Exhibit 10.12
EXECUTION COPY
FIRST PRIORITY SUBSIDIARY SECURITY AGREEMENT
FIRST PRIORITY SUBSIDIARY SECURITY AGREEMENT,
dated as of June 12, 2000, made by the DOMESTIC
SUBSIDIARIES identified on the signature pages
hereto and any other person that becomes a Domestic
Subsidiary pursuant to the Exchange Debt Facility
Documents (as such term is defined below) (the
"Grantors"), in favor of ▇▇▇▇▇▇ Guaranty Trust
Company of New York, as agent (in such capacity,
the "Agent" for the Exchange Debt Parties.
The Exchange Debt Parties have extended credit to the Borrower
pursuant to the Exchange Debt Facility Documents. It is a condition
precedent, among other conditions, to the effectiveness of the Exchange
Debt Facility Documents that the Grantors execute and deliver an agreement
in the form hereof to secure the Exchange Debt Obligations.
Accordingly, the Grantors and the Agent, on behalf of itself and each
Exchange Debt Party (and each of their respective successors or assigns),
hereby agree as follows:
SECTION 1. Defined Terms.
SECTION 1.01. Definitions. (a) Unless otherwise defined herein,
terms used herein shall have the meanings given in the Definitions Annex
annexed hereto and by this reference incorporated herein, or if not defined
therein, in the Exchange Debt Facility.
(b) The following terms shall have the following meanings:
"Agreement" means this First Priority Subsidiary Security Agreement,
as the same may be amended, modified or otherwise supplemented from time to
time.
"Event of Default" means an "Event of Default" as defined in the
Exchange Debt Facility.
"Exchange Debt First Priority Collateral" is defined in Section 2 of
this Agreement.
"Indemnitee" means the Exchange Debt Parties and their respective
officers, directors, trustees, affiliates and controlling persons.
"Prescription Files" means, as to any Grantor, all right, title and
interest of such Grantor in and to all prescription files maintained by it
or on its behalf, including without limitation all patient profiles,
customer lists, customer information and other records of prescriptions
filled by it, in whatever form and wherever maintained by it or on its
behalf, and all goodwill and other intangible assets arising from the
maintenance of such records and the possession of the information contained
therein.
"Proceeds" means with respect to each Grantor, any consideration
received from the sale, exchange, collection or other disposition of any
asset or property which constitutes Exchange Debt First Priority
Collateral.
"Records" means with respect to each Grantor, all files, records,
ledger sheets, and documents covering or relating to any of the
Prescription Files or Proceeds, including all such files, records, ledger
sheets, and documents covering or relating to any of the Prescription Files
stored in electronic form.
SECTION 1.02. Other Definitional Provisions. (a) The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section references are to this
Agreement unless otherwise specified. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without
limitation".
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. Grant of Security Interest. As collateral security for the
prompt and complete payment and performance when due, whether at the stated
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise of the Exchange Debt Obligations, each Grantor hereby grants to
the Agent, for the ratable benefit of the Exchange Debt Parties, a first
priority security interest in all of the following property now owned or at
any time hereafter acquired by such Grantor (collectively, with respect to
each Grantor, the "Exchange Debt First Priority Collateral"):
(a) all Prescription Files;
(b) all Records; and
(c) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing.
Such security interests are granted as security only and shall not
subject any Exchange Debt Party to, or in any way alter or modify, any
obligation or liability of any Grantor with respect to or arising out of
the Exchange Debt First Priority Collateral.
No recourse may be had pursuant to or by reason of this Agreement to
any asset of any Grantor other than Exchange Debt First Priority
Collateral, it being understood that any such recourse afforded by any
other Exchange Debt Facility Document is unaffected by this or any other
provision of this Agreement.
Nothing contained in this Section 2 is intended to limit any
Grantor's right to create Permitted Liens (as defined below).
SECTION 3. Representations and Warranties. Each Grantor hereby
represents and warrants, as to itself and the Exchange Debt First Priority
Collateral in which the security interest is created hereunder, that:
SECTION 3.01. Title; No Other Liens. Except for the security interest
granted to the Agent for the ratable benefit of the Exchange Debt Parties
pursuant to this Agreement and the other Liens permitted to exist pursuant
to the Exchange Debt Facility Documents (the "Permitted Liens"), each
Grantor owns each item of the Exchange Debt First Priority Collateral free
and clear of any and all Liens or claims of others (or arrangements
reasonably satisfactory to the Agent have been made for the timely release
or discharge of such Liens), it being understood that the right, title and
interest of such Grantor is in all cases subject to the right of the
patient to direct that a prescription be delivered or otherwise transmitted
to, and filled by, another affiliated or unaffilliated pharmacy. No
security agreement, financing statement or other public notice with respect
to all or any part of such Exchange Debt First Priority Collateral is on
file or of record in any public office, except such as have been filed or
will be filed, pursuant to this Agreement, in favor of the Agent, for the
ratable benefit of the Exchange Debt Parties, or in respect of Permitted
Liens (or arrangements reasonably satisfactory to the Agent have been made
for the timely termination of such agreement or financing statement).
SECTION 3.02. Enforceable Obligation; Perfected, First Priority
Security Interests. This Agreement constitutes a legal, valid and binding
obligation of each Grantor, enforceable against such Grantor in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting
creditors' rights generally and except as enforceability may be limited by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law), and the security interests
granted pursuant to this Agreement (a) upon completion of the filings and
other actions specified in Schedule 1 hereto (or in the case of
Instruments, delivery to the Agent or its designee) shall constitute fully
perfected security interests in the Exchange Debt First Priority Collateral
in favor of the Agent for the ratable benefit of the Exchange Debt Parties,
and (b) are prior and superior in right to all other Liens (other than
Permitted Liens, to the extent that such Permitted Liens are expressly
permitted by the Exchange Debt Facility Documents to have priority) on the
Exchange Debt First Priority Collateral in existence on the date hereof.
SECTION 3.03. Prescription Files. The Prescription Files owned by
such Grantor, including all related Documents, are kept at the locations
listed in Schedule 2 hereto, which shall be updated from time to time in
accordance with Section 4.03 of this Agreement, or at such other locations
as shall be permitted by Section 4.02.
SECTION 3.04. Chief Executive Office; Jurisdiction of Organization.
As of the Closing Date, each Grantor's chief executive office, principal
place of business and jurisdiction of incorporation or organization is
located at the locations listed in Schedule 4 hereto.
SECTION 4. Covenants. Each Grantor covenants and agrees with the
Exchange Debt Parties that, from and after the date of this Agreement until
this Agreement is terminated and the security interests created hereby are
released:
SECTION 4.01. Maintenance of Perfected Security Interest; Further
Documentation. (a) Each Grantor shall cause all filings and other actions
listed in Schedule 1 to be taken. Each Grantor shall maintain the security
interests created by this Agreement as first priority perfected security
interests subject only to Liens, to the extent such Permitted Liens are
expressly permitted by the Exchange Debt Facility Documents to have
priority, and shall defend such security interests against all claims and
demands of all persons whomsoever (other than those pursuant to Permitted
Liens).
(b) At any time and from time to time, upon the written request of
the Agent, and at the sole expense of a Grantor, such Grantor shall
promptly and duly execute and deliver such further instruments and
documents and take such further action as the Agent may reasonably request
for the purpose of obtaining or preserving the full benefits of this
Agreement and of the rights and powers herein granted, including, without
limitation, the filing of any financing or continuation statements under
the Uniform Commercial Code in effect in any jurisdiction with respect to
the security interests created hereby.
SECTION 4.02. Changes in Locations, Name, etc. A Grantor shall not,
except (x) upon prior written notice to the Agent and delivery to the Agent
of a written supplement to Schedule 2 showing the additional location or
locations at which Prescription Files, including all related Documents,
shall be kept, and (y) if filings under the Uniform Commercial Code or
otherwise have been made which maintain in favor of the Agent a valid,
legal and perfected security interest in the Exchange Debt First Priority
Collateral subject to no liens, other than Permitted Liens,
(a) permit any of the Prescription Files, including all related
Documents, to be kept at a location other than those listed in
Schedule 2 hereto;
(b) change the location of its chief executive office,
principal place of business and jurisdiction of incorporation or
organization from that specified in Schedule 4 hereto; or
(c) change its (i) corporate name or any trade name used to
identify it in its conduct of business or in the ownership of its
properties, (ii) identity or (iii) corporate structure to such an
extent that any financing statement filed in favor of the Agent in
connection with this Agreement would become seriously misleading.
SECTION 4.03. Further Identification of Exchange Debt First Priority
Collateral. Each Grantor shall furnish to the Agent from time to time
statements and schedules further identifying and describing the Exchange
Debt First Priority Collateral and such other reports in connection with
such Exchange Debt First Priority Collateral as the Agent may reasonably
request, all in reasonable detail.
SECTION 4.04. Notices. A Grantor shall advise the Agent promptly, in
reasonable detail, in accordance with Section 11 hereto, of:
(a) any Lien (other than security interests created hereby or
Permitted Liens) on any material portion of the Exchange Debt First
Priority Collateral; and
(b) the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the security interests
created hereby or on the aggregate value of the Exchange Debt First
Priority Collateral.
SECTION 4.05. Agent's Liabilities and Expenses; Indemnification. (a)
Notwithstanding anything to the contrary provided herein, the Agent assumes
no liabilities with respect to any claims regarding each Grantor's
ownership (or purported ownership) of, or rights or obligations (or
purported rights or obligations) arising from, the Exchange Debt First
Priority Collateral or any use (or actual or alleged misuse) whether
arising out of any past, current or future event, circumstance, act or
omission or otherwise, or any claim, suit, loss, damage, expense or
liability of any kind or nature arising out of or in connection with the
Exchange Debt First Priority Collateral or the production, marketing,
delivery, sale or provision of goods or services under or in connection
with any of the Exchange Debt First Priority Collateral. All of such
liabilities shall, as between the Agent, the Exchange Debt Parties and the
Grantors, be borne exclusively by the Grantors unless such liability arises
from the gross negligence or willful misconduct of the Agent or any
Exchange Debt Party.
(b) Each Grantor hereby agrees to pay all reasonable expenses of the
Agent and the other Exchange Debt Parties and to indemnify the Agent and
the other Exchange Debt Parties with respect to any and all losses, claims,
damages, liabilities and related expenses in respect of this Agreement or
the Exchange Debt First Priority Collateral in each case to the extent and
under the circumstances the Borrower is required to do so pursuant to the
Exchange Debt Facility Documents.
(c) Any amounts payable as provided hereunder shall be additional
Exchange Debt Obligations secured hereby and by the other Exchange Debt
First Priority Collateral Documents. Without prejudice to the survival of
any other agreements contained herein, all indemnification and
reimbursement obligations contained herein shall survive the payment in
full of the principal and interest and other amounts due under the Exchange
Debt Facility Documents and the termination of this Agreement.
SECTION 5. Provisions Relating to Prescription Files.
SECTION 5.01. Appraisal of Prescription Files. In addition to its
right under the Exchange Debt Facility Documents, the Agent shall have the
right upon the occurrence and during the continuance of an Event of Default
to receive appraisal reports of the Prescription Files in any manner and
through any medium that it considers reasonably advisable, and each Grantor
shall furnish all such assistance and information as the Agent may
reasonably require in connection with such appraisal reports. At any time
and from time to time upon the occurrence and during the continuance of an
Event of Default, upon the Agent's reasonable request and at the expense of
each Grantor, each Grantor shall cause independent appraisers such as
Hilco/Great American Group or others reasonably satisfactory to the Agent
to furnish to the Agent appraisal reports showing a valuation for the
Prescription Files.
SECTION 5.02. Access to Prescription Files and Related Documents.
Subject to Section 25, in addition to its right under the Exchange Debt
Facility Documents, the Agent shall have the right upon the occurrence and
during the continuance of an Event of Default to access the Prescription
Files and related Documents. Each Grantor hereby agrees that the Agent, or
a person at the direction of the Agent, as necessary for the Agent, or such
person at the direction of the Agent, shall have the right to use, without
charge, all data processing equipment, computers and related programs and
other software, necessary or desirable in order to access the Exchange Debt
First Priority Collateral in furtherance of the Agent's rights under this
Agreement and the other Exchange Debt Facility Documents.
SECTION 6. Remedies.
SECTION 6.01. Application of Proceeds. Upon the occurrence and
during the continuance of an Event of Default, the proceeds of any sale or
other realization upon any Exchange Debt First Priority Collateral will be
applied as soon as practicable after receipt as follows:
FIRST: to the Agent in an amount equal to the fees and
expenses of the Agent pursuant to this Agreement and the
Exchange Debt Facility Documents that are unpaid as of the
applicable date of receipt of such proceeds, and to any
Exchange Debt Party which has theretofore advanced or paid any
such fees and expenses of the Agent in an amount equal to the
amount thereof so advanced or paid by such Exchange Debt Party
pro rata based on the amount of such fees and expenses (or such
advances or payment);
SECOND: to the Agent to reimburse any amounts owing to the
Agent pursuant to Section 7.03;
THIRD: to the Agent, for distribution to the Exchange
Debt Parties to be applied to the payment of the Exchange Debt
Obligations then due and owing, pro rata based on the amount of
Exchange Debt Obligations then due and owing (after giving
effect to any payments previously made under this Section),
until all of the Exchange Debt Obligations then due and owing
have been paid in full; and
FOURTH: after payment in full of all Exchange Debt
Obligations, to Rite Aid and the Grantors or their successors
or assigns, as their interests may appear, or to whosoever may
be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.
SECTION 6.02. Uniform Commercial Code Remedies. Subject in all
respects to Section 25 hereof, if an Event of Default shall have occurred
and be continuing, the Agent, on behalf of the Exchange Debt Parties may
exercise, in addition to all other rights and remedies granted to them in
this Agreement and in any other instrument or agreement securing,
evidencing or relating to the Exchange Debt Obligations, all rights and
remedies of a senior secured party under the Uniform Commercial Code.
Without limiting the generality of the foregoing, the Agent, without demand
of performance or other demand, presentment, protest, advertisement or
notice of any kind (except any notice required by law referred to below) to
or upon a Grantor or any other person (all and each of which demands,
defenses, advertisements and notices are hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Exchange Debt First Priority Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase, or
otherwise dispose of and deliver the Exchange Debt First Priority
Collateral or any part thereof (or contract to do any of the foregoing), in
one or more parcels at public or private sale or sales, at any exchange,
broker's board or office of any Exchange Debt Party or elsewhere upon such
terms and conditions as it may deem advisable and at such prices as it may
deem best, for cash or on credit or for future delivery without assumption
of any credit risk. Any Exchange Debt Party shall have the right upon any
such public sale or sales, and, to the extent permitted by law, upon any
such private sale or sales, to purchase the whole or any part of the
Exchange Debt First Priority Collateral so sold, free of (to the extent
permitted by law) any right or equity of redemption in a Grantor, which
right or equity is hereby, to the extent permitted by law, waived or
released. Each Grantor further agrees, at the Agent's request, to assemble
the Exchange Debt First Priority Collateral and make it available to the
Agent at places which the Agent shall reasonably select, whether at such
Grantor's premises or elsewhere. The Agent shall apply the net proceeds of
any such collection, recovery, receipt, appropriation, realization or sale,
after deducting all reasonable costs and expenses incurred therein or
incidental to the care or safekeeping of any of such Exchange Debt First
Priority Collateral or reasonably relating to such Exchange Debt First
Priority Collateral or the rights of the Agent and the Exchange Debt
Parties hereunder, including, without limitation, reasonable attorneys'
fees and disbursements, to the payment in whole or in part of the Exchange
Debt Obligations, in accordance with Section 6.01, and only after such
application and after the payment by the Agent of any other amount required
by any provision of law, need the Agent account for the surplus, if any, to
such Grantor. If any notice of a proposed sale or other disposition of such
Exchange Debt First Priority Collateral shall be required by law, such
notice shall be in writing and deemed reasonable and proper if given at
least 10 days before such sale or other disposition.
The Agent shall have absolute discretion as to the time of application
of any such proceeds, moneys or balances in accordance with this Agreement.
Upon any sale of the Exchange Debt First Priority Collateral by the Agent
(including pursuant to a power of sale granted by statute or under a
judicial proceeding), the receipt of the Agent or of the officer making the
sale shall be a sufficient discharge to the purchaser or purchasers of the
Exchange Debt First Priority Collateral so sold and such purchaser or
purchasers shall not be obligated to see to the application of any part of
the purchase money paid over to the Agent or such officer or be answerable
in any way for the misapplication thereof.
SECTION 6.03. Waiver. Each Grantor waives and agrees not to assert
any rights or privileges it may acquire under Section 9-112 of the Uniform
Commercial Code.
SECTION 7. Agent's Appointment as Attorney-in-Fact; Agent's Performance
of Grantors' Obligations.
SECTION 7.01. Powers. Each Grantor hereby irrevocably constitutes
and appoints the Agent and any officer or agent thereof, with full power of
substitution, during the continuance of an Event of Default, as its true
and lawful attorney-in-fact, with full irrevocable power and authority in
the place and stead of such Grantor and in the name of such Grantor or in
its own name from time to time in the Agent's discretion, for the purpose
of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes of this
Agreement, and, without limiting the generality of the foregoing, such
Grantor hereby gives the Agent the power and right, on behalf of such
Grantor, without notice to or assent by such Grantor, to do the following
upon the occurrence and during the continuance of an Event of Default:
(a) to pay or discharge taxes and Liens levied or placed on or
threatened against the Exchange Debt First Priority Collateral (other
than Permitted Liens);
(b) to execute, in connection with any sale provided for in
Section 6.02 hereof, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Exchange
Debt First Priority Collateral;
(c)(i) to sign and indorse any documents in connection with any
of the Exchange Debt First Priority Collateral; (ii) to commence and
prosecute any suits, actions or proceedings at law or in equity in
any court of competent jurisdiction to collect the Exchange Debt
First Priority Collateral or any thereof and to enforce any other
right in respect of any Exchange Debt First Priority Collateral;
(iii) to defend any suit, action or proceeding brought against any
Grantor with respect to any Exchange Debt First Priority Collateral;
(iv) to settle, compromise or adjust any such suit, action or
proceeding and, in connection therewith, to give such discharges or
releases as the Agent may deem appropriate; and (v) generally, to
use, sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Exchange Debt First Priority
Collateral as fully and completely as though the Agent were the
absolute owner thereof for all purposes, and to do, at the Agent's
option and at the expense of such Grantor, at any time, or from time
to time, all acts and things which the Agent reasonably deems
necessary to protect, preserve or realize upon such Exchange Debt
First Priority Collateral and the Agent's and the Exchange Debt
Parties' security interests therein and to effect the intent of this
Agreement, all as fully and effectively as such Grantor might do; and
(d) to file any financing statement, or to take such other
steps, required to perfect any security interest described herein.
SECTION 7.02. Performance by Agent of Grantor's Obligations. If any
Grantor fails to perform or comply with any of its agreements contained
herein, the Agent, at its option, but without any obligation so to do, may
perform or comply, or otherwise cause performance or compliance, with such
agreement.
SECTION 7.03. Grantor's Reimbursement Obligation. The expenses of
the Agent and any Exchange Debt Party, as applicable, reasonably incurred
in connection with actions undertaken as provided in this Section 7,
together with interest thereon at a rate per annum equal to the default
rate of interest set forth in Section 2.04(c) of the Exchange Debt
Facility, from the date payment is demanded by the Agent to the date
reimbursed by such Grantor, shall be payable by the Borrower to the Agent
on demand.
SECTION 7.04. Ratification; Power Coupled With An Interest. Each
Grantor hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.
SECTION 8. Duties of Exchange Debt Parties. No Exchange Debt Party
nor any of its respective directors, officers, employees or agents shall be
liable for failure to demand, collect or realize upon any of the Exchange
Debt First Priority Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Exchange Debt
First Priority Collateral upon the request of a Grantor or any other person
or to take any other action whatsoever with regard to the Exchange Debt
First Priority Collateral or any part thereof. The powers conferred on the
Exchange Debt Parties hereunder are solely to protect the Exchange Debt
Parties' interests in the Exchange Debt First Priority Collateral and shall
not impose any duty upon any Exchange Debt Party to exercise any such
powers. The Exchange Debt Parties shall be accountable only for amounts
that they actually receive as a result of the exercise of such powers, and
neither they nor any of their officers, directors, employees or agents
shall be responsible to any Grantor for any act or failure to act
hereunder, except for their own gross negligence or wilful misconduct.
SECTION 9. Execution of Financing Statements. Pursuant to Section
9-402 of the Uniform Commercial Code, each Grantor authorizes the Agent to
file financing statements with respect to the Exchange Debt First Priority
Collateral without the signature of such Grantor in such form and in such
filing offices as the Agent reasonably determines appropriate to perfect
the security interests of the Agent under this Agreement. A carbon,
photographic or other reproduction of this Agreement shall be sufficient as
a financing statement for filing in any jurisdiction.
SECTION 10. Authority of Agent. Each Grantor acknowledges that the
rights and responsibilities of the Agent under this Agreement with respect
to any action taken by the Agent or the exercise or non-exercise by the
Agent of any option, voting right, request, judgment or other right or
remedy provided for herein or resulting or arising out of this Agreement
shall, as between the Agent and the other Exchange Debt Parties, be
governed by the Exchange Debt Facility Documents and by such other
agreements with respect thereto as may exist from time to time among them
but, as between the Agent and the Grantors, the Agent shall be conclusively
presumed to be acting as agent for the other Exchange Debt Parties with
full and valid authority so to act or refrain from acting.
SECTION 11. Notices. All notices, requests and demands to or upon
the Exchange Debt Parties or the Grantors under this Agreement shall be
given or made in accordance with Section 9.01 of the Exchange Debt Facility
and addressed as follows:
(a) if to the Agent, in accordance with Section 9.01 of the
Exchange Debt Facility;
(b) if to any Grantor, c/o the Borrower in accordance with
Section 9.01 of the Exchange Debt Facility;
SECTION 12. Security Interest Absolute. All rights of the Agent
hereunder, the security interest and all obligations of the Grantors
hereunder shall be absolute and unconditional.
SECTION 13. Survival of Agreement. All covenants, agreements,
representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Exchange Debt Facility Document
shall be considered to have been relied upon by the Exchange Debt Parties
and shall survive the execution and delivery to the Exchange Debt Parties
of the amendments to the Exchange Debt Facility Documents, regardless of
any investigation made by the Exchange 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, or any fee or any other amount payable under
or in respect of this Agreement or any other Exchange Debt Facility
Document is outstanding and unpaid.
SECTION 14. 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 ANY OF THE OTHER
EXCHANGE DEBT FACILITY 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
15.
SECTION 15. Jurisdiction; Consent to Service of Process. (a) Each
Grantor 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 Exchange Debt Facility
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 any obligor
or any Exchange Debt Party may otherwise have to bring any action or
proceeding relating to this Agreement or the other Exchange Debt Facility
Documents against any Grantor or any Exchange Debt Party or its properties
in the courts of any jurisdiction.
(b) Each Grantor and each Exchange Debt Party 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 Exchange Debt Facility 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 11. 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 16 Release. (a) This Agreement and the security interest
created hereunder shall terminate when all Exchange Debt Obligations have
been fully and indefeasibly paid, at which time the Agent shall execute and
deliver to each Grantor, or to such person or persons as such Grantor shall
reasonably designate, all Uniform Commercial Code termination statements
and similar documents prepared by such Grantor at its expense which such
Grantor shall reasonably request to evidence such termination. Any
execution and delivery of termination statements or documents pursuant to
this Section 16(a) shall be without recourse to or warranty by the Agent.
(b) All Exchange Debt First Priority Collateral used, sold,
transferred or otherwise disposed of in accordance with the terms of the
Exchange Debt Facility Document (including pursuant to a waiver or
amendment of the terms thereof) shall be used, sold, transferred or
otherwise disposed of free and clear of the Lien and the security interest
created hereunder. In connection with the foregoing, (i) the Agent shall
execute and deliver to each Grantor, or to such person or persons as such
Grantor shall reasonably designate, all Uniform Commercial Code termination
statements and similar documents prepared by such Grantor at its expense
which such Grantor shall reasonably request to evidence the release of the
Lien and security interest created hereunder with respect to such Exchange
Debt First Priority Collateral and (ii) any representation, warranty or
covenant contained herein relating to such Exchange Debt First Priority
Collateral shall no longer be deemed to be made with respect to such used,
sold, transferred or otherwise disposed Exchange Debt First Priority
Collateral.
SECTION 17. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction. The parties hereunder 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 18. Amendments in Writing; No Waiver. (a) None of the terms
or provisions of this Agreement may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Grantors
and the Agent, provided that any provision of this Agreement may be waived
by the Required Banks (as defined in the Exchange Debt Facility) pursuant
to a letter or agreement executed by the Agent or by telecopy transmission
from the Agent, in either case with the prior written consent of the
Required Banks.
(b) No Exchange Debt Party shall by any act (except by a written
instrument pursuant to Section 18 hereof) or delay be deemed to have waived
any right or remedy hereunder or to have acquiesced in any Default or Event
of Default or in any breach of any of the terms and conditions hereof. No
failure to exercise, nor any delay in exercising, on the part of any
Exchange Debt Party, any right, power or privilege hereunder shall operate
as a waiver thereof. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. A waiver by any
Exchange Debt Party of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which such Exchange
Debt Party would otherwise have on any future occasion.
SECTION 19. Remedies Cumulative. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any other rights or remedies provided by law.
SECTION 20. Section Headings. The section and Section headings used
in this Agreement are for convenience of reference only and are not to
affect the construction hereof or be taken into consideration in the
interpretation hereof.
SECTION 21. Successors and Assigns. This Agreement shall be binding
upon the successors and assigns of each Grantor and shall inure to the
benefit of each Grantor and the Exchange Debt Parties and their successors
and assigns, provided that this Agreement may not be assigned by any
Grantor without the prior written consent of the Agent.
SECTION 22. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
SECTION 23. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract.
SECTION 24. Additional Grantors. Pursuant to the Exchange Debt
Facility Documents, each Domestic Subsidiary that was not in existence or
not a Domestic Subsidiary on the date thereof is required to enter into
this Agreement as a Grantor upon becoming a Domestic Subsidiary. Upon
execution and delivery, after the date hereof, by the Agent and such
Domestic Subsidiary of an instrument in the form of Annex 1, such Domestic
Subsidiary shall become a Grantor hereunder with the same force and effect
as if originally named as a Grantor hereunder. The execution and delivery
of any such instrument shall not require the consent of any Grantor
hereunder. The rights and obligations of each Grantor hereunder shall
remain in full force and effect notwithstanding the addition of any new
Grantor as a party to this Agreement.
SECTION 25. Patient Confidentiality. Notwithstanding any other
provision of this Agreement, the Agent hereby agrees on behalf of itself
and each Exchange Debt Party and any of their designees and assigns to, and
shall take all reasonable steps to, comply with all applicable state or
federal laws or administrative regulations regarding the confidentiality of
patient records and patient medical information it receives in connection
with the transactions described in this Agreement.
Notwithstanding any other provision of this Agreement, enforcement
hereof is limited as set forth in Section 5.02(e) of the Collateral Trust
and Intercreditor Agreement.
IN WITNESS WHEREOF, the undersigned has caused this First Priority
Subsidiary Security Agreement to be duly executed and delivered as of the
date first above written.
EACH OF THE SUBSIDIARIES LISTED ON
SCHEDULE A HERETO, as a Grantor
By:
-------------------------------------
Name:
Title:
▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF
NEW YORK, as Agent
By:
-------------------------------------
Name:
Title:
THRIFTY PAYLESS, INC., as a Grantor
By:
-------------------------------------
Name:
Title:
PCS HEALTH SYSTEMS, INC., as a Grantor
By:
-------------------------------------
Name:
Title:
Schedules:
---------
Annex 1 Supplement
Schedule A Grantors
Schedule 1 Filings and Other Actions Required to Perfect Security Interests
Schedule 2 Prescription Files
Schedule 3 Perfection Certificate
Schedule 4 Chief Executive Office, Principal Place of Business and Jurisdiction of
Incorporation or Organization
Annex 1
to the First Priority Subsidiary
Security Agreement
SUPPLEMENT NO. dated as of [ ] (this "Supplement") to the First
Priority Subsidiary Security Agreement dated as of June 12, 2000 (the
"First Priority Subsidiary Security Agreement"), between the DOMESTIC
SUBSIDIARIES identified on the signature pages thereto and any other person
that becomes a Domestic Subsidiary (the "Grantors"), in favor of ▇▇▇▇▇▇
GUARANTY TRUST COMPANY OF NEW YORK, as agent (the "Agent") for the Second
Priority Secured Parties.
A. Reference is made to the (a) the Exchange Debt Facility Documents
and (b) the First Priority Subsidiary Security Agreement dated as of June
12, 2000, among the Subsidiary Guarantors and the Agent.
B. The Grantors have entered into the First Priority Subsidiary
Security Agreement in order to induce the Exchange Parties to enter into
the Exchange Debt Facility Documents. Pursuant to the Exchange Debt
Facility Documents, each Domestic Subsidiary that was not in existence or
not a Domestic Subsidiary on the date thereof is required to enter into the
First Priority Subsidiary Security Agreement as a Grantor upon becoming a
Domestic Subsidiary. Section 24 of the First Priority Subsidiary Security
Agreement provides that additional Domestic Subsidiaries may become
Grantors under the First Priority Subsidiary Security Agreement by
execution and delivery of an instrument in the form of this Supplement. The
undersigned (the "New Grantor") is a Domestic Subsidiary and is executing
this Supplement in accordance with the requirements of the Exchange Debt
Facility Documents to become a Grantor under the First Priority Subsidiary
Security Agreement as consideration for credit previously extended to the
Borrower.
Accordingly, the Agent and the New Grantor agree as follows:
SECTION 1. In accordance with Section 24 of the First Priority
Subsidiary Security Agreement, the New Grantor by its signature below
becomes a Grantor under the First Priority Subsidiary Security Agreement
with the same force and effect as if originally named therein as a Grantor
and the New Grantor hereby agrees to all the terms and provisions of the
First Priority Subsidiary Security Agreement applicable to it as a Grantor
thereunder. Each reference to a "Grantor" in the First Priority Subsidiary
Security Agreement shall be deemed to include the New Grantor. The First
Priority Subsidiary Security Agreement is hereby incorporated herein by
reference.
SECTION 2. The New Grantor represents and warrants to the Exchange
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, subject to the effects
of applicable bankruptcy, insolvency or similar laws affecting creditors'
rights generally and equitable principles of general applicability.
SECTION 3. This Supplement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument. This Supplement
shall become effective when the Agent shall have received counterparts of
this Supplement that, when taken together, bear the signatures of the New
Grantor and the Agent.
SECTION 4. Except as expressly supplemented hereby, the First
Priority Subsidiary Security 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, neither party hereto shall be required to comply with such
provision for so long as such provision is held to be invalid, illegal or
unenforceable, but the validity, legality and enforceability of the
remaining provisions contained herein and in the First Priority Subsidiary
Security Agreement shall not in any way be affected or impaired. 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 the Exchange Debt Facility. All
communications and notices hereunder to the New Grantor shall be given to
it c/o the Borrower as set forth in Section 9.01 of the Exchange Debt
Facility.
IN WITNESS WHEREOF, the New Grantor and the Agent have duly executed
this Supplement to the Senior Priority Subsidiary Security Agreement as of
the day and year first above written.
[NAME OF NEW GRANTOR],
By:
-------------------------------------
Name:
Title:
▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF
NEW YORK, as Agent
By:
-------------------------------------
Name:
Title:
Schedule A
to the First Priority Subsidiary
Security Agreement
DOMESTIC SUBSIDIARIES
Schedule 1
to the First Priority Subsidiary
Security Agreement
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
Schedule 2
to the First Priority Subsidiary
Security Agreement
PRESCRIPTION FILES LOCATIONS
Schedule 3
to the First Priority Subsidiary
Security Agreement
PERFECTION CERTIFICATE
Schedule 4
to the First Priority Subsidiary
Security Agreement
CHIEF EXECUTIVE OFFICE, PRINCIPAL PLACE OF BUSINESS AND
JURISDICTION OF INCORPORATION OR ORGANIZATION