EXECUTION COPY
SECOND PRIORITY SUBSIDIARY GUARANTEE dated as of June
27, 2001, among each of the subsidiaries listed on Schedule I
hereto (each such subsidiary individually, a "Subsidiary
Guarantor" and collectively, the "Subsidiary Guarantors") of
RITE AID CORPORATION, a Delaware corporation (the "Borrower"),
and WILMINGTON TRUST COMPANY, a Delaware banking corporation,
as collateral agent (the "Second Priority Collateral Trustee")
for the Second Priority Debt Parties.
Capitalized terms used herein and not defined herein shall have the
meanings assigned to such terms in the Definitions Annex annexed hereto and by
this reference incorporated herein.
Each of the Subsidiary Guarantors is a wholly owned Subsidiary of the
Borrower and acknowledges that it will derive substantial benefit from the
credit to be extended under the Second Priority Debt Documents. It is a
condition precedent, among other conditions, to the effectiveness of the Second
Priority Debt Documents that the Subsidiary Guarantors execute and deliver a
Second Priority Subsidiary Guarantee Agreement in the form hereof. As
consideration therefor and in order to induce the Second Priority Debt Parties
to enter into the Second Priority Debt Documents, the Subsidiary Guarantors are
willing to execute this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. Each Subsidiary Guarantor unconditionally
guarantees, jointly with the other Subsidiary Guarantors and severally, as a
primary obligor and not merely as a surety, the due and punctual payment of, and
the due and punctual performance of, the Second Priority Debt Obligations, which
shall include any Additional Senior Second Priority Debt Obligation, Additional
Second Priority Debt Obligation, Replacement Senior Second Priority Debt
Obligation or Replacement Second Priority Debt Obligation to the extent that
such debt becomes Additional Senior Second Priority Debt, Additional Second
Priority Debt, Replacement Senior Second Priority Debt or Replacement Second
Priority Debt, respectively, pursuant to Section 10.12 of the Collateral Trust
and Intercreditor Agreement. Each Subsidiary Guarantor agrees that the Second
Priority Debt Obligations may be extended or renewed, in whole or in part,
without notice to or further assent from it, and that it will remain bound upon
its guarantee notwithstanding any extension or renewal of any Second Priority
Debt Obligation. The parties acknowledge that Rite Aid Realty Corp. is a direct
obligor of the Second Priority Debt Obligations represented by the Synthetic
Lease Facility.
Anything contained in this Agreement to the contrary notwithstanding,
the obligations of each Subsidiary Guarantor hereunder shall be limited to a
maximum aggregate amount equal to the greatest amount that would not render such
Subsidiary Guarantor's obligations hereunder
subject to avoidance under Section 548 of Title 11 of the United States Code or
any comparable provisions of any applicable state law, after giving effect to
all other liabilities of such Subsidiary Guarantor, contingent or otherwise,
that are relevant under such laws (specifically excluding, however, any
liabilities of such Subsidiary Guarantor (a) in respect of intercompany
indebtedness to the Borrower or Affiliates of the Borrower to the extent that
such indebtedness would be discharged in an amount equal to the amount paid by
such Subsidiary Guarantor hereunder, and (b) under any Guarantee of the Second
Priority Debt Obligations) and after giving effect as assets to the value of any
rights to subrogation, contribution, reimbursement, indemnity or similar rights
of such Subsidiary Guarantor pursuant to (i) applicable law or (ii) any
agreement providing for an equitable allocation among such Subsidiary Guarantor
and other Affiliates of the Borrower of obligations arising under Guarantees by
such parties (including the Second Priority Indemnity, Subrogation and
Contribution Agreement). To the extent the provisions of this paragraph are
applicable, any such reduction shall be applied to the obligations of such
Subsidiary Guarantor hereunder before any reduction in the obligation of such
Subsidiary Guarantor under the Senior Subsidiary Guarantee Agreement.
SECTION 2. Obligations Not Waived. To the fullest extent permitted by
applicable law, each Subsidiary Guarantor waives presentment to, demand of
payment from and protest to the Borrower of any of the Second Priority Debt
Obligations, and also waives notice of acceptance of its guarantee and notice of
protest for nonpayment. To the fullest extent permitted by applicable law, the
obligations of each Subsidiary Guarantor hereunder shall not be affected by (a)
the failure of the Second Priority Collateral Trustee or any other Second
Priority Debt Party to assert any claim or demand or to enforce or exercise any
right or remedy against the Borrower or any other Subsidiary Guarantor under the
provisions of the Second Priority Debt Documents or otherwise, (b) any
rescission, waiver, amendment or modification of, or any release from any of the
terms or provisions of this Agreement, any other Second Priority Debt Document,
any Guarantee or any other agreement, including with respect to any other
Subsidiary Guarantor under this Agreement or (c) the failure to perfect any
security interest in, or the release of, any of the security held by or on
behalf of the Second Priority Collateral Trustee or any other Second Priority
Debt Party.
SECTION 3. Security. Each of the Subsidiary Guarantors authorizes the
Second Priority Collateral Trustee and each of the other Second Priority Debt
Parties, to (a) take and hold security for the payment of this Guarantee and the
Second Priority Debt Obligations and exchange, enforce, waive and release any
such security, (b) apply such security and direct the order or manner of sale
thereof as they in their sole discretion may determine and (c) release or
substitute any one or more endorsees, other Subsidiary Guarantors or other
Obligors.
SECTION 4. Guarantee of Payment. Each Subsidiary Guarantor agrees that
its guarantee constitutes a guarantee of payment when due and not of collection,
and waives any right to require that any resort be had by the Second Priority
Collateral Trustee or any other Second Priority Debt Party to any of the
security held for payment of the Second Priority Debt Obligations or to any
balance of any deposit account or credit on the books of the Second Priority
Collateral Trustee or any other Second Priority Debt Party in favor of the
Borrower, any other Obligor or any other Person.
2
SECTION 5. No Discharge or Diminishment of Guarantee. The obligations
of each Subsidiary Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Second Priority Debt Obligations),
including any claim of waiver, release, surrender, alteration or compromise of
any of the Senior Obligations, and shall not be subject to any defense or
setoff, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality or unenforceability of the Second Priority Debt
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each Subsidiary Guarantor hereunder shall not be discharged or
impaired or otherwise affected by the failure of the Second Priority Collateral
Trustee or any other Second Priority Debt Party to assert any claim or demand or
to enforce any remedy under the Second Priority Debt Documents, any other Second
Priority Debt Document or any other agreement, by any waiver or modification of
any provision of any thereof, by any default, failure or delay, wilful or
otherwise, in the performance of the Second Priority Debt Obligations, or by any
other act or omission that may or might in any manner or to any extent vary the
risk of any Subsidiary Guarantor or that would otherwise operate as a discharge
of each Subsidiary Guarantor as a matter of law or equity (other than the
indefeasible payment in full in cash of all the Second Priority Debt
Obligations).
SECTION 6. Defenses of Borrower Waived. To the fullest extent permitted
by applicable law, each of the Subsidiary Guarantors waives any defense based on
or arising out of any defense of the Borrower or the unenforceability of the
Second Priority Debt Obligations or any part thereof from any cause, or the
cessation from any cause of the liability of the Borrower, other than the final
and indefeasible payment in full in cash of the Second Priority Debt
Obligations. The Second Priority Collateral Trustee and the other Second
Priority Debt Parties may, at their election, foreclose on any security held by
one or more of them by one or more judicial or nonjudicial sales, accept an
assignment of any such security in lieu of foreclosure, compromise or adjust any
part of the Second Priority Debt Obligations, make any other accommodation with
the Borrower or any other guarantor or exercise any other right or remedy
available to them against the Borrower or any other guarantor, without affecting
or impairing in any way the liability of any Subsidiary Guarantor hereunder
except to the extent the Second Priority Debt have been fully, finally and
indefeasibly paid in cash. Pursuant to applicable law, each of the Subsidiary
Guarantors waives any defense arising out of any such election even though such
election operates, pursuant to applicable law, to impair or to extinguish any
right of reimbursement or subrogation or other right or remedy of such
Subsidiary Guarantor against the Borrower or any other Subsidiary Guarantor or
guarantor, as the case may be, or any security.
SECTION 7. Agreement to Pay; Subordination. In furtherance of the
foregoing and not in limitation of any other right that the Second Priority
Collateral Trustee or any other Second Priority Debt Party has at law or in
equity against any Subsidiary Guarantor by virtue hereof, upon the failure of
the Borrower or any other Obligor to pay any Senior Obligation when and as the
same shall become due, whether at maturity, by acceleration, after notice of
prepayment or otherwise, each Subsidiary Guarantor hereby promises to and will
forthwith pay, or cause to be paid, to the Second Priority Collateral Trustee or
such other Second Priority Debt Party as designated thereby in cash the amount
of such unpaid Second Priority Debt Obligations. Upon payment by any Subsidiary
Guarantor of any sums to the Second Priority Collateral Trustee or
3
any Second Priority Debt Party as provided above, all rights of such Subsidiary
Guarantor against the Borrower arising as a result thereof by way of right of
subrogation, contribution, reimbursement, indemnity or otherwise, including
pursuant to the Second Priority Indemnity, Subrogation and Contribution
Agreement, shall in all respects be subordinate and junior in right of payment
to the prior indefeasible payment in full in cash of all the Second Priority
Debt Obligations. In addition, any indebtedness of the Borrower now or hereafter
held by any Subsidiary Guarantor is hereby subordinated in right of payment to
the prior payment in full of the Second Priority Debt Obligations. If any amount
shall erroneously be paid to any Subsidiary Guarantor on account of (i) such
subrogation, contribution, reimbursement, indemnity or similar right or (ii) any
such indebtedness of the Borrower, such amount shall be held in trust for the
benefit of the Second Priority Debt Parties and shall forthwith be paid to the
Second Priority Collateral Trustee to be credited against the payment of the
Second Priority Debt Obligations, whether matured or unmatured, in accordance
with the terms of the Second Priority Debt Documents and the Collateral Trust
and Intercreditor Agreement.
SECTION 8. Subordination. (a) Second Priority Guarantee Obligations
Subordinated to Senior Guarantee Obligations. The obligations of each Subsidiary
Guarantor under this Agreement (the "Second Priority Guarantee Obligations" of
such Subsidiary Guarantor) shall be subordinated, to the extent and in the
manner provided in this Section 8, to the prior payment by such Subsidiary
Guarantor of its obligations under the Senior Subsidiary Guarantee Agreement
(the "Senior Guarantee Obligations" of such Subsidiary Guarantor); provided,
however, that the obligations of Rite Aid Realty Corp. under the Synthetic Lease
Facility shall not be subordinated to the Senior Guarantee Obligations. This
Section 8 will constitute a continuing offer to all persons who, in reliance
upon its provisions, become holders of, or continue to hold, Senior Secured
Obligations, and such holders made obligees under this Section and they and/or
each of them may enforce it provisions.
(b) No Payment of Second Priority Guarantee Obligations in Certain
Circumstances.
(i) No payment will be made on account of the Second Priority
Guarantee Obligations of any Subsidiary Guarantor (other than payment
obligations of Rite Aid Realty Corp. under the Synthetic Lease
Facility) until the Senior Obligation Payment Date.
(ii) If any payment or distribution of assets, of any Subsidiary
Guarantor is received by any Second Priority Debt Party in respect of
the Second Priority Guarantee Obligations of such Subsidiary Guarantor
at a time when that payment of distribution should not have been made
as a result of clause (i) above, such payment or distribution will be
received and held in trust for and will be paid over to the Senior Debt
Parties in respect of Senior Guarantee Obligations of such Subsidiary
Guarantor which are due and payable and remain unpaid or unprovided for
in cash or cash equivalents until all such Senior Guarantee Obligations
have been paid in full or provided for in cash or cash equivalents (as
allocated by the Senior Collateral Agent), after giving effect to any
concurrent payment or distribution or provision therefor to the Senior
Secured Parties.
4
(c) Second Priority Guarantee Obligations Subordinated to Prior Payment
of all Senior Guarantee Obligations on Dissolution, Liquidation or
Reorganization. Upon any distribution of assets of any Subsidiary Guarantor upon
dissolution, winding up, liquidation or reorganization of such Subsidiary
Guarantor (whether in bankruptcy, insolvency, receivership of similar proceeding
related to such Subsidiary Guarantor or its property or upon an assignment for
the benefit of creditors or otherwise);
(i) the Senior Secured Parties shall be entitled to receive
payment in full in cash or cash equivalents of all amounts then due in
respect of the Senior Guarantee Obligations of such Subsidiary
Guarantor (including all such obligations in respect of interest
accruing subsequent to the commencement of a bankruptcy proceeding in
respect of either the Borrower or such Subsidiary Guarantor, whether or
not allowed or allowable as a claim in such bankruptcy proceeding)
before the Second Priority Debt Parties are entitled to receive any
direct or indirect payment or distribution on account of the Second
Priority Guarantee Obligations of such Subsidiary Guarantor;
(ii) any payment or distribution of cash, properties or
securities of any kind or character to which the Second Priority Debt Parties
would be entitled in respect of the Second Priority Guarantee Obligations of
such Subsidiary Guarantor except for the provisions of this Section 8 will be
paid by the liquidating trustee or agent or other person making such a payment
or distribution directly to the Senior Secured Parties or their representatives
to the extent necessary to make payment in full in or provision for payment in
full in cash or cash equivalents of all Senior Guarantee Obligations of such
Subsidiary Guarantor remaining unpaid, after giving effect to any concurrent
payment or distribution to the Senior Secured Parties; and
(iii) if, notwithstanding the foregoing, any payment or
distribution of any kind or character, whether in cash, property or securities
is received by the Second Priority Debt Parties on account of the Second
Priority Guarantee Obligations of any Subsidiary Guarantor before all Senior
Guarantee Obligations of such Subsidiary Guarantor are paid in full in cash or
cash equivalents, such payment or distribution will be received in trust and
held for and will be paid over to the Senior Secured Parties or their
representatives for application to the payment of such Senior Guarantee
Obligations of such Subsidiary Guarantor until all such Senior Guarantee
Obligations of such Subsidiary Guarantor have been paid in full or provided for
in cash or cash equivalents after giving effect to any concurrent payment or
distribution to the Senior Secured Parties.
(d) For purposes of this Section 8, the words "cash, property or
securities" shall (so long as the effect of this paragraph (d) is not to cause
the Second Priority Guarantee Obligations of any Subsidiary Guarantor to be
treated in any bankruptcy proceedings as part of the same class of claims as the
Senior Guarantee Obligations of such Subsidiary Guarantor or any class of claims
on a parity with or senior to the Senior Guarantee Obligations of any Subsidiary
Guarantor for any payment or distribution) not be deemed to include any payment
or distribution of securities (subordinated at least to the same extent as the
Second Priority Guarantee Obligations of such Subsidiary Guarantor to the
payment of all Senior Guarantee Obligations of such Subsidiary Guarantor then
outstanding) of such Subsidiary Guarantor or any other corporation authorized by
5
an order or decree giving effect, and stating in such order or decree that
effect has been given, to subordination provided for in this Section 8 and made
by a court of competent jurisdiction in a bankruptcy proceeding; provided that
(i) the Senior Guarantee Obligations of such Subsidiary Guarantor are assumed by
the new corporation, if any, resulting from any such reorganization or
readjustment, and (ii) the rights of the Senior Secured Parties are not, without
their consent, altered by such bankruptcy proceeding.
(e) Second Priority Debt Parties to be Subrogated to Rights of Senior
Secured Parties. Following the payment in full in cash or cash equivalents or
provision for payment in full in cash or cash equivalents of all Senior
Guarantee Obligations of any Subsidiary Guarantor, the Second Priority Debt
Parties will be subrogated to the rights of the Senior Secured Parties to
receive payments or distributions of assets in respect of the Senior Subsidiary
Guarantee Obligations of such Subsidiary Guarantor until all amounts owing in
respect of the Second Priority Guarantee Obligations of such Subsidiary
Guarantor have been pay in full, and for the purpose of such subrogation no such
payments or distributions to the Senior Secured Parties by or on behalf of such
Subsidiary Guarantor or by or on behalf of the Second Priority Debt Parties by
virtue of this Section which otherwise would have been made to the Second
Priority Debt Parties will, as between such Subsidiary Guarantor and the Second
Priority Debt Parties, be deemed to be payment by such Subsidiary Guarantor to
or on account of its Senior Guarantee Obligations, it being understood that the
provisions of this Section are and are intended solely for the purpose of
defining the relative rights of the Second Priority Debt Parties, on the one
hand, and the Senior Secured Parties, on the other hand.
(f) Obligations of the Subsidiary Guarantors Unconditional. Nothing
contained in this Section 8 or elsewhere in this Agreement is intended to or
will impair, as between the Subsidiary Guarantors and the Second Priority Debt
Parties, the obligations of the Subsidiary Guarantors, which are absolute and
unconditional, to pay to the Second Priority Debt Parties the Second Priority
Guarantee Obligations as when they become due and payable in accordance with
their terms, or is intended to or will affect the relative rights of the Second
Priority Debt Parties and creditors of the Subsidiary Guarantors other than the
Senior Secured Parties, nor will anything herein or therein prevent any Second
Priority Debt Party from exercising all remedies otherwise permitted by
applicable law upon default under the Second Priority Debt Documents, subject to
the rights of the Senior Secured Parties, if any, under this Section, and under
the Collateral Trust and Intercreditor Agreement.
(g) Subordination Rights not Impaired by Acts or Omissions of the
Subsidiary Guarantors or Senior Secured Parties. No right of any present or
future Senior Secured Parties to enforce subordination as provided herein will
at any time in any way be prejudiced or impaired by any act or failure to act on
the part of any Subsidiary Guarantor or by any act or failure to act by any such
Senior Secured Parties, or by any noncompliance by any Subsidiary Guarantor with
the terms of this Agreement, regardless of any knowledge thereof which any such
holder may have or otherwise be charged with.
SECTION 9. Information. Each of the Subsidiary Guarantors assumes all
responsibility for being and keeping itself informed of the Borrower's financial
condition and assets, and of all
6
other circumstances bearing upon the risk of nonpayment of the Senior
Obligations and the nature, scope and extent of the risks that such Subsidiary
Guarantor assumes and incurs hereunder, and agrees that none of the Second
Priority Collateral Trustee or the other Second Priority Debt Parties will have
any duty to advise any of the Subsidiary Guarantors of information known to it
or any of them regarding such circumstances or risks.
SECTION 10. Representations and Warranties. Each of the Subsidiary
Guarantors represents and warrants as to itself that all representations and
warranties relating to it contained in the Second Priority Debt Documents are
true and correct.
SECTION 11. Termination. The Guarantees made hereunder (a) shall
terminate when all the Second Priority Debt Obligations have been indefeasibly
paid in full and (b) shall continue to be effective or be reinstated, as the
case may be, if at any time payment; or any part thereof, of any Second Priority
Debt Obligations is rescinded or must otherwise be restored by any Second
Priority Debt Party or any Subsidiary Guarantor upon the bankruptcy or
reorganization of the Borrower, any Subsidiary Guarantor or otherwise.
SECTION 12. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Subsidiary Guarantors that are
contained in this Agreement shall bind and inure to the benefit of each party
hereto and their respective successors and assigns. This Agreement shall become
effective as to any Subsidiary Guarantor when a counterpart hereof executed on
behalf of such Subsidiary Guarantor shall have been delivered to the Second
Priority Collateral Trustee, and a counterpart hereof shall have been executed
on behalf of the Second Priority Collateral Trustee, and thereafter shall be
binding upon such Subsidiary Guarantor and the Second Priority Collateral
Trustee and their respective successors and assigns, and shall inure to the
benefit of such Subsidiary Guarantor, the Second Priority Collateral Trustee and
the other Second Priority Debt Parties, and their respective successors and
assigns, except that no Subsidiary Guarantor shall have the right to assign its
rights or obligations hereunder or any interest herein (and any such attempted
assignment shall be void). If all of the capital stock of a Subsidiary Guarantor
is sold, transferred or otherwise disposed of pursuant to a transaction
permitted by the Second Priority Debt Documents, such Subsidiary Guarantor shall
be released from its obligations under this Agreement without further action.
This Agreement shall be construed as a separate agreement with respect to each
Subsidiary Guarantor and may be amended, modified, supplemented, waived or
released with respect to any Subsidiary Guarantor without the approval of any
other Subsidiary Guarantor and without affecting the obligations of any other
Subsidiary Guarantor hereunder.
SECTION 13. Waivers; Amendment. (a) No failure or delay of the Second
Priority Collateral Trustee in exercising any power or right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the Second
Priority Collateral Trustee hereunder and of the other Second Priority Debt
Parties under the
7
other Second Priority Debt Documents are cumulative and are not exclusive of any
rights or remedies that they would otherwise have. No waiver of any provision of
this Agreement or consent to any departure by any Subsidiary Guarantor therefrom
shall in any event be effective unless the same shall be permitted by clause
(b), and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice or demand on any
Subsidiary Guarantor in any case shall entitle such Subsidiary Guarantor to any
other or further notice or demand in similar or other circumstances.
(b) None of the terms or provisions of this Agreement may be waived,
amended, supplemented or otherwise modified except by a written instrument
executed by each Subsidiary Guarantor affected thereby and by the Second
Priority Collateral Trustee with the written consent of the Second Priority
Instructing Group, provided that (i) any provision of this Agreement may be
waived by the Second Priority Instructing Group pursuant to a letter or
agreement executed by the Second Priority Collateral Trustee or by telecopy
transmission from the Second Priority Collateral Trustee, in either case with
the prior written consent of the Second Priority Instructing Group and (ii) any
amendment, waiver, supplement or other modification which by its terms adversely
affects the rights of the Second Priority Debt Parties under a particular Second
Priority Facility in a manner materially different from its effect on the other
Second Priority Facilities shall only be effective with the consent of the
Second Priority Representative for each Second Priority Facility so adversely
affected.
SECTION 14. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 15. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, facsimile
transmission or similar writing) and shall be given to such party: (x) in the
case of the Second Priority Collateral Trustee, at its address or facsimile
number set forth on the signature pages hereof, (y) in the case of each
Subsidiary Guarantor, in care of the Borrower, at the address of the Borrower or
facsimile number set forth on the signature pages of the Collateral Trust and
Intercreditor Agreement or (z) in the case of any party, such other address or
facsimile number as such party may hereafter specify for the purpose by notice
to the Second Priority Collateral Trustee and the Borrower. Each such notice,
request or other communication shall be effective if given by facsimile, when
such communication is transmitted to the facsimile number specified in this
Section and confirmation of receipt is received, if given by mail, 72 hours
after such communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid or if given by any other means, when delivered
at the address specified in this Section.
SECTION 16. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made by the Subsidiary Guarantors
herein and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement or any other Second Priority Debt
Document shall be considered to have been relied upon by the Second Priority
Collateral Trustee and the other Second Priority Debt Parties and shall survive
the effectiveness of the Second Priority Debt Documents regardless of any
investigation made by
8
the Second Priority Debt 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
under any Second Priority Debt Documents or any other fee or amount payable
under this Agreement or any other Second Priority Debt Document is outstanding
and unpaid.
(b) In the event any one or more of the provisions contained in this
Agreement or in any other Second Priority Debt Document should be held invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby (it being understood that the
invalidity of a particular provision in a particular jurisdiction shall not in
and of itself affect the validity of such provision in any other jurisdiction).
The parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 17. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract, and shall become effective as
provided in Section 12. Delivery of an executed signature page to this Agreement
by facsimile transmission shall be as effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 18. Rules of Interpretation. References in this Agreement to
"Articles", "Sections", "Schedules" or "Exhibits" shall be to Articles,
Sections, Schedules or Exhibits of or to this Agreement unless otherwise
specifically provided. Any defined terms may, unless the context otherwise
requires, be used in the singular or plural depending on the reference.
"Include" or "includes" shall be deemed to be followed by "without limitation"
whether or not they are in fact followed by such words or words of like import.
"Writing", "written" and comparable terms refer to printing, typing and other
means of reproducing words in a visible form. References to any agreement or
contract are to such agreement or contract as amended, modified or supplemented
from time to time in accordance with the terms hereof and thereof. References to
any Person include the successors and assigns of such Person. References "from"
or "through" any date mean, unless otherwise specified, "from and including" or
"through and including", respectively.
SECTION 19. Jurisdiction; Consent to Service of Process. (a) Each
Subsidiary Guarantor 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 Second Priority Debt 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
9
right that the Second Priority Collateral Trustee or any other Second Priority
Debt Party may otherwise have to bring any action or proceeding relating to this
Agreement or the other Second Priority Debt Documents against any Subsidiary
Guarantor or its properties in the courts of any jurisdiction.
(b) Each Subsidiary Guarantor 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
Second Priority Debt 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 15. 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 20. 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 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 SENIOR LOAN DOCUMENTS, AS APPLICABLE, BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 20.
SECTION 21. Additional Subsidiary Guarantors. Pursuant to the Second
Priority Debt Documents, certain Domestic Subsidiaries of the Borrower that were
not in existence on the date of the Second Priority Debt Documents are required
to enter into this Agreement as a Subsidiary Guarantor upon becoming a
Subsidiary. Upon execution and delivery after the date hereof by the Second
Priority Collateral Trustee and such a Subsidiary of an instrument in the form
of Annex 1, such Subsidiary shall become a Subsidiary Guarantor hereunder with
the same force and effect as if originally named as a Subsidiary Guarantor
herein. The execution and delivery of any instrument adding an additional
Subsidiary Guarantor as a party to this Agreement shall not require the consent
of any other Subsidiary Guarantor hereunder. The rights and obligations of each
Subsidiary Guarantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Subsidiary Guarantor as a party to this
Agreement.
SECTION 22. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Second Priority Debt Party is hereby authorized at any
time and from time to
10
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other Debt at any time owing by such Second Priority Debt Party to or
for the credit or the account of any Subsidiary Guarantor against any or all the
obligations of such Subsidiary Guarantor now or hereafter existing under this
Agreement and the other Second Priority Debt Documents held by such Second
Priority Debt Party, irrespective of whether or not such Second Priority Debt
Party shall have made any demand under this Agreement or any other Second
Priority Debt Document and although such obligations may be unmatured and
regardless of the adequacy of any Collateral. The rights of each Second Priority
Debt Party under this Section 22 are in addition to other rights and remedies
(including other rights of setoff) which such Second Priority Debt Party may
have.
SECTION 23. Collateral Trust and Intercreditor Agreement. Each of the
parties to this Agreement acknowledges and agrees, for the benefit of each other
party to the Collateral Trust and Intercreditor Agreement, that notwithstanding
anything herein to the contrary, the terms of this Agreement, and the rights and
remedies of the parties hereto (except as otherwise provided with regards to the
Synthetic Lease Obligations as referenced in Section 8), are subordinate to the
interests of the Senior Secured Parties and subject to the Collateral Trust and
Intercreditor Agreement.
11
IN WITNESS WHEREOF, the parties hereto have duly executed this Second
Priority Subsidiary Guarantee Agreement as of the day and year first above
written.
WILMINGTON TRUST COMPANY, as Second Priority
Collateral Trustee,
By________________________________
Name:
Title:
EACH OF THE SUBSIDIARIES LISTED ON
SCHEDULE I HERETO, as Grantors,
By________________________________
Name:
Title:
THRIFTY PAYLESS, INC., as Grantor,
By________________________________
Name:
Title:
12
Schedule I to the
Second Priority Guarantee Agreement
Subsidiary Guarantors
000 Xxxxxxxx Xxxxxx Xxxxxxx, LLC
0000 Xxxx Xxxxx Xxxxxx Xxxxx, Xxxxx, LLC
0000 Xxxxxxx Xxxx - Xxxxxxxx Inc.
1740 Associates, LLC
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 Xxxxxxxx Xx. Xxxx.
000 Xxxxx Xxxxxxxx- Xxxxxx, Xxxx, LLC
Xxx & Government Streets- Mobile, Alabama, LLC
Apex Drug Stores, Inc.
Baltimore/Annapolis Boulevard & Governor Richie Hwy-Glen Burnie, MD, LLC
Broadview and Wallings -Broadview Heights Ohio, Inc.
Xxxxxxx Xxxxxx xxx Xxxx Xxxxxx- Xxxxx, XX, LLC
Dominion Action Four Corporation
Dominion Action One Corporation
Dominion Action Three Corporation
Dominion Action Two Corporation
Dominion Drug Stores Corporation
Drug Fair of PA, Inc.
Drug Fair, Inc.
Eagle Managed Care Corp.
Eighth and Water Streets- Ulrichsville, Ohio, LLC
England Street-Asheland Corporation GDF, Inc.
Gettysburg and Hoover-Dayton, Ohio, LLC
Gratiot & Center-Saginaw Township, Michigan, LLC Harco, Inc.
Xxxxx Xxxxxx Xxxxxx Corporation
K&B Alabama Corporation
K&B Florida Corporation
K&B Louisiana Corporation
K&B Mississippi Corporation
K&B Services, Inc.
K&B Tennessee Corporation
K&B Texas Corporation
K&B Trainees, Inc.
K&B, Incorporated
Xxxx & Besthoff, Inc.
Keystone Centers, Inc.
Lakehurst and Broadway Corporation
Xxxxxxxx & Chillicothe Roads- Chesterland, LLC
Xxxxxx & Xxxxxxx LLC
Name Rite, LLC
Northline & Xxx- Xxxxxx- Southgate, LLC
Ocean Acquisition Corporation
P.L.D. Enterprises, Inc.
Xxxxxx Drive and Navy Boulevard Property Corporation
Paw Paw Lake Road & Paw Paw Avenue-Coloma, Michigan, LLC
PDS-1 Michigan, Inc.
Perry Distributors, Inc.
Perry Drug Stores, Inc.
PL Xpress, Inc.
Portfolio Medical Services, Inc.
Rack Rite Distributors, Inc.
Ram-Utica, Inc.
RDS Detroit, Inc.
Reads, Inc.
Rite Aid Drug Palace, Inc.
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.
2
Rite Aid of Virginia, Inc.
Rite Aid of Washington, D.C., Inc.
Rite Aid of West Virginia, Inc.
Rite Aid Realty Corp.
Rite Aid Rome Distribution Center, Inc.
Rite Aid Transport, Inc.
Rite Aid Venturer #1, Inc.
Rite Fund, Inc.
Rite Investments Corporation
RX Choice, Inc.
Script South
Seven Mile and Evergreen- Detroit, LLC
Silver Springs Road-Baltimore, Maryland/One, LLC
Silver Springs Road-Baltimore, Maryland/Two, LLC
Sophie One Corp.
State & Fortification Streets-Jackson, Mississippi, LLC
Xxxxx Xxxxxx xxx Xxxx Xxxx-Xxxxxx, Xxxx, LLC
Super Distributors, Inc.
Super Ice Cream Suppliers, Inc.
Super Laboratories, Inc.
Super Pharmacy Network, Inc.
Super Tobacco Distributors, Inc
The Lane Drug Company
The Xxxx Company
Thrifty Corporation
Thrifty Payless, Inc
Thrifty Wilshire, Inc.
Tyler and Xxxxxxx Roads, Birmingham-Alabama, LLC
Virginia Corporation
W.R.A.C., Inc.
Fairground, LLC
Xxxxxxxxxx'x Enterprises, Inc.
Leader Drugs, Inc.
3
Annex 1 to the
Second Priority Guarantee Agreement
SUPPLEMENT NO. dated as of , to the Second
Priority Guarantee Agreement dated as of June 27, 2001 (as the
same may be amended, supplemented or otherwise modified from
time to time, the "Second Priority Guarantee Agreement"),
among each of the subsidiaries listed on Schedule I thereto
(each such subsidiary individually, a "Subsidiary Guarantor"
and collectively, the "Subsidiary Guarantors") of RITE AID
CORPORATION, a Delaware corporation (the "Borrower"), and
WILMINGTON TRUST COMPANY, a Delaware banking corporation, as
collateral agent (the "Second Priority Collateral Trustee")
for the Second Priority Debt Parties.
A. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Second Priority Guarantee
Agreement.
B. In accordance with Section 21 of the Second Priority Subsidiary
Guarantee Agreement, the Domestic Subsidiary by its signature below becomes a
Subsidiary Guarantor (the "New Subsidiary Guarantor") under the Second Priority
Subsidiary Guarantee Agreement with the same force and effect as if originally
named therein as a Subsidiary Guarantor and the New Subsidiary Guarantor hereby
(a) agrees to all the terms and provisions of the Second Priority Subsidiary
Guarantee Agreement applicable to it as a Subsidiary Guarantor thereunder and
(b) represents and warrants that the representations and warranties made by it
as a Subsidiary Guarantor thereunder are true and correct on and as of the date
hereof. Each reference to a "Subsidiary Guarantor" in the Second Priority
Subsidiary Guarantee Agreement shall be deemed to include the New Subsidiary
Guarantor. The Second Priority Subsidiary Guarantee Agreement is hereby
incorporated herein by reference.
Accordingly, the Second Priority Collateral Trustee and the New
Subsidiary Guarantor agree as follows:
SECTION 1. In accordance with Section 21 of the Second Priority
Guarantee Agreement, the New Subsidiary Guarantor by its signature below becomes
a Subsidiary Guarantor under the Second Priority Guarantee Agreement with the
same force and effect as if originally named therein as a Subsidiary Guarantor
and the New Subsidiary Guarantor hereby (a) agrees to all the terms and
provisions of the Second Priority Guarantee Agreement applicable to it as a
Subsidiary Guarantor thereunder and (b) represents and warrants that the
representations and warranties made by it as a Subsidiary Guarantor thereunder
are true and correct on and as of the date hereof. Each reference to a
"Subsidiary Guarantor" in the Second Priority Guarantee Agreement shall be
deemed to include the New Subsidiary Guarantor. The Second Priority Guarantee
Agreement is hereby incorporated herein by reference.
SECTION 2. The New Subsidiary Guarantor represents and warrants to the
Second Priority Collateral Trustee and the other Second Priority Debt Parties
that this Supplement has been duly authorized, executed and delivered by it and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Second Priority Collateral Trustee shall have received counterparts of this
Supplement that, when taken together, bear the signatures of the New Subsidiary
Guarantor and the Second Priority Collateral Trustee. Delivery of an executed
signature page to this Supplement by facsimile transmission shall be as
effective as delivery of a manually executed counterpart of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the Second Priority
Guarantee 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, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Second Priority Guarantee Agreement shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision hereof in a particular jurisdiction shall not in and of
itself affect the validity of such provision in any other jurisdiction). The
parties hereto shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 7. All communications and notices hereunder shall be in writing
and given as provided in Section 15 of the Second Priority Guarantee Agreement.
All communications and notices hereunder to the New Subsidiary Guarantor shall
be given to it at the address set forth under its signature below, with a copy
to the Borrower.
SECTION 8. The New Subsidiary Guarantor agrees to reimburse the Second
Priority Collateral Trustee for its out-of-pocket expenses in connection with
this Supplement, including the fees, disbursements and other charges of counsel
for the Second Priority Collateral Trustee.
IN WITNESS WHEREOF, the New Subsidiary Guarantor and the Second
Priority Collateral Trustee have duly executed this Supplement to the Second
Priority Guarantee Agreement as of the day and year first above written.
2
[NAME OF NEW SUBSIDIARY GUARANTOR],
By________________________________
Name:
Title:
WILMINGTON TRUST COMPANY, as Second
Priority Collateral Trustee,
By________________________________
Name:
Title:
3
Annex 2 to
the Senior Subsidiary
Guarantee Agreement
DEFINITIONS ANNEX
