Common use of Perfection and Priority of Security Interests Clause in Contracts

Perfection and Priority of Security Interests. (a) Any and all security interests, mortgages, assignments, pledges and other liens, charges or encumbrances now existing or hereafter created or arising in favor of the Junior Collateral Agent for its benefit and the benefit of any holder of Junior Secured Obligations are expressly junior in priority, operation and effect to any and all security interests, mortgages, assignments, pledges and other liens, charges or encumbrances now existing or hereafter created or arising in favor of the Collateral Agent for the benefit of the Senior Secured Parties, notwithstanding anything to the contrary contained in any agreement or filing to which the Guarantor, the Borrower or the Junior Collateral Agent may now or hereafter be a party, and irrespective of the time, order or method of attachment or perfection of any mortgages, financing statements or other security interests, assignments, pledges and other liens, charges or encumbrances or any defect or deficiency or alleged defect or deficiency in any of the foregoing. Any assets and properties of the Guarantor or the Borrower or any of their respective subsidiaries now or from time to time hereafter given, granted, assigned or pledged to secure both the Senior Secured Obligations and the Junior Secured Obligations shall be subject to the priority established by this Section 1. (b) At all times until the Senior Secured Obligations shall have been paid and satisfied in full, the Collateral Agent shall be entitled to sell, transfer or otherwise dispose of or deal with the Collateral as provided in the Senior Security Documents, in each case without regard to the Junior Security Interests therein, or any rights to which the Junior Secured Parties would otherwise be entitled as a result of such Junior Security Interests, the only obligation of the Collateral Agent to the Junior Secured Parties in respect thereof being to act in a commercially reasonable manner in making any such disposition of the Collateral and to deliver to the Junior Collateral Agent (unless otherwise directed by a court of competent jurisdiction) any proceeds remaining from the sale of the Collateral after such payment and satisfaction in full of the Senior Secured Obligations or, if the Collateral Agent shall still be in possession of all or any part of the Collateral after such payment and satisfaction in full, the Collateral or such part thereof remaining, without representation or warranty on the part of the Collateral Agent or the Senior Secured Parties; provided that, except as aforesaid, nothing contained in this sentence shall be construed to give rise to, nor shall the Junior Secured Parties have, any claims whatsoever against any Senior Secured Party on account of any act or omission to act in connection with the exercise of any right or remedy of the Senior Secured Parties with respect to the Collateral. Except as provided in Section 2(b) below, the Junior Collateral Agent shall not, and shall not attempt to, exercise any rights with respect to the Junior Security Interests in the Collateral, whether pursuant to the Junior Security Documents or otherwise, until such payment and satisfaction in full of the Senior Secured Obligations. (c) For the sole purpose of perfecting the Junior Security Interests in items of Collateral in which a security interest can be perfected only by possession, the Collateral Agent acknowledges that it holds such items of Collateral for itself and the Senior Secured Parties and as bailee for the Junior Collateral Agent on behalf of the Junior Secured Parties, subject to the terms and conditions hereof.

Perfection and Priority of Security Interests. (a) Any and all security interests, mortgages, assignments, pledges and other liens, charges or encumbrances now existing or hereafter created or arising All Junior Liens in favor of the Junior Collateral Agent for its benefit and the benefit respect of any holder of Junior Secured Obligations Collateral are expressly subordinated and made junior in priority, operation and effect to any and all security interests, mortgages, assignments, pledges and other liens, charges or encumbrances now existing or hereafter created or arising the Applicable Senior Liens in favor respect of the Collateral Agent for the benefit of the Senior Secured Partiessuch Collateral, notwithstanding anything to the contrary contained in this Agreement, any Other Security Document or any other agreement or filing to which the Guarantor, the Borrower or the Junior Collateral Agent may now or hereafter be a partycontrary, and irrespective of the time, order or method of attachment or perfection of any mortgages, financing statements or other security interests, assignments, pledges such Junior Liens and other liens, charges or encumbrances the Applicable Senior Liens or any defect or deficiency or alleged defect or deficiency in any of the foregoing. Any assets and properties . (b) Each Secured Party holding Obligations secured by a Junior Lien acknowledges that a portion of the Guarantor or Applicable Senior Obligations consists of Indebtedness that is revolving in nature and that the Borrower or amount thereof that may be outstanding at any of their respective subsidiaries now time or from time to time hereafter givenmay be increased or reduced and subsequently reborrowed, grantedand that the terms of the Applicable Senior Obligations may be modified, assigned extended or pledged amended from time to secure both the Senior Secured Obligations time, and the aggregate amount of the Applicable Senior Obligations may be increased, replaced or refinanced, all without notice to or consent by such Secured Party and without affecting the provisions hereof. The lien priorities provided for herein and in the Other Security Documents shall not be altered or otherwise affected by any amendment, modification, supplement, extension, increase, replacement, renewal, restatement or refinancing of either the Obligations secured by any Junior Lien or the Applicable Senior Obligations, or by any action that the Collateral Agent or the Secured Parties holding any of such Obligations shall be subject may take or fail to the priority established by this Section 1take in respect of any Collateral. (bc) At all times Each Secured Party holding Obligations secured by a Junior Lien acknowledges and agrees that the Collateral Agent and the holders of the Applicable Senior Obligations shall have no duties or other obligations to such Secured Party with respect to the Collateral subject to such Junior Lien other than to transfer to the holders of the Obligations secured by such Junior Lien the proceeds, if any, that remain following any sale, transfer or other disposition of such Collateral and the payment and satisfaction in full of the Applicable Senior Obligations. In furtherance of the foregoing, each Secured Party holding Obligations secured by a Junior Lien acknowledges and agrees that until the Applicable Senior Secured Obligations shall have been paid and satisfied in full, the Collateral Agent shall be entitled entitled, for the benefit of the holders of the Applicable Senior Obligations, to sell, transfer or otherwise dispose of or deal with the Collateral subject to such Junior Lien as provided herein and in the Senior Other Security Documents, in each case Documents without regard to the such Junior Security Interests therein, Lien or any rights to which the Junior Secured Parties holders of the Obligations secured thereby would otherwise be entitled as a result of such Junior Security InterestsLien, the only obligation of the Collateral Agent and the holders of the Applicable Senior Obligations to the holders of the Obligations secured by such Junior Secured Parties in respect thereof Lien being to act in a commercially reasonable manner in making any such disposition of the Collateral and to deliver to the Junior Collateral Agent (unless otherwise directed by a court of competent jurisdiction) any proceeds remaining from the sale such sale, transfer or other disposition of the applicable Collateral after the payment and satisfaction in full of the Applicable Senior Obligations. Each Secured Party holding Obligations secured by a Junior Lien agrees that it will not, and will not attempt to, exercise or instruct the Collateral Agent to exercise any rights that it may have as a result of such Junior Lien until the payment and satisfaction in full of the Senior Secured Obligations or, if the Collateral Agent shall still be in possession of all or any part of the Collateral after such payment and satisfaction in full, the Collateral or such part thereof remaining, without representation or warranty on the part of the Collateral Agent or the Senior Secured Parties; provided that, except as aforesaid, nothing contained in this sentence shall be construed to give rise to, nor shall the Junior Secured Parties have, any claims whatsoever against any Senior Secured Party on account of any act or omission to act in connection with the exercise of any right or remedy of the Senior Secured Parties with respect to the Collateral. Except as provided in Section 2(b) below, the Junior Collateral Agent shall not, and shall not attempt to, exercise any rights with respect to the Junior Security Interests in the Collateral, whether pursuant to the Junior Security Documents or otherwise, until such payment and satisfaction in full of the Senior Secured Obligations. (c) For the sole purpose of perfecting the Junior Security Interests in items of Collateral in which a security interest can be perfected only by possession, the Collateral Agent acknowledges that it holds such items of Collateral for itself and the Senior Secured Parties and as bailee for the Junior Collateral Agent on behalf of the Junior Secured Parties, subject to the terms and conditions hereof.

Perfection and Priority of Security Interests. (a) Any and all security interests, mortgages, assignments, pledges and other liens, charges or encumbrances now existing or hereafter created or arising in favor of the Junior Trustee in the Collateral Agent for its benefit with respect to the New Note Security Agreement and the benefit of any holder of Junior Secured Obligations New Note Mortgages, are expressly junior in priority, operation and effect to any and all security interests, mortgages, assignments, pledges and other secured claims, liens, charges or encumbrances now existing or hereafter created or arising in favor of Bank One with respect to the security interests and liens in and to the Collateral Agent for granted under the benefit of the Senior Bank One Restated Secured PartiesLoan Agreement and Mortgages, notwithstanding anything to the contrary contained in any agreement or filing to which the Guarantor, the Borrower or the Junior Collateral Agent Trustee may now or hereafter be a party, and irrespective of the time, order or method of attachment or perfection of any mortgages, financing statements or other security interests, assignments, pledges and other liens, charges or encumbrances or any defect or deficiency or alleged defect or deficiency in any of the foregoing. Any assets . (b) The Trustee, on behalf of itself and properties the holders of the Guarantor or New Notes, hereby acknowledges that the Borrower or Bank One Senior Obligations represent, in part, indebtedness that is revolving in nature and that the amount thereof that may be outstanding at any of their respective subsidiaries now time or from time to time hereafter givenmay be increased or reduced (even to $0) and subsequently reborrowed, grantedand that the terms of the Bank One Senior Obligations may be modified, assigned extended, amended, restated, compromised, supplemented, terminated, waived or pledged released from time to secure both the Senior Secured Obligations time, and the Junior Secured aggregate amount of the Bank One Senior Obligations shall may be subject increased, renewed, replaced or refinanced, all without notice to or consent by the priority established by Trustee and without affecting the provisions hereof. The lien priorities provided in this Section 12.02 shall not be altered or otherwise affected by any amendment, modification, supplement, extension, increase, replacement, renewal, restatement or refinancing of either the Bank One Senior Obligations, the New Indenture, the New Note Security Agreement, the New Note Mortgages, or any portion thereof, nor by any action that Bank One or the Trustee may take or fail to take in respect of the Collateral. (bc) At all times until For purposes of perfecting the Senior Secured Obligations shall have been paid Trustee's security interest in the Collateral and satisfied in fullthe proceeds thereof, the Collateral Agent shall be entitled to sellparties hereby acknowledge that the Borrowers will, transfer at their sole cost and expense, perform any and all acts and execute and file such UCC-1 financing statements and mortgage deeds or otherwise dispose deeds of or deal with trust covering the Collateral as provided shall be necessary or advisable to in order to grant and make effective the security interest and/or liens of the Trustee in and to the Collateral. The parties agree that all UCC-1 financing statements, mortgage deeds or deeds of trust or similar such documents, filed to make effective and maintain the Trustee's security interests and/or liens in the Senior Security Documents, Collateral shall be in each case without regard form satisfactory to Bank One and shall contain the notation substantially a follows: "The interest of the [Secured Party] [Mortgagee] in the [collateral] [real property] described herein is junior and subordinate to the Junior interests of Bank One and its successors and assigns, under that certain [Amended and Restated Bank One Loan and Security Interests thereinAgreement] [Mortgage Deed] (as amended, supplemented or otherwise modified from time to time) with Borrowers, pursuant to that certain Intercreditor Agreement among Bank One, N.A., Wells Fargo Bank, National Association, as Trustee, Continental Conxxxxx and Equipment Company and Goodman Conveyor Company (as amended, supplemented or otherwise modxxxxx xrom time to time)." (d) The arrangements described in paragraphs (a), (b) and (c) above shall in no way be construed as imposing any rights duties or other obligations on Bank One other than to which the Junior Secured Parties would otherwise be entitled as a result of such Junior Security Interests, the only obligation of the Collateral Agent transfer to the Junior Secured Parties in respect thereof being to act in a commercially reasonable manner in making any such disposition of the Collateral and to deliver to the Junior Collateral Agent Trustee (unless otherwise directed by or as a court of competent jurisdictionjurisdiction may otherwise direct) the proceeds, if any, that remain following a sale, transfer or other disposition of all or any proceeds remaining from the sale portion of the Collateral after such by Bank One and the payment and satisfaction in full of the any and all Bank One Senior Secured Obligations or, if the Collateral Agent Bank One shall still be in possession of all or any part of the Collateral after such payment and satisfaction in full, the Collateral or such part thereof remaining, without representation or warranty on the part of Bank One. At all times until the Bank One Senior Obligations shall have maintaining any proceedings or action to foreclose and enforce Bank One's liens and security interests with respect to any part or all of the Collateral, then the Trustee may file protective pleadings in such proceedings and actions to assert its junior lien and security interests in the Collateral Agent so long as the Trustee does not interfere with or impede such action or proceeding of Bank One. (e) In the event a proceeding under Title 11 of the U.S. Code (the "Bankruptcy Code") or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law shall be commenced by or against any Borrower, the Trustee shall not file any objection based upon the failure to provide adequate protection for its junior lien and/or security interest to any motion filed in such proceeding seeking: (i) authorization for such Borrower under Section 363 of the Bankruptcy Code (or the Senior Secured Partiesanalogous provision of such other law) to use cash collateral (as defined therein) to the extent that Bank One has given its consent, (ii) authorization for such Borrower under Section 364 of the Bankruptcy Code (or the analogous provision of such other law) to incur secured indebtedness and priority administration indebtedness to Bank One or an affiliate of Bank One for loans (a "Bank One DIP Loan") that may be made by Bank One or an affiliate of Bank One to such Borrower after the commencement and/or termination of such proceedings, and to secure the repayment and performance of such post-petition indebtedness (and interest thereon and costs and expenses in connection therewith) by granting to Bank One or such affiliate of Bank One a first-priority security interest in and a first-priority lien on any part or all the Collateral, (iii) authorization for such Borrower under Section 364 of the Bankruptcy Code (or the analogous provision of such other law), to grant to Bank One or such affiliate of Bank One a first priority security interest in and a first-priority lien on any part or all the Collateral and (iv) authorization for such Borrower under the Bankruptcy Code to grant Bank One adequate protection, whether in the form of cash payments, accrued interest or otherwise, in connection with the use of cash collateral or in connection with the transactions contemplated by clauses (i) through (iii) hereof; provided thatprovided, except as aforesaid, however that nothing contained in this sentence Section 2.02(e) or Section 2.03 shall be construed to give rise toprohibit the Trustee from (and, nor shall the Junior Secured Parties have, any claims whatsoever against any Senior Secured Party on account of any act or omission to act in connection with the exercise of any right or remedy of the Senior Secured Parties with respect to the Collateral. Except as provided in Section 2(bclauses (x) belowand (z) following, the Junior Collateral Agent shall not, and shall Bank One agrees not attempt to, exercise any rights with respect to object to the Junior Security Interests Trustee): (w) offering, obtaining from other sources and/or participating in post-petition financing to the Borrower, (x) seeking adequate protection solely in the Collateralform of a priority claim under the Bankruptcy Code subordinate to any similar claim now or hereafter held by Bank One or an affiliate of Bank One, whether pursuant to the Junior Security Documents or otherwise, until provided such payment and satisfaction in full of the Senior Secured Obligations. (c) For the sole purpose of perfecting the Junior Security Interests in items of Collateral in which a security interest can be perfected only by possession, the Collateral Agent acknowledges that it holds such items of Collateral for itself and the Senior Secured Parties and as bailee for the Junior Collateral Agent on behalf of the Junior Secured Parties, priority claim is subject to the terms and conditions hereofof this Agreement, (y) objecting to the reasonableness of the terms of any proposed Bank One DIP Loan, or (z) requesting a replacement lien subordinate to any lien now or hereafter held by Bank One or an affiliate of Bank One, provided such replacement lien is subject to the provisions of this Agreement.

Perfection and Priority of Security Interests. (a) Any and all security interests, mortgages, assignments, pledges and other liens, charges or encumbrances now existing or hereafter created or arising in favor of the Junior Secured Parties with respect to the Collateral Agent for its benefit and the benefit of any holder of Junior Secured Obligations are expressly junior in priority, operation and effect to any and all security interests, mortgages, assignments, pledges and other secured claims, liens, charges or encumbrances now existing or hereafter created or arising in favor of the Collateral Agent for the benefit of the Senior Secured PartiesParties with respect to the Collateral, notwithstanding anything to the contrary contained in any agreement or filing to which the Guarantor, the Borrower Trustee or the any Junior Collateral Agent Secured Party may now or hereafter be a party, and irrespective of the time, order or method of attachment or perfection of any mortgages, financing statements or other security interests, assignments, pledges and other liens, charges or encumbrances or any defect or deficiency or alleged defect or deficiency in any of the foregoing. Any assets . (b) The Trustee, on behalf of itself and properties of the Guarantor or other Junior Secured Parties, acknowledges that the Borrower or Senior Obligations represent indebtedness that is revolving in nature and that the amount thereof that may be outstanding at any of their respective subsidiaries now time or from time to time hereafter givenmay be increased or reduced and subsequently reborrowed, grantedand that the terms of the Senior Obligations may be modified, assigned extended or pledged amended from time to secure both time, and the aggregate amount of the Senior Obligations may be increased, replaced or refinanced, all without notice to or consent by the Junior Secured Parties and without affecting the provisions hereof; provided that no such modification, extension or amendment shall be effective for purposes of this Agreement if it increases the principal amount of the loans outstanding under the Credit Agreement to an amount in excess of $25,000,000. The lien priorities provided in this Section 1 shall not be altered or otherwise affected by any amendment, modification, supplement, extension, increase, replacement, renewal, restatement or refinancing of either the Senior Obligations or the Junior Obligations, or any portion thereof, nor by any action that the Senior Secured Obligations Parties or the Junior Secured Parties may take or fail to take in respect of the Collateral. (c) For purposes of perfecting the Junior Security Interest in the Collateral and the proceeds thereof, the Grantors and the Agent hereby acknowledge that the Company will file such UCC-1 financing statements covering the Collateral as it shall deem appropriate, naming the Borrower (or one or more Subsidiary Guarantors) as debtor, and the Trustee, on behalf of the Junior Secured Parties, as secured party. Each of the Trustee and the Junior Secured Obligations Parties agrees that all UCC-1 Financing Statements filed by or on behalf of Junior Secured Parties shall be subject in form satisfactory to the priority established by this Section 1Agent and shall contain the following notation: "The interest of the Secured Party in the collateral described herein is junior and subordinate to the interests of The Chase Manhattan Bank and its successors and assigns, as agent, and the Lenders party to that certain Credit Agreement dated as of December 11, 1997, as amended from time to time, with RBX Corporation, pursuant to that certain Intercreditor Agreement dated as of December 11, 1997, as amended from time to time." (bd) At all times until It is acknowledged that (i) pursuant to the Senior Secured Obligations shall have been paid and satisfied in fullLockbox Assignment Agreement, the Collateral Agent shall be entitled to sell, transfer or otherwise dispose of or deal with the Collateral as provided in the Senior Security Documents, in each case without regard Grantors have granted to the Junior Security Interests therein, or any rights to which Trustee for the benefit of the Junior Secured Parties would otherwise a second-priority security interest in the Lockbox Accounts and (ii) the Lockbox Accounts are maintained with the Lockbox Bank under the dominion and control of the Agent in accordance with the terms of the Lockbox Assignment Agreement, which grants to the Agent for the benefit of the Senior Secured Parties a first-priority security interest in the Lockbox Accounts. Notwithstanding anything to the contrary in this Agreement, under no circumstances shall the Agent have, or be entitled deemed to have, any fiduciary duty or any other duty (other than as expressly set forth in paragraph (e) below) to any Junior Secured Party or the Trustee with respect to actions it takes or is permitted to take hereunder with respect to the Lockbox Accounts. (e) The Trustee, on behalf of itself and the other Junior Secured Parties, acknowledges and agrees with the Senior Secured Parties that the arrangements described in paragraphs (a), (b), (c) and (d) above are solely for the purpose of providing the Junior Secured Parties with a result of such perfected Junior Security Interests, the only obligation of Interest in the Collateral and shall in no way be construed as imposing any duties or other obligations on the Agent other than to transfer to the Junior Secured Parties in respect thereof being to act in (or as a commercially reasonable manner in making any such court of competent jurisdiction may otherwise direct) the proceeds, if any, that remain following a sale, transfer or other disposition of the Collateral and to deliver to by the Junior Collateral Agent (unless otherwise directed by a court of competent jurisdiction) any proceeds remaining from the sale on behalf of the Collateral after such Senior Secured Parties and the payment and satisfaction in full of the any and all Senior Secured Obligations or, if the Collateral Agent shall still be in possession of all or any part of the Collateral after such payment and satisfaction in full, the Collateral or such part thereof remaining, without representation or warranty on the part of the Collateral Agent or the Senior Secured Parties; provided . In furtherance of the foregoing, the Junior Secured Parties acknowledge and agree with the Senior Secured Parties that, except at all times until the Senior Obligations shall have been paid and satisfied in full, the Agent shall be entitled to (i) maintain control over the Lockbox Accounts in accordance with the Lockbox Assignment Agreement and (ii) sell, transfer or otherwise dispose of or deal with the Collateral as aforesaidprovided in the Senior Security Documents without regard to the security interest of the Junior Secured Parties therein, or any rights to which the Junior Secured Parties would otherwise be entitled as a result of such security interest, the only obligation of the Agent to the Junior Secured Parties in respect thereof being to promptly deliver to the Trustee (unless otherwise directed in writing by the Trustee or by a court of competent jurisdiction) any proceeds remaining from such sale, transfer or other disposition of the Collateral after such payment and satisfaction in full of the Senior Obligations or, if the Agent shall still be in possession of all or any part of the Collateral after such payment and satisfaction in full, the Collateral or such part thereof remaining, without representation or warranty on the part of the Agent or the Senior Secured Parties, provided that nothing contained in this sentence shall be construed to give rise to, nor shall the Trustee or the Junior Secured Parties have, any claims whatsoever against the Agent or any Senior Secured Party on account of any act or omission to act in connection with the exercise of any right or remedy of the Senior Secured Parties Agent with respect to the Collateral. Except Collateral (other than with respect to any claims that may arise as provided a result of the failure of the Agent, after the payment and satisfaction in Section 2(b) belowfull of the Senior Obligations, to deliver any remaining Collateral or proceeds to the Trustee or the Junior Collateral Agent Secured Parties). The Trustee, on behalf of itself and the other Junior Secured Parties, agrees that, without the prior written consent of the Agent, it shall not, and shall not attempt to, exercise any rights of enforcement with respect to (A) the Senior Security Interest in the Collateral or (B) the Junior Security Interests Interest in the Collateral, whether pursuant to the Junior Security Documents or otherwise, until such the payment and satisfaction in full of the Senior Secured Obligations. (cf) For The Trustee, on behalf of itself and the sole purpose other Junior Secured Parties, agrees that in the event a proceeding under Title 11 of perfecting the Junior Security Interests in items of Collateral in which a security interest can U.S. Code (the "Bankruptcy Code") or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law shall be perfected only commenced by possessionor against any Grantor, the Collateral Agent acknowledges that it holds Trustee or such items Junior Secured Party shall not file any objection or in any other manner attempt to prevent the court conducting such proceeding from (and shall be deemed to have consented to such proceeding) (i) authorizing such Grantor under Section 364 of Collateral for itself the Bankruptcy Code (or the analogous provision of such other law) to incur secured indebtedness and priority administration indebtedness to the Senior Secured Parties and as bailee (or any of them) for loans that may be made by the Junior Collateral Agent on behalf Senior Secured Parties (or any of them) to such Grantor after the commencement and/or termination of such proceedings (but only to the extent that the principal amount of the Junior Secured Partiescommitments to provide such post-petition secured indebtedness, subject when aggregated with the principal amount of the Loans outstanding under the Credit Agreement immediately prior to the terms commencement of such proceeding, would not exceed $25,000,000), and conditions to secure the repayment and performance of such post-petition indebtedness (and interest thereon and costs and expenses in connection therewith) by granting to the Senior Secured Parties (or any of them) a first-priority security interest in and a first-priority lien on all the Collateral, (ii) pursuant to Section 363 of the Bankruptcy Code (or the analogous provision of such other law), granting the Senior Secured Parties (or any of them) a first-priority security interest in and a first-priority lien on all the Collateral, (iii) authorizing such Grantor under the Bankruptcy Code to grant the Senior Secured Parties (or any of them) adequate protection, whether in the form of cash payments, accrued interest or otherwise, in connection with the use of cash collateral or in connection with the transactions contemplated by clauses (i) and (ii) hereof.

Perfection and Priority of Security Interests. (a) Any and all security interests, mortgages, assignments, pledges and other liens, charges or encumbrances now existing or hereafter created or arising in favor of the Junior Secured Parties with respect to the Collateral Agent for its benefit and the benefit of any holder of Junior Secured Obligations are expressly junior in priority, operation and effect to any and all security interests, mortgages, assignments, pledges and other secured claims, liens, charges or encumbrances now existing or hereafter created or arising in favor of the Senior Collateral Agent for the benefit of the Senior Secured PartiesParties with respect to the Collateral, notwithstanding anything to the contrary contained in any agreement or filing to which the Guarantor, the Borrower Junior Agent or the any Junior Collateral Agent Secured Party may now or hereafter be a party, and irrespective of the time, order or method of attachment or perfection of any mortgages, financing statements or other security interests, assignments, pledges and other liens, charges or encumbrances or any defect or deficiency or alleged defect or deficiency in any of the foregoing. Any assets . (b) The Junior Agent, on behalf of itself and properties of the Guarantor or other Junior Secured Parties, acknowledges that the Borrower or Senior Obligations represent indebtedness that is revolving in nature and that the 196 12 amount thereof that may be outstanding at any of their respective subsidiaries now time or from time to time hereafter givenmay be increased or reduced and subsequently reborrowed, grantedand that the terms of the Senior Obligations may be modified, assigned extended, amended, restated, compromised, supplemented, terminated, waived or pledged released from time to secure both time, and the aggregate amount of the Senior Obligations may be increased, renewed, replaced or refinanced, all without notice to or consent by the Junior Secured Parties and without affecting the provisions hereof, provided that no such modification, extension or amendment shall be effective for purposes of this Agreement if it increases the principal amount of the loans outstanding under the Senior Credit Agreement to an amount in excess of $600,000,000. The lien priorities provided in this Section 4.01 shall not be altered or otherwise affected by any amendment, modification, supplement, extension, increase, replacement, renewal, restatement or refinancing of either the Senior Obligations or the Junior Obligations, or any portion thereof, nor by any action that the Senior Secured Obligations Parties or the Junior Secured Parties may take or fail to take in respect of the Collateral. (c) For purposes of perfecting the Junior Security Interest in the Collateral and the proceeds thereof, the Grantors and the Senior Agent hereby acknowledge that each Grantor will file such UCC-1 financing statements covering the Collateral as it shall deem appropriate, naming the Borrower (or one or more Guarantors) as debtor, and the Junior Agents, on behalf of the Junior Secured Parties, as secured party. Each of the Junior Agent and the Junior Secured Obligations Parties agrees that all UCC-1 Financing Statements filed by or on behalf of Junior Secured Parties shall be subject in form satisfactory to the priority established by this Section 1Senior Agent and shall contain the following notation: "The interest of the Secured Party in the collateral described herein is junior and subordinate to the interests of The Chase Manhattan Bank and its successors and assigns, as agent, and the Lenders party to that certain Credit Agreement dated as of September 26, 1997, as amended and restated as of December 31, 1998 (as amended, supplemented or otherwise modified from time to time) with Hechinger Investment Company of Delaware, Inc. pursuant to that certain Intercreditor Agreement dated as of December 31, 1998 (as amended, supplemented or otherwise modified from time to time)." (bd) At all times until the Senior Secured Obligations shall have been paid and satisfied in full, the Collateral Agent shall be entitled to sell, transfer or otherwise dispose of or deal with the Collateral as provided in the Senior Security Documents, in each case without regard It is acknowledged that (i) pursuant to the Junior Security Interests thereinAgreement, or any rights the Grantors have granted to which the Junior Agent for the benefit of the Junior Secured Parties would otherwise a second-priority security interest in the Collection Deposit Accounts, (ii) the Collection Deposit Accounts are maintained with the Senior Collateral Agent or with a Sub-Agent under the dominion and control of the Senior Collateral Agent in accordance with the terms of the Depository Agreements and (iii) pursuant to the Senior Security Agreement, the Grantors have granted to the Senior Collateral Agent for the benefit of the Senior Secured Parties a first-priority security interest in the Collection Deposit Accounts. Subject to the provisions of this Article IV, the Senior Collateral Agent shall maintain sole dominion and control over the Collection Deposit Accounts for the benefit of the Junior Secured Parties in addition to the Senior Secured Parties. Notwithstanding any provision to the contrary in this Section 4.01(d), the Senior Collateral Agent shall continue to have a first-priority security interest in the Collection Deposit Accounts for the benefit of the Senior Secured Parties. Notwithstanding anything to the contrary in this Agreement, under no circumstances shall the Senior Collateral Agent have, or be entitled deemed to have, any fiduciary duty or any other duty (other than as expressly set forth in paragraph (f) below) to any Junior Secured Party or the Junior Agent with respect to actions it takes or is permitted to take hereunder with respect to the Collection Accounts. (e) It is acknowledged that (i) pursuant to the Junior Pledge Agreement, the Borrower, the Holdings Guarantors party thereto and the Subsidiary Guarantors party thereto have granted to the Junior Agent for the benefit of the Junior Secured Parties a result second-priority security interest in the Pledge Agreement Collateral, (ii) to the extent necessary to perfect a security interest under the Uniform Commercial Code, the Pledge Agreement Collateral is in the possession of such the Senior Collateral Agreement in accordance with the terms of the Senior Pledge Agreement and (iii) the Borrower, the Holdings Guarantors party to the Senior Pledge Agreement and the Subsidiary Guarantors party to the Senior Pledge Agreement have granted to the Senior Collateral Agent for the benefit of the Senior 197 13 Secured Parties a first-priority security interest in the Pledge Agreement Collateral. Subject to the provisions of this Article IV, the Senior Collateral Agent shall maintain possession, to the extent reasonably possible, of the Pledge Agreement Collateral for the benefit of the Junior Secured Parties in addition to the Senior Secured Parties. Notwithstanding any provision to the contrary in this Section 4.01(e), the Senior Collateral Agent shall continue to have a first-priority security interest in the Pledge Agreement Collateral for the benefit of the Senior Secured Parties. Notwithstanding anything to the contrary in this Agreement, under no circumstances shall the Senior Collateral Agent have, or be deemed to have, any fiduciary duty or any other duty (other than as expressly set forth in paragraph (f) below) to any Junior Secured Party or the Junior Agent with respect to actions it takes or is permitted to take hereunder with respect to the Pledge Agreement Collateral. (f) The Junior Agent, on behalf of itself and the other Junior Secured Parties, acknowledges and agrees with the Senior Secured Parties that the arrangements described in paragraphs (a), (b), (c), (d) and (e) above are solely for the purpose of providing the Junior Secured Parties with a perfected Junior Security Interests, the only obligation of Interest in the Collateral and shall in no way be construed as imposing any duties or other obligations on the Senior Agent other than to transfer to the Junior Secured Parties in respect thereof being to act in (or as a commercially reasonable manner in making any such court of competent jurisdiction may otherwise direct) the proceeds, if any, that remain following a sale, transfer or other disposition of the Collateral and to deliver to by the Junior Senior Collateral Agent (unless otherwise directed by a court of competent jurisdiction) any proceeds remaining from the sale on behalf of the Collateral after such Senior Secured Parties and the payment and satisfaction in full of the any and all Senior Secured Obligations or, if the Senior Collateral Agent shall still be in possession of all or any part of the Collateral after such payment and satisfaction in full, the Collateral or such part thereof remaining, without representation or warranty on the part of the Collateral Senior Agent or the Senior Secured Parties; provided . In furtherance of the foregoing, the Junior Secured Parties acknowledge and agree with the Senior Secured Parties that, except at all times until the Senior Obligations shall have been paid and satisfied in full, the Senior Collateral Agent shall be entitled to (i) maintain control over the Collection Deposit Accounts in accordance with the Senior Security Agreement and the Depository Agreements, (ii) maintain control over the Pledge Agreement Collateral in accordance with the Senior Pledge Agreement and (iii) sell, transfer or otherwise dispose of or deal with the Collateral as aforesaidprovided in the Senior Security Documents without regard to the security interest of the Junior Secured Parties therein, or any rights to which the Junior Secured Parties would otherwise be entitled as a result of such security interest, the only obligation of the Senior Agent to the Junior Secured Parties in respect thereof being to promptly deliver to the Junior Agent (unless otherwise directed in writing by the Junior Agent or by a court of competent jurisdiction) any proceeds remaining from such sale, transfer or other disposition of the Collateral after such payment and satisfaction in full of the Senior Obligations or, if the Senior Agent shall still be in possession of all or any part of the Collateral after such payment and satisfaction in full, the Collateral or such part thereof remaining, without representation or warranty on the part of the Senior Agent or the Senior Secured Parties, provided that nothing contained in this sentence shall be construed to give rise to, nor shall the Junior Agent or the Junior Secured Parties have, any claims whatsoever against the Senior Agent or any Senior Secured Party on account of any act or omission to act in connection with the exercise of any right or remedy of the Senior Secured Parties Agent with respect to the Collateral. Except Collateral (other than with respect to any claims that may arise as provided a result of the failure of the Senior Agent, after the payment and satisfaction in Section 2(b) belowfull of the Senior Obligations, to deliver any remaining Collateral or proceeds to the Junior Collateral Agent or the Junior Secured Parties). The Junior Agent, on behalf of itself and the other Junior Secured Parties, agrees that, without the prior written consent of the Senior Agent, it shall not, and shall not attempt to, exercise any rights of enforcement with respect to (A) the Senior Security Interest in the Collateral or (B) the Junior Security Interests Interest in the Collateral, whether pursuant to the Junior Security Documents or otherwise, until such the payment and satisfaction in full of the Senior Secured Obligations. (cg) For The Junior Agent, on behalf of itself and the sole purpose other Junior Secured Parties, agrees that in the event a proceeding under Title 11 of perfecting the U.S. Code (the "Bankruptcy Code") or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law shall be commenced by or against any Grantor, the Junior Security Interests Agent or such Junior Secured Party shall not file any objection or in items any other manner attempt to prevent the court conducting such proceeding from (and shall be deemed to have consented to such proceeding) (i) authorizing such Grantor under Section 364 of Collateral in which a security interest can be perfected only by possession, the Collateral Agent acknowledges that it holds Bankruptcy Code (or the analogous provision of such items of Collateral for itself other law) to incur secured indebtedness and priority administration indebtedness to the Senior Secured Parties (or any of them) for loans that may be made by the Senior Secured Parties (or any of them) to such Grantor after the commencement and/or termination of such proceedings, and as bailee for to secure the Junior Collateral Agent repayment and performance of such post-petition indebtedness (and interest thereon and costs and expenses in connection therewith) by granting to the Senior Secured Parties (or any of them) a first-priority security interest in and a first-priority lien on behalf all the Collateral, (ii) pursuant to Section 364 of the Junior Bankruptcy Code (or the analogous provision of such other law), granting the Senior Secured PartiesParties (or any of them) a first-priority security interest in and a first-priority lien on all the Collateral, subject (iii) authorizing such Grantor under the Bankruptcy Code to grant the terms Senior Secured Parties (or any of them) adequate protection, whether in the form of cash payments, accrued interest or otherwise, in connection with the use of cash collateral or in connection with the transactions contemplated by clauses (i) and conditions (ii) hereof.

Perfection and Priority of Security Interests. (a) Any and all security interests, mortgages, assignments, pledges and other liens, charges or encumbrances now existing or hereafter created or arising All Junior Liens in favor of the Junior Collateral Agent for its benefit and the benefit respect of any holder of Junior Secured Obligations Collateral are expressly subordinated and made junior in priority, operation and effect to any and all security interests, mortgages, assignments, pledges and other liens, charges or encumbrances now existing or hereafter created or arising the Applicable Senior Liens in favor respect of the Collateral Agent for the benefit of the Senior Secured Partiessuch Collateral, notwithstanding anything to the contrary contained in this Agreement, any Other Security Document or any other agreement or filing to which the Guarantor, the Borrower or the Junior Collateral Agent may now or hereafter be a partycontrary, and irrespective of the time, order or method of attachment or perfection of any mortgages, financing statements or other security interests, assignments, pledges such Junior Liens and other liens, charges or encumbrances the Applicable Senior Liens or any defect or deficiency or alleged defect or deficiency in any of the foregoing. Any assets and properties . (b) Each Secured Party holding Obligations secured by a Junior Lien acknowledges that a portion of the Guarantor or Applicable Senior Obligations consists of Indebtedness that is revolving in nature and that the Borrower or amount thereof that may be outstanding at any of their respective subsidiaries now time or from time to time hereafter givenmay be increased or reduced and subsequently reborrowed, grantedand that the terms of the Applicable Senior Obligations may be modified, assigned extended or pledged amended from time to secure both the Senior Secured Obligations time, and the aggregate amount of the Applicable Senior Obligations may be increased, replaced or refinanced, all without notice to or consent by such Secured Party and without affecting the provisions hereof. The lien priorities provided for herein and in the Other Security Documents shall not be altered or otherwise affected by any amendment, modification, supplement, extension, increase, replacement, renewal, restatement or refinancing of either the Obligations secured by any Junior Lien or the Applicable Senior Obligations, or by any action that the Collateral Agent or the Secured Parties holding any of such Obligations shall be subject may take or fail to the priority established by this Section 1take in respect of any Collateral. (bc) At Each Secured Party holding Obligations secured by a Junior Lien acknowledges and agrees that the Collateral Agent and the holders of the Applicable Senior Obligations shall have no duties or other obligations to such Secured Party with respect to the Collateral subject to such Junior Lien other than to transfer to the holders of the Obligations secured by such Junior Lien the proceeds, if any, that remain following any sale, transfer or other disposition of such Collateral and the payment and satisfaction in full of all times the Applicable Senior Obligations. In furtherance of the foregoing, each Secured Party holding Obligations secured by a Junior Lien acknowledges and agrees that until the Applicable Senior Secured Obligations shall have been paid and satisfied in full, the Collateral Agent shall be entitled entitled, for the benefit of the holders of the Applicable Senior Obligations, to sell, transfer or otherwise dispose of or deal with the Collateral subject to such Junior Lien as provided herein and in the Senior Other Security Documents, in each case Documents without regard to the such Junior Security Interests therein, Lien or any rights to which the Junior Secured Parties holders of the Obligations secured thereby would otherwise be entitled as a result of such Junior Security InterestsLien, the only obligation of the Collateral Agent and the holders of the Applicable Senior Obligations to the holders of the Obligations secured by such Junior Secured Parties in respect thereof Lien being to act in a commercially reasonable manner in making any such disposition of the Collateral and to deliver to the Junior Collateral Agent (unless otherwise directed by a court of competent jurisdiction) any proceeds remaining from the sale such sale, transfer or other disposition of the applicable Collateral after such the payment and satisfaction in full of all the Applicable Senior Secured Obligations or, if the Collateral Agent shall still be in possession of all or any part of the Collateral after such payment and satisfaction in full, the Collateral or such part thereof remaining, without representation or warranty on the part of the Collateral Agent or the Senior Secured Parties; provided that, except as aforesaid, nothing contained in this sentence shall be construed to give rise to, nor shall the Junior Secured Parties have, any claims whatsoever against any Senior Obligations. Each Secured Party on account of any act or omission to act in connection with the exercise of any right or remedy of the Senior Secured Parties with respect to the Collateral. Except as provided in Section 2(b) below, the holding Obligations secured by a Junior Collateral Agent shall Lien agrees that it will not, and shall will not attempt to, exercise or instruct the Collateral Agent to exercise any rights with respect to that it may have as a result of such Junior Lien until the Junior Security Interests in the Collateral, whether pursuant to the Junior Security Documents or otherwise, until such payment and satisfaction in full of all the Applicable Senior Secured Obligations. Notwithstanding anything in this paragraph to the contrary, any holder of Applicable Senior Obligations with respect to any Junior Lien shall be entitled to transfer proceeds of Collateral subject to such Junior Lien to any other holder of Applicable Senior Obligations to the extent it is required to do so under the terms of this Agreement, and shall, to the extent of such transfer, be deemed to have satisfied its obligations to the holders of the Obligations secured by such Junior Lien under this paragraph. (cd) For In the sole purpose event a proceeding under the Bankruptcy Code or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law shall be commenced by or against any Grantor that shall have granted a Junior Lien, until the Applicable Senior Obligations shall have been paid and satisfied in full, each Secured Party holding Obligations secured by such Junior Lien hereby authorizes and empowers (without imposing an obligation on) the holders of perfecting the Junior Security Interests in items of Collateral in which a security interest can be perfected only by possession, Applicable Senior Obligations or the Collateral Agent acknowledges that it holds or any Administrative Agent acting on their behalf to vote such items of Collateral for itself and the Senior Secured Parties and as bailee for the Junior Collateral Agent on behalf Party's share of the Obligations secured by such Junior Secured PartiesLien, subject insofar as any such voting right arises from or relates to such Junior Lien or to the terms and conditions hereofCollateral subject thereto, in connection with any resolution, arrangement, plan of reorganization, compromise or settlement relating to such Collateral.

