Exhibit 10.5
PCS JUNIOR PLEDGE AGREEMENT
AGREEMENT dated as of October 19,1999 between RITE AID CORPORATION
(with its successors, the "BORROWER") and XXXXXX GUARANTY TRUST COMPANY OF
NEW YORK, as Agent.
W I T N E S S E T H:
WHEREAS, the Borrower, certain banks and Xxxxxx Guaranty Trust Company
of New York ("XXXXXX"), as agent for such banks are parties to a Credit
Agreement dated as of July 19, 1996 (as the same may be amended from time
to time, the "CREDIT AGREEMENT"); and
WHEREAS, the Borrower has agreed to grant a continuing security
interest in and to the Collateral (as hereafter defined) to secure its
obligations under the Credit Agreement and the Notes issued pursuant
thereto;
WHEREAS, the Borrower has heretofore granted a continuing security
interest in and to the Collateral to secure its obligations under the
Credit Agreement dated as of January 21, 1999 (the "PCS Credit Agreement")
among the Borrower, the banks listed therein and Xxxxxx, as agent and the
notes issued pursuant thereto;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. Terms defined in the Credit Agreement and not
otherwise defined herein have, as used herein, the respective meanings
provided for therein. The following additional terms, as used herein, have
the following respective meanings:
"COLLATERAL" has the meaning assigned to such term in Section 3(a).
"ISSUER" means PCS Holdings Corporation, and its successors.
"JUNIOR SECURED OBLIGATIONS" means the obligations secured under this
Agreement including (i) up to $200,000,000 principal amount of loans made
to the Borrower under the Credit Agreement on or after the date hereof for
the purpose of repaying maturing commercial paper (together with interest
on such loans and facility fees allocable to such loans (including, without
limitation, any interest which accrues after the commencement of any case,
proceeding or other action relating to the bankruptcy, insolvency or
reorganization of the Borrower, whether or not allowed or allowable as a
claim in any such proceeding)), (ii) all other amounts payable by the
Borrower hereunder and (iii) any renewals or extensions of any of the
foregoing.
"JUNIOR SECURITY INTERESTS" means the security interests in the
Collateral granted hereunder securing the Junior Secured Obligations.
"PLEDGED STOCK" means (i) the Subsidiary Shares and (ii) any other
capital stock required to be pledged to the Agent pursuant to Section 3(b).
"SENIOR PLEDGE AGREEMENT" means the PCS Pledge Agreement dated as of
September 29, 1999 between the Borrower and Xxxxxx Guaranty Trust Company,
as agent.
"SENIOR SECURED OBLIGATIONS" means the obligations secured under the
PCS Credit Agreement including (i) all principal of and interest
(including, without limitation, any interest which accrues after the
commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of the Borrower, whether or not
allowed or allowable as a claim in any such proceeding) on any loan under,
or any note issued pursuant to, the PCS Credit Agreement, (ii) all other
amounts payable by the Borrower under the Senior Pledge Agreement or under
the PCS Credit Agreement and (iii) any renewals or extensions of any of the
foregoing.
"SENIOR SECURITY INTERESTS" means the security interests in the
Collateral granted under the Senior Pledge Agreement securing the Senior
Secured Obligations.
"SUBSIDIARY SHARES" means 565 shares of Class A Stock, par value $1.00
per share, of the Issuer.
Unless otherwise defined herein, or unless the context otherwise
requires, all terms used herein which are defined in the New York Uniform
Commercial Code as in effect on the date hereof shall have the meanings
therein stated.
SECTION 2. Representations and Warranties. The Borrower represents
and warrants as follows:
(a) Title to Pledged Stock. The Borrower owns all of the Pledged
Stock, free and clear of any Liens other than the Junior Security
Interests and the Senior Security Interests. The Pledged Stock
includes all of the issued and outstanding capital stock of the
Issuer. All of the Pledged Stock has been duly authorized and validly
issued, and is fully paid and non-assessable, and is subject to no
options to purchase or similar rights of any Person. The Borrower is
not and will not become a party to or otherwise bound by any
agreement, other than this Agreement, which restricts in any manner
the rights of any present or future holder of any of the Pledged Stock
with respect thereto.
(b) Validity, Perfection and Priority of Junior Security
Interests. The Agent has valid and perfected security interests in the
Collateral subject to no prior Lien other than the Lien created
pursuant to the Senior Pledge Agreement. No registration, recordation
or filing with any governmental body, agency or official is required
in connection with the execution or delivery of this Agreement or
necessary for the validity or enforceability hereof or for the
perfection or enforcement of the Junior Security Interests. Neither
the Borrower nor any of its Subsidiaries has performed or will perform
any acts which might prevent the Agent from enforcing any of the terms
and conditions of this Agreement or which would limit the Agent in any
such enforcement.
(c) UCC Filing Locations. The chief executive office of the
Borrower is located at its address set forth on the signature pages of
the Credit Agreement.
SECTION 3. The Junior Security Interests. In order to secure the
full and punctual payment of the Junior Secured Obligations in accordance
with the terms thereof, and to secure the performance of all the
obligations of the Borrower hereunder:
(a) The Borrower hereby assigns and pledges to and with the
Agent for the benefit of the Banks and grants to the Agent for the
benefit of the Banks security interests in the Pledged Stock, and all
of its rights and privileges with respect to the Pledged Stock, and
all income and profits thereon, and all dividends and other payments
and distributions with respect thereto, and all proceeds of the
foregoing (the "COLLATERAL"), such security interest to be subordinate
and junior to the security interest created under the Senior Pledge
Agreement. Delivery of the certificate representing the Subsidiary
Shares to Xxxxxx as agent under the Senior Pledge Agreement shall
constitute delivery of the Subsidiary Shares to Xxxxxx as agent
hereunder. Upon termination of the commitments and repayment of all
loans and other amounts outstanding under the PCS Credit Agreement and
the Senior Pledge Agreement, such Subsidiary Shares shall be held by
Xxxxxx exclusively as agent hereunder.
(b) In the event that the Issuer at any time issues any
additional or substitute shares of capital stock of any class, the
Borrower will immediately pledge and deposit with the Agent
certificates representing all such shares as additional security for
the Junior Secured Obligations. All such shares constitute Pledged
Stock and are subject to all provisions of this Agreement.
(c) The Junior Security Interests are granted as security only
and shall not subject the Agent or any Bank to, or transfer or in any
way affect or modify, any obligation or liability of the Borrower with
respect to any of the Collateral or any transaction in connection
therewith.
SECTION 4. Delivery of Pledged Stock. All certificates representing
Pledged Stock delivered to the Agent by the Borrower pursuant hereto shall
be in suitable form for transfer by delivery, or shall be accompanied by
duly executed instruments of transfer or assignment in blank, with
signatures appropriately guaranteed, and accompanied by any required
transfer tax stamps, all in form and substance satisfactory to the Agent.
SECTION 5. Further Assurances. (a) The Borrower agrees that it will,
at its expense and in such manner and form as the Agent may require,
execute, deliver, file and record any financing statement, specific
assignment or other paper and take any other action that may be necessary
or desirable, or that the Agent may request, in order to create, preserve,
perfect or validate any Junior Security Interest or to enable the Agent to
exercise and enforce its rights hereunder with respect to any of the
Collateral. To the extent permitted by applicable law, the Borrower hereby
authorizes the Agent to execute and file, in the name of the Borrower or
otherwise, Uniform Commercial Code financing statements (which may be
carbon, photographic, photostatic or other reproductions of this Agreement
or of a financing statement relating to this Agreement) which the Agent in
its sole discretion may deem necessary or appropriate to further perfect
the Junior Security Interests.
(b) The Borrower agrees that it will not change (i) its name,
identity or corporate structure in any manner or (ii) the location of
its chief executive office unless it shall have given the Agent not
less than 30 days' prior notice thereof.
SECTION 6. Record Ownership of Pledged Stock. Subject to the rights
of the holders of the Senior Secured Obligations, the Agent may at any time
or from time to time, in its sole discretion, cause any or all of the
Pledged Stock to be transferred of record into the name of the Agent or its
nominee. The Borrower will promptly give to the Agent copies of any notices
or other communications received by it with respect to Pledged Stock
registered in the name of the Borrower and the Agent will promptly give to
the Borrower copies of any notices and communications received by the Agent
with respect to Pledged Stock registered in the name of the Agent or its
nominee.
