EXHIBIT 10.45
EQUITY FOR BANK DEBT EXCHANGE AGREEMENT
This Equity for Bank Debt Exchange Agreement (the "Exchange
Agreement"), dated as of April 12, 2001 (the "Effective Date"), is entered into
by and between Rite Aid Corporation, a Delaware corporation (the "Company"), and
Fir Tree Value Fund, L.P., Fir Tree Institutional Value Fund, L.P., Fir Tree
Value Partners LDC and Fir Tree Recovery Master Fund, L.P. (collectively, "Fir
Tree").
WHEREAS, the Company desires to reduce its indebtedness; and
WHEREAS, Fir Tree holds, or has entered into agreements to acquire,
$53,535,249 aggregate principal amount of indebtedness under the Company's RCF
Credit Facility due August 15, 2002 (the "RCF Facility"); and
WHEREAS, Fir Tree desires to exchange $53,535,249 aggregate principal
amount of the RCF Facility (the "Bank Debt") for shares of common stock, $1.00
par value per share (the "Common Stock") of the Company (the "Exchange"); and
WHEREAS, Fir Tree and the Company have agreed that it is in their
mutual interest to exchange the Bank Debt for shares of Common Stock;
NOW THEREFORE, in consideration of the premises and the agreements and
representations contained herein, the parties hereto do hereby agree as follows:
1. Definitions. As used herein, the following terms have the
following meanings:
"Average Price" means the sum of the volume weighted average
price (as calculated for the period beginning at 9:30 a.m. New York Time ("NYT")
and concluding at 4:00 p.m. NYT) per share of Common Stock on the NYSE for each
day of the Pricing Period as reported by Bloomberg Financial LP (using the AQR
function) divided by 30.
"Bank Debt Exchange Price" means 100% of the principal amount
of the Bank Debt.
"Interest Rate" means the interest rate payable to holders of
Euro-Dollar Loans pursuant to the RCF Facility provided that if the RCF
Facility has been redeemed, the last interest rate payable prior to the date of
redemption of the RCF Facility.
"NYSE" means the New York Stock Exchange.
"Pricing Period" means the 30 consecutive trading days on the
NYSE, beginning April 9, 2001.
"Stock Exchange Price" means 96% of the Average Price during
the Pricing Period.
2. Exchange. Within three business days following the last day
of the Pricing Period, Fir Tree will deliver the Bank Debt (except and only to
such extent that Fir Tree is unable to close any acquisition of any Bank Debt as
a result of circumstances beyond its reasonable control) to such person or
entity as the Company and Fir Tree mutually agree (the "Escrow Agent") and the
Company will deliver to the Escrow Agent a certificate representing such number
of shares, rounded to the nearest whole number (the "Shares"), of Common Stock
and a certificate representing an equal number of shares of Class C Preferred
Stock of the Company (the "Preferred Shares") having the designations rights and
preferences set forth in the certificate of designation attached as Exhibit A
hereto, equal to the Bank Debt divided by the Stock Exchange Price. Any interest
paid on the Bank Debt while held in escrow will be paid promptly to Fir Tree.
The Company will use its best efforts to file a registration statement to cover
resales of the Shares pursuant to the Securities Act of 1933, as amended (the
"Securities Act"). The Exchange Date shall be deemed to be the earlier of (x)
the date upon which the Shares are registered (the "Registration Date") for
resale under the Securities Act (the "Registration Exchange Date"), and, (y)
the date upon which the aggregate principal amount of the RCF Facility is repaid
in full (the "Refinancing Exchange Date"). During the Pricing Period, the
Company, Fir Tree and the Escrow Agent will enter into an escrow agreement on
terms as the parties mutually agree.
3. Exchange Date on or Before August 20, 2001. If the Exchange
Date occurs on or before August 20, 2001 and the Exchange Date is the
Registration Exchange Date, the Escrow Agent will deliver (a) the certificate(s)
representing the Shares to Fir Tree in such names and denominations as Fir Tree
provides in writing to the Company, and (b) the Bank Debt and a certificate
representing the Preferred Shares to the Company. If the Exchange Date occurs on
or before August 20, 2001 and the Exchange Date is the Refinancing Exchange
Date, the Escrow Agent will deliver (a) the certificate(s) representing the
Preferred Shares to Fir Tree in such names and denominations as Fir Tree
provides in writing to the Company, and (b) the Bank Debt and a certificate
representing the Shares to the
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Company. On the Exchange Date, whether such Exchange Date is the Registration
Exchange Date or the Refinancing Exchange Date, the Company shall pay Fir Tree
the accrued and unpaid interest on the Bank Debt pursuant to the RCF Facility.
