RITE AID CORPORATION
GUARANTY AGREEMENT
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DATED AS OF SEPTEMBER 30, 1996
RE: $79,560,908.91 7.30% SENIOR SECURED NOTES DUE FEBRUARY 28, 2002
ISSUED BY:
XXXXX, INC.
TABLE OF CONTENTS
(Not a Part of the Agreement)
PAGE
1. PRELIMINARY STATEMENT..........................................................................1
2. GUARANTY AND OTHER RIGHTS AND UNDERTAKINGS.....................................................2
2.1 Guaranteed Obligations..............................................................2
2.2 Performance Under the Guaranteed Agreements.........................................2
2.3 Releases............................................................................3
2.4 Waivers.............................................................................3
2.5 Certain Waivers of Subrogation, Reimbursement and Indemnity.........................6
2.6 Invalid Payments................................................................... 6
2.7 Marshaling..........................................................................6
2.8 Subordination...................................................................... 6
2.9 Setoff, Counterclaim or Other Deductions............................................7
2.10 Election by Guarantor to Perform Obligations........................................7
2.11 No Election of Remedies by Noteholders..............................................7
2.12 Separate Action, Other Enforcement Rights ..........................................7
2.13 Noteholder Setoff...................................................................8
2.14 Delay or Omission; No Waiver........................................................8
2.15 Restoration of Rights and Remedies..................................................8
2.16 Cumulative Remedies................................................................ 8
2.17 Maintenance of Office...............................................................8
2.18 Further Assurances..................................................................8
3. INTERPRETATION OF THIS GUARANTY................................................................9
3.1 Terms Defined...................................................................... 9
3.2 Section Headings and Construction..................................................15
4. WARRANTIES AND REPRESENTATION.................................................................15
4.1 Condition of the Issuer............................................................15
4.2 Organization.......................................................................15
4.3 Financial Statements...............................................................16
4.4 Actions Pending....................................................................16
4.5 Outstanding Debt...................................................................16
4.6 Title to Properties................................................................16
4.7 Taxes..............................................................................16
4.8 Conflicting Agreements and Other Matters...........................................16
4.9 Regulation G, etc..................................................................17
4.10 ERISA..............................................................................17
4.11 Compliance With Law................................................................17
4.12 Governmental Consent...............................................................18
4.13 Disclosure.........................................................................18
4.14 Certain Laws.......................................................................18
5. COVENANTS.....................................................................................19
5.1 Information........................................................................19
5.2 Payment of Obligations.............................................................21
5.3 Maintenance of Property; Insurance.................................................21
5.4 Conduct of Business and Maintenance of Existence...................................21
5.5 Compliance with Laws...............................................................22
5.6 Inspection of Property, Books and Records..........................................22
5.7 Restriction on Debt of Subsidiaries................................................22
5.8 Restriction on Sales with Leases Back..............................................22
5.9 Restriction on Liens...............................................................23
5.10 Leverage Ratio.....................................................................25
5.11 Fixed Charge Coverage..............................................................25
5.12 Limitation on Minority Investments.................................................25
5.13 Consolidations, Mergers and Sales of Assets........................................25
5.14 Master Lease.......................................................................25
5.15 Retirement of Notes................................................................25
6. MISCELLANEOUS.................................................................................26
6.1 Expenses...........................................................................26
6.2 Amendment..........................................................................26
6.3 Survival of Representations and Warranties.........................................26
6.4 Successors and Assigns.............................................................27
6.5 Communications.....................................................................27
6.6 Descriptive Headings, etc..........................................................28
6.7 Satisfaction Requirement...........................................................28
6.8 Partial Invalidity.................................................................28
6.9 Governing Law......................................................................28
6.10 Effective Date.....................................................................28
6.11 Benefits of Guaranty Restricted to Noteholders.....................................28
6.12 Consent to Jurisdiction: Appointment of Agent......................................28
6.13 Survival...........................................................................29
6.14 Entire Agreement...................................................................29
6.15 Duplicate Originals, Execution in Counterpart......................................29
Annex 1 - Address of Guarantor
GUARANTY
THIS GUARANTY, dated as of September 30,1996 (as amended or
restated from time to time, this "Guaranty"), by RITE AID CORPORATION, a
Delaware corporation (together with its successors and assigns, the
"Guarantor"), in favor of each of the Noteholders (as such term is
hereinafter defined).
1. PRELIMINARY STATEMENT.
1.1 Certain operating subsidiaries of the Guarantor (the
"Operating Subsidiaries') entered into certain Bills of Sale and Purchase
and Sale Agreements, all dated February 29, 1996 (such Bills of Sale and
Purchase and Sale Agreement being collectively referred to here-in as the
"Sales Agreements"), with Realty Leasing Consultants, Inc., a Delaware
corporation ("RLC"), pursuant to which the Operating Subsidiaries
transferred, assigned and sold to RLC all of their right, title and
interest in and to various improvements located in approximately two
thousand one hundred (2, 100) retail stores operated by the Operating
Subsidiaries (the "Improvements'), and, in payment therefor, RLC delivered
certain promissory notes (the "RLC Notes") to an agent for the Operating
Subsidiaries.
1.2 RLC entered into the RLC/RA Master Lease Agreement, dated
February 29, 1996 (as amended from time to time, the "Master Lease"), with
Rite Aid of Florida, Inc., a Subsidiary of the Guarantor and a Florida
corporation ('Rite Aid Florida"), pursuant to which RLC leased the
Improvements to Rite Aid Florida. T:Zite Aid Florida has entered into
subleases (the "Subleases') with the Operating Subsidiaries pursuant to
which Rite Aid Florida subleases the Improvements to the Operating
Subsidiaries.
1.3 In connection with the foregoing, the Guarantor issued the
RLC/RA Guarantee Agreement, dated as of February 29, 1996, in favor of RLC
and its successors and assigns, pursuant to which the Guarantor, among
other things, guaranteed the obligations of the Operating Subsidiaries
under the Sales Agreements and the Subleases and the obligations of Rite
Aid Florida under the Master Lease.
1.4 RLC is entering into the Rent Purchase Agreement, dated as of
September 30, 1996 (the "Rent Purchase Agreement), with Xxxxx, Inc., a
Delaware corporation (together with its successors and assigns, the
"Issuer"), pursuant to which RLC is transferring, assigning and selling to
the Issuer all of its right, We and interest -in and to rental payments
(the "Rental Payments') owed by Rite Aid Florida under, together with
certain related rights under, the Master Lease in respect of the period
commencing on March 1, 1997 and concluding on (and including) February 28,
2002. RLC will use the proceeds of such transaction to pay, in part, its
obligations under the RLC Notes.
1.5 To finance such purchase of Rental Payments under the Rent
Purchase Agreement, the Issuer has authorized the issuance of its 7.30%
Senior Secured Notes due February 28, 2002 (as may be amended or restated
from time to time, the "Notes"), in the aggregate principal amount of
Seventy-Nine Million Five Hundred Sixty Thousand Nine Hundred Eight and
91/100 Dollars ($79,560,908.91), pursuant to the Note Agreement (as may be
amended or restated from time to time, the "Note Agreement'), dated as of
September 30, 1996, entered into among the Issuer and each of the
purchasers named on Annex 1 thereto (the "Purchasers").
1.6 The Guarantor is issuing this Guaranty to induce the
Purchasers to purchase the Notes so that the Issuer will have funds
available to pay RLC for the Rental Payments and RLC, in turn, will have
funds available to pay:, in part, its obligations under the RLC Notes.
1.7 All acts and proceedings required by law and by the
certificate of incorporation and bylaws of the Guarantor necessary to
constitute this Guaranty a valid and binding agreement for the uses and
purposes set forth herein in accordance with its terms have been done and
taken, and the execution and delivery hereof has been in all respects duly
authorized.
2. GUARANTY AND OTHER RIGHTS AND UNDERTAKINGS
2.1 Guaranteed Obligations.
The Guarantor, in consideration of the execution and delivery of
the Note Agreement and the purchase of the Notes by the Purchasers, hereby
irrevocably, unconditionally, and absolutely guarantees, on a continuing
basis, to each Noteholder, as and for the Guarantor's own debt, until final
and indefeasible payment has been made:
(a) the due and punctual payment by the Issuer of the principal
of, and accrued interest and the Yield-Maintenance Amount (if any) on,
the Notes at any time outstanding and the due and punctual payment of
all other amounts payable, and all other indebtedness owing, by the
Issuer under the Notes and the Note Agreement (the "Guaranteed
Agreements"), in each case when and -as the same shall become due and
payable, whether at maturity, pursuant to mandatory or optional
prepayment (by means of a put to the Issuer or otherwise), by
acceleration or otherwise, all in accordance with the terms and
provisions hereof and thereof, it being the intent of the Guarantor
that the guaranty set forth herein shall be a continuing guaranty of
payment and not a guaranty of collection; and
(b) the punctual and faithful performance, keeping, observance,
and fulfillment by the Issuer of all duties. agreements, covenants and
obligations of the Issuer contained' in the Guaranteed Agreements.
All of the obligations set forth in subsection (a) and subsection (b) of
this Section 0 are referred to herein as the "Guaranteed Obligations" and
the guaranty thereof contained herein is referred to herein as the
"Unconditional Guaranty". This Unconditional Guaranty is a primary,
original and immediate obligation of the Guarantor and is an absolute,
unconditional, continuing and irrevocable guaranty of payment and
performance and shall remain in full force and effect until the full, final
and indefeasible payment of the Guaranteed Obligations.
2.2 Performance Under the Guaranteed Agreements.
In the event the Issuer fails to pay, perform, keep, observe, or
fulfill any Guaranteed Obligation in the manner provided in the Guaranteed
Agreements, the Guarantor shall cause forthwith to be paid the moneys, or
to be performed, kept, observed, or fulfilled each of such obligations, in
respect of which such failure has occurred in accordance with the terms and
provisions of the Guaranteed Agreements- In furtherance of the foregoing,
if an Event of Default shall exist, all of the Guaranteed Obligations
shall, in the manner and subject to the limitations provided in the Note
Agreement for the acceleration of the Notes, forthwith become due and
payable without notice, regardless of whether the acceleration of the Notes
shall be stayed, enjoined, delayed or otherwise prevented.
2.3 Releases.
The Guarantor consents and agrees that, without any notice
whatsoever to or by the Guarantor and without impairing, releasing,
abating, deferring, suspending, reducing, terminating or otherwise
affecting the obligations of the Guarantor hereunder, each Noteholder, by
action or inaction, may:
(a) compromise or settle, renew or extend the period of duration
or the time for the payment of the obligations under, or discharge the
performance of, or may refuse to, or otherwise not, enforce, or may,
by action or inaction, release all or any one or more parties to. any
one or more of the Financing Documents, or any other guaranty,
agreement or instrument related thereto;
(b) assign, sell or transfer, or otherwise dispose of, any one
or more of the Notes;
(c) grant waivers, extensions, consents and other indulgences of
any kind whatsoever to the Issuer or any other guarantor in respect of
any one or more of the Financing Documents, or
any other guaranty, agreement or instrument related thereto;
(d) amend, modify or supplement in any manner whatsoever and at
any time (or from time to time) any one or more of the Financing
Documents, or any other guaranty. agreement or instrument related
thereto;
(e) release or substitute any one or more of the endorsers or
guarantors of the Guaranteed Obligations whether parties hereto or
not; and
(f) sell, exchange, release, surrender or enforce, by action or
inaction, any Property at any time pledged or granted as security in
respect of the Guaranteed Obligations, whether so pledged or granted
by the Issuer, the Guarantor or another guarantor of the Issuer's
obligations under the Financing Documents, or any other guaranty,
agreement or instrument related thereto.
2.4 Waivers.
To the fullest extent permitted by law, the Guarantor does hereby
waive:
(a) any notice of
(i) acceptance of this Unconditional Guaranty;
(ii) the issuance and any purchase of the Notes under the
Note Agreement or the creation, existence or acquisition of any of the
Guaranteed Obligations, or the amount of the Guaranteed Obligations,
subject to the Guarantor's right to make inquiry of each Noteholder to
ascertain the amount of the Guaranteed Obligations owing to such
Noteholder at any reasonable time, provided that the Guarantor will
took solely to the Security Agent for the determination of the
identities of the Noteholders;
(iii) any transfer of Notes from one holder to another;
(iv) any adverse change in the financial condition of the
Issuer and the Subsidiaries or any other fact that might increase,
expand or affect the Guarantor's risk hereunder;
(v) presentment for payment, demand, protest, and notice
thereof as to the Notes or any other instrument;
(vi) any Default or Event of Default; and
(vii) any kind or nature whatsoever to which the Guarantor
might otherwise be entitled (other than those specifically required to
be given to the Guarantor pursuant to the terms of this Guaranty);
(b) the right by statute or otherwise to require any Noteholder to
institute suit against the Issuer or any other guarantor or to exhaust the
rights and remedies of any Noteholder against the Issuer or any other
guarantor;
(c) the benefit of any stay (except in connection with a pending
appeal), valuation, appraisal, redemption or extension law now or at any
time hereafter in force which, but for this waiver, might be applicable to
any sale of Property of the Guarantor made under any judgment, order or
decree based on this Guaranty, and the Guarantor covenants that it will not
at any time insist upon or plead, or in any manner claim or take the
benefit or advantage of, such law;
(d) any defense or objection to the absolute, primary. continuing
nature, or the validity, enforceability or amount, of this Unconditional
Guaranty, including, without limitation, any defense based on (and the
primary, continuing nature. and the validity, enforceability and amount, of
this Unconditional Guaranty shall be unaffected by) any of the following:
(i) any change in future conditions;
(ii) any change of law;
(iii) any invalidity or irregularity with respect to the
issuance or assumption of any obligations (including, without limitation,
the Financing Documents, or any agreement or instrument
related thereto) by the Issuer or any other Person;
(iv) the execution and delivery of any agreement at any
time hereafter (including, without limitation, the Financing Documents, or
any agreement or instrument related thereto) by the Issuer or any other
Person;
(v) the genuineness, validity, regularly or enforceability
of any of the Guaranteed Obligations;
(vi) any default, failure or delay, willful or otherwise,
in the performance of any obligations by the Issuer or the Guarantor;
(vii) any creditors' rights, bankruptcy, receivership or
other insolvency proceeding of the Issuer, the Guarantor or any Subsidiary
of the Guarantor, or sequestration or seizure of any Property of the
Issuer, the Guarantor or any Subsidiary of the Guarantor, or any merger,
consolidation, reorganization, dissolution, liquidation or winding up or
change in corporate constitution or corporate identity or loss of corporate
identity of the Issuer, the Guarantor or any Subsidiary of the Guarantor;
(viii) any disability or other defense of the Issuer or the
Guarantor to payment and performance of all Guaranteed Obligations
(including, without limitation, any defense based on or otherwise relating
to Rite Aid Florida having made or continuing to make payments under the
Master Lease) other than the defenses that the Guaranteed Obligations shall
have been fully and finally performed and indefeasibly paid to the
Noteholders or that the Notes have been indefeasibly acquired by the
Guarantor in compliance with the provisions of the Put Agreement;
(ix) the cessation from any cause whatsoever of the
liability of the Issuer or the Guarantor in respect of the Guaranteed
Obligations;
(x) impossibility or illegality of performance on the part
of the Issuer or the Guarantor under the Financing Documents;
(xi) any change of the circumstances of the Issuer, the
Guarantor or any other Person, whether or not foreseen or foreseeable,
whether or not imputable to the Issuer or the Guarantor, including, without
limitation, impossibility of performance through fire, explosion, accident
labor disturbance, floods, droughts, embargoes, wars (whether or not
declared), civil commotions, acts of God or the public enemy, delays or
failure of suppliers or carriers, inability to obtain materials, economic
or political conditions, or any other causes affecting performance, or any
other force majeure, whether or not beyond the control of the Issuer or the
Guarantor and whether or not of the kind hereinbefore specified;
(xii) any attachment, claim, demand, charge, Lien, order,
process, encumbrance or any other happening or event or reason, similar or
dissimilar to the foregoing, or any withholding or diminution at the
source, by reason of any taxes, assessments, expenses, indebtedness,
obligations or liabilities of any character, foreseen or unforeseen, and
whether or not valid, incurred by or against any Person, or any claims,
demands, charges, Liens or encumbrances of any nature, foreseen or
unforeseen, incurred by any Person, or against any sums payable under the
Financing Documents, or any agreement or instrument related thereto so that
such sums would be rendered inadequate or would be unavailable to make the
payment as herein provided;
(xiii) any change in the ownership of the equity securities
of the Issuer, the Guarantor or any other Person liable in respect of the
Notes; or
(xiv) any other action, happening, event or reason
whatsoever that shall delay, interfere with, hinder or prevent, or in any
way adversely affect, the performance by the Issuer or the
Guarantor of any of its obligations under the Financing Documents.
2.5 Certain Waivers of Subrogation, Reimbursement and Indemnity.
The Guarantor shall not assert any claim for subrogation,
reimbursement, or indemnity whatsoever in respect of the Guaranteed
Obligations, and no right of recourse to or with respect to any assets or
Property of the Issuer until such time as the Guaranteed Obligations shall
have been indefeasibly paid in full to the Noteholders. Until such time as
such payment shall have been made, all such rights to subrogation,
reimbursement and indemnity shall be subordinated to the rights of the
Noteholders hereunder and under the Guaranteed Agreements.
2.6 Invalid Payments.
To the extent the Issuer makes a payment or payments to any
Noteholder, which payment or payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or
required. for any of the foregoing reasons or for any other reason, to be
repaid or paid over to a custodian, trustee, receiver or any other party or
officer under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction,
state or federal law, or any common law or equitable cause, then to the
extent of such payment or repayment, the obligation or part thereof
intended to be satisfied shall be revived and continued in full force and
effect as if said payment had not been made and the Guarantor shall be
primarily liable for such obligation.
2.7 Marshaling.
Neither any Noteholder nor any Person acting for the benefit of
any Noteholder shall be under any obligation to marshal any assets in favor
of the Guarantor or against or in payment of any or all of the Guaranteed
Obligations.
2.8 Subordination.
In the event that, for any reason whatsoever, the issuer or a
Person obligated in respect of the Guaranteed Obligations pursuant to
another Guaranty, is now or hereafter becomes indebted to the Guarantor in
any manner (such -indebtedness referred to as an "Affiliate Obligation"),
the amount of such Affiliate Obligation. interest thereon, and all other
amounts due with respect thereto, shall, at all times during the existence
of a Default or an Event of Default, be subordinate as to time of payment
and in all other respects to all the Guaranteed Obligations, and the
Guarantor shall not be entitled to enforce or receive payment thereof until
all sums then due and owing to the Noteholders in respect of the Guaranteed
Obligations shall have been paid in full, except that the Guarantor may
enforce (and shall enforce, at the request of the Required Holders, and at
the Guarantor's expense) any obligations in respect of any such Affiliate
Obligation owing to the Guarantor from the Issuer or such indebted Person
so long as all proceeds in respect of any recovery from such enforcement
shall be held by the Guarantor in trust for the benefit of the Noteholders,
to be paid thereto as promptly as reasonably possible. If any other
payment, other than pursuant to the immediately preceding sentence, shall
have been made to the Guarantor by the Issuer or such indebted Person on
any such Affiliate Obligation during any time that a Default or an Event of
Default exists and there are Guaranteed Obligations outstanding, the
Guarantor shall hold in trust all such payments for the benefit of the
Noteholders, to be paid thereto as promptly as reasonably possible.
2.9 Setoff, Counterclaim or Other Deductions.
Except as otherwise required by law, each payment by the Guarantor
shall be made without setoff, counterclaim or other deduction.
2.10 Election by Guarantor to Perform Obligations.
Any election by the Guarantor to pay or otherwise perform any of
the obligations of the Issuer under the Guaranteed Agreements, or any
agreement or instrument related thereto, shall not release the Issuer, the
Guarantor or any other guarantor from such obligations or any of such
Person's other obligations under the Guaranteed Agreements, or any
agreement or instrument related thereto,
except to the extent actually performed by the Guarantor.
2.11 No Election of Remedies by Noteholders.
Each Noteholder shall, individually or collectively, have the
right to seek recourse a0inst the Guarantor to the fullest extent provided
for herein for the Guarantors obligations under this Guaranty in respect of
the Guaranteed Obligations. No election to proceed in one form of action or
proceeding, or against any party, or on any obligation, shall constitute a
waiver of such Noteholders right to proceed in any other form of action or
proceeding or against other parties unless such Noteholder has expressly
waived such right in writing. Specifically, but without limiting the
generality of the foregoing, no action or proceeding by any Noteholder
against the Issuer or the Guarantor under any document or instrument
evidencing obligations of the Issuer or the Guarantor to such Noteholder
shall serve to diminish the liability of the Guarantor under this Guaranty.
except to the extent that such Noteholder finally and unconditionally shall
have realized payment of the Guaranteed Obligations.
2.12 Separate Action; Other Enforcement Rights.
Each of the rights and remedies granted under this Guaranty to
each Noteholder in respect of the Notes held by such Noteholder may be
exercised by such Noteholder without notice by such Noteholder to, or the
consent of or any other action by, any other Noteholder. Each Noteholder
may proceed to protect and enforce this Unconditional Guaranty by suit or
suits or proceedings in equity, at law or in bankruptcy, and whether for
the specific performance of any covenant or agreement contained herein or
in execution or aid of any power herein granted or for the recovery of
judgment for the obligations hereby guarantied or for the enforcement of
any other proper, legal or equitable remedy available under applicable law.
2.13 Noteholder Setoff.
Each Noteholder shall have, to the fullest extent permitted by law
and this Guaranty, a right of set-off against any and all credits and any
and all other Property of the Guarantor, now or at any time whatsoever,
with or in the possession of, such Noteholder, or anyone acting for such
Noteholder, to ensure the full performance of any and all obligations of
the Guarantor hereunder.
2.14 Delay or Omission; No Waiver.
No course of dealing an the part of any Noteholder and no delay or
failure on the part of any such Person to exercise any right hereunder
shall impair such right or operate as a waiver of such right or otherwise
prejudice such Person's rights, powers and remedies hereunder. Every right
and remedy given by this Unconditional Guaranty or by law to any Noteholder
may be exercised from time to time as often as may be deemed expedient by
such Person.
2.15 Restoration of Rights and Remedies.
If any Noteholder shall have instituted any proceeding to enforce
any right or remedy under this Unconditional Guaranty or under any Note
held by such Noteholder, and such proceeding shall have been dismissed,
discontinued or abandoned for any reason, or shall have been determined
adversely to such Noteholder, then and in every such case each such
Noteholder, the Issuer and the Guarantor shall, except as may be limited or
affected by the doctrine of res judicata, as applied to any such
proceeding, be restored severally and respectively to its respective former
positions hereunder and thereunder, and thereafter, subject as aforesaid,
the rights and remedies of such Noteholders shall continue as though no
such proceeding had been instituted.
2.16 Cumulative Remedies,
No remedy under this Guaranty or any of the Guaranteed Agreements
is intended to be exclusive of any other remedy, but each and every remedy
shall be cumulative and in addition to any and every other remedy given
pursuant to this Guaranty or the Guaranteed Agreements.
2.17 Maintenance of Offices.
The Guarantor will maintain an office at its address referred to
in Section 6.5 where notices, presentations and demands in respect of this
Guaranty may be made upon it, Such office will be maintained at such
address until such time as the Guarantor shall notify the Noteholders of
any change of location of such office.
2.18 Further Assurances.
The Guarantor will cooperate with the Noteholders and execute such
further instruments and documents as the Required Holders shall reasonably
request to carry out, to the reasonable satisfaction of the Required
Holders, the transactions contemplated by this Guaranty and the Guaranteed
Agreements and the documents and instruments related thereto.
3. INTERPRETATION OF THIS GUARANTY
3.1 Terns Defined.
As used in this Guaranty, the capitalized terms have the meaning
specified below, set forth in the document or set forth in the section of
this Guaranty referred to immediately following such term (such
definitions, unless otherwise expressly provided, to be equally applicable
to both the singular and plural forms of the terms defined):
Affiliate Obligation - has the meaning assigned to such term in
Section 2.8 hereof.
Attributable Debt - means, as to any particular Sale and Leaseback
Transaction under which the Guarantor or any Subsidiary is at the time
liable, at any date as of which the amount thereof is to be determined
(a) in the case of any such transaction involving a Capital
Lease, the amount on such date of the Capital Lease Obligation
thereunder, or
(b) in the case of any other Sale and Leaseback
Transaction, the then present value of the minimum rental
obligations under such Sale and Leaseback Transaction during the
remaining term thereof (after giving effect to any extensions at
the option of the lessor) computed by discounting the respective
rental payments at the actual interest factor included in such
payments or, if such interest factor cannot be readily determined,
at the rate of fourteen percent (14%) per annum. The amount of any
rental payment required to be made under any such Sale and
Leaseback Transaction not involving a Capital Lease may exclude
amounts required to be paid by the lessee on account of
maintenance and repairs, insurance, taxes. assessments, utilities,
operating and labor costs and similar charges.
Benefit Arrangement - means at any time an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by
any member of the ERISA Group.
Capital Lease - means any lease of Property which, in accordance
with generally accepted accounting principles, should be capitalized on the
lessees balance sheet; and "Capital Lease Obligation" means the amount of
the liability so capitalized in respect of a Capital Lease.
Commitments - has the meaning assigned to such term in the Credit
Agreement as in effect on the date hereof.
Consolidated Debt - means at any date the Debt of the Guarantor
and its Consolidated Subsidiaries, determined on a consolidated basis as of
such date.
Consolidated EBIT - means, for any period, Consolidated Net Income
for such period plus, to the extent deducted in determining Consolidated
Net Income for such period, the aggregate amount of
(a) Consolidated Interest Charges and
(b) provision for income taxes.
Consolidated Interest Charges - means, for any period, the
aggregate amount of interest charges, whether expensed or capitalized,
incurred or accrued by the Guarantor and Its Consolidated Subsidiaries
during such period.
Consolidated Net Income - means, for any period, the net income
(or loss) of the Guarantor and its Consolidated Subsidiaries, determined on
a consolidated basis for such period.
Consolidated Net Tangible Assets - means the total amount of
assets (less applicable reserves and other properly deductible items) which
under generally accepted accounting principles would be included on a
consolidated balance sheet of the Guarantor and its Consolidated
Subsidiaries after deducting therefrom
(a) all liabilities and liability items, including amounts in
respect of obligations or guarantees of obligations under leases,
which under generally accepted accounting principles would be included
on such balance sheet, except Funded Debt, capital stock and surplus,
surplus reserves and provisions for deferred income taxes, and
(b) all goodwill, trade names, trademarks, patents, unamortized
debt discount and expense and other like intangibles, which - in each
case under generally accepted accounting principles would be included
on such consolidated balance sheet.
Consolidated Net Worth -- means at any date the consolidated
stockholders' equity of the Guarantor and -its Consolidated Subsidiaries
determined as of such date.
Consolidated Rent - means, for any period, the consolidated rental
expense of the Guarantor and its Consolidated Subsidiaries for such period.
Consolidated Subsidiary - means at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of the
Guarantor in its consolidated financial statements if such statements were
prepared as of such date.
Credit Agreement - means the Credit Agreement, dated as of July
19, 1996 and as may be amended from time to time, among the Guarantor, the
banks from time to time party thereto, and Xxxxxx Guaranty Trust Company of
New York, as Agent.
Debt - of any Person means at any date, without duplication,
(a) all obligations of such Person for borrowed money,
(b) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments,
(c) all obligations of such Person to pay the deferred purchase
price of Property or services, except trade accounts payable arising
in the ordinary course of business,
(d) all obligations of such Person as lessee which are
capitalized in accordance with generally accepted accounting
principles,
(e) all Debt secured by a Lien on any asset of such Person,
whether or not such Debt is otherwise an obligation of such Person.
and
(f) all Debt of others Guaranteed by such Person.
Default - has the meaning assigned to such term in the Note
Agreement.
Environmental Laws - means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
other governmental restrictions relating to the environment or to
emissions, discharges or releases of pollutants, contaminants, petroleum or
petroleum products, chemicals or industrial, toxic or hazardous substances
or wastes into the environment including, without limitation, ambient air,
surface water, ground Water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes
or the clean-up or other remediation thereof.
ERISA - means the Employee Retirement Income Security Act of 1974,
as amended, or any successor statute.
ERISA Group - means the Guarantor, any Subsidiary and all members
of a controlled group of corporations and all trades or businesses (whether
or not incorporated) under common control which, together with the
Guarantor or any Subsidiary, are treated as a single employer under Section
414 of the Internal Revenue Code.
Event of Default - has the meaning assigned to such term in the
Note Agreement.
Financing Documents - has the meaning assigned to such term in the
Note Agreement.
Fixed Charge Coverage Ratio - means at any date, the ratio of
(a) Consolidated EBIT plus Consolidated Rent to
(b) Consolidated interest Charges plus Consolidated Rent,
in each case for the period of four (4) consecutive fiscal quarters most
recently ended on or prior to such date.
Funded Debt - means any Debt maturing more than one year after the
date of determination thereof and any Debt regardless of its term,
renewable pursuant to the terms thereof or of a revolving credit or similar
agreement effective for more than one year after the date of the creation
of such Debt, which would, in accordance with generally accepted accounting
practice, be classified as funded debt but shall not include
(a) any Debt for the payment, redemption or satisfaction of
which money (or evidences of indebtedness, if permitted under the
instrument creating such indebtedness) in the necessary amount shall
have been deposited in trust with a trustee or proper depository
either at or before the maturity or redemption date thereof, or
(b) guarantees arising in connection with the sale, discount,
guarantee or pledge of notes, chattel mortgages, leases, accounts
receivable, trade acceptances and other paper arising in the ordinary
course of business, out of instalment or conditional sales to or by,
or transactions involving title retention with, distributors, dealers
or other customers of merchandise, equipment or services or guarantees
other than guarantees of indebtedness for borrowed money.
Guarantee - by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of
any other Person; provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
The term "Guarantee" used as a verb has a corresponding meaning.
Guaranteed Agreements - has the meaning assigned to such term in
Section 2.1 hereof.
Guaranteed Obligations - has the meaning assigned to such term in
Section 0 hereof.
Guarantor- has the meaning assigned to such term in the first
paragraph hereof.
Guaranty, this - has the meaning assigned to such term in the
first paragraph hereof-
Improvements - has the meaning assigned to such term in Section
1.1 hereof.
Internal Revenue Code - means the Internal Revenue Code of 1986,
as amended, or any successor statute.
Issuer - has the meaning assigned to such term in Section 1 -4 hereof-
Investment - means any investment in any Person, whether by means
of share purchase, capital contribution, loan, time deposit or otherwise.
Any repurchase by the Guarantor of its own capital stock shall not
constitute an Investment for purposes of this Guaranty.
Lien - means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of
such asset- For the purposes of this Guaranty, the Guarantor or any
Subsidiary shall be deemed to own Subject to a Lien any asset which it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement Capital Lease or other title retention agreement
relating to such asset.
Master Lease - has the meaning assigned to such term in Section 11
hereof.
Material Adverse Effect - means a material adverse effect on
(a) the business, profits, Properties or condition (financial or
otherwise) of the Guarantor and the Subsidiaries taken as a whole, or
(b) the ability of the Guarantor to perform its obligations
under this Guaranty or any Guaranteed Agreement to which it is a
party.
Multiemployer Plan - means at any time an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which any member
of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five (5) plan years made
contributions, including for these purposes any Person which ceased to be a
member of the ERISA Group during such five (5) year period.
Note Agreement - has the meaning assigned to such term in Section
1-5 hereof.
Noteholder - means, at any time, each Person that is the holder of
any Note at such time.
Notes - has the meaning assigned to such term in Section 1.5
hereof.
Operating Subsidiaries - has the meaning assigned to such term in
Section 1.1 hereof.
Payment Assurance Agreement - means the Payment Assurance
Agreement, dated as of February 29, 1996, made by the Guarantor and Rite
Kid Florida in favor of Deutsche Bank AG, New York Branch.
PBGC - means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of 'its functions under ERISA.
Person - means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or any agency or
instrumentality thereof.
Plan - means at any time an employee pension benefit plan (other
than a Multiemployer Plan) which is covered by Tale TV of ERISA or subject
to the minimum funding standards under Section 412 of the Internal Revenue
Code and either
(a) is maintained, or contributed to, by any member of the ERISA
Group or
(b) has at any time within the preceding five (5) years been
maintained, or contributed to, by any Person which was at such time a
member of the ERISA Group for employees of any Person which was at
such time a member of the ERISA Group.
Property - means any interest in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible.
Purchasers - has the meaning assigned to such term in Section 1.5
hereof.
Put Agreement - means the Put Agreement, dated as of September 30,
1996, between the Guarantor and the Purchasers.
Rent Purchase Agreement - has the meaning assigned to such term in
Section 1-4 hereof.
Rental Payments - has the meaning assigned to such term in Section
1.4 hereof.
Required Holders - has the meaning assigned to such term in the
Note Agreement.
Rite Aid Florida - has the meaning assigned to such term in
Section 1.2 hereof.
RLC - has the meaning assigned to such term in Section 1.1 hereof.
RLC Notes - has the meaning assigned to such term in Section 1.1
hereof
Sale and Leaseback Transaction - has the meaning assigned to such
term in Section 5.8 hereof.
Sales Agreements - has the meaning assigned to such term in
Section 1. 1 hereof.
Secured Debt - means indebtedness for borrowed money which is
secured by a Lien on Property of the Guarantor or any Subsidiary, but shall
not include guarantees arising in connection with the sale, discount,
guarantee or pledge of notes, chattel mortgages, leases, accounts
receivable, trade acceptances and other papers arising, in the ordinary
course of business, out of installment or conditional sales to or by, or
transactions involving title retention with, distributors, dealers or other
customers, of merchandise, equipment or services.
Security Agent - has the meaning assigned to such term in the Note
Agreement.
Significant Subsidiary - means at any time any Subsidiary or any
group of Subsidiaries having consolidated assets, individually or in the
aggregate, equal to or greater than eight percent (8%) of the consolidated
assets of the Guarantor and its Consolidated Subsidiaries at such time.
Subleases - has the meaning assigned to such term in Section 1.2 hereof
Subsidiary - means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by the
Guarantor.
Temporary Cash Investment - means any Investment in
(a) direct obligations of the United States or any agency
thereof, or obligations guaranteed by the United States or any agency
thereof,
(b) commercial paper rated at least A-1 by Standard & Poor's
Ratings Group, a division of XxXxxx-Xxxx, inc., and P-1 by Xxxxx'x
Investors Service, Inc.,
(c) time deposits with, including certificates of deposit issued
by, any office located in the United States of any bank or trust
company which is organized under the laws of the United States or any
state thereof and has capital, surplus and undivided profits
aggregating at least Five Hundred Million Dollars ($500,000,000) or
(d) repurchase agreements with respect to securities described
in clause (a) above entered into with an office of a bank or trust
company meeting the criteria specified in clause (c) above, provided
in each case that such Investment matures within one (1) year from the
date of acquisition thereof by the Guarantor or a Subsidiary.
Total Capital - means, at any date, the sum of Consolidated Debt
and Consolidated Not Worth, each determined as of such date.
Unconditional Guaranty - has the meaning assigned to such term in
Section 2.1 hereof. United States - means the United States of America,
including the States and the District of Columbia, but excluding its
territories and possessions.
Wholly-Owned Consolidated Subsidiary - means any Consolidated
Subsidiary all of the shares of capital stock or other ownership interests
of which (except directors' qualifying shares) are at the time directly or
indirectly owned by the Guarantor.
Yield-Maintenance Amount - has the meaning assigned to such term
in the Note Agreement.
3.2 Section Headings and Construction.
(a) Section Headings, etc. The titles of the Sections
appear as a matter of convenience only, do not constitute a part
hereof and shall not affect the construction hereof. The words
"herein," "hereof," "hereunder" and "hereto" refer to this Guaranty as
a whole and not to any particular Section or other subdivision.
(b) Construction. Each covenant contained herein shall be
construed (absent an express contrary provision herein) as being
independent of each other covenant contained herein, and compliance
with any one covenant shall not (absent such an express contrary
provision) be deemed to excuse compliance with one or more other
covenants.
4. WARRANTIES AND REPRESENTATIONS
The Guarantor represents and warrants to each Purchaser, as of the
date of effectiveness hereof, as follows"
4.1 Condition of the Issuer. The Guarantor delivers this Guaranty
based solely upon its own independent investigation of the financial
condition of the Issuer and 'in no part upon any representation or
statement of any one or more of the Noteholders with respect thereto. The
Guarantor is in a position to obtain, and hereby assumes full
responsibility for obtaining, any additional information concerning the
financial condition of the Issuer as the Guarantor may deem material to
'its obligations hereunder, and the Guarantor is not relying upon, nor
expecting, any Noteholder to furnish it any information concerning the
financial condition of the Issuer.
4.2 Organization. The Guarantor is a corporation duly organized
and existing in good standing under the laws of the State of Delaware, each
Subsidiary is duly organized and existing in good -standing under the laws
of the jurisdiction in which it is incorporated, and the Guarantor has and
each Subsidiary has the corporate power to own its respective Property and
to carry on its respective,business as now being conducted.
4.3 Financial Statements. The Guarantor has furnished each
Purchaser with a copy of its annual report to shareholders, and its form
10-K, in each case, for its fiscal year ended March 2, 1996, and a copy of
its form 10-Q for its fiscal quarter ended June 1, 1996. such financial
statements (including any related schedules and notes) are true and correct
in all material respects (subject, as to interim statements, to changes
resulting from audits and yearend adjustments), have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods involved -and show all liabilities, direct
and contingent, of the Guarantor and the Consolidated Subsidiaries required
to be shown in accordance with such principles. The balance sheets tirly
present the condition of the Guarantor and the Consolidated Subsidiaries as
at the dates thereof, and the consolidated statements Of operations,
changes in shareholders' equity, income and cash flows fairly present the
results of the operations of the Guarantor and the Consolidated
Subsidiaries for the periods indicated. There has been no material adverse
change in the business, condition or operatons (financial or otherwise) of
the Guarantor and the Subsidiaries taken as a whole since March 1, 1996-
4.4 Actions Pending. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Guarantor, threatened
against the Guarantor or any of the Subsidiaries, or, any properties or
rights of the Guarantor or any of the Subsidiaries, by or before any court,
arbitrator or administrative or governmental body that could reasonably be
expected to have a Material Adverse Effect.
4.5 Outstanding Debt. Neither the Guarantor nor any of the
Subsidiaries has outstanding any Debt except as set forth in its form 10-Q
for its fiscal quarter ended June 1, 1996 and except for Debt outstanding
under the Credit Agreement.
4.6 Title to Properties. Each of the Guarantor and the
Subsidiaries has good and indefeasible title to its respective real
properties (other than properties that it leases) and good title to all of
its other respective Properties, including the Properties reflected in the
most recent balance sheet referred to in Section 4-3 hereof (other than
Properties disposed of in the ordinary course of business), subject to no
Lion of any kind except Liens permitted by Section 5.9 hereof. All leases
necessary In any material respect for the conduct of the respecfive
businesses of the Guarantor and the Subsidiaries are valid and subsisting
and are in full force and effect.
4.7 Taxes. Each of the Guarantor and the Subsidia(les has filed
all Federal, State and other income tax returns that, to the best knowledge
of the officers of the Guarantor, are required to be filed, and each has
paid all taxes as shown on such returns and on all assessments received by
it to the extent that such taxes have become due, except such taxes as are
being cor-dested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with generally
accepted accounting pdnciples.
4.8 Conflicting Agreements and Other Maffers.
(a) Restrictive Agreements. Neither the Guarantor nor any of the
Subsidiaries is a party to any contract or agreement or subject to any
charter or other corporate restriction which could reasonably be expected
to have a Material Adverse Effect.
(b) Conffictfng Agreements. Neither the execution nor delivery
hereof or any of the Financing Documents to which the Guarantor or any
Subsidiary is a party, nor fulfillment of nor compliance with the terms and
provisions hereof and of any such Financing Document, will conflict with,
or result in a breach of the terms, conditions or provisions of, or
constitute a default under, or result in any violation of, or result in the
creation of any Lien upon any of the Properties of the Guarantor or any of
the Subsidiades pursuant to, the charter or bylaws of the Guarantor or any
of the Subsidiaries, any award of any arbitrator or any agreement
(including any agreement with stockholders), instrument, order, judgment,
decree, statute, law, rule or regulation to which the Guarantor or any of
the Subsidiaries is subject.
(c) Limitations on Debt. Except as set forth in the Credit
Agreement, the Payment Assurance Agreement, and the Indenture, dated May,
1993, pursuant to which the Guarantor issued its 6.78% senior debentures
due 2013, neither the Guarantor nor any of the Subsidiaries is a party to,
or otherwise subject to any pirovision contained in, any instniment
evidencing indebtedness of the Guarantor or such Subsidiary, any agreement"
relating hereto or any other contract or agreement (including its charter)
that limits the amount of, or otherwise imposes restrictions on the
incurring of, Debt of the Guanantor.
4.9 Regulation G, etc. Neither the Guarantor nor any Subsidiary
owns or has any present intention of acquiring any "margin stock"as defined
in Regulation G (12 CFR Part 207) of the Board of Governors of the Federal
Reserve System C'Margin Stock")- Neither the Guarantor nor any agent acting
on its behalf has taken any action that might cause this Guaranty, the
Notes or any other IFinancing Document to Violate Regulation G, Regulation
T or any other regulation of the Board of Governors of the Federal Reserve
System or to violate the Securities Exchange Act of 1934, as amended, in
each case as in effect now or as the same may hereafter be in affect.
4.10 ERISA. No accumulated funding deficiency (as defined in
section 302 of ERISA and section 412 of the Intemal Revenue Code), whether
or not waived, exists with respect to any Plan- No liability to the PBGG
has been or is expected by the Guarantor to be incurred with respect to any
Plan by the Guarantor or any of the Subsidiaries that could reasonably be
expected to have a Material Adverse Effect. Neither the Guarantor nor any
of the Subsidiades has incurred or presently expects to incur any
withdrawal liability under Title IV of ERISA with respect to any
Multiemployer Plan that could reasonably be expected to have Material
Adverse Effect. The execution and delivery hereof and of the Financing
Documents will not involve any transaction that is subject to the
prohibitions of section 406 of ERISA or in connection with which a tax
could be imposed pursuant to section 4975 of the internal Revenue. Code.
The representation by the Guarantor in the next preceding sentence is made
in reliance upon and subject to the accuracy of the representation of each
Purchaser in paragraph 8 of the Note Agreement as to the source of the
funds to be used to pay the purchase price of the Notes to be purchased
each such Purchaser.
4.11 Compliance with Law.
(a) Compliance. Each of the Guarantor and the Subsidiaries is in
compliance with all applicable laws (including, without limitation, all
Environmental Laws) in effect in each jurisdiction where it is presently
doing business and in which the failure so to comply could reasonably be
expected to have a Material Adverse Effect.
(b) Liability. Neither the Guarantor nor any of the Subsidiaries
is subject to any liability under any Environmental Laws that, in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
4.12 Governmental Consent. Neither the nature of the Guarantor or
of any Subsidiary, nor any of their respective businesses or properties,
nor any relationship between the Guarantor or any Subsidiary and any other
Person, nor any circumstance in connection with the offering, issuance,
sale or delivery of the Notes, is such as to require any authorization,
consent, approval, exemption or other action by or notice to or filing with
any court or administrative or governmental body in connection with the
execution and delivery hereof or fulfillment of or compliance with the terms
and provisions hereof.
4.13 Disclosure. Neither this Guaranty nor any other document,
certificate or statement furnished to you by or an behalf of the Guarantor
in connection herewith or any Financing Document contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and in such documents,
certificates and statements not misleading. There is no fact peculiar to
the Guarantor or any of the Subsidiaries that could reasonably be expected
to have a Material Adverse Effect or in the future may (so far as the
Guarantor can now foresee) have a Material Adverse Effect and that has not
been set forth herein or in the other documents, certificates and
statements furnished to you by or on behalf of the Guarantor prior to the
date hereof in connection with the transaofiom contemplated hereby or by
the Financing Documents.
4.14 Certain Laws.
(a) Investment Company Act. The Guarantor is not, and is not
directly or indirectly controlled by, or acting on behalf of any Person
which is, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(b) Absence of Foreign or Enemy Status. The Guarantor is not
(i) an "enemy" or an "ally of enemy' within the meaning of
Section 2 of the Trading with the Enemy Act, as amended, or any
executive orders or regulations issued or promulgated pursuant
thereto, or
(ii) a "national" of any "designated enemy country" as such
terms are defined in Executive Order No. 9095, as amended, of the
President of the United States of America.
(c) Holding Company Status. The Guarantor is not a "holding
company" or an "affiliata" of a "holding company," or a "subsidiary
company" of a "holding company," or a "public utility" within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
5. COVENANTS
5.1 Information.
So long as any of the Guaranteed Obligations remain outstanding,
the Guarantor will deliver to each Noteholder-
(a) as soon as available and in any event within ninety (90) days
after the end of each fiscal year of the Guarantor, a consolidated
balance sheet of the Guarantor and its Consolidated Subsidiaries as of
the end of such fiscal year and the related consolidated statements of
income and cash flows for such fiscal year, setting forth in each case
in comparative form the figures for the previous fiscal year, all
reported on in a manner acceptable to the Securities and Exchange
Commission by KPMG Peat Marwick LLP or other independent public
accountants of nationally recognized standing-,
(b) as soon as available and in any event within forty-five (45)
days after the end of each of the first three (3) quarters of each
fiscal year of the Guarantor, a consolidated balance sheet of the
Guarantor and its Consolidated Subsidiaries as of the end of such
quarter and the related consolidated statements of income and cash
flows for such quarter and for the portion of the Guarantor's fiscal
year ended at the end of such quarter, setting forth in each case in
comparative form the figures for the corresponding quarter and the
corresponding portion of the Guarantors previous fiscal year, all
certified (subject to normal year-end adjustments) as to fairness of
presentation, generally accepted accounting principles and consistency
by the chief financial officer of the Guarantor
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above. a certificate of
the chief financial officer or the chief accounting officer of the
Guarantor
(i) setting forth in reasonable detail the calculations required
to establish whether the Guarantor was in compliance with the
requirements of Sections 5.7 to 5.12, inclusive, on the date of such
financial statements and
(ii) stating whether any Default exists on the date of Such
certificate and, if any Default then e)Cists, setting forth the
details thereof and the action which the Guarantor is taking or
proposes to take with respect thereto,
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements
(i) as to whether anything has come to their attention to cause
them to believe that any Default existed on the date of such
statements and
(ii) confirming the calculations set forth in the officees
certificate delivered simultaneously therewith pursuant to clause (G)
above,
(e) within five (5) days after any officer of the Guarantor
obtains knowledge of any Default, if such Default is then continuing,
a certificate of the chief financial officer or the chief accounting
officer of the Guarantor setting forth the details thereof and the
action which the Guarantor is taking or proposes to take wfth respect
thereto;
(f) promptly upon the mailing thereof to the shareholders of the
Guarantor generally, copies of statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration
statements on Form " or its equivalent) and reports on Forms 10- K.
10-Q and 8-K (or their equivalents) which the Guarantor shall have
filed with the Securities and Exchange Commission;
(h) if and when any member of the ERISA Group
(i) gives or is required to give notice to the PBGC of any
"reportable evenf' (as defined in Section 4043 of ERISA) with respect
to any Plan which might constitute grounds for a termination of such
Plan under Title IV of ERISA, or knows that the plan administrator of
any Plan has given or is required to give notice of any such
reportable event a copy of the notice of such reportable event given
or required to be given to the PBGC;
(ii) receives notice of complete or partial 'Withdrawal liability
under Title IV of ERISA or notice that any Multiemployer Plan is in
reorganization, is insolvent or has been terminated, a copy of such
notice;
(iii) receives notice from the PBGC under Title IV of ERISA of an
intent to terminate, impose liability (other than for premiums under
Section 4007 of ERISA) in respect of, or appoint a trustee to
administer, any Plan a copy of such notice,
(iv) applies for a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code, a copy ofsuch application,
(v) gives notice of intent to terminate any Plan under Section
4041(c) of ERISA, a copy of such notice and other information filed
with the PBGC,
(vi) gives notice of withdrawal from, any Plan pursuant to Section
4063 of ERISA, a copy of such notice; or
(vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes
any amendment to any Plan or any Benefit Arrangement which has
resulted or could result in the imposition of a Lien or the posting of
a bond or other security, a certificate of the chief financial officer
or the chief accounting officer of the Guarantor setting forth details
as to such occurrence and the action, if any, which the Guarantor or
applicable member of the ERISA Group is required or proposes to take;
and
(i) from time to time such additional information regarding the
financial position or business of the Guarantor and its Subsidiaries
as any Noteholder may reasonably request.
5.2 Payment of Obligations.
The Guarantor will, and will cause each of its Subsidiaries to,
pay and discharge, as the same shall become due and payable,
(a) all material claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like Persons prior to the
time such claims or demands give rise to a Lien upon any of its
Property or assets, and
(b) all material taxes, assessments and governmental charges or
levies upon it or its Property or assets,
except where any of the items in clause (a) or (b) above may be contested
in good faith by appropriate proceedings, and the Guarantor or such
Subsidiary, as the case may be, shall have set aside on its books. in
00oordance with generally accepted accounting principles, appropriate
reserves, if any, for the accrual of any such items.
5.3 Maintenance of Property; Insurance,
(a) The Guarantor will keep, and will cause each Subsidiary to
keep, all Property usefiA and necessary in its business in, good
working order and condition, ordinary wear and tear excepted.
(b) The Guarantor will, and VAII cause each of its Subsidiaries
to, maintain (either in the name of the Guarantor or in such
Subsidlary's own name) with financially sound and responsible
in;surance companies, insurance on all their respective properties in
at least such amounts and against at least such risks (and with such
risk retention) as are usually insured against in the same general
area by companies of established repute engaged in the same or a
similar business: and will furnish to the Noteholders, upon request of
any Noteholder, information presented in reasonable detail as to the
insurance so carried.
5.4 Conduct of Business and Maintenance of Existence.
Except as otherwise permitted in this Guaranty, the Guarantor will
continue, and will cause each Significant Subsidiary to continue, to engage
in business of the same general type as now conducted by the Guarantor and
its Significant Subsidiaries, and will preserve, renew and keep in full
fome and effect, and will cause each Significant Subsidiary (except where
such Significant Subsidiary merges into the Guarantor or any other
Subsidiary) to preserve, renew and keep in full force and affect. their
respective legal existences and their respective rights, privileges and
franchises necessary or desirable in the normal conduct of business.
5.5 Compliance with Laws.
The Guarantor will comply, and cause each Subsidiary to comply, in
all material respects with all applicable laws, ordinances, rules,
regulations. and requirements of governmental authorities (including,
without limitation, Environmental Laws and ERISA and the rules and
regulations thereunder) except where the necessfty of compliance therewith
is contested in good faith by appropriate proceedings or where the failure
to comply would not have a Material Adverse Effect.
5.6 Inspection of Property, Books and Records.
The Guarantor will keep, and will cause each Subsidiary to keep,
proper books of record and account in which full, true and correct entries
shall be made of all dealings and transactions in relation to its business
and activities; and will permit, and will cause each Subsidiary to permit,
representatives of any Noteholder, at such Noteholder's expense, to visit
and inspect any of their respective properties, to examine and make
abstracts from any of their respective books and records and to discuss
their respective affairs, finances and accounts with their respective
officers, employees and independent public accountants, all at such
reasonable 'times and as often as may reasonably be desired.
5.7 Restriction on Debt of Subsidiaries.
The Guarantor will not permit any Subsidiary to create, issue,
incur, assume, or in any other way become liable for any unsecured Debt
unless immediately prior thereto the Guarantor would be entitled under
subsection (d) of Section 5.9 to create Secured Debt not specifically
permitted under Section 5.9 but for subsection (d) thereof in an amount
equal to such Debt; provided that the foregoing restriction shall not
prevent
(a) any Subsidiary from becoming liable to the Guarantor or to a
Wholly-Owned Consolidated Subsidiary for Debt or
(b) the extension, renewal or refunding of any Debt of any
Subsidiary so long as Consolidated Debt is not thereby increased.
5.8 Restriction on Sales with Leases Back.
Except for a sale or transfer by a Subsidiary to the Guarantor or
a Wholly-Owned Consolidated Subsidiary, the Guarantor will not, and will
not permit any Subsidiary to, sell or transfer any manufacturing plant,
warehouse, retail store or equipment now or hereafter owned and operated by
the Guarantor or a Subsidiary, with the intention that the Guarantor or any
Subsidiary take back a lease thereof, except a lease for a period,
including renewals, not exceeding twenty-four (24) months. by the end of
which period it is intended that the use of such Property or equipment by
the lessee will be discontinued (any such transaction being herein referred
to as a "Sale and Leaseback Transaction'); provided that, notwithstanding
the foregoing, the Guarantor or any Subsidiary may enter into a Sale and
Leaseback Transaction N the Guarantor or a Subsidiary would be entitled
under subsection (d) of Section 5.9 to create Secured Debt not spedfically
permitted under Section 5.9 but for subsection (d) thereof in an amount
equal to the Attributable Debt respecting such Sale and Leaseback
Transaction; provided further that, notwithstanding the foregoing, the
Guarantor or any Subsidiary may enter into a Sale and Leaseback Transaction
if entered into in respect of Property acquired by the Guarantor or a
Subsidiary if such Sale and Leaseback Transaction is entered into within
twenty-four (24) months from the date of such acquisition; and provided
stfil further that, noWthstanding the foregoing, the Guarantor or any
Subsidiary may enter into a Sale and Leaseback Transaction if the
Guarantor, within one hundred twenty (120) days before or after the sale or
transfer shall have been made by the Guarantor or by any Subsidiary,
applied or applies an amount equal to the greater of
(a) the net proceeds of the sale of the Property sold and leased
back pursuant to such arrangement or
(b) the fair market value of the Property so sold and leased
back at the time of entering into such arrangement (as detennined by
any two of the followng: the Chairman of the Board of the Guarantor,
its Chief Executive Officer, 'its President, any Vice President of the
Guarantor, its Treasurer and its Controller) to
(i) the retirement of Secured Debt of the Guarantor other
than at maturity or pursuant to any mandatory sinking fund payment
or any mandatory prepayment provision or
(ii) reduction of the Commitments.
5.9 Restriction on Liens.
The Guarantor will not, and will not permit any Subsidiary to,
create, issue, incur, assume or guar-xxxxx any Secured Debt without making
effective provision (and the Guarantor covenants that in such case R will
make or cause to be made effecrive provision) whereby the Notes (and any
other Debt of the Guarantor or such Subsidiary then entitled thereto) shall
be secured by the same Uen equally and ratably with (or prior to) any and
all other obligations and Debt thereby secured for so long as any such
other obligations and Debt shall be so secured; provided that the foregoing
covenant shall not apply to the following:
(a) (i) Any Lien on any Property acquired or constructed by the
Guarantor or a Subsidiary and created contemporaneously with, or
within twenty-four (24) months after, such acquisition or the
completion of such construction and commencement of full operation off
such Property, whichever is later, to secure or provide for the
payment of any part of the purchase or construction price of such
Property, or
(ii) the acquisition by the Guarantor or a Subsidiary of
Property subject to any Lien upon such Property existing at the time
of acquisition thereof, whether or not assumed by the Guarantor or
such Subsidiary, or
(iii) any conditional sales agreement or other title retention
agreement with respect to any Property hereafter acquired; provided
that the Lien does not spread to other Property except unimproved real
Property previously owned upon which any new construction has taken
place and subsequent additions to such acquired or constructed
Property;
(b) Any Lien created for the sole purpose of extending, renewing
or refunding, in whole or part, any Lien permitted by this Section 5-9 or
any Lien securing the Debt of the Guarantor or of any Subsidiary on the
date of this Guaranty or of a corporation at the time such corporation
becomes a Subsidiary, or any extension% renewals or refunding$ of any such
Uen; provided that the principal amount, of Debt secured thereby shall not
exceed the principal amount of Debt so secured at the time of such
extension, renewal or refunding and that such extension, renewal or
refunding Lien shall be limited to all or that part of the same Property
which secured the Debt so extended, renewed or refunded;
(c) Any Secured Debt of a Subsidiary owing to the Guarantor or a
WhollyOwned Consolidated Subsidiary; and
(d) Secured Debt of the Guarantor and its Subsidiaries which would
otherwise be prohibited by the foregoing restrictions (not including
Secured Debt permitted to be secured under subsections (a) through (c)
above) so long as the sum of any such Secured Debt hereafter incurred and
outstanding at the time plus Attributable Debt of the Guarantor and any
Subsidiaries in respect of Sale and Leaseback Transaofionr, hereafter
entered into and outstanding at the time (excluding Attributable Debt
incurred in respect of any Sale and Leaseback Transaction
(i) entered into in respect of Property acquired by the
Guarantor or a Subsidiary not more than twenty-four (24) months prior
to the date such Sale and Leaseback Transaction is entered into or
(ii) if the Guarantor, within one hundred twenty (120) days
before or after such Sale and Leaseback Transaction is entered into,
applies an amount equal to the greater of
(A) the net proceeds of the sale of the Property so sold
and leased back or
(B) the fair market value of such Property at the date such
arrangement is entered into, the retirement of Secured Debt (other
than at maturitY or pursuant to any mandatory payment provision)
or to reduction of the Commitments) Plus unsecured Debt of any
Subsidiary hereafter incurred and outstanding at the time
(excluding unsecured Debt incurred through the extension, renewal
or refunding of Debt of such Subsidiary where Consolidated Debt
was not thereby increased and excluding any Debt owed to the
Guarantor or a Wholly-Owned Consolidated Subsidiary) does not at
the time exceed five percent (5%) of Consolidated Net Tangible
Assets.
5.10 Leverage Ratio.
Consolidated Debt will at no time exceed sixty-five percent (65%)
of Total Capital.
5.11 Fixed Charge Coverage.
The Fixed Charge Coverage Ratio will at no time be less than one
hundred eight-five percent (185%).
5.12 Limitation on Minority Investments.
Neither the Guarantor nor any Consolidated Subsidiary will make or
acquire any Investment in any Person other than:
(a) Investments in Consolidated Subsidiaries;
(b) Temporary Cash Investments; and
(c) Any Investment not otherwise permitted by the foregoing
clauses of this Section if, immediately after such Investment is made
or acquired, the aggregate net book value of all Investments permitted
by this clause (c) does not exceed fifteen percent (15%) of
Consolidated Net Worth.
5.13 Consolidations, Mergers and Sales of Assets.
The Guarantor will not
(a) consolidate or merge with or into any other Person or
(b) sell, lease or otherwise transfer, directly or indirectly, all
or any substantial part of the assets of the Guarantor and its
Subsidiaries, taken as a Whole, to any other Person;
provided that the Guarantor may merge with another Person if
(i) the Guarantor is the corporation surviving such merger and
(ii) immediately after giving effect to such merger, no Default
shall have occurred and be continuing;
provided further that the Guarantor may sell, lease or otherwise transfer
any retail store located within the state of North Carolina-
5.14 Master Lease. The Guarantor agrees that it shall cause the
Master Lease to be accounted for as a finance lease for financial reporting
purposes.
5.15 Retirement of Notes. Neither the Guarantor nor any of its
Subsidiaries will prepay, retire, purchase or otherwise acquire in whole or
in part any Notes, or any interest therein (whether by pledge,
participating interest or otherwise), pdor to their stated final maturity
except by prepayment pursuant hereto or pursuant to the Put Agreement-
6. MISCELLANEOUS
6.1 Expenses.
(a) The Guarantor shall pay when billed the reasonable costs and
expenses (including reasonable attorneys' fees) incurred by the
Noteholders in connection with the consideration, negotiation,
preparation or execution of any amendments, waivers, consents,
standstill agreements and other similar agreements with respect hereto
or with respect to any of the Guaranteed Agreements (whether or not
any such amendments, waivers, consents, standstill agreements or other
similar agreements are executed).
(b) At any time when the Noteholders and either one or both of
the Issuer and the Guarantor are conducting restructuring or workout
negotiations in respect hereof, or a Default or Event of Default
exists, the Guarantor shall pay when billed the reasonable costs and
expenses (including reasonable attorneys' fees and the reasonable fees
of professional advisors) incurred by the Noteholders in connection
with the assessment analysis or enforcement of any rights or remedies
that are or may be available to the Noteholders.
(c) If the Guarantor shall fail to pay when due any principal
of, or YieldMaintenance Amount or accrued interest on, any Note, the
Guarantor shall pay to each holder of Notes, to the extent permitted
by law, such amounts as shall be sufficient to cover the costs and
expenses, including but not limited to reasonable attorneys! fees,
incurred by such holder in collecting any sums due on such Notes-
6.2 Amendment
This Guaranty may be amended only in a writing executed by the
Guarantor and the Required Holders. Subject to the next succeeding
sentence, the covenants set forth in Section 5.7 through 5.13, inclusive,
hereof, and the definitions in defined terms used therein, shall be deemed
to be automatically amended to be identical to the equivalent covenants and
definitions in the Credit Agreement effective upon the effectiveness of any
amendment thereto 'in the Credit Agreement. Any such deemed amendment shall
automatically cease to be eftetive upon the termination of the Credit
Agreement or any repayment of all or substantially all of the indebtedness
outstanding thereunder, if such termination or repayment shall occur within
one hundred eighty (180) days after the effectiveness of such deemed
amendment. In addlition. any such deemed amendment shall not annul or
othervAse have any effect on any acceleration of the Notes pursuant to
paragraph 6 of the Note Agreement if such amendment shall become effective
after such acceleration shall have occurred.
6.3 Survival of Representations and Warranties.
All representations and warranties contained herein or made in
writing by the Guarantor in connection herewith shall survive the execution
and delivery hereof.
6.4 Successors and Assigns.
(a) Whenever the Guarantor or any of the parties to the
Financing Documents is referred to, such reference shall be deemed to
include the successors and assigns of such party, and all the
covenants. promises and agreements contained in this Guaranty by or on
behalf of the Guarantor shall bind the successors and assigns of the
Guarantor and shall inure to the benefit of each of the Noteholders
from time to time whether so expressed or not and whether or not an
assignment of the rights hereunder shall have been delivered in
connection with any assignment or other transfer of Notes,
(b) The Guarantor agrees to provide an executed copy of this
Guaranty to any transferee of the Note by any Noteholder, provided
that no additional obligations of the Guarantor shall thereby be
created but rather that the existing obligations of the Guarantor
shall be more particularly stated in respect of one or more future
Noteholders that are the subject of this Guaranty,
6.5 Communications.
(a) Method; Address. All written communications provided for
under this Guaranty shall be sent by registered or certified mail with
return receipt requested or nationwide overnight delivery service (with
charges prepaid) and
(i) if to any Purchaser, addressed to such Purchaser at the
address specified for such commurfications in the Purchasers'
Schedule attached to the Note Agreement as Annex 1, or at such
other address as any Purchaser shall have specified to the
Guarantor in writing,
(ii) if to any other Noteholder, addressed to such other
Noteholder at such address as such other Noteho(der shall have
specified to the Guarantor in writing or, if any such other
Noteholder shall not have so specified an address to the
Guarantor, then addressed to such other Noteholder in care of the
last holder of such Note that shall have so specified an address
to the Guarantor, and
(iii) if to the Guarantor, addressed to it at the address
set forth on Annex 1 hereto, or at such other address as the
Guarantor shall have specified to each Noteholder in writing:
provided that any such communication to the Guarantor may also, at
the option of any Noteholder, be delivered by any other means
either to the Guarantor at Its address specified In such Annex 1
or to any executive officer of the Guarantor.
(b) When Given. Any communication addressed and delivered as
herein provided shall be deemed to be received when actually delivered
to the address of the addressee (whether or not delivery is accepted)
or received by the teleropy machine of the recipient. Any
communication not so addressed and delivered shall be ineffective.
6.6 Descriptive Headings, etc. The descriptive headings of'the
several Sections hereof are inserted for convenience only and do not
constitute a part hereof. The words "herein," "hereof," "hereunder" and
"heretd' refer to this Guaranty as a whole and not to any particular
section or other subdivision.
6.7 Satisfaction Requirement. If any agreement, certificate or
other writing, or any action taken or to be taken, is by the terms hereof
required to be satisfactory to each Noteholder, the Noteholders or to the
Required Holders, the determination of such satisfaction shall be made by
each such Noteholder, the Noteholders or the Required Holders, as the case
may be, in the sole and exclusive judgment (exercised in good faith) of the
Person or Persons making such determination.
6.8 Partial Invalidity.
The unenforceability or invalidity of any provision or provisions
hereof shall not render any other provision or provisions contained herein
unenforceable or invalid.
6.9 Governing Low.
THIS GUARANTY SKALL BE CONSTRUED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF
NEW YORK.
6.10 Effective Date.
This Guaranty shall be effective as of the date hereof.
6.11 Benefits of Guaranty Restricted to Noteholders.
Nothing express or implied in this Guaranty ir, intended or shall
be construed to give to any Person other then the Guarantor and the
Noteholders any legal or equitable right, remedy or claim under or in
respect hereof or any covenant, condition or provision therein or herein
contained; and all such covenants, conditions and provisions are and shall
be held to be for the sole and exclusive benefit of the Guarantor and the
Noteholders.
6.12 Consent to Jurisdiction; Appointment of Agent.
(a) Consent to Jurisdiction. THE GUARANTOR HEREBY IRREVOCABLY
AND UNCONDITIONALLY AGREES THAT ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS GUARANTY, THE NOTES, OR ANY OTHER FINANCING
DOCUMENT, OR ANY ACTION OR PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE
ANY JUDGMENT IN RESPECT OF ANY BREACH HEREUNDER, OR UNDER ANY
GUARANTEED AGREEMENT, BROUGHT BY ANY HOLDER OF A NOTE AGAINST THE
GUARANTOR OR ANY OF ITS PROPERTY, MAY BE BROUGHT BY SUCH HOLDER OF A
NOTE IN ANY FEDERAL DISTRICT COURT LOCATED IN NEW YORK CITY, NEW YORK
OR ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY, NEW YORK, AS
SUCH HOLDER OF A NOTE MAY IN ITS SOLE DISCRETION ELECT, AND BY THE
EXECUTION AND DELIVERY OF THIS GUARANTY. THE GUARANTOR IRREVOCABLY AND
UNCONDITIONALLY SU13MITS TO THE NOWEXCLUSIVE IN PERSONAM JURISDICTION
OF EACH SUCH COURT, AND THE GUARANTOR IRREVOCABLY WAIVES AND AGREES
NOT TO ASSERT IN ANY PROCEEDING BEFORE ANY TRIBUNAL, BY WAY OF MOTION,
AS A DEFENSE OR OTHERWISE, ANY CLAIM THAT IT IS NOT SUBJECT TO THE [IV
PERSONAM JURISDICTION OF ANY SUCH COURT. IN ADDITION, THE GUARANTOR
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION T14AT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
GUARANTY OR ANY GUARANTEED AGREEMENT, BROUGHT IN ANY SUCH COURT, AND
HEREBY IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT
THE ABILJTY OR RIGHT OF ANY HOLDER OF A NOTE TO OBTAIN JURISDICTION
OVER THE GUARANTOR IN SUCH OTHER JURISDICTION AS MAY BE PERMITTED BY
APPLICABLE LAW.
(b) Agent for Service of Process. THE GUARANTOR HEREBY
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT PROCESS SERVED EITHER
PERSONALLY OR BY REGISTERED MAIL SHALL CONSTITUTE, TO THE EXTENT
PERMITTED BY LAW, ADEQUATE SERVICE OF PROCESS IN ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY
GUARANTEED AGREEMENT, OR ANY ACTION OR PROCEEDING TO EXECUTE OR
OTHERWISE ENFORCE ANY JUDGMENT IN RESPECT OF ANY BREACH HEREUNDER OR
UNDER THE GUARANTEED AGREEMENTS, BROUGHT BY ANY HOLDER OF A NOTE
AGAINST THE GUARANTOR OR ANY OF ITS PROPERTY. RECEIPT OF PROCESS SO
SERVED SHALL BE CONCLUSIVELY PRESUMED AS EVIDENCED BY A DELIVERY
RECEIPT FURNISHED BY THE UNITED STATES POSTAL SERVICE. NOTHING HEREIN
SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OR RIGHT OF A14Y
HOLDER OF A NOTE TO SERVE ANY WRITS, PROCESS OR SUMMONSES IN ANY
MANNER PERMITTED BY APPLICABLE LAW.
6.13 Survival.
So long as the Guaranteed Obligations and all payment obligations
of the Guarantor hereunder shall not have been fully and finally performed
and indefeasibly paid, the obligations of the Guarantor hereunder shall
survive the transfer and payment of any Note and the payment in full of
-all the Notes.
6.14 Entire Agreement
This Guaranty constitutes the trial written expression of all of
the terms hereof and is a complete and exclusive statement of those terms.
6.15 Duplicate Originals, Execution in Counterpait
Two or more duplicate originals hereof may be signed by the
parties, each of which shall be ari original but all of which together
shall constitute one and the same instrument. This Guaranty may be executed
in one or more counterparts and shall be effective when at least one
counterpart shall have been executed by each party hereto, and each set of
counterparts that, collectively, show execution by each party hereto shall
constitute one duplicate original.
[Remainder of page intentionally blank. Next page is signature page.]
IN WITNESS WHEREOF, the Guarantor has caused thi8 Guaranty to be
executed on its behalf by a duly authorized officer of the Guarantor.
RITE AID CORPORATION
By: _________________________________________
Name:
Title:
Accepted and Agreed,
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By: _______________________________________
Name:
Title:
PRUCO LIFE INSURANCE COMPANY
By: _____________________________________
Name:
Title:
