EXECUTION COPY
Proprietary and Confidential
RITE AID REALTY CORP.
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INSTRUMENT GUARANTY
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Dated as of June 27, 2001
INSTRUMENT GUARANTY
Proprietary and Confidential
INSTRUMENT GUARANTY
INSTRUMENT GUARANTY, dated as of June 27, 2001 (this "Instrument
Guaranty"), by Rite Aid Realty Corp., a Delaware corporation (the "Company"), to
each of the Note Holders and Certificate Holders. Capitalized terms used herein
and not defined herein shall have the meanings ascribed to them in the
Participation Agreement dated as of the date hereof among the Company, Xxxxx
Fargo Bank Northwest, National Association, not in its individual capacity
except as expressly set forth therein but solely as Trustee of the RAC
Distribution Statutory Trust, Rite Aid Corporation, the Persons named therein as
Note Holders and Certificate Holders, and Citicorp USA, Inc., as Agent (the
"Participation Agreement").
Preliminary Statement
A. As contemplated by the Participation Agreement, the Lessor will acquire
(i) a fee interest in two certain parcels of land located in Perryman, Maryland
and a fee interest in certain improvements located thereon and (ii) a leasehold
interest in a certain parcel of land located in Lancaster, California and a fee
interest in certain improvements located thereon.
B. The Lessor will finance its acquisition of its interests in the
Properties through the issuance of Notes and Certificates. The Company intends
this Instrument Guaranty to be an inducement for the Holders to purchase the
Notes and Certificates which the Holders would be unwilling to do if the Company
did not execute and deliver this Instrument Guaranty.
NOW, THEREFORE, in consideration of the premises and intending to be
legally bound by this Instrument Guaranty, the Company hereby agrees to be bound
as follows:
l. (a) The Company unconditionally guarantees and agrees that, subject to
the following sentence, all sums due under the Instruments (including all
principal or Certificate Amount of, and interest or Distributions on, as the
case may be, the Instruments), together with any other sums which may become due
pursuant to any Operative Document with respect to the Instruments (including
Charges and Additional Costs), but only to the extent provided in the Operative
Documents, whether the same shall accrue before or after the filing of a
proceeding under the Bankruptcy Law, will be promptly paid in full (i) when due
(after any grace periods permitted under the Operative Documents), whether at
stated maturity, by acceleration or otherwise, in accordance with the provisions
of the Instruments and the Operative Documents, or (ii) upon the
INSTRUMENT GUARANTY
Proprietary and Confidential
occurrence of an Event of Default. Notwithstanding anything to the contrary
herein contained, it is expressly understood and agreed that unless an Event of
Default shall have occurred and be continuing, this Instrument Guaranty shall
not constitute a guaranty of an amount in excess of and shall be limited to the
amount of the Residual Value Amount that may be payable at any time, which shall
be allocated in accordance with Article VII of the Participation Agreement. This
Instrument Guaranty shall be irrevocable, and in all events shall be continuing,
unconditional and absolute, and if for any reason any such sums, or any part
thereof, shall not be paid promptly when due, upon demand therefor by the
Holders upon the Company, the Company shall pay the same to the Person entitled
thereto pursuant to and in accordance with the provisions hereof, regardless of
any defenses (other than the defense of payment, including payment to the Agent
pursuant to the Participation Agreement) or rights of set-off or counterclaim,
regardless of whether any Note Holder or Certificate Holder shall have taken any
steps to enforce its rights against the Company, the Lessor, the Trustee or any
other Person, to collect such sums, or any part thereof, and regardless of any
other condition or contingency. Subject to the limitation provided in the second
sentence of this subsection (a), the Company also agrees to pay to the Note
Holders and the Certificate Holders from time to time such further amounts as
shall be sufficient to cover the costs and expenses of collecting such sums, or
part thereof, or of otherwise enforcing this Instrument Guaranty, including, in
any case, compensation to their respective attorneys for all services rendered
in that connection.
(b) Any and all payments by the Company hereunder shall be made free and
clear of and without deduction for any and all Charges. Subject to the
limitation provided in the second sentence of Section 1(a), if the Company shall
be required by Law to deduct any Charges from or in respect of any sum payable
hereunder to any Holder, (i) the sum payable by the Company shall be increased
as may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this paragraph 1(b)) the
Holder receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Company shall make such deductions, and (iii) the
Company shall pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable Law.
2. The Company hereby unconditionally
(a) waives any requirement that the Note Holders and the Certificate
Holders from time to time first make demand upon, or seek to enforce
remedies against, any other Person or any of the collateral or property of
such other Person before demanding payment from, or seeking to enforce this
Instrument Guaranty against, the Company;
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(b) covenants that this Instrument Guaranty will not be discharged
except by complete satisfaction by indefeasible payment in cash in full of
all payment obligations contained in the Instruments and in the Operative
Documents with respect to the Instruments;
(c) agrees that this Instrument Guaranty shall remain in full effect
without regard to, and shall not be affected or impaired by, any
invalidity, illegality, irregularity or unenforceability in whole or in
part of the Instruments, the Participation Agreement, any other Operative
Document (and the Company hereby waives any defense relating to the
enforceability of the Operative Documents or any provision contained
therein), or any limitation of the liability of the Company thereunder
(except for the limitation contained in the second sentence of Section 1(a)
hereof and exc ept for any other limitation expressly set forth in the
Operative Documents), or any limitation on the method or terms of payment
thereunder which may now or hereafter be caused or imposed in any manner
whatsoever;
(d) waives diligence, presentment and protest with respect to, and any
notice of default in, the payment of any amount at any time payable under
or in connection with the Instruments or any of the Operative Documents
(except for notices required to be delivered under the Operative
Documents); and
(e) agrees that each and every right, power and remedy given under
this Instrument Guaranty or any other Operative Document shall be
cumulative and not exclusive, and shall be in addition to all other rights,
powers and remedies now or hereafter granted or otherwise existing.
3. The obligations, undertakings and conditions to be performed or observed
by the Company under this Instrument Guaranty shall not be affected or impaired
by reason of the happening from time to time of any of the following with
respect to the Instruments and the other Operative Documents, all without notice
to, or the further consent of, the Company (except for notices required to be
delivered and consents to be obtained under the Operative Documents):
(a) the waiver by the Lessor, any Note Holder, any Certificate Holder
or any other Person of the observance or performance by the Company of any
of the obligations, undertakings or conditions contained in any of such
Instruments, except to the extent of such waiver;
(b) the extension, in whole or in part, of the time for payment of any
amount owing or payable under any of the Instruments, the Participation
Agreement or any other Operative Document or of any other sums or
obligations
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under or arising out of or on account of the Instruments, the
Participation Agreement or any other Operative Document except to the
extent of such extension;
(c) provided the Company has consented to the same if required under
the Participation Agreement, the modification or amendment (whether
material or otherwise) of any of the obligations of the Lessor under any of
the Instruments or any other Operative Document or of the Company under any
Operative Document, except to the extent of such modification or amendment;
(d) the taking or the omission of any of the actions referred to in
any Instrument or any other Operative Document (including, without
limitation, the giving of any consent referred to therein);
(e) any failure, omission, delay or lack on the part of the Agent, the
Lessor, any Note Holder, any Certificate Holder or any other Person to
enforce, assert or exercise any right, power or remedy conferred on the
Lessor, any such Note Holder, any such Certificate Holder or any other
Person in any of such Instruments or any action on the part of the Lessor,
any Note Holder, any Certificate Holder or any other Person granting
indulgence or extension in any form;
(f) the release or discharge of the Agent, the Lessor or any other
Person from the performance or observance of any obligation, undertaking or
condition to be performed by the Agent, the Lessor or such other Person
under any Instrument or any other Operative Document by operation of Law;
(g) the receipt and acceptance by the Agent, the Lessor or a Holder of
an Instrument, or any other Person of notes, checks or other instruments
for the payment of money and extensions and renewals thereof;
(h) any action, inaction or election of remedies by the Lessor or a
Holder of an Instrument or any other Person which results in any impairment
or destruction of any subrogation rights of the Company, or any rights of
the Company to proceed against any other Person for reimbursement;
(i) the surrender by the Agent, the Lessor or any Holder of an
Instrument or any other Person of any security at any time held for the
performance or observance of any of the agreements, covenants, terms or
conditions contained in the Instruments or any of the Operative Documents;
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(j) any event or circumstance which might otherwise constitute a legal
or equitable discharge or defense of a guarantor, indemnitor or surety
under the laws of the State of New York or any other jurisdiction;
(k) any other circumstance whatsoever (with or without notice to or
knowledge of the Company) which constitutes, or might be construed to
constitute, an equitable or legal discharge of the Company with respect to
its obligations hereunder or under the other Operative Documents, in
bankruptcy or in any other instance, except based on payment or
performance;
(l) any change in circumstances, whether or not foreseen or
foreseeable, whether or not imputable to the Company, the Agent or the
Lessor and whether or not such change in circumstances shall or might in
any manner and to any extent vary the risk of the Company hereunder;
(m) the invalidity or unenforceability of any of the Operative
Documents; or
(n) any other cause, whether similar or dissimilar to the foregoing;
it being the intention of the Company that this Instrument Guaranty be absolute
and unconditional in any and all circumstances and that this Instrument Guaranty
shall be discharged only by the indefeasible payment in full of all sums with
respect to which this Instrument Guaranty relates.
4. An "Event of Default" hereunder shall mean any "Event of Default" (as
defined in the Participation Agreement).
5. Notice of acceptance of this Instrument Guaranty and notice of the
execution and delivery of any other instrument referred to in this Instrument
Guaranty are hereby waived by the Company.
6. This Instrument Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the obligations to be paid, is rescinded or must otherwise be restored or
returned by any Holder of an Instrument, upon the insolvency, bankruptcy or
reorganization of the Company, or otherwise, all as though such payment had not
been made. The provisions of this paragraph 6 shall survive the termination of
this Instrument Guaranty.
7. This Instrument Guaranty shall remain in full force and effect until
payment and performance in full of all obligations of the Company in accordance
with the provisions of this Instrument Guaranty. The Company's payment
obligations
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hereunder shall be deemed satisfied upon receipt by Agent on behalf of the
Lessor of all amounts payable hereunder. This Instrument Guaranty is a guaranty
of payment and not a guaranty of collection.
8. (a) TIME IS OF THE ESSENCE IN THIS INSTRUMENT GUARANTY AND THE TERMS
HEREIN SHALL BE SO CONSTRUED. This Instrument Guaranty shall be binding upon the
Company and its successors and shall inure to the benefit of, and be enforceable
by, the Holders of the Instruments and their respective successors and assigns
as to the obligations respectively owed them and guaranteed hereunder. This
Instrument Guaranty may not be changed, waived, discharged or terminated orally,
but only by a statement in writing signed by the Company and the Holders of the
Instruments, in compliance with the requirements set forth in the Participation
Agreement. This Instrument Guaranty may be enforced as to any one or more
defaults either separately or cumulatively.
(b) THIS INSTRUMENT GUARANTY SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW (OR ANY SIMILAR
SUCESSOR PROVISION THERETO) BUT EXCLUDING ALL OTHER CONFLICT-OF-LAW RULES.
9. All notices, demands, requests, consents, approvals and other
instruments hereunder shall be given in the manner and at the appropriate
address set forth in the Participation Agreement or at such other address as
such party shall designate by notice to each of the other parties hereto.
10. Notwithstanding anything to the contrary contained in this Instrument
Guaranty or any of the other Operative Documents, the amounts which the Company
is obligated to pay pursuant to this Instrument Guaranty and the other Operative
Documents, and the amounts which the Holders of the Instruments are entitled to
receive pursuant to this Instrument Guaranty and other Operative Documents, are
subject to limitations pursuant to Section 9.17 of the Participation Agreement.
11. The Company waives any and all notice of the creation, renewal,
extension or accrual of any of the amounts which the Company is obligated to pay
hereunder and notice of or proof of reliance by the Holders of the Instruments
upon this Instrument Guaranty or acceptance of this Instrument Guaranty. The
indebtedness evidenced by the Instruments shall conclusively be deemed to have
been created, contracted, incurred, renewed, extended, amended or waived in
reliance upon this Instrument Guaranty, and all dealings between the Company and
the Holders of the
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Instruments shall likewise be conclusively presumed to have been had or
consummated in reliance upon this Instrument Guaranty.
12. The rules of construction set forth in Appendix A to the Participation
Agreement apply to this Instrument Guaranty.
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[SIGNATURE PAGE TO INSTRUMENT GUARANTY]
IN WITNESS WHEREOF, the Company has caused this Instrument Guaranty to be
duly executed as of the day and year first above written.
RITE AID REALTY CORP.
By: ____________________________
Name:
Title:
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