share and believe this price is generally reflective of 50% of $130,000,000, the anticipated amount of Allowed Claims in Class 3. No discussions were had regarding the contents of the Class 5 Rights Notice soliciting the Class 5 Subscription. The Debtor did not participate in the negotiations, other than provide information on the status of claims resolution, but does not object to $6.50 as the Class 5 Subscription Price. 10. Resolution of the Class 5 Subscription Price by motion, as contemplated in Section 1.33 of the Joint Plan, results in cost savings to the estate by eliminating the need to perform a continuing calculation of the Class 5 Subscription Price, and by eliminating the need for publication of the Class 5 Subscription Price on March 24, 1995 as provided in Section 7.10(b) of the Joint Plan. Elimination of the publication will save the estate up to $40,000. 11. Technical modifications to the Plan are required to effectuate the establishment of the Class 5 Subscription Price. These modifications are attached hereto as Exhibit A. These modifications do not materially affect the treatment of any claims or interests under the Joint Plan as confirmed, but rather clarify the fact that a Class 5 Subscription Price has been reached set at $6.50 per share. 12. The agreement of all Plan Proponents to the terms of this order are reflected by their execution of this order; now therefore, IT IS ORDERED that the Class 5 Subscription Price is set at $6.50 per share and the technical modifications to the Joint Plan set forth in Exhibit "A" hereto are approved. Dated: February 3, 1995 _/s/ Judge A. Thomas Small_________ United States Bankruptcy Judge We consent: By: _/s/ Benjamin Waisbren, Esq._____ Benjamin Waisbren, Esq. Michael Yetnikoff, Esq. Lord, Bissell & Brook 115 South LaSalle Street Chicago, Illinois 60603 _/s/ Lacy M. Presnell, III, Esq._ Lacy M. Presnell, III, Esq. Burns, Day & Presnell, P.A. 2626 Glenwood Avenue, Suite 560 Raleigh, North Carolina 27605 COUNSEL FOR THE EQUITY COMMITTEE _/s/ Glenn B. Rice, Esq.________ Glenn B. Rice, Esq. Otterbourg, Steindler, Houston & Rosen, P.C. 230 Park Avenue New York, New York 10169 _/s/ N. Hunter Wyche, Jr., Esq._ N. Hunter Wyche, Jr., Esq. Wyche & Story P. O. Box 1389 Raleigh, North Carolina 27602 COUNSEL FOR CREDITORS' COMMITTEE _/s/ Michael E. Foreman, Esq.____ Michael E. Foreman, Esq. Proskauer, Rose, Goetz & Mendelsohn 1585 Broadway, 25th Floor New York, New York 10036 _/s/ Terri L. Gardner, Esq.______ Terri L. Gardner, Esq. Smith, Debnam, Hibbert & Pahl 4700 New Bern Avenue Raleigh, North Carolina 27611 COUNSEL FOR THE DEBTOR _/s/ Jeffrey L. Glatzer, Esq.______ Jeffrey L. Glatzer, Esq. Anderson Kill Okick & Oshinsky, P.C. 1251 Avenue of the Americas New York, NY 10020 _/s/ William A. Mann, Esq._________ William A. Mann, Esq. Ragsdale, Liggett & Foley Cross Pointe Plaza 2840 Plaza Place Raleigh, North Carolina 27612 COUNSEL FOR BANK OF TOKYO, LTD. _/s/ Thomas H. Day, Esq.___________ Thomas H. Day, Esq. Hebb & Gitlin One State Street Hartford, CT 06103-3178 _/s/ Gregory B. Crampton, Esq._____ Gregory B. Crampton, Esq. Merriman, Nicholls & Crampton, P.A. 100 Saint Albans Drive, Suite 200 Raleigh, North Carolina 27619 COUNSEL FOR THE PRE-PETITION SECURED NOTEHOLDERS IN THE UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA RALEIGH DIVISION In Re: CASE NO. 93-01365-5-ATS ROSE'S STORES, INC., (CHAPTER 11) (Tax ID #56-0382475), Debtor. ___________________________ CONSENT ORDER APPROVING MOTION FOR ORDER AUTHORIZING TECHNICAL MODIFICATIONS TO JOINT PLAN OF REORGANIZATION REGARDING RECORD DATES FOR DISTRIBUTIONS TO CLASS 5 THIS MATTER coming on before the undersigned Bankruptcy Judge upon the motion of Rose's Stores, Inc. (the "Debtor") for the entry of an ex parte order authorizing technical modifications to the Joint Plan of Reorganization regard- ing record dates for distributions to Class 5 (the "Motion"), and following a review of the Motion and notice as required by the Court, the Court finds as follows: 1. The Debtor has requested this Court to enter an order pursuant to Section 12.7 of the Joint Plan and sections 1127 and 105 of the Bankruptcy Code permitting technical modifications to the Joint Plan to redefine Equity Record Date and Record Date as discussed herein. 2. The Debtor filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code on September 5, 1993 (the "Petition Date") and is operating as a debtor-in-possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. 3. The Debtor owns and operates a chain of 113 retail discount stores located in the mid-Atlantic and Southeastern United States. 4. On December 14, 1994, this Court confirmed the Joint Plan. The Joint Plan was the product of intense negotiations among the Debtor, the Official Committee of Unsecured Creditors (the "Unsecured Committee"), the Official Committee of Equity Security Holders (the "Equity Committee") and the Debtor's secured lenders. 5. Section 1.63 of the Joint Plan defines "Equity Record Date" as "the Record Date for purposes of making distributions under this Plan to holders of Common Stock Interests, which date shall be February 7, 1995." Section 1.114 defines "Record Date" as follows: Record Date shall mean (a) for the purpose of voting on this Plan, the date of entry of the order approving the Disclosure Statement, (b) for the purposes of any distribution and payments under and pursuant to this Plan other than to holders of Common Stock Interests, the Effective Date, or (c) for the purpose of any distribution to the holders of Common Stock Interests, the Equity Record Date. 6. Assuming that the Joint Plan becomes effective and the Alternative Treatment Events do not occur, each holder of a Common Stock Interest in Class 5 shall receive, in exchange for such Interest, (i) its Pro- Rata share of the New Rose's Warrants, within thirty days after the Effective Date, (ii) its Pro-Rata share of the New Rose's Common Stock Secondary Distribu- tion, if any, after the Determination Date, and (iii) the non-transferrable right to pay Cash to acquire shares of New Rose's Common Stock in accordance with the Class 5 Subscription pursuant to Section 7.10 of the Plan and the Class 5 Rights Notice. 7. Section 7.4 of the Joint Plan provides that, as of the close of business on the Effective Date (or with respect to Common Stock Interests, the Equity Record Date), the transfer ledgers or registers and any other records determining record ownership of the Debtor's equity and debt instruments maintained by the Debtor or the Collateral Agent shall be closed and there can be no further changes in the record holders of Interests. This Section further [FN] All capitalized terms not defined herein shall have the meanings set forth in the Joint Plan. [/FN] provides, with regard to Interests, that the Debtor shall have no obligation to recognize any thereafter occurring transfers of Interests, but shall be entitled to recognize only those Persons who were holders of Interests on the Effective Date or Equity Record Date, as applicable. 8. An issue has arisen regarding the trading of Common Stock Interests after the Equity Record Date. The Joint Plan provides that the transfer ledgers recording ownership of the Debtor's Common Stock Interests shall be closed after the Equity Record Date. 9. The Debtor has been advised by legal counsel and believes that, based upon the provisions in the Joint Plan cited above, NASDAQ may halt the trading of the Debtor's stock and delist the Debtor's stock. This action would restrict the ability of holders of the existing stock to continue trading the stock based on the anticipated or possible value of the warrants and might also cause the Debtor to incur significant additional fees and charges from NASDAQ with respect to the listing of the new common stock and warrants. The Debtor has further been advised by legal counsel and believes that normal practice in the Chapter 11 cases of publicly held companies in which the exist- ing stock will be canceled is for the record date for distributions to such holders to be the same as the effective date of the plan. The Debtor believes that the Joint Plan is not clear as to the intention of the parties with respect to continued trading of the existing stock after the Equity Record Date which is February 7, 1995. The Joint Plan does not provide for any notice, other than distribution of the Joint Plan itself, which would give notice of the termina- tion of trading of the existing stock after February 7. 10. After discussions with the Debtor's securities counsel and bankruptcy counsel, the Debtor proposes that the Equity Record Date remain February 7, 1995 for the Class 5 Subscription. At this time, the Class 5 Rights Notice is being prepared for mailing to record holders of Common Stock Interests no later than February 12, 1995. However, with regard to the distribution of New Rose's Warrants and any distribution from the New Rose's Common Stock Secondary Distribution, the Debtor proposes that the record date be the Effec- tive Date. On the Effective Date, all existing common stock is considered canceled under Section 7.4 of the Joint Plan such that no further trading can or should occur. Immediately after the Effective Date, the New Rose's Common Stock should begin trading on a when-issued basis. 11. The modifications required in the Joint Plan to effectuate the change specified in paragraph 10 will be as follows: Section 1.63 should be revised to delete the words "making distributions under this Plan" and to insert the words "distributing the rights to participate in the Class 5 Subscription." Section 1.114(b) should be revised to insert the words "the rights to participate in the Class 5 Subscription" immediately before the words "to holders of." Section 1.114(c) should be revised to delete the words "any distributions" and to insert the words "distributing the rights to participate in the Class 5 Subscription." Section 7.4 should be revised (i) to delete, in line 6 thereof, the words "(or with respect to Common Stock Interests, the Equity Record Date)" and (ii) to delete, in line 13 thereof, the words "(or the Equity Record Date, as applicable)." 12. The Debtor believes that these changes will benefit current holders of Common Stock Interests by allowing them to continue trading their Common Stock Interests prior to the Effective Date. Furthermore, the Debtor will be benefitted with regard to protection of its NASDAQ listing. 13. The Pre-Petition Secured Noteholders have not executed this consent order. However, they do not object to its entry by the Court; now therefore, IT IS ORDERED that the technical modifications to the Joint Plan as set forth herein are approved. Dated: February 13, 1995 _/s/ Judge A. Thomas Small____________ United States Bankruptcy Judge We consent: By: _/s/ Benjamin Waisbren, Esq._____ Benjamin Waisbren, Esq. Michael Yetnikoff, Esq. Lord, Bissell & Brook 115 South LaSalle Street Chicago, Illinois 60603 _/s/ Lacy M. Presnell, III, Esq._ Lacy M. Presnell, III, Esq. Burns, Day & Presnell, P.A. 2626 Glenwood Avenue, Suite 560 Raleigh, North Carolina 27605 COUNSEL FOR THE EQUITY COMMITTEE _/s/ Glenn B. Rice, Esq._________ Glenn B. Rice, Esq. Otterbourg, Steindler, Houston & Rosen, P.C. 230 Park Avenue New York, New York 10169 _/s/ N. Hunter Wyche, Jr., Esq._ N. Hunter Wyche, Jr., Esq. Wyche & Story P. O. Box 1389 Raleigh, North Carolina 27602 COUNSEL FOR CREDITORS' COMMITTEE _/s/ Michael E. Foreman, Esq.____ Michael E. Foreman, Esq. Proskauer, Rose, Goetz & Mendelsohn 1585 Broadway, 25th Floor New York, New York 10036 _/s/ Terri L. Gardner, Esq.______ Terri L. Gardner, Esq. Smith, Debnam, Hibbert & Pahl 4700 New Bern Avenue Raleigh, North Carolina 27611 COUNSEL FOR THE DEBTOR _/s/ Jeffrey L. Glatzer, Esq.______ Jeffrey L. Glatzer, Esq. Anderson Kill Okick & Oshinsky, P.C. 1251 Avenue of the Americas New York, NY 10020 _/s/ William A. Mann, Esq._________ William A. Mann, Esq. Ragsdale, Liggett & Foley Cross Pointe Plaza 2840 Plaza Place Raleigh, North Carolina 27612 COUNSEL FOR BANK OF TOKYO, LTD.