Exhibit 10.11
EXECUTION COPY
SECOND PRIORITY INDEMNITY, SUBROGATION and
CONTRIBUTION AGREEMENT dated as of JUNE 12, 2000,
among RITE AID CORPORATION, a Delaware corporation
(the "Borrower"), each Subsidiary of the Borrower
listed on Schedule I hereto (the "Subsidiary
Guarantors") and WILMINGTON TRUST COMPANY, a
Delaware banking
corporation, as collateral trustee (in such
capacity, the "Second Priority Collateral Trustee")
for the holders from time to time of the Second
Priority Debt Obligations.
Capitalized terms used herein and not defined herein shall have the
meanings assigned to such terms in the Definitions Annex annexed hereto and
by this reference incorporated herein.
The Second Priority Debt Parties have extended credit to the Borrower
or one or more of its Subsidiaries pursuant to the Second Priority Debt
Documents. Each of the Subsidiary Guarantors is a wholly owned Subsidiary
of the Borrower and acknowledges that it has and will continue to derive
substantial benefit from the credit so extended under the Second Priority
Debt Documents. It is a condition precedent, among other conditions, to the
effectiveness of pending amendments to and extensions of the Second
Priority Debt Documents that the Subsidiary Guarantors execute and deliver
an agreement in the form hereof.
Accordingly, the Borrower, each Subsidiary Guarantor and the Second
Priority Collateral Trustee agree as follows:
SECTION 1. INDEMNITY AND SUBROGATION. In addition to all such rights
of indemnity and subrogation as the Subsidiary Guarantors may have under
applicable law (but subject to Section 3), the Borrower agrees that (a) in
the event a payment shall be made by any Subsidiary Guarantor under the
Second Priority Subsidiary Guarantee Agreement, the Borrower shall
indemnify such Subsidiary Guarantor for the full amount of such payment and
such Subsidiary Guarantor shall be subrogated to the rights of the person
to whom such payment shall have been made to the extent of such payment and
(b) in the event and to the extent any assets of any Subsidiary Guarantor
shall be sold pursuant to any Second Priority Collateral Document to
satisfy a claim of any Second Priority Debt Party, the Borrower shall
indemnify such Subsidiary Guarantor in an amount equal to the greater of
the book value or the fair market value of the assets so sold.
SECTION 2. CONTRIBUTION AND SUBROGATION. Each Subsidiary Guarantor (a
"Contributing Subsidiary Guarantor") agrees (subject to Section 3) that, in
the event a payment shall be made by any other Subsidiary Guarantor under
the Second Priority Subsidiary Guarantee Agreement or assets of any other
Subsidiary Guarantor shall be sold pursuant to any Second Priority
Collateral Document to satisfy a claim of any Second Priority Debt Party
and such other Subsidiary Guarantor (the "Claiming Subsidiary Guarantor")
shall not have been fully indemnified by the Borrower as provided in
Section 1, the Contributing Subsidiary Guarantor shall indemnify the
Claiming Subsidiary Guarantor in an amount equal to the amount of such
payment or the greater of the book value or the fair market value of such
assets, as the case may be, in each case multiplied by a fraction of which
the numerator shall be the net worth of the Contributing Subsidiary
Guarantor on May 27, 2000 (or, in the case of any Subsidiary Guarantor
becoming a party hereto pursuant to Section 12 after such date, the date of
the Supplement hereto executed and delivery by such Subsidiary Guarantor)
and the denominator shall be the aggregate net worth of all the Subsidiary
Guarantors on May 27, 2000 (or, in the case of any Subsidiary Guarantor
becoming a party hereto pursuant to Section 12 after such date, the date of
the Supplement hereto executed and delivered by such Subsidiary Guarantor).
Any Contributing Subsidiary Guarantor making any payment to a Claiming
Subsidiary Guarantor pursuant to this Section 2 shall be subrogated to the
rights of such Claiming Subsidiary Guarantor under Section 1 to the extent
of such payment.
SECTION 3. SUBORDINATION. Notwithstanding any provision of this
Agreement to the contrary, all rights of the Subsidiary Guarantors under
Sections 1 and 2 and all other rights of indemnity, contribution or
subrogation under applicable law or otherwise shall be fully subordinated
to the indefeasible payment in full in cash of the Second Priority Debt
Obligations. No failure on the part of the Borrower or any Subsidiary
Guarantor to make the payments required by Sections 1 and 2 (or any other
payments required under applicable law or otherwise) shall in any respect
limit the obligations and liabilities of any Subsidiary Guarantor with
respect to its obligations hereunder, and each Subsidiary Guarantor shall
remain liable for the full amount of the obligations of such Subsidiary
Guarantor hereunder.
SECTION 4. TERMINATION. This Agreement shall survive and be in full
force and effect (a) so long as any Second Priority Debt Obligation is
outstanding and has not been indefeasibly paid in full in cash and (b) if
at any time payment, or any part thereof, of any Second Priority Debt
Obligation is rescinded or must otherwise be restored by any Second
Priority Debt Party or any Subsidiary Guarantor upon the bankruptcy or
reorganization of the Borrower, any Subsidiary Guarantor or otherwise.
SECTION 5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. NO WAIVER; AMENDMENT. (a) No failure on the part of the
Second Priority Collateral Trustee or any Subsidiary Guarantor to exercise,
and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or remedy by the Second Priority Collateral Trustee
or any Subsidiary Guarantor preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. All remedies hereunder
are cumulative and are not exclusive of any other remedies provided by law.
None of the Second Priority Collateral Trustee and the Subsidiary
Guarantors shall be deemed to have waived any rights hereunder unless such
waiver shall be in writing and signed by such parties.
(b) None of the provisions of this Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed
by each Subsidiary Guarantor affected thereby and by the Second Priority
Collateral Trustee with the prior written consent of the Second Priority
Instructing Group, provided that (i) any provision of this Agreement may be
waived by the Second Priority Instructing Group pursuant to a letter or
agreement executed by the Second Priority Collateral Trustee or by telecopy
transmission from the Second Priority Collateral Trustee, in either case
with the prior written consent of the Second Priority Instructing Group and
(ii) any amendment, waiver, supplement or other modification which by its
terms adversely affects the Second Priority Debt Parties under a particular
Second Priority Facility in a manner different from its effect on the other
Second Priority Facilities shall only be effective with the consent of the
Second Priority Representative for each Second Priority Facility so
adversely affected.
SECTION 7. NOTICES. All communications and notices hereunder shall be
in writing and given as provided in the Second Priority Subsidiary Guarantee
Agreement and addressed as specified therein.
SECTION 8. BINDING AGREEMENT; ASSIGNMENTS. Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the parties that are contained
in this Agreement shall bind and inure to the benefit of their respective
successors and assigns.
Neither the Borrower nor any Subsidiary Guarantor may assign or transfer
any of its rights or obligations hereunder (and any such attempted
assignment or transfer shall be void) without the prior written consent of
the Second Priority Instructing Group. Notwithstanding the foregoing, at
the time any Subsidiary Guarantor is released from its obligations under
the Second Priority Subsidiary Guarantee Agreement in accordance with such
Second Priority Subsidiary Guarantee Agreement and the Second Priority Debt
Documents, such Subsidiary Guarantor will cease to have any rights or
obligations under this Agreement.
SECTION 9. SURVIVAL OF AGREEMENT; SEVERABILITY. (a) All covenants,
agreements, representations and warranties made by the Borrower and each
other Obligor herein and in the certificates or other instruments prepared
or delivered in connection with this Agreement or any other Second Priority
Debt Document shall be considered to have been relied upon by the Second
Priority Collateral Trustee, other Second Priority Debt Parties and each
Subsidiary Guarantor and shall survive the effectiveness of the Second
Priority Debt Documents and shall continue in full force and effect as long
as the principal of or any accrued interest on any loans under any Second
Priority Debt Document or any other fee or amount payable under this
Agreement or under any of the other Second Priority Debt Document remain
outstanding and unpaid.
(b) In case any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect,
no party hereto shall be required to comply with such provision for so long
as such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal
or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 10. COUNTERPARTS. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts),
each of which shall constitute an original, but all of which when taken
together shall constitute a single contract. This Agreement shall be
effective with respect to any Subsidiary Guarantor when a counterpart
bearing the signature of such Subsidiary Guarantor shall have been
delivered to the Second Priority Collateral Trustee. Delivery of an
executed signature page to this Agreement by facsimile transmission shall
be as effective as delivery of a manually signed counterpart of this
Agreement.
SECTION 11. RULES OF INTERPRETATION. References in this Agreement to
"Articles", "Sections", "Schedules" or Exhibits" shall be to Articles,
Sections, Schedules or Exhibits of or to this Agreement unless otherwise
specifically provided. Any defined terms may, unless the context otherwise
requires, be used in the singular or plural depending on the reference.
"Include" or "includes" and "including" shall be deemed to be followed by
"without limitation" whether or not they are in fact followed by such words
or words of like import. "Writing", "written" and comparable terms refer to
printing, typing and other means of reproducing words in a visible form.
References to any agreement or contract are to such agreement or contract
as amended, modified or supplemented from time to time in accordance with
the terms hereof and thereof. References to any Person include the
successors and assigns of such Person. References "from" or "through" any
date mean, unless otherwise specified, "from and including" or "through and
including", respectively.
SECTION 12. ADDITIONAL SUBSIDIARY GUARANTORS. Pursuant to the Second
Priority Debt Documents, each Domestic Subsidiary of the Borrower that was
not in existence on the date of the Second Priority Debt Documents is
required to enter into the Second Priority Subsidiary Guarantee Agreement
as a Subsidiary Guarantor upon becoming a Domestic Subsidiary. Upon
execution and delivery, after the date hereof, by the Second Priority
Collateral Trustee and such a Subsidiary of an instrument in the form of
Annex 1 hereto, such Subsidiary shall become a Subsidiary Guarantor
hereunder with the same force and effect as if originally named as a
Subsidiary Guarantor hereunder. The execution and delivery of any
instrument adding an additional Subsidiary Guarantor as a party to this
Agreement shall not require the consent of any Subsidiary Guarantor
hereunder. The rights and obligations of each Subsidiary Guarantor
hereunder shall remain in full force and effect notwithstanding the
addition of any new Subsidiary Guarantor as a party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the date first
appearing above.
EACH OF THE SUBSIDIARIES
LISTED ON SCHEDULE I
HERETO, as a Subsidiary Guarantor
By:
-------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
as Second Priority Collateral Trustee
By:
-------------------------------------
Name:
Title:
RITE AID CORPORATION,
as Borrower
By:
-------------------------------------
Name:
Title:
THRIFTY PAYLESS, INC.,
as a Subsidiary Guarantor
By:
-------------------------------------
Name:
Title:
PCS HEALTH SYSTEMS, INC.,
as a Subsidiary Guarantor
By:
-------------------------------------
Name:
Title:
Schedule I
to the Second Priority Indemnity, Subrogation
and Contribution Agreement
Subsidiary Guarantors
---------------------
Annex 1 to
the Second Priority Indemnity, Subrogation and
Contribution Agreement
SUPPLEMENT NO. [ ] dated as of [ ], to the Second
Priority Indemnity, Subrogation and Contribution
Agreement dated as of June 12, 2000 (as the same may be
amended, supplemented or otherwise modified from time to
time, the "Second Priority Indemnity, Subrogation and
Contribution Agreement"), among RITE AID CORPORATION, a
Delaware corporation (the "Borrower"), each Subsidiary of
the Borrower listed on Schedule I thereto (the
"Subsidiary Guarantors"), and WILMINGTON TRUST COMPANY, a
Delaware banking corporation, as collateral trustee (the
"Second Priority Collateral Trustee") for the holders
from time to time of the Second Priority Debt
Obligations.
A. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in or by reference to the
Second Priority Indemnity, Subrogation and Contribution Agreement.
B. The Borrower and the Subsidiary Guarantors have entered into the
Second Priority Indemnity, Subrogation and Contribution Agreement as a
condition precedent to the effectiveness of the Second Priority Debt
Documents. Pursuant to the Second Priority Debt Documents, each Domestic
Subsidiary of the Borrower that was not in existence on the date of the
Second Priority Debt Documents is required to enter into the Second
Priority Subsidiary Guarantee Agreement as a Subsidiary Guarantor upon
becoming a Domestic Subsidiary. Section 12 of the Second Priority
Indemnity, Subrogation and Contribution Agreement provides that additional
Domestic Subsidiaries of the Borrower may become Subsidiary Guarantors
under the Second Priority Indemnity, Subrogation and Contribution Agreement
by execution and delivery of an instrument in the form of this Supplement.
The undersigned Subsidiary of the Borrower (the "New Subsidiary Guarantor")
is executing this Supplement in accordance with the requirements of the
Second Priority Debt Documents to become a Subsidiary Guarantor under the
Second Priority Indemnity, Subrogation and Contribution Agreement.
Accordingly, the Second Priority Collateral Trustee and the New
Subsidiary Guarantor agree as follows:
SECTION 1. In accordance with Section 12 of the Second Priority
Indemnity, Subrogation and Contribution Agreement, the New Subsidiary
Guarantor by its signature below becomes a Subsidiary Guarantor under the
Second Priority Indemnity, Subrogation and Contribution Agreement with the
same force and effect as if originally named therein as a Subsidiary
Guarantor and the New Subsidiary Guarantor hereby agrees to all the terms
and provisions of the Second Priority Indemnity, Subrogation and
Contribution Agreement applicable to it as a Subsidiary Guarantor
thereunder. Each reference to a "Subsidiary Guarantor" in the Second
Priority Indemnity, Subrogation and Contribution Agreement shall be deemed
to include the New Subsidiary Guarantor. The Second Priority Indemnity,
Subrogation and Contribution Agreement is hereby incorporated herein by
reference.
SECTION 2. The New Subsidiary Guarantor represents and warrants to
the Second Priority Collateral Trustee and the other Second Priority Debt
Parties that this Supplement has been duly authorized, executed and
delivered by it and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when
the Second Priority Collateral Trustee shall have received counterparts of
this Supplement that, when taken together, bear the signatures of the New
Subsidiary Guarantor and the Second Priority Collateral Trustee. Delivery
of an executed signature page to this Supplement by facsimile transmission
shall be as effective as delivery of a manually signed counterpart of this
Supplement.
SECTION 4. Except as expressly supplemented hereby, the Second
Priority Indemnity, Subrogation and Contribution Agreement shall remain in
full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained in
this Supplement should be held invalid, illegal or unenforceable in any
respect, neither party hereto shall be required to comply with such
provision for so long as such provision is held to be invalid, illegal or
unenforceable, but the validity, legality and enforceability of the
remaining provisions contained herein and in the Second Priority Indemnity,
Subrogation and Contribution Agreement shall not in any way be affected or
impaired. The parties hereto shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid
provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
SECTION 7. All communications and notices hereunder shall be in
writing and given as provided in Section 7 of the Second Priority
Indemnity, Subrogation and Contribution Agreement. All communications and
notices hereunder to the New Subsidiary Guarantor shall be given to it at
the address set forth under its signature.
SECTION 8. The New Subsidiary Guarantor agrees to reimburse the
Second Priority Collateral Trustee for its reasonable out-of-pocket
expenses in connection with this Supplement, including the reasonable fees,
other charges and disbursements of counsel for the Second Priority
Collateral Trustee.
IN WITNESS WHEREOF, the New Subsidiary Guarantor and the Second
Priority Collateral Trustee have duly executed this Supplement to the
Second Priority Indemnity, Subrogation and Contribution Agreement as of the
day and year first above written.
[NAME OF NEW SUBSIDIARY
GUARANTOR],
By:
-------------------------------------
Name:
Title:
WILMINGTON TRUST
COMPANY, as Second Priority
Collateral Trustee,
By:
-------------------------------------
Name:
Title:
RITE AID CORPORATION, as
Borrower
By:
-------------------------------------
Name:
Title:
Schedule I
to Supplement No.___ to the Second Priority Indemnity
Subrogation and Contribution Agreement
Subsidiary Guarantors
---------------------
