Exhibit 10.9
EXECUTION COPY
SECOND PRIORITY SUBSIDIARY GUARANTEE
AGREEMENT dated as of June 12, 2000, 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 trustee (in such capacity, the "Second
Priority Collateral Trustee") for the holders from
time to time of the Second Priority Debt
Obligations.
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.
The Second Priority Debt Parties have extended credit to the Borrower
or one or more of its Subsidiaries pursuant to the Second Priority Debt
Documents. Each of the Subsidiary Guarantors is a wholly owned Subsidiary
of the Borrower and acknowledges that it has and will continue to derive
substantial benefit from the credit so extended under the Second Priority
Debt Documents. It is a condition precedent, among other conditions, to the
effectiveness of pending amendments to and extensions 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 lenders party to the
Second Priority Debt Documents to enter into such amendments and
extensions, the Subsidiary Guarantors are willing to execute this
Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. GUARANTEE. (a) 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. 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.
(b) 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, in each case 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 Senior 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 subsection (b) are
applicable, any such reduction shall be applied to the obligations of such
Subsidiary Guarantor hereunder before any reduction in the obligations 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.
SECTION 5. NO DISCHARGE OR DIMINISHMENT OF GUARANTEE. Except as
contemplated by Sections 1(b) and 11 hereof, 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 Second Priority Debt 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 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 Obligations 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. 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 guarantor under the Second Priority Debt Documents to
pay any Second Priority Debt 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 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, subject to the provision of Section 8
hereof, 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). 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 provisions are made
for the benefit of the holders of Senior Secured Obligations, and such
holders made obligees under this Section and they and/or each of them may
enforce its provisions.
(b) No Payment on 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 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 or 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.
(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 or
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 proceeding 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 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 paid 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 sole 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 and 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 other circumstances bearing upon
the risk of nonpayment of the Second Priority Debt 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 Obligation is rescinded or must
otherwise be restored by any Second Priority Debt Party 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
(including, without limitation, any such disposition by way of merger or
consolidation) 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 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 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 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 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 Document or any other fee or amount payable under this
Agreement or any other Second Priority Debt Document remain 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" and "including" 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 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 any other Second Priority Debt Document 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 SECOND
PRIORITY DEBT 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 SECOND PRIORITY DEBT 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, each Domestic Subsidiary of the Borrower that was
not in existence on the date hereof is 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 (as defined in
any Second Priority Debt Document) shall have occurred and be continuing,
each Second Priority Debt Party is hereby authorized at any time and from
time to 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 indebtedness 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 the other Second Priority Debt
Documents 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 are subject to
the Collateral Trust and Intercreditor Agreement and subordinated as
provided therein.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
EACH OF THE SUBSIDIARIES LISTED
ON SCHEDULE I HERETO,
as a Subsidiary Guarantor
By:
-------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
as Second Priority Collateral Trustee
By:
-------------------------------------
Name:
Title:
THRIFTY PAYLESS, INC.,
as a Subsidiary Guarantor
By:
-------------------------------------
Name:
Title:
PCS HEALTH SYSTEMS, INC.,
as a Subsidiary Guarantor
By:
-------------------------------------
Name:
Title:
Schedule I to the
Second Priority Subsidiary Guarantee Agreement
Subsidiary Guarantor
--------------------
Annex 1 to the
Second Priority Subsidiary Guarantee Agreement
SUPPLEMENT NO. dated as of , to the Second Priority
Subsidiary Guarantee Agreement dated as of June 12, 2000,
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 trustee (in such
capacity, the "Second Priority Collateral Trustee") for
the holders from time to time of the Second Priority Debt
Obligations.
A. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Second Priority
Subsidiary Guarantee Agreement.
B. The Subsidiary Guarantors have entered into the Second Priority
Guarantee Agreement as a condition precedent to the effectiveness of the
Second Priority Debt Documents. Pursuant to the Second Priority Debt
Documents, each Domestic Subsidiary (as defined therein) of the Borrower is
required to enter into the Second Priority Guarantee Agreement as a
Subsidiary Guarantor upon becoming a Domestic Subsidiary. Section 21 of the
Second Priority Subsidiary Guarantee Agreement provides that additional
Subsidiaries of the Borrower may become Subsidiary Guarantors under the
Second Priority Subsidiary Guarantee Agreement by execution and delivery of
an instrument in the form of this Supplement. The undersigned Subsidiary of
the Borrower (the "New Subsidiary Guarantor") is executing this Supplement
in accordance with the requirements of the Second Priority Debt Documents
to become a Subsidiary Guarantor under the Second Priority Subsidiary
Guarantee Agreement.
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
Subsidiary Guarantee Agreement, the New Subsidiary Guarantor by its
signature below becomes a 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.
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 Subsidiary 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 Subsidiary 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
Subsidiary 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
Senior Subsidiary Guarantee Agreement as of the day and year first above
written.
[NAME OF NEW SUBSIDIARY GUARANTOR],
By:
-------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY, as Second
Priority Collateral Trustee
By:
-------------------------------------
Name:
Title:
