EXECUTION COPY
SENIOR SUBSIDIARY SECURITY AGREEMENT
SENIOR SUBSIDIARY SECURITY AGREEMENT, dated
as of June 27, 2001, as amended and restated as
of May 28, 2003 (as amended, supplemented or
otherwise modified from time to time, this
"Agreement"), made by the SUBSIDIARY GUARANTORS
identified on the signature pages hereto and any
other Person that becomes a Subsidiary Guarantor
pursuant to the Senior Credit Agreement (as such
term is defined below) (collectively, the
"Grantors"), in favor of CITICORP NORTH AMERICA,
INC., a Delaware corporation ("CNAI"), as senior
collateral processing co-agent, and JPMORGAN
CHASE BANK, a New York banking corporation
("JPMCB"), as senior collateral processing
co-agent (each, individually in such capacity, a
"Senior Collateral Agent", and collectively, the
"Senior Collateral Agents") for the Senior
Secured Parties.
Reference is made to the Senior Credit Agreement, dated as of June
27, 2001, as amended and restated as of May 28, 2003 (as amended, supplemented
or otherwise modified from time to time, the "Senior Credit Agreement"), among
Rite Aid Corporation, a Delaware corporation (the "Borrower"), the lenders
from time to time party thereto (the "Senior Lenders"), CNAI, as
administrative agent for the Senior Lenders, and JPMCB, as syndication agent
for the Senior Lenders. Reference is also made to the Senior Subsidiary
Security Agreement dated as of June 27, 2001 (as amended, supplemented or
otherwise modified from time to time prior to the Restatement Effective Date,
the "Original Senior Subsidiary Security Agreement") among the Subsidiary
Guarantors identified on the signature pages thereto and each other Person
that became a Subsidiary Guarantor pursuant to the Senior Credit Agreement
prior to the Restatement Effective Date (collectively, the "Original
Grantors") and Citicorp USA, Inc., a Delaware corporation, as senior
collateral agent (in such capacity, the "Original Senior Collateral Agent"),
pursuant to which the Original Grantors agreed to secure the Senior
Obligations (as defined in the Original Senior Subsidiary Security Agreement).
The Original Grantors and the Original Senior Collateral Agent now wish to
amend and restate the Original Senior Subsidiary Security Agreement in its
entirety as set forth herein to secure the obligations of the Borrower under
the Senior Credit Agreement.
The Senior Lenders have agreed to make Loans to the Borrower, and the
Issuing Banks have agreed to issue Letters of Credit for the account of the
Borrower, pursuant to, and upon the terms and subject to the conditions
specified in, the Senior Credit Agreement. Each of the Subsidiary Guarantors
has agreed to guarantee, among other things, all the obligations of the
Borrower under the Senior Credit Agreement. In order to induce the Senior
Lenders to make the Loans and the Issuing Banks to issue Letters of Credit,
the Grantors have agreed to guarantee the due and punctual payment of the
Senior Obligations pursuant to the terms of the senior subsidiary guarantee
agreement dated as of June 27, 2001, as amended and restated as of May 28,
2003 (as amended, supplemented or otherwise modified from time to time, the
"Senior Subsidiary Guarantee Agreement") among the Borrower, the Subsidiary
Guarantors and the Senior Collateral Agents for the benefit of the Senior
Secured Parties.
Accordingly, the Grantors and the Senior Collateral Agents, on behalf
of themselves and each Senior Secured Party (and each of their respective
successors and assigns), hereby agree as follows:
SECTION 1. Defined Terms.
SECTION 1.01. Definitions. (a) Unless otherwise defined herein
capitalized terms used herein shall have the meanings given in the Definitions
Annex attached as Annex 2 hereto (as amended, supplemented or otherwise
modified from time to time), or if not defined therein, as defined in the
Senior Credit Agreement. All terms defined in the New York UCC (as defined
herein) and not defined in this Agreement shall have the meanings specified
therein.
(b) The following terms shall have the following meanings:
"Accounts Receivable" means, with respect to each Grantor, all right,
title and interest of such Grantor to Accounts and all of its right, title and
interest in any returned goods, together with all rights, titles, securities
and guaranties with respect thereto, including any rights to stoppage in
transit, replevin, reclamation and resales, and all related security
interests, liens and pledges, whether voluntary or involuntary in each case
whether due or become due, whether now or hereafter arising in the future.
"Blocked Account" means each of the accounts established by the
applicable Grantors listed in Section 4 of Schedule 3 to this Agreement and
maintained with a Blocked Account Bank pursuant to a Blocked Account
Agreement.
"Blocked Account Agreement" means any Blocked Account Agreement
between the Senior Collateral Agents and a Blocked Account Bank substantially
in the form of Schedule 4 to this Agreement.
"Blocked Account Bank" means any bank or financial institution that
is satisfactory to the Senior Collateral Agents that executes and delivers to
the Senior Collateral Agents a Blocked Account Agreement.
"Blocked Account Cash Sweep Notice" means a notice in the form
attached as Exhibit A to the Blocked Account Agreement.
"Cash Management Accounts" mean, collectively, (a) the Blocked
Accounts, (b) the Deposit Accounts, (c) the Concentration Account and (d) the
Citibank Concentration Accounts.
"Cash Management System" means the system of cash management
described in Schedule 3 to this Agreement.
"Cash Sweep Cash Collateral Account" means the collateral account
established as part of the Cash Management System at Citibank, N.A. and under
the sole dominion and control of the Senior Collateral Agents, Account No.
00000000.
"Cash Sweep Notice" means (a) any Blocked Account Cash Sweep Notice
and (b) the Concentration Account Cash Sweep Notice.
"Cash Sweep Period" means any period in which funds are transferred
from (a) any Blocked Account to the Concentration Account or any Citibank
Concentration Account, as applicable, pursuant to a Blocked Account Cash Sweep
Notice or (b) the Concentration Account to any Citibank Concentration Account
pursuant to a Concentration Account Cash Sweep Notice.
"Citibank Concentration Account" means the account established at
Citibank and under sole dominion and control of the Senior Collateral Agents,
Account No. [00000000], together with any similar account established at
Citibank, N.A. for the purpose of collecting funds during a Cash Sweep Period.
"Concentration Account" means the cash collateral account established
at JPMorgan Chase Bank and maintained with the Concentration Account Bank
pursuant to a Concentration Account Agreement, Account No. 9102750222.
"Concentration Account Agreement" means a Concentration Account
Agreement between any Subsidiary Guarantor, the Senior Collateral Agents and a
bank or financial institution satisfactory to the Senior Collateral Agents
substantially in the form of Schedule 7 to this Agreement.
"Concentration Account Bank" means a bank or financial institution
that is satisfactory to the Senior Collateral Agents that executes and
delivers to the Senior Collateral Agents a Concentration Account Agreement.
"Concentration Account Cash Sweep Notice" means a notice in the form
attached as Exhibit A to the Concentration Account Agreement.
"Contracts" means, with respect to each Grantor, all rights of such
Grantor under all contracts and agreements to which such Grantor is a party or
under which such Grantor has any right, title or interest or to which such
Grantor or any property of such Grantor is subject, as the same may from time
to time be amended, supplemented or otherwise modified, including, without
limitation, (a) all rights of such Grantor to receive moneys due and to become
due to it thereunder or in connection therewith, (b) all rights of such
Grantor to damages arising out of, or for, breach or default in respect
thereof and (c) all rights of such Grantor to exercise all remedies
thereunder.
"Copyright License" means any written agreement, now or hereafter in
effect, granting any right to any third party under any copyright now or
hereafter owned by any Grantor or that such Grantor otherwise has the right to
license, or granting any right to any Grantor under any copyright now or
hereafter owned by any third party, and all rights of such Grantor under any
such agreement.
"Copyrights" means all of the following now owned or hereafter
acquired by any Grantor: (a) all copyright rights in any work subject to the
copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, and (b) all registrations and applications
for registration of any such copyright in the United States or any other
country, including registrations, recordings, supplemental registrations and
pending applications for registration in the United States Copyright Office.
"Deposit Account" means, collectively, (a) the Lockbox Account and
(b) the Government Lockbox Account, as well as any demand, time, savings,
passbook, or similar account maintained with a bank or other financial
institution. The term "Deposit Account" shall not include investment property
or accounts evidenced by an instrument.
"Event of Default" means an "Event of Default" as defined in the
Senior Credit Agreement.
"Government Lockbox Account" means the deposit account and
corresponding lockbox established and maintained at Mellon Bank, N.A., Account
No. 0000000 or another Government Lockbox Account Bank.
"Government Lockbox Account Agreement" means any Government Lockbox
Account Agreement between the Senior Collateral Agents and a Government
Lockbox Account Bank substantially in the form of Schedule 6 to this
Agreement.
"Government Lockbox Account Bank" means any bank or financial
institution that is satisfactory to the Senior Collateral Agents that executes
and delivers to the Senior Collateral Agents a Government Lockbox Account
Agreement.
"Indemnitee" means the Senior Secured Parties and their respective
officers, directors, trustees, affiliates and controlling Persons.
"Intellectual Property" means all inventions, designs, Patents,
Copyrights, Licenses, Trademarks, trade secrets, confidential or proprietary
technical and business information, know-how, show-how or other data or
information, software and databases and all embodiments or fixations thereof
and related documentation, registrations and franchises, and all additions,
improvements and accessions to, and books and records describing or used in
connection with, any of the foregoing.
"Intercompany Advances" means any advances or open accounts owing by
the Borrower or any Subsidiary to any Grantor.
"License" means any Patent License, Trademark License, Copyright
License or other license or sublicense agreement to which any Grantor is a
party.
"Lockbox Account" means the deposit account and corresponding lockbox
established at Mellon Bank, N.A. and maintained with the Lockbox Account Bank
pursuant to a Lockbox Account Agreement, Account No. 0000000.
"Lockbox Account Agreement" means any Lockbox Account Agreement
between the Senior Collateral Agents and a Lockbox Account Bank substantially
in the form of Schedule 5 to this Agreement.
"Lockbox Account Bank" means any bank or financial institution that
is satisfactory to the Senior Collateral Agents that executes and delivers to
the Senior Collateral Agents a Lockbox Account Agreement.
"New York UCC" means the Uniform Commercial Code as in effect from
time to time in the State of New York.
"Patent License" means any written agreement, now or hereafter in
effect, granting to any third party any right to make, use or sell any
invention on which a patent, now or hereafter owned by any Grantor or that any
Grantor otherwise has the right to license, is in existence, or granting to
any Grantor any right to make, use or sell any invention on which a patent,
now or hereafter owned by any third party, is in existence, and all rights of
any Grantor under any such agreement.
"Patents" means all of the following now owned or hereafter acquired
by any Grantor: (a) all letters patent of the United States or any other
country, all registrations and recordings thereof, and all applications for
letters patent of the United States or the equivalent thereof in any other
country, including registrations, recordings and pending applications in the
United States Patent and Trademark Office or the equivalent thereof in any
similar offices in any other country, and (b) all reissues, continuations,
divisions, continuations-in-part, renewals or extensions thereof, and the
inventions disclosed or claimed therein, including the right to make, use
and/or sell the inventions disclosed or claimed therein.
"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 information contained therein.
"Proceeds" has the meaning specified in Section 9-102 of the New York
UCC, and shall include (a) all cash and negotiable instruments received by or
held on behalf of the Senior Collateral Agents, (b) any claim of any Grantor
against any third party for (and the right to xxx and recover for and the
rights to damages or profits due or accrued arising out of or in connection
with) (i) past, present or future infringements of any Patent now or hereafter
owned by any Grantor, or licensed under a Patent License, (ii) past, present
or future infringement or dilution of any Trademark now or hereafter owned by
any Grantor or licensed under a Trademark License or injury to the goodwill
associated with or symbolized by any Trademark now or hereafter owned by any
Grantor, (iii) past, present or future breach of any License and (iv) past,
present or future infringement of any Copyright now or hereafter owned by any
Grantor or licensed under a Copyright License and (c) any and all other
amounts from time to time paid or payable under or in connection with any of
the Senior Collateral.
"Senior Collateral" is defined in Section 2 of this Agreement.
"Senior Collateral Account" means any collateral account established
by the Senior Collateral Agents as provided in Section 5.03 or Section 7.02.
"Trademark License" means any written agreement, now or hereafter in
effect, granting to any third party any right to use any trademark now or
hereafter owned by any Grantor or that any Grantor otherwise has the right to
license, or granting to any Grantor any right to use any trademark now or
hereafter owned by any third party, and all rights of any Grantor under any
such agreement.
"Trademarks" means all of the following now owned or hereafter
acquired by any Grantor: (a) all trademarks, service marks, trade names,
corporate names, company names, business names, fictitious business names,
trade styles, trade dress, logos, other source or business identifiers,
designs and general intangibles of like nature, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
registration and recording applications filed in connection therewith,
including registrations and registration applications in the United States
Patent and Trademark Office or any similar offices in any State of the United
States or any other country or any political subdivision thereof, and all
extensions or renewals thereof, (b) all goodwill associated therewith or
symbolized thereby and (c) all other assets, rights and interests that
uniquely reflect or embody such goodwill.
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 security for the payment or
performance, as the case may be, in full of the obligations under the Senior
Subsidiary Guarantee Agreement, each Grantor hereby assigns and pledges to the
Senior Collateral Agents, jointly, their successors and assigns, for the
ratable benefit of the Senior Secured Parties, and hereby grants to the Senior
Collateral Agents, jointly, their successors and assigns, for the ratable
benefit of the Senior Secured Parties, a security interest in all right, title
or interest now owned or at any time hereafter acquired by such Grantor or in
which such Grantor now has or at any time in the future may acquire any right,
title or interest (collectively, the "Senior Collateral"):
(a) all Accounts Receivable and Chattel Paper;
(b) all Deposit Accounts;
(c) the Cash Management Accounts and the funds on deposit therein;
(d) all Contracts;
(e) all Documents;
(f) all General Intangibles;
(g) all Instruments;
(h) all Intellectual Property;
(i) all Inventory;
(j) all Prescription Files;
(k) all books and records pertaining to any and all of the foregoing;
and
(l) to the extent not otherwise included, all Proceeds and products
of any and all of the foregoing.
Nothing contained in this Section 2 is intended to limit any Grantor's rights
to create Permitted Liens (as defined below). Senior Collateral shall not
include any property specified in Section 2(h) above if the granting of a
security interest therein would jeopardize the Grantor's rights in any pending
intent-to-use applications for Federal Trademark registration. Furthermore,
notwithstanding anything herein to the contrary, in no event shall the
security interest granted under this Section 2 attach to any lease, license,
contract, property rights or agreement to which each Grantor is a party or any
of its rights or interests thereunder if and for so long as the grant of such
security interest shall constitute or result in (i) the abandonment,
invalidation or unenforceability of any right, title or interest of any
Grantor therein or (ii) in a breach or termination pursuant to the terms of,
or a default under, any such lease, license, contract, property rights or
agreement (other than to the extent that any such term would be rendered
ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the Uniform
Commercial Code (or any successor provision or provisions) of any relevant
jurisdiction or any other applicable law or principles of equity); provided
however that such security interest shall attach immediately at such time as
the condition causing such abandonment, invalidation or unenforceability shall
be remedied and, to the extent severable, shall attach immediately to any
portion of such lease, license, contract, property rights or agreement that
does not result in any of the consequences specified in clause (i) or (ii) of
this sentence.
Each Grantor hereby irrevocably authorizes the Senior Collateral
Agents at any time and from time to time to file in any Uniform Commercial
Code jurisdiction any initial financing statements (including fixture filings)
and amendments thereto without the signature of such Grantor in such form and
in such filing offices as the Senior Collateral Agents reasonably determine,
that contain the information required by Article 9 of the Uniform Commercial
Code of each applicable jurisdiction for the filing of any financing statement
or amendment, including (a) whether the Grantor is an organization, the type
of organization and any organizational identification number issued to the
Grantor and (b) in the case of a financing statement filed as a fixture
filing, a sufficient description of the real property to which such Collateral
relates. The Grantor agrees to provide such information to the Senior
Collateral Agents promptly upon request. In addition, each Grantor hereby
authorizes and agrees that such financing statements may describe the Senior
Collateral in the same manner as described herein or may contain an indication
or description of collateral that describes such property in any other manner
as the Senior Collateral Agents may determine, in their sole discretion, is
necessary, advisable or prudent to ensure the perfection of the security
interest in the Collateral granted to the Senior Collateral Agents herein,
including, without limitation, describing such property as "all assets now
owned or hereafter acquired" or "all personal property now owned or hereafter
acquired."
Each Grantor also ratifies its authorization for the Senior
Collateral Agents to file in any Uniform Commercial Code jurisdiction any
initial financing statements or amendments thereto if filed prior to the
Restatement Effective Date.
The Senior Collateral Agents are further authorized to file filings
with the United States Patent and Trademark Office or United States Copyright
Office (or any successor office or any similar office in any other country) or
other documents for the purpose of perfecting, confirming, continuing,
enforcing or protecting the security interest in the Senior Collateral granted
by each Grantor hereunder, without the signature of any Grantor, and naming
any Grantor or the Grantors as debtors and the Senior Collateral Agents as
secured parties.
Such security interests are granted as security only and shall not
subject the Senior Collateral Agents nor any Senior Secured Party to, or in
any way alter or modify, any obligation or liability of any Grantor with
respect to or arising out of the Senior Collateral.
SECTION 3. Representations and Warranties. Each Grantor hereby
represents and warrants, as to itself and the Senior 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 Senior Collateral Agents for the ratable benefit of the Senior
Secured Parties pursuant to this Agreement and the other Liens (including the
Second Priority Liens) permitted to exist pursuant to the Senior Credit
Agreement (the "Permitted Liens"), each Grantor owns each item of the Senior
Collateral free and clear of any and all Liens or claims of others (or
arrangements reasonably satisfactory to the Senior Collateral Agents have been
made for the timely release or discharge of such Liens). No security
agreement, financing statement or other public notice with respect to all or
any part of such Senior 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 Senior Collateral Agents, for the ratable benefit
of the Senior Secured Parties, or in respect of Permitted Liens (or
arrangements reasonably satisfactory to the Senior Collateral Agents have been
made for the timely termination of such agreement or financing statement).
Further, no Grantor has intentionally entered into any contract, lease or
license in anticipation of this Agreement, which by its terms, validly
prohibits the granting of a security interest in the Senior Collateral herein.
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 contemplated by or specified in this Agreement (or in the case
of Instruments, delivery to the Senior Collateral Agents or their designees)
shall constitute fully perfected security interests in the Senior Collateral
in favor of the Senior Collateral Agents for the ratable benefit of the Senior
Secured 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 Senior Loan Documents to have priority) on the
Senior Collateral in existence on the Restatement Effective Date.
SECTION 3.03. Chief Executive Office; Jurisdiction of Incorporation.
As of the Restatement Effective Date, each Grantor's chief executive office,
principal place of business and jurisdiction of incorporation is located at
the locations listed in Schedule 8 hereto.
SECTION 3.04. Farm Products. None of the Senior Collateral
constitutes, or is the Proceeds of, Farm Products (as such term is defined in
the Uniform Commercial Code).
SECTION 3.05. Intellectual Property. (a) Schedule 2 lists all
Intellectual Property owned (and registered with the U.S. Copyright Office or
the U.S. Patent and Trademark Office) or licensed by such Grantor in its own
name on the Restatement Effective Date.
(b) On the date hereof, based on information known, or reasonably
available to such Grantor, all Intellectual Property material to the conduct
of such Grantor's business is valid, subsisting, unexpired and enforceable,
has not been abandoned and does not infringe the intellectual property rights
of any other Person.
(c) Except as set forth in Schedule 2, on the Restatement Effective
Date, none of the Intellectual Property is the subject of any licensing or
franchise agreement pursuant to which such Grantor is the licensor or
franchisor.
(d) On the Restatement Effective Date, based on information known, or
reasonably available to such Grantor, no holding decision or judgment has been
rendered by any Governmental Authority which would materially limit, cancel or
question the validity of, or such Grantor's rights in, any Intellectual
Property in any respect that could reasonably be expected to have a Material
Adverse Effect.
(e) Except as set forth on Schedule 2, on the Restatement Effective
Date, no action or proceeding is pending, or, to the knowledge of such
Grantor, threatened (i) seeking to materially limit, cancel or question the
validity of any Intellectual Property material to the conduct of such
Grantor's business or such Grantor's ownership interest therein, or (ii)
which, if adversely determined, would have a material adverse effect on the
value of any Intellectual Property.
SECTION 4. Covenants. Each Grantor covenants and agrees with the
Senior Secured Parties that, from and after the Restatement Effective Date
until this Agreement is terminated and the security interests created hereby
are released:
SECTION 4.01. Delivery of Instruments. If an Intercompany Advance
owned by such Grantor shall be or become evidenced by any promissory note, or
other Instrument, upon the request of the Senior Collateral Agents, such
promissory note, or other Instrument shall be immediately delivered to the
Senior Collateral Agents, duly indorsed in a manner reasonably satisfactory to
the Senior Collateral Agents, to be held as Senior Collateral pursuant to this
Agreement.
SECTION 4.02. Maintenance of Insurance. Each Grantor shall maintain
insurance policies in accordance with the requirements of Section 5.07 of the
Senior Credit Agreement.
SECTION 4.03. Maintenance of Perfected Security Interest; Further
Documentation. (a) Each Grantor shall maintain the security interests created
by this Agreement as first priority perfected security interests subject only
to Permitted Liens, to the extent such Permitted Liens are expressly permitted
by the Senior Loan 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 Senior Collateral Agents, 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 Senior Collateral Agents 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.
(c) No Grantor shall intentionally enter into any contract, lease or
license which by its terms would validly prohibit the grant of a security
interest in the Senior Collateral under this Agreement.
SECTION 4.04. Further Identification of Senior Collateral. Each
Grantor shall furnish to the Senior Collateral Agents from time to time
statements and schedules further identifying and describing the Senior
Collateral and such other reports in connection with such Senior Collateral as
the Senior Collateral Agents may reasonably request, all in reasonable detail.
SECTION 4.05. Senior Collateral Agents' Liabilities and Expenses;
Indemnification. (a) Notwithstanding anything to the contrary provided herein,
neither the Senior Collateral Agents nor any other Senior Secured Party
assumes any 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 Senior 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 Senior Collateral or the production, marketing, delivery,
sale or provision of goods or services under or in connection with any of the
Senior Collateral. All of such liabilities shall, as between the Senior
Collateral Agents, the Senior Secured Parties and the Grantors, be borne
exclusively by the Grantors unless such liability arises from the gross
negligence or willful misconduct of the Senior Collateral Agents or any Senior
Secured Party.
(b) Each Grantor hereby agrees to pay all reasonable expenses of the
Senior Collateral Agents and the other Senior Secured Parties and to indemnify
the Senior Collateral Agents and the other Senior Secured Parties with respect
to any and all losses, claims, damages, liabilities and related expenses in
respect of this Agreement or the Senior Collateral, in each case to the extent
and under the circumstances the Borrower is required to do so pursuant to
Section 9.03 of the Senior Credit Agreement.
(c) Any amounts payable as provided hereunder shall be additional
Senior Obligations secured hereby and by the other Senior Collateral
Documents. Without prejudice to the survival of any other agreements contained
herein, all indemnification and reimbursement obligations contained herein
shall survive the Senior Obligation Payment Date and the termination of this
Agreement.
SECTION 4.06. Intellectual Property. (a) Each relevant Grantor
(either itself or through licensees) will (i) continue to use each Trademark
material to the conduct of such Grantor's business, to the extent that such
Grantor's business operations continue as to the said goods and/or services
(subject to such Grantor's reasonable business judgment), sufficient to avoid
unintentional abandonment of any rights in such Trademarks, (ii) maintain as
in the past the quality of products and services offered under such Trademark,
(iii) use such Trademark with the appropriate notice of registration and all
other notices and legends required by applicable law, (iv) not knowingly adopt
or use any xxxx which is confusingly similar or a colorable imitation of such
Trademark unless the Senior Collateral Agents, for the ratable benefit of the
Senior Secured Parties, shall obtain a perfected security interest in such
xxxx pursuant to this Agreement, and (v) not knowingly (and not permit any
licensee or sublicensee thereof to) do any act or knowingly omit to do any act
whereby such Trademark material to the conduct of Grantor's business may
become invalidated or impaired in any way.
(b) Such Grantor (either itself or through licensees) will not do any
act, or omit to do any act, whereby any Patent material to the conduct of
Grantor's business may become forfeited, abandoned or dedicated to the public.
(c) Such Grantor (either itself or through licensees) will not
knowingly (and will not permit any licensee or sublicensee thereof to) do any
act or knowingly omit to do any act whereby any portion of the Copyrights
material to the conduct of Grantor's business may become invalidated or
otherwise impaired or fall into the public domain.
(d) Such Grantor (either itself or through licensees) will not do any
act that knowingly uses any material Intellectual Property to infringe the
intellectual property rights of any other Person.
(e) In a status report provided to the Senior Collateral Agents on a
quarterly basis ("Quarterly Status Report"), such Grantor will indicate
whether any application or registration relating to any material Intellectual
Property has been forfeited, abandoned or dedicated to the public, or of any
such determination or development (including, without limitation, the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, the United States Copyright
Office or any court or tribunal in any country) regarding such Grantor's
ownership of, or the validity of, any material Intellectual Property or such
Grantor's right to register the same or to own and maintain the same.
(f) In the Quarterly Status Report provided to the Senior Collateral
Agents pursuant to Section 4.06(e), such Grantor will report whenever such
Grantor, either by itself or through any agent, employee, licensee or
designee, has filed an application for the registration of any Intellectual
Property with the United States Patent and Trademark Office, the United States
Copyright Office or any similar office or agency in any other country or any
political subdivision thereof. Upon request of the Senior Collateral Agents,
such Grantor shall execute and deliver, and have recorded, any and all
agreements, instruments, documents and papers as the Senior Collateral Agents
may request to evidence the Senior Collateral Agents' and Senior Secured
Parties' security interest in any Copyright, Patent or Trademark and the
goodwill and general intangibles of such Grantor relating thereto or
represented thereby.
(g) Such Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States
Patent and Trademark Office, the United States Copyright Office or any similar
office or agency in any other country or any political subdivision thereof, to
maintain and pursue each application (and to obtain the relevant registration)
and to maintain each registration of the Intellectual Property material to the
conduct of Grantor's business, including, without limitation, filing of
applications for renewal, affidavits of use and affidavits of
incontestability.
(h) In the event that any Intellectual Property material to the
conduct of Grantor's business is infringed, misappropriated or diluted by a
third party, such Grantor shall (i) take such actions as such Grantor shall
reasonably deem appropriate under the circumstances to protect such
Intellectual Property and (ii) if such Intellectual Property is of material
economic value, promptly notify the Senior Collateral Agents after it learns
thereof and take all reasonable steps to protect its interests, which may
include bringing suit for infringement, misappropriation or dilution, to seek
injunctive relief where appropriate and to recover any and all damages for
such infringement, misappropriation or dilution.
SECTION 4.07. Cash Management System. (a) The Grantors shall at all
times maintain, and each Subsidiary Guarantor shall comply with its
obligations under, the Cash Management System.
(b) Each Grantor shall use its commercially reasonable efforts to
cause any applicable third party to effectuate the Cash Management System.
SECTION 5. Provisions Relating to Accounts.
SECTION 5.01. Grantors Remain Liable under Accounts. Anything herein
to the contrary notwithstanding, a Grantor shall remain liable under each of
the Accounts to observe and perform all the material conditions and material
obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise to each such Account. No Senior
Secured Party shall have any obligation or liability under any Account (or any
agreement giving rise thereto) by reason of or arising out of this Agreement
or the receipt by the Senior Collateral Agents or any Senior Secured Party of
any payment relating to such Account pursuant hereto, nor shall any Senior
Secured Party be obligated in any manner to perform any of the obligations of
a Grantor under or pursuant to any Account (or any agreement giving rise
thereto), to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any Account (or any agreement giving rise
thereto), to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
SECTION 5.02. Analysis of Accounts. In addition to their rights under
the Senior Credit Agreement, the Senior Collateral Agents shall have the right
upon the occurrence and during the continuance of an Event of Default to make
test verifications of the Accounts in any manner and through any medium that
they considers reasonably advisable, and each Grantor shall furnish all such
assistance and information as the Senior Collateral Agents may reasonably
require in connection with such test verifications. At any time and from time
to time upon the occurrence and during the continuance of an Event of Default,
upon the Senior Collateral Agents' reasonable request and at the expense of
each Grantor, each Grantor shall immediately request and use commercially
reasonable efforts to cause independent public accountants or others
reasonably satisfactory to the Senior Collateral Agents to furnish to the
Senior Collateral Agents reports showing reconciliations, aging and test
verifications of, and trial balances for, the Accounts. Upon the occurrence
and during the continuance of an Event of Default, the Senior Collateral
Agents in their own names or in the name of others may communicate with
Account Debtors on the Accounts to verify with them to the Senior Collateral
Agents' reasonable satisfaction the existence, amount and terms of any
Accounts and to direct all payments to the Senior Collateral Agents. To the
extent reasonably practicable the Senior Collateral Agents will seek to take
such actions through third parties.
SECTION 5.03. Collections on Accounts. (a) The Senior Collateral
Agents hereby authorize each Grantor to collect the Accounts, and the Senior
Collateral Agents may curtail or terminate said authority at any time after
the occurrence and during the continuance of an Event of Default. If required
by the Senior Collateral Agents at any time after the occurrence and during
the continuance of an Event of Default, any payments of Accounts, when
collected by a Grantor during the continuance of such an Event of Default, (i)
shall be forthwith (and, in any event, within two Business Days) deposited by
such Grantor in the exact form received, duly indorsed by such Grantor to the
Senior Collateral Agents if required, in a Senior Collateral Account
maintained under the sole dominion and control of and on terms and conditions
reasonably satisfactory to the Senior Collateral Agents, subject to withdrawal
by the Senior Collateral Agents as provided in Section 8.03, and (ii) until so
turned over, shall be held by such Grantor in trust for the Senior Secured
Parties, segregated from other funds of such Grantor.
(b) At the Senior Collateral Agents' request after the occurrence and
during the continuance of an Event of Default, each Grantor shall deliver to
the Senior Collateral Agents all original and other documents evidencing, and
relating to, the agreements and transactions which gave rise to the Accounts,
including, without limitation, all original orders, invoices and shipping
receipts.
SECTION 5.04. Representations and Warranties. As of the Restatement
Effective Date, the place where each Grantor keeps its records concerning the
Accounts is at the location listed in Schedule 1 hereto.
SECTION 5.05. Covenants. (a) The amount represented by each Grantor
to the Senior Secured Parties from time to time as owing by each account
debtor or by all Account Debtors in respect of the Accounts shall at such time
be in all material respects the correct amount actually owing by such Account
Debtor or debtors thereunder.
(b) Upon the occurrence and during the continuance of an Event of
Default, a Grantor shall not grant any extension of the time of payment of any
of the Accounts Receivable, compromise, compound or settle the same for less
than the full amount thereof, release, wholly or partly, any Person liable for
the payment thereof, or allow any credit or discount whatsoever thereon other
than extensions, credits, discounts, compromises or settlements granted or
made in the ordinary course of business.
(c) Unless a Grantor shall deliver prior written notice, identifying
the change of location for its books and records, such Grantor shall not
remove its books and records from the location specified in Schedule 1.
SECTION 5.06. Deposit Accounts. For each deposit account that any
Grantor at any time opens or maintains, such Grantor shall, at the Senior
Collateral Agents' request and option, pursuant to an agreement in form and
substance satisfactory to the Senior Collateral Agents, either (a) cause the
depositary bank to agree to comply at any time with instructions from the
Senior Collateral Agents to such depositary bank directing the disposition of
funds from time to time credited to such deposit account, without further
consent of such Grantor, or (b) arrange for the Senior Collateral Agents to
become the customers of the depositary bank with respect to the deposit
account, with the Grantor being permitted, only with the consent of the Senior
Collateral Agents, to exercise rights to withdraw funds from such deposit
account. The provisions of this paragraph shall not apply to (i) any deposit
account for which any Grantor, the depositary bank and the Senior Collateral
Agents have entered into a cash collateral agreement specially negotiated
among such Grantor, the depositary bank and the Senior Collateral Agents for
the specific purpose set forth therein and (ii) deposit accounts for which the
Senior Collateral Agents are the depositaries.
SECTION 6. Provisions Relating to Contracts.
SECTION 6.01. Grantors Remain Liable under Contracts. Anything herein
to the contrary notwithstanding, each Grantor shall remain liable under each
Contract to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with and pursuant
to the terms and provisions of such Contract. No Senior Secured Party shall
have any obligation or liability under any Contract by reason of or arising
out of this Agreement or the receipt by any such Senior Secured Party of any
payment relating to such Contract pursuant hereto, nor shall any Senior
Secured Party be obligated in any manner to perform any of the obligations of
a Grantor under or pursuant to any Contract, to make any payment, to make any
inquiry as to the nature or the sufficiency of any payment received by it or
as to the sufficiency of any performance by any party under any Contract, to
present or file any claim, to take any action to enforce any performance or to
collect the payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times.
SECTION 6.02. Communication With Contracting Parties. Upon the
occurrence and during the continuance of an Event of Default, the Senior
Collateral Agents in their own names or in the name of their nominees may
communicate with parties to the Contracts to verify with them to the Senior
Collateral Agents' reasonable satisfaction the existence, amount and terms of
any Contracts. To the extent reasonably practicable the Senior Collateral
Agents will seek to take such actions through third parties.
SECTION 7. Remedies.
SECTION 7.01. Notice to Account Debtors and Contract Parties. Upon
the request of the Senior Collateral Agents at any time after the occurrence
and during the continuance of an Event of Default, a Grantor shall notify
Account Debtors on the Accounts and parties to the Contracts that the Accounts
and the Contracts have been assigned to the Senior Collateral Agents for the
ratable benefit of the Senior Secured Parties and that payments in respect
thereof during the continuance of such an Event of Default shall be made
directly to the Senior Collateral Agents.
SECTION 7.02. Proceeds to be Turned Over To Senior Collateral Agents.
In addition to the rights of the Senior Collateral Agents and the Senior
Secured Parties specified in Section 5.03 with respect to payments of
Accounts, if an Event of Default shall occur and be continuing all Proceeds
received by a Grantor consisting of cash, checks and other near-cash items
shall upon the Senior Collateral Agents' request be held by such Grantor in
trust for the Senior Secured Parties, segregated from other funds of such
Grantor, and shall, upon the Senior Collateral Agents' request (it being
understood that the exercise of remedies by the Senior Secured Parties in
connection with an Event of Default under clauses (h) and (i) of Article VII
of the Senior Credit Agreement shall be deemed to constitute a request by the
Senior Collateral Agents for the purposes of this sentence) forthwith upon
receipt by such Grantor, be turned over to the Senior Collateral Agents in the
exact form received by such Grantor (duly indorsed by such Grantor to the
Senior Collateral Agents, if required) and held by the Senior Collateral
Agents in a Senior Collateral Account maintained under the sole dominion and
control of the Senior Collateral Agents and on terms and conditions reasonably
satisfactory to the Senior Collateral Agents. All Proceeds while held by the
Senior Collateral Agents in a Senior Collateral Account (or by such Grantor in
trust for the Senior Collateral Agents and the Senior Secured Parties) shall
subject to Section 7.03 continue to be held as collateral security for all the
Senior Obligations and shall not constitute payment thereof until applied as
provided in Section 7.03.
SECTION 7.03. Application of Proceeds. (a) So long as the Collateral
Trust and Intercreditor Agreement is in effect, following a Triggering Event
(as defined therein), the proceeds of any sale or other realization upon any
Collateral will be applied as set forth in the Collateral Trust and
Intercreditor Agreement.
(b) At all times when the Collateral Trust and Intercreditor
Agreement is not in effect, the proceeds of any sale or other realization upon
any Collateral following an Event of Default will be applied as soon as
practicable after receipt as follows:
FIRST: to the Senior Collateral Agents in an amount equal to
the fees and expenses of the Senior Collateral Agents pursuant to
this Agreement and the Senior Credit Agreement that are unpaid as of
the applicable date of receipt of such proceeds, and to any Senior
Secured Party which has theretofore advanced or paid any such fees
and expenses of the Senior Collateral Agents in an amount equal to
the amount thereof so advanced or paid by such Senior Secured Party
pro rata based on the amount of such fees and expenses (or such
advances or payment);
SECOND: to the Senior Collateral Agents to reimburse any
amounts owing to the Senior Collateral Agents pursuant to Section
8.03;
THIRD: to the Senior Collateral Agents, for distribution to
the Senior Secured Parties to be applied to the payment of the Senior
Obligations then due and owing, pro rata based on the amount of
Senior Obligations then due and owing (after giving effect to any
payments previously made under this Section), until all of the Senior
Obligations then due and owing have been paid in full; and
FOURTH: after payment in full of all Senior 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 7.04. Uniform Commercial Code Remedies. If an Event of
Default shall have occurred and be continuing, the Senior Collateral Agents,
on behalf of the Senior Secured 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 Senior
Obligations, all rights and remedies of a senior secured party under the
Uniform Commercial Code. Without limiting the generality of the foregoing, the
Senior Collateral Agents, 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 Senior 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 Senior 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 Senior
Secured Party or elsewhere upon such terms and conditions as the Senior
Collateral Agents may deem advisable and at such prices as they may deem best,
for cash or on credit or for future delivery without assumption of any credit
risk. Any Senior Secured 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 Senior 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 Senior Collateral
Agents' request, to assemble the Senior Collateral and make it available to
the Senior Collateral Agents at places which the Senior Collateral Agents
shall reasonably select, whether at such Grantor's premises or elsewhere. The
Senior Collateral Agents 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 Senior Collateral or reasonably relating to such
Senior Collateral or the rights of the Senior Collateral Agents and the Senior
Secured Parties hereunder, including, without limitation, reasonable
attorneys' fees and disbursements, to the payment in whole or in part of the
Senior Obligations, in accordance with Section 7.03, and only after such
application and after the payment by the Senior Collateral Agents of any other
amount required by any provision of law, including, without limitation,
Section 9-615(a)(3) of the Uniform Commercial Code, need the Senior Collateral
Agents account for the surplus, if any, to such Grantor. If any notice of a
proposed sale or other disposition of such Senior 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 Senior Collateral Agents 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 Senior Collateral by the Senior
Collateral Agents (including pursuant to a power of sale granted by statute or
under a judicial proceeding), the receipt of the Senior Collateral Agents or
of the officer making the sale shall be a sufficient discharge to the
purchaser or purchasers of the Senior 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 Senior Collateral Agents or such officer or be
answerable in any way for the misapplication thereof.
SECTION 7.05. Grant of License to Use Intellectual Property. For the
purpose of enabling the Senior Collateral Agents to exercise rights and
remedies under this Article at such time as the Senior Collateral Agents shall
be lawfully entitled to exercise such rights and remedies, each Grantor hereby
grants to the Senior Collateral Agents an irrevocable, non-exclusive license
(exercisable without payment of royalty or other compensation to the Grantors)
to use, license or sub-license any of the Senior Collateral consisting of
Intellectual Property now owned or hereafter acquired by such Grantor, and
wherever the same may be located, and including in such license reasonable
access to all media in which any of the licensed items may be recorded or
stored and to all computer software and programs used for the compilation or
printout thereof. The use of such license by the Senior Collateral Agents
shall be exercised, at the option of the Senior Collateral Agents, solely upon
the occurrence and during the continuation of an Event of Default; provided
that any license, sub-license or other transaction entered into by the Senior
Collateral Agents in accordance herewith shall be binding upon the Grantors
notwithstanding any subsequent cure of an Event of Default.
SECTION 7.06. Waiver; Deficiency. Each Grantor shall remain liable
for any deficiency if the proceeds of any sale or other disposition of the
Senior Collateral are insufficient to pay the Senior Obligations and the
reasonable fees and disbursements of any attorneys employed by any Senior
Secured Party to collect such deficiency.
SECTION 7.07. Cash Sweep Remedies. The Senior Collateral Agents, on
behalf of the Senior Secured Parties are entitled to exercise all rights and
remedies granted to them in respect of the Cash Management Accounts in
accordance with Schedule 3 of this Agreement.
SECTION 8. Senior Collateral Agents' Appointment as
Attorneys-in-Fact; Senior Collateral Agents' Performance of Grantors'
Obligations.
SECTION 8.01. Powers. Each Grantor hereby irrevocably constitutes and
appoints the Senior Collateral Agents and any officer or agent thereof, with
full power of substitution, during the continuance of an Event of Default, as
its true and lawful attorneys-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 their own name from time to time in the Senior Collateral
Agents' 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 Senior Collateral Agents 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) in the name of such Grantor or their own names, or
otherwise, to take possession of and indorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
moneys due under any Account, Instrument, General Intangible or
Contract or with respect to any other Senior Collateral and to file
any claim or to take any other action or proceeding in any court of
law or equity or otherwise deemed appropriate by the Senior
Collateral Agents for the purpose of collecting any and all such
moneys due under any Account, Instrument, General Intangible or
Contract or with respect to any other Senior Collateral whenever
payable;
(b) in the case of any Intellectual Property, execute and
deliver, and have recorded, any and all agreements, instruments,
documents and papers as the Senior Collateral Agents may request to
evidence the Senior Collateral Agents' and the Senior Secured
Parties' security interest in such Intellectual Property and the
goodwill and general intangibles of such Grantor relating thereto or
represented thereby;
(c) to pay or discharge taxes and Liens levied or placed on or
threatened against the Senior Collateral (other than Permitted
Liens), to effect any repairs or any insurance called for by the
terms of this Agreement and to pay all or any part of the premiums
therefor and the costs thereof;
(d) to execute, in connection with any sale provided for in
Section 7.04 hereof, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Senior
Collateral;
(e) (i) to direct any party liable for any payment under any of
the Senior Collateral to make payment of any and all moneys due or to
become due thereunder directly to the Senior Collateral Agents or as
the Senior Collateral Agents shall direct; (ii) to ask or demand for,
collect, receive payment of and receipt for, any and all moneys,
claims and other amounts due or to become due at any time in respect
of or arising out of any Senior Collateral; (iii) to sign and indorse
any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of
the Senior Collateral; (iv) to commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Senior Collateral or any thereof and to
enforce any other right in respect of any Senior Collateral; (v) to
defend any suit, action or proceeding brought against any Grantor
with respect to any Senior Collateral; (vi) to settle, compromise or
adjust any such suit, action or proceeding and, in connection
therewith, to give such discharges or releases as the Senior
Collateral Agents may deem appropriate; (vii) to the extent permitted
by applicable law, assign any Copyright, Patent or Trademark (along
with the goodwill of the business to which any such Copyright, Patent
or Trademark pertains); and (viii) generally, to use, sell, transfer,
pledge and make any agreement with respect to or otherwise deal with
any of the Senior Collateral as fully and completely as though the
Senior Collateral Agents were the absolute owners thereof for all
purposes, and to do, at the Senior Collateral Agents' option and at
the expense of such Grantor, at any time, or from time to time, all
acts and things which the Senior Collateral Agents reasonably deem
necessary to protect, preserve or realize upon such Senior Collateral
and the Senior Collateral Agents' and the Senior Secured Parties'
security interests therein and to effect the intent of this
Agreement, all as fully and effectively as such Grantor might do; and
(f) to file any Uniform Commercial Code financing statement, or
to take such other steps, required to perfect or confirm the
perfection of any security interest described herein.
SECTION 8.02. Performance by Senior Collateral Agents of Grantor's
Obligations. If any Grantor fails to perform or comply with any of its
agreements contained herein, the Senior Collateral Agents, at their option,
but without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
SECTION 8.03. Grantor's Reimbursement Obligation. The expenses of the
Senior Collateral Agents and any other Senior Secured Party, as applicable,
reasonably incurred in connection with actions undertaken as provided in this
Section 8, together with interest thereon at a rate per annum equal to the
Default Rate, from the date payment is demanded by the Senior Collateral
Agents to the date reimbursed by such Grantor, shall be payable by the
Borrower to the Senior Collateral Agents on demand.
SECTION 8.04. 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 9. Duty of Senior Collateral Agents. The Senior Collateral
Agents' sole duty with respect to the custody, safekeeping and physical
preservation of the Senior Collateral in its possession, under Section 9-207
of the Uniform Commercial Code or otherwise, shall be to deal with it in the
same manner as the Senior Collateral Agents deal with similar property for
their own accounts. No Senior Secured 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 Senior Collateral or for any delay
in doing so or shall be under any obligation to sell or otherwise dispose of
any Senior Collateral upon the request of a Grantor or any other Person or to
take any other action whatsoever with regard to the Senior Collateral or any
part thereof. The powers conferred on the Senior Secured Parties hereunder are
solely to protect the Senior Secured Parties' interests in the Senior
Collateral and shall not impose any duty upon any Senior Secured Party to
exercise any such powers. The Senior Secured 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 10. Authority of Senior Collateral Agents. Each Grantor
acknowledges that the rights and responsibilities of the Senior Collateral
Agents under this Agreement with respect to any action taken by the Senior
Collateral Agents or the exercise or non-exercise by the Senior Collateral
Agents 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 Senior Collateral Agents and the other Senior Secured Parties, be
governed by the Senior Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them but, as between the
Senior Collateral Agents and the Grantors, the Senior Collateral Agents shall
be conclusively presumed to be acting as co-agents for the other Senior
Secured 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
Senior Secured Parties or the Grantors under this Agreement shall be given or
made in accordance with Section 9.01 of the Senior Credit Agreement and
addressed as follows:
(a) if to the Senior Collateral Agents, in accordance with
Section 9.01 of the Senior Credit Agreement;
(b) if to any Grantor, c/o the Borrower in accordance with
Section 9.01 of the Senior Credit Agreement.
SECTION 12. Security Interest Absolute. All rights of the Senior
Collateral Agents 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 Senior Loan Document shall be
considered to have been relied upon by the Senior Secured Parties and shall
survive the making by the Senior Lenders of the Loans, the execution and
delivery to the Senior Lenders of the Senior Loan Documents and the issuance
of any Letters of Credit, regardless of any investigation made by the Senior
Secured 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 LC
Disbursement, or any other Senior Obligation is outstanding and unpaid and so
long as any Letter of Credit is outstanding and so long as the Commitments
have not been terminated.
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, ACTION OR OTHER PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OF 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 ANY LITIGATION, ACTION OR OTHER PROCEEDING, 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 14.
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 Senior Loan 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 Senior Secured Party may
otherwise have to bring any action or proceeding relating to this Agreement or
the other Senior Loan Documents against any Grantor or any Senior Secured
Party or its properties in the courts of any jurisdiction.
(b) Each Grantor and each Senior Secured 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 Senior Loan 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 Senior Obligations have been fully
and indefeasibly paid and when the Senior Secured Parties have no further
Commitments under the Senior Credit Agreement and no Letters of Credit are
outstanding (except pursuant to cash collateral arrangements satisfactory to
the Senior Collateral Agents), at which time the Senior Collateral Agents
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
Senior Collateral Agents.
(b) All Senior Collateral used, sold, transferred or otherwise
disposed of in accordance with the terms of the Senior Credit Agreement and
the Collateral Trust and Intercreditor Agreement (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 Senior Collateral
Agents 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 Senior
Collateral and (ii) any representation, warranty or covenant contained herein
relating to such Senior Collateral shall no longer be deemed to be made with
respect to such used, sold, transferred or otherwise disposed Senior
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 Senior Collateral Agents, provided that any provision of this Agreement
may be waived by the Majority Senior Parties pursuant to a letter or agreement
executed by the Senior Collateral Agents or by telecopy transmission from the
Senior Collateral Agents.
(b) No Senior Secured Party shall by any act (except by a written
instrument pursuant to Section 18(a) 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 Senior Secured
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 Senior Secured 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 Senior Secured 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 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 Senior Secured Parties and their successors and
assigns, provided that this Agreement may not be assigned by any Grantor
without the prior written consent of the Senior Collateral Agents.
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. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be
effective as delivery of a manually executed counterpart of this Agreement.
SECTION 24. Additional Grantors. Pursuant to Section 5.11 of the
Senior Credit Agreement, certain wholly owned Domestic Subsidiaries that were
not in existence or not a Domestic Subsidiary on the Restatement Effective
Date are required to enter into this Agreement as a Grantor upon becoming a
Domestic Subsidiary. Upon execution and delivery, after the Restatement
Effective Date, by the Senior Collateral Agents and such a 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. The Senior Collateral Agents
hereby agree on behalf of themselves and each Senior Secured 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.
SECTION 26. Collateral Trust and Intercreditor Agreement.
Notwithstanding anything herein to the contrary, the terms of this Agreement,
and the rights of the Senior Collateral Agents and the Senior Secured Parties
hereunder, are subject to the Collateral Trust and Intercreditor Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Senior 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 Grantors,
By________________________________
Name:
Title:
CITICORP NORTH AMERICA, INC.,
as Senior Collateral Agent,
By________________________________
Name:
Title:
JPMORGAN CHASE BANK, as Senior
Collateral Agent,
By________________________________
Name:
Title:
Schedules:
----------
Annex 1 Supplement
Annex 2 Definitions Annex
Schedule A Subsidiary Guarantors
Schedule 1 Records of Accounts
Schedule 2 Copyrights and Copyright Licenses; Patents and Patent
Licenses; and Trademarks and Trademark Licenses
Schedule 3 Cash Management System
Schedule 4 Form of Blocked Account Agreement
Schedule 5 Form of Lockbox Account Agreement
Schedule 6 Form of Government Lockbox Account Agreement
Schedule 7 Form of Concentration Agreement
Schedule 8 Perfection Certificate
Annex 1
to the Senior Subsidiary
Security Agreement
SUPPLEMENT NO. dated as of [ ] (this
"Supplement") to the Senior Subsidiary Security
Agreement dated as of June 27, 2001 and amended and
restated as of May 28, 2003 (as amended, supplemented
or otherwise modified from time to time, the "Senior
Subsidiary Security Agreement"), between the
SUBSIDIARIES GUARANTORS identified on the signature
pages thereto and any other Person that becomes a
Subsidiary Guarantor (collectively, the "Grantors"),
in favor of CITICORP NORTH AMERICA, INC., a Delaware
banking corporation ("CNAI"), as senior collateral
processing co-agent and JPMORGAN CHASE BANK, a New
York banking corporation ("JPMCB"), as senior
collateral processing co-agent (each, individually, a
"Senior Collateral Agent", and collectively, the
"Senior Collateral Agents" for the Senior Secured
Parties.
A. Reference is made to the (a) Senior Credit Agreement dated as of
June 27, 2001 and amended and restated as of May 28, 2003 (as amended,
supplemented or otherwise modified from time to time, the "Senior Credit
Agreement"), among Rite Aid Corporation, a Delaware corporation (the
"Borrower"), the lenders from time to time party thereto (the "Senior
Lenders"), CNAI, as administrative agent for the Senior Lenders, and JPMCB, as
syndication agent for the Senior Lenders and (b) the Senior Subsidiary
Security Agreement.
B. Capitalized terms used herein and not otherwise defined shall have
the meanings assigned to such terms in the Senior Subsidiary Security
Agreement, including the Definitions Annex (as may be amended, supplemented or
otherwise modified from time to time) and the Senior Credit Agreement.
C. The Grantors have entered into the Senior Subsidiary Security
Agreement in order to induce the Senior Lenders to make Loans and induce the
Issuing Banks to issue Letters of Credit pursuant to, and upon the terms and
subject to the conditions specified in, the Senior Credit Agreement. Pursuant
to Section 5.11 of the Senior Credit Agreement, certain wholly owned Domestic
Subsidiaries that were not in existence or not a Domestic Subsidiary on the
date thereof are required to enter into the Senior Subsidiary Security
Agreement as a Grantor upon becoming a Domestic Subsidiary. Section 24 of the
Senior Subsidiary Security Agreement provides that additional Domestic
Subsidiaries may become Grantors under the Senior Subsidiary Security
Agreement by execution and delivery of an instrument in the form of this
Supplement. The undersigned (the "New Grantor") is a wholly-owned Domestic
Subsidiary and is executing this Supplement in accordance with the
requirements of the Senior Credit Agreement to become a Grantor under the
Senior Subsidiary Security Agreement in order to induce the Senior Lenders to
make additional Loans and the Issuing Banks to issue additional Letters of
Credit and as consideration for Loans previously made and Letters of Credit
previously issued.
Accordingly, the Senior Collateral Agents and the New Grantor agree
as follows:
SECTION 1. In accordance with Section 24 of the Senior Subsidiary
Security Agreement, the New Grantor by its signature below becomes a Grantor
under the Senior 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 Senior Subsidiary Security Agreement
applicable to it as a Grantor thereunder. Each reference to a "Grantor" in the
Senior Subsidiary Security Agreement shall be deemed to include the New
Grantor. The Senior Subsidiary Security Agreement is hereby incorporated
herein by reference.
SECTION 2. The New Grantor represents and warrants to the Senior
Secured 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 Senior Collateral Agents shall have received
counterparts of this Supplement that, when taken together, bear the signatures
of the New Grantor and the Senior Collateral Agents.
SECTION 4. Except as expressly supplemented hereby, the Senior
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 Senior 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 Senior Credit Agreement. 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 Senior Credit Agreement.
SECTION 1.01. IN WITNESS WHEREOF, the New Grantor and the Senior
Collateral Agents have duly executed this Supplement to the Senior Subsidiary
Security Agreement as of the day and year first above written.
[NAME OF NEW GRANTOR],
by ________________________________
Name:
Title:
CITICORP NORTH AMERICA, INC., as
Senior Collateral Agent,
by ________________________________
Name:
Title:
JPMORGAN CHASE BANK, as Senior
Collateral Agent,
by ________________________________
Name:
Title:
Annex 2
to the Senior Subsidiary
Security Agreement
DEFINITIONS ANNEX
Schedule A
to the Senior Subsidiary
Security Agreement
SUBSIDIARY GUARANTORS
Subsidiary Guarantors
---------------------
Schedule 1
to the Senior Subsidiary
Security Agreement
RECORDS OF ACCOUNTS
Description
Schedule 2
to the Senior Subsidiary
Security Agreement
COPYRIGHTS REGISTRATIONS AND COPYRIGHT LICENSES
PATENTS AND PATENT LICENSES
TRADEMARK REGISTRATIONS AND TRADEMARK LICENSES
PENDING ACTIONS
Schedule 3
to the Senior Subsidiary
Security Agreement
CASH MANAGEMENT SYSTEM
SECTION 1. Accounts. (a) No later than 30 days after the Restatement
Effective Date (or such later date as may be agreed by the Senior Collateral
Agents), each Grantor shall, upon the request of the Senior Collateral Agents,
cause:
(i) each Blocked Account Bank to execute and deliver an
updated Blocked Account Agreement in respect of each Blocked Account;
(ii) each Lockbox Account Bank to execute and deliver an
updated Lockbox Account Agreement in respect of each Lockbox Account;
(iii) each Government Lockbox Account Bank to execute and
deliver an updated Government Lockbox Account Agreement in respect of
each Government Lockbox Account; and
(iv) each Concentration Account Bank to execute and deliver an
updated Concentration Account Agreement in respect of the
Concentration Account.
(b) On each Business Day, each Grantor will transfer, directly or
indirectly substantially all of the funds credited to each of its depositary
accounts in same day funds, to a Blocked Account (including during a Cash
Sweep Period) in accordance with its customary business practice.
(c) Each Grantor shall cause all payments in the Government Lockbox
Account to be deposited into the Lockbox Account as promptly as possible and
in any event no later than the Business Day on which such payments become
available in the Government Lockbox Account (including during a Cash Sweep
Period).
(d) Each Cash Management Account is, and shall remain, under the sole
dominion and control of the Senior Collateral Agents. Each Grantor
acknowledges and agrees that:
(i) during a Cash Sweep Period such Grantor has no right of
withdrawal from any Cash Management Account except that:
(A) the relevant Grantors shall be permitted to
instruct any Blocked Account Bank to transfer all amounts
deposited in or credited to any Blocked Account to the
Concentration Account in accordance with the applicable
Blocked Account Agreement, and
(B) the relevant Grantor shall be permitted to instruct
the Concentration Account Bank to transfer all amounts
deposited in or credited to the Concentration Account in
accordance with the Concentration Account Agreement;
(ii) the funds on deposit in the Cash Management Accounts shall
continue to be collateral security for all of the Senior Obligations.
(e) Prior to the delivery of a Cash Sweep Notice, the Grantor is free
to withdraw funds on deposit in or credited to the Blocked Accounts and the
Concentration Account in such amounts and with such frequency as the Grantor
may from time to time determine, without notice to or consent from the Senior
Collateral Agents.
SECTION 2. Cash Sweep. (a) The Senior Collateral Agents shall
immediately be entitled to deliver Cash Sweep Notices upon the conditions
specified in Section 9.15(a) in the Senior Credit Agreement.
(b) Upon delivery of:
(i) a Blocked Account Cash Sweep Notice from the Senior
Collateral Agents, the balance of each Blocked Account shall be
forwarded to the Concentration Account, each Business Day or the next
Business Day (as permitted by the applicable Blocked Account
Agreement), in same day funds, for so long as such Blocked Account
Cash Sweep Notice shall be in effect; and
(ii) a Concentration Account Cash Sweep Notice from the Senior
Collateral Agents, the balance of the Concentration Account shall be
forwarded to a Citibank Concentration Account, each Business Day (or
the next Business Day (as permitted by the Concentration Account
Agreement)), in same day funds, for so long as such Concentration
Account Cash Sweep Notice shall be in effect.
(c) On each Business Day during a Cash Sweep Period, the Senior
Collateral Agents shall use funds on deposit in any Citibank Concentration
Account as follows:
(i) after the occurrence of a Triggering Event, in accordance
with the provisions of Section 4.01(a) of the Collateral Trust and
Intercreditor Agreement, as applicable; and
(ii) at any other time, first, to repay the Revolving
Borrowings (without any Reduction of the Commitments) and second, to
be deposited into the Cash Sweep Cash Collateral Account for the
benefit of the Senior Secured Parties, as collateral for the payment
and performance of the Senior Obligations. The Senior Collateral
Agents shall have exclusive dominion and control, including the
exclusive right of withdrawal, over the Cash Sweep Cash Collateral
Account. Deposits in the Cash Sweep Cash Collateral Account shall be
invested in Permitted Investments, to be selected by the Senior
Collateral Agents in their sole discretion, and interest earned on
such deposits shall be deposited in such account as additional
collateral for the payment and performance of the Senior Obligations.
Interest or profits, if any, on such investments shall accumulate in
such account. Upon termination of any Cash Sweep Period, funds in the
Cash Sweep Cash Collateral Account shall be released to the
Concentration Account within three Business Days after the end of
such Cash Sweep Period.
(d) The Senior Collateral Agents shall be required to automatically
rescind any Cash Sweep Notice upon the conditions specified in Section 9.15(b)
of the Senior Credit Agreement.
(e) The Senior Collateral Agents reserve the right to send as many
Cash Sweep Notices to the extent that they are entitled to do so under
paragraph (a) of this Section 2.
SECTION 3. Collections. (a) Each Grantor agrees to notify and direct
promptly
(i) subject to paragraph (ii) below, each Account Debtor and
every other Person obligated to make payments to any Blocked Account
or Deposit Account, as applicable, to make all such payments to such
Blocked Account or Deposit Account, as applicable. Each Grantor shall
use all commercially reasonable efforts to cause each Account Debtor
and every other Person identified in the preceding sentence to make
all payments owing to any Grantor to a Blocked Account or Deposit
Account, as applicable; and
(ii) each Account Debtor which is a Governmental Authority
(and only such Account Debtors) to make all payments owing to any
Grantor to the Government Lockbox Account.
(b) In the event that any Grantor directly receives any remittances
or payments on Accounts Receivable or any other obligation, notwithstanding
the arrangements for payment directly into the Blocked Accounts or the Deposit
Accounts, such remittances and payments shall be held in trust for the benefit
of the Senior Collateral Agents and the other Senior Secured Parties and shall
be segregated from other funds of such Grantor, subject to the Lien granted by
the Senior Subsidiary Security Agreement, and such Grantor shall cause such
remittances and payments to be deposited into the applicable Blocked Account
or Deposit Account as soon as practicable after such Grantor's receipt
thereof.
SECTION 4. Accounts. (a) The following are the Blocked Accounts:
Blocked Account Bank Account Numbers
Bank of America 1233625317
PNC Bank 8612489237
US Bank 153607068225
Fleet Bank 9415842956
Union Bank of CA 1870024297
(b) The following are the Deposit Accounts:
Account Holder Account Details
Mellon Bank, N.A. 0693636
Mellon Bank, N.A. 1037294
(c) The following is the Concentration Account:
Account Holder Account Details
JPMorgan Chase Bank 9102750222
Schedule 4
to the Senior Subsidiary
Security Agreement
[FORM OF]
BLOCKED ACCOUNT AGREEMENT
[Date]
[Blocked Account Bank]
[address]
Ladies and Gentlemen:
Reference is made to (a) account no. [ ] maintained with you (the
"Blocked Account Bank") by [ ] (the "Grantor") into which funds are deposited
from time to time (the "Blocked Account") and (b) the Senior Subsidiary
Security Agreement dated as of June 27, 2001 and amended and restated as of
May 28, 2003 (as amended, supplemented or otherwise modified from time to
time, the "Senior Subsidiary Security Agreement"), among the Subsidiary
Guarantors (such term and each other capitalized term used but not defined
herein having the meaning assigned to such term in the Senior Subsidiary
Security Agreement, including the Definitions Annex, and the Senior Credit
Agreement) and the Senior Collateral Agents.
Pursuant to the Senior Subsidiary Security Agreement, the Grantor has
granted to the Senior Collateral Agents, for the benefit of the Senior Secured
Parties, a perfected security interest in certain property of the Grantor,
including, the Blocked Account.
The Grantor hereby transfers to the Senior Collateral Agents
exclusive ownership and control of, and all of its right, title and interest
in and to, the Blocked Account and all funds and other property on deposit
therein. By executing this Blocked Account Agreement, the Blocked Account Bank
acknowledges that the Senior Collateral Agents now have exclusive ownership
and control of the Blocked Account, that all funds in the Blocked Account
shall be transferred to the Senior Collateral Agents as provided herein, that
the Blocked Account is being maintained by the Blocked Account Bank for the
benefit of the Senior Collateral Agents and that all amounts and other
property therein are held by the Blocked Account Bank as custodian for the
Senior Collateral Agents.
Except as provided in paragraphs (e), (f) and (l) below, the Blocked
Account shall not be subject to deduction, setoff, banker's lien,
counterclaim, defense, recoupment or any other right in favor of any Person or
entity other than the Senior Collateral Agents. By executing this Blocked
Account Agreement the Blocked Account Bank also acknowledges that, as of the
date hereof, the Blocked Account Bank has received no notice of any other
pledge or assignment of the Blocked Account and the Blocked Account Bank
agrees with the Senior Collateral Agents as follows:
(a) Notwithstanding anything to the contrary or any other agreement
relating to the Blocked Account, the Blocked Account is and will be maintained
for the benefit of the Senior Collateral Agents, will be entitled "Citicorp
North America, Inc. and JPMorgan Chase Bank, as Senior Collateral Agents under
the Senior Subsidiary Security Agreement dated as of June 27, 2001 and amended
and restated as of May 28, 2003 Account" and will be subject to written
instructions only from an authorized officer of the Senior Collateral Agents
(except as expressly provided otherwise herein).
(b) The Blocked Account Bank agrees to give the Senior Collateral
Agents prompt notice if the Blocked Account shall become subject to any writ,
judgment, warrant of attachment, execution or similar process.
(c) [A post office box (the "Lockbox") has been rented in the name of
the Grantor at the [ post office and the address to be used for such Lockbox
is:
[Insert address]
The Blocked Account Bank's authorized representatives will have access to the
Lockbox under the authority given by the Grantor to the post office and will
make regular pick-ups from the Lockbox timed to gain maximum benefit of early
presentation and availability of funds. The Blocked Account Bank will endorse
and process all checks received in the Lockbox and deposit such checks (to the
extent eligible) in the Blocked Account in accordance with the procedures set
forth below .]
(d) The Blocked Account Bank will follow its operating procedures for
the handling of any [checks received from the Lockbox] or other remittance
received in the Blocked Account that contains restrictive endorsements,
irregularities (such as a variance between the written and numerical amounts),
undated or postdated items, missing signatures, incorrect payees and the like.
(e) The Blocked Account Bank will endorse and process all eligible
checks and other remittance items not covered by paragraph (d) and deposit
such checks and remittance items in the Blocked Account.
(f) The Blocked Account Bank will mail all checks returned unpaid
because of uncollected or insufficient funds under appropriate advice to the
Grantor (with a copy of the notification of return to the Senior Collateral
Agents). The Blocked Account Bank may charge the Blocked Account for the
amounts of any returned check that has been previously credited to the Blocked
Account. To the extent insufficient funds remain in the Blocked Account to
cover any such returned check, the Grantor shall indemnify the Blocked Account
Bank for the uncollected amount of such returned check upon your demand.
(g) The Blocked Account Bank will maintain a record of all checks and
other remittance items received in the Blocked Account on a daily basis and,
in addition to providing the Grantor with photostatic copies thereof,
vouchers, enclosures and the like of such checks and remittance items, furnish
to the Senior Collateral Agents a monthly statement setting forth the amounts
deposited in and withdrawn from the Blocked Account and shall furnish such
other information relating to the Blocked Account at such times as shall be
reasonably requested by the Senior Collateral Agents to: Citicorp North
America, Inc., as Senior Collateral Agent, [ ], Attention: [ ] and JPMorgan
Chase Bank, as Senior Collateral Agent, [ ], Attention: [ ], with a copy to
the Grantor.
(h) Prior to the delivery of a written notice from the Senior
Collateral Agents in the form of Exhibit A hereto (the "Blocked Account Cash
Sweep Notice"), the Grantor is free to withdraw funds from the Blocked Account
in such amounts and with such frequency as the Grantor may from time to time
determine, without notice to or consent from the Senior Collateral Agents.
(i) From and after delivery to the Blocked Account Bank of a Blocked
Account Cash Sweep Notice and until the Blocked Account Bank is notified in
writing by the Senior Collateral Agents that the Blocked Account Cash Sweep
Notice is no longer in effect (a "Blocked Account Cash Sweep Period"), the
Grantor will have no control over the use of, or any right to withdraw any
amount from, to draw upon, or to otherwise exercise any power with respect to
the Blocked Account, except that the Grantor shall be permitted to instruct
the Blocked Account Bank only with respect to the transfer of funds from the
Blocked Account to the Concentration Account (as defined below) in accordance
with paragraph (k) below.
(j) During a Blocked Account Cash Sweep Period, the Blocked Account
Bank shall transfer, in same day funds, on each Business Day, all funds, if
any on deposit in, or otherwise to the credit of, the Blocked Account to the
account listed below (the "Concentration Account") in accordance with
paragraph (k) below, provided that funds on deposit that are subject to
collection may be transmitted promptly upon collection:
ABA Number:
[name and address of Grantor's bank]
Account Name:
Concentration Account
Account Number:
Reference:
Attn:
or to such other account as the Senior Collateral Agents may from time to
time, or at any time, designate in writing.
(k) During a Blocked Account Cash Sweep Period, (i) the Grantor shall
provide written instructions to the Blocked Account Bank on each Business Day
to transfer all funds on deposit in, or otherwise credited to, the Blocked
Account to the Concentration Account; (ii) to the extent there are any
available balances in the Blocked Account at the end of any Business Day which
have not been transferred pursuant to clause (i) of this paragraph, the
Grantor shall provide, on the next Business Day, written instructions for the
transfer of such available balances from the Blocked Account to the
Concentration Account; and (iii) if the Grantor does not provide the written
instructions pursuant to clause (ii) of this paragraph, the Blocked Account
Bank shall automatically initiate such transfer described in clause (ii) of
this paragraph and all other transfers from the Blocked Account to the
Concentration Bank without further direction from the Grantor until otherwise
notified by the Senior Collateral Agents.
(l) All customary service charges and fees with respect to the
Blocked Account shall be debited to the Blocked Account. In the event
insufficient funds remain in the Blocked Account to cover such customary
service charges and fees, the Grantor shall pay and indemnify the Blocked
Account Bank for the amounts of such customary service charges and fees.
Neither the Senior Collateral Agents nor the Senior Secured Parties shall have
any liability for the payment of any such fees in respect of the Blocked
Account.
This letter agreement shall be binding upon and shall inure to the
benefit of the Blocked Account Bank, the Grantor, the Senior Collateral
Agents, the Senior Secured Parties referred to in the Senior Subsidiary
Security Agreement and their respective successors, transferees and assigns of
any of the foregoing. This letter agreement may not be modified or terminated
except upon the mutual consent of the Senior Collateral Agents, the Grantor
and the Blocked Account Bank. The Blocked Account Bank may terminate the
letter agreement only upon 45 days' prior written notice to the Grantor and
the Senior Collateral Agents. The Senior Collateral Agents may terminate this
letter agreement at any time. So long as any Senior Obligations remain
outstanding and the Commitments are still outstanding, upon such termination
the Blocked Account Bank shall close the Blocked Account and transfer all
funds in the Blocked Account to the Senior Collateral Agents at the
Concentration Account or as otherwise directed by the Senior Collateral
Agents. After any such termination, the Blocked Account Bank shall nonetheless
remain obligated promptly to transfer to the Concentration Account or as the
Senior Collateral Agents may otherwise direct all funds and other property
received in respect of the Blocked Account.
This letter agreement may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when
so executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this letter agreement by telecopier shall
be effective as delivery of a manually executed counterpart of this letter
agreement.
This letter agreement supersedes all prior agreements, oral or
written, with respect to the subject matter hereof and may not be amended,
modified or supplemented except by a writing signed by the Senior Collateral
Agents, the Grantor and the Blocked Account Bank.
This letter agreement shall be governed by, and construed in
accordance with, the law of the State of New York.
Upon acceptance of this letter agreement it will be the valid and
binding obligation of the Grantor, the Senior Collateral Agents, and the
Blocked Account Bank, in accordance with its terms.
Very truly yours,
[ ]
By:_________________________________________
Name:
Title:
CITICORP NORTH AMERICA, INC, as Senior
Collateral Agent
By:_________________________________________
Name:
Title:
JPMORGAN CHASE BANK, as Senior Collateral Agent
By:_________________________________________
Name:
Title:
Acknowledged and agreed to as
of the date first above written:
[ ]
By:___________________________
Name:
Title:
Exhibit A
to the Blocked Account Agreement
BLOCKED ACCOUNT CASH SWEEP NOTICE
[Blocked Account Bank]
[Address]
Re: Account No. [ ] (the "Blocked Account")
Ladies and Gentlemen:
Reference is made to the Blocked Account and that certain Blocked
Account Agreement dated June 27, 2001 and amended and restated as of May 28,
2003 (as amended, supplemented or otherwise modified from time to time, the
"Blocked Account Agreement") among the Blocked Account Bank, the Grantor and
the Senior Collateral Agents. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to them in the Blocked Account
Agreement.
The Senior Collateral Agents hereby notify you that, in accordance
with certain provisions of the Senior Subsidiary Security Agreement, from and
after the date of this notice, you are hereby directed to transfer (by wire
transfer or other method of transfer mutually acceptable to you and the Senior
Collateral Agents) to the Senior Collateral Agents, in same day funds, on each
Business Day, the entire balance in the Blocked Account to the Concentration
Account specified in paragraph (j) of the Blocked Account Agreement (or to
such other account as the Senior Collateral Agents may from time to time, or
at any time, designate in writing) until you are notified in writing by the
Senior Collateral Agents that this Blocked Account Cash Sweep Notice is no
longer effective.
Very truly yours,
CITICORP NORTH AMERICA, INC,
as Senior Collateral Agent,
By:____________________________
Name:
Title:
JPMORGAN CHASE BANK, as Senior Collateral Agent,
By:____________________________
Name:
Title:
Schedule 5
to the Senior Subsidiary
Security Agreement
[FORM OF]
LOCKBOX ACCOUNT AGREEMENT
[Date]
[Mellon Bank, N.A.
Document Control Manager
Three Mellon Bank Center
Room 3119
Xxxxxxxxxx, XX 00000]
Ladies and Gentlemen:
Reference is made to (a) account number [ ] and corresponding lockbox
and data automation system maintained with you (the "Lockbox Account Bank") by
[ ] (the "Grantor") into which funds are deposited from time to time (the
"Lockbox Account") and (b) the Senior Subsidiary Security Agreement dated as
of June 27, 2001 and amended and restated as of May 28, 2003 (as amended,
supplemented or otherwise modified from time to time, the "Senior Subsidiary
Security Agreement") among the Subsidiary Guarantors (such term and each other
capitalized term used but not defined herein having the meaning assigned to
such term in the Senior Subsidiary Security Agreement, including the
Definitions Annex and Senior Credit Agreement referred to therein) and the
Senior Collateral Agent.
The Grantor hereby confirms its irrevocable and unconditional
instruction to you that, until receipt of a written notice from the Senior
Collateral Agents to the contrary, you shall follow exclusively the
instructions of the Senior Collateral Agents with respect to the Lockbox
Account and that the Lockbox Account shall be under the sole dominion and
control of the Senior Collateral Agent. Notwithstanding anything to the
contrary or any other agreement relating to the Lockbox Account, the Lockbox
Account is and will be maintained for the benefit of the Senior Collateral
Agent, will be entitled "Citicorp North America, Inc. and JPMorgan Chase Bank,
as Senior Collateral Agents under the Senior Subsidiary Agreement dated as of
June 27, 2001 and amended and restated as of May 28, 2003 Account" and will be
subject to written instructions only from an authorized officer of each Senior
Collateral Agent.
The Grantor also hereby notifies you that the Senior Collateral
Agents shall be irrevocably entitled to exercise any and all rights in respect
of, or in connection with, the Lockbox Account, including, without limitation,
the right to specify when payments are to be made out of, or in connection
with, the Lockbox Account. The Senior Collateral Agents hereby instruct you,
until you receive notice from the Senior Collateral Agents changing this
instruction, to transfer, in same day funds, on each Business Day, all funds,
if any on deposit in, or otherwise to the credit of, the Lockbox Account to
the Account listed below, provided that funds on deposit that are subject to
collection may be transmitted properly upon collection.
BA Number: __________________________
[name and address of Grantor's bank]
Account Name:________________________
Concentration Account
Account Number:______________________
Reference: __________________________
Attn: ______________________________
[or to such other account as the Senior Collateral
Agents and the Grantor may designate in writing.]
All expenses for the maintenance and provision of services in
conjunction with the Lockbox Account held in the name of the Grantor are the
responsibility of the Grantor. In the event that the Grantor does not pay all
service fees due to the Lockbox Account Bank within thirty (30) days after the
due date, the Lockbox Account Bank is authorized to charge the Lockbox Account
for such fees. In the event the Lockbox Account Bank is unable to obtain
sufficient funds from such charges to cover such fees the Grantor shall
indemnify the Lockbox Account Bank for all then-due fees on the Lockbox
Account that have not been paid.
The Grantor and the Senior Collateral Agents agree that the Lockbox
Account Bank may debit the Lockbox Account for any items (including, but not
limited to, checks, drafts, Automatic Clearinghouse (ACH) credits or wire
transfers or other electronic transfers or credits) deposited or credited to
the Lockbox Account which may be returned or otherwise not collected and,
subject to the preceding paragraph, for all charges, fees, commissions and
expenses incurred by the Lockbox Account Bank in providing services or
otherwise in connection herewith. The Lockbox Account Bank may charge the
Lockbox Account as permitted herein at such times as are in accordance with
the Lockbox Account Bank's customary practice for the chargeback of returned
items and expenses. In the event the Lockbox Account Bank is unable to obtain
sufficient funds for such charges to cover returned items, or reversed or
returned credits, or any other items not collected and any other charges,
expenses, or commissions incurred by the Lockbox Account Bank in providing the
services (referred to as a "cost" or "costs"), the Grantor shall indemnify the
Lockbox Account Bank for all amounts related to the above described costs
incurred by the Lockbox Account Bank. The Senior Collateral Agents agree that
if the Grantor has not reimbursed the Lockbox Account Bank for the amounts
described in this paragraph and the Lockbox Account Bank has transferred funds
to the Senior Collateral Agents, then the Senior Collateral Agents agree to
reimburse the Lockbox Account Bank (for any returned items described in this
paragraph but not for charges, fees or commissions incurred therewith) within
ten business days after demand by the Lockbox Account Bank.
Notwithstanding any other provision of this Agreement, unless the
Lockbox Account Bank is grossly negligent or engages in wilful misconduct in
performance or non-performance in connection with this Agreement and the
Lockbox Account, the Grantor agrees to indemnify and hold the Lockbox Account
Bank harmless from any claims, damages, losses or expenses incurred by any
party in connection herewith; in the event the Lockbox Account Bank breaches
the standard of care set forth herein, the Grantor and the Senior Collateral
Agents each expressly agrees that the Lockbox Account Bank's liability shall
be limited to damages directly caused by such breach and in no event shall the
Lockbox Account Bank be liable for any incidental, indirect, punitive or
consequential damages or attorney's fees whatsoever.
Notwithstanding any other provision of this Agreement, the Lockbox
Account Bank shall not be liable for any failure, inability to perform, or
delay in performance hereunder, if such failure, inability, or delay is due to
an act of God, war, civil commotion, governmental action, fire, explosion,
strikes, other industrial disturbance, equipment malfunction, action,
non-action or delayed action on the part of the Grantor or the Senior
Collateral Agents or of any other entity or any other causes that are beyond
the Lockbox Account Bank's reasonable control.
This Agreement may not be modified or terminated by the Grantor
unless, in the case of a modification, the prior written consent of the Senior
Collateral Agents and the Lockbox Account Bank is obtained and, in the case of
termination, the prior written consent of the Senior Collateral Agents is
obtained. The Lockbox Account Bank may terminate this Agreement upon
forty-five (45) days' prior written notice to the Grantor and the Senior
Collateral Agents. The Senior Collateral Agents may terminate this Agreement
at any time. The Grantor's obligations under this Agreement to indemnify, hold
harmless and pay amounts owed (and the Grantor's obligation to reimburse the
Lockbox Account Bank for any returned items) shall survive the termination of
this Agreement.
[This Agreement shall be governed by the laws of the State of New
York.]
The terms and conditions of the services, attached as Exhibit A, is
made part of this Agreement with respect to matters not explicitly covered in
this Agreement. To the extent there is a conflict between this Agreement and
the terms and conditions of services, this agreement shall take precedence.
This Agreement shall become effective immediately upon its execution
by all parties hereto. Any notice permitted or required hereunder shall be in
writing and shall be deemed to have been duly given if sent by Personal
delivery, express or first class mail, or facsimile addressed, in the case of
notice to the Lockbox Account Bank, to:
[Mellon Bank, N.A.
Document Control Manager
Three Mellon Bank Center
Room 3119
Xxxxxxxxxx, XX 00000]
Phone: (000) 000-0000
Fax: (000) 000-0000
and, in the case of notice to the Grantor, to:
00 Xxxxxx Xxxx
Xxxx Xxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Rite Aid Funding LLC/ Rite Aid Treasury
and, in the case of notice to the Senior Collateral Agents to:
[ ]
Fax: [ ]
Attn: [ ]
or to such other address or addresses as the party to
receive notice may provide in writing to the other party in
accordance with this paragraph. The Lockbox Account Bank
shall have no duty or obligation to inquire into the
authenticity or effectiveness of any such notice received
pursuant to this Agreement.
Please agree to the terms of, and acknowledge receipt of, this notice
by signing in the space provided below.
Very truly yours,
[NAME OF SUBSIDIARY GUARANTOR]
By:_____________________________
Name:
Title:
By:____________________, on behalf By:___________________,
of each of the above listed companies on behalf of each of the
above listed companies
Name:
Name:
Agreed and acknowledged:
[MELLON BANK, N.A.]
By:__________________________
Name:
Title:
CITICORP NORTH AMERICA, INC., as Senior Collateral
Agent,
By:__________________________
Name:
Title:
JPMORGAN CHASE BANK, as Senior Collateral Agent,
By:__________________________
Name:
Title:
Schedule 6
to the Senior Subsidiary
Security Agreement
GOVERNMENT LOCKBOX ACCOUNT AGREEMENT
[Date]
[Mellon Bank, N.A.
Document Control Manager
Three Mellon Bank Center
Room 3119
Xxxxxxxxxx, XX 00000]
Ladies and Gentlemen:
Reference is made to (a) account no. [ ] and corresponding lockbox
and data automation system maintained with you (the "Government Lockbox
Account Bank") by [ ] (the "Grantor") into which funds are deposited from time
to time (the "Government Lockbox") and (b) the Senior Subsidiary Security
Agreement dated as of June 27, 2001 and amended and restated as of May 28,
2003 (as amended, supplemented or otherwise modified from time to time, the
"Senior Subsidiary Security Agreement"), among the Subsidiary Guarantors (such
term and each other capitalized term used and not otherwise defined herein
having the meaning assigned to such term in the Senior Subsidiary Security
Agreement including the Definitions Annex and Senior Credit Agreement referred
to therein) and the Senior Collateral Agents.
The Grantor hereby provides the following revocable instruction with
respect to the Government Lockbox Account (the "Standing Revocable
Instruction"): the Government Lockbox Account Bank shall transfer from the
Government Lockbox Account daily, via a zero balance service as described in
the terms and conditions of the services, attached as Exhibit A, all available
funds held in the Government Lockbox Account to account no. [ ] at Mellon
Bank, N.A. in the name of the Grantor for Citicorp North America, Inc. and
JPMorgan Chase Bank, as Senior Collateral Agents (which account is under the
sole dominion and control of the Senior Collateral Agents). This Standing
Revocable Instruction is revocable by the Grantor at any time and for any
reason by providing written instructions to the Government Lockbox Account
Bank, signed by the undersigned (which writing may be by facsimile and upon
which you may conclusively rely), whereupon the Government Lockbox Account
Bank shall follow, without further inquiry, such contrary written instruction
and not the Standing Revocable Instruction.
The Grantor also hereby notifies the Government Lockbox Account Bank
that, as collateral security for the Senior Obligations, the undersigned
Subsidiary Guarantors granted to the Grantor and the Grantor hereby assigns to
the Senior Collateral Agents a continuing security interest in (i) the
Government Lockbox Account, (ii) all contract rights and privileges in respect
to the Government Lockbox Account, (iii) all cash, checks, money orders and
other items of value on deposit in the Government Lockbox Account and (iv) all
proceeds of the foregoing.
All expenses for the maintenance and provision of services in
conjunction with the Government Lockbox Account held in the name of the
Grantor are the responsibility of the Grantor. In the event that the Grantor
does not pay all service fees due to the Government Lockbox Account Bank
within thirty (30) days after the due date, the Government Lockbox Account
Bank is authorized to charge the Government Lockbox Account for such fees. In
the event the Government Lockbox Account Bank is unable to obtain sufficient
funds from such charges to cover such fees the Grantor shall indemnify the
Government Lockbox Account Bank for all then-due fees on the Government
Lockbox Account that have not been paid.
The Grantor and the Senior Collateral Agents agree that the
Government Lockbox Account Bank may debit the Government Lockbox Account for
any items (including, but not limited to, checks, drafts, Automatic
Clearinghouse (ACH) credits or wire transfers or other electronic transfers or
credits) deposited or credited to the Government Lockbox Account which may be
returned or otherwise not collected and, subject to the preceding paragraph,
for all charges, fees, commissions and expenses incurred by the Government
Lockbox Account Bank in providing services or otherwise in connection
herewith. The Government Lockbox Account Bank may charge the Government
Lockbox Account as permitted herein at such times as are in accordance with
the Government Lockbox Account Bank's customary practice for the chargeback of
returned items and expenses. In the event the Government Lockbox Account Bank
is unable to obtain sufficient funds for such charges to cover returned items,
or reversed or returned credits, or any other items not collected and any
other charges, expenses, or commissions incurred by the Government Lockbox
Account Bank in providing the services (referred to as a "cost" or "costs")
the Grantor shall indemnify the Government Lockbox Account Bank for all
amounts related to the above described costs incurred by the Government
Lockbox Account Bank. The Senior Collateral Agents agree that if the Grantor
has not reimbursed the Government Lockbox Account Bank for the amounts
described in this paragraph and the Government Lockbox Account Bank has
transferred funds to the Senior Collateral Agents, then the Senior Collateral
Agents agree to reimburse the Government Lockbox Account Bank (for any
returned items described in this paragraph but not for charges, fees or
commissions incurred therewith) within ten business days after demand by the
Government Lockbox Account Bank.
Notwithstanding any other provision of this Government Lockbox
Account Agreement, unless the Government Lockbox Account Bank is grossly
negligent or engages in wilful misconduct in performance or non-performance in
connection with this Agreement and the Government Lockbox Account, the Grantor
agrees to indemnify and hold the Government Lockbox Account Bank harmless from
any claims, damages, losses or expenses incurred by any party in connection
herewith; in the event the Government Lockbox Account Bank breaches the
standard of care set forth herein, the Grantor and the Senior Collateral
Agents each expressly agrees that the Government Lockbox Account Bank's
liability shall be limited to damages directly caused by such breach and in no
event shall the Government Lockbox Account Bank be liable for any incidental,
indirect, punitive or consequential damages or attorney's fees whatsoever.
Notwithstanding any other provision of this Government Lockbox
Account Agreement, the Government Lockbox Account Bank shall not be liable for
any failure, inability to perform, or delay in performance hereunder, if such
failure, inability, or delay is due to an act of God, war, civil commotion,
governmental action, fire, explosion, strikes, other industrial disturbance,
equipment malfunction, action, non-action or delayed action on the part of the
Grantor or the Senior Collateral Agents or of any other entity or any other
causes that are beyond the Government Lockbox Account Bank's reasonable
control.
This Government Lockbox Account Agreement may not be modified or
terminated by the Grantor unless, in the case of a modification, the prior
written consent of the Senior Collateral Agents and the Government Lockbox
Account Bank is obtained and, in the case of termination, the prior written
consent of the Senior Collateral Agents is obtained. The Government Lockbox
Account Bank may terminate this Agreement upon forty-five (45) days' prior
written notice to the Grantor and the Senior Collateral Agents. The Senior
Collateral Agents may terminate this Agreement at any time. The Grantor's
obligations under this Agreement to indemnify, hold harmless and pay amounts
owed (and the Senior Collateral Agents' obligation to reimburse the Government
Lockbox Account Bank for any returned items) shall survive the termination of
this Agreement.
This Agreement shall be governed by the laws of the State of New
York.
The terms and conditions of the services, attached as Exhibit A, is
made part of this Agreement with respect to matters not explicitly covered in
this Agreement. To the extent there is a conflict between this Agreement and
the terms and conditions of services, this agreement shall take precedence.
This Agreement shall become effective immediately upon its execution
by all parties hereto. Any notice permitted or required hereunder shall be in
writing and shall be deemed to have been duly given if sent by Personal
delivery, express or first class mail, or facsimile addressed, in the case of
notice to the Government Lockbox Account Bank, to:
[Mellon Bank, N.A.
Document Control Manager
Three Mellon Bank Center
Room 3119
Xxxxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000]
and, in the case of notice to the Grantor, to:
00 Xxxxxx Xxxx
Xxxx Xxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Rite Aid Funding LLC/ Rite Aid Treasury
and, in the case of notice to the Senior Collateral Agents, to:
[ ]
Fax: [ ]
Attn: [ ]
or to such other address or addresses as the party to
receive notice may provide in writing to the other party in
accordance with this paragraph. The Government Lockbox
Account Bank shall have no duty or obligation to inquire
into the authenticity or effectiveness of any such notice
received pursuant to this Agreement.
Please agree to the terms of, and acknowledge receipt of, this notice
(including, without limitation, the notice of, and consent to, the security
interest referred to in the foregoing paragraph) by signing in the space
provided below.
Very truly yours,
[NAME OF SUBSIDIARY GUARANTOR]
By:________________________________
Name:
Title:
By:___________________, on behalf of
each of the above listed companies
Name:
By:____________________, on behalf of
each of the above listed companies
Name:
Agreed and acknowledged:
[MELLON BANK, N.A.]
By:__________________________
Name:
Title:
CITICORP NORTH AMERICA, INC., as Senior Collateral Agent,
By:__________________________
Name:
Title:
JPMORGAN CHASE BANK, as Senior Collateral Agent,
By:__________________________
Name:
Title:
Schedule 7
to the Senior Subsidiary
Security Agreement
[FORM OF]
CONCENTRATION ACCOUNT AGREEMENT
[Date]
[Concentration Account Bank]
[address]
Ladies and Gentlemen:
Reference is made to (a) account no. [ ] maintained with you (the
"Concentration Account Bank") by [ ] (the "Grantor") into which funds are
deposited from time to time (the "Concentration Account") and (b) the Senior
Subsidiary Security Agreement dated as of June 27, 2001 and amended and
restated as of May 28, 2003 (as amended, supplemented or otherwise modified
from time to time, the Senior Subsidiary Security Agreement"), among the
Subsidiary Guarantors (such term and each other capitalized term used but not
defined herein having the meaning assigned to such term in the Senior
Subsidiary Security Agreement, including the Definitions Annex and Senior
Credit Agreement referred to therein) and the Senior Collateral Agents.
Pursuant to the Senior Subsidiary Security Agreement, the Grantor has
granted to the Senior Collateral Agents, for the benefit of the Senior Secured
Parties, a perfected security interest in certain property of the Grantor,
including the Concentration Account.
The Grantor hereby transfers to the Senior Collateral Agents
exclusive ownership and control of, and all of its right, title and interest
in and to, the Concentration Account and all funds and other property on
deposit therein. By executing this Concentration Account Agreement, the
Concentration Account Bank acknowledges that the Senior Collateral Agents now
have exclusive ownership and control of the Concentration Account, that all
funds in the Concentration Account shall be transferred to the Senior
Collateral Agents as provided herein, that the Concentration Account is being
maintained by the Concentration Account Bank for the benefit of the Senior
Collateral Agents and that all amounts and other property therein are held by
the Concentration Account Bank as custodian for the Senior Collateral Agents.
Except as provided in paragraphs (e), (f) and (j) below, the
Concentration Account shall not be subject to deduction, setoff, banker's
lien, counterclaim, defense, recoupment or any other right in favor of any
Person or entity other than the Senior Collateral Agents. By executing this
Concentration Account Agreement, the Concentration Account Bank also
acknowledges that, as of the date hereof, the Concentration Account Bank has
received no notice of any other pledge or assignment of the Concentration
Account and the Concentration Account Bank agrees with the Senior Collateral
Agents as follows:
(a) Notwithstanding anything to the contrary or any other
agreement relating to the Concentration Account, the Concentration
Account is and will be maintained for the benefit of the Senior
Collateral Agents, will be entitled "Citicorp North America, Inc. and
JPMorgan Chase Bank as Senior Collateral Agents under the Senior
Subsidiary Security Agreement dated as of June 27, 2001 and amended
and restated as of May 28, 2003 Account" and will be subject to
written instructions only from authorized officers of the Senior
Collateral Agents (except as expressly provided otherwise herein).
(b) The Concentration Account Bank agrees to give the Senior
Collateral Agents prompt notice if the Concentration Account shall
become subject to any writ, judgment, warrant of attachment,
execution or similar process.
(c) [A post office box (the "Lockbox") has been rented in
the name of the Grantor at the [ post office and the address to be
used for such Lockbox is:
[Insert address]
The Concentration Account Bank's authorized representatives will have access
to the Lockbox under the authority given by the Grantor to the post office and
will make regular pick-ups from the Lockbox timed to gain maximum benefit of
early presentation and availability of funds. The Concentration Account Bank
will endorse process all checks received in the Lockbox and deposit such
checks (to the extent eligible) in the Concentration Account in accordance
with the procedures set forth below .]
(d) The Concentration Account Bank will follow its usual
operating procedures for the handling of any [checks received from
the Lockbox] or other remittance received in the Concentration
Account that contains restrictive endorsements, irregularities (such
as a variance between the written and numerical amounts), undated or
postdated items, missing signatures, incorrect payees and the like.
(e) The Concentration Account Bank will endorse and process
all eligible checks and other remittance items not covered by
paragraph (d) and deposit such checks and remittance items in the
Concentration Account.
(f) The Concentration Account Bank will mail all checks
returned unpaid because of uncollected or insufficient funds under
appropriate advice to the Grantor (with a copy of the notification of
return to the Senior Collateral Agents). The Concentration Account
Bank may charge the Concentration Account for the amounts of any
returned check that has been previously credited to the Concentration
Account. To the extent insufficient funds remain in the Concentration
Account to cover any such returned check, the Grantor shall indemnify
the Concentration Account Bank for the uncollected amount of such
returned check upon your demand.
(g) The Concentration Account Bank will maintain a record of
all checks and other remittance items received in the Concentration
Account on a daily basis and, in addition to providing the Grantor
with photostatic copies thereof, vouchers, enclosures and the like of
such checks and remittance items, furnish to the Senior Collateral
Agents a monthly statement setting forth the amounts deposited in and
withdrawn from the Concentration Account and shall furnish such other
information relating to the Concentration Account at such times as
shall be reasonably requested by the Senior Collateral Agents to:
Citicorp North America, Inc., as Senior Collateral Agent, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: [ ], and
JPMorgan Chase Bank, as Senior Collateral Agent, 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: [ ], with a copy to the Grantor.
(h) Prior to the delivery of a written notice from the
Senior Collateral Agent in the form of Exhibit A hereto (the
"Concentration Account Cash Sweep Notice"), the Grantor is free to
withdraw funds from the Concentration Account in such amounts and
with such frequency as the Grantor may from time to time determine,
without notice to or consent from the Senior Collateral Agents.
(i) From and after delivery to the Concentration Account
Bank of a Concentration Account Cash Sweep Notice and until the
Concentration Account Bank is notified in writing by the Senior
Collateral Agents that the Concentration Account Cash Sweep Notice is
no longer in effect (a "Concentration Account Cash Sweep Period"),
the Grantor will have no control over the use of, or any right to
withdraw any amount from, to draw upon, or to otherwise exercise any
power with respect to the Concentration Account.
(j) During a Concentration Account Cash Sweep Period, the
Concentration Account Bank shall transfer, in same day funds, on each
Business Day, all funds, if any on deposit in, or otherwise to the
credit of, the Concentration Account to the account listed below (the
"Citibank Concentration Account") or to such other account as the
Senior Collateral Agents may from time to time designate in writing,
provided that funds on deposit that are subject to collection may be
transmitted promptly upon collection to:
ABA Number: _________________________________
[Citicorp North America, Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000]
Account Name: Citibank Concentration Account
Account Number:__________________________
Reference: ______________________________
Attn: ___________________________________
(k) All customary service charges and fees with respect to
the Concentration Account shall be debited to the Concentration
Account. In the event insufficient funds remain in the Concentration
Account to cover such customary service charges and fees, the Grantor
shall pay and indemnify the Concentration Account Bank for the
amounts of such customary service charges and fees. Neither the
Senior Collateral Agents nor the Senior Secured Parties shall have
any liability for the payment of any fees or charges in respect of
the Concentration Account.
This letter agreement shall be binding upon and shall inure to the
benefit of the Concentration Account Bank, the Grantor, the Senior Collateral
Agents, the Senior Secured Parties referred to in the Senior Subsidiary
Security Agreement and their respective successors, transferees and assigns of
any of the foregoing. This letter agreement may not be modified or terminated
except upon the mutual consent of the Senior Collateral Agents, the Grantor
and the Concentration Account Bank. The Concentration Account Bank may
terminate the letter agreement only upon 45 days' prior written notice to the
Grantor and the Senior Collateral Agents. The Senior Collateral Agents may
terminate this letter agreement at any time. So long as any Senior Obligations
remain outstanding and the Commitments are still outstanding, upon such
termination the Concentration Account Bank shall close the Concentration
Account and transfer all funds in the Concentration Account to the Senior
Collateral Agents at the Citibank Concentration Account or as otherwise
directed by the Senior Collateral Agents. After any such termination, the
Concentration Account Bank shall nonetheless remain obligated promptly to
transfer to the Concentration Account, or as the Senior Collateral Agents may
otherwise direct, all funds and other property received in respect of the
Concentration Account.
This letter agreement may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when
so executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this letter agreement by telecopier shall
be effective as delivery of a manually executed counterpart of this letter
agreement.
This letter agreement supersedes all prior agreements, oral or
written, with respect to the subject matter hereof and may not be amended,
modified or supplemented except by a writing signed by the Senior Collateral
Agents, the Grantor and the Concentration Account Bank.
This letter agreement shall be governed by, and construed in
accordance with, the law of the State of New York.
Upon acceptance of this letter agreement, it will be the valid and
binding obligation of the Grantor, the Senior Collateral Agents, and the
Concentration Account Bank, in accordance with its terms.
Very truly yours,
[ ]
By: ____________________________________
Name:
Title:
CITICORP NORTH AMERICA, INC, as Senior
Collateral Agent,
By: ____________________________________
Name:
Title:
JPMORGAN CHASE BANK, as Senior
Collateral Agent,
By: ____________________________________
Name:
Title:
Acknowledged and agreed to as
of the date first above written:
[ ]
By: ____________________________
Name:
Title:
Exhibit A
to the Concentration Account Agreement
CONCENTRATION ACCOUNT CASH SWEEP NOTICE
[Concentration Account Bank]
[Address]
Re: Account No. [ ] (the "Concentration Account")
Ladies and Gentlemen:
Reference is made to the Concentration Account and that certain
Concentration Account Agreement dated June 27, 2001 and amended and restated
as of May 28, 2003 (as amended, supplemented or otherwise modified from time
to time, the "Concentration Account Agreement") among the Concentration
Account Bank, the Grantor and the Senior Collateral Agents. Capitalized terms
used herein and not otherwise defined herein shall have the meanings assigned
to them in the Concentration Account Agreement.
The Senior Collateral Agents hereby notify you that, in accordance
with certain provisions of the Senior Subsidiary Security Agreement, from and
after the date of this notice, you are hereby directed to transfer (by wire
transfer or other method of transfer mutually acceptable to you and the Senior
Collateral Agents) to the Senior Collateral Agents, in same day funds, on each
Business Day, the entire balance in the Concentration Account to the Citibank
Concentration Account specified in paragraph (j) of the Concentration Account
Agreement (or to such other account as the Senior Collateral Agents may from
time to time, or at any time, designate in writing) until you are notified in
writing by the Senior Collateral Agents that this Concentration Account Cash
Sweep Notice is no longer effective.
Very truly yours,
CITICORP NORTH AMERICA, INC, as Senior
Collateral Agent,
By: ____________________________________
Name:
Title:
JPMORGAN CHASE BANK, as Senior Collateral Agent,
By: ____________________________________
Name:
Title:
Schedule 8
to the Senior Subsidiary
Security Agreement
PERFECTION CERTIFICATE
