Exhibit 4.17
EXECUTION COPY
AMENDMENT NO. 2 TO GUARANTY
AMENDMENT NO. 2 TO GUARANTY ("Amendment No. 2"), dated as of December
2, 1999, from RITE AID CORPORATION, a Delaware corporation (the
"Guarantor"), to SUMITOMO BANK LEASING AND FINANCE, INC., a Delaware
corporation (the "Lessor").
WHEREAS, the Lessor and Rite Aid Realty Corp. (the "Lessee") entered
into a Master Lease and Security Agreement dated as of May 30, 1997, as
amended by Amendment No. 1, dated as of March 11, 1998, and as further
amended by Amendment No. 2, dated as of June 22, 1998, and as further
amended by Amendment No. 3, dated as of May 26, 1999, and as further
amended by Amendment No. 4, dated as of October 25, 1999 (as so amended,
the "Lease"); and
WHEREAS, the Guarantor and the Lessor entered into a Guaranty, dated
as of May 30, 1997, as amended by Amendment No. 1, dated as of October 25,
1999 (as so amended, the "Guaranty"); and
WHEREAS, the Guarantor and the Lessor now desire to further amend the
Guaranty; and
WHEREAS, capitalized terms used but not defined herein shall have the
respective meanings given to such terms in Appendix I to the Lease.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:
Section 1. Amendments to Guaranty. Annex A to the Guaranty is
hereby amended as follows:
(a) The following new definition is added to the definition section
of Annex A in its appropriate alphabetical position:
"LIFO Adjustments" means, for any period, the net adjustment to
costs of goods sold for such period required by the Guarantor's
LIFO inventory method, determined in accordance with generally
accepted accounting principles.
(b) The following definitions contained in Annex A are amended to
read in their entirety as follows:
"Consolidated EBITDA" means, for any period, Consolidated Net
Income for such period, plus (a), to the extent deducted in
determining Consolidated Net Income for such period, the
aggregate amount of (i) Consolidated Interest Charges, (ii)
provision for income taxes, (iii) depreciation and
amortization, (iv) LIFO Adjustments, (v) store closing expenses
and (vi) any other nonrecurring charge to the extent such
nonrecurring charge does not involve any cash expenditure
during such period, less (b), to the extent not deducted in
determining Consolidated Net Income for such period, the
aggregate amount of (i) any cash expenditure during such period
in connection with which a nonrecurring charge was taken in any
prior period and (ii) LIFO Adjustments.
"Consolidated Net Income" means, for any period, the net income
(or loss) of the Guarantor and its Consolidated Subsidiaries
(exclusive of (a) extraordinary items of gain or loss, (b) any
gain or loss in connection with any sale of assets other than
sales of inventory in the ordinary course of business, but in
the case of loss only to the extent that such loss does not
involve any cash expenditure during such period and (c) the
Guarantor's share of the net income (or loss) of
xxxxxxxxx.xxx), determined on a consolidated basis for such
period.
"Consolidated Net Worth" means at any date the consolidated
stockholders' equity of the Guarantor and its Consolidated
Subsidiaries determined as of such date; provided that such
consolidated stockholders' equity shall be adjusted to exclude
the effect of items which have been excluded from Consolidated
Net Income for any period commencing after August 28, 1999 by
reason of the parenthetical phrase contained in the definition
of such term. Consolidated Net Worth includes the Guarantor's
8% Convertible Pay-In-Kind Preferred Stock.
"Consolidated Rent" means, for any period, the consolidated
rental expense of the Guarantor and its Consolidated
Subsidiaries for such period, and including in any event rental
costs of closed stores for such period whether or not reflected
as an expense in the determination of Consolidated Net Income
for such period.
"Credit Agreement" means the Amended and Restated Credit
Agreement dated as of October 25, 1999, as amended by Amendment
No. 1, dated as of December 2, 1999, among Rite Aid
Corporation, the banks from time to time parties thereto and
Xxxxxx Guaranty Trust Company of New York, as Agent, without
giving effect to any amendments or waivers thereof made by the
requisite parties thereunder after December 2, 1999 unless
expressly consented to by the Required Participants.
"1999 Facility" means the $1,300,000,000 Term Loan Agreement
dated as of October 25, 1999, as amended by Amendment No. 1,
dated as of December 2, 1999, among Rite Aid Corporation, the
banks listed therein and Xxxxxx Guaranty Trust Company of New
York, as Agent, without giving effect to any amendments or
waivers thereof made by the requisite parties thereunder after
December 2, 1999 unless expressly consented to by the Required
Participants.
(c) Section 1.12 of Annex A is amended to read in its entirety as
follows:
"SECTION 1.12 Capitalization Leverage Ratio. At no time shall
the ratio of (i) Consolidated Debt at such time to (ii) Total
Capital at such time, exceed 0.695; provided that upon any sale
of the capital stock of PCS, such maximum ratio shall be reset
at the level which produces the result that the amount of
additional Debt that the Guarantor may incur within the limits
of this ratio immediately after giving effect to such sale and
the repayment of any Debt required in connection therewith is
equal to the amount of additional Debt that the Guarantor could
incur within the limits of this ratio immediately before giving
effect to such sale and the repayment of any Debt required in
connection therewith."
(d) Section 1.13 of Annex A is amended to read in its entirety as
follows:
"SECTION 1.13. Limitation on Debt. The Guarantor will not, and
will not permit any of its Subsidiaries to, incur or at any
time be liable with respect to any Debt except:
(a) Debt under the Credit Agreement or the 1999 Facility;
(b) Debt outstanding on December 2, 1999;
(c) Debt incurred to refinance Debt referred to in clause (a)
or clause (b) above, provided that the amount thereof that is
at the time outstanding or committed is not increased and the
maturity thereof is not shortened; and
(d) Debt not permitted by clauses (a), (b) and (c) above in an
aggregate principal amount at any time outstanding not to
exceed $25,000,000."
(f) Section 1.14 of Annex A is amended to read in its entirety as
follows (including the table following the end of the quotation marks:
"SECTION 1.14. Fixed Charge Coverage. At no time during any
period set forth below shall the Fixed Charge Coverage Ratio be
less than the ratio set forth below opposite such period:"
Fiscal Quarter Ending on or Ratio
Closest to:
November 30, 1999 1.35
February 29, 2000 1.30
May 31, 200 and thereafter 1.25
Section 2. Amendment Fee. In consideration of the Required
Participants' consent to this Amendment No. 2, concurrently with the
execution and delivery of this Amendment No. 2, and as a condition
precedent to the effectiveness of this Amendment No. 2, the Guarantor shall
pay an amendment fee to the Liquidity Agent in an amount equal to 0.25% of
$119,000,000 for the ratable benefit of the Lenders and the Lessor. Such
fee is payable in full on the date hereof by wire transfer of immediately
available funds to an account to be designated by the Liquidity Agent. The
Guarantor hereby agrees that the amendment fee have been fully earned and
once paid are nonrefundable.
Section 3. Conditions Precedent. This Amendment No. 2 shall become
effective when the following conditions are met: (i) the Liquidity Agent
shall have received the Amendment Fee in accordance with Section 2 of this
Amendment No. 2; (ii) the Liquidity Agent shall have received from each of
the Guarantor and the Required Participants a duly executed counterpart
hereof; and (iii) the Guarantor shall have satisfied all of the conditions
precedent to each of (x) Amendment No. 1 to the Credit Agreement and (y)
Amendment No. 1 to the 1999 Facility.
Section 4. Representations and Warranties. The Guarantor hereby
represents and warrants that (a) each of the representations and warranties
made in Section 4 of the Guaranty are true and correct with the same force
and effect as though made on and as of the date of this Amendment No. 2,
except (i) to the extent that any such representations or warranties
expressly relate to an earlier date, such representations and warranties
were true and correct on and as of such earlier date, (ii) with respect to
the representation set forth in Section 4(d) and (e) of the Guaranty, such
representation is true and correct on and as of the date hereof as if made
on and as of the date hereof except to the extent set forth in the
Information (as defined in Annex A hereto) and (iii) with respect to the
representation set forth in Section 4(f) of the Guaranty, such
representation is true and correct on and as of the date hereof as if made
on and as of the date hereof except to the extent set forth in the
Guarantor's 1999 Annual Report on Form 10-K for the fiscal year ended
February 27, 1999, and (b) no Default or Event of Default has occurred and
is continuing.
Section 5. Continuing Effect. Except as expressly modified and
amended hereby, the Guaranty remains unchanged and in full force and effect
in all respects. As expressly modified and amended hereby, the Guarantor
hereby ratifies and affirms the Guaranty.
Section 6. Governing Law. THIS AMENDMENT NO. 2 SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
Section 7. Counterparts. This Amendment No. 2 may be executed in any
number of counterparts and by different parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered,
shall be deemed to be an original and all of which counterparts, taken
together, shall constitute but one and the same Amendment No. 2.
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on next page.]
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 2 to be executed by their officers thereunto duly authorized
as of the date first above written.
RITE AID CORPORATION,
as Guarantor
By:__________________________________
Name:
Title:
Acknowledged and Agreed:
SUMITOMO BANK LEASING AND FINANCE, INC.
By:__________________________________
Name:
Title:
