Exhibit 10.1
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EXECUTION COPY
RITE AID CORPORATION
$300,000,000
9 1/2% Senior Secured Notes Due 2011
Purchase Agreement
New York, New York
February 5, 2003
Xxxxxxx Xxxxx Xxxxxx Inc.
X.X. Xxxxxx Securities Inc.
Credit Suisse First Boston LLC
Fleet Securities, Inc.
As Representatives of the Initial Purchasers
c/o Xxxxxxx Xxxxx Barney 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, $300,000,000 principal
amount of its 9 1/2% Senior Secured Notes Due 2011 (including the guarantees
thereof described herein, the "Securities"). The Securities are to be issued
under an indenture (the "Indenture"), to be dated as of February 12, 2003,
between 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 February 12, 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 preliminary offering memorandum, dated February 3, 2003 (as amended
or supplemented at the Execution Time, including any and all exhibits thereto
and any information incorporated by reference therein, the "Preliminary
Memorandum"), and a final offering memorandum, dated February 5, 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"). Each of the Preliminary Memorandum and the Final Memorandum sets
forth certain information concerning the Company and the Securities. The
Company hereby confirms that it has authorized the use of the Preliminary
Memorandum and 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) The Preliminary Memorandum, at the date thereof, did 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. 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 Preliminary
Memorandum or 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
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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 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
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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 12.5% Notes and Shareholder Notes, to the extent the
Shareholder Notes have not been redeemed.
(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
1525 Cortyou Road-Brooklyn 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
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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 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
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of the Company or any of their properties, as applicable, or (iii)
any agreement or 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.
(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
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of this Agreement or 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 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
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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 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
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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
Representative Supplement No. 1, dated as of April 4, 2002, to the
Intercreditor Agreement, 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.
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 97.25% of the principal amount thereof, plus
accrued interest, if any, from February 12, 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 February
12, 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.
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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.
(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.
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(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.
(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.
11
(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) pursuant to any credit
facility permitted under the Indenture, (iii) purchase money debt
permitted under the Indenture and (iv) notes on similar terms to the
Securities 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 Xxxxxxx Xxxxx Xxxxxx 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 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 Preliminary Memorandum and Final Memorandum and
each amendment or supplement to either of them; (iii) the printing
(or reproduction) and delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of
the Preliminary Memorandum and Final Memorandum, and all amendments
or supplements to either of them, as may, in each case, 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
12
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 1525
Cortyou Road-Brooklyn 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:
(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 an opinion,
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 form set forth in Schedule
V 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 VI and VII or as otherwise agreed
to by the parties hereto.
(c) The Representatives shall have received from Cravath,
Swaine & Xxxxx, 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.
13
(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 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
14
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. 71, 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 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
15
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", "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 the redemption of the Shareholder Notes or any
other 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.
16
(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. 4 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 but prior to the
issuance of the Securities, the Company shall have used a portion of
its available cash to redeem all outstanding Shareholder Notes and
the Representatives shall have received evidence satisfactory to
them of such redemption.
(n) 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.
(o) On or prior to the Closing Date, the Representative
Supplement shall have been duly executed and delivered by the Second
Priority Collateral Trustee, Senior Collateral Agent and Trustee,
and all of the conditions to the Trustee becoming a party to the
Intercreditor Agreement shall have been satisfied.
(p) On or prior to the Closing Date, an amendment to the
Second Priority Subsidiary Security Agreement incorporating the
definitions included in the Senior Subsidiary Security Agreement
into the Second Priority Subsidiary Security Agreement, 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.
(q) 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.
17
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, 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 Xxxxxxx Xxxxx Barney
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 Preliminary
Memorandum, 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 Preliminary Memorandum or 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; provided further, however, that with
respect to any untrue statement or omission of material fact made in any
Preliminary Memorandum, the indemnity agreement contained in this Section
8(a) shall not inure to the benefit of any Initial Purchaser from whom the
person asserting any such loss, claim, damage or liability purchased the
securities concerned, to the extent that any such loss, claim, damage or
liability of such Initial Purchaser occurs under the circumstance where it
shall have been determined by a court of competent jurisdiction by final
and nonappealable judgment that (x) the Company had previously furnished
copies of the Final Memorandum to the Representatives, (y) the untrue
statement or omission of a material fact contained in the Preliminary
Memorandum was corrected in the Final Memorandum and (z) there was not
sent or given to such person, at or prior to the written confirmation of
the sale of such securities to such person, a copy of the Final
Memorandum. This indemnity agreement will be in addition to any liability
which the Company and the Subsidiary Guarantors may otherwise have.
18
(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 Preliminary
Memorandum or 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
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 Preliminary
Memorandum and the Final Memorandum, constitute the only information
furnished in writing by or on behalf of the Initial Purchasers for
inclusion in the Preliminary Memorandum or 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
19
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 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
20
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; 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 Stock Exchange or trading in securities generally on the New York
Stock Exchange or the Pacific Stock 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 Xxxxxxx Xxxxx Xxxxxx Inc. General
Counsel (fax no.: (000) 000-0000) and confirmed to the General Counsel,
Xxxxxxx Xxxxx Barney 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
21
mailed, delivered or telefaxed to Xxxxxx Sari, Esq. (fax no.: (717)
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 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.
22
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
23
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
24
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Xxxxxxx Xxxxx Xxxxxx Inc.
X.X. Xxxxxx Securities Inc.
Credit Suisse First Boston Corporation
Fleet Securities, Inc.
By: Xxxxxxx Xxxxx Barney Inc.
by ______________________
Name:
Title:
For themselves and the other several Initial
Purchasers named in Schedule I to
the foregoing Agreement.
25
SCHEDULE I
Principal
Amount of
Securities
Initial Purchasers to be Purchased
------------------ ---------------
Xxxxxxx Xxxxx Xxxxxx Inc..................................... $ 165,000,000
X.X. Xxxxxx Securities Inc................................... $ 105,000,000
Credit Suisse First Boston LLC............................... $ 15,000,000
Fleet Securities, Inc........................................ $ 15,000,000
_____________
Total.................................. $ 300,000,000
26
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 June 27, 2001 from Rite Aid of
West Virginia, Inc., as Trustor, to First American Title Insurance
Company, as Trustee for the benefit of the Senior Collateral Agent (as
defined therein) and 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 June 27, 2001 from Thrifty
Payless, Inc., as Trustor, to First American Title Insurance Company, as
Trustee for the benefit of the Senior Collateral Agent (as defined
therein) and 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. 2, to be dated as of February
12, 2003 to the Collateral Trust and Intercreditor Agreement.
27
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.
28
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.
29
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.
30
SCHEDULE IV
Opinion of Xxxxxx Sari, Esq., General Counsel of the Company
See attached.
31
SCHEDULE V
Opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
See attached.
32
SCHEDULE VI
Security Opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
See attached.
33
SCHEDULE VII
Security Opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
See attached.
34
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
February 12, 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
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-1
EXHIBIT B
AMENDMENT NO. 4 TO SENIOR CREDIT AGREEMENT
AMENDMENT NO. 4, dated as of February 6, 2003 (this
"Amendment"), to the SENIOR CREDIT AGREEMENT dated as of
June 27, 2001 (as amended, supplemented or otherwise
modified from time to time, the "Senior Credit Facility"),
among RITE AID CORPORATION, a Delaware corporation ("Rite
Aid" or the "Borrower"), the Banks (as defined in Article 1
thereof), CITICORP USA, INC. ("Citicorp USA"), as a
Swingline Bank, as an Issuing Bank and as administrative
agent for the Banks (in such capacity, the "Senior
Administrative Agent"), Citicorp USA, as collateral agent
for the Banks (in such capacity, the "Senior Collateral
Agent") and JPMORGAN CHASE BANK, CREDIT SUISSE FIRST BOSTON
and FLEET RETAIL FINANCE INC., as syndication agents (in
such capacity, the "Syndication Agents").
RECITALS
A. Capitalized terms used herein and not otherwise defined shall
have the meanings assigned to them in the Senior Credit Facility.
B. The Borrower and the Banks are entering into this Amendment
pursuant to Section 9.05(a) of the Senior Credit Facility.
AGREEMENTS
In consideration of the foregoing Recitals and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Amendments to the Senior Credit Facility. The Senior
Credit Facility is hereby amended as follows:
(a) The Definitions Annex is amended by amending the definition of
"Specified Debt Financings", for purposes of the Senior Credit Facility only,
by inserting"; (vi) any Replacement Second Priority Debt or Replacement Senior
Second Priority Debt" at the end of clause (v) thereof and by replacing the
reference therein to "(vi)" with a reference to "(vii)".
(b) Section 1.01 is amended by inserting the following definitions
in the appropriate alphabetical order:
""11.25% Senior Notes" means the 11.25% Senior Notes of the
Borrower due 2008 issued pursuant to the Unsecured Note Indenture and any
Registered Equivalent Notes issued in exchange therefor."
""February 2003 Note Indenture" means an Indenture to be entered
into among Rite Aid, the Subsidiary Guarantors and the trustee named therein,
relating to the February 2003 Notes."
""February 2003 Notes" means the Senior Secured Notes of Rite Aid
due 2011 having terms (i) substantially as set forth in Annex A to the Fourth
Amendment or (ii) that are not substantially less favorable to the Banks than
those set forth in Annex A
1
to the Fourth Amendment and issued pursuant to the February 2003 Note
Indenture and any Registered Equivalent Notes issued in exchange therefor."
""Fourth Amendment" means Amendment No. 4 to this Agreement
dated as of February 6, 2003."
(c) Section 5.07(a) is amended by deleting the reference to "or"
at the end of clause (ii), deleting clause (iii) thereof through the word
"Agreement" and restating clause (A) thereof in its entirety as follows:
"(A)(w) the Senior Loan Documents, (x) agreements
with respect to Debt secured by Liens permitted by Section
5.15 restricting the ability to transfer or grant Liens on
the assets securing such Debt, (y) agreements with respect
to Additional Second Priority Debt, Replacement Second
Priority Debt, Additional Senior Second Priority Debt or
Replacement Senior Second Priority Debt (1) containing
provisions described in clauses (i) and/or (ii) above that
are not substantially more restrictive, taken as a whole,
than those of the February 2003 Note Indenture when
originally entered into or (2) requiring that such Debt be
secured by assets in respect of which Liens are granted to
secure other Debt (provided that in the case of any such
assets subject to a Senior Lien, such Debt will be required
to be secured only with a Second Priority Lien); provided,
however, that the Second Priority Debt Documents relating to
any such Debt may not contain terms requiring any Liens be
granted with respect to Senior Collateral consisting of cash
or Temporary Cash Investments pledged pursuant to Section
2.18(j) of this Agreement or Section 8 of the Senior
Subsidiary Guarantee Agreement or otherwise required to be
provided upon the occurrence of a default under any bank
credit facility to secure obligations in respect of letters
of credit issued thereunder and (z) agreements with respect
to unsecured Debt governed by indentures or by credit
agreements or note purchase agreements with institutional
investors permitted by this Agreement containing terms that
are not substantially more restrictive, taken as a whole,
than those of the Unsecured Note Indenture as in effect on
the date of the Fourth Amendment."
(d) Section 5.07(a) is further amended by (i) replacing the "and"
immediately before the reference to "(F)" with a comma, (ii) inserting a
reference in clause (F) thereof to", the Shareholder Notes, the Indentures,
the February 2003 Note Indenture when originally entered into" immediately
following the reference therein to "the Exchange Note Documents", (iii)
replacing the reference in clause (F) thereof to "Initial Borrowing Date" with
a reference to "date of the Fourth Amendment" and (iv) inserting new clauses
(G) and (H) as follows:
", (G) any restriction existing under agreements relating to assets
acquired by the Borrower or a Subsidiary in a transaction permitted
hereby, provided such agreements existed at the time of such
acquisition, were not put into place in anticipation of such
acquisition and are not applicable to any assets other than assets so
acquired and (H) any restriction existing under any agreement of a
Person acquired as a Subsidiary pursuant to Section 5.21(a)(vii),
Section 5.21(b) or Section 5.22(b), provided any such agreement
existed at the time of such acquisition, was not put into place in
anticipation of such acquisition and was not applicable to any Person
or assets other than the Person or assets so acquired.".
2
(e) Section 5.07(b) is amended in its entirety as follows:
"(b) The Borrower will not, and will not permit any
Subsidiary to, enter into or suffer to exist or become
effective any consensual encumbrance or restriction on the
ability of any Subsidiary to (i) make Restricted Payments in
respect of any capital stock of such Subsidiary held by, or
pay any Debt owed to, the Borrower or any other Subsidiary,
(ii) make any Investment in the Borrower or any other
Subsidiary, or (iii) transfer any of its assets to the
Borrower or any other Subsidiary, except for (A) any
restriction existing under (1) the Senior Loan Documents or
existing on the date of the Fourth Amendment under the
indenture governing the Shareholder Notes, the Unsecured
Note Indenture, the Exchange Note Documents, the Synthetic
Lease Documents, the Indentures or under the February 2003
Note Indenture when originally entered into, (2) the
indenture or agreement governing any Replacement Senior
Second Priority Debt or Replacement Second Priority Debt in
respect of Debt set forth in clause (1) above, (3) the
indenture or agreement governing any Additional Senior
Second Priority Debt, provided the provisions thereof
described in clauses (i), (ii) and (iii) above are not
substantially more restrictive, taken as a whole, than those
of the Synthetic Lease Documents (as in effect on the date
of the Fourth Amendment) or (4) agreements with respect to
Debt permitted by this Agreement containing provisions
described in clauses (i), (ii) and (iii) above that are not
substantially more restrictive, taken as a whole, than those
of the February 2003 Note Indenture when originally entered
into or, alternatively, than those of the Unsecured Note
Indenture (as in effect on the date of the Fourth
Amendment), (B) customary non-assignment provisions in
leases and other contracts entered into in the ordinary
course of business, (C) as required by applicable law, (D)
customary restrictions contained in purchase and sale
agreements limiting the transfer of the subject assets
pending closing, (E) any restriction existing under
agreements relating to assets acquired by the Borrower or a
Subsidiary in a transaction permitted hereby, provided such
agreements existed at the time of such acquisition, were not
put into place in anticipation of such acquisition and are
not applicable to any assets other than assets so acquired,
(F) any restriction existing under any agreement of a Person
acquired as a Subsidiary pursuant to Section 5.21(a)(vii),
Section 5.21(b) or Section 5.22(b), provided any such
agreement existed at the time of such acquisition, was not
put into place in anticipation of such acquisition and was
not applicable to any Person or assets other than the Person
or assets so acquired and (G) agreements with respect to
Debt secured by Liens permitted by Section 5.15 that
restrict the ability to transfer the assets securing such
Debt."
(f) Section 5.07(e) is amended by (x) deleting clause (i)(B)
thereof, replacing the reference in clause (i) to "(C)" with a reference to
"(B)" and replacing the reference in clause (i) to "(D)" with a reference to
"(C)" and (y) replacing the reference to "$150,500,000 in the aggregate" in
clause (ii) thereof with the following: "an aggregate of $150,500,000 plus the
amount, if any, of Shareholder Notes subject to Optional Debt Repurchases
prior to February 28, 2004 under clause (i) of this paragraph (e), in each
case".
(g) Section 5.20(f) is amended by replacing the reference to
"September 1, 2005" in clause (ii) therein with a reference to "December 31,
2008", and by revising the reference in clause (iii) therein to read in its
entirety as follows:
"(iii) the terms relating to amortization,
convertibility and subordination (if any), and other
material terms taken as a whole, of any such extending,
refunding, refinancing or exchanging of Debt, and of any
agreement entered into and of any instrument issued in
connection therewith, are not materially less favorable to
the Borrower and the
3
Subsidiaries (or, in the case of subordination terms, to the
Senior Bank Parties) than the terms, taken as a whole, of
the agreements and instruments governing the Debt being
extended, refunded, refinanced or exchanged; provided,
however, that any such extending, refunding or refinancing
Debt (x) may bear interest not in excess of the then
applicable market rate and may have market call protection
provisions, and (y) which extends, refunds or refinances
unsecured Debt, may, in any event, have terms and provisions
which, taken as a whole, are not materially less favorable
to the Borrower and the Subsidiaries than those of the
Unsecured Note Indenture (as in effect on the date of the
Fourth Amendment), and".
(h) Each of Sections 5.20(g), 5.20(h), 5.20(i) and 5.20(o) is
amended by replacing the reference to "April 1, 2006" in clause (y) therein
with a reference to "December 31, 2008" and by replacing the reference to "no
more restrictive" in clause (y) therein with a reference to "that are not
substantially more restrictive, taken as a whole,".
Section 2. Consents. The Banks, including for purposes of Section
7.01 of the Collateral Trust and Intercreditor Agreement, hereby (i) consent
to one or more amendments of the Exchange Note Indenture and any notes issued
thereunder (including any amendment not requiring the consent of the trustee
thereunder or of the holders of the Exchange Notes), (ii) consent to one or
more amendments of the indenture pursuant to which the Shareholder Notes were
issued and the Shareholder Notes (including any amendment not requiring the
consent of the trustee thereunder or the holders of the Shareholder Notes), in
each case to the extent necessary to provide additional covenants and other
terms substantively equivalent to any or all of the covenants and other terms
contained in the February 2003 Note Indenture when originally entered into and
(iii) confirm their consent to the prior issuance by the Borrower of the
Shareholder Notes and waive any noncompliance with the Senior Credit Facility
that may be deemed to have occurred as a result thereof.