SECTION 7. Right to Receive Distributions on Collateral. Subject to
the rights of the holders of the Senior Secured Obligations, during the
continuance of any Default the Agent shall have the right to receive and to
retain as Collateral hereunder all dividends and other payments and
distributions made upon or with respect to the Collateral and the Borrower
shall take all such action as the Agent may deem necessary or appropriate
to give effect to such right. All such dividends and other payments and
distributions which are received by the Borrower shall be received in trust
for the benefit of the Agent and the Banks and, if the Agent so directs
during the continuance of a Default, shall be segregated from other funds
of the Borrower and shall, forthwith upon demand by the Agent during the
continuance of a Default, be paid over to the Agent as Collateral in the
same form as received (with any necessary endorsement). After all Defaults
have been cured, the Agent's right to retain dividends and other payments
and distributions under this Section 7 shall cease and the Agent shall pay
over to the Borrower any such Collateral retained by it during the
continuance of a Default.
SECTION 8. Right to Vote Pledged Stock. Subject to the rights of the
holders of the Senior Secured Obligations, unless a Default shall have
occurred and be continuing, the Borrower shall have the right, from time to
time, to vote and to give consents, ratifications and waivers with respect
to the Pledged Stock, and the Agent shall, upon receiving a written request
from the Borrower accompanied by a certificate signed by its principal
financial officer stating that no Default has occurred and is continuing,
deliver to the Borrower or as specified in such request such proxies,
powers of attorney, consents, ratifications and waivers in respect of any
of the Pledged Stock which is registered in the name of the Agent or its
nominee as shall be specified in such request and be in form and substance
satisfactory to the Agent.
Subject to the rights of the holders of the Senior Secured
Obligations, if a Default shall have occurred and be continuing, the Agent
shall have the right to the extent permitted by law and the Borrower shall
take all such action as may be necessary or appropriate to give effect to
such right, to vote and to give consents, ratifications and waivers, and
take any other action with respect to any or all of the Pledged Stock with
the same force and effect as if the Agent were the absolute and sole owner
thereof.
SECTION 9. General Authority. The Borrower hereby irrevocably
appoints the Agent its true and lawful attorney, with full power of
substitution, in the name of the Borrower, the Agent, the Banks or
otherwise, for the sole use and benefit of the Agent and Banks, but at the
expense of the Borrower, to the extent permitted by law to exercise, at
anytime and from time to time while an Event of Default has occurred and is
continuing, all or any of the following powers with respect to all or any
of the Collateral:
(a) to demand, xxx for, collect, receive and give acquittance
for any and all monies due or to become due upon or by virtue thereof,
(b) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto,
(c) to sell, transfer, assign or otherwise deal in or with the
same or the proceeds or avails thereof, as fully and effectually as if
the Agent were the absolute owner thereof, and
(d) to extend the time of payment of any or all thereof and to
make any allowance and other adjustments with reference thereto;
provided that the Agent shall give the Borrower not less than ten days'
prior notice of the time and place of any sale or other intended
disposition of any of the Collateral except any Collateral which is
perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market. The Agent and the Borrower agree
that such notice constitutes "reasonable notification" within the meaning
of Section 9-504(3) of the Uniform Commercial Code.
SECTION 10. Remedies upon Event of Default. Subject to the rights of
the holders of the Senior Secured Obligations, if any Event of Default
shall have occurred and be continuing, the Agent may exercise on behalf of
the Banks all the rights of a secured party under the Uniform Commercial
Code (whether or not in effect in the jurisdiction where such rights are
exercised) and, in addition, the Agent may, without being required to give
any notice, except as herein provided or as may be required by mandatory
provisions of law, (i) apply the cash, if any, then held by it as
Collateral as specified in Section 13 and (ii) if there shall be no such
cash or if such cash shall be insufficient to pay all the Junior Secured
Obligations in full, sell the Collateral or any part thereof at public or
private sale or at any broker's board or on any securities exchange, for
cash, upon credit or for future delivery, and at such price or prices as
the Agent may deem satisfactory. Any Bank may be the purchaser of any or
all of the Collateral so sold at any public sale (or, if the Collateral is
of a type customarily sold in a recognized market or is of a type which is
the subject of widely distributed standard price quotations, at any private
sale). The Agent is authorized, in connection with any such sale, if it
deems it advisable so to do, (A) to restrict the prospective bidders on or
purchasers of any of the Pledged Stock to a limited number of sophisticated
investors who will represent and agree that they are purchasing for their
own account for investment and not with a view to the distribution or sale
of any of such Pledged Stock, (B) to cause to be placed on certificates for
any or all of the Pledged Stock or on any other securities pledged
hereunder a legend to the effect that such security has not been registered
under the Securities Act of 1933 and may not be disposed of in violation of
the provision of said Act, and (C) to impose such other limitations or
conditions in connection with any such sale as the Agent deems necessary or
advisable in order to comply with said Act or any other law. The Borrower
will execute and deliver such documents and take such other action as the
Agent deems necessary or advisable in order that any such sale may be made
in compliance with law. Upon any such sale the Agent shall have the right
to deliver, assign and transfer to the purchaser thereof the Collateral so
sold. Each purchaser at any such sale shall hold the Collateral so sold
absolutely and free from any claim or right of whatsoever kind, including
any equity or right of redemption of the Borrower which may be waived, and
the Borrower, to the extent permitted by law, hereby specifically waives
all rights of redemption, stay or appraisal which it has or may have under
any law now existing or hereafter adopted. The notice (if any) of such sale
required by Section 9 shall (1) in the case of a public sale, state the
time and place fixed for such sale, (2) in the case of a sale at a broker's
board or on a securities exchange, state the board or exchange at which
such sale is to be made and the day on which the Collateral, or the portion
thereof so being sold, will first be offered for sale at such board or
exchange, and (3) in the case of a private sale, state the day after which
such sale may be consummated. Any such public sale shall be held at such
time or times within ordinary business hours and at such place or places as
the Agent may fix in the notice of such sale. At any such sale the
Collateral may be sold in one lot as an entirety or in separate parcels, as
the Agent may determine. The Agent shall not be obligated to make any such
sale pursuant to any such notice. The Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
the sale, and such sale may be made at any time or place to which the same
may be so adjourned. In the case of any sale of all or any part of the
Collateral on credit or for future delivery, the Collateral so sold may be
retained by the Agent until the selling price is paid by the purchaser
thereof, but the Agent shall not incur any liability in the case of the
failure of such purchaser to take up and pay for the Collateral so sold
and, in the case of any such failure, such Collateral may again be sold
upon like notice. The Agent, instead of exercising the power of sale herein
conferred upon it, may proceed by a suit or suits at law or in equity to
foreclose the Junior Security Interests and sell the Collateral, or any
portion thereof, under a judgment or decree of a court or courts of
competent jurisdiction.
SECTION 11. Expenses. The Borrower agrees that it will forthwith
upon demand pay to the Agent:
(a) the amount of any taxes which the Agent may have been
required to pay by reason of the Junior Security Interests or to free
any of the Collateral from any Lien thereon, and
(b) the amount of any and all out-of-pocket expenses, including
the fees and disbursements of counsel, which the Agent may incur in
connection with (i) the administration or enforcement of this
Agreement, including such expenses as are incurred to preserve the
value of the Collateral and the validity, perfection, rank and value
of any Junior Security Interest, (ii) the collection, sale or other
disposition of any of the Collateral, (iii) the exercise by the Agent
of any of the rights conferred upon it hereunder or (iv) any Default.
Any such amount not paid on demand shall bear interest at the rate
applicable to Base Rate Borrowings plus 2% and shall be an additional
Junior Secured Obligation hereunder.
SECTION 12. Limitation on Duty of Agent in Respect of Collateral.
Beyond the exercise of reasonable care in the custody thereof, the Agent
shall have no duty as to any Collateral in its possession or control or in
the possession or control of any agent or bailee or any income thereon or
as to the preservation of rights against prior parties or any other rights
pertaining thereto. The Agent shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in its possession if
the Collateral is accorded treatment substantially equal to that which it
accords its own property, and shall not be liable or responsible for any
loss or damage to any of the Collateral, or for any diminution in the value
thereof, by reason of the act or omission of any agent or bailee selected
by the Agent in good faith.
SECTION 13. Application of Proceeds. Upon the occurrence and during
the continuance of an Event of Default, the proceeds of any sale of, or
other realization upon, all or any part of the Collateral and any cash held
shall, after application of such proceeds in accordance with Section 13 of
the Senior Pledge Agreement, be applied by the Agent in the following order
of priorities:
FIRST, to payment of the expenses of such sale or other
realization, including reasonable compensation to agents and counsel
for the Agent, and all expenses, liabilities and advances incurred or
made by the Agent in connection therewith, and any other unreimbursed
expenses for which the Agent or any Bank is to be reimbursed pursuant
to Section 9.03 of the Credit Agreement or Section 11 hereof and
unpaid fees owing to the Agent under the Credit Agreement;
SECOND, to the ratable payment of unpaid principal of the Junior
Secured Obligations;
THIRD, to the ratable payment of accrued but unpaid interest on
the Junior Secured Obligations in accordance with the provisions of
the Credit Agreement;
FOURTH, to the ratable payment of all other Junior Secured
Obligations, until all Junior Secured Obligations shall have been paid
in full; and
FINALLY, to payment to the Borrower or its successors or assigns,
or as a court of competent jurisdiction may direct, of any surplus
then remaining from such proceeds.
The Agent may make distributions hereunder in cash or in kind or, on a
ratable basis, in any combination thereof
SECTION 14. Concerning the Agent. The provisions of Article 7 of the
Credit Agreement shall inure to the benefit of the Agent in respect of this
Agreement and shall be binding upon the parties to the Credit Agreement in
such respect, In furtherance and not in derogation of the rights,
privileges and immunities of the Agent therein set forth:
(a) The Agent is authorized to take all such action as is
provided to be taken by it as Agent hereunder and all other action
reasonably incidental thereto. As to any matters not expressly
provided for herein (including, without limitation, the timing and
methods of realization upon the Collateral) the Agent shall act or
refrain from acting in accordance with written instructions from the
Required Banks or, in the absence of such instructions, in accordance
with its discretion.
(b) The Agent shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity,
perfection, priority or enforceability of the Junior Security
Interests in any of the Collateral, whether impaired by operation of
law or by reason of any action or omission to act on its part
hereunder. The Agent shall have no duty to ascertain or inquire as to
the performance or observance of any of the terms of this Agreement by
the Borrower.
SECTION 15. Appointment of Co-Agents. At any time or times, in order
to comply with any legal requirement in any jurisdiction, the Agent may
appoint another bank or trust company or one or more other persons, either
to act as co-agent or co-agents, jointly with the Agent, or to act as
separate agent or agents on behalf of the Banks with such power and
authority as may be necessary for the effectual operation of the provisions
hereof and may be specified in the instrument of appointment (which may, in
the discretion of the Agent, include provisions for the protection of such
co-agent or separate agent similar to the provisions of Section 14).
SECTION 16. Termination of Junior Security Interests; Release of
Collateral. Upon the repayment in full of all Junior Secured Obligations
and the termination of the Commitments under the Credit Agreement, the
Junior Security Interests shall terminate and all rights to the Collateral
shall revert to the Borrower. At any time and from time to time prior to
such termination of the Junior Security Interests, the Agent may release
any of the Collateral with the prior written consent of the Required Banks.
Upon any such termination of the Junior Security Interests or release of
Collateral, the Agent will, at the expense of the Borrower, execute and
deliver to the Borrower such documents as the Borrower shall reasonably
request to evidence the termination of the Junior Security Interests or the
release of such Collateral, as the case may be.
SECTION 17. Notices. All notices hereunder shall be given in
accordance with Section 9.01 of the Credit Agreement.
SECTION 18. Waivers, Non-Exclusive Remedies. No failure on the part
of the Agent to exercise, and no delay in exercising and no course of
dealing with respect to, any right under this Agreement shall operate as a
waiver thereof; nor shall any single or partial exercise by the Agent of
any right under the Credit Agreement or this Agreement preclude any other
or further exercise thereof or the exercise of any other right. The rights
in this Agreement and the Credit Agreement are cumulative and are not
exclusive of any other remedies provided by law.
SECTION 19. Successors and Assigns. This Agreement is for the
benefit of the Agent and the Banks and their successors and assigns, and in
the event of an assignment of all or any of the Junior Secured Obligations,
the rights hereunder, to the extent applicable to the indebtedness so
assigned, may be transferred with such indebtedness. This Agreement shall
be binding on the Borrower and its successors and assigns.
SECTION 20. Changes in Writing. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally,
but only in writing signed by the Borrower and the Agent with the consent
of the Required Banks.
SECTION 21. New York Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York, except
as otherwise required by mandatory provisions of law and except to the
extent that remedies provided by the laws of any jurisdiction other than
New York are governed by the laws of such jurisdiction.
SECTION 22. Severability. If any provision hereof is invalid or
unenforceable in any jurisdiction, then, to the fullest extent permitted by
law, (i) the other provisions hereof shall remain in full force and effect
in such jurisdiction and shall be liberally construed in favor of the Agent
and the Banks in order to carry out the intentions of the parties hereto as
nearly as may be possible; and (ii) the invalidity or unenforceability of
any provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and
year first above written.
RITE AID CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Executive Vice President
XXXXXX GUARANTY TRUST
COMPANY OF NEW YORK,
as Agent
By: /s/ Xxxxxx Xxxxxx-Xxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxx-Xxxxxx
Title: Vice President