4. Exchange Date Between August 21, 2001 and November 21,
2001. If both the Exchange Date and the Registration Date occur between August
21, 2001 and November 21, 2001, in addition to the obligations set forth in
Section 3 above, the Company shall pay Fir Tree, as liquidated damages
("Liquidated Damages") for the Company's failure to cause the registration
statement covering the Shares to be declared effective by August 21, 2001, an
amount equal to 12% per annum of the Bank Debt minus the Interest Rate (the
"Liquidated Damages Rate") for each day in the period from August 21, 2001 until
the Exchange Date, provided that both the Exchange Date and the Registration
Date occur on or before November 21, 2001. Liquidated Damages shall be paid by
the Company to Fir Tree on the same dates and in the same manner as if such
payment was a payment of interest pursuant to Section 2.04 of the RCF Facility.
5. Exchange Date After November 21, 2001. If both the Exchange
Date and the Registration Date do not occur by November 21, 2001, then the
Liquidated Damages Rate shall increase to 18% per annum minus the Interest Rate
for each day in the period from November 22, 2001 until both the Exchange Date
and the Registration Date have occurred. Liquidated Damages shall be paid by the
Company to Fir Tree on the same dates and in the same manner as if such payment
was a payment of interest pursuant to Section 2.04 of the RCF Facility
6. Event of Default on RCF Facility. If prior to the Exchange
Date, an Event of Default has occurred under the RCF Facility, as defined in the
RCF Facility, then Fir Tree shall have the option not to consummate the
Exchange, and to instruct the Escrow Agent to release the Bank Debt to Fir Tree
including interest thereon, and the certificates evidencing the Shares and the
Preferred Shares shall be delivered to the Company for cancellation and this
Exchange Agreement shall be deemed null and void and neither Fir Tree nor the
Company shall have any liability to the other arising out of this Exchange
Agreement. Fir Tree must make such election within five business days notice of
such Event of Default.
7. Representations and Warranties. The Company represents and
warrants to Fir Tree that: (x) the issuance and delivery of the Shares or the
Preferred Shares, as the case may be, to Fir Tree will not violate: (a) the
Company's Articles of Incorporation or Bylaws, (b) any material agreement to
which the Company is a party, including any indenture; or (c) any applicable
federal or state statute,
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rule or regulation that would prevent the Company from carrying out its
obligations hereunder; (y) no representation or warranty contained herein or
information appearing in any writing in connection with the transactions
contemplated hereby furnished to Fir Tree or in any document filed since October
11, 2000 with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements herein
or therein not misleading, (z) the Shares or the Preferred Shares, as the case
may be, when released from escrow and issued in accordance with this Exchange
Agreement, will be validly issued, fully paid and non-assessable, and (aa) this
Exchange Agreement has been validly authorized, executed and delivered by the
Company and constitutes a valid and binding obligation of the Company
enforceable in accordance with its terms, subject to standard bankruptcy and
equitable remedies exceptions.
8. Investment Representations. Fir Tree understands that the
Shares and the Preferred Shares have not been registered under the Securities
Act and that the certificates for the Shares and the Preferred Shares will bear
a legend to that effect. Fir Tree also understands that the Shares and the
Preferred Shares, as the case may be, are being offered and sold pursuant to an
exemption from registration contained in the Securities Act, based in part upon
their representations contained in this Exchange Agreement. Fir Tree hereby
represents and warrants as follows:
(a) Acquisition for Own Account. Fir Tree is acquiring the
Shares or the Preferred Shares, as the case may be, for its own account for
investment and not with a view toward distribution.
(b) General Solicitation. Neither Fir Tree nor anyone acting
on its behalf has made or will make offers or sales of the Shares or the
Preferred Shares in the United States by means of any form of general
solicitation or general advertising (each within the meaning of Regulation D
under the Securities Act) in the United States in violation of applicable
securities laws.
(c) Ability to Protect Own Interests. Fir Tree represents that
by reason of its business or financial experience, or the business and financial
experience of its management, it has the capacity to protect its own interests
in connection with the transaction contemplated in this Exchange Agreement. Fir
Tree is not a corporation formed for the specific purpose of consummating this
transaction.
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(d) Accredited Investor. Fir Tree represents that it is an
"accredited investor" as that term is defined in Regulation D promulgated under
the Securities Act.
(e) Access to Information. Fir Tree has been given access to
all publicly available Company documents, records, and other information, has
received physical delivery of all those which it has requested, and has had
adequate opportunity to ask questions of, and receive answers from, the
Company's officers, employees, agents, accountants, and representatives
concerning the Company's business, operations, financial condition, assets,
liabilities, and all other matters relevant to its investment in the Shares or
the Preferred Shares, as the case may be.
(f) Compliance with Laws. Fir Tree and its transferees will
comply with all material filing and other reporting obligations under all
applicable law which shall be applicable to it with respect to the Shares and
the Preferred Shares, as the case may be.
(g) Enforceability. This Exchange Agreement has been duly
authorized, and executed and delivered by Fir Tree and (assuming the due
authorization, execution and delivery thereof by the Company) constitutes a
valid and binding obligation of Fir Tree, enforceable in accordance with its
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating to or
affecting enforcement of creditors' rights generally, or by general principles
of equity (regardless of whether enforcement is considered in a proceeding in
equity).
9. Furnishing Information by Fir Tree. The Company may require
Fir Tree to furnish to the Company such information, including but not limited
to the names and denominations to be included in the registration statement,
regarding Fir Tree and Fir Tree's intended method of distribution of the Shares
as the Company may from time to time reasonably request in writing, Fir Tree
agrees to notify the Company as promptly as practicable of any inaccuracy or
change in information previously furnished by Fir Tree to the Company or of the
occurrence of any event in either case as a result of which any prospectus
relating to such registration contains or would contain an untrue statement of
a material fact regarding Fir Tree or Fir Tree's intended method of distribution
of Shares or omits to state any material fact regarding Fir Tree or Fir Tree's
intended method of distribution of Shares required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, and promptly to furnish
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information so required so that such prospectus shall not contain, with respect
to Fir Tree or the distribution of such Shares, an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing.
10. Indemnity.
(a) The Company will indemnify Fir Tree and its officers,
directors, partners, agents, employees and representatives against all expenses,
claims, losses and liabilities arising out of or based upon any breach of any
representation, warranty or covenant contained herein, or arising out of or
based on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering circular or other
document incident to the registration of the Shares, qualification or
compliance, or any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statement therein
not misleading, and will reimburse Fir Tree for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in strict
conformity with written information furnished to the Company by Fir Tree and
provided specifically for use therein.
(b) Fir Tree will indemnify the Company and its officers,
directors, partners, agents, employees and representatives against all
expenses, claims, losses and liabilities arising out of or based upon any breach
of any representation, warranty or covenant contained herein, or arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement, prospectus, offering circular or
other document incident to the registration of the Shares, qualification or
compliance, or any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statement therein
not misleading, and will reimburse the Company for any legal or any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in strict
conformity with written information furnished to Fir Tree by the Company and
provided specifically for use therein.
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(c) Each party entitled to indemnification under this Section
10 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claims as to which indemnity may be sought and
shall permit the Indemnifying Party to assume the defense of any such claim or
any litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party, whose approval shall not
unreasonably be withheld or delayed, and the Indemnified Party may participate
in such defense with counsel reasonably acceptable to and paid for by the
Indemnifying Party but otherwise at the Indemnified Party's expense, and
provided, further, that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 10 to the extent such failure is not materially prejudicial.
No Indemnifying Party in the defense of any such claim or litigation shall
except with the consent of each Indemnified Party, consent to entry of any
judgement or enter into any settlement which does not include an unconditional
release of such Indemnified Party from all liability in respect of such claim or
litigation. Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with the defense of
such claim and litigation resulting therefrom.
(d) If the indemnification provided for in this Section 10 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and the Indemnified Party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party of the Indemnified
Party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statements of a material fact or the omission to state
a material fact relates to information supplied by the Indemnifying Party or by
the Indemnified Party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission. No
person guilty of fraudulent misrepresentation (within the meaning of section
11(f) of the Securities
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Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
11. Governing Law. This Exchange Agreement shall be governed
by the laws of the State of New York without giving effect to the conflict of
law rules contained therein.
12. Amendments and Waivers. Any term of this Exchange
Agreement may be amended or modified and the observance of any term of this
Exchange Agreement may be waived (either generally or in a particular instance
and either retroactively or prospectively) only with the prior written consent
of the Company and Fir Tree.
13. Further Assurances. The Company and Fir Tree agree to
enter into a registration rights agreement during the Pricing Period, on
customary terms, which terms will include but not be limited to customary
black-outs, carve outs and indemnity.
14. Miscellaneous. This Exchange Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective successors
and assigns and affiliates of the parties hereto, whether so expressed or not.
Except as aforesaid, this Exchange Agreement shall not inure to the benefit of
any third party. This Exchange Agreement embodies the entire agreement and
understanding between Fir Tree and the Company and supersedes all prior
agreements and understandings relating to the subject matter hereof. The
headings in this Exchange Agreement are for purposes of reference only and shall
not limit or otherwise affect the meaning hereof. This Exchange Agreement may be
executed in any number of counterparts, each of which shall be an original, but
all of which together shall constitute one instrument.
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15. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, telex, facsimile
or similar writing) and shall be given to such party at its address, facsimile
number or telex number set forth on the signature pages hereof. Each such
notice, request or other communication shall be effective (i) if given by telex,
when transmitted to the telex number referred to in this Section 15 and the
appropriate answer back is received, (ii) if given by facsimile, when
transmitted to the facsimile number referred to on the signature page and
confirmation of receipt is received, (iii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iv) if given by any other means, when delivered at
the address referred to in this Section.
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IN WITNESS WHEREOF, the parties have caused this Exchange Agreement to
be duly executed as of the Effective Date.
FIR TREE VALUE FUND, L.P.
FIR TREE INSTITUTIONAL VALUE FUND, L.P.
FIR TREE VALUE PARTNERS LDC
FIR TREE RECOVERY MASTER FUND, L.P.
By:
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Name:
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Title:
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Address:
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Facsimile No.:
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RITE AID CORPORATION
By:
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Name:
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Title:
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Address:
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Facsimile No.:
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