Section 3. Representations and Warranties. To induce the other
parties hereto to enter into this Amendment, the Borrower represents and
warrants to each of the Banks, the Senior Administrative Agent and the Senior
Collateral Agent that, as of the Amendment Effective Date (as defined below):
(a) This Amendment has been duly authorized, executed and
delivered by it and constitutes its valid and binding obligation, enforceable
against it in accordance with its terms.
(b) The representations and warranties set forth in Article IV of
the Senior Credit Facility are true and correct in all material respects on
and as of the Amendment Effective Date with the same effect as though made on
and as of the Amendment Effective Date, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case such representations and warranties shall be true and correct as of such
earlier date).
(c) After giving effect to the agreements herein, no Default has
occurred and is continuing.
Section 4. Effectiveness. This Amendment, other than Section 1(f)
hereof, shall become effective on the first date (the "Amendment Effective
Date") on which the Senior Administrative Agent shall have received
counterparts of this Amendment that, when taken together, bear the signatures
of the Majority Banks, the Borrower and the Senior Administrative Agent.
Section 1(f) of this Agreement shall become effective on the first date on
which (i) the condition set forth in the immediately preceding sentence is
satisfied and (ii) Rite Aid shall have issued the February 2003 Notes in an
aggregate principal amount of not less than $150,000,000
4
and the indenture governing the February 2003 Notes shall have been executed
and delivered and, unless the Majority Banks shall have otherwise consented,
shall contain terms that are not substantially less favorable to the Banks
than those set forth in Annex A to this Amendment (and shall be deemed to have
become effective on such date immediately prior to any repurchase or
redemption of the Shareholder Notes on such date that occurs prior to such
issuance).
Section 5. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
Section 6. Reference to Senior Credit Facility. Except as amended
hereby, the Senior Credit Facility shall remain in full force and effect and
is hereby ratified and confirmed in all respects. On and after the Amendment
Effective Date, each reference in the Senior Credit Facility to "this
Agreement", "hereunder", "hereof", "herein", or words of like import, and each
reference to the Senior Credit Facility shall be deemed a reference to the
Senior Credit Facility, as amended hereby, as the case may be. This Amendment
shall constitute a "Senior Loan Document" for all purposes of the Senior
Credit Facility and the other Senior Loan Documents.
Section 7. Costs and Expenses. The Borrower agrees to reimburse
the Senior Administrative Agent for its reasonable out-of-pocket expenses in
connection with this Amendment, including the reasonable fees, charges and
disbursements of counsel for the Senior Administrative Agent.
Section 8. Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. Delivery of any executed counterpart of a signature page of
this Amendment by facsimile transmission shall be as effective as delivery of
a manually executed counterpart hereof.
Section 9. Headings. The headings of this Amendment are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective officers as of the date
first above written.
RITE AID CORPORATION,
By: ___________________________
Name:
Title:
CITICORP USA, INC., individually and as
Senior Administrative Agent and Senior
Collateral Agent,
By: ___________________________
Name:
Title:
6
AMENDMENT NO. 4
DATED AS OF FEBRUARY 6, 2003 TO THE
RITE AID SENIOR CREDIT FACILITY
To approve Amendment No. 4:
Name of Institution:
______________________________
by
Name:
Title:
7
ANNEX A
This Annex A summarizes the primary differences between the
covenants and certain other provisions contained in the 11 1/4% Senior Notes
due 2008 (the "11 1/4% Notes") of Rite Aid Corporation ("Rite Aid") and the
covenants and other provisions to be contained in the Senior Secured Notes due
2011 (the "February 2003 Notes") of Rite Aid. Unless otherwise noted below,
capitalized terms used herein and not otherwise defined have a substantially
similar meaning to the meaning assigned to them in the Indenture under which
the 11 1/4% Notes were issued. Rite Aid 's obligations under the February 2003
Notes will be guaranteed, subject to certain limitations, by Rite Aid's
subsidiaries that guarantee Rite Aid's obligations under the Senior Credit
Facility. The guarantees will be secured by second priority liens granted by
the subsidiary guarantors on all their assets that secure Rite Aid's
obligations under the Senior Credit Facility, subject to certain exceptions.
The second priority liens will be shared with certain existing and future
indebtedness and certain of such indebtedness will have priority over the
February 2003 Notes in distributions of the collateral. The February 2003
Notes include additional provisions relating to the subsidiary guarantees, the
security interests, the collateral and various agreements related to the
foregoing.
Covenants
Limitation on Debt Substantially similar except that the February 2003
Notes permit additional Debt to be Incurred. In addition,
under the February 2003 Notes (a) a number of "Permitted
Debt" baskets permit such Debt by Subsidiaries that
guarantee Rite