Perfection and Priority of Security Interests. (a) Any and all security interests, assignments, pledges, mortgages, deeds of trust, deeds to secure debt and other liens, charges or encumbrances now existing or hereafter created or arising in favor of the Second Priority Collateral Trustee for the benefit of the Second Priority Debt Parties with respect to the Collateral and securing the Second Priority Debt Obligations are expressly junior in priority, operation and effect to any and all security interests, assignments, pledges and other liens, charges or encumbrances now existing or hereafter created or arising in favor of the Junior Collateral Agent for its benefit and the benefit of any holder of Junior Secured Obligations are expressly junior in priority, operation and effect to any and all security interests, mortgages, assignments, pledges and other liens, charges or encumbrances now existing or hereafter created or arising in favor of the Senior Collateral Agent for the benefit of the Senior Secured PartiesParties with respect to the Collateral and securing the Senior Obligations, notwithstanding anything to the contrary contained in any agreement or filing to which the Guarantor, the Borrower Second Priority Collateral Trustee or the Junior Collateral Agent any Second Priority Debt Party may now or hereafter be a party, and irrespective regardless of the time, order or method of attachment attachment, recording or perfection of any mortgages, financing statements or other security interests, assignments, pledges pledges, mortgages and other liens, charges or encumbrances or any defect or deficiency or alleged defect or deficiency in any of the foregoing. Any assets . (b) The Second Priority Representatives, on behalf of themselves and properties the other Second Priority Debt Parties, acknowledge that a portion of the Guarantor or Senior Bank Obligations represent debt that is revolving in nature and that the Borrower or amount thereof that may be outstanding at any of their respective subsidiaries now time or from time to time hereafter givenmay be increased or reduced and subsequently reborrowed, grantedand that the terms of the Senior Bank Obligations may be modified, assigned extended or pledged amended from time to secure both time, and the aggregate amount of the Senior Bank Obligations may be increased, replaced or refinanced, subject to the limitations of Section 7.02 hereof but otherwise without notice to or consent by the Second Priority Debt Parties and without affecting the provisions hereof. The lien priorities provided in this Section 5.01 shall not be altered or otherwise affected by any such amendment, modification, supplement, extension, repayment, reborrowing, increase, replacement, renewal, restatement or refinancing of the Senior Bank Obligations, the other Senior Obligations or the Second Priority Debt Obligations, or any portion thereof, nor by any action that the Senior Secured Obligations Parties or the Second Priority Debt Parties may take or fail to take in respect of the Collateral in accordance with this Agreement. (c) For purposes of perfecting the Second Priority Lien in the Collateral and the Junior Secured Obligations proceeds thereof, the Subsidiary Guarantors and the Senior Collateral Agent hereby acknowledge that UCC-1 financing statements, patent/trademark/copyright filings and mortgages or other filings or recordings covering the Collateral, naming one or more Subsidiary Guarantors as debtor, and the Second Priority Collateral Trustee, on behalf of the Second Priority Debt Parties, as secured party, may be filed in appropriate public offices from time to time. (i) Each of the Second Priority Representatives and each Second Priority Debt Party agrees that all UCC-1 financing statements, patent/trademark/copyright filings (except as provided in clause (ii) below) or other filings or recordings filed or recorded by or on behalf of the Second Priority Debt Parties shall be in form satisfactory to the Senior Collateral Agent and shall contain the following notation: "The interest of the Secured Party in the collateral described herein is junior and subordinate to the interests of Citicorp USA, Inc., and its successors and assigns, as collateral agent for certain secured parties, including the lenders from time to time party to that certain Senior Credit Agreement dated as of June 27, 2001, as amended, refinanced or replaced from time to time, with Rite Aid Corporation in accordance with the provisions of that certain Collateral Trust and Intercreditor Agreement dated as of June 27, 2001, among Rite Aid Corporation, certain subsidiaries of Rite Aid Corporation, Wilmington Trust Company, as Second Priority Collateral Trustee, Citicorp USA, Inc., as Senior Collateral Agent, and certain other parties, as Second Priority Representatives, as amended from time to time." (ii) In addition, each of the Second Priority Representatives and each Second Priority Debt Party agrees that all mortgages, deeds of trust, deeds to secure debt and similar instruments (collectively, "mortgages") now or hereafter filed against real and/or personal property pursuant to any Secured Document in favor of or for the benefit of the Second Priority Collateral Trustee and/or the Second Priority Debt Parties shall be in form satisfactory to the Senior Collateral Agent and shall contain the following provision: "The lien of this [Mortgage] is junior and subordinate to the lien of any mortgage now or hereafter granted to Citicorp USA, Inc. and its successors and assigns, as collateral agent for certain secured parties, including the lenders from time to time party to that certain Senior Credit Agreement dated as of June 27, 2001, as amended, replaced or refinanced from time to time, with Rite Aid Corporation and its successors and assigns, in accordance with the provisions of that certain Collateral Trust and Intercreditor Agreement dated as of June 27, 2001, among Rite Aid Corporation, certain subsidiaries of Rite Aid Corporation, Wilmington Trust Company, as Second Priority Collateral Trustee, Citicorp USA, Inc., as Senior Collateral Agent, and certain other parties, as Second Priority Representatives, as amended from time to time." (d) The Second Priority Representatives, on behalf of themselves and the other Second Priority Debt Parties, hereby agree: (i) to subordinate the Second Priority Collateral Documents to any lease of any of the Mortgaged Properties to the same extent that the Senior Collateral Documents are or have been subordinated to such lease, but without affecting the relative priority of the Senior Collateral Documents and the Second Priority Collateral Documents, (ii) to grant nondisturbance rights with respect to any lease of any of the Mortgaged Properties with respect to which the Senior Collateral Agent has granted nondisturbance on substantially the same terms as granted by the Senior Collateral Agent, (iii) that if all or any portion of a Mortgaged Property is a leasehold interest, (A) upon termination of any lease creating such leasehold interest (the "Original Lease"), any right of the Second Priority Collateral Trustee to request a "new lease" pursuant to the terms of the Original Lease shall be junior and subordinate to the right of the Senior Collateral Agent to request such a new lease and the Second Priority Collateral Trustee shall not exercise any such right without the prior written consent of the Senior Collateral Agent, (B) the Second Priority Collateral Trustee shall waive, surrender and give up any right either the Second Priority Collateral Trustee or the Second Priority Debt Parties may have to redeem the premises demised by the Original Lease or to continue the Original Lease for its original term after the lessee thereunder has been dispossessed or ejected therefrom by process of law or otherwise and (C) the Senior Lien and the Second Priority Lien shall remain in force or be reinstated with the same relative priority that existed with respect to the Original Lease, and (iv) that if the holder or grantor of a Second Priority Collateral Document pays or discharges any liens prior in right to the lien created by the Senior Collateral Documents with funds provided by the Second Priority Collateral Trustee or any Second Priority Debt Party, neither the Second Priority Collateral Trustee nor any Second Priority Debt Party shall acquire, by subrogation or otherwise, any claim superior or equivalent to the lien of the Senior Collateral Documents so long as any indebtedness secured by the Senior Collateral Documents remains outstanding. Notwithstanding anything to the contrary in the Senior Mortgages, the Senior Collateral Agent and the Senior Secured Parties hereby consent to the assignment of leases and rents to the Second Priority Collateral Trustee for the Second Priority Secured Parties contained in the Second Priority Mortgages for the purpose of securing and discharging the performance by the respective Subsidiary Guarantors party thereto, provided however, that such assignment is subject to the priority established by terms of this Section 1Agreement. The Senior Collateral Agent and the Senior Secured Parties agree that the terms of each Senior Mortgage and the rights and remedies of the parties thereto are subject to this Agreement. The Second Priority Collateral Trustee and the Second Priority Debt Parties agree that the terms of each Second Priority Mortgage and the rights and remedies of the parties thereto are subject to this Agreement and subordinated as provided herein. (e) The Second Priority Representatives, on behalf of themselves and the other Second Priority Debt Parties, acknowledge and agree with the Senior Collateral Agent and the Senior Secured Parties that the arrangements described in clauses (a), (b), (c) At and (d) above are solely for the purpose of providing the Second Priority Debt Parties with a perfected second priority Lien in the Collateral under the Second Priority Collateral Documents and shall in no way be construed as imposing any duties or other obligations on the Senior Collateral Agent. In furtherance of the foregoing, the Second Priority Representatives and the Second Priority Debt Parties acknowledge and agree with the Senior Secured Parties that, at all times following a Triggering Event until the Senior Secured Obligations shall have been paid and satisfied in fullObligation Payment Date, the Senior Collateral Agent shall be entitled have the right to sell, transfer or otherwise dispose of or deal with with, or cause the Subsidiary Guarantors to sell, transfer or otherwise dispose of or deal with, the Collateral as provided in the Senior Security Documents, in each case Collateral Documents without regard to the Junior Security Interests security interest of the Second Priority Debt Parties therein, or any rights to which the Junior Secured Second Priority Debt Parties would otherwise be entitled as a result of such Junior Security Interestssecurity interest, the only obligation of the Senior Collateral Agent to the Junior Secured Second Priority Debt Parties in respect thereof being to act in a commercially reasonable manner in making any such disposition of the Collateral and to deliver to the Junior Second Priority Collateral Agent Trustee or the Second Priority Representatives (unless otherwise directed in writing by the Second Priority Collateral Trustee or by a court of competent jurisdiction) any proceeds remaining from the sale such sale, transfer or other disposition of the such Collateral after such payment and satisfaction in full of the Senior Secured Obligations Obligation Payment Date or, if the Senior Collateral Agent shall still be in possession of all or any part of the such Collateral after such payment and satisfaction in full, the such Collateral or such part thereof remaining, without representation or warranty on the part of the Senior Collateral Agent or the Senior Secured Parties; , provided that, except as aforesaid, that nothing contained in this sentence shall be construed to give rise to, nor shall the Junior Secured Second Priority Collateral Trustee or the Second Priority Debt Parties have, any claims whatsoever against the Senior Collateral Agent or any Senior Secured Party on account of any act or omission to act in connection with the exercise of any right or remedy of the Senior Secured Parties Collateral Agent with respect to the CollateralCollateral that is permitted by the Collateral Documents (other than with respect to any claims that may arise as a result of the failure of the Senior Collateral Agent, after the Senior Obligation Payment Date, to deliver any such remaining Collateral or proceeds to the Second Priority Collateral Trustee or the Second Priority Representatives). Except as provided in Section 2(b) belowThe Second Priority Representatives, on behalf of themselves and the Junior Collateral Agent other Second Priority Debt Parties, agree that they shall not, and shall not attempt to, exercise any rights with respect to (A) the Junior Security Interests Senior Lien in the Collateral or (B) the Second Priority Lien in the Collateral, whether pursuant to the Junior Security Second Priority Collateral Documents or otherwise, until the Senior Obligation Payment Date; provided that nothing in this sentence (or elsewhere in the Agreement) shall preclude (x) exercise of the rights expressly reserved to the Second Priority Collateral Trustee, the Second Priority Representatives and the Second Priority Debt Parties in accordance with the terms of this Agreement or (y) the enforcement of this Agreement. (f) In any Bankruptcy Proceeding, until the Senior Obligation Payment Date, the Second Priority Collateral Trustee and the Second Priority Representatives, on behalf of themselves and the other Second Priority Debt Parties, agree not to take any action whatsoever (including, without limitation, voting any claim) in respect of or relating to the Second Priority Debt Obligations, insofar as any such payment action arises from or relates to the Second Priority Collateral Documents, the Second Priority Lien or relates to the Collateral, in any manner that is inconsistent with or adverse to the rights and satisfaction in full priorities of the Senior Secured ObligationsParties as set forth herein. (cg) For In the sole purpose of perfecting the Junior Security Interests event that in items of Collateral in which a security interest can be perfected only by possessionany Bankruptcy Proceeding, the Second Priority Debt Parties shall not have filed a proof of claim in respect of any Second Priority Debt Obligation by the date ten days prior to the latest date on which such proof of claim may be filed, the Senior Collateral Agent acknowledges that it holds such items of Collateral for itself and the Senior Secured Parties and as bailee for the Junior Collateral Agent is hereby authorized but not obligated, on behalf of any applicable Second Priority Debt Party, to file such proof of claim; provided that any Second Priority Debt Parties shall be entitled to amend, vote or otherwise exercise rights in respect of any such proof of claim so filed by the Junior Secured Parties, subject Senior Collateral Agent to the terms and conditions hereofsame extent as they would be permitted under this Agreement to do so had such proof of claim been filed by them.

Perfection and Priority of Security Interests. (a) Any and all security interests, assignments, pledges, mortgages, deeds of trust, deeds to secure debt and other liens, charges or encumbrances now existing or hereafter created or arising in favor of the Second Priority Collateral Trustee for the benefit of the Second Priority Debt Parties with respect to the Collateral and securing the Second Priority Debt Obligations are expressly junior in priority, operation and effect to any and all security interests, assignments, pledges and other liens, charges or encumbrances now existing or hereafter created or arising in favor of the Junior Senior Collateral Agent for its benefit and the benefit of any holder of Junior Secured Obligations are expressly junior in priority, operation and effect to any and all security interests, mortgages, assignments, pledges and other liens, charges or encumbrances now existing or hereafter created or arising in favor of the Collateral Agent Agents for the benefit of the Senior Secured PartiesParties with respect to the Collateral and securing the Senior Obligations, notwithstanding anything to the contrary contained in any agreement or filing to which the Guarantor, the Borrower Second Priority Collateral Trustee or the Junior Collateral Agent any Second Priority Debt Party may now or hereafter be a party, and irrespective regardless of the time, order or method of attachment attachment, recording or perfection of any mortgages, financing statements or other security interests, assignments, pledges pledges, mortgages and other liens, charges or encumbrances or any defect or deficiency or alleged defect or deficiency in any of the foregoing. Any assets . (b) The Second Priority Representatives, on behalf of themselves and properties the other Second Priority Debt Parties, acknowledge that a portion of the Guarantor or Senior Obligations represent debt that is revolving in nature and that the Borrower or amount thereof that may be outstanding at any of their respective subsidiaries now time or from time to time hereafter givenmay be increased or reduced and subsequently reborrowed, grantedand that the terms of the Senior Obligations may be modified, assigned extended or pledged amended from time to secure both time, and the aggregate amount of the Senior Obligations may be increased, replaced or refinanced, without notice to or consent by the Second Priority Debt Parties and without affecting the provisions hereof. The lien priorities provided in this Section 5.01 shall not be altered or otherwise affected by any such amendment, modification, supplement, extension, repayment, reborrowing, increase, replacement, renewal, restatement or refinancing of the Senior Obligations or the Second Priority Debt Obligations, or any portion thereof, nor by any action that the Senior Secured Obligations Parties or the Second Priority Debt Parties may take or fail to take in respect of the Collateral in accordance with this Agreement. (c) For purposes of perfecting the Second Priority Lien in the Collateral and the Junior proceeds thereof, the Subsidiary Guarantors and the Senior Collateral Agents hereby acknowledge that UCC-1 financing statements, patent/trademark/copyright filings and mortgages or other filings or recordings covering the Collateral, naming one or more Subsidiary Guarantors as debtor, and the Second Priority Collateral Trustee, on behalf of the Second Priority Debt Parties, as secured party, may be filed in appropriate public offices from time to time. (i) Each of the Second Priority Representatives and each Second Priority Debt Party agrees that all UCC-1 financing statements, patent/trademark/copyright filings (except as provided in clause (ii) below) or other filings or recordings filed or recorded by or on behalf of the Second Priority Debt Parties shall be in form satisfactory to the Senior Collateral Agents and shall contain the following notation: "The interest of the Secured Obligations Party in the collateral described herein is junior and subordinate to the interests of Citicorp North America, Inc., and its successors and assigns, as collateral agent for certain secured parties, including the lenders from time to time party to that certain Senior Credit Agreement dated as of June 27, 2001, as amended, refinanced or replaced from time to time, with Rite Aid Corporation in accordance with the provisions of that certain Collateral Trust and Intercreditor Agreement dated as of June 27, 2001, among Rite Aid Corporation, certain subsidiaries of Rite Aid Corporation, Wilmington Trust Company, as Second Priority Collateral Trustee, Citicorp North America, Inc., as Senior Collateral Agent, and certain other parties, as Second Priority Representatives, as amended from time to time." (ii) In addition, each of the Second Priority Representatives and each Second Priority Debt Party agrees that all mortgages, deeds of trust, deeds to secure debt and similar instruments (collectively, "mortgages"), if any, hereafter filed against real and/or personal property pursuant to any Secured Document in favor of or for the benefit of the Second Priority Collateral Trustee and/or the Second Priority Debt Parties shall be in form satisfactory to the Senior Collateral Agents and shall contain the following provision: "The lien of this [Mortgage] is junior and subordinate to the lien of any mortgage now or hereafter granted to Citicorp North America, Inc., and its successors and assigns, as collateral agent for certain secured parties, including the lenders from time to time party to that certain Senior Credit Agreement dated as of June 27, 2001, as amended, replaced or refinanced from time to time, with Rite Aid Corporation and its successors and assigns, in accordance with the provisions of that certain Collateral Trust and Intercreditor Agreement dated as of June 27, 2001, among Rite Aid Corporation, certain subsidiaries of Rite Aid Corporation, Wilmington Trust Company, as Second Priority Collateral Trustee, Citicorp North America, Inc., as Senior Collateral Agent, and certain other parties, as Second Priority Representatives, as amended from time to time." (d) The Second Priority Representatives, on behalf of themselves and the other Second Priority Debt Parties, hereby agree: (i) to subordinate the Second Priority Collateral Documents to any lease of any Mortgaged Properties to the same extent that the Senior Collateral Documents are or have been subordinated to such lease, but without affecting the relative priority of the Senior Collateral Documents and the Second Priority Collateral Documents, (ii) to grant nondisturbance rights with respect to any lease of any Mortgaged Properties with respect to which the Senior Collateral Agents have granted nondisturbance on substantially the same terms as granted by the Senior Collateral Agents. (iii) that if all or any portion of any Mortgaged Property is a leasehold interest, (A) upon termination of any lease creating such leasehold interest (the "Original Lease"), any right of the Second Priority Collateral Trustee to request a "new lease" pursuant to the terms of the Original Lease shall be junior and subordinate to the right of the Senior Collateral Agents to request such a new lease and the Second Priority Collateral Trustee shall not exercise any such right without the prior written consent of the Senior Collateral Agents, (B) the Second Priority Collateral Trustee shall waive, surrender and give up any right either the Second Priority Collateral Trustee or the Second Priority Debt Parties may have to redeem the premises demised by the Original Lease or to continue the Original Lease for its original term after the lessee thereunder has been dispossessed or ejected therefrom by process of law or otherwise and (C) the Senior Lien and the Second Priority Lien shall remain in force or be reinstated with the same relative priority that existed with respect to the Original Lease, and (iv) that if the holder or grantor of a Second Priority Collateral Document pays or discharges any Liens prior in right to the Lien created by the Senior Collateral Documents with funds provided by the Second Priority Collateral Trustee or any Second Priority Debt Party, neither the Second Priority Collateral Trustee nor any Second Priority Debt Party shall acquire, by subrogation or otherwise, any claim superior or equivalent to the Lien of the Senior Collateral Documents so long as any indebtedness secured by the Senior Collateral Documents remains outstanding. Notwithstanding anything to the contrary in the Senior Mortgages, if any, the Senior Collateral Agents and the Senior Secured Parties hereby consent to the assignment of leases and rents to the Second Priority Collateral Trustee for the Second Priority Secured Parties that shall be contained in the Second Priority Mortgages for the purpose of securing and discharging the performance by the Subsidiary Guarantors party thereto, provided, however, that such assignment shall be subject to the priority established by terms of this Section 1Agreement. The Senior Collateral Agents and the Senior Secured Parties agree that the terms of each Senior Mortgage, if any, entered into after the Restatement Effective Date and the rights and remedies of the parties thereto shall be subject to this Agreement. The Second Priority Collateral Trustee and the Second Priority Debt Parties agree that the terms of each Second Priority Mortgage, if any, entered into after the Restatement Effective Date and the rights and remedies of the parties thereto shall be subject to this Agreement and subordinated as provided herein. (e) The Second Priority Representatives, on behalf of themselves and the other Second Priority Debt Parties, acknowledge and agree with the Senior Collateral Agents and the Senior Secured Parties that the arrangements described in clauses (a), (b), (c) At and (d) above are solely for the purpose of providing the Second Priority Debt Parties with a perfected second priority Lien in the Collateral under the Second Priority Collateral Documents and shall in no way be construed as imposing any duties or other obligations on the Senior Collateral Agents. In furtherance of the foregoing, the Second Priority Representatives and the Second Priority Debt Parties acknowledge and agree with the Senior Secured Parties that, at all times following a Triggering Event until the Senior Secured Obligations Obligation Payment Date, the Senior Collateral Agents shall have been paid and satisfied in full, the Collateral Agent shall be entitled right to sell, transfer or otherwise dispose of or deal with with, or cause the Subsidiary Guarantors to sell, transfer or otherwise dispose of or deal with, the Collateral as provided in the Senior Security Documents, in each case Collateral Documents without regard to the Junior Security Interests security interest of the Second Priority Debt Parties therein, or any rights to which the Junior Secured Second Priority Debt Parties would otherwise be entitled as a result of such Junior Security Interestssecurity interest, the only obligation of the Senior Collateral Agent Agents to the Junior Secured Second Priority Debt Parties in respect thereof being to act in a commercially reasonable manner in making any such disposition of the Collateral and to deliver to the Junior Second Priority Collateral Agent Trustee or the Second Priority Representatives (unless otherwise directed in writing by the Second Priority Collateral Trustee or by a court of competent jurisdiction) any proceeds remaining from the sale such sale, transfer or other disposition of the such Collateral after such payment and satisfaction in full of the Senior Secured Obligations Obligation Payment Date or, if the Senior Collateral Agent Agents shall still be in possession of all or any part of the such Collateral after such payment and satisfaction in full, the such Collateral or such part thereof remaining, without representation or warranty on the part of the Senior Collateral Agent Agents or the Senior Secured Parties; , provided that, except as aforesaid, that nothing contained in this sentence shall be construed to give rise to, nor shall the Junior Secured Second Priority Collateral Trustee or the Second Priority Debt Parties have, any claims whatsoever against either Senior Collateral Agent or any Senior Secured Party on account of any act or omission to act in connection with the exercise of any right or remedy of the Senior Secured Parties Collateral Agents with respect to the CollateralCollateral that is permitted by the Collateral Documents (other than with respect to any claims that may arise as a result of the failure of the Senior Collateral Agents, after the Senior Obligation Payment Date, to deliver any such remaining Collateral or proceeds to the Second Priority Collateral Trustee or the Second Priority Representatives). Except as provided in Section 2(b) belowThe Second Priority Representatives, on behalf of themselves and the Junior Collateral Agent other Second Priority Debt Parties, agree that they shall not, and shall not attempt to, exercise any rights with respect to (A) the Junior Security Interests Senior Lien in the Collateral or (B) the Second Priority Lien in the Collateral, whether pursuant to the Junior Security Second Priority Collateral Documents or otherwise, until the Senior Obligation Payment Date; provided that nothing in this sentence (or elsewhere in this Agreement) shall preclude (x) exercise of the rights expressly reserved to the Second Priority Collateral Trustee, the Second Priority Representatives and the Second Priority Debt Parties in accordance with the terms of this Agreement or (y) the enforcement of this Agreement. (f) In any Bankruptcy Proceeding, until the Senior Obligation Payment Date, the Second Priority Collateral Trustee and the Second Priority Representatives, on behalf of themselves and the other Second Priority Debt Parties, agree not to take any action whatsoever (including, without limitation, voting any claim) in respect of or relating to the Second Priority Debt Obligations, insofar as any such payment action arises from or relates to the Second Priority Collateral Documents, the Second Priority Lien or relates to the Collateral, in any manner that is inconsistent with or adverse to the rights and satisfaction in full priorities of the Senior Secured ObligationsParties as set forth herein. (cg) For In the sole purpose of perfecting the Junior Security Interests event that in items of Collateral in which a security interest can be perfected only by possessionany Bankruptcy Proceeding, the Collateral Agent acknowledges that it holds Second Priority Debt Parties shall not have filed a proof of claim in respect of any Second Priority Debt Obligation by the date ten days prior to the latest date on which such items proof of Collateral for itself and claim may be filed, each of the Senior Secured Parties and as bailee for the Junior Collateral Agent Agents are hereby authorized but not obligated, on behalf of the Junior Secured Partiesany applicable Second Priority Debt Party, subject to file such proof of claim; provided that any Second Priority Debt Parties shall be entitled to amend, vote or otherwise exercise rights in respect of any such proof of claim so filed by either such Senior Collateral Agent to the terms and conditions hereofsame extent as they would be permitted under this Agreement to do so had such proof of claim been filed by them.