Exhibit 10.3
EXECUTION COPY
SENIOR SUBSIDIARY SECURITY AGREEMENT
SENIOR SUBSIDIARY SECURITY AGREEMENT,
dated as of June 12, 2000, made by the
SUBSIDIARY GUARANTORS identified on the
signature pages hereto and any other person
that becomes a Subsidiary Guarantor pursuant
to the Senior Credit Facility (as such term is
defined below) (the "Grantors"), in favor of
CITICORP USA, INC., a New York banking
corporation, as collateral agent (in such
capacity, the "Senior Collateral Agent") for
the Senior Secured Parties.
Reference is made to (a) the Senior Credit Agreement, dated as of
June 12, 2000 (as the same may be amended, supplemented or otherwise
modified from time to time, the "Senior Credit Facility"), among Rite Aid,
as Borrower, the Senior Banks parties thereto, the Swingline Banks, the
Issuing Banks, the Senior Administrative Agent, the Senior Collateral Agent
and the Syndication Agents and (b) the Independent Standby L/C Documents
pursuant to which Mellon Bank and Citibank have issued and may in the
future issue certain standby letters of credit.
The Senior Banks have agreed to make Loans to the Borrower, and the
Issuing Banks have agreed to issue Letters of Credit for the account of the
Borrower, pursuant to, and upon the terms and subject to the conditions
specified in, the Senior Credit Facility. Mellon Bank and Citibank have
issued and may in the future issue the Independent Standby Letters of
Credit. Each of the Subsidiary Guarantors has agreed to guarantee, among
other things, all the obligations of the Borrower under the Senior Credit
Facility. The obligations of the Senior Banks to make Loans and of the
Issuing Banks to issue Letters of Credit are conditioned upon, among other
things, the execution and delivery by the Grantors of an agreement in the
form hereof to secure the Senior Obligations.
Accordingly, the Grantors and the Senior Collateral Agent, on
behalf of itself and each Senior Secured Party (and each of their
respective successors or assigns), hereby agree as follows:
SECTION 1. Defined Terms.
SECTION 1.01. Definitions. (a) Unless otherwise defined herein,
terms used herein shall have the meanings given in the Definitions Annex
attached as Annex 2 hereto, or if not defined therein, as defined in or by
reference to the Senior Credit Facility, and the following terms which are
defined in the Uniform Commercial Code in effect in the State of New York
on the date hereof are used herein as so defined: Chattel Paper and Farm
Products.
(b) The following terms shall have the following meanings:
"Account Debtor" includes "Account Debtor" as defined in the Senior
Credit Facility and with respect to each Grantor means any person who is or
may become obligated to any Grantor with respect to or on account of an
Account.
"Accounts" includes Accounts as defined in the Senior Credit
Facility and means with respect to each Grantor, any and all right, title
and interest of such Grantor to payment for goods and services sold, leased
or rendered, including any such right evidenced by Chattel Paper, whether
due or to become due, whether or not it has been earned or performed, and
whether now or hereafter acquired or arising in the future, including,
without limitation, accounts receivable from affiliates of such person,
except that "Accounts" shalll not include Accounts owned by Affiliates not
incorporated or otherwise organized in a state of United States of America.
"Accounts Receivable" means with respect to each Grantor, all
right, title and interest of such Grantor to Accounts and all of its right,
title and interest in any returned goods, together with all rights, titles,
securities and guaranties with respect thereto, including any rights to
stoppage in transit, replevin, reclamation and resales, and all related
security interests, liens and pledges, whether voluntary or involuntary in
each case whether due or become due, whether now or hereafter arising in
the future.
"Agreement" means this Senior Subsidiary Security Agreement, as the
same may be amended, modified or otherwise supplemented from time to time.
"Blocked Account" means each of the accounts established by the
applicable Grantors listed in Section 4 of Schedule 5 to this Agreement and
maintained with a Blocked Account Bank pursuant to a Blocked Account
Agreement.
"Blocked Account Agreement" means any Blocked Account Agreement
between the Senior Collateral Agent and a Blocked Account Bank
substantially in the form of Schedule 6 to this Agreement.
"Blocked Account Bank" means any bank or financial institution that
is satisfactory to the Senior Collateral Agent that executes and delivers
to the Senior Collateral Agent a Blocked Account Agreement.
"Blocked Account Cash Sweep Notice" means a notice in the form
attached as Exhibit A to the Blocked Account Agreement.
"Cash Management Accounts" mean, collectively, (a) the Blocked
Accounts, (b) the Deposit Accounts, (c) the Concentration Account and (d)
the Citibank Concentration Accounts.
"Cash Management System" means the system of cash management
described in Schedule 5 to this Agreement.
"Cash Sweep Cash Collateral Account" means the collateral account
established as part of the Cash Management System at Citibank and under the
sole dominion and control of the Senior Collateral Agent, Account No.
00000000.
"Cash Sweep Notice" means (a) any Blocked Account Cash Sweep Notice
and (b) the Concentration Account Cash Sweep Notice.
"Cash Sweep Period" means any period in which funds are transferred
from (a) any Blocked Account to the Concentration Account or any Citibank
Concentration Account, as applicable, pursuant to a Blocked Account Cash
Sweep Notice or (b) the Concentration Account to any Citibank Concentration
Account pursuant to a Concentration Account Cash Sweep Notice.
"Citibank Concentration Account" means the account established at
Citibank and under sole dominion and control of the Senior Collateral
Agent, Account No. 00000000, together with any similar account established
at Citibank for the purpose of collecting funds during a Cash Sweep Period.
"Concentration Account" means the account established at The Chase
Manhattan Bank and maintained with the Concentration Account Bank pursuant
to a Concentration Account Agreement, Account No. 9102750222.
"Concentration Account Agreement" means a Concentration Account
Agreement between any Subsidiary Guarantor, the Senior Collateral Agent and
a bank or financial institution satisfactory to the Senior Collateral Agent
substantially in the form of Schedule 9 to this Agreement.
"Concentration Account Bank" means the bank or financial
institution that is satisfactory to the Senior Collateral Agent that
executes and delivers to the Senior Collateral Agent a Concentration
Account Agreement.
"Concentration Account Cash Sweep Notice" means a notice in the
form attached as Exhibit A to the Concentration Account Agreement.
"Contracts" means with respect to each Grantor, all rights of such
Grantor under contracts and agreements to which such Grantor is a party or
under which such Grantor has any right, title or interest or to which such
Grantor or any property of such Grantor is subject, as the same may from
time to time be amended, supplemented or otherwise modified, including,
without limitation, (a) all rights of such Grantor to receive moneys due
and to become due to it thereunder or in connection therewith, (b) all
rights of such Grantor to damages arising out of, or for, breach or default
in respect thereof and (c) all rights of such Grantor to exercise all
remedies thereunder, in each case to the extent the grant by such Grantor
of a security interest pursuant to this Agreement in its rights under such
contract or agreement is not validly prohibited without the consent of any
other Person, or is permitted with consent if all necessary consents to
such grant of a security interest have been obtained from all such other
Persons (it being understood that the foregoing shall not be deemed to
obligate such Grantor to obtain such consents) in each case, to the extent
that such Contract relates to any Accounts, Inventory or Intercompany
Advances, provided, that the foregoing limitation shall not affect, limit,
restrict or impair the grant by such Grantor of a security interest
pursuant to this Agreement in any such Contract to the extent that an
otherwise applicable prohibition on such grant is rendered ineffective by
the Uniform Commercial Code .
"Copyrights" means (a) all copyrights arising under the laws of the
United States, any other country or any political subdivision thereof,
whether registered or unregistered and whether published or unpublished
(including, without limitation, those listed in Schedule 4), all
registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings and
applications in the United States Copyright Office, and (b) the right to
obtain all renewals thereof.
"Copyright Licenses" means any written agreement naming any Grantor
as licensor or licensee (including, without limitation, those listed in
Schedule 4), granting any right under any Copyright, including, without
limitation, the grant of rights to manufacture, distribute, exploit and
sell materials derived from any Copyright, and all rights of such Grantor
under any such Agreement.
"Deposit Account" means, collectively, (a) the Lockbox Account and
(b) the Government Lockbox Account.
"Documents" means with respect to each Grantor, all Instruments,
files, records, ledger sheets, and documents covering or relating to any of
the Accounts, General Intangibles, Inventory or Proceeds.
"Event of Default" means an "Event of Default" as defined in any
Senior Loan Document.
"General Intangibles" means with respect to each Grantor, as
defined in the Uniform Commercial Code in effect on the date hereof to the
extent, in the case of any General Intangibles arising under any contract
or agreement, that the grant by such Grantor of a security interest
pursuant to this Agreement in its rights under such contract or agreement
is not prohibited without the consent of any other person, or is permitted
with consent if all necessary consents to such grant of a security interest
have been obtained from all such other persons (it being understood that
the foregoing shall not be deemed to obligate such Grantor to obtain such
consents) in each case to the extent that such General Intangibles relate
to the Accounts, Inventory or Intercompany Advances, provided, that the
foregoing limitation shall not affect, limit, restrict or impair the grant
by such Grantor of a security interest pursuant to this Agreement in any
such General Intangible to the extent that an otherwise applicable
prohibition on such grant is rendered ineffective by the Uniform Commercial
Code, and provided, further, that "General Intangibles" shall not include
any General Intangibles owned by an Affiliate not incorporated or otherwise
organized in a state of the United States.
"Government Lockbox Account" means the deposit account and
corresponding lockbox established at Mellon Bank and maintained with a
Government Lockbox Account Bank, Account No. 0000000.
"Government Lockbox Account Agreement" means any Government Lockbox
Account Agreement between the Senior Collateral Agent and a Government
Lockbox Account Bank substantially in the form of Schedule 8 to this
Agreement.
"Government Lockbox Account Bank" means any bank or financial
institution that is satisfactory to the Senior Collateral Agent that
executes and delivers to the Senior Collateral Agent a Government Lockbox
Account Agreement.
"Indemnitee" means the Senior Secured Parties and their respective
officers, directors, trustees, affiliates and controlling persons.
"Instrument" means an Instrument as defined in the Uniform
Commercial Code, insofar as such Instruments evidence Intercompany
Advances, Accounts Receivable or proceeds of Inventory.
"Intellectual Property" means the collective reference to all
rights, priorities and privileges relating to intellectual property,
whether arising under United States, multinational or foreign laws or
otherwise, including, without limitation, the Copyrights, the Copyright
Licenses, the Patents, the Patent Licenses, the Trademarks, the Trademark
Licenses, inventions, designs, trade secrets, confidential or proprietary
technical and business information, know-how, show-how or other data or
information, software and databases and all embodiments or fixations
thereof, and all rights to xxx at law or in equity for any infringement or
other impairment thereof, including the right to receive all proceeds and
damages therefrom.
"Intercompany Advances" means any advances or open accounts owing
by the Borrower or any Subsidiary of the Borrower to any Grantor.
"Inventory" means with respect to each Grantor, all right, title
and interest of such Grantor in and to goods intended for sale or lease by
such Grantor, or consumed in such Grantor's business (including, without
limitation, all operating parts and supplies), together with all raw
materials and finished goods, whether now owned or hereafter acquired or
arising.
"License" means any Patent License, Trademark License, Copyright
License or other license or sublicense to which any Grantor is a party,
including those listed on Schedule 4 (other than those license agreements
in existence on the date hereof and listed on Schedule 4 and those license
agreements entered into after the date hereof, which by their terms
prohibit assignment or a grant of a security interest by such Grantor as
licensee thereunder).
"Lockbox Account" means the deposit account and corresponding
lockbox established at Mellon Bank and maintained with the Lockbox Account
Bank pursuant to a Lockbox Account Agreement, Account No. 0000000.
"Lockbox Account Agreement" means any Lockbox Account Agreement
between the Senior Collateral Agent and a Lockbox Account Bank
substantially in the form of Schedule 7 to this Agreement.
"Lockbox Account Bank" means any bank or financial institution that
is satisfactory to the Senior Collateral Agent that executes and delivers
to the Senior Collateral Agent a Lockbox Account Agreement.
"Patents" means (a) all letters patent of the United States, any
other country or any political subdivision thereof, all reissues and
extensions thereof and all goodwill associated therewith, including,
without limitation, any of the foregoing referred to in Schedule 4, (b) all
applications for letters patent of the United States or any other country
and all divisions, continuations and continuations-in-part thereof,
including, without limitation, any of the foregoing referred to in Schedule
4, and (c) all rights to obtain any reissues or extensions of the
foregoing.
"Patent License" means all agreements, whether written or oral,
providing for the grant by or to any Grantor of any right to manufacture,
use or sell any invention covered in whole or in part by a Patent,
including, without limitation, any of the foregoing referred to in Schedule 4.
"Proceeds" means with respect to each Grantor, any consideration
received from the sale, exchange, collection or other disposition of any
asset or property which constitutes Senior Collateral, any value received
as a consequence of the possession of any Senior Collateral and any payment
received from any insurer or other Person or entity as a result of the
destruction, loss, theft, damage or other involuntary conversion of
whatever nature of any asset or property which constitutes Senior
Collateral, and shall include, without limitation, (a) all cash and
negotiable instruments received or held on behalf of the Senior Collateral
Agent pursuant to Section 5.03, (b) any claim of such Grantor against a
third party for (and the right to xxx and recover for and the rights to
damages or profits due or accrued arising out of or in connection with) (i)
past, present or future infringement of any Patent now or hereafter owned
by any Grantor, or licensed under a Patent License, (ii) past, present or
future infringement or dilution of any Trademark now or hereafter owned by
any Grantor or licensed under a Trademark License or injury to the goodwill
associated with or symbolized by any Trademark now or hereafter owned by
any Grantor and (iii) past, present or future infringement of any Copyright
now or hereafter owned by any Grantor or licensed under a Copyright License
and (c) any and all amounts from time to time paid or payable under or in
connection with any of the Senior Collateral.
"Senior Collateral" is defined in Section 2 of this Agreement.
"Senior Collateral Account" means any collateral account
established by the Senior Collateral Agent as provided in Section 5.03 or
Section 8.02.
"Trademarks" means (a) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade
styles, service marks, logos and other source or business identifiers, and
all goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any State
thereof or any other country or any political subdivision thereof, or
otherwise, and all common-law rights related thereto, including, without
limitation, any of the foregoing referred to in Schedule 4, and (b) the
right to obtain all renewals thereof.
"Trademark License" means any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any
Trademark, including, without limitation, any of the foregoing referred to
in Schedule 4.
SECTION 1.2. Other Definitional Provisions. (a) The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section references are to this
Agreement unless otherwise specified. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without
limitation".
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. Grant of Security Interest. As collateral security for
the prompt and complete payment and performance when due, whether at the
stated maturity, by acceleration, upon one or more dates set for prepayment
or otherwise of the obligations of each Grantor under the Senior Subsidiary
Guarantee Agreement, such Grantor hereby grants to the Senior Collateral
Agent, for the ratable benefit of the Senior Secured Parties, a security
interest in all of the following property now owned or at any time
hereafter acquired by such Grantor (collectively, with respect to each
Grantor, the "Senior Collateral"):
(a) the Accounts Receivable and Chattel Paper;
(b) the Cash Management Accounts and the cash on deposit therein;
(c) all Contracts;
(d) all Documents;
(e) all General Intangibles;
(f) all Instruments;
(g) all Intellectual Property;
(h) all Inventory;
(i) all books and records pertaining to any and all of the
foregoing and item (j) herein; and
(j) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing.
Nothing contained in this Section 2 is intended to limit any Grantor's
rights to create Permitted Liens (as defined below). "Senior Collateral"
shall not include (i) any contract, lease or license, which, by its terms,
validly prohibits the granting of a security interest therein unless a
consent to the pledge hereunder has been obtained, provided that each
Grantor will use commercially reasonable efforts to obtain any consent
necessary thereunder to permit the pledge hereunder, and provided, further,
that the foregoing limitation shall not affect, limit, restrict or impair
the grant by such Grantor of a security interest pursuant to this Agreement
in any such Senior Collateral to the extent that an otherwise applicable
prohibition on such grant is rendered ineffective by the Uniform Commercial
Code or (ii) the Exchange Debt First Priority Collateral. Furthermore,
Senior Collateral shall not include any property specified in Section 2(g)
above if the granting of a security interest therein would jeopardize the
Grantor's rights in any pending intent-to-use applications for Federal
Trademark registration.
Such security interests are granted as security only and shall not
subject any Senior Secured Party to, or in any way alter or modify, any
obligation or liability of any Grantor with respect to or arising out of
the Senior Collateral.
SECTION 3. Representations and Warranties. Each Grantor hereby
represents and warrants, as to itself and the Senior Collateral in which
the security interest is created hereunder, that:
SECTION 3.01. Title; No Other Liens. Except for the security
interest granted to the Senior Collateral Agent for the ratable benefit of
the Senior Secured Parties pursuant to this Agreement and the other Liens
permitted to exist pursuant to the Senior Credit Facility (the "Permitted
Liens"), each Grantor owns each item of the Senior Collateral free and
clear of any and all Liens or claims of others (or arrangements reasonably
satisfactory to the Senior Collateral Agent have been made for the timely
release or discharge of such Liens). No security agreement, financing
statement or other public notice with respect to all or any part of such
Senior Collateral is on file or of record in any public office, except such
as have been filed or will be filed, pursuant to this Agreement, in favor
of the Senior Collateral Agent, for the ratable benefit of the Senior
Secured Parties, or in respect of Permitted Liens (or arrangements
reasonably satisfactory to the Senior Collateral Agent have been made for
the timely termination of such agreement or financing statement). Further,
no Grantor has intentionally entered into any contract, lease or license in
anticipation of this Agreement, which by its terms, validly prohibits the
granting of a security interest herein.
SECTION 3.02. Enforceable Obligation; Perfected, First Priority
Security Interests. This Agreement constitutes a legal, valid and binding
obligation of each Grantor, enforceable against such Grantor in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting
creditors' rights generally and except as enforceability may be limited by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law), and the security interests
granted pursuant to this Agreement (a) upon completion of the filings and
other actions specified in Schedule 1 hereto (or in the case of
Instruments, delivery to the Senior Collateral Agent or its designee) shall
constitute fully perfected security interests in the Senior Collateral in
favor of the Senior Collateral Agent for the ratable benefit of the Senior
Secured Parties, and (b) are prior and superior in right to all other Liens
(other than Permitted Liens, to the extent that such Permitted Liens are
expressly permitted by the Senior Loan Documents to have priority) on the
Senior Collateral in existence on the date hereof.
SECTION 3.03. Inventory. The Inventory owned by such Grantor are
kept at the locations listed in Schedule 2 hereto, which shall be updated
from time to time in accordance with Section 4.05 of this Agreement, or at
such other locations as shall be permitted by Section 4.04.
SECTION 3.04. Chief Executive Office; Jurisdiction of
Incorporation. As of the Closing Date, each Grantor's chief executive
office, principal place of business and jurisdiction of incorporation is
located at the locations listed in Schedule 10 hereto.
SECTION 3.05. Farm Products. None of the Senior Collateral
constitutes, or is the Proceeds of, Farm Products (as such term is defined
in the Uniform Commercial Code).
SECTION 3.06. Intellectual Property. (a) Schedule 4 lists all
Intellectual Property owned (and registered with the U.S. Copyright Office
or the U.S. Patent and Trademark Office) or licensed by such Grantor in its
own name on the date hereof.
(b) On the date hereof, based on information known, or reasonably
available to such Grantor, all Intellectual Property material to the
conduct of such Grantor's business is valid, subsisting, unexpired and
enforceable, has not been abandoned and does not infringe the intellectual
property rights of any other person.
(c) Except as set forth in Schedule 4, on the date hereof, none of
the Intellectual Property is the subject of any licensing or franchise
agreement pursuant to which such Grantor is the licensor or franchisor.
(d) On the date hereof, based on information known, or reasonably
available to such Grantor, no holding decision or judgment has been
rendered by any Governmental Authority which would materially limit, cancel
or question the validity of, or such Grantor's rights in, any Intellectual
Property in any respect that could reasonably be expected to have a
Material Adverse Effect.
(e) Except as set forth on Schedule 4, on the date hereof, no
action or proceeding is pending, or, to the knowledge of such Grantor,
threatened, on the date hereof (i) seeking to materially limit, cancel or
question the validity of any Intellectual Property material to the conduct
of such Grantor's business or such Grantor's ownership interest therein, or
(ii) which, if adversely determined, would have a material adverse effect
on the value of any Intellectual Property.
SECTION 4. Covenants. Each Grantor covenants and agrees with the
Senior Secured Parties that, from and after the date of this Agreement
until this Agreement is terminated and the security interests created
hereby are released:
SECTION 4.01. Delivery of Instruments. If an Intercompany Advance
owned by such Grantor shall be or become evidenced by any promissory note,
or other Instrument, upon the request of the Senior Collateral Agent, such
promissory note, or other Instrument shall be immediately delivered to the
Senior Collateral Agent, duly indorsed in a manner reasonably satisfactory
to the Senior Collateral Agent, to be held as Senior Collateral pursuant to
this Agreement.
SECTION 4.02. Maintenance of Insurance. Each Grantor shall maintain
insurance policies in accordance with the requirements of Section 5.03 of
the Senior Credit Facility.
SECTION 4.03. Maintenance of Perfected Security Interest; Further
Documentation. (a) Each Grantor shall cause all filings and other actions
listed in Schedule 1 to be taken. Each Grantor shall maintain the security
interests created by this Agreement as first priority perfected security
interests subject only to Permitted Liens, to the extent such Permitted
Liens are expressly permitted by the Senior Loan Documents to have
priority, and shall defend such security interests against all claims and
demands of all persons whomsoever (other than those pursuant to Permitted
Liens).
(b) At any time and from time to time, upon the written request of
the Senior Collateral Agent, and at the sole expense of a Grantor, such
Grantor shall promptly and duly execute and deliver such further
instruments and documents and take such further action as the Senior
Collateral Agent may reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights and powers
herein granted, including, without limitation, the filing of any financing
or continuation statements under the Uniform Commercial Code in effect in
any jurisdiction with respect to the security interests created hereby.
(c) No Grantor shall intentionally enter into any contract, lease
or license in contemplation of this Agreement, which by its terms would
validly prohibit the grant of a security interest herein.
SECTION 4.04. Changes in Locations, Name, etc. A Grantor shall not,
except (x) upon prior written notice to the Senior Collateral Agent and
delivery to the Senior Collateral Agent of a written supplement to Schedule
2 showing the additional location or locations at which Inventory shall be
kept, and (y) if filings under the Uniform Commercial Code or otherwise
have been made which maintain in favor of the Senior Collateral Agent a
valid, legal and perfected security interest in the Senior Collateral
subject to no liens, other than Permitted Liens,
(a) permit any of the Inventory to be kept at a location
other than those listed in Schedule 2 hereto, except for Inventory
in transit between locations described in this paragraph (a);
(b) change the location of its chief executive office,
principal place of business and jurisdiction of incorporation from
that specified in Schedule 10 hereto; or
(c) change its (i) corporate name or any trade name used to
identify it in its conduct of business or in the ownership of its
properties, (ii) identity or (iii) corporate structure to such an
extent that any financing statement filed in favor of the Senior
Collateral Agent in connection with this Agreement would become
seriously misleading.
SECTION 4.05. Further Identification of Senior Collateral. Each
Grantor shall furnish to the Senior Collateral Agent from time to time
statements and schedules further identifying and describing the Senior
Collateral and such other reports in connection with such Senior Collateral
as the Senior Collateral Agent may reasonably request, all in reasonable
detail.
SECTION 4.06. Notices. A Grantor shall advise the Senior Collateral
Agent promptly, in reasonable detail, in accordance with Section 13 hereto,
of:
(a) any Lien (other than security interests created hereby or
Permitted Liens) on any material portion of the Senior Collateral; and
(b) the occurrence of any other event which could reasonably
be expected to have a material adverse effect on the security
interests created hereby or on the aggregate value of the Senior
Collateral.
SECTION 4.07. Senior Collateral Agent's Liabilities and Expenses;
Indemnification. (a) Notwithstanding anything to the contrary provided
herein, neither the Senior Collateral Agent nor any other Senior Secured
Party assumes any liabilities with respect to any claims regarding each
Grantor's ownership (or purported ownership) of, or rights or obligations
(or purported rights or obligations) arising from, the Senior Collateral or
any use (or actual or alleged misuse) whether arising out of any past,
current or future event, circumstance, act or omission or otherwise, or any
claim, suit, loss, damage, expense or liability of any kind or nature
arising out of or in connection with the Senior Collateral or the
production, marketing, delivery, sale or provision of goods or services
under or in connection with any of the Senior Collateral. All of such
liabilities shall, as between the Senior Collateral Agent, the Senior
Secured Parties and the Grantors, be borne exclusively by the Grantors
unless such liability arises from the gross negligence or willful
misconduct of the Senior Collateral Agent or any Senior Secured Party.
(b) Each Grantor hereby agrees to pay all reasonable expenses of
the Senior Collateral Agent and the other Senior Secured Parties and to
indemnify the Senior Collateral Agent and the other Senior Secured Parties
with respect to any and all losses, claims, damages, liabilities and
related expenses in respect of this Agreement or the Senior Collateral in
each case to the extent and under the circumstances the Borrower is
required to do so pursuant to Section 9.03 of the Senior Credit Facility.
(c) Any amounts payable as provided hereunder shall be additional
Senior Obligations secured hereby and by the other Senior Collateral
Documents. Without prejudice to the survival of any other agreements
contained herein, all indemnification and reimbursement obligations
contained herein shall survive the Senior Obligation Payment Date and the
termination of this Agreement.
SECTION 4.08. Intellectual Property. (a) Each relevant Grantor
(either itself or through licensees) will (i) continue to use each
Trademark material to the conduct of such Grantor's business, to the extent
that such Grantor's business operations continue as to the said goods
and/or services (subject to such Grantor's reasonable business judgment),
sufficient to avoid unintentional abandonment of any rights in such
Trademarks, (ii) maintain as in the past the quality of products and
services offered under such Trademark, (iii) use such Trademark with the
appropriate notice of registration and all other notices and legends
required by applicable law, (iv) not knowingly adopt or use any xxxx which
is confusingly similar or a colorable imitation of such Trademark unless
the Senior Collateral Agent, for the ratable benefit of the Senior Secured
Parties, shall obtain a perfected security interest in such xxxx pursuant
to this Agreement, and (v) not knowingly (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby
such Trademark material to the conduct of Grantor's business may become
invalidated or impaired in any way.
(b) Such Grantor (either itself or through licensees) will not do
any act, or omit to do any act, whereby any Patent material to the conduct
of Grantor's business may become forfeited, abandoned or dedicated to the
public.
(c) Such Grantor (either itself or through licensees) will not
knowingly (and will not permit any licensee or sublicensee thereof to) do
any act or knowingly omit to do any act whereby any portion of the
Copyrights material to the conduct of Grantor's business may become
invalidated or otherwise impaired or fall into the public domain.
(d) Such Grantor (either itself or through licensees) will not do
any act that knowingly uses any material Intellectual Property to infringe
the intellectual property rights of any other person.
(e) In a status report provided to the Senior Collateral Agent on a
quarterly basis ("Quarterly Status Report"), such Grantor will indicate
whether any application or registration relating to any material
Intellectual Property has been forfeited, abandoned or dedicated to the
public, or of any such determination or development (including, without
limitation, the institution of, or any such determination or development
in, any proceeding in the United States Patent and Trademark Office, the
United States Copyright Office or any court or tribunal in any country)
regarding such Grantor's ownership of, or the validity of, any material
Intellectual Property or such Grantor's right to register the same or to
own and maintain the same.
(f) In the Quarterly Status Report provided to the Senior
Collateral Agent pursuant to Section 4.08(e), such Grantor will report
whenever such Grantor, either by itself or through any agent, employee,
licensee or designee, has filed an application for the registration of any
Intellectual Property with the United States Patent and Trademark Office,
the United States Copyright Office or any similar office or agency in any
other country or any political subdivision thereof. Upon request of the
Senior Collateral Agent, such Grantor shall execute and deliver, and have
recorded, any and all agreements, instruments, documents and papers as the
Senior Collateral Agent may request to evidence the Senior Collateral
Agent's and Senior Secured Parties' security interest in any Copyright,
Patent or Trademark and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby.
(g) Such Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States
Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any other country or any political subdivision
thereof, to maintain and pursue each application (and to obtain the
relevant registration) and to maintain each registration of the
Intellectual Property material to the conduct of Grantor's business,
including, without limitation, filing of applications for renewal,
affidavits of use and affidavits of incontestability.
(h) In the event that any Intellectual Property material to the
conduct of Grantor's business is infringed, misappropriated or diluted by a
third party, such Grantor shall (i) take such actions as such Grantor shall
reasonably deem appropriate under the circumstances to protect such
Intellectual Property and (ii) if such Intellectual Property is of material
economic value, promptly notify the Senior Collateral Agent after it learns
thereof and take all reasonable steps to protect its interests, which may
include bringing suit for infringement, misappropriation or dilution, to
seek injunctive relief where appropriate and to recover any and all damages
for such infringement, misappropriation or dilution.
SECTION 4.09. Cash Management System. (a) The Grantors shall at all
times maintain, and each Subsidiary Guarantor shall comply with its
obligations under, the Cash Management System.
(b) Each Grantor shall use its commercially reasonable
efforts to cause any applicable third party to effectuate the Cash
Management System.
SECTION 5. Provisions Relating to Accounts.
SECTION 5.01. Grantors Remain Liable under Accounts. Anything
herein to the contrary notwithstanding, a Grantor shall remain liable under
each of the Accounts to observe and perform all the material conditions and
material obligations to be observed and performed by it thereunder, all in
accordance with the terms of any agreement giving rise to each such
Account. No Senior Secured Party shall have any obligation or liability
under any Account (or any agreement giving rise thereto) by reason of or
arising out of this Agreement or the receipt by the Senior Collateral Agent
or any Senior Secured Party of any payment relating to such Account
pursuant hereto, nor shall any Senior Secured Party be obligated in any
manner to perform any of the obligations of a Grantor under or pursuant to
any Account (or any agreement giving rise thereto), to make any payment, to
make any inquiry as to the nature or the sufficiency of any payment
received by it or as to the sufficiency of any performance by any party
under any Account (or any agreement giving rise thereto), to present or
file any claim, to take any action to enforce any performance or to collect
the payment of any amounts which may have been assigned to it or to which
it may be entitled at any time or times.
SECTION 5.02. Analysis of Accounts. In addition to its rights under
the Senior Credit Facility, the Senior Collateral Agent shall have the
right upon the occurrence and during the continuance of an Event of Default
to make test verifications of the Accounts in any manner and through any
medium that it considers reasonably advisable, and each Grantor shall
furnish all such assistance and information as the Senior Collateral Agent
may reasonably require in connection with such test verifications. At any
time and from time to time upon the occurrence and during the continuance
of an Event of Default, upon the Senior Collateral Agent's reasonable
request and at the expense of each Grantor, each Grantor shall immediately
request and use commercially reasonable efforts to cause independent public
accountants or others reasonably satisfactory to the Senior Collateral
Agent to furnish to the Senior Collateral Agent reports showing
reconciliations, aging and test verifications of, and trial balances for,
the Accounts. Upon the occurrence and during the continuance of an Event of
Default, the Senior Collateral Agent in its own name or in the name of
others may communicate with Account Debtors on the Accounts to verify with
them to the Senior Collateral Agent's reasonable satisfaction the
existence, amount and terms of any Accounts and to direct all payments to
the Senior Collateral Agent. To the extent reasonably practicable the
Senior Collateral Agent will seek to take such actions through third
parties.
SECTION 5.03. Collections on Accounts. (a) The Senior Collateral
Agent hereby authorizes each Grantor to collect the Accounts, and the
Senior Collateral Agent may curtail or terminate said authority at any time
after the occurrence and during the continuance of an Event of Default. If
required by the Senior Collateral Agent at any time after the occurrence
and during the continuance of an Event of Default, any payments of
Accounts, when collected by a Grantor during the continuance of such an
Event of Default, (i) shall be forthwith (and, in any event, within two
Business Days) deposited by such Grantor in the exact form received, duly
indorsed by such Grantor to the Senior Collateral Agent if required, in a
Senior Collateral Account maintained under the sole dominion and control of
and on terms and conditions reasonably satisfactory to the Senior
Collateral Agent, subject to withdrawal by the Senior Collateral Agent as
provided in Section 8.03, and (ii) until so turned over, shall be held by
such Grantor in trust for the Senior Secured Parties, segregated from other
funds of such Grantor.
(b) At the Senior Collateral Agent's request after the occurrence
and during the continuance of an Event of Default, each Grantor shall
deliver to the Senior Collateral Agent all original and other documents
evidencing, and relating to, the agreements and transactions which gave
rise to the Accounts, including, without limitation, all original orders,
invoices and shipping receipts.
SECTION 5.04. Representations and Warranties. As of the Closing
Date, the place where each Grantor keeps its records concerning the
Accounts is at the location listed in Schedule 3 hereto.
SECTION 5.05. Covenants. (a) The amount represented by each Grantor
to the Senior Secured Parties from time to time as owing by each account
debtor or by all Account Debtors in respect of the Accounts shall at such
time be in all material respects the correct amount actually owing by such
Account Debtor or debtors thereunder.
(b) Upon the occurrence and during the continuance of an Event of
Default, a Grantor shall not grant any extension of the time of payment of
any of the Accounts Receivable, compromise, compound or settle the same for
less than the full amount thereof, release, wholly or partly, any person
liable for the payment thereof, or allow any credit or discount whatsoever
thereon other than extensions, credits, discounts, compromises or
settlements granted or made in the ordinary course of business.
(c) Unless a Grantor shall deliver prior written notice,
identifying the change of location for its books and records, such Grantor
shall not remove its books and records from the location specified in
Schedule 3.
SECTION 6. [Intentionally Reserved]
SECTION 7. Provisions Relating to Contracts.
SECTION 7.01. Grantors Remain Liable under Contracts. Anything
herein to the contrary notwithstanding, each Grantor shall remain liable
under each Contract to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, all in
accordance with and pursuant to the terms and provisions of such Contract.
No Senior Secured Party shall have any obligation or liability under any
Contract by reason of or arising out of this Agreement or the receipt by
any such Senior Secured Party of any payment relating to such Contract
pursuant hereto, nor shall any Senior Secured Party be obligated in any
manner to perform any of the obligations of a Grantor under or pursuant to
any Contract, to make any payment, to make any inquiry as to the nature or
the sufficiency of any payment received by it or as to the sufficiency of
any performance by any party under any Contract, to present or file any
claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to it or to which it
may be entitled at any time or times.
SECTION 7.02. Communication With Contracting Parties. Upon the
occurrence and during the continuance of an Event of Default, the Senior
Collateral Agent in its own name or in the name of its nominee may
communicate with parties to the Contracts to verify with them to the Senior
Collateral Agent's reasonable satisfaction the existence, amount and terms
of any Contracts. To the extent reasonably practicable the Senior
Collateral Agent will seek to take such actions through third parties.
SECTION 8. Remedies.
SECTION 8.01. Notice to Account Debtors and Contract Parties. Upon
the request of the Senior Collateral Agent at any time after the occurrence
and during the continuance of an Event of Default, a Grantor shall notify
Account Debtors on the Accounts and parties to the Contracts that the
Accounts and the Contracts have been assigned to the Senior Collateral
Agent for the ratable benefit of the Senior Secured Parties and that
payments in respect thereof during the continuance of such an Event of
Default shall be made directly to the Senior Collateral Agent.
SECTION 8.02. Proceeds to be Turned Over To Senior Collateral
Agent. In addition to the rights of the Senior Collateral Agent and the
Senior Secured Parties specified in Section 5.03 with respect to payments
of Accounts, if an Event of Default shall occur and be continuing all
Proceeds received by a Grantor consisting of cash, checks and other
near-cash items shall upon the Senior Collateral Agent's request be held by
such Grantor in trust for the Senior Secured Parties, segregated from other
funds of such Grantor, and shall, upon the Senior Collateral Agent's
request (it being understood that the exercise of remedies by the Senior
Secured Parties in connection with an Event of Default under Section
6.01(g) and Section 6.01(h) of the Senior Credit Facility shall be deemed
to constitute a request by the Senior Collateral Agent for the purposes of
this sentence) forthwith upon receipt by such Grantor, be turned over to
the Senior Collateral Agent in the exact form received by such Grantor
(duly indorsed by such Grantor to the Senior Collateral Agent, if required)
and held by the Senior Collateral Agent in a Senior Collateral Account
maintained under the sole dominion and control of the Senior Collateral
Agent and on terms and conditions reasonably satisfactory to the Senior
Collateral Agent. All Proceeds while held by the Senior Collateral Agent in
a Senior Collateral Account (or by such Grantor in trust for the Senior
Collateral Agent and the Senior Secured Parties) shall subject to Section
8.03 continue to be held as collateral security for all the Senior
Obligations and shall not constitute payment thereof until applied as
provided in Section 8.03.
SECTION 8.03. Application of Proceeds. (a) So long as the
Collateral Trust and Intercreditor Agreement is in effect, following a
Triggering Event (as defined therein), the proceeds of any sale or other
realization upon any Collateral will be applied as set forth in the
Collateral Trust and Intercreditor Agreement.
(b) At all times when the Collateral Trust and Intercreditor
Agreement is not in effect, the proceeds of any sale or other realization
upon any Collateral following an Event of Default will be applied as soon
as practicable after receipt as follows:
FIRST: to the Senior Collateral Agent in an amount
equal to the fees and expenses of the Senior Collateral
Agent pursuant to this Agreement and the Senior Credit
Facility that are unpaid as of the applicable date of
receipt of such proceeds, and to any Senior Secured Party
which has theretofore advanced or paid any such fees and
expenses of the Senior Collateral Agent in an amount equal
to the amount thereof so advanced or paid by such Senior
Secured Party pro rata based on the amount of such fees and
expenses (or such advances or payment);
SECOND: to the Senior Collateral Agent to reimburse any
amounts owing to the Senior Collateral Agent pursuant to
Section 9.03;
THIRD: to the Senior Collateral Agent, for
distribution to the Senior Secured Parties to be applied to
the payment of the Senior Obligations then due and owing,
pro rata based on the amount of Senior Obligations then due
and owing (after giving effect to any payments previously
made under this Section), until all of the Senior
Obligations then due and owing have been paid in full; and
FOURTH: after payment in full of all Senior
Obligations, to Rite Aid and the Grantors or their
successors or assigns, as their interests may appear, or to
whosoever may be lawfully entitled to receive the same or as
a court of competent jurisdiction may direct.
SECTION 8.04. Uniform Commercial Code Remedies. If an Event of
Default shall have occurred and be continuing, the Senior Collateral Agent,
on behalf of the Senior Secured Parties may exercise, in addition to all
other rights and remedies granted to them in this Agreement and in any
other instrument or agreement securing, evidencing or relating to the
Senior Obligations, all rights and remedies of a senior secured party under
the Uniform Commercial Code. Without limiting the generality of the
foregoing, the Senior Collateral Agent, without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind
(except any notice required by law referred to below) to or upon a Grantor
or any other person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Senior
Collateral, or any part thereof, and/or may forthwith sell, lease, assign,
give option or options to purchase, or otherwise dispose of and deliver the
Senior Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at
any exchange, broker's board or office of any Senior Secured Party or
elsewhere upon such terms and conditions as it may deem advisable and at
such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. Any Senior Secured Party
shall have the right upon any such public sale or sales, and, to the extent
permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Senior Collateral so sold, free of (to the extent
permitted by law) any right or equity of redemption in a Grantor, which
right or equity is hereby, to the extent permitted by law, waived or
released. Each Grantor further agrees, at the Senior Collateral Agent's
request, to assemble the Senior Collateral and make it available to the
Senior Collateral Agent at places which the Senior Collateral Agent shall
reasonably select, whether at such Grantor's premises or elsewhere. The
Senior Collateral Agent shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses incurred therein or incidental
to the care or safekeeping of any of such Senior Collateral or reasonably
relating to such Senior Collateral or the rights of the Senior Collateral
Agent and the Senior Secured Parties hereunder, including, without
limitation, reasonable attorneys' fees and disbursements, to the payment in
whole or in part of the Senior Obligations, in accordance with Section
8.03, and only after such application and after the payment by the Senior
Collateral Agent of any other amount required by any provision of law,
including, without limitation, Section 9-504(1)(c) of the Uniform
Commercial Code, need the Senior Collateral Agent account for the surplus,
if any, to such Grantor. If any notice of a proposed sale or other
disposition of such Senior Collateral shall be required by law, such notice
shall be in writing and deemed reasonable and proper if given at least 10
days before such sale or other disposition.
The Senior Collateral Agent shall have absolute discretion as to
the time of application of any such proceeds, moneys or balances in
accordance with this Agreement. Upon any sale of the Senior Collateral by
the Senior Collateral Agent (including pursuant to a power of sale granted
by statute or under a judicial proceeding), the receipt of the Senior
Collateral Agent or of the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Senior Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Senior
Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.
SECTION 8.05. Grant of License to Use Intellectual Property. For
the purpose of enabling the Senior Collateral Agent to exercise rights and
remedies under this Article at such time as the Senior Collateral Agent
shall be lawfully entitled to exercise such rights and remedies, each
Grantor hereby grants to the Senior Collateral Agent an irrevocable, non-
exclusive license (exercisable without payment of royalty or other
compensation to the Grantors) to use, license or sub-license any of the
Senior Collateral consisting of Intellectual Property now owned or
hereafter acquired by such Grantor, and wherever the same may be located,
and including in such license reasonable access to all media in which any
of the licensed items may be recorded or stored and to all computer
software and programs used for the compilation or printout thereof. The use
of such license by the Senior Collateral Agent shall be exercised, at the
option of the Senior Collateral Agent, solely upon the occurrence and
during the continuation of an Event of Default; provided that any license,
sub-license or other transaction entered into by the Senior Collateral
Agent in accordance herewith shall be binding upon the Grantors
notwithstanding any subsequent cure of an Event of Default.
SECTION 8.06. Waiver; Deficiency. Each Grantor waives and agrees
not to assert any rights or privileges it may acquire under Section 9-112
of the Uniform Commercial Code. Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Senior
Collateral are insufficient to pay the Senior Obligations and the
reasonable fees and disbursements of any attorneys employed by any Senior
Secured Party to collect such deficiency.
SECTION 8.07. Cash Sweep Remedies. The Senior Collateral Agent, on
behalf of the Senior Secured Parties is entitled to exercise all rights and
remedies granted to them in respect of the Cash Management Accounts in
accordance with Schedule 5 of this Agreement.
SECTION 9. Senior Collateral Agent's Appointment as
Attorney-in-Fact; Senior Collateral Agent's Performance of Grantors'
Obligations.
SECTION 9.01. Powers. Each Grantor hereby irrevocably constitutes
and appoints the Senior Collateral Agent and any officer or agent thereof,
with full power of substitution, during the continuance of an Event of
Default, as its true and lawful attorney-in-fact, with full irrevocable
power and authority in the place and stead of such Grantor and in the name
of such Grantor or in its own name from time to time in the Senior
Collateral Agent's discretion, for the purpose of carrying out the terms of
this Agreement, to take any and all appropriate action and to execute any
and all documents and instruments which may be necessary or desirable to
accomplish the purposes of this Agreement, and, without limiting the
generality of the foregoing, such Grantor hereby gives the Senior
Collateral Agent the power and right, on behalf of such Grantor, without
notice to or assent by such Grantor, to do the following upon the
occurrence and during the continuance of an Event of Default:
(a) in the name of such Grantor or its own name, or
otherwise, to take possession of and indorse and collect any
checks, drafts, notes, acceptances or other instruments for the
payment of moneys due under any Account, Instrument, General
Intangible or Contract or with respect to any other Senior
Collateral and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed
appropriate by the Senior Collateral Agent for the purpose of
collecting any and all such moneys due under any Account,
Instrument, General Intangible or Contract or with respect to any
other Senior Collateral whenever payable;
(b) in the case of any Intellectual Property, execute and
deliver, and have recorded, any and all agreements, instruments,
documents and papers as the Senior Collateral Agent may request to
evidence the Senior Collateral Agent's and the Senior Secured
Parties' security interest in such Intellectual Property and the
goodwill and general intangibles of such Grantor relating thereto
or represented thereby;
(c) to pay or discharge taxes and Liens levied or placed on
or threatened against the Senior Collateral (other than Permitted
Liens), to effect any repairs or any insurance called for by the
terms of this Agreement and to pay all or any part of the premiums
therefor and the costs thereof;
(d) to execute, in connection with any sale provided for in
Section 8.04 hereof, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Senior
Collateral;
(e)(i) to direct any party liable for any payment under any
of the Senior Collateral to make payment of any and all moneys due
or to become due thereunder directly to the Senior Collateral Agent
or as the Senior Collateral Agent shall direct; (ii) to ask or
demand for, collect, receive payment of and receipt for, any and
all moneys, claims and other amounts due or to become due at any
time in respect of or arising out of any Senior Collateral; (iii)
to sign and indorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications, notices and other documents in
connection with any of the Senior Collateral; (iv) to commence and
prosecute any suits, actions or proceedings at law or in equity in
any court of competent jurisdiction to collect the Senior
Collateral or any thereof and to enforce any other right in respect
of any Senior Collateral; (v) to defend any suit, action or
proceeding brought against any Grantor with respect to any Senior
Collateral; (vi) to settle, compromise or adjust any such suit,
action or proceeding and, in connection therewith, to give such
discharges or releases as the Senior Collateral Agent may deem
appropriate; (vii) to the extent permitted by applicable law,
assign any Copyright, Patent or Trademark (along with the goodwill
of the business to which any such Copyright, Patent or Trademark
pertains); and (viii) generally, to use, sell, transfer, pledge and
make any agreement with respect to or otherwise deal with any of
the Senior Collateral as fully and completely as though the Senior
Collateral Agent were the absolute owner thereof for all purposes,
and to do, at the Senior Collateral Agent's option and at the
expense of such Grantor, at any time, or from time to time, all
acts and things which the Senior Collateral Agent reasonably deems
necessary to protect, preserve or realize upon such Senior
Collateral and the Senior Collateral Agent's and the Senior Secured
Parties' security interests therein and to effect the intent of
this Agreement, all as fully and effectively as such Grantor might
do; and
(f) to file any Uniform Commercial Code financing statement,
or to take such other steps, required to perfect or confirm the
perfection of any security interest described herein.
SECTION 9.02. Performance by Senior Collateral Agent of Grantor's
Obligations. If any Grantor fails to perform or comply with any of its
agreements contained herein, the Senior Collateral Agent, at its option,
but without any obligation so to do, may perform or comply, or otherwise
cause performance or compliance, with such agreement.
SECTION 9.03. Grantor's Reimbursement Obligation. The expenses of
the Senior Collateral Agent and any other Senior Secured Party, as
applicable, reasonably incurred in connection with actions undertaken as
provided in this Section 9, together with interest thereon at a rate per
annum equal to the default rate of interest set forth in Section 2.07 of
the Senior Credit Facility, from the date payment is demanded by the Senior
Collateral Agent to the date reimbursed by such Grantor, shall be payable
by the Borrower to the Senior Collateral Agent on demand.
SECTION 9.04. Ratification; Power Coupled With An Interest. Each
Grantor hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.
SECTION 10. Duty of Senior Collateral Agent. The Senior Collateral
Agent's sole duty with respect to the custody, safekeeping and physical
preservation of the Senior Collateral in its possession, under Section
9-207 of the Uniform Commercial Code or otherwise, shall be to deal with it
in the same manner as the Senior Collateral Agent deals with similar
property for its own account. No Senior Secured Party nor any of its
respective directors, officers, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Senior Collateral or
for any delay in doing so or shall be under any obligation to sell or
otherwise dispose of any Senior Collateral upon the request of a Grantor or
any other person or to take any other action whatsoever with regard to the
Senior Collateral or any part thereof. The powers conferred on the Senior
Secured Parties hereunder are solely to protect the Senior Secured Parties'
interests in the Senior Collateral and shall not impose any duty upon any
Senior Secured Party to exercise any such powers. The Senior Secured
Parties shall be accountable only for amounts that they actually receive as
a result of the exercise of such powers, and neither they nor any of their
officers, directors, employees or agents shall be responsible to any
Grantor for any act or failure to act hereunder, except for their own gross
negligence or wilful misconduct.
SECTION 11. Execution of Financing Statements. Pursuant to Section
9-402 of the Uniform Commercial Code, each Grantor authorizes the Senior
Collateral Agent to file financing statements with respect to the Senior
Collateral without the signature of such Grantor in such form and in such
filing offices as the Senior Collateral Agent reasonably determines
appropriate to perfect the security interests of the Senior Collateral
Agent under this Agreement. A carbon, photographic or other reproduction of
this Agreement shall be sufficient as a financing statement for filing in
any jurisdiction.
SECTION 12. Authority of Senior Collateral Agent. Each Grantor
acknowledges that the rights and responsibilities of the Senior Collateral
Agent under this Agreement with respect to any action taken by the Senior
Collateral Agent or the exercise or non-exercise by the Senior Collateral
Agent of any option, voting right, request, judgment or other right or
remedy provided for herein or resulting or arising out of this Agreement
shall, as between the Senior Collateral Agent and the other Senior Secured
Parties, be governed by the Senior Credit Facility and by such other
agreements with respect thereto as may exist from time to time among them
but, as between the Senior Collateral Agent and the Grantors, the Senior
Collateral Agent shall be conclusively presumed to be acting as agent for
the other Senior Secured Parties with full and valid authority so to act or
refrain from acting.
SECTION 13. Notices. All notices, requests and demands to or upon
the Senior Secured Parties or the Grantors under this Agreement shall be
given or made in accordance with Section 9.01 of the Senior Credit Facility
and addressed as follows:
(a) if to the Senior Collateral Agent, in accordance with
Section 9.01 of the Senior Credit Facility;
(b) if to any Grantor, c/o the Borrower at the address of
the Borrower specified in Annex 2 Senior Credit Facility.
SECTION 14. Security Interest Absolute. All rights of the Senior
Collateral Agent hereunder, the security interest and all obligations of
the Grantors hereunder shall be absolute and unconditional.
SECTION 15. Survival of Agreement. All covenants, agreements,
representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Senior Loan Document shall be
considered to have been relied upon by the Senior Secured Parties and shall
survive the making by the Senior Banks of the Loans, the execution and
delivery to the Senior Banks of the Senior Loan Documents and the issuance
of any Letters of Credit, regardless of any investigation made by the
Senior Secured Parties or on their behalf, and shall continue in full force
and effect as long as the principal of or any accrued interest on any Loan
or L/C Disbursement, or any other Senior Obligation is outstanding and
unpaid and so long as any Letter of Credit or Independent Standby Letter of
Credit is outstanding and so long as the Commitments have not been
terminated.
SECTION 16. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO
A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER
SENIOR LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT
IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 16.
SECTION 17. Jurisdiction; Consent to Service of Process. (a) Each
Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and
any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement or the other Senior Loan Documents, or
for recognition or enforcement of any judgment, and each of the parties
hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in
such New York State or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law. Nothing in this Agreement shall affect any right that any Obligor or
any Senior Secured Party may otherwise have to bring any action or
proceeding relating to this Agreement or the other Senior Loan Documents
against any Grantor or any Senior Secured Party or its properties in the
courts of any jurisdiction.
(b) Each Grantor and each Senior Secured Party hereby irrevocably
and unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection that it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement or the other Senior Loan Documents in any New
York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any
such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 13. Nothing in this
Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 18. Release. (a) This Agreement and the security interest
created hereunder shall terminate when all Senior Obligations have been
fully and indefeasibly paid and when the Senior Secured Parties have no
further Commitments under the Senior Credit Facility and no Letters of
Credit or Independent Standby Letters of Credit are outstanding, at which
time the Senior Collateral Agent shall execute and deliver to each Grantor,
or to such person or persons as such Grantor shall reasonably designate,
all Uniform Commercial Code termination statements and similar documents
prepared by such Grantor at its expense which such Grantor shall reasonably
request to evidence such termination. Any execution and delivery of
termination statements or documents pursuant to this Section 18(a) shall be
without recourse to or warranty by the Senior Collateral Agent.
(b) All Senior Collateral used, sold, transferred or otherwise
disposed of in accordance with the terms of the Senior Credit Facility and
the Collateral Trust and Intercreditor Agreement (including pursuant to a
waiver or amendment of the terms thereof) shall be used, sold, transferred
or otherwise disposed of free and clear of the Lien and the security
interest created hereunder. In connection with the foregoing, (i) the
Senior Collateral Agent shall execute and deliver to each Grantor, or to
such person or persons as such Grantor shall reasonably designate, all
Uniform Commercial Code termination statements and similar documents
prepared by such Grantor at its expense which such Grantor shall reasonably
request to evidence the release of the Lien and security interest created
hereunder with respect to such Senior Collateral and (ii) any
representation, warranty or covenant contained herein relating to such
Senior Collateral shall no longer be deemed to be made with respect to such
used, sold, transferred or otherwise disposed Senior Collateral.
SECTION 19. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction. The parties hereunder 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 20. Amendments in Writing; No Waiver. (a) None of the terms
or provisions of this Agreement may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Grantors
and the Senior Collateral Agent, provided that any provision of this
Agreement may be waived by the Majority Senior Parties pursuant to a letter
or agreement executed by the Senior Collateral Agent or by telecopy
transmission from the Senior Collateral Agent, except any amendment or
waiver which materially adversely affects the Independent Standby L/C
Parties under this Agreement will require the additional consent of the
Independent Standby L/C Parties pursuant to a letter or agreement by the
Independent Standby L/C Parties or by telecopy transmission from the
Independent Standby L/C Parties.
(b) No Senior Secured Party shall by any act (except by a written
instrument pursuant to Section 20 hereof) or delay be deemed to have waived
any right or remedy hereunder or to have acquiesced in any Default or Event
of Default or in any breach of any of the terms and conditions hereof. No
failure to exercise, nor any delay in exercising, on the part of any Senior
Secured Party, any right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. A waiver by any Senior
Secured Party of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy which such Senior Secured
Party would otherwise have on any future occasion.
SECTION 21. Remedies Cumulative. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any other rights or remedies provided by law.
SECTION 22. Section Headings. The section and Section headings used
in this Agreement are for convenience of reference only and are not to
affect the construction hereof or be taken into consideration in the
interpretation hereof.
SECTION 23. Successors and Assigns. This Agreement shall be binding
upon the successors and assigns of each Grantor and shall inure to the
benefit of each Grantor and the Senior Secured Parties and their successors
and assigns, provided that this Agreement may not be assigned by any
Grantor without the prior written consent of the Senior Collateral Agent.
SECTION 24. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
SECTION 25. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract.
SECTION 26. Additional Grantors. Pursuant to Section 5.08 of the
Senior Credit Facility, each Domestic Subsidiary that was not in existence
or not a Domestic Subsidiary on the date thereof is required to enter into
this Agreement as a Grantor upon becoming a Domestic Subsidiary. Upon
execution and delivery, after the date hereof, by the Senior Collateral
Agent and such Domestic Subsidiary of an instrument in the form of Annex 1,
such Domestic Subsidiary shall become a Grantor hereunder with the same
force and effect as if originally named as a Grantor hereunder. The
execution and delivery of any such instrument shall not require the consent
of any Grantor hereunder. The rights and obligations of each Grantor
hereunder shall remain in full force and effect notwithstanding the
addition of any new Grantor as a party to this Agreement.
SECTION 27. Patient Confidentiality. The Senior Collateral Agent
hereby agrees on behalf of itself and each Senior Secured Party and any of
their designees and assigns to, and shall take all reasonable steps to,
comply with all applicable state or federal laws or administrative
regulations regarding the confidentiality of patient records and patient
medical information it receives in connection with the transactions
described in this Agreement.
SECTION 28. Collateral Trust and Intercreditor Agreement.
Notwithstanding anything herein to the contrary, the terms of this
Agreement, and the rights of the Senior Collateral Agent and the Senior
Secured Parties hereunder, are subject to the Collateral Trust and
Intercreditor Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Senior
Subsidiary Security Agreement to be duly executed and delivered as of the
date first above written.
CITICORP USA, INC., as Senior Collateral Agent,
By________________________________
Name:
Title:
THRIFTY PAYLESS, INC., as a Grantor,
By________________________________
Name:
Title:
PCS HEALTH SYSTEMS, INC., as a Grantor,
By________________________________
Name:
Title:
EACH OF THE SUBSIDIARIES LISTED ON
SCHEDULE A HERETO, as Grantors,
By________________________________
Name:
Title:
Schedules:
---------
Annex 1 Supplement
Annex 2 Definitions Annex
Schedule A Subsidiary Guarantors
Schedule 1 Filings and Other Actions Required to Perfect Security Interests
Schedule 2 Inventory
Schedule 3 Records of Accounts
Schedule 4 Copyrights and Copyright Licenses; Patents and Patent Licenses;
and Trademarks and Trademark Licenses Schedule 5 Cash Management
System
Schedule 6 Form of Blocked Account Agreement
Schedule 7 Form of Lockbox Account Agreement
Schedule 8 Form of Government Lockbox Account Agreement
Schedule 9 Form of Concentration Agreement
Schedule 10 Perfection Certificate
Annex 1
to the Senior Subsidiary
Security Agreement
SUPPLEMENT NO. dated as of [ ] (this "Supplement") to the Senior
Subsidiary Security Agreement dated as of June 12, 2000 (the "Senior
Subsidiary Security Agreement"), between the SUBSIDIARIES GUARANTORS
identified on the signature pages thereto and any other person that becomes
a Subsidiary Guarantor (the "Grantors"), in favor of CITICORP USA, INC., a
New York banking corporation, as collateral agent (the " Senior Collateral
Agent") for the Senior Secured Parties.
A. Reference is made to the (a) Senior Credit Agreement dated as of
June 12, 2000 (as amended or modified from time to time, the "Senior Credit
Agreement"), among Rite Aid, as Borrower, the Senior Banks parties thereto,
the Swingline Banks, the Issuing Banks, the Senior Administrative Agent,
the Senior Collateral Agent and the Syndication Agents, (b) the Independent
Standby L/C Documents pursuant to which Mellon Bank and Citibank have
issued and may in the future issue certain letters of credit and (c) the
Senior Subsidiary Security Agreement dated as of June 12, 2000, among the
Subsidiary Guarantors and the Senior Collateral Agent.
B. Capitalized terms used herein and not otherwise defined shall
have the meanings assigned to such terms in the Senior Subsidiary Security
Agreement, including the Definitions Annex and the Senior Credit Facility
referred to therein.
C. The Grantors have entered into the Senior Subsidiary Security
Agreement in order to induce the Senior Banks to make Loans and induce the
Issuing Banks to issue Letters of Credit pursuant to, and upon the terms
and subject to the conditions specified in, the Senior Credit Facility.
Pursuant to Section 5.08 of the Senior Credit Facility, each Domestic
Subsidiary that was not in existence or not a Domestic Subsidiary on the
date thereof is required to enter into the Senior Subsidiary Security
Agreement as a Grantor upon becoming a Domestic Subsidiary. Section 26 of
the Senior Subsidiary Security Agreement provides that additional Domestic
Subsidiaries may become Grantors under the Senior Subsidiary Security
Agreement by execution and delivery of an instrument in the form of this
Supplement. The undersigned (the "New Grantor") is a Domestic Subsidiary
and is executing this Supplement in accordance with the requirements of the
Senior Credit Facility to become a Grantor under the Senior Subsidiary
Security Agreement in order to induce the Senior Banks to make additional
Loans and the Issuing Banks to issue additional Letters of Credit and as
consideration for Loans previously made and Letters of Credit previously
issued.
Accordingly, the Senior Collateral Agent and the New Grantor agree
as follows:
SECTION 1. In accordance with Section 26 of the Senior Subsidiary
Security Agreement, the New Grantor by its signature below becomes a
Grantor under the Senior Subsidiary Security Agreement with the same force
and effect as if originally named therein as a Grantor and the New Grantor
hereby agrees to all the terms and provisions of the Senior Subsidiary
Security Agreement applicable to it as a Grantor thereunder. Each reference
to a "Grantor" in the Senior Subsidiary Security Agreement shall be deemed
to include the New Grantor. The Senior Subsidiary Security Agreement is
hereby incorporated herein by reference.
SECTION 2. The New Grantor represents and warrants to the Senior
Secured 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, subject to the effects
of applicable bankruptcy, insolvency or similar laws affecting creditors'
rights generally and equitable principles of general applicability.
SECTION 3. This Supplement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument. This Supplement
shall become effective when the Senior Collateral Agent shall have received
counterparts of this Supplement that, when taken together, bear the
signatures of the New Grantor and the Senior Collateral Agent.
SECTION 4. Except as expressly supplemented hereby, the Senior
Subsidiary Security 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 Senior Subsidiary Security
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 the Senior Credit Facility. All
communications and notices hereunder to the New Grantor shall be given to
it c/o the Borrower as set forth in Section 9.01 of the Senior Credit
Facility.
IN WITNESS WHEREOF, the New Grantor and the Senior Collateral Agent
have duly executed this Supplement to the Senior Subsidiary Security
Agreement as of the day and year first above written.
[NAME OF NEW GRANTOR],
by ___________________________________
Name:
Title:
CITICORP USA, INC., as Senior Collateral Agent,
by ___________________________________
Name:
Title:
Annex 2
to the Senior Subsidiary
Security Agreement
DEFINITIONS ANNEX
This is the Definitions Annex referred to in the Senior Loan
Documents (such term and each other capitalized term used herein as defined
below, and if not defined herein, have the meanings assigned to such terms
in the applicable Senior Loan Document or Second Priority Debt Document)
and the Second Priority Debt Documents. The meanings given to terms defined
herein shall be equally applicable to both the singular and plural forms of
such terms.
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 thereof and of each Senior Loan Document and
Second Priority Debt Document containing restrictions or imposing
conditions on the amendment, modification or supplementing of such
agreement or contract.
"Affiliate" means, when used with respect to a specified Person,
another person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control
with the Person specified.
"Asset Sale" means any sale, transfer or other disposition
(including pursuant to a Sale and Leaseback Transaction) of any property or
asset of the Borrower or any Subsidiary (including any equity interest in a
Subsidiary), other than a Permitted Disposition.
"Attributable Debt" means, as to any particular Capital Lease or
Sale and Leaseback Transaction under which the Borrower or any Subsidiary
is at the time liable, at any date as of which the amount thereof is to be
determined (i) in the case of a transaction involving a Capital Lease, the
amount on such date of the obligation thereunder that would appear on a
balance sheet prepared as of such date in accordance with generally
accepted accounting principles, or (ii) in the case of a Sale and Leaseback
Transaction not involving a Capital Lease, 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 per annum
that would be applicable to a Capital Lease of the Borrower having similar
payment terms. 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, whether or not characterized as rent.
"Bankruptcy Proceeding" means any proceeding under Title 11 of the
U.S. Code or any other Federal, state or foreign bankruptcy, insolvency,
reorganization, receivership or similar law.
"Basket Asset Sale" means any sale or disposition (including a Sale
and Leaseback Transaction not involving any Mortgaged Property) of office
locations, stores or other personal or real property (including any
improvements thereon), whether or not constituting Mortgaged Property, or
leasehold interest therein for fair value in the ordinary course of
business consistent with past practice and not inconsistent with the
Borrower's business plan delivered to the Representatives on the Closing
Date, provided, however, that, (i) the aggregate consideration received
therefor (including the fair market value of any non-cash consideration)
shall not exceed $75,000,000 in any fiscal year (calculated without regard
to Sale and Leaseback Transactions permitted by Section 5.14(a), (b) and
(c) of the Senior Credit Facility as in effect on the Closing Date) and
(ii) at least 75% of such consideration shall consist of cash.
"Borrower" means Rite Aid.
"Business Day" means any day other than a Saturday, Sunday or day
on which banks in New York City are authorized or required by law to close;
provided, however, that when used in connection with a Euro-Dollar Loan,
the term "Business Day" shall also exclude any day on which banks are not
open for dealings in dollar deposits in the London interbank market.
"Capital Markets Transaction" means the receipt by the Borrower or
a Subsidiary of proceeds of an issuance in the public or private capital
markets of long-term debt securities, of equity securities or of
equity-linked (e.g., trust preferred) securities (other than any proceeds
in respect of the issuance of Exchange Notes to SPV and the disposition of
such Exchange Notes pursuant to the Forward Commitment Agreement).
"Casualty/Condemnation" means any event that gives rise to
Casualty/Condemnation Proceeds.
"Casualty/Condemnation Proceeds" means
(a) any insurance proceeds under any insurance policies or
otherwise with respect to any casualty or other insured damage to
any assets of the Borrower or its Subsidiaries, and
(b) any proceeds received by the Borrower or any Subsidiary
of any action or proceeding for the taking of any assets of the
Borrower or its Subsidiaries, or any part thereof or interest
therein, for public or quasi-public use under the power of eminent
domain, by reason of any similar public improvement or condemnation
proceeding,
less, in each case (i) any fees, commissions and expenses (including the
costs of adjustment and condemnation proceedings) and other costs paid or
incurred by the Borrower or any Subsidiary in connection therewith, (ii)
income taxes reasonably estimated to be payable as a result of any gain
recognized in connection with the receipt of such payment or proceeds and
(iii) payment of the outstanding amount of any Debt (or Attributable Debt),
other than the Secured Obligations, together with premium or penalty, if
any, and interest thereon (or comparable obligations in respect of
Attributable Debt), that is secured by a Lien on (or if Attributable Debt,
the lease of) the stock or assets in question and that has priority over
both the Senior Lien and the Second Priority Lien and is to be repaid as a
result of receipt of such payments or proceeds; provided, however, that no
such proceeds shall constitute Casualty/Condemnation Proceeds to the extent
that such proceeds are (A) reinvested in other like fixed or capital assets
within 180 days of the Casualty/Condemnation that gave rise to such
proceeds or (B) committed to be reinvested in other like fixed or capital
assets within 180 days of such Casualty/Condemnation, with diligent pursuit
of such reinvestment, and reinvested in such assets within 365 days of such
Casualty/Condemnation.
"Citibank" means Citibank, N.A.
"Citibank Standby L/C Documents" means the reimbursement
agreements, letter of credit applications and other documents relating to
the Citibank Standby Letters of Credit.
"Citibank Standby L/C Obligations" means (a) each payment,
including payments in respect of reimbursements and cash collateralization,
required to be made by Rite Aid under the Citibank Standby L/C Documents in
respect of Citibank Standby Letters of Credit in an aggregate amount at any
time outstanding not in excess of (i) $8,000,000 minus (ii) the cumulative
amount of proceeds of Collateral applied to such obligations as the result
of the exercise of remedies under the Senior Collateral Documents and (b)
all other monetary obligations, including fees, costs, expenses and
indemnities (including interest and monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding)
of Rite Aid or any Obligor under the Citibank Standby L/C Documents to the
extent attributable to the Citibank Standby Letters of Credit referred to
in clause (a).
"Citibank Standby Letters of Credit" means the standby letters of
credit issued for the account of the Borrower by Citibank outstanding on
the Closing Date in an aggregate face amount of approximately $8,000,000,
together with any standby letter of credit (other than any letter of credit
issued under the Senior Credit Facility) hereafter issued by Citibank for
the account of any Obligor, provided that the Citibank Standby Letters of
Credit shall be limited to an amount at any time outstanding not in excess
of (i) $8,000,000 minus (ii) the cumulative amount of proceeds of
Collateral applied as the result of the exercise of remedies under the
Senior Collateral Documents to reimbursement and cash collateralization
obligations in respect of Citibank Standby Letters of Credit.
"Closing Date" means the date on which the Senior Credit Facility,
the amendments and restatements giving rise to the Existing Facilities and
the exchange offer and other transactions giving rise to the Exchange Notes
become effective.
"Collateral" means the Senior Collateral and the Second Priority
Collateral.
"Collateral Documents" means (a) the Senior Collateral Documents
and (b) the Second Priority Collateral Documents.
"Collateral Trust and Intercreditor Agreement" means the Collateral
Trust and Intercreditor Agreement, dated as of June 12, 2000, among Rite
Aid, the Subsidiary Guarantors, the Second Priority Collateral Trustee, the
Senior Collateral Agent and each Second Priority Representative.
"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "Controlling" and "Controlled" shall have meanings
correlative thereto.
"Debt" of any Person means at any date, without duplication, (i)
all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) 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, (iv) all obligations of such
Person as lessee which are capitalized in accordance with generally
accepted accounting principles, (v) all non-contingent obligations of such
Person to reimburse any bank or other Person in respect of amounts paid
under a letter of credit or similar instrument, (vi) 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 (vii) all Debt of others Guaranteed by such
Person.
"Debt Facility" means any of the Senior Credit Facility, the
Existing Facilities, the Synthetic Lease Facilities and the Exchange Note
Indenture.
"Default Rate" means a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 365 or 366 days, as the case
may be) equal to the sum of (a) the rate of interest publicly announced by
Citibank in New York, New York, from time to time as its "base rate", plus
(b) 2.00%.
"Designated Asset Disposition" means any sale, transfer or other
disposition of Exchange Debt First Priority Collateral other than a
Permitted Disposition.
"Domestic Subsidiary" means any Subsidiary incorporated or
organized under the laws of the United States of America, any State thereof
or the District of Columbia.
"Xxxxxxxxx.xxx Common Stock" means the common stock of Xxxxxxxxx.xxx,
Inc., a Delaware corporation, owned by Rite Aid.
"Xxxxxxxxx.xxx Pledge Agreement" means the Xxxxxxxxx.xxx Pledge
Agreement dated as of October 25, 1999 and amended and restated as of June
12, 2000, between the Borrower and Xxxxxx Guaranty Trust Company of New
York, as agent thereunder.
"Exchange Debt Facility" means the Exchange Debt Facility dated as
of June 12, 2000 among Rite Aid Corporation, the banks party thereto and
Xxxxxx Guaranty Trust Company of New York, as administrative agent.
"Exchange Debt Facility Documents" means the collective reference
to the "Loan Documents" as defined in the Exchange Debt Facility.
"Exchange Debt First Priority Collateral" means the prescription
files of Rite Aid's Subsidiaries and the proceeds thereof.
"Exchange Debt First Priority Collateral Documents" means the
collective reference to the "First Priority Collateral Documents", as
defined in the Exchange Debt Facility.
"Exchange Debt Obligations" means (i) all principal of and interest
(including, without limitation, any interest which accrues after the
commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of the Borrower, whether or not
allowed or allowable as a claim in any such proceeding) on any loans made
under the Exchange Debt Facility, (ii) all other amounts payable by the
Borrower to the Exchange Debt Parties under the Exchange Debt Facility
Documents, and (iii) any renewals or extensions of any of the foregoing;
provided, however, that the principal amount of indebtedness included in
the Exchange Debt Obligations shall not exceed the maximum amount from time
to time permitted to be outstanding by the Collateral Trust and
Intercreditor Agreement.
"Exchange Debt Parties" means all parties to the Exchange Debt
Facility Documents other than the Obligors or any Affiliate thereof, the
Senior Bank Parties and the Representatives, but including the
administrative agent under the Exchange Debt Facility and the beneficiaries
of each indemnification obligation undertaken by Rite Aid or any other
Obligor under any Exchange Debt Facility Document.
"Exchange Note Documents" means the Exchange Notes and the Exchange
Note Indenture, Exchange and Registration Rights Agreement among the State
Street Bank and Trust, as trustee, Rite Aid and the Subsidiary Guarantors,
and the Forward Commitment Agreement.
"Exchange Note Indenture" means the Indenture dated as of June 12,
2000, among Rite Aid, the Subsidiary Guarantors and State Street Bank and
Trust Company, as trustee, relating to the Exchange Notes.
"Exchange Note Obligations" means (i) all principal of and interest
(including, without limitation, any interest which accrues after the
commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of the Borrower, whether or not
allowed or allowable as a claim in any such proceeding) on the Exchange
Notes, (ii) all other amounts payable by the Borrower to the Exchange Note
Parties under the Exchange Note Documents, and (iii) any renewals or
extensions of any of the foregoing.
"Exchange Note Parties" means all parties to the Exchange Note
Documents and the holders from time to time of the Exchange Notes, in each
case other than the Obligors or any Affiliate thereof, the Senior Bank
Parties and the Representatives, but including the trustee under the
Exchange Note Indentures and the beneficiaries of each indemnification
obligation undertaken by Rite Aid or any other Obligor under any Exchange
Note Document.
"Exchange Notes" means the 10.50% Senior Secured Notes Due 2002 of
Rite Aid (i) issued in exchange for certain 5.50% Notes Due 2000 of Rite
Aid and 6.70% Notes Due 2001 of Rite Aid or (ii) issued on the Closing Date
to SPV and to be transferred to SSB, JPM and their respective transferees
and assignees pursuant to the Forward Commitment Agreement; provided,
however, that the aggregate principal amount of Exchange Notes issued
pursuant to the Forward Commitment Agreement shall not exceed $93,158,000.
"Existing Facilities" means
(a) the PCS Facility;
(b) the RCF Facility;
(c) the Xxxxx Facility; and
(d) the Exchange Debt Facility.
"Existing Facilities Documents" means the collective reference to
(i) the PCS Facility Documents, (ii) the RCF Facility Documents, (iii) the
Xxxxx Facility Documents and (iv) the Exchange Debt Facility Documents.
"Existing Facility Obligations" means the PCS Facility Obligations,
the RCF Facility Obligations, the Xxxxx Facility Obligations and the
Exchange Debt Obligations.
"Existing Facility Parties" means the PCS Facility Parties, the RCF
Facility Parties, the Xxxxx Facility Parties and the Exchange Debt Parties.
"Xxxxx Facility" means the Amendment No. 3 to Note Agreement,
Amendment No. 4 to Guaranty Agreement, Amendment No. 1 to Put Agreement
(the "Omnibus Amendment") dated as of June 12, 2000, relating to the
Adjustable Rate Senior Secured Notes due August 15, 2002 originally issued
by Xxxxx, Inc. and guaranteed by Rite Aid. The "Xxxxx Facility " shall be
deemed to include the Note Agreement dated as of September 30, 1996, among
Xxxxx, Inc., and each of the Purchasers listed in Annex 1 thereto, as
amended through the Closing Date.
"Xxxxx Facility Documents" means (i) the Xxxxx Facility, (ii) the
Guaranty Agreement dated as of September 30, 1996 pursuant to which Rite
Aid guaranteed the obligations of Xxxxx, Inc. under the Xxxxx Facility;
(iii) the Put Agreement dated as of September 30, 1996 entered into by Rite
Aid, and (iv) the Security Agreement dated as of September 30, 1996 entered
into by Xxxxx, Inc. and The Prudential Insurance Company of America as the
Security Agent on behalf of the Xxxxx Facility Parties, in each case as
amended through the Closing Date.
"Xxxxx Facility Obligations" means (i) all outstanding principal
amounts under the Xxxxx Facility Documents, (ii) all interest (including,
without limitation, any interest which accrues after the commencement of
any case, proceeding or other action relating to the bankruptcy, insolvency
or reorganization of the Borrower, whether or not allowed or allowable as a
claim in any such proceeding) on the principal amounts pursuant to clause
(i) of this definition, (iii) any renewals or extensions of any of the
foregoing and (iv) any and all other amounts payable by the Borrower in
respect of the Xxxxx Facility Documents; provided, however, that the
principal amount of indebtedness included in the Xxxxx Facility Obligations
shall not exceed the maximum amount from time to time permitted to be
outstanding by the Collateral Trust and Intercreditor Agreement.
"Xxxxx Facility Parties" means The Prudential Insurance Company of
America and Pruco Life Insurance Company and their successors and assigns
as noteholders and purchasers under the Xxxxx Facility Documents and The
Prudential Insurance Company of America, as Security Agent under the Xxxxx
Facility Documents and its successor or assignee.
"Forward Commitment Agreement" means the Forward Commitment
Agreement dated June 12, 2000, among Rite Aid, SPV, SSB and JPM.
"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.
"Indentures" mean, collectively, (a) the Indenture dated as of
December 21, 1998, between Rite Aid and Xxxxxx Trust and Savings Bank, as
trustee, (b) the Indenture dated as of August 1, 1993, between Rite Aid and
Xxxxxx Guaranty Trust Company of New York, as trustee, (c) the Indenture
dated as September 10, 1997, between Rite Aid and Xxxxxx Trust and Savings
Bank, as trustee and (d) the Indenture dated as of September 22, 1998,
between Rite Aid and Xxxxxx Trust and Savings Bank, as trustee.
"Independent Standby L/C Documents" means the Citibank Standby L/C
Documents and the Mellon Standby L/C Documents.
"Independent Standby L/C Obligations" means the Citibank Standby
L/C Obligations and the Mellon Standby L/C Obligations.
"Independent Standby L/C Parties" means Citibank and Mellon Bank in
their capacities as issuers of Independent Standby Letters of Credit.
"Independent Standby Letters of Credit" means the Citibank Standby
Letters of Credit and the Mellon Standby Letters of Credit.
"Instructing Group" means, until the Senior Obligation Payment
Date, the Majority Senior Parties, and thereafter the Second Priority
Instructing Group.
"JPM" means X.X. Xxxxxx Securities, Inc.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of
such asset, including, without limitation, the interest of a vendor or
lessor under any conditional sale agreement, Capital Lease or other title
retention agreement relating to such asset.
"Majority Senior Parties" means the Majority Banks, as defined in
the Senior Credit Facility, or with respect to any waiver, amendment or
request, Senior Banks having such amount of unused Revolving Credit
Commitments, Revolving Credit Exposure, unused Term Loan Commitments and
outstanding Term Loans as may be required under the Senior Credit Facility
to approve the same.
"Mellon Bank" means Mellon Bank, N.A.
"Mellon Standby L/C Documents" mean the reimbursement agreements,
letter of credit applications and other documents relating to the Mellon
Standby Letters of Credit.
"Mellon Standby L/C Obligations" means (a) each payment, including
payments in respect of reimbursements and cash collateralization, required
to be made by Rite Aid under the Mellon Standby L/C Documents in respect of
Mellon Standby Letters of Credit in an aggregate amount at any time
outstanding not in excess of (i) $26,000,000 minus (ii) the cumulative
amount of proceeds of Collateral applied to such obligations as the result
of the exercise of remedies under the Senior Collateral Documents and (b)
all other monetary obligations, including fees, costs, expenses and
indemnities (including interest and monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable as a claim in such
proceeding) of Rite Aid under the Mellon Standby L/C Documents to the
extent attributable to the Mellon Standby Letters of Credit referred to in
clause (a).
"Mellon Standby Letters of Credit" means the standby letters of
credit issued for the account of the Borrower by Mellon Bank outstanding on
the Closing Date in an aggregate face amount of $26,000,000, together with
any standby letter of credit (other than any letter of credit issued under
the Senior Credit Facility) hereafter issued by Mellon Bank for the account
of any Obligor provided that the Mellon Standby Letters of Credit shall be
limited to an amount at any time outstanding not in excess of (i)
$26,000,000 minus (ii) the cumulative amount of proceeds of Collateral
applied as the result of the exercise of remedies under the Senior
Collateral Documents to reimbursement and cash collateralization
obligations in respect of Mellon Standby Letters of Credit.
"Moody's" means Xxxxx'x Investors Service, Inc., or any successor
to its business of rating debt securities.
"Net Cash Proceeds" means,
(a) with respect to any sale, transfer or other disposition
of any property or asset (a "Disposition"), an amount equal to the
cash proceeds received by the Borrower or any of its Subsidiaries
from or in respect of such Disposition (including, when received,
any cash proceeds received in respect of any noncash proceeds of
any Disposition), less (I) the sum of
(i) reasonable costs and expenses paid or incurred in
connection with such transaction, including, without
limitation, any underwriting brokerage or other customary
selling commissions and reasonable legal, advisory and other
fees and expenses (including title and recording expenses,
associated therewith), payments of unassumed liabilities
relating to the assets sold and any severance and
termination costs;
(ii) the amount of any Debt (or Attributable Debt),
together with premium or penalty, if any, and accrued
interest thereon (or comparable obligations in respect of
Attributable Debt) secured by a Lien on (or if Attributable
Debt, the lease of) any asset disposed of in such
Disposition and discharged from the proceeds thereof, but
only to the extent such Lien has priority over the Senior
Lien, the Second Priority Lien and the Liens under the
Exchange Debt First Priority Collateral Documents;
(iii) any taxes actually paid or to be payable by
such Person (as estimated by a senior financial or
accounting officer of the Borrower, giving effect to the
overall tax position of the Borrower) in respect of such
Disposition;
(iv) the portion of such cash proceeds which the
Borrower determines in good faith and reasonably should be
reserved for post-closing adjustments, including, without
limitation, indemnification payments and purchase price
adjustments, provided, that on the date that all such
post-closing adjustments have been determined, the amount
(if any) by which the reserved amount in respect of such
Disposition exceeds the actual post-closing adjustments
payable by the Borrower or any of the Subsidiary Guarantors
shall constitute Net Cash Proceeds on such date; and
(v) in the case of a PCS Divestiture the sum of (1)
the PCS Incremental Investment as of the date of
consummation of such disposition plus (2) the aggregate Net
Cash Proceeds of PCS Dispositions in the form of Sale and
Leaseback Transactions theretofore applied to prepayments of
the PCS Facility; and
plus (II) in the case of a PCS Divestiture, the PCS Investment
Reduction as of the date of consummation of such transaction;
(b) with respect to any Capital Markets Transaction, an
amount equal to the cash proceeds received by the Borrower or any
of its Subsidiaries from or in respect of such Capital Markets
Transaction, less any reasonable transaction costs; including
investment banking and underwriting fees, discounts and commissions
and any other expenses (including legal fees and expenses)
reasonably incurred by such Person in respect of such Capital
Markets Transaction; and
(c) with respect to receipt of Casualty/Condemnation Proceeds,
the amount thereof.
"Obligors" means Rite Aid, the Subsidiary Guarantors and any other
Person who is liable for any of the Secured Obligations.
"paid in full" means paid in full in cash.
"PCS" means PCS Holding Corporation, a Delaware corporation, and
its successors.
"PCS Common Stock" means the common stock of PCS owned by Rite Aid.
"PCS Dispositions" means (i) any sale or other disposition of
capital stock of PCS (or of any non-cash proceeds thereof), (ii) any sale,
lease or other disposition (including a Casualty/Condemnation) by PCS or
any of its Subsidiaries of any asset, other than (y) dispositions of
inventory, cash, cash equivalents and other cash management investments and
obsolete, unused or unnecessary equipment, in each case in the ordinary
course of business, and (z) dispositions to PCS or a wholly-owned
Subsidiary of PCS or (iii) any sale, lease or other disposition (including
a Casualty/Condemnation) of PCS Land.
"PCS Divestiture" means a PCS Disposition as a result of which the
business of PCS is no longer conducted by a Consolidated Subsidiary of the
Borrower.
"PCS/Drugstore Pledged Collateral" means the capital stock of PCS
and Xxxxxxxxx.xxx pledged by Rite Aid under the PCS Pledge Agreement and
the Xxxxxxxxx.xxx Pledge Agreement and all income and profits thereon,
dividends and other payments and distributions with respect thereto and all
proceeds of the foregoing subject to a Lien under such agreements.
"PCS Excluded Assets" means (i) any Collateral consisting of assets
of PCS or a Subsidiary of PCS, other than PCS Linked Accounts, (ii) PCS
Land and (iii) any proceeds of clauses (i) and (ii). For purposes of
Article IV of the Collateral Trust and Intercreditor Agreement, any
proceeds of enforcement of the Senior Subsidiary Guarantee Agreement or the
Second Priority Guarantee Agreement against PCS or a Subsidiary of PCS
(other than with respect to the PCS Linked Accounts and the proceeds
thereof) shall be deemed to be proceeds of Collateral consisting of PCS
Excluded Assets.
"PCS Facility" means the PCS Facility dated as of June 12, 2000,
among Rite Aid, the banks party thereto and Xxxxxx Guaranty Trust Company
of New York, as administrative agent.
"PCS Facility Documents" means the "Loan Documents" as defined in
the PCS Facility.
"PCS Facility Obligations" means (i) all principal of and interest
(including, without limitation, any interest which accrues after the
commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of the Borrower, whether or not
allowed or allowable as a claim in any such proceeding) on any loan made
under the PCS Facility, (ii) all other amounts payable by the Borrower
under the PCS Facility Documents and (iii) any renewals or extensions of
any of the foregoing; provided, however, that the principal amount of
indebtedness included in the PCS Facility Obligations shall not exceed the
maximum amount from time to time permitted to be outstanding by the
Collateral Trust and Intercreditor Agreement.
"PCS Facility Parties" means the parties to the PCS Facility
Documents other than the Obligors, the Senior Bank Parties and the
Representatives, but including the administrative agent under the PCS
Facility and the beneficiaries of each indemnification obligation by Rite
Aid or any other Obligor under any PCS Facility Documents.
"PCS Incremental Investment" means, at any date, the amount, if
any, by which the inter-company payable owing by Rite Aid Hdqtrs. Corp. to
PCS at such date is less than such amount as at May 27, 2000. The Borrower
shall promptly notify each of the Representatives following the Closing
Date of such latter amount.
"PCS Investment Reduction" means, at any date, the excess, if any,
of (i) the amount, if any, by which the intercompany payable owing by Rite
Aid Hdqtrs. Corp. to PCS at such date is greater than such amount as at May
27, 2000, over (ii) the cumulative PCS EBITDA, as defined in the Senior
Credit Facility, for the period from May 27, 2000, to such date.
"PCS Land" means the real property described as X.X. 00xx Xxxxxx
and Mountainview Road, Scottsdale, Arizona, together with any improvements
thereon.
"PCS Linked Accounts" means any accounts receivable owed to PCS by
third party insurers in respect of claims generated by other Subsidiaries
of Rite Aid and giving rise to related accounts payable owed by PCS to such
other Subsidiaries of Rite Aid.
"PCS Pledge Agreement" means the PCS Pledge Agreement dated as of
October 25, 1999 and amended and restated as of June 12, 2000, between the
Borrower and Xxxxxx Guaranty Trust Company of New York, as agent
thereunder.
"Permitted Disposition" means any of the following:
(i) dispositions of inventory at retail, cash, cash
equivalents and other cash managing investments and obsolete,
unused, uneconomic or unnecessary equipment, in each case in the
ordinary course of business;
(ii) a disposition to a Subsidiary Guarantor, provided, that
(A) if the property subject to such disposition constitutes
Collateral immediately before giving effect to such disposition,
such property continues to constitute Collateral subject to the
Senior Lien and the Second Priority Lien, and (B) no dispositions
of property will be made to or by PCS or its Subsidiaries except in
the ordinary course of business consistent with past practice;
(iii) a sale or discount, in each case without recourse and
in the ordinary course of business, of overdue Accounts (as defined
in the Senior Credit Facility) arising in the ordinary course of
business, but only to the extent such Accounts are no longer
Eligible Accounts Receivable (as defined in the Senior Credit
Facility) and such sale or discount is in connection with the
compromise or collection thereof consistent with customary industry
practice (and not as part of any bulk sale);
(iv) Basket Asset Sales; and
(v) any disposition of Exchange Notes by SPV to SSB or JPM
(or their respective successors, assigns and affiliates), pursuant
to the Forward Commitment Agreement as in effect on the Closing
Date.
"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 an agency or instrumentality
thereof.
"RCF Facility" means the RCF Facility dated as of June 12, 2000,
among Rite Aid, the banks party thereto and Xxxxxx Guaranty Trust Company
of New York, as administrative agent.
"RCF Facility Documents" means the "Loan Documents" as defined in
the RCF Facility.
"RCF Facility Obligations" means (i) all principal of and interest
(including, without limitation, any interest which accrues after the
commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of the Borrower, whether or not
allowed or allowable as a claim in any such proceeding) on any loan made
under the RCF Facility, (ii) all other amounts payable by the Borrower to
the RCF Facility Parties under the RCF Facility Documents and (iii) any
renewals or extensions of any of the foregoing; provided, however, that the
principal amount of indebtedness included in the RCF Facility Obligations
shall not exceed the maximum amount from time to time permitted to be
outstanding by the Collateral Trust and Intercreditor Agreement.
"RCF Facility Parties" means the parties to the RCF Facility
Documents other than the Obligors.
"Reduction" means, when applied to any Debt Facility, (i) the
permanent repayment of outstanding loans (or obligations in respect of
Attributable Debt) under such Debt Facility, (ii) the permanent reduction
of outstanding lending commitments under such Debt Facility or (iii) the
permanent cash collateralization of outstanding letters of credit under
such facility (together with the termination of any lending commitments
utilized by such letters of credit).
"Reduction Event" is (i) a PCS Disposition, (ii) a Capital Markets
Transaction, (iii) a Designated Asset Disposition, (iv) a Senior Collateral
Disposition, (v) other Asset Sales or (vi) receipt of other
Casualty/Condemnation Proceeds.
"Related Exchange Debt" means, with respect to any of the Existing
Facilities (other than the Exchange Debt Facility), Debt under the Exchange
Debt Facility issued in exchange for Debt under such Existing Facility.
"Related Exchange Debt Obligation" shall mean Exchange Debt
Obligations in respect of Related Exchange Debt.
"Representatives" means each of the Senior Collateral Agent and the
Second Priority Representatives.
"Required Prepayment Amount" has the meaning assigned to such term
in the Senior Credit Facility, as in effect on the Closing Date.
"Rite Aid" means Rite Aid Corporation, a Delaware corporation, and
its successors.
"Rite Aid Hdqtrs. Corp." means Rite Aid Hdqtrs. Corp., a Delaware
corporation and a Wholly-Owned Consolidated Subsidiary of the Borrower.
"S&P" means Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc., or any successor to its business of rating
debt securities.
"Sale and Leaseback Transaction" means the sale or transfer by the
Borrower or any Subsidiary of any office building (including its
headquarters), distribution center, manufacturing plant, warehouse, Store
or equipment now or hereafter owned by the Borrower or any Subsidiary with
the intention that the Borrower or any Subsidiary take back a lease
thereof.
"Second Priority Collateral" means all the "Second Priority
Collateral" as defined in any Second Priority Collateral Documents and
shall also include the Mortgaged Properties and the proceeds thereof, but
shall not in any event include the PCS/Drugstore Pledged Collateral or the
Exchange Debt First Priority Collateral.
"Second Priority Collateral Documents" means the Second Priority
Mortgages, the Second Priority Subsidiary Security Agreement, the Second
Priority Subsidiary Guarantee Agreement, the Second Priority Indemnity,
Subrogation and Contribution Agreement, the Collateral Trust and
Intercreditor Agreement and each of the mortgages, security agreements and
other instruments and documents executed and delivered by any Subsidiary
Guarantor pursuant to any of the foregoing for purposes of providing
collateral security or credit support for any Second Priority Debt
Obligation or obligation under the Second Priority Subsidiary Guarantee
Agreement but specifically excluding the Xxxxxxxxx.xxx Pledge Agreement,
the Exchange Debt First Priority Collateral Documents and the PCS Pledge
Agreement.
"Second Priority Collateral Trustee" means Wilmington Trust
Company, in its capacity as collateral trustee under the Collateral Trust
and Intercreditor Agreement and the Second Priority Collateral Documents,
and its successors.
"Second Priority Debt Documents" means the Existing Facility
Documents, the Exchange Note Documents, the Synthetic Lease Documents and
the Second Priority Collateral Documents.
"Second Priority Debt Obligations" means the collective reference
to the Exchange Debt Obligations, the Exchange Note Obligations, the
Synthetic Lease Obligations, the PCS Facility Obligations, the RCF Facility
Obligations and the Xxxxx Facility Obligations.
"Second Priority Debt Parties" means the Existing Facility Parties,
the Exchange Note Parties, the Synthetic Lease Parties and the Second
Priority Collateral Trustee.
"Second Priority Facilities" means the Exchange Debt Facility, the
Exchange Note Indenture, the Synthetic Lease Facilities, the PCS Facility,
the RCF Facility and the Xxxxx Facility.
"Second Priority Indemnity, Subrogation and Contribution Agreement"
means the Second Priority Indemnity, Subrogation and Contribution
Agreement, dated as of June 12, 2000, among Rite Aid, the Subsidiary
Guarantors and the Second Priority Collateral Trustee.
"Second Priority Instructing Group" means Second Priority
Representatives with respect to Second Priority Facilities under which at
least a majority of the then aggregate amount of Second Priority Debt
Obligations are outstanding.
"Second Priority Lien" means the Liens on the Second Priority
Collateral in favor of the Second Priority Debt Parties under the Second
Priority Collateral Documents.
"Second Priority Mortgages" means the mortgages, deeds of trust,
leasehold mortgages, assignments of leases and rents, modifications and
other security documents which create a Lien in favor of the Second
Priority Collateral Trustee for the benefit of the Second Priority Debt
Parties, delivered pursuant to the Second Priority Debt Documents, each
substantially in the form of Exhibit [ ] to the RCF Facility, with such
changes as are approved by the Senior Collateral Agent and the Second
Priority Representatives.
"Second Priority Representative" means, in respect of each Second
Priority Facility, the trustee under the Exchange Note Indenture and the
administrative agent, security agent or agent under each other Second
Priority Facility and each of their successors in such capacities.
"Second Priority Subsidiary Guarantee Agreement" means the Second
Priority Subsidiary Guarantee Agreement, dated as of June 12, 2000, made by
the Subsidiary Guarantors (including any additional Subsidiary Guarantor
becoming party thereto after the Closing Date) in favor of the Second
Priority Collateral Trustee for the benefit of the Second Priority Debt
Parties.
"Second Priority Subsidiary Security Agreement" means the Second
Priority Subsidiary Security Agreement, dated as of June 12, 2000, made by
the Subsidiary Guarantors (including any additional Subsidiary Guarantor
becoming party thereto after the Closing Date) in favor of the Second
Priority Collateral Trustee for the benefit of the Second Priority Debt
Parties.
"Secured Obligations" means the Senior Obligations and the Second
Priority Debt Obligations.
"Senior Bank" means a "Bank" as defined in the Senior Credit
Facility.
"Senior Bank Obligations" means (i) the principal of each loan made
under the Senior Credit Facility, (ii) all reimbursement and cash
collateralization obligations in respect of letters of credit issued under
the Senior Credit Facility, (iii) all monetary obligations of the Borrower
or any Subsidiary under each Senior Interest Rate Agreement entered into
with any counterparty that was a Senior Bank (or an Affiliate thereof) at
the time such Senior Interest Rate Agreement was entered into, (iv) all
interest on the loans, letter of credit reimbursement, fees and other
obligations under the Senior Credit Facility or such Senior Interest Rate
Agreements (including, without limitation any interest which accrues after
the commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of the Borrower or any Subsidiary
Guarantor, whether or not allowed or allowable as a claim in such
proceeding), (v) all other amounts payable by the Borrower under the Senior
Loan Documents and (vi) all increases, renewals, extensions and
refinancings of the foregoing; provided, however, that the principal amount
of the indebtedness under the Senior Credit Facility included in the Senior
Bank Obligations shall not exceed the maximum amount from time to time
permitted to be outstanding by the Collateral Trust and Intercreditor
Agreement.
"Senior Bank Parties" means each party to the Senior Credit
Facility other than any Obligor, each counterparty to a Senior Interest
Rate Agreement, the beneficiaries of each indemnification obligation
undertaken by Rite Aid or any other Obligor under any Senior Loan Document,
and the successors and permitted assigns of each of the foregoing.
"Senior Collateral" means all the "Senior Collateral" as defined in
any Senior Collateral Document and shall also include the Mortgaged
Properties and the proceeds thereof, but shall not in any event include the
PCS/Drugstore Pledged Collateral and the Exchange Debt First Priority
Collateral.
"Senior Collateral Agent" means Citicorp USA, Inc., in its capacity
as Senior Collateral Agent under the Senior Collateral Documents, and its
successors.
"Senior Collateral Disposition" means (i) any sale, transfer or
other disposition of Senior Collateral (including any property or assets
that would constitute Senior Collateral but for the release of the Senior
Lien with respect thereto in connection with such sale, transfer or other
disposition), other than a PCS Disposition, or a Permitted Disposition or
(ii) a Casualty/Condemnation with respect to Senior Collateral (other than
PCS Excluded Assets).
"Senior Collateral Documents" means the Senior Mortgages, the
Senior Subsidiary Security Agreement, the Senior Subsidiary Guarantee
Agreement, the Senior Indemnity, Subrogation and Contribution Agreement,
the Collateral Trust and Intercreditor Agreement and each of the mortgages,
security agreements and other instruments and documents executed and
delivered by any Subsidiary Guarantor pursuant to any of the foregoing or
pursuant to the Senior Credit Facility or for purposes of providing
collateral security or credit support for any Senior Obligation or
obligation under the Senior Subsidiary Guarantee Agreement.
"Senior Credit Facility" means the Senior Credit Agreement, dated
as of June 12, 2000, among Rite Aid, as Borrower, the Senior Banks, the
Swingline Banks, the Issuing Banks, the Senior Administrative Agent, the
Senior Collateral Agent and the Syndication Agents.
"Senior Indemnity, Subrogation and Contribution Agreement" means
the Senior Indemnity, Subrogation and Contribution Agreement, dated as of
June 12, 2000 among Rite Aid, the Subsidiary Guarantors (including
Subsidiary Guarantors becoming party thereto after the Closing Date) and
the Senior Collateral Agent.
"Senior Interest Rate Agreement" means any Interest Rate Agreement
entered into with Rite Aid or any Subsidiary, if the applicable
counterparty was a Senior Bank or an Affiliate thereof at the time the
Interest Rate Agreement was entered into.
"Senior Lien" means the Liens on the Senior Collateral in favor of
the Senior Secured Parties under the Senior Collateral Documents.
"Senior Loan Documents" means the Senior Credit Facility, the Notes
referred to in the Senior Credit Facility, each Senior Interest Rate
Agreement, and the Senior Collateral Documents.
"Senior Mortgages" means the mortgages, deeds of trust, leasehold
mortgages, assignments of leases and rents, modifications and other
security documents delivered pursuant to the Senior Credit Facility, each
substantially in the form of Exhibit J to the Senior Credit Facility, with
such changes as are approved by the Senior Collateral Agent.
"Senior Obligation Payment Date" means the date on which (i) the
Senior Obligations have been paid in full, (ii) all lending commitments
under the Senior Credit Facility have been terminated and (iii) there are
no outstanding Independent Standby Letters of Credit or letters of credit
issued under the Senior Credit Facility other than such as have been fully
cash collateralized under documents and arrangements satisfactory to the
issuer of such letters of credit.
"Senior Obligations" means (a) the Senior Bank Obligations and (b)
the Independent Standby L/C Obligations.
"Senior Secured Parties" means (a) the Senior Bank Parties and (b)
the Independent Standby L/C Parties.
"Senior Subsidiary Guarantee Agreement" means the Senior Subsidiary
Guarantee Agreement, made by the Subsidiary Guarantors (including
Subsidiary Guarantors that become parties thereto after the Closing Date)
in favor of the Senior Collateral Agent for the benefit of the Senior
Secured Parties.
"Senior Subsidiary Security Agreement" means the Senior Subsidiary
Security Agreement, made by the Subsidiary Guarantors (including Subsidiary
Guarantors that become parties thereto after the Closing Date) in favor of
the Senior Collateral Agent for the benefit of the Senior Secured Parties.
"SPV" means Fiona One Corp., a Delaware corporation and a
wholly-owned Subsidiary of Rite Aid which is organized for the sole purpose
of acquiring Exchange Notes on the Closing Date from Rite Aid and selling
such Exchange Notes to SSB and JPM in accordance with the Forward
Commitment Agreement.
"SSB" means Xxxxxxx Xxxxx Xxxxxx Inc.
"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
Borrower.
"Subsidiary Guarantor" means each Subsidiary that is party to the
Senior Subsidiary Guarantee Agreement, the Second Priority Subsidiary
Guarantee Agreement or any other Senior Collateral Document or Second
Priority Collateral Document.
"Synthetic Lease Documents" means the documents governing the
Synthetic Leases.
"Synthetic Lease Facilities" means certain synthetic leases entered
into by the Subsidiary Guarantors and guaranteed by Rite Aid having an
aggregate discounted present value of approximately $214,000,000, as
amended and restated as of the Closing Date.
"Synthetic Lease Obligations" means all rent and supplemental rent,
all fees and all other expenses or amounts payable by any Obligors to any
Synthetic Lease Parties under any Synthetic Lease Document; provided,
however, that the aggregate amount of the Synthetic Lease Obligations shall
not exceed the maximum amount from time to time permitted to be outstanding
by the Collateral Trust and Intercreditor Agreement.
"Synthetic Lease Parties" means all parties to the Synthetic Lease
Documents other than the Obligors.
"Temporary Cash Investment" means any investment by any Person in
(i) direct obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency thereof, (ii)
commercial paper rated at least A-1 by S&P and P-1 by Moody's, (iii) 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 or licensed under the laws of the United States or any state
thereof and has capital, surplus and undivided profits aggregating at least
$500,000,000, (iv) repurchase agreements with respect to securities
described in clause (i) above entered into with an office of a bank or
trust company meeting the criteria specified in clause (iii) above,
provided in each case that such investment matures within one year from the
date of acquisition thereof by such Person or (v) money market mutual funds
at least 90% the assets of which are held in investments referred to in
clauses (i) through (iv) above (except that the maturities of certain
investments held by any such money market funds may exceed one year so long
as the dollar-weighted average life of the investments of such money market
mutual fund is less than one year).
"Uniform Commercial Code" or "UCC" means, unless otherwise
specified, the Uniform Commercial Code as from time to time in effect in
the State of New York.
Schedule A
to the Senior Subsidiary
Security Agreement
SUBSIDIARY GUARANTORS
Subsidiary Guarantors
Rite Aid Hdqtrs. Corp.
Rite Aid of Alabama, Inc.
Rite Aid of Connecticut, Inc.
Rite Aid of Delaware, Inc.
Rite Aid of Florida, Inc.
Rite Aid of Georgia, Inc.
Rite Aid of Illinois, Inc.
Rite Aid of Indiana, Inc.
Rite Aid of Kentucky, Inc.
Rite Aid of Maine, Inc.
Rite Aid of Maryland, Inc.
Rite Aid of Massachusetts, Inc.
Rite Aid of Michigan, Inc.
Rite Aid of New Hampshire, Inc.
Rite Aid of New Jersey, Inc.
Rite Aid of New York, Inc.
Rite Aid of North Carolina, Inc.
Rite Aid of Ohio, Inc.
Rite Aid of Pennsylvania, Inc.
Rite Aid of South Carolina, Inc.
Rite Aid of Tennessee, Inc.
Rite Aid of Vermont, Inc.
Rite Aid of Virginia, Inc.
Rite Aid of Washington, D.C., Inc.
Rite Aid of West Virginia, Inc.
Drug Fair of PA. Inc.
Drug Fair, Inc.
Eagle Managed Care Corp.
GDF, Inc.
Harco, Inc.
The Lane Drug Company
Keystone Centers, Inc.
Ocean Acquisition Corporation
PCS Holding Corporation
Perry Drug Stores, Inc.
Xxxx, Inc.
Rite Aid Funding LLC
Rite Investments Corp.
Rite Aid Drug Palace, Inc.
Rite Aid Rome Distribution Center, Inc.
Rite Aid Transport, Inc.
RX Choice, Inc.
Script South
Thrifty Payless, Inc.
W.R.A.C., Inc.
0000 Xxxxxx Xxxx Xxxx - Xxxxxxxxxx Corp.
0000 Xxxxxxxxxxxx Xxxxxx Xxxx -
Xxxxxxxxxxxx Xxxx, Inc.
5277 Associates, Inc.
000 Xxx Xxxxxx Corporation
5600 Superior Properties, Inc.
000-000 Xxxxx Xx. Xxxx.
Xxxxxxxxx and Wallings -Broadview
Heights Ohio, Inc.
Dominion Action One Corporation
Dominion Action Two Corporation
Dominion Action Three Corporation
Dominion Action Four Corporation
Dominion Drug Stores Corp.
England Street-Asheland Corporation
Xxxxx Xxxxxx Xxxxxx Corporation
Lakehurst and Broadway Corporation
Xxxxxx Drive and Navy Boulevard Property
Corporation
Portfolio Medical Services, Inc.
Rack Rite Distributors, Inc.
Ram-Utica, INC.
Rite Aid Venturer #1, Inc.
Rite Fund, Inc.
The Xxxx Company
Virginia Corporation
K&B, Incorporated
K&B Alabama Corporation
K&B Florida Corporation
K&B Louisiana Corporation
K&B Mississippi Corporation
K&B Services, Incorporated
K&B Tennessee Corporation
K&B Texas Corporation
K&B Trainees, Inc.
Xxxx & Xxxxxxxx, Inc.
Super Beverage of Texas #2, Inc.
Super Beverage of Texas #3, Inc.
Super Beverage of Texas #4, Inc.
Super Beverage of Texas #5, Inc.
Super Beverage of Texas #6, Inc.
Super Distributors, Inc.
Super Ice Cream Suppliers, Inc.
Super Laboratories, Inc.
Super Pharmacy Network, Inc.
Super Tobacco Distributors, Inc.
PCS Health Systems, Inc.
PCS Services, Inc.
PCS Mail Services, Inc.
PCS Mail Service of Fort Worth, Inc.
PCS Mail Service of Birmingham, Inc.
PCS Mail Services of Scottsdale, Inc.
Clinical Pharmaceuticals, Inc.
Apex Drug Stores, Inc.
PDS-1 Michigan, Inc.
RDS Detroit, Inc.
Perry Distributors, Inc.
PL Xpress, Inc.
Thrifty Corporation
P.L.D. Enterprises, Inc.
Rite Aid Lease Management Company
Rite Aid Realty Corp.
Thrifty Wilshire, Inc.
Name Rite LLC
Sophie One Corp.
000 Xxxxxxxx Xxxxxx Xxxxxxx, LLC.
0000 Xxxx Xxxxx Xxxxxx Xxxxx, Xxxxx,
LLC
0000 Xxxxxxx Xxxx - Xxxxxxxx Inc.
1740 Associates, LLC
000 Xxxxx Xxxxxxxx- Xxxxxx, Xxxx, LLC
000 Xxxxxxx Xxxxxx- Xxxxxxx, LLC
Xxx & Government Streets- Mobile,
Alabama, LLC
Baltimore/Annapolis Boulevard & Governor
Richie Hwy-Glen Burnie, MD, LLC
Xxxxxxx Xxxxxx xxx Xxxx Xxxxxx- Xxxxx, XX,
LLC
Eighth and Water Streets- Ulrichsville,
Ohio, LLC
Euclid and Wilders Roads- Bay City, LLC
Gettysburg and Hoover-Dayton, Ohio, LLC
Gratiot & Center- Saginaw Township,
Michigan, LLC
Xxxxxxxxxx Xxxxxx & Xxxxx 00xx Xxxxxx-
Monroe, Louisiana, LLC
Main & XxXxxxxxx- Xxxxx, LLC
Xxxxxxxx & Chillicothe Roads- Chesterland,
LLC
Xxxxxx & Xxxxxxx LLC
Northline & Xxx- Xxxxxx- Southgate, LLC
Paw Paw Lake Road & Paw Paw Avenue-
Coloma, Michigan, LLC
Xxxxxxxx Xxxx & Xxxxxxxxxx Xxxxxxxxx-
Xxxxxxxx Xxxxxxx, Xxxx, LLC
Xxxxx 0 xxx Xxxx Xxxx- Fredricksburg,
LLC
Route 202 at Route 124 Jaffrey- New
Hampshire, LLC
Seven Mile and Evergreen- Detroit, LLC
Silver Springs Road- Baltimore, Maryland/
One, LLC
Silver Springs Road- Baltimore, Maryland/
Two, LLC
Xxxxx Xxxxxx xxx Xxxx Xxxx- Xxxxxx, Xxxx,
LLC
State & Fortification Streets- Jackson,
Mississippi, LLC
Tyler and Xxxxxxx Roads, Birmingham-
Alabama, LLC
Schedule 1
to the Senior Subsidiary
Security Agreement
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
Patent and Trademark Filings
Copyright Filings
Schedule 2
to the Senior Subsidiary
Security Agreement
INVENTORY LOCATIONS
Schedule 3
to the Senior Subsidiary
Security Agreement
RECORDS OF ACCOUNTS
Description
Schedule 4
to the Senior Subsidiary
Security Agreement
COPYRIGHTS REGISTRATIONS AND COPYRIGHT LICENSES
PATENTS AND PATENT LICENSES
TRADEMARK REGISTRATIONS AND TRADEMARK LICENSES
PENDING ACTIONS
Schedule 5
to the Senior Subsidiary
Security Agreement
CASH MANAGEMENT SYSTEM
SECTION 1. Accounts. (a) Each Grantor shall cause:
(i) each Blocked Account Bank to execute and deliver a
Blocked Account Agreement in respect of each Blocked Account by the
Closing Date;
(ii) each Lockbox Account Bank to execute and deliver a
Lockbox Account Agreement in respect of each Lockbox Account by the
Closing Date;
(iii) each Government Lockbox Account Bank to execute and
deliver an Government Lockbox Account Agreement in respect of each
Government Lockbox Account by the Closing Date; and
(iv) each Concentration Account Bank to execute and deliver a
Concentration Account Agreement in respect of the Concentration
Account by the Closing Date.
(b) (i) On each Business Day, each Grantor will transfer,
directly or indirectly substantially all of the funds credited to
each of its depositary accounts in same day funds, to a Blocked
Account (including during a Cash Sweep Period) in accordance with
its customary business practice.
(ii)Funds from PCS and its Subsidiaries shall, at all times,
be deposited in a segregated Blocked Account(s).
(c) Each Grantor shall cause all payments in the Government Lockbox
Account to be deposited into the Lockbox Account as promptly as possible
and in any event no later than the Business Day on which such payments
become available in the Government Lockbox Account (including during a Cash
Sweep Period).
(d) Each Cash Management Account is, and shall remain, under the
sole dominion and control of the Senior Collateral Agent. Each Grantor
acknowledges and agrees that:
(i) during a Cash Sweep Period such Grantor has no right of
withdrawal from any Cash Management Account except that:
(A) the relevant Grantors shall be permitted to
instruct any Blocked Account Bank to transfer all amounts
deposited in or credited to any Blocked Account to the
Concentration Account in accordance with the applicable
Blocked Account Agreement, and
(B) the relevant Grantor shall be permitted to
instruct the Concentration Account Bank to transfer all
amounts deposited in or credited to the Concentration
Account in accordance with the Concentration Account
Agreement;
(ii) the funds on deposit in the Cash Management Accounts
shall continue to be collateral security for all of the Senior
Obligations.
(e) Prior to the delivery of a Cash Sweep Notice, the Grantor is
free to withdraw funds on deposit in or credited to the Blocked Accounts
and the Concentration Account in such amounts and with such frequency as
the Grantor may from time to time determine, without notice to or consent
from the Senior Collateral Agent.
SECTION 2. Cash Sweep. (a) The Senior Collateral Agent, shall
immediately be entitled to deliver Cash Sweep Notices upon the conditions
specified in Section 9.11(a) in the Senior Credit Facility.
(b) Upon delivery of:
(i) a Blocked Account Cash Sweep Notice from the Senior
Collateral Agent, the balance of each Blocked Account shall be
forwarded to the Concentration Account, each Business Day or the
next Business Day (as permitted by the applicable Blocked Account
Agreement), in same day funds, for so long as such Blocked Account
Cash Sweep Notice shall be in effect; provided, however, upon the
occurrence of a Triggering Event (as defined in the Collateral
Trust and Intercreditor Agreement), at the Senior Collateral
Agent's option, the balance of each Blocked Account which holds
funds from PCS and its Subsidiaries shall be forwarded to a
segregated Citibank Concentration Account each Business Day or the
next Business Day (as permitted by the applicable Blocked Account
Agreement) in same day funds, for so long as such Blocked Account
Cash Sweep Notice shall be in effect; and
(ii) a Concentration Account Cash Sweep Notice from the
Senior Collateral Agent, the balance of the Concentration Account
shall be forwarded to a Citibank Concentration Account, each
Business Day (or the next Business Day (as permitted by the
Concentration Account Agreement)), in same day funds, for so long
as such Concentration Account Cash Sweep Notice shall be in effect.
(c) On each Business Day during a Cash Sweep Period, the Senior
Collateral Agent shall use funds on deposit in any Citibank Concentration
Account as follows:
(i) after the occurrence of a Triggering Event, in
accordance with the provisions of Section 4.01(b) or (c) of the
Collateral Trust and Intercreditor Agreement, as applicable; and
(ii) at any other time, first, to repay the Revolving Credit
Borrowings (without any reduction of the Commitments) and second,
to be deposited into the Cash Sweep Cash Collateral Account for the
benefit of the Senior Secured Parties, as collateral for the
payment and performance of the Senior Obligations. The Senior
Collateral Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal, over the Cash Sweep
Cash Collateral Account. Deposits in the Cash Sweep Cash Collateral
Account shall be invested in Temporary Cash Investments, to be
selected by the Senior Collateral Agent in its sole discretion, and
interest earned on such deposits shall be deposited in such account
as additional collateral for the payment and performance of the
Senior Obligations. Interest or profits, if any, on such
investments shall accumulate in such account. Upon termination of
any Cash Sweep Period, funds in the Cash Sweep Cash Collateral
Account shall be released to the Concentration Account within three
Business Days after the end of such Cash Sweep Period.
(d) The Senior Collateral Agent shall be required to automatically
rescind any Cash Sweep Notice upon the conditions specified in Section
9.11(b) of the Senior Credit Facility.
(e) The Senior Collateral Agent reserves the right to send as many
Cash Sweep Notices to the extent that it is entitled to do so under
paragraph (a) of this Section 2.
SECTION 3. Collections. (a) Each Grantor agrees to notify and
direct promptly
(i) subject to paragraph (ii) below, each Account Debtor and
every other Person obligated to make payments to any Blocked
Account or Deposit Account, as applicable, to make all such
payments to such Blocked Account or Deposit Account, as applicable.
Each Grantor shall use all commercially reasonable efforts to cause
each Account Debtor and every other person identified in the
preceding sentence to make all payments owing to any Grantor to a
Blocked Account or Deposit Account, as applicable; and
(ii) each Account Debtor which is a Governmental Entity (and
only such Account Debtors) to make all payments owing to any
Grantor to the Government Lockbox Account.
(b) In the event that any Grantor directly receives any remittances
or payments on Accounts Receivable or any other obligation, notwithstanding
the arrangements for payment directly into the Blocked Accounts or the
Deposit Accounts, such remittances and payments shall be held in trust for
the benefit of the Senior Collateral Agent and the other Senior Secured
Parties and shall be segregated from other funds of such Grantor, subject
to the Lien granted by the Senior Subsidiary Security Agreement, and such
Grantor shall cause such remittances and payments to be deposited into the
applicable Blocked Account or Deposit Account as soon as practicable after
such Grantor's receipt thereof.
SECTION 4. Accounts. (a) The following are the Blocked Accounts:
BLOCKED ACCOUNT BANK ACCOUNT NUMBERS
Bank of America 3750909869
Bank of America 1233625317
Bank of America 1233829710
PNC Bank 8612489237
PNC Bank 8550419961
US Bank 153607068225
Bank One 1134843
Fleet Bank 9415842956
Union Bank of CA 1870024297
First Union National Bank 2000611234904
Xxxxxx Bank 3931276
(b) The following are the Deposit Accounts:
ACCOUNT HOLDER ACCOUNT DETAILS
Mellon Bank 0693636
Mellon Bank 1037294
(c) The following is the Concentration Account:
ACCOUNT HOLDER ACCOUNT DETAILS
The Chase Manhattan Bank 9102750222
Schedule 6
to the Senior Subsidiary
Security Agreement
[FORM OF]
BLOCKED ACCOUNT AGREEMENT
[Date]
[Blocked Account Bank]
[address]
Ladies and Gentlemen:
Reference is made to (a) account no. [ ] maintained with you (the
"Blocked Account Bank") by [ ] (the "Grantor") into which funds are
deposited from time to time (the "Blocked Account") and (b) the Senior
Subsidiary Security Agreement dated as of June 12, 2000 (as amended,
supplemented or otherwise modified from time to time, the Senior Subsidiary
Security Agreement"), among the Subsidiary Guarantors (such term and each
other capitalized term used but not defined herein having the meaning
assigned to such term in the Senior Subsidiary Security Agreement,
including the Definitions Annex and Senior Credit Facility referred to
therein) and the Senior Collateral Agent.
Pursuant to the Senior Subsidiary Security Agreement, the Grantor
has granted to the Senior Collateral Agent, for the benefit of the Senior
Secured Parties, a perfected security interest in certain property of the
Grantor, including, the Blocked Account.
The Grantor hereby transfers to the Senior Collateral Agent
exclusive ownership and control of, and all of its right, title and
interest in and to, the Blocked Account and all funds and other property on
deposit therein. By executing this Blocked Account Agreement, the Blocked
Account Bank acknowledges that the Senior Collateral Agent now has
exclusive ownership and control of the Blocked Account, that all funds in
the Blocked Account shall be transferred to the Senior Collateral Agent as
provided herein, that the Blocked Account is being maintained by the
Blocked Account Bank for the benefit of the Senior Collateral Agent and
that all amounts and other property therein are held by the Blocked Account
Bank as custodian for the Senior Collateral Agent.
Except as provided in paragraphs (e), (f) and (l) below, the
Blocked Account shall not be subject to deduction, setoff, banker's lien,
counterclaim, defense, recoupment or any other right in favor of any person
or entity other than the Senior Collateral Agent. By executing this Blocked
Account Agreement the Blocked Account Bank also acknowledges that, as of
the date hereof, the Blocked Account Bank has received no notice of any
other pledge or assignment of the Blocked Account and the Blocked Account
Bank agrees with the Senior Collateral Agent as follows:
(a) Notwithstanding anything to the contrary or any other
agreement relating to the Blocked Account, the Blocked Account is
and will be maintained for the benefit of the Senior Collateral
Agent, will be entitled "Citicorp USA, Inc. as Senior Collateral
Agent under the Senior Subsidiary Agreement dated as of May [ ],
2000 Account" and will be subject to written instructions only from
an authorized officer of the Senior Collateral Agent (except as
expressly provided otherwise herein).
(b) The Blocked Account Bank agrees to give the Senior
Collateral Agent prompt notice if the Blocked Account shall become
subject to any writ, judgment, warrant of attachment, execution or
similar process.
(c) [A post office box (the "Lockbox") has been rented in
the name of the Grantor at the [post office and the address to be
used for such Lockbox is:
[Insert address]
The Blocked Account Bank's authorized representatives will have
access to the Lockbox under the authority given by the Grantor to
the post office and will make regular pick-ups from the Lockbox
timed to gain maximum benefit of early presentation and
availability of funds. The Blocked Account Bank will endorse
process all checks received in the Lockbox and deposit such checks
(to the extent eligible) in the Blocked Account in accordance with
the procedures set forth below .]
(d) The Blocked Account Bank will follow your its operating
procedures for the handling of any [checks received from the
Lockbox] or other remittance received in the Blocked Account that
contains restrictive endorsements, irregularities (such as a
variance between the written and numerical amounts), undated or
postdated items, missing signatures, incorrect payees and the like.
(e) The Blocked Account Bank will endorse and process all
eligible checks and other remittance items not covered by paragraph
(d) and deposit such checks and remittance items in the Blocked
Account.
(f) The Blocked Account Bank will mail all checks returned
unpaid because of uncollected or insufficient funds under
appropriate advice to the Grantor (with a copy of the notification
of return to the Senior Collateral Agent). The Blocked Account Bank
may charge the Blocked Account for the amounts of any returned
check that has been previously credited to the Blocked Account. To
the extent insufficient funds remain in the Blocked Account to
cover any such returned check, the Grantor shall indemnify the
Blocked Account Bank for the uncollected amount of such returned
check upon your demand.
(g) The Blocked Account Bank will maintain a record of all
checks and other remittance items received in the Blocked Account
on a daily basis and, in addition to providing the Grantor with
photostatic copies thereof, vouchers, enclosures and the like of
such checks and remittance items, furnish to the Senior Collateral
Agent a monthly statement setting forth the amounts deposited in
and withdrawn from the Blocked Account and shall furnish such other
information relating to the Blocked Account at such times as shall
be reasonably requested by the Senior Collateral Agent to: Citicorp
USA, Inc., as Senior Collateral Agent, [ ], Attention:
[ ], with a copy to the Grantor.
(h) Prior to the delivery of a written notice in the form of
Exhibit A hereto (the "Blocked Account Cash Sweep Notice"), the
Grantor is free to withdraw funds from the Blocked Account in such
amounts and with such frequency as the Grantor may from time to
time determine, without notice to or consent from the Senior
Collateral Agent.
(i) From and after delivery to the Blocked Account Bank of a
Blocked Account Cash Sweep Notice and until the Blocked Account
Bank is notified in writing by the Senior Collateral Agent that the
Blocked Account Cash Sweep Notice is no longer in effect (a
"Blocked Account Cash Sweep Period"), the Grantor will have no
control over the use of, or any right to withdraw any amount from,
to draw upon, or to otherwise exercise any power with respect to
the Blocked Account, except that the Grantor shall be permitted to
instruct the Blocked Account Bank only with respect to the transfer
of funds from the Blocked Account to the Concentration Account in
accordance with paragraph (k) below.
(j) During a Blocked Account Cash Sweep Period, the Blocked
Account Bank shall transfer, in same day funds, on each Business
Day, all funds, if any on deposit, or otherwise to the credit of,
the Blocked Account to the account listed below (the "Concentration
Account"), provided that funds on deposit that are subject to
collection may be transmitted promptly upon collection:
ABA Number:
[name and address of Grantor's bank]
Account Name:
Concentration Account
Account Number:
Reference:
Attn:
or to such other account as the Senior Collateral Agent may from
time to time, or at any time, designate in writing.
(k) During a Blocked Account Cash Sweep Period, (i) the
Grantor shall provide written instructions to the Blocked Account
Bank on each Business Day to transfer all funds on deposit in, or
otherwise credited to, the Blocked Account to the Concentration
Account; (ii) to the extent there are any available balances in the
Blocked Account at the end of any Business Day which have not been
transferred pursuant to clause (i) of this paragraph, the Grantor
shall provide, on the next Business Day, written instructions for
the transfer of such available balances from the Blocked Account to
the Concentration Account; and (iii) if the Grantor does not
provide the written instructions pursuant to clause (ii) of this
paragraph, the Blocked Account Bank shall automatically initiate
such transfer described in clause (ii) of this paragraph and all
other transfers from the Blocked Account to the Concentration Bank
without further direction from the Grantor until otherwise notified
by the Senior Collateral Agent.
(l) All customary service charges and fees with respect to
the Blocked Account shall be debited to the Blocked Account. In the
event insufficient funds remain in the Blocked Account to cover
such customary service charges and fees, the Grantor shall pay and
indemnify the Blocked Account Bank for the amounts of such
customary service charges and fees. Neither the Senior Collateral
Agent nor the Senior Secured Parties shall have any liability for
the payment of any such fees in respect to the Blocked Account.
This letter agreement shall be binding upon and shall inure to the
benefit of the Blocked Account Bank, the Grantor, the Senior Collateral
Agent, the Senior Secured Parties referred to in the Senior Subsidiary
Security Agreement and their respective successors, transferees and assigns
of any of the foregoing. This letter agreement may not be modified or
terminated except upon the mutual consent of the Senior Collateral Agent,
the Grantor and the Blocked Account Bank. The Blocked Account Bank may
terminate the letter agreement only upon 45 days' prior written notice to
the Grantor and the Senior Collateral Agent. The Senior Collateral Agent
may terminate this letter agreement at any time. So long as any Senior
Obligations remain outstanding and the Commitments are still outstanding,
upon such termination the Blocked Account Bank shall close the Blocked
Account and transfer all funds in the Blocked Account to the Senior
Collateral Agent at the Concentration Account or as otherwise directed by
the Senior Collateral Agent. After any such termination, the Blocked
Account Bank shall nonetheless remain obligated promptly to transfer to the
Concentration Account or as the Senior Collateral Agent may otherwise
direct all funds and other property received in respect of the Blocked
Account.
This letter agreement may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which when
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this letter agreement by
telecopier shall be effective as delivery of a manually executed
counterpart of this letter agreement.
This letter agreement supersedes all prior agreements, oral or
written, with respect to the subject matter hereof and may not be amended,
modified or supplemented except by a writing signed by the Senior
Collateral Agent, the Grantor and the Blocked Account Bank.
This letter agreement shall be governed by, and construed in
accordance with, the law of the state of New York.
Upon acceptance of this letter agreement it will be the valid and
binding obligation of the Grantor, the Senior Collateral Agent, and the
Blocked Account Bank, in accordance with its terms.
Very truly yours,
[ ].
By:____________________________
Name:
Title:
CITICORP USA, INC, as Senior Collateral Agent
By:____________________________
Name:
Title:
Acknowledged and agreed to as of
the date first above written:
[ ]
By:_____________________________
Name:
Title:
Exhibit A
to the Blocked Account Agreement
BLOCKED ACCOUNT CASH SWEEP NOTICE
[Blocked Account Bank]
[Address]
Re: Account No. [ ] (the "Blocked Account")
Ladies and Gentlemen:
Reference is made to the Blocked Account and that certain Blocked
Account Agreement dated May [ ], 2000 (as amended, supplemented or
otherwise modified from time to time, the "Blocked Account Agreement")
among the Blocked Account Bank, the Grantor and the Senior Collateral
Agent. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in the Blocked Account Agreement.
The Senior Collateral Agent hereby notifies you that, in accordance
with certain provisions of the Senior Subsidiary Security Agreement, from
and after the date of this notice, you are hereby directed to transfer (by
wire transfer or other method of transfer mutually acceptable to you and
the Senior Collateral Agent) to the Senior Collateral Agent, in same day
funds, on each Business Day, the entire balance in the Blocked Account to
the Concentration Account specified in paragraph (j) of the Blocked Account
Agreement (or to such other account as the Senior Collateral Agent may from
time to time, or at any time, designate in writing) until you are notified
in writing by the Senior Collateral Agent that this Blocked Account Cash
Sweep Notice is no longer effective.
Very truly yours,
CITICORP USA, INC, as Senior Collateral Agent
By:__________________________________________
Name:
Title:
Schedule 7
to the Senior Subsidiary
Security Agreement
[FORM OF]
LOCKBOX ACCOUNT AGREEMENT
[Date]
[Mellon Bank, N.A.
Document Control Manager
Three Mellon Bank Center
Room 3119
Xxxxxxxxxx, XX 00000]
Ladies and Gentlemen:
Reference is made to (a) account number [ ] and corresponding lockbox
and date automation system maintained with you (the "Lockbox Account Bank")
by [
] (the "Grantor") into which funds are deposited from time to time (the
"Lockbox Account") and (b) the Senior Subsidiary Security Agreement dated
as of June 12, 2000 (as further amended, supplemented or otherwise modified
from time to time, the "Senior Subsidiary Security Agreement") among the
Subsidiary Guarantors (such term and each other capitalized term used but
not defined herein having the meaning assigned to such term in the Senior
Subsidiary Security Agreement, including the Definitions Annex and Senior
Credit Facility referred to therein) and the Senior Collateral Agent.
The Grantor hereby confirms its irrevocable and unconditional
instruction to you that, until receipt of a written notice from the Senior
Collateral Agent to the contrary, you shall follow exclusively the
instructions of the Senior Collateral Agent with respect to the Lockbox
Account and that the Lockbox Account shall be under the sole dominion and
control of the Senior Collateral Agent. Notwithstanding anything to the
contrary or any other agreement relating to the Lockbox Account, the
Lockbox Account is and will be maintained for the benefit of the Senior
Collateral Agent, will be entitled "Citicorp USA, Inc. as Senior Collateral
Agent under the Senior Subsidiary Agreement dated as of May [ ], 2000
Account" and will be subject to written instructions only from an
authorized officer of the Senior Collateral Agent.
The Grantor also hereby notifies you that the Senior Collateral Agent
shall be irrevocably entitled to exercise any and all rights in respect of,
or in connection with, the Lockbox Account, including, without limitation,
the right to specify when payments are to be made out of, or in connection
with, the Lockbox Account. The Senior Collateral Agent hereby instructs
you, until you receive notice from the Senior Collateral Agent changing
this instruction, to transfer, in same day funds, on each Business Day, all
funds, if any on deposit, or otherwise to the credit of, the Lockbox
Account to the Account listed below, provided that funds on deposit that
are subject to collection may be transmitted properly upon collection.
ABA Number:___________________________
[name and address of Grantor's bank]
Account Name:_________________________
Concentration Account
Account Number:_______________________
Reference:____________________________
Attn:_________________________________
[or to such other account as the Senior Collateral Agent and
the Grantor may designate in writing.]
All expenses for the maintenance and provision of services in
conjunction with the Lockbox Account held in the name of the Grantor are
the responsibility of the Grantor. In the event that the Grantor does not
pay all service fees due to the Lockbox Account Bank within thirty (30)
days after the due date, the Lockbox Account Bank is authorized to charge
the Lockbox Account for such fees. In the event the Lockbox Account Bank is
unable to obtain sufficient funds from such charges to cover such fees the
Grantor shall indemnify the Lockbox Account Bank for all then-due fees on
the Lockbox Account that have not been paid.
The Grantor and the Senior Collateral Agent agree that the Lockbox
Account Bank may debit the Lockbox Account for any items (including, but
not limited to, checks, drafts, Automatic Clearinghouse (ACH) credits or
wire transfers or other electronic transfers or credits) deposited or
credited to the Lockbox Account which may be returned or otherwise not
collected and, subject to the preceding paragraph, for all charges, fees,
commissions and expenses incurred by the Lockbox Account Bank in providing
services or otherwise in connection herewith. The Lockbox Account Bank may
charge the Lockbox Account as permitted herein at such times as are in
accordance with the Lockbox Account Bank's customary practice for the
chargeback of returned items and expenses. In the event the Lockbox Account
Bank is unable to obtain sufficient funds for such charges to cover
returned items, or reversed or returned credits, or any other items not
collected and any other charges, expenses, or commissions incurred by the
Lockbox Account Bank in providing the services (referred to as a "cost" or
"costs") the Grantor shall indemnify the Lockbox Account Bank for all
amounts related to the above described costs incurred by the Lockbox
Account Bank. The Senior Collateral Agent agrees that if the Grantor has
not reimbursed the Lockbox Account Bank for the amounts described in this
paragraph and the Lockbox Account Bank has transferred funds to the Senior
Collateral Agent, then the Senior Collateral Agent agrees to reimburse the
Lockbox Account Bank (for any returned items described in this paragraph
but not for charges, fees or commissions incurred therewith) within ten
business days after demand by the Lockbox Account Bank.
Notwithstanding any other provision of this Agreement, unless the
Lockbox Account Bank is grossly negligent or engages in wilful misconduct
in performance or non-performance in connection with this Agreement and the
Lockbox Account, the Grantor agrees to indemnify and hold the Lockbox
Account Bank harmless from any claims, damages, losses or expenses incurred
by any party in connection herewith; in the event the Lockbox Account Bank
breaches the standard of care set forth herein, the Grantor and the Senior
Collateral Agent each expressly agrees that the Lockbox Account Bank's
liability shall be limited to damages directly caused by such breach and in
no event shall the Lockbox Account Bank be liable for any incidental,
indirect, punitive or consequential damages or attorney's fees whatsoever.
Notwithstanding any other provision of this Agreement, the Lockbox
Account Bank shall not be liable for any failure, inability to perform, or
delay in performance hereunder, if such failure, inability, or delay is due
to an act of God, war, civil commotion, governmental action, fire,
explosion, strikes, other industrial disturbance, equipment malfunction,
action, non-action or delayed action on the part of the Grantor or the
Senior Collateral Agent or of any other entity or any other causes that are
beyond the Lockbox Account Bank's reasonable control.
This Agreement may not be modified or terminated by the Grantor unless,
in the case of a modification, the prior written consent of the Senior
Collateral Agent and the Lockbox Account Bank is obtained and in the case
of termination the prior written consent of the Senior Collateral Agent is
obtained. The Lockbox Account Bank may terminate this Agreement upon
forty-five (45) days' prior written notice to the Grantor and the Senior
Collateral Agent. The Senior Collateral Agent may terminate this Agreement
at any time. The Grantor's obligations under this Agreement to indemnify,
hold harmless and pay amounts owed (and the Grantor's obligation to
reimburse the Lockbox Account Bank for any returned items) shall survive
the termination of this Agreement.
[This Agreement shall be governed by the laws of the state of New
York.]
The terms and conditions of the services, attached as Exhibit A, is
made part of this Agreement with respect to matters not explicitly covered
in this Agreement. To the extent there is a conflict between this Agreement
and the terms and conditions of services, this agreement shall take
precedence.
This Agreement shall become effective immediately upon its execution by
all parties hereto. Any notice permitted or required hereunder shall be in
writing and shall be deemed to have ben duly given if sent by personal
delivery, express or first class mail, or facsimile addressed, in the case
of notice to the Lockbox Account Bank to:
[Mellon Bank, N.A.
Document Control Manager
Three Mellon Bank Center
Room 3119
Xxxxxxxxxx, XX 00000]
Phone: (000) 000-0000
Fax: (000) 000-0000
and in the case of notice to the Grantor, to:
[30 Xxxxxx Xxxx
Xxxx Xxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Rite Aid Funding LLC/ Rite Aid Treasury]
and in the case of notice to the Senior Collateral Agent:
[ ]
Fax: [ ]
Attn: [ ]
or to such other address or addresses as the party to receive notice may
provide in writing to the other party in accordance with this paragraph.
The Lockbox Account Bank shall have no duty or obligation to inquire into
the authenticity or effectiveness of any such notice received pursuant to
this Agreement.
Please agree to the terms of, and acknowledge receipt of, this notice
by signing in the space provided below.
Very truly yours,
[NAME OF SUBSIDIARY
GUARANTOR]
'
By:____________________
Name:
Title:
[RITE AID CORPORATION RITE AID OF TENNESSEE, INC.
RITE AID OF ALABAMA, INC. RITE AID OF VERMONT, INC.
RITE AID OF CONNECTICUT, INC. RITE AID OF VIRGINIA, INC.
RITE AID OF DELAWARE, INC. RITE AID OF WEST VIRGINIA, INC.
RITE AID OF WASHINGTON, DC., INC KEYSTONE CENTERS, INC.
RITE AID OF FLORIDA, INC. RITE AID DRUG PALACE, INC.
RITE AID OF GEORGIA, INC. LANE DRUG COMPANY
RITE AID OF INDIANA, INC. APEX DRUG STORES, INC.
RITE AID OF KENTUCKY, INC. PERRY DRUG STORES, INC.
RITE AID OF MAINE, INC. RDS DETROIT, INC.
RITE AID OF MARYLAND, INC. PDS-1 MICHIGAN, INC.
RITE AID OF MASSACHUSETTS, INC. THRIFTY PAYLESS, INC.
RITE AID OF MICHIGAN, INC. HARCO, INC.
RITE AID OF NEW HAMPSHIRE, INC. K&B ALABAMA CORPORATION
RITE AID OF NEW JERSEY, INC. K&B FLORIDA CORPORATION
RITE AID OF NEW YORK, INC. K&B LOUISIANA CORPORATION
RITE AID OF NORTH CAROLINA, INC. K&B MISSISSIPPI CORPORATION
RITE AID OF OHIO, INC. K&B TEXAS CORPORATION
RITE AID OF PENNSYLVANIA, INC. K&B TENNESSEE CORPORATION
RITE AID OF SOUTH CAROLINA, INC. SUPER PHARMACY NETWORK, INC.
PCS MAIL SERVICE OF FORT WORTH, INC. PCS HEALTH SYSTEMS, INC.]
PCS MAIL SERVICE OF BIRMINGHAM, INC.
By:____________________, on behalf
By:____________________, on behalf of each of the above listed companies
of each of the above listed companies Name:
Agreed and acknowledged:
[MELLON BANK, N.A.]
By:__________________________
Name:
Title:
CITICORP USA, INC., as Senior Collateral Agent
By:__________________________
Name:
Title:
Schedule 8
to the Senior Subsidiary
Security Agreement
GOVERNMENT LOCKBOX ACCOUNT AGREEMENT
[Date]
[Mellon Bank, N.A.
Document Control Manager
Three Mellon Bank Center
Room 3119
Xxxxxxxxxx, XX 00000]
Ladies and Gentlemen:
Reference is made to (a) account no. [ ] and corresponding lockbox and
data automation system maintained with you (the "Government Lockbox Account
Bank") by [ ] (the "Grantor") into which funds are deposited from
time to time (the "Government Lockbox") and (b) the Senior Subsidiary
Security Agreement dated as of May [ ], 2000 (as amended, supplemented or
otherwise modified from time to time, the " Senior Subsidiary Security
Agreement"), among the Subsidiary Guarantors (such term and each other
capitalized term used and not otherwise defined herein having the meaning
assigned to such term in the Senior Subsidiary Security Agreement including
the Definitions Annex and Senior Credit Facility referred to therein) and
the Senior Collateral Agent.
The Grantor hereby provides the following revocable instruction with
respect to the Government Lockbox Account (the "Standing Revocable
Instruction"): the Government Lockbox Account Bank shall transfer from the
Government Lockbox Account daily, via a zero balance service as described
in the terms and conditions of the services, attached as Exhibit A, all
available funds held in the Government Lockbox Account to account no. [ ]
at Mellon Bank, N.A. in the name of the Grantor for Citicorp USA, Inc., as
Senior Collateral Agent (which account is under the sole dominion and
control of the Senior Collateral Agent). This Standing Revocable
Instruction is revocable by the Grantor at any time and for any reason by
providing written instructions to the Government Lockbox Account Bank,
signed by the undersigned (which writing may be by facsimile and upon which
you may conclusively rely), whereupon the Government Lockbox Account Bank
shall follow, without further inquiry, such contrary written instruction
and not the Standing Revocable Instruction.
The Grantor also hereby notifies the Government Lockbox Account that,
as collateral security for the Senior Obligations, the undersigned
Subsidiary Guarantors granted to the Grantor and the Grantor hereby assigns
to the Senior Collateral Agent a continuing security interest in (i) the
Government Lockbox Account, (ii) all contract rights and privileges in
respect to the Government Lockbox Account, (iii) all cash, checks, money
orders and other items of value on deposit in the Government Lockbox
Account and (iv) all proceeds of the foregoing.
All expenses for the maintenance and provision of services in
conjunction with the Government Lockbox Account held in the name of the
Grantor are the responsibility of the Grantor. In the event that the
Grantor does not pay all service fees due to the Government Lockbox Account
Bank within thirty (30) days after the due date, the Government Lockbox
Account Bank is authorized to charge the Government Lockbox Account for
such fees. In the event the Government Lockbox Account Bank is unable to
obtain sufficient funds from such charges to cover such fees the Grantor
shall indemnify the Government Lockbox Account Bank for all then-due fees
on the Government Lockbox Account that have not been paid.
The Grantor and the Senior Collateral Agent agree that the Government
Lockbox Account Bank may debit the Government Lockbox Account for any items
(including, but not limited to, checks, drafts, Automatic Clearinghouse
(ACH) credits or wire transfers or other electronic transfers or credits)
deposited or credited to the Government Lockbox Account which may be
returned or otherwise not collected and, subject to the preceding
paragraph, for all charges, fees, commissions and expenses incurred by the
Government Lockbox Account Bank in providing services or otherwise in
connection herewith. The Government Lockbox Account Bank may charge the
Government Lockbox Account as permitted herein at such times as are in
accordance with the Government Lockbox Account Bank's customary practice
for the chargeback of returned items and expenses. In the event the
Government Lockbox Account Bank is unable to obtain sufficient funds for
such charges to cover returned items, or reversed or returned credits, or
any other items not collected and any other charges, expenses, or
commissions incurred by the Government Lockbox Account Bank in providing
the services (referred to as a "cost" or "costs") the Grantor shall
indemnify the Government Lockbox Account Bank for all amounts related to
the above described costs incurred by the Government Lockbox Account Bank.
The Senior Collateral Agent agrees that if the Grantor has not reimbursed
the Government Lockbox Account Bank for the amounts described in this
paragraph and the Government Lockbox Account Bank has transferred funds to
the Senior Collateral Agent, then the Senior Collateral Agent agrees to
reimburse the Government Lockbox Account Bank (for any returned items
described in this paragraph but not for charges, fees or commissions
incurred therewith) within ten business days after demand by the Government
Lockbox Account Bank.
Notwithstanding any other provision of this Government Lockbox Account
Agreement, unless the Government Lockbox Account Bank is grossly negligent
or engages in wilful misconduct in performance or non-performance in
connection with this Agreement and the Government Lockbox Account, the
Grantor agrees to indemnify and hold the Government Lockbox Account Bank
harmless from any claims, damages, losses or expenses incurred by any party
in connection herewith; in the event the Government Lockbox Account Bank
breaches the standard of care set forth herein, the Grantor and the Senior
Collateral Agent each expressly agrees that the Government Lockbox Account
Bank's liability shall be limited to damages directly caused by such breach
and in no event shall the Government Lockbox Account Bank be liable for any
incidental, indirect, punitive or consequential damages or attorney's fees
whatsoever.
Notwithstanding any other provision of this Government Lockbox Account
Agreement, the Government Lockbox Account Bank shall not be liable for any
failure, inability to perform, or delay in performance hereunder, if such
failure, inability, or delay is due to an act of God, war, civil commotion,
governmental action, fire, explosion, strikes, other industrial
disturbance, equipment malfunction, action, non-action or delayed action
on the part of the Grantor or the Senior Collateral Agent or of any other
entity or any other causes that are beyond the Government Lockbox Account
Bank's reasonable control.
This Government Lockbox Account Agreement may not be modified or
terminated by the Grantor unless, in the case of a modification, the prior
written consent of the Senior Collateral Agent and the Government Lockbox
Account Bank is obtained and in the case of termination the prior written
consent of the Senior Collateral Agent is obtained. The Government Lockbox
Account Bank may terminate this Agreement upon forty-five (45) days' prior
written notice to the Grantor and the Senior Collateral Agent. The Senior
Collateral Agent may terminate this Agreement at any time. The Grantor's
obligations under this Agreement to indemnify, hold harmless and pay
amounts owed (and the Senior Collateral Agent's obligation to reimburse the
Government Lockbox Account Bank for any returned items) shall survive the
termination of this Agreement.
This Agreement shall be governed by the laws of the State of New York.
The terms and conditions of the services, attached as Exhibit A, is
made part of this Agreement with respect to matters not explicitly covered
in this Agreement. To the extent there is a conflict between this Agreement
and the terms and conditions of services, this agreement shall take
precedence.
This Agreement shall become effective immediately upon its execution by
all parties hereto. Any notice permitted or required hereunder shall be in
writing and shall be deemed to have been duly given if sent by personal
delivery, express or first class mail, or facsimile addressed, in the case
of notice to the Government Lockbox Account Bank to:
[Mellon Bank, N.A.
Document Control Manager
Three Mellon Bank Center
Room 3119
Xxxxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000]
and in the case of notice to the Grantor, to:
[30 Xxxxxx Xxxx
Xxxx Xxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Rite Aid Funding LLC/ Rite Aid Treasury]
and in the case of notice to the Senior Collateral Agent:
[ ]
Fax: [ ]
Attn: [ ]
or to such other address or addresses as the party to receive notice may
provide in writing to the other party in accordance with this paragraph.
The Government Lockbox Account Bank shall have no duty or obligation to
inquire into the authenticity or effectiveness of any such notice received
pursuant to this Agreement.
Please agree to the terms of, and acknowledge receipt of,
this notice (including, without limitation, the notice of, and consent to,
the security interest referred to in the foregoing paragraph) by signing in
the space provided below.
Very truly yours,
[NAME OF SUBSIDIARY
GUARANTOR]
By:____________________
Name:
Title:
[RITE AID CORPORATION
RITE AID OF ALABAMA, INC.
RITE AID OF CONNECTICUT, INC.
RITE AID OF DELAWARE, INC.
RITE AID OF WASHINGTON, DC., INC
RITE AID OF FLORIDA, INC.
RITE AID OF GEORGIA, INC.
RITE AID OF INDIANA, INC.
RITE AID OF KENTUCKY, INC.
RITE AID OF MAINE, INC.
RITE AID OF MARYLAND, INC.
RITE AID OF MASSACHUSETTS, INC.
RITE AID OF MICHIGAN, INC.
RITE AID OF NEW HAMPSHIRE, INC.
RITE AID OF NEW JERSEY, INC.
RITE AID OF NEW YORK, INC.
RITE AID OF NORTH CAROLINA, INC.
RITE AID OF OHIO, INC.
RITE AID OF PENNSYLVANIA, INC.
RITE AID OF SOUTH CAROLINA, INC.
PCS MAIL SERVICE OF FORT WORTH, INC.
PCS MAIL SERVICE OF BIRMINGHAM, INC.
By:___________________, on behalf of
each of the above listed companies
Name:
RITE AID OF TENNESSEE, INC.
RITE AID OF VERMONT, INC.
RITE AID OF VIRGINIA, INC.
RITE AID OF WEST VIRGINIA, INC.
KEYSTONE CENTERS, INC.
RITE AID DRUG PALACE, INC.
LANE DRUG COMPANY
APPEX DRUG STORES, INC.
PERRY DRUG STORES, INC.
RDS DETROIT, INC.
PDS-1 MICHIGAN, INC.
THRIFTY PAYLESS, INC.
HARCO, INC.
K&B ALABAMA CORPORATION
K&B FLORIDA CORPORATION
K&B LOUISIANA CORPORATION
K&B MISSISSIPPI CORPORATION
K&B TEXAS CORPORATION
K&B TENNESSEE CORPORATION
SUPER PHARMACY NETWORK, INC.
PCS HEALTH SYSTEMS, INC.]
By:____________________, on behalf of each of the above listed companies
Name: Agreed and acknowledged:
[MELLON BANK, N.A.]
By:__________________________
Name:
Title:
CITICORP USA, INC., as Senior Collateral Agent
By:__________________________
Name:
Title:
Schedule 9
to the Senior Subsidiary
Security Agreement
[FORM OF]
CONCENTRATION ACCOUNT AGREEMENT
[Date]
[Concentration Account Bank]
[address]
Ladies and Gentlemen:
Reference is made to (a) account no. [ ] maintained with you (the
"Concentration Account Bank") by [ ] (the "Grantor") into which funds are
deposited from time to time (the "Concentration Account") and (b) the
Senior Subsidiary Security Agreement dated as of June 12, 2000 (as amended,
supplemented or otherwise modified from time to time, the Senior Subsidiary
Security Agreement"), among the Subsidiary Guarantors (such term and each
other capitalized term used but not defined herein having the meaning
assigned to such term in the Senior Subsidiary Security Agreement,
including the Definitions Annex and Senior Credit Facility referred to
therein) and the Senior Collateral Agent.
Pursuant to the Senior Subsidiary Security Agreement, the Grantor has
granted to the Senior Collateral Agent, for the benefit of the Senior
Secured Parties, a perfected security interest in certain property of the
Grantor, including, the Concentration Account.
The Grantor hereby transfers to the Senior Collateral Agent exclusive
ownership and control of, and all of its right, title and interest in and
to, the Concentration Account and all funds and other property on deposit
therein. By executing this Concentration Account Agreement, the
Concentration Account Bank acknowledges that the Senior Collateral Agent
now has exclusive ownership and control of the Concentration Account, that
all funds in the Concentration Account shall be transferred to the Senior
Collateral Agent as provided herein, that the Concentration Account is
being maintained by the Concentration Account Bank for the benefit of the
Senior Collateral Agent and that all amounts and other property therein are
held by the Concentration Account Bank as custodian for the Senior
Collateral Agent.
Except as provided in paragraphs (e), (f) and (j) below, the
Concentration Account shall not be subject to deduction, setoff, banker's
lien, counterclaim, defense, recoupment or any other right in favor of any
person or entity other than the Senior Collateral Agent. By executing this
Concentration Account Agreement the Concentration Account Bank also
acknowledges that, as of the date hereof, the Concentration Account Bank
has received no notice of any other pledge or assignment of the
Concentration Account and the Concentration Account Bank agrees with the
Senior Collateral Agent as follows:
(a) Notwithstanding anything to the contrary or any other
agreement relating to the Concentration Account, the Concentration
Account is and will be maintained for the benefit of the Senior
Collateral Agent, will be entitled "Citicorp USA, Inc. as Senior
Collateral Agent under the Senior Subsidiary Security Agreement dated
as of May [ ], 2000 Account" and will be subject to written
instructions only from an authorized officer of the Senior Collateral
Agent (except as expressly provided otherwise herein).
(b) The Concentration Account Bank agrees to give the Senior
Collateral Agent prompt notice if the Concentration Account shall
become subject to any writ, judgment, warrant of attachment, execution
or similar process.
(c) [A post office box (the "Lockbox") has been rented in
the name of the Grantor at the [ post office and the address to be used
for such Lockbox is:
[Insert address]
The Concentration Account Bank's authorized representatives will have
access to the Lockbox under the authority given by the Grantor to the
post office and will make regular pick-ups from the Lockbox timed to
gain maximum benefit of early presentation and availability of funds.
The Concentration Account Bank will endorse process all checks received
in the Lockbox and deposit such checks (to the extent eligible) in the
Concentration Account in accordance with the procedures set forth below
.]
(d) The Concentration Account Bank will follow its usual
operating procedures for the handling of any [checks received from the
Lockbox] or other remittance received in the Concentration Account that
contains restrictive endorsements, irregularities (such as a variance
between the written and numerical amounts), undated or postdated items,
missing signatures, incorrect payees and the like.
(e) The Concentration Account Bank will endorse and process
all eligible checks and other remittance items not covered by paragraph
(d) and deposit such checks and remittance items in the Concentration
Account.
(f) The Concentration Account Bank will mail all checks
returned unpaid because of uncollected or insufficient funds under
appropriate advice to the Grantor (with a copy of the notification of
return to the Senior Collateral Agent). The Concentration Account Bank
may charge the Concentration Account for the amounts of any returned
check that has been previously credited to the Concentration Account.
To the extent insufficient funds remain in the Concentration Account to
cover any such returned check, the Grantor shall indemnify the
Concentration Account Bank for the uncollected amount of such returned
check upon your demand.
(g) The Concentration Account Bank will maintain a record of
all checks and other remittance items received in the Concentration
Account on a daily basis and, in addition to providing the Grantor with
photostatic copies thereof, vouchers, enclosures and the like of such
checks and remittance items, furnish to the Senior Collateral Agent a
monthly statement setting forth the amounts deposited in and withdrawn
from the Concentration Account and shall furnish such other information
relating to the Concentration Account at such times as shall be
reasonably requested by the Senior Collateral Agent to: Citicorp USA,
Inc., as Senior Collateral Agent, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: [ ], with a copy to the Grantor.
(h) Prior to the delivery of a written notice from the
Senior Collateral Agent in the form of Exhibit A hereto (the
"Concentration Account Cash Sweep Notice"), the Grantor is free to
withdraw funds from the Concentration Account in such amounts and with
such frequency as the Grantor may from time to time determine, without
notice to or consent from the Senior Collateral Agent.
(i) From and after delivery to the Concentration Account
Bank of a Concentration Account Cash Sweep Notice and until the
Concentration Account Bank is notified in writing by the Senior
Collateral Agent that the Concentration Account Cash Sweep Notice is no
longer in effect (a "Concentration Account Cash Sweep Period"), the
Grantor will have no control over the use of, or any right to withdraw
any amount from, to draw upon, or to otherwise exercise any power with
respect to the Concentration Account.
(j) During a Concentration Account Cash Sweep Period, the
Concentration Account Bank shall transfer, in same day funds, on each
Business Day, all funds, if any on deposit, or otherwise to the credit
of, the Concentration Account to the account listed below (the
"Citibank Concentration Account") or to such other account as the
Senior Collateral Agent may from time to time designate in writing,
provided that funds on deposit that are subject to collection may be
transmitted promptly upon collection:
ABA NUMBER:_________________________________
[Citicorp USA, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000]
ACCOUNT NAME: Citibank Concentration Account
ACCOUNT NUMBER:_____________________________
REFERENCE:__________________________________
ATTN:_______________________________________
(k) All customary service charges and fees with respect to
the Concentration Account shall be debited to the Concentration
Account. In the event insufficient funds remain in the Concentration
Account to cover such customary service charges and fees, the Grantor
shall pay and indemnify the Concentration Account Bank for the amounts
of such customary service charges and fees. Neither the Senior
Collateral Agent nor the Senior Secured Parties shall have any
liability for the payment of any fees or charges in respect of the
Concentration Account.
This letter agreement shall be binding upon and shall inure to the
benefit of the Concentration Account Bank, the Grantor, the Senior
Collateral Agent, the Senior Secured Parties referred to in the Senior
Subsidiary Security Agreement and their respective successors, transferees
and assigns of any of the foregoing. This letter agreement may not be
modified or terminated except upon the mutual consent of the Senior
Collateral Agent, the Grantor and the Concentration Account Bank. The
Concentration Account Bank may terminate the letter agreement only upon 45
days' prior written notice to the Grantor and the Senior Collateral Agent.
The Senior Collateral Agent may terminate this letter agreement at any
time. So long as any Senior Obligations remain outstanding and the
Commitments are still outstanding, upon such termination the Concentration
Account Bank shall close the Concentration Account and transfer all funds
in the Concentration Account to the Senior Collateral Agent at the Citibank
Concentration Account or as otherwise directed by the Senior Collateral
Agent. After any such termination, the Concentration Account Bank shall
nonetheless remain obligated promptly to transfer to the Concentration
Account or as the Senior Collateral Agent may otherwise direct all funds
and other property received in respect of the Concentration Account.
This letter agreement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this letter agreement by
telecopier shall be effective as delivery of a manually executed
counterpart of this letter agreement.
This letter agreement supersedes all prior agreements, oral or written,
with respect to the subject matter hereof and may not be amended, modified
or supplemented except by a writing signed by the Senior Collateral Agent,
the Grantor and the Concentration Account Bank.
This letter agreement shall be governed by, and construed in accordance
with, the law of the state of New York.
Upon acceptance of this letter agreement it will be the valid and
binding obligation of the Grantor, the Senior Collateral Agent, and the
Concentration Account Bank, in accordance with its terms.
Very truly yours,
[ ].
By:____________________________
Name:
Title:
CITICORP USA, INC, as Senior Collateral Agent
By:____________________________
Name:
Title:
Acknowledged and agreed to as of
the date first above written:
[ ]
By:____________________________
Name:
Title:
Exhibit A
to the Concentration Account Agreement
CONCENTRATION ACCOUNT CASH SWEEP NOTICE
[Concentration Account Bank]
[Address]
Re: Account No. [ ] (the "Concentration Account")
Ladies and Gentlemen:
Reference is made to the Concentration Account and that certain
Concentration Account Agreement dated June 12, 2000 (as amended,
supplemented or otherwise modified from time to time, the "Concentration
Account Agreement") among the Concentration Account Bank, the Grantor and
the Senior Collateral Agent. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to them in the
Concentration Account Agreement.
The Senior Collateral Agent hereby notifies you that, in accordance
with certain provisions of the Senior Subsidiary Security Agreement, from
and after the date of this notice, you are hereby directed to transfer (by
wire transfer or other method of transfer mutually acceptable to you and
the Senior Collateral Agent) to the Senior Collateral Agent, in same day
funds, on each Business Day, the entire balance in the Concentration
Account to the Citibank Concentration Account specified in paragraph (j) of
the Concentration Account Agreement (or to such other account as the Senior
Collateral Agent may from time to time, or at any time, designate in
writing) until you are notified in writing by the Senior Collateral Agent
that this Concentration Account Cash Sweep Notice is no longer effective or
to such other account as the Senior Collateral Agent may from time to time
designate in writing.
Very truly yours,
CITICORP USA, INC, as Senior Collateral Agent
By:__________________________________________
Name:
Title:
Schedule 10
to the Senior Subsidiary
Security Agreement
PERFECTION CERTIFICATE
