EXECUTION COPY
RITE AID CORPORATION
$360,000,000
8.125% Senior Secured Notes Due 2010
Purchase Agreement
New York, New York
April 15, 2003
Citigroup Global Markets Inc.
X.X. Xxxxxx Securities Inc.
Fleet Securities, Inc.
As Representatives of the Initial Purchasers
c/o Citigroup Global Markets Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Rite Aid Corporation, a corporation organized under the laws of
Delaware (the "Company"), proposes to issue and sell to the several parties
named in Schedule I hereto (the "Initial Purchasers"), for whom you (the
"Representatives") are acting as representatives, $360,000,000 principal amount
of its 8.125% Senior Secured Notes Due 2010 (including the guarantees thereof
described herein, the "Securities"). The Securities are to be issued under an
indenture (the "Indenture"), to be dated as of April 22, 2003, among the
Company, the subsidiary guarantors party thereto (the "Subsidiary Guarantors")
and BNY Midwest Trust Company, as trustee (the "Trustee"). The Securities have
the benefit of a Registration Rights Agreement (the "Registration Rights
Agreement"), to be dated April 22, 2003, among the Company, the Subsidiary
Guarantors and the Initial Purchasers, pursuant to which the Company and such
Subsidiary Guarantors have agreed to file with the Commission (i) a registration
statement under the Securities Act registering an issue of senior secured notes
of the Company (including the guarantees thereof described herein, the "Exchange
Notes"), which are identical in all material respects to the Securities (except
that the Exchange Notes will not contain terms with respect to transfer
restrictions) and (ii) under certain circumstances, a shelf registration
statement pursuant to Rule 415 under the Securities Act. To the extent there are
no additional parties listed on Schedule I other than you, the term
Representatives as used herein shall mean you as the Initial Purchasers, and the
terms Representatives and Initial Purchasers shall mean either the singular or
plural as the context requires. The use of the neuter in this Agreement shall
include the feminine and masculine wherever appropriate. Certain terms used
herein are defined in Section 17 hereof. Capitalized terms used but not defined
herein shall have the meanings given to such terms in the Final Memorandum (as
defined below).
The sale of the Securities to the Initial Purchasers will be made
without registration of the Securities under the Securities Act in reliance upon
exemptions from the registration requirements of the Securities Act.
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In connection with the sale of the Securities, the Company has
prepared a final offering memorandum, dated April 15, 2003 (as amended or
supplemented at the Execution Time, including any and all exhibits thereto and
any information incorporated by reference therein, the "Final Memorandum"),
which sets forth certain information concerning the Company and the Securities.
The Company hereby confirms that it has authorized the use of the Final
Memorandum, and any amendment or supplement thereto, in connection with the
offer and sale of the Securities by the Initial Purchasers.
The Subsidiary Guarantors shall provide a subordinated guarantee of
the obligations under the Securities and shall grant to the holders of the
Securities a shared second priority lien, subject to permitted liens, on the
Collateral pursuant to the guarantee agreements, security agreements, mortgages,
intercreditor agreements and other similar agreements listed on Schedule II
hereto (collectively, the "Security Documents").
For purposes of this Agreement, all references to Subsidiary
Guarantors shall mean those entities set forth on Schedule III hereto plus any
other Subsidiary Guarantor that becomes a party to this Agreement pursuant to
Sections 5(o) hereof; provided, however, that any such Subsidiary Guarantor
shall cease to be a Subsidiary Guarantor under this Agreement and the
Registration Rights Agreement at such time as such entity ceases to be a
Subsidiary Guarantor under the Security Documents.
1. Representations and Warranties. The Company and each of the
Subsidiary Guarantors jointly and severally represent and warrant to each
Initial Purchaser as set forth below in this Section 1.
(a) At the Execution Time and on the Closing Date (as defined in
Section 3 hereof), the Final Memorandum did not, and will not (and any
amendment or supplement thereto, at the date thereof and at the Closing
Date, will not), contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading; provided,
however, that the Company and the Subsidiary Guarantors make no
representation or warranty as to the information contained in or omitted
from the Final Memorandum, or any amendment or supplement thereto, in
reliance upon and in conformity with information furnished in writing to
the Company by or on behalf of the Initial Purchasers through any of the
Representatives specifically for inclusion therein.
(b) Neither the Company, nor any of its Affiliates, nor any person
acting on its or their behalf (other than the Initial Purchasers or anyone
acting on their behalf, as to whom the Company makes no representation)
has, directly or indirectly, made offers or sales of any security, or
solicited offers to buy any security, under circumstances that would
require the registration of the Securities under the Securities Act.
(c) Neither the Company, nor any of its Affiliates, nor any person
acting on its or their behalf (other than the Initial Purchasers or anyone
acting on their behalf, as to whom the Company makes no representation) has
engaged in any form of general solicitation or
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general advertising (within the meaning of Regulation D) in connection with
any offer or sale of the Securities in the United States.
(d) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(e) Neither the Company, nor any of its Affiliates, nor any person
acting on its or their behalf (other than the Initial Purchasers or anyone
acting on their behalf, as to whom the Company makes no representation) has
engaged in any directed selling efforts with respect to the Securities
being sold in reliance on Regulation S, and each of them has complied with
the offering restrictions requirements of Regulation S. Terms used in this
paragraph have the meanings given to them by Regulation S.
(f) Neither the Company nor any Subsidiary Guarantor is, and after
giving effect to the offering and sale of the Securities and the
application of the proceeds thereof as described in the Final Memorandum
none of them will be, an "investment company" within the meaning of the
Investment Company Act.
(g) The Company is subject to and in compliance, in all material
respects, with the reporting requirements of Section 13 or Section 15(d) of
the Exchange Act.
(h) Neither the Company nor any Subsidiary Guarantor has paid or
agreed to pay to any person any compensation for soliciting another to
purchase any Securities (except as contemplated by this Agreement).
(i) Neither the Company nor any Subsidiary Guarantor has taken,
directly or indirectly, any action designed to or that would constitute or
that might reasonably be expected to cause or result in, under the Exchange
Act or otherwise, the stabilization or manipulation of the price of any
security of the Company or any Subsidiary Guarantor to facilitate the sale
or resale of the Securities.
(j) On the Closing Date, each of the Indenture and the Security
Documents will conform in all material respects to the descriptions thereof
contained in the Final Memorandum.
(k) On the Closing Date, the obligations of the Subsidiary Guarantors
under the Subsidiary Guarantees in favor of the holders of Securities will
be secured by, and upon issuance of the Exchange Notes the obligations of
the Subsidiary Guarantors under the Subsidiary Guarantees in favor of the
holders of the Exchange Notes will be secured by, valid and enforceable
perfected second priority liens on the Collateral pursuant to the Security
Documents for the benefit of holders of the Securities or the Exchange
Notes, as the case may be (the "Security Interests"), and the Collateral
will be free and clear of all liens, except for the liens on the Collateral
created or permitted by the Indenture and the Security Documents. The
Security Interests will be pari passu in all respects with the liens
securing the Company's 9 1/2% Notes and 12.5% Notes.
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(l) On the Closing Date, all filings, recordings, registrations and
other actions necessary or desirable to preserve and protect the rights
with respect to, and perfect and make valid and enforceable, the Security
Interests under the Security Documents will have been taken and be in full
force and effect.
(m) Each of the Company and its subsidiaries has been duly
incorporated, is validly existing as a corporation and, except for Rite Aid
of Connecticut, Inc., is in good standing under the laws of the
jurisdiction in which it is chartered or organized with full corporate
power and authority to own or lease, as the case may be, and to operate its
properties and conduct its business as described in the Final Memorandum,
and is duly qualified to do business as a foreign corporation and is in
good standing under the laws of each jurisdiction which requires such
qualification except to the extent that failure to be so qualified or be in
good standing would not reasonably be expected to have a material adverse
effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course of
business (a "Material Adverse Effect").
(n) All the outstanding shares of capital stock of each subsidiary
have been duly and validly authorized and issued and are fully paid and
nonassessable, and, except for Rx USA, Inc., Rite Aid Lease Management
Company, Read's, Inc., Thrifty PayLess Health Services, L.L.P. and Rite Aid
Risk Management Corp., all outstanding shares of capital stock of the
subsidiaries of the Company are owned by the Company either directly or
through wholly owned subsidiaries free and clear of any perfected security
interest or any other security interests, claims, liens or encumbrances.
(o) The Company's authorized equity capitalization is as set forth in
the Final Memorandum.
(p) The statements in the Final Memorandum under the headings "Certain
United States Federal Tax Considerations for Non-United States Holders",
"Description of Notes", "Exchange Offer; Registration Rights", "Business --
Regulation" and "Business -- Legal Proceedings", "Description of Other
Indebtedness", "Description of Collateral and Intercreditor Arrangements"
and "Risk Factors" fairly summarize the matters therein described.
(q) This Agreement has been duly authorized, executed and delivered by
the Company and each Subsidiary Guarantor; the Security Documents have been
duly authorized and each constitute, or when executed and delivered by the
Company and each Subsidiary Guarantor (to the extent stated therein to be a
party thereto) will each constitute, a legal, valid and binding instrument
enforceable against the Company and each Subsidiary Guarantor (to the
extent a party thereto) in accordance with their terms (subject, as to the
enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting creditors' rights generally
from time to time in effect and to general principles of equity); the
Indenture has been duly authorized and, assuming due authorization,
execution and delivery thereof by the Trustee, when executed and delivered
by the Company and each Subsidiary Guarantor, will constitute a
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legal, valid and binding instrument enforceable against the Company and
each Subsidiary Guarantor in accordance with its terms (subject, as to the
enforcement of remedies, to applicable bankruptcy, fraudulent conveyance,
reorganization, insolvency, moratorium or other laws affecting creditors'
rights generally from time to time in effect and to general principles of
equity); the Securities have been duly authorized, and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Initial Purchasers, will have been duly
executed and delivered by the Company and each Subsidiary Guarantor and
(assuming the due authorization, execution and delivery of the Indenture by
the Trustee) will constitute the legal, valid and binding obligations of
the Company and each Subsidiary Guarantor entitled to the benefits of the
Indenture (subject, as to the enforcement of remedies, to applicable
bankruptcy, fraudulent conveyance, reorganization, insolvency, moratorium
or other laws affecting creditors' rights generally from time to time in
effect and to general principles of equity, good faith and fair dealing,
regardless of whether in a proceeding at law or in equity); and the
Registration Rights Agreement has been duly authorized and, when executed
and delivered by the Company and each Subsidiary Guarantor, will constitute
a legal, valid and binding instrument enforceable against the Company and
each Subsidiary Guarantor in accordance with its terms (subject, as to the
enforcement of remedies, to applicable bankruptcy, fraudulent conveyance,
reorganization, insolvency, moratorium or other laws affecting creditors'
rights generally from time to time in effect and to general principles of
equity and except that the enforceability of any rights to contribution or
indemnification may be violative of public policy under any law, rule or
regulation).
(r) Subject to compliance by the Initial Purchasers with the
representations, warranties and agreements set forth in Section 4 of this
Agreement, no consent, approval, authorization, filing with or order of any
court or governmental agency or body is required in connection with the
transactions contemplated herein, in the Indenture, the Security Documents
(other than the filing of Uniform Commercial Code financing statements) or
the Registration Rights Agreement, except such as will be obtained under
the Securities Act and the Trust Indenture Act (with respect to the
Registration Rights Agreement), the securities laws of any jurisdiction
outside the U.S. in which the Securities are offered and such as may be
required under the blue sky laws of any jurisdiction and the National
Association of Securities Dealers Inc. in connection with the purchase and
distribution of the Securities by the Initial Purchasers in the manner
contemplated herein and in the Final Memorandum and the Registration Rights
Agreement.
(s) On the Closing Date, neither the execution and delivery of the
Indenture, this Agreement or the Registration Rights Agreement, the issue
and sale of the Securities, nor the fulfillment of the terms hereof,
thereof or of the Security Documents will conflict with, result in a breach
or violation of, or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to
(other than the Security Interests) (i) the charter or by-laws of either of
the Company or any subsidiary, (ii) any statute, rule, regulation or order
of any governmental agency or body or any court, domestic or foreign,
having jurisdiction over the Company or any subsidiary of the Company or
any of their properties, as applicable, or (iii) any agreement or
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instrument to which the Company or any such subsidiary is a party or by
which the Company or any such subsidiary is bound or to which any of the
properties of the Company or any of its subsidiaries is subject.
(t) The consolidated historical financial statements and schedules of
the Company and its consolidated subsidiaries included in or incorporated
by reference in the Final Memorandum present fairly in all material
respects the financial condition, results of operations and cash flows of
the Company as of the dates and for the periods indicated, comply as to
form with the applicable accounting requirements of the Securities Act and
have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods involved
(except as otherwise noted therein); the selected financial data set forth
under the caption "Selected Consolidated Financial Information" in the
Final Memorandum fairly present, on the basis stated in the Final
Memorandum, the information included therein.
(u) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries or its or their property is pending or,
to the best knowledge of the Company or the Subsidiary Guarantors,
threatened that (i) could reasonably be expected to have a material adverse
effect on the performance of this Agreement, the Security Documents, the
Indenture or the Registration Rights Agreement, or the consummation of any
of the transactions contemplated hereby or thereby; or (ii) could
reasonably be expected to have a Material Adverse Effect, except as set
forth in or contemplated in the Final Memorandum (exclusive of any
amendment or supplement thereto).
(v) The Company and each of its subsidiaries own or lease all such
properties as are necessary to the conduct of their respective operations
as presently conducted, except where the failure to own or lease such
property could not reasonably be expected to have a Material Adverse
Effect.
(w) Neither the Company nor any subsidiary is in violation or default
of (i) any provision of its charter or bylaws; (ii) the terms of any
agreement or instrument to which it is a party or bound or to which its
property is subject; or (iii) any statute, rule, regulation or order of any
governmental agency or body or any court, domestic or foreign, having
jurisdiction over the Company or any subsidiary of the Company or any of
their properties, as applicable, except in the case of (ii) and (iii), such
violation or default that could not reasonably by expected to have a
Material Adverse Effect.
(x) Deloitte & Touche LLP, who have certified certain financial
statements of the Company and its consolidated subsidiaries and delivered
their report with respect to the audited consolidated financial statements
included in or incorporated by reference in the Final Memorandum, are, to
the knowledge of the Company, independent public accountants with respect
to the Company within the meaning of the Securities Act and the applicable
published rules and regulations thereunder.
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(y) There are no stamp or other issuance or transfer taxes or duties
or other similar fees or charges required to be paid in connection with the
execution and delivery of this Agreement or Representative Supplement No. 3
to be dated as of April 22, 2003, to the Intercreditor Agreement (the
"Representative Supplement") (other than customary filing fees) or the
issuance or sale by the Company of the Securities.
(z) The Company has filed all foreign, federal, state and local tax
returns that are required to be filed or has requested extensions thereof
(except in any case in which the failure so to file would not have a
Material Adverse Effect, except as set forth in or contemplated in the
Final Memorandum (exclusive of any amendment or supplement thereto)) and
has paid all taxes required to be paid by it and any other assessment, fine
or penalty levied against it, to the extent that any of the foregoing is
due and payable, except for any such assessment, fine or penalty that is
currently being contested in good faith or as would not have a Material
Adverse Effect, except as set forth in or contemplated in the Final
Memorandum (exclusive of any amendment or supplement thereto).
(aa) No labor problem or dispute with the employees of the Company or
any of its subsidiaries exists or is threatened or imminent, and the
Company is not aware of any existing or imminent labor disturbance by the
employees of any of its or its subsidiaries' principal suppliers,
contractors or customers that could reasonably be expected to have a
Material Adverse Effect, except as set forth in or contemplated in the
Final Memorandum (exclusive of any amendment or supplement thereto).
(bb) The Company and each of its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which they
are engaged; the Company and its subsidiaries are in compliance with the
terms of such policies and instruments in all material respects, except
where noncompliance could not reasonably be expected to have a Material
Adverse Effect; and neither the Company nor any such subsidiary has any
reason to believe that it will not be able to renew or replace its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
at a cost that would not have a Material Adverse Effect, except as set
forth in or contemplated in the Final Memorandum (exclusive of any
amendment or supplement thereto).
(cc) No subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock, from repaying to the
Company any loans or advances to such subsidiary from the Company or from
transferring any of such subsidiary's property or assets to the Company or
any other subsidiary of the Company, except as described in or contemplated
by the Final Memorandum.
(dd) The Company and its subsidiaries possess all licenses,
certificates, permits and other authorizations issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, except where the failure to possess such licenses,
certificates, permits and other authorizations could not reasonably
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be expected to have a Material Adverse Effect, and neither the Company nor
any such subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, could reasonably be expected to have a
Material Adverse Effect, except as set forth in or contemplated in the
Final Memorandum (exclusive of any amendment or supplement thereto).
(ee) The Company and its subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"); (ii) have received and are in compliance with all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses; and (iii) have
not received notice of any actual or potential liability for the
investigation or remediation of any disposal or release of hazardous or
toxic substances or wastes, pollutants or contaminants, except where such
non-compliance with Environmental Laws, failure to receive required
permits, licenses or other approvals, or liability would not, individually
or in the aggregate, have a Material Adverse Effect, except as set forth in
the Final Memorandum (exclusive of any amendment or supplement thereto);
except as set forth in the Final Memorandum, neither the Company nor any of
the subsidiaries has been named as a "potentially responsible party" under
the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended, which, if the subject of any unfavorable ruling,
decision or finding could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(ff) Each of the Company and its subsidiaries has fulfilled its
obligations, if any, under the minimum funding standards of Xxxxxxx 000 xx
xxx Xxxxxx Xxxxxx Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the regulations and published interpretations
thereunder with respect to each "plan" (as defined in Section 3(3) of ERISA
and such regulations and published interpretations) in which employees of
the Company and its subsidiaries are eligible to participate; the Company
and its subsidiaries have not incurred any unpaid liability to the Pension
Benefit Guaranty Corporation (other than for the payment of premiums in the
ordinary course) or to any such plan under Title IV of ERISA.
(gg) The Company and its subsidiaries own, possess, license or have
other rights to use, on reasonable terms, all patents, patent applications,
trade and service marks, trade and service xxxx registrations, trade names,
copyrights, licenses, inventions, trade secrets, technology, know-how and
other intellectual property (collectively, the "Intellectual Property")
necessary for the conduct of the Company's business as now conducted or as
proposed in the Final Memorandum to be conducted, except as otherwise
referenced in the Final Memorandum where the failure to own such
Intellectual Property could not reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any of its subsidiaries has
received any charge, complaint, claim, demand or notice alleging any
interference, infringement, misappropriation or violation of a third
party's right in Intellectual Property (including any claim that the
Company or any of its
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subsidiaries must license or refrain from using such Intellectual
Property), which, if the subject of any unfavorable ruling, decision or
finding could, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(hh) The Company maintains, and has maintained during the periods
covered by the Exchange Act reports incorporated by reference in the Final
Memorandum, disclosure controls and procedures (as such term is defined in
Rule 13a-14 under the Exchange Act) that are effective in ensuring that
information required to be disclosed in the reports that it files or
submits under the Exchange Act is recorded, processed, summarized and
reported with the time periods specified in the rules and forms of the
Commission, including, without limitation, effective controls and
procedures designed to ensure that information required to be so described
is accumulated and communicated to the Company's management, including its
principal executive officer or officers, and its principal financial
officer or officers, as appropriate to allow timely decisions regarding
required disclosure, except as disclosed in such reports with respect to
the Company's 1997 fiscal year and that the Company restated its financial
statements for the 1998 and 1999 fiscal years.
(ii) The Security Documents listed on Schedule II hereto represent all
of the guarantee agreements, security agreements, mortgages, intercreditor
agreements and other similar agreements necessary to effectuate the
Subsidiary Guarantors' subordinated guarantee of the obligations under the
Securities and grant to the holders of the Securities a shared second
priority lien on the Collateral, other than UCC financing statements. Other
than (i) Representative Supplement No. 1, dated as of April 4, 2002, to the
Intercreditor Agreement, (ii) Representative Supplement No. 2, dated as of
February 12, 2003, to the Intercreditor Agreement, (iii) Representative
Supplement No. 3, to be dated as of April 22, 2003, to the Intercreditor
Agreement, (iv) Amendment No. 1, dated as of April 15, 2003, to the
Intercreditor Agreement, (v) Amendment to the Second Priority Subsidiary
Security Agreement, dated as of February 12, 2003, and (vi) Amendment No. 1
to Second Priority Subsidiary Security Agreement, Second Priority
Subsidiary Guarantee and Second Priority Indemnity, Subrogation and
Contribution Agreement, dated as of April 15, 2003, none of the Security
Documents have been amended or otherwise modified since the date of the
original execution thereof.
(jj) Since June 27, 2001, neither the Company nor any Subsidiary
Guarantor has taken any action or omitted to take any action, or entered
into any agreement that resulted or would result in (i) the release or
modification of any Security Interest granted under the Security Documents,
other than in accordance with the terms of the Security Documents or (ii)
any of the Security Documents failing to be in full force and effect.
Any certificate signed by any officer of the Company or any Subsidiary
Guarantor and delivered to the Representatives or counsel for the Initial
Purchasers in connection with the offering of the Securities shall be deemed a
representation and warranty by the Company or such Subsidiary Guarantor, as to
matters covered thereby, to each Initial Purchaser.
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2. Purchase and Sale. Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
agrees to sell to each Initial Purchaser, and each Initial Purchaser agrees,
severally and not jointly, to purchase from the Company, at a purchase price of
96.221% of the principal amount thereof, plus accrued interest, if any, from
April 22, 2003 to the Closing Date, the principal amount of Securities set forth
opposite such Initial Purchaser's name on Schedule I hereto.
3. Delivery and Payment. Delivery of and payment for the Securities
shall be made at 10:00 A.M., New York City time, on April 22, 2003, which date
and time may be postponed by agreement between the Representatives and the
Company or as provided in Section 9 hereof (such date and time of delivery and
payment for the Securities being herein called the "Closing Date"). Delivery of
the Securities shall be made to the Representatives for the respective accounts
of the several Initial Purchasers against payment by the several Initial
Purchasers through the Representatives of the purchase price thereof to or upon
the order of the Company by wire transfer payable in same-day funds to the
account specified by the Company (with respect to the portion of the purchase
price required to be used to prepay amounts under the Senior Credit Facility
pursuant to the amendment to the Senior Credit Facility in the form of Exhibit B
hereto, such account shall be the account to which such prepayment must be
made). Delivery of the Securities shall be made through the facilities of The
Depository Trust Company unless the Representatives shall otherwise instruct.
4. Offering by Initial Purchasers. Each Initial Purchaser, severally
and not jointly, represents and warrants to and agrees with the Company that:
(a) It is a qualified institutional buyer (as defined in Rule 144A
under the Securities Act) or an institutional accredited investor (as
defined in Rule 501(a) under the Securities Act).
(b) It has not offered or sold, and will not offer or sell, any
Securities except (i) to those persons it reasonably believes to be
qualified institutional buyers (as defined in Rule 144A under the
Securities Act) and that, in connection with each such sale, it has taken
or will take reasonable steps to ensure that the purchaser of such
Securities is aware that such sale is being made in reliance on Rule 144A;
or (ii) in accordance with the restrictions set forth in Exhibit A hereto.
(c) Neither it nor any person acting on its behalf has made or will
make offers or sales of the Securities in the United States by means of any
form of general solicitation or general advertising (within the meaning of
Regulation D) in the United States.
5. Agreements. The Company and each of the Subsidiary Guarantors
jointly and severally agree with each Initial Purchaser that:
(a) The Company will furnish to each Initial Purchaser and to counsel
for the Initial Purchasers, without charge, during the period referred to
in paragraph (c) below, as many copies of the Final Memorandum and any
amendments and supplements thereto as you may reasonably request.
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(b) The Company will not amend or supplement the Final Memorandum
without the prior written consent of the Representatives, which consent
will not be unreasonably withheld or delayed.
(c) If at any time prior to the completion of the sale of the
Securities by the Initial Purchasers (as determined by the
Representatives), any event occurs as a result of which the Final
Memorandum, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it shall be necessary to amend
or supplement the Final Memorandum to comply with applicable law, the
Company promptly (i) will notify the Representatives of any such event;
(ii) subject to the requirements of paragraph (b) of this Section 5, will
prepare an amendment or supplement that will correct such statement or
omission or effect such compliance; and (iii) will supply any supplemented
or amended Final Memorandum to the several Initial Purchasers and counsel
for the Initial Purchasers without charge in such quantities as you may
reasonably request.
(d) The Company will arrange, if necessary, for the qualification of
the Securities for sale by the Initial Purchasers under the laws of such
jurisdictions as the Representatives may designate and will maintain such
qualifications in effect so long as required for the sale of the
Securities, provided that in no event shall the Company or any subsidiary
be obligated to qualify to do business in any jurisdiction where it is not
now so qualified or to take any action that would subject it to service of
process in suits, other than those arising out of the offering or sale of
the Securities, in any jurisdiction where it is not now so subject. The
Company will promptly advise the Representatives of the receipt by the
Company of any notification with respect to the suspension of the
qualification of the Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose.
(e) The Company will not, and will not permit any of its controlled
Affiliates to, and will use its reasonable best efforts not to permit any
of its other Affiliates to, resell any Securities that have been acquired
by any of them.
(f) Neither the Company, nor any of its Affiliates, nor any person
acting on its or their behalf (other than the Initial Purchasers and their
Affiliates) will, directly or indirectly, make offers or sales of any
security, or solicit offers to buy any security, under circumstances that
would require the registration of the Securities under the Securities Act.
(g) Neither the Company, nor any of its Affiliates, nor any person
acting on its or their behalf (other than the Initial Purchasers or anyone
acting on their behalf, as to whom the Company makes no agreement) will
engage in any form of general solicitation or general advertising (within
the meaning of Regulation D) in connection with any offer or sale of the
Securities in the United States.
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(h) So long as any of the Securities are "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act, the Company
will, during any period in which it is not subject to and in compliance
with Section 13 or 15(d) of the Exchange Act or it is not exempt from such
reporting requirements pursuant to and in compliance with Rule 12g3-2(b)
under the Exchange Act, provide to each holder of such restricted
securities and to each prospective purchaser (as designated by such holder)
of such restricted securities, upon the request of such holder or
prospective purchaser, any information required to be provided by Rule
144A(d)(4) under the Securities Act. This covenant is intended to be for
the benefit of the holders, and the prospective purchasers designated by
such holders, from time to time of such restricted securities.
(i) Neither the Company, nor any of its Affiliates, nor any person
acting on its or their behalf (other than the Initial Purchasers or anyone
acting on their behalf, as to whom the Company makes no agreement) will
engage in any directed selling efforts with respect to the Securities, and
each of them will comply with the offering restrictions requirements of
Regulation S. Terms used in this paragraph have the meanings given to them
by Regulation S.
(j) The Company will cooperate with the Representatives and use its
best efforts to permit the Securities to be eligible for clearance and
settlement through The Depository Trust Company.
(k) The Company will not offer, sell, contract to sell, grant any
other option to purchase or otherwise dispose of, directly or indirectly,
or announce the offering of, or file a registration statement for, any debt
securities issued or guaranteed by the Company or any of its direct or
indirect subsidiaries, or enter into any agreement to do any of the
foregoing (other than (i) the Securities and the Exchange Notes, (ii)
exchange notes issued in exchange for the 9 1/2% Notes on the same basis,
and having the same terms, as the 9 1/2% Notes, (iii) pursuant to any
credit facility permitted under the Indenture, (iv) purchase money debt
permitted under the Indenture and (v) notes on similar terms to the
Securities or the 9 1/2% Notes in order to refinance or in exchange for the
12.5% Notes) for a period of 90 days from the date the Securities are
issued without the prior written consent of Citigroup Global Markets Inc.
(l) The Company will not take, directly or indirectly, any action
designed to or that would constitute or that might reasonably be expected
to cause or result in, under the Exchange Act or otherwise, the
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Securities.
(m) The Company currently has no plan or intent to be or become, or be
or become owned by, an open-end investment company, unit investment trust
or face-amount certificate company that is or is required to be registered
under Section 8 of the Investment Company Act.
(n) The Company and the Subsidiary Guarantors agree to pay the costs
and expenses relating to the following matters: (i) the preparation of the
Indenture, the
13
Registration Rights Agreement and the Security Documents, the issuance of
the Securities, the recording and perfection of security interests pursuant
to the Security Documents and the fees of the Trustee and the collateral
agents and trustees under the Security Documents (other than the legal fees
and expenses of counsel to the Initial Purchasers in connection with the
foregoing); (ii) the preparation, printing or reproduction of the Final
Memorandum and each amendment or supplement thereto; (iii) the printing (or
reproduction) and delivery (including postage, air freight charges and
charges for counting and packaging) of such copies of the Final Memorandum,
and all amendments or supplements thereto, as may be reasonably requested
for use in connection with the offering and sale of the Securities; (iv)
the preparation, printing, authentication, issuance and delivery of
certificates for the Securities, including any stamp or transfer taxes in
connection with the original issuance and sale of the Securities; (v) the
printing (or reproduction) and delivery of this Agreement, any blue sky
memorandum and all other agreements or documents printed (or reproduced)
and delivered in connection with the offering of the Securities; (vi) any
registration or qualification of the Securities for offer and sale under
the securities or blue sky laws of the several states (including filing
fees and the reasonable fees and expenses of counsel for the Initial
Purchasers relating to such registration and qualification); (vii)
admitting the Securities for trading in The Portal Market of the NASD;
(viii) the transportation and other expenses incurred by or on behalf of
Company representatives in connection with presentations to prospective
purchasers of the Securities; (ix) the fees and expenses of the Company's
accountants and the fees and expenses of counsel (including local and
special counsel) for the Company; and (x) all other costs and expenses
incident to the performance by the Company and the Subsidiary Guarantors of
its and their obligations hereunder and under the Indenture, the
Registration Rights Agreement and the Security Documents. It is understood,
however, that, except as provided in this Section 5 and Sections 7 and 8 of
this Agreement, the Initial Purchasers will pay all of their own costs and
expenses, including the fees and expenses of their counsel.
(o) The Company shall cause any entity that is a Subsidiary Guarantor
under the Indenture on the Closing Date and not set forth on Schedule III
hereto to become a party to this Agreement, the Registration Rights
Agreement and the Security Documents, if not already a party to the
Security Documents, on or prior to the Closing Date.
(p) The Company will take all steps necessary to cure as soon as
possible the good standing deficiency of its subsidiary Rite Aid of
Connecticut, Inc. Within 30 days of such deficiency being cured, the
Company shall provide the Initial Purchasers with evidence of the cure of
such deficiency.
6. Conditions to the Obligations of the Initial Purchasers. The
obligations of the Initial Purchasers to purchase the Securities shall be
subject to the accuracy of the representations and warranties on the part of the
Company and each of the Subsidiary Guarantors contained herein at the Execution
Time and the Closing Date, to the accuracy of the statements of the Company and
each of the Subsidiary Guarantors made in any certificates pursuant to the
provisions hereof, to the performance by the Company and each of the Subsidiary
Guarantors of its obligations hereunder and to the following additional
conditions:
14
(a) The Initial Purchasers shall have received an opinion, dated the
Closing Date, of Xxxxxx Sari, Esq., general counsel for the Company, in
form and substance satisfactory to the Initial Purchasers, substantially in
the form set forth in Schedule IV or as otherwise agreed to by the parties
hereto.
(b) The Initial Purchasers shall have received three opinions, dated
the Closing Date, of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel for
the Company, in form and substance satisfactory to the Initial Purchasers,
substantially in the forms set forth in Schedules V, VI and VII or as
otherwise agreed to by the parties hereto. Such counsel shall also furnish
to the Initial Purchasers opinions, dated the Closing Date, relating to the
Security Interests, in form and substance satisfactory to the Initial
Purchasers, substantially in the forms set forth in Schedules VIII and IX
or as otherwise agreed to by the parties hereto.
(c) The Representatives shall have received from Cravath, Swaine &
Xxxxx LLP, counsel for the Initial Purchasers, such opinion or opinions,
dated the Closing Date and addressed to the Representatives, with respect
to the issuance and sale of the Securities, the Indenture, the Registration
Rights Agreement, the Final Memorandum (as amended or supplemented at the
Closing Date) and other related matters as the Representatives may
reasonably require, and the Company shall have furnished to such counsel
such documents as they reasonably request for the purpose of enabling them
to pass upon such matters.
(d) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the Company,
dated the Closing Date, to the effect that the signers of such certificate
have carefully examined the Final Memorandum, any amendment or supplement
to the Final Memorandum and this Agreement and that:
(i) the representations and warranties of the Company and each
Subsidiary Guarantor in this Agreement are true and correct on and as
of the Closing Date with the same effect as if made on the Closing
Date, and the Company and each Subsidiary Guarantor has complied with
all the agreements and satisfied all the conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date; and
(ii) since the date of the most recent financial statements
included in the Final Memorandum (exclusive of any amendment or
supplement thereto), there has been no material adverse change in the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated by the Final
Memorandum (exclusive of any amendment or supplement thereto).
(e) On or prior to the Closing Date, each Security Document shall have
been executed and delivered by the parties thereto and shall be in full
force and effect and the
15
obligations of the Subsidiary Guarantors in respect of the Securities and,
when issued, the Exchange Notes shall be Second Priority Debt Obligations
having the benefit of second priority security interests in the Second
Priority Collateral.
(f) On or prior to the Closing Date, the Company and the Subsidiary
Guarantors shall have caused to be delivered to the Trustee evidence
satisfactory to the Trustee of the completion and effectiveness of all
filings, recordings, registrations and other actions of the Security
Documents, and such other financing statements and security documents, as
may be necessary or, in the opinion of the Trustee, desirable to perfect
the second priority liens created, or intended to be created, by the
Security Documents in favor of the holders of Securities and Exchange
Notes. All filing fees, taxes and other amounts payable in connection with
such filings, recordings, registrations and other actions shall have been
paid (unless such amounts payable are not accepted at the time of such
filing, recording, registration or other action and are otherwise billed to
the Company) and the Trustee and the Representatives shall have received
evidence satisfactory to them of such filings, recordings, registrations
and other actions and payments.
(g) At the Execution Time and at the Closing Date, the Company shall
have requested and caused Deloitte & Touche LLP to furnish to the
Representatives letters, dated respectively as of the Execution Time and as
of the Closing Date, in form and substance satisfactory to the
Representatives, confirming that they are independent accountants within
the meaning of the Securities Act and the Exchange Act and the respective
applicable rules and regulations adopted by the Commission thereunder, and
stating in effect that:
(i) in their opinion the audited financial statements included or
incorporated in the Final Memorandum and reported on by them comply as
to form in all material respects with the applicable accounting
requirements of the Exchange Act and the related rules and regulations
adopted by the Commission thereunder that would apply to the Final
Memorandum if the Final Memorandum were a prospectus included in a
registration statement on Form S-1 under the Securities Act;
(ii) on the basis of a reading of the latest unaudited financial
statements made available by the Company and its subsidiaries; their
limited review, in accordance with the standards established under
Statement on Auditing Standards No. 100, of the unaudited interim
financial information for the nine-month period ended November 30,
2002, and as at November 30, 2002; carrying out certain specified
procedures (but not an examination in accordance with generally
accepted auditing standards) which would not necessarily reveal
matters of significance with respect to the comments set forth in such
letter; a reading of the minutes of the meetings of the stockholders,
directors and audit, executive and compensation committees of the
Company and the Subsidiaries; and inquiries of certain officials of
the Company who have responsibility for financial and accounting
matters of the Company and its subsidiaries as to transactions and
16
events subsequent to November 30, 2002, nothing came to their
attention which caused them to believe that:
(1) any unaudited financial statements included or
incorporated in the Final Memorandum do not comply in form in all
material respects with applicable accounting requirements and
with the related rules and regulations adopted by the Commission
with respect to financial statements included or incorporated in
quarterly reports on Form 10-Q under the Exchange Act; or said
unaudited financial statements are not in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements included or incorporated in the Final Memorandum;
(2) with respect to the period subsequent to November 30,
2002, there were any changes, at a specified date not more than
five days prior to the date of the letter, in the long-term debt
less current maturities of the Company and its subsidiaries or
common stock of the Company or increases in the stockholders'
deficit of the Company as compared with the amounts shown on the
November 30, 2002 consolidated balance sheet included or
incorporated in the Final Memorandum, or for the period from
December 1, 2002 to such specified date there were any decreases,
as compared with the corresponding period in the preceding year,
in revenues, increases in net loss or loss from continuing
operations before income taxes and cumulative effect of
accounting change or in net loss per share of the Company and its
subsidiaries, except in all instances for changes or decreases
set forth in such letter, in which case the letter shall be
accompanied by an explanation by the Company as to the
significance thereof unless said explanation is not deemed
necessary by the Representatives; or
(3) the information included in response to Regulation S-K,
Item 301 (Selected Financial Data), Item 302 (Supplementary
Financial Information), Item 402 (Executive Compensation) and
Item 503(d) (Ratio of Earnings to Fixed Charges) is not in
conformity with the disclosure requirements of Regulation S-K.
(iii) they have performed certain other specified procedures as a
result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its subsidiaries) set
forth in the Final Memorandum, including the information set forth
under the captions "Summary", "Risk Factors", "Use of Proceeds",
"Capitalization", "Selected Consolidated Financial Information",
"Management's Discussion and Analysis of Financial Condition and
Results of Operations", "Business", "Management", "Security Ownership
of Certain Beneficial Owners and Management", "Certain Relationships
and Related Transactions",
17
"Description of Other Indebtedness", "Description of Collateral and
Intercreditor Arrangements" and "Description of Notes" in the Final
Memorandum, agrees with the accounting records of the Company and its
subsidiaries, excluding any questions of legal interpretation;
References to the Final Memorandum in this Section 6(g) include any
amendment or supplement thereto at the date of the applicable letter.
(h) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Final Memorandum (exclusive of any
amendment or supplement thereto), there shall not have been, other than any
repurchase of indebtedness, (i) any change or decrease specified in the
letter or letters referred to in paragraph (g) of this Section 6; or (ii)
any change, or any development involving a prospective change, in or
affecting the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Final Memorandum
(exclusive of any amendment or supplement thereto) the effect of which, in
any case referred to in clause (i) or (ii) above, is, in the sole judgment
of the Representatives, so material and adverse as to make it impractical
or inadvisable to market the Securities as contemplated by the Final
Memorandum (exclusive of any amendment or supplement thereto).
(i) The Securities shall have been designated as Portal-eligible
securities in accordance with the rules and regulations of the NASD, and
the Securities shall be eligible for clearance and settlement through The
Depository Trust Company.
(j) Subsequent to the Execution Time, there shall not have been any
decrease in the rating of any of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Securities Act), any notice given of any
intended or potential decrease in any such rating (including notice of an
adverse change in the outlook for such rating) or of a possible change in
any such rating that does not indicate the direction of the possible
change.
(k) On or prior to the Closing Date, the Registration Rights Agreement
shall be in form and substance satisfactory to the Representatives, shall
have been executed and delivered by the parties thereto and shall be in
full force and effect.
(l) On or prior to the Closing Date, Amendment No. 5 to the Senior
Credit Facility, in the form attached as Exhibit B hereto, shall have been
executed and delivered by the parties thereto and shall be in full force
and effect.
(m) On or prior to the Closing Date, the Amendment and Consent to the
Synthetic Lease Facility, in the form attached as Exhibit C hereto, shall
have been executed and delivered by the parties thereto and shall be in
full force and effect.
(n) On or prior to the Closing Date, the Representative Supplement
shall have been duly executed and delivered by the Second Priority
Collateral Trustee, Senior
18
Collateral Agent and Trustee, and all of the conditions to the Trustee
becoming a party to the Intercreditor Agreement shall have been satisfied.
(o) On or prior to the Closing Date, Amendment No. 1 to the
Intercreditor Agreement, in the form attached as Exhibit D hereto, shall
have been executed and delivered by the parties thereto and shall be in
full force and effect.
(p) On or prior to the Closing Date, Amendment No. 1 to the Second
Priority Subsidiary Security Agreement, Second Priority Subsidiary
Guarantee and Second Priority Indemnity, Subrogation and Contribution
Agreement, in the form attached as Exhibit E hereto, shall have been
executed and delivered by the parties thereto and shall be in full force
and effect.
(q) On or prior to the Closing Date, the Second Priority Credit Line
Deed of Trust, Security Agreement and Assignment of Leases and Rents, dated
as of April 17, 2003, from Rite Aid of West Virginia, Inc., as Trustor, to
Xxxx X. Xxxxxxx, an individual, as Trustee for the benefit of the Second
Priority Collateral Trustee (as defined therein), encumbering real property
located at Rock Branch Industrial Park, Poca, West Virginia (Xxxxxx
County), shall have been executed and delivered by the parties thereto,
shall be in full force and effect, and, upon the recordation thereof, shall
create a valid second lien on the property covered by such mortgage, free
and clear of all liens, defects and encumbrances except for Permitted
Liens.
(r) On or prior to the Closing Date, the Second Priority Credit Line
Deed of Trust, Security Agreement and Assignment of Leases and Rents, dated
as of April 17, 2003, from Thrifty PayLess, Inc., as Trustor, to First
American Title Insurance Company Los Angeles, as Trustee for the benefit of
the Second Priority Collateral Trustee (as defined therein), encumbering
real property located at 0000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx
(Yolo County), shall have been executed and delivered by the parties
thereto and shall be in full force and effect, and, upon the recordation
thereof, shall create a valid second lien on the property covered by such
mortgage, free and clear of all liens, defects and encumbrances except for
Permitted Liens.
(s) Prior to the Closing Date, the Company shall have furnished to the
Representatives such further information, certificates and documents as the
Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Initial Purchasers,
this Agreement and all obligations of the Initial Purchasers hereunder may be
canceled at, or at any time prior to, the Closing Date by the Representatives.
Notice of such cancellation shall be given to the Company in writing or by
telephone or facsimile confirmed in writing.
19
The documents required to be delivered by this Section 6 will be
delivered at the office of counsel for the Initial Purchasers, at Cravath,
Swaine & Xxxxx LLP, 000 Xxxxxx Xxxxxx, Xxx Xxxx, XX 00000, on the Closing Date.
7. Reimbursement of Expenses. If the sale of the Securities provided
for herein is not consummated because any condition to the obligations of the
Initial Purchasers set forth in Section 6 hereof is not satisfied, because of
any termination pursuant to Section 10 hereof or because of any refusal,
inability or failure on the part of the Company or any Subsidiary Guarantor to
perform any agreement herein or comply with any provision hereof other than by
reason of a default by any of the Initial Purchasers, the Company and the
Subsidiary Guarantors, jointly and severally, will reimburse the Initial
Purchasers severally through Citigroup Global Markets Inc. on demand for all
reasonable out-of-pocket expenses (including reasonable fees and disbursements
of counsel) that shall have been incurred by them in connection with the
proposed purchase and sale of the Securities.
8. Indemnification and Contribution. (a) The Company and each of the
Subsidiary Guarantors jointly and severally agree to indemnify and hold harmless
each Initial Purchaser, the directors, officers, employees, affiliates and
agents of each Initial Purchaser and each person who controls any Initial
Purchaser within the meaning of either the Securities Act or the Exchange Act
against any and all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or other Federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Final Memorandum
(or in any supplement or amendment thereto), or arise out of or are based upon
the omission or alleged omission to state therein a material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, and agrees to reimburse each such indemnified party,
as incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company and the Subsidiary
Guarantors will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made in
the Final Memorandum, or in any amendment thereof or supplement thereto, in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Initial Purchasers through the Representatives
specifically for inclusion therein. This indemnity agreement will be in addition
to any liability which the Company and the Subsidiary Guarantors may otherwise
have.
(b) Each Initial Purchaser severally and not jointly agrees to
indemnify and hold harmless the Company, each of its directors, each of its
officers, and each person who controls the Company within the meaning of either
the Securities Act or the Exchange Act, to the same extent as the foregoing
indemnity from the Company to each Initial Purchaser, but only with reference to
written information relating to such Initial Purchaser furnished to the Company
by or on behalf of such Initial Purchaser through the Representatives
specifically for inclusion in the Final Memorandum (or in any amendment or
supplement thereto). This indemnity agreement will be in addition to any
liability which any Initial Purchaser may otherwise have. The
20
Company acknowledges that the statements set forth in the last paragraph of the
cover page regarding the delivery of the Securities and, under the heading "Plan
of Distribution", (i) the list of Initial Purchasers and their respective
participation in the sale of the Securities; (ii) the sentences related to
concessions and reallowances; and (iii) the paragraph related to stabilization,
syndicate covering transactions and penalty bids in the Final Memorandum,
constitute the only information furnished in writing by or on behalf of the
Initial Purchasers for inclusion in the Final Memorandum (or in any amendment or
supplement thereto).
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses; and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel if (i) the
use of counsel chosen by the indemnifying party to represent the indemnified
party would present such counsel with a conflict of interest; (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party; (iii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action; or (iv) the indemnifying party shall authorize the indemnified
party to employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld), settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company, each Subsidiary Guarantor and the
Initial Purchasers severally agree to contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses
21
reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which the Company and one or more of the Initial
Purchasers may be subject in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Subsidiary Guarantors on the
one hand and by the Initial Purchasers on the other from the offering of the
Securities; provided, however, that in no case shall any Initial Purchaser
(except as may be provided in any agreement among the Initial Purchasers
relating to the offering of the Securities) be responsible for any amount in
excess of the purchase discount or commission applicable to the Securities
purchased by such Initial Purchaser hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company, each
Subsidiary Guarantor and the Initial Purchasers severally shall contribute in
such proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company and the Subsidiary Guarantors on the one
hand and of the Initial Purchasers on the other in connection with the
statements or omissions which resulted in such Losses, as well as any other
relevant equitable considerations. Benefits received by the Company and the
Subsidiary Guarantors shall be deemed to be equal to the total net proceeds from
the offering (before deducting expenses) received by the Company, and benefits
received by the Initial Purchasers shall be deemed to be equal to the total
purchase discounts and commissions in each case set forth on the cover of the
Final Memorandum. Relative fault shall be determined by reference to, among
other things, whether any untrue or any alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information provided by the Company on the one hand or the Initial Purchasers on
the other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Company, each Subsidiary Guarantor and the Initial Purchasers
agree that it would not be just and equitable if contribution were determined by
pro rata allocation or any other method of allocation which does not take
account of the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers obligation to contribute
pursuant to this Section 8(d) are several in proportion to their respective
purchase obligations and not joint. For purposes of this Section 8, each person
who controls an Initial Purchaser within the meaning of either the Securities
Act or the Exchange Act and each director, officer, employee, affiliate and
agent of an Initial Purchaser shall have the same rights to contribution as such
Initial Purchaser, and each person who controls the Company within the meaning
of either the Securities Act or the Exchange Act and each officer and director
of the Company shall have the same rights to contribution as the Company,
subject in each case to the applicable terms and conditions of this paragraph
(d).
9. Default by an Initial Purchaser. If any one or more Initial
Purchasers shall fail to purchase and pay for any of the Securities agreed to be
purchased by such Initial Purchaser hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Initial Purchasers shall be obligated severally to take
up and pay for (in the respective proportions which the principal amount of
Securities set forth opposite their names on Schedule I hereto bears to the
aggregate principal amount of Securities set forth opposite the names of all the
remaining Initial Purchasers) the Securities which the defaulting Initial
Purchaser or Initial Purchasers agreed but failed to purchase;
22
provided, however, that in the event that the aggregate principal amount of
Securities which the defaulting Initial Purchaser or Initial Purchasers agreed
but failed to purchase shall exceed 10% of the aggregate principal amount of
Securities set forth on Schedule I hereto, the remaining Initial Purchasers
shall have the right to purchase all, but shall not be under any obligation to
purchase any, of the Securities, and if such nondefaulting Initial Purchasers do
not purchase all the Securities, this Agreement will terminate without liability
to any nondefaulting Initial Purchaser or the Company. In the event of a default
by any Initial Purchaser as set forth in this Section 9, the Closing Date shall
be postponed for such period, not exceeding two Business Days, as the
Representatives and the Company shall determine in order that the required
changes in the Final Memorandum or in any other documents or arrangements may be
effected. Nothing contained in this Agreement shall relieve any defaulting
Initial Purchaser of its liability, if any, to the Company or any nondefaulting
Initial Purchaser for damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by notice given to the Company prior
to delivery of and payment for the Securities, if at any time prior to such time
(i) trading in the Company's Common Stock shall have been suspended by the
Commission, the New York Stock Exchange or the Pacific Exchange or trading in
securities generally on the New York Stock Exchange or the Pacific Exchange
shall have been suspended or limited or minimum prices shall have been
established on either such Exchange; (ii) a banking moratorium shall have been
declared either by Federal or New York State authorities; or (iii) there shall
have occurred any outbreak or escalation of hostilities, declaration by the
United States of a national emergency or war or other calamity or crisis the
effect of which on financial markets is such as to make it, in the sole judgment
of the Representatives, impracticable or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the Final Memorandum
(exclusive of any amendment or supplement thereto).
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Initial Purchasers set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of the Initial Purchasers or the Company
or any of the officers, directors, employees, agents or controlling persons
referred to in Section 8 hereof, and will survive delivery of and payment for
the Securities. The provisions of Sections 7 and 8 hereof shall survive the
termination or cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telefaxed to Citigroup Global Markets Inc. General Counsel (fax
no.: (000) 000-0000) and confirmed to the General Counsel, Citigroup Global
Markets Inc. at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
General Counsel; or, if sent to the Company or any Subsidiary Guarantor, will be
mailed, delivered or telefaxed to Xxxxxx Sari, Esq. (fax no.: (000) 000-0000)
and confirmed to Xxxxxx Sari, Esq., Rite Aid Corporation, 00 Xxxxxx Xxxx, Xxxx
Xxxx, Xxxxxxxxxxxx 00000.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents
23
and controlling persons referred to in Section 8 hereof, and, except as
expressly set forth in Section 5(h) hereof, no other person will have any right
or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed within the State of New York.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument.
16. Headings. The section headings used herein are for convenience
only and shall not affect the construction hereof.
17. Definitions. The terms which follow, when used in this Agreement,
shall have the meanings indicated.
"Affiliate" shall have the meaning specified in Rule 501(b) of
Regulation D.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in The City of New York.
"Commission" shall mean the Securities and Exchange Commission.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Investment Company Act" shall mean the Investment Company Act of
1940, as amended, and the rules and regulations of the Commission promulgated
thereunder.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Regulation D" shall mean Regulation D under the Securities Act.
"Regulation S" shall mean Regulation S under the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
amended, and the rules and regulations of the Commission promulgated thereunder.
24
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this Agreement and your acceptance shall represent a binding agreement between
the Company and the several Initial Purchasers.
Very truly yours,
Rite Aid Corporation,
by
---------------------------------
Name:
Title:
Each of the Subsidiary
Guarantors listed on
Schedule III hereto,
by
---------------------------------
Name: Xxxxxx X. Sari
Title: Authorized Signatory
25
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Citigroup Global Markets Inc.
X.X. Xxxxxx Securities Inc.
Fleet Securities, Inc.
By: Citigroup Global Markets Inc.
by
----------------------
Name:
Title:
For themselves and the other several Initial
Purchasers named in Schedule I to
the foregoing Agreement.
26
SCHEDULE I
Principal
Amount of
Securities
Initial Purchasers to be Purchased
------------------ ---------------
Citigroup Global Markets Inc. .......... $225,000,000
X.X. Xxxxxx Securities Inc. ............ $126,000,000
Fleet Securities, Inc. ................. $ 9,000,000
------------
Total ............................... $360,000,000
27
SCHEDULE II
Security Documents
(i) Collateral Trust and Intercreditor Agreement, dated as of June 27,
2001 among Rite Aid Corporation, the Subsidiary Guarantors (as defined therein),
Wilmington Trust Company, as collateral trustee for the holders from time to
time of the Second Priority Debt Obligations (as defined therein), Citicorp USA,
Inc., as collateral agent for the Senior Secured Parties (as defined therein)
under the Senior Loan Documents (as defined therein), Citibank USA, Inc., as
agent for the Synthetic Lease Parties (as defined therein), State Street Bank
and Trust Company, as trustee under the Exchange Note Indenture (as defined
therein) for the holders of the Exchange Notes (as defined therein), and each
other Second Priority Representative (as defined therein) which from time to
time becomes a party thereto (the "Collateral Trust and Intercreditor
Agreement").
(ii) Second Priority Subsidiary Guarantee Agreement, dated as of June
27, 2001 among the Subsidiary Guarantors (as defined therein) and Wilmington
Trust, as collateral agent.
(iii) Second Priority Subsidiary Security Agreement, dated as of June
27, 2001 among the Subsidiary Guarantors (as defined therein) in favor of
Wilmington Trust, as collateral trustee.
(iv) Second Priority Credit Line Deed of Trust, Security Agreement and
Assignment of Leases and Rents, dated as of April 17, 2003, from Rite Aid of
West Virginia, Inc., as Trustor, to Xxxx X. Xxxxxxx, an individual, as Trustee
for the benefit of the Second Priority Collateral Trustee (as defined therein),
encumbering real property located at Rock Branch Industrial Park, Poca, West
Virginia (Xxxxxx County).
(v) Second Priority Credit Line Deed of Trust, Security Agreement and
Assignment of Leases and Rents, dated as of April 17, 2003, from Thrifty
PayLess, Inc., as Trustor, to First American Title Insurance Company Los
Angeles, as Trustee for the benefit of the Second Priority Collateral Trustee
(as defined therein), encumbering real property located at 0000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxxxx (Yolo County).
(vi) Representative Supplement No. 3, to be dated as of April 22, 2003
to the Collateral Trust and Intercreditor Agreement.
(vii) Amendment No. 1, dated as of April 15, 2003 to the Collateral
Trust and Intercreditor Agreement.
(viii) Amendment to the Second Priority Subsidiary Security Agreement,
dated as of February 12, 2003.
28
(ix) Amendment No. 1 to Second Priority Subsidiary Security Agreement,
Second Priority Subsidiary Guarantee and Second Priority Indemnity, Subrogation
and Contribution Agreement, dated as of April 15, 2003.
29
SCHEDULE III
Subsidiary Guarantors
Corporations
------------
Thrifty PayLess, Inc.
Rite Aid of Vermont, Inc.
Rite Aid of Ohio, Inc.
Rite Aid of Maine, Inc.
Rite Aid of West Virginia, Inc.
The Lane Drug Company
0000 Xxxxxxx Xxxx - Xxxxxxxx Inc.
0000 Xxxxxx Xxxx Xxxx - Xxxxxxxxxx Corp.
0000 Xxxxxxxxxxxx Xxxxxx Xxxx - Xxxxxxxxxxxx Xxxx, Inc.
5277 Associates, Inc.
000 Xxx Xxxxxx Xxxx.
0000 Superior Properties, Inc.
000-000 Xxxxx Xx. Xxxx.
Xxxx Drug Stores, Inc.
Broadview and Wallings - Broadview Heights Ohio, Inc.
Dominion Action Four Corporation
Dominion Action One Corporation
Dominion Action Three Corporation
Dominion Action Two Corporation
Dominion Drug Stores Corp.
Drug Fair of PA, Inc.
Drug Fair, Inc.
Eagle Managed Care Corp.
England Street-Asheland Corporation
GDF, Inc.
Harco, Inc.
K&B Alabama Corporation K&B Florida Corporation
K&B Louisiana Corporation
K&B Mississippi Corporation
K&B Services, Incorporated
K&B Tennessee Corporation
K&B Texas Corporation
K&B, Incorporated
Keystone Centers, Inc.
Lakehurst and Broadway Corporation
Ocean Acquisition Corporation
P.L.D. Enterprises, Inc.
Xxxxxx Drive and Navy Boulevard Property Corporation
PDS-1 Michigan, Inc.
Perry Distributors, Inc.
30
Perry Drug Stores, Inc.
PL Xpress, Inc.
Portfolio Medical Services, Inc.
Rack Rite Distributors, Inc.
Ram-Utica, Inc.
RDS Detroit, Inc.
Read's Inc.
Rite Aid Drug Palace, Inc.
Rite Aid Hdqtrs. Corp
Rite Aid of Alabama, Inc.
Rite Aid of Connecticut, Inc.
Rite Aid of Delaware, Inc.
Rite Aid of Florida, Inc.
Rite Aid of Georgia, Inc.
Rite Aid of Illinois, Inc.
Rite Aid of Indiana, Inc.
Rite Aid of Kentucky, Inc.
Rite Aid of Maryland, Inc.
Rite Aid of Massachusetts, Inc.
Rite Aid of Michigan, Inc.
Rite Aid of New Hampshire, Inc.
Rite Aid of New Jersey, Inc.
Rite Aid of New York, Inc.
Rite Aid of North Carolina, Inc.
Rite Aid of Pennsylvania, Inc.
Rite Aid of South Carolina, Inc.
Rite Aid of Tennessee, Inc.
Rite Aid of Virginia, Inc.
Rite Aid of Washington, D.C., Inc.
Rite Aid Realty Corp.
Rite Aid Rome Distribution Center, Inc.
Rite Aid Transport, Inc.
Rite Aid Venturer #1, Inc.
Rite Fund, Inc.
Rite Investments Corp.
Rx Choice, Inc.
Sophie One Corp.
Super Ice Cream Suppliers, Inc.
Super Pharmacy Network, Inc.
Super Tobacco Distributors, Inc.
The Xxxx Company
Thrifty Corporation
Virginia Corporation
W.R.A.C., Inc.
31
Limited Liability Companies
---------------------------
000 Xxxxx Xxxxxxxx - Xxxxxx, Xxxx, LLC
Eighth and Water Streets - Urichsville, Ohio, LLC
Gettysburg and Xxxxxx-Dayton, Ohio, LLC
Xxxxxxxx & Chillicothe Roads - Chesterland, LLC
Xxxxxx & Xxxxxxx, LLC
Silver Springs Road - Baltimore, Maryland/One, LLC
Silver Springs Road - Baltimore, Maryland/Two, LLC
Xxxxx Xxxxxx xxx Xxxx Xxxx-Xxxxxx, Xxxx, LLC
000 Xxxxxxxx Xxxxxx Xxxxxxx, LLC
0000 Xxxx Xxxxx Xxxxxx Xxxxx, Xxxxx, LLC
1740 Associates, L.L.C.
Xxx & Government Streets - Mobile, Alabama, LLC
Baltimore/Annapolis Boulevard and Governor Richie Highway -
Glen Burnie, Maryland, LLC
Xxxxxxx Xxxxxx xxx Xxxx Xxxxxx - Xxxxx, XX, LLC
Fairground, L.L.C.
Gratiot & Center - Saginaw Township, Michigan, LLC
Name Rite, L.L.C.
Northline & Xxx - Xxxxxx - Southgate, LLC
Paw Paw Lake Road & Paw Paw Avenue - Coloma, Michigan, LLC
Seven Mile and Evergreen - Detroit, LLC
State & Fortification Streets - Jackson, Mississippi, LLC
Tyler and Xxxxxxx Roads, Birmingham - Alabama, LLC
Rite Aid Services, L.L.C.
32
SCHEDULE IV
Opinion of Xxxxxx Sari, Esq., General Counsel of the Company
See attached.
33
SCHEDULE V
Opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
See attached.
34
SCHEDULE VI
Opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
See attached.
35
SCHEDULE VII
Opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
See attached.
36
SCHEDULE VIII
Security Opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
See attached.
37
SCHEDULE IX
Security Opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
See attached.
EXHIBIT A
Selling Restrictions for Offers and
Sales outside the United States
(1)(a) The Securities have not been and will not be registered under
the Securities Act and may not be offered or sold within the United States or
to, or for the account or benefit of, U.S. persons except in accordance with
Regulation S under the Securities Act or pursuant to an exemption from the
registration requirements of the Securities Act. Each Initial Purchaser
represents and agrees that, except as otherwise permitted by Section 4(a)(i) or
(ii) of the Agreement to which this is an exhibit, it has offered and sold the
Securities, and will offer and sell the Securities, (i) as part of their
distribution at any time; and (ii) otherwise until 40 days after the later of
the commencement of the offering and the Closing Date, only in accordance with
Rule 903 of Regulation S under the Securities Act. Accordingly, each Initial
Purchaser represents and agrees that neither it, nor any of its Affiliates nor
any person acting on its or their behalf has engaged or will engage in any
directed selling efforts with respect to the Securities, and that it and they
have complied and will comply with the offering restrictions requirement of
Regulation S. Each Initial Purchaser agrees that, at or prior to the
confirmation of sale of Securities (other than a sale of Securities pursuant to
Section 4(a)(i) or (ii) of the Agreement to which this is an exhibit), it shall
have sent to each distributor, dealer or person receiving a selling concession,
fee or other remuneration that purchases Securities from it during the
distribution compliance period a confirmation or notice to substantially the
following effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be offered
or sold within the United States or to, or for the account or benefit
of, U.S. persons (i) as part of their distribution at any time or (ii)
otherwise until 40 days after the later of the commencement of the
offering and April 22, 2003, except in either case in accordance with
Regulation S or Rule 144A under the Securities Act. Terms used above
have the meanings given to them by Regulation S."
(b) Each Initial Purchaser also represents and agrees that it has not
entered and will not enter into any contractual arrangement with any distributor
with respect to the distribution of the Securities, except with its Affiliates
or with the prior written consent of the Company.
(c) Terms used in this section have the meanings given to them by
Regulation S.
(2) Each Initial Purchaser represents and agrees that (i) it has not
offered or sold, and prior to the expiry of six months from the closing of the
offering of the Securities will not offer or sell, any Securities to persons in
the United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding managing or disposing of investments, whether as a principal
or agent, for purposes of their businesses or otherwise in circumstances which
have not resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers Securities Regulations 1995;
(ii) it has only communicated or caused to be
A-1
communicated and will only communicate or cause to be communicated any
invitation or inducement to engage in investment activity (within the meaning of
section 21 of the Financial Services and Markets Act 2000 (the "FSMA")) received
by it in connection with the issue or sale of any Securities in circumstances in
which section 21(1) of the FSMA does not apply to the Issuer; and (iii) it has
complied and will comply with applicable provisions of FSMA with respect to
anything done by it in relation to the Securities in, from or otherwise
involving the United Kingdom.
A-2
EXHIBIT B
Form of Amendment No. 5 to
Senior Credit Agreement
See attached.
B-1
EXHIBIT C
Form of Amendment to
Synthetic Lease Facility
See attached.
C-1
EXHIBIT D
Form of Amendment No. 1 to
Intercreditor Agreement
See attached.
D-1
EXHIBIT E
Form of Amendment No. 1 to
Second Priority Subsidiary Security Agreement,
Second Priority Subsidiary Guarantee and
Second Priority Indemnity, Subrogation and
Contribution Agreement
See attached.
E-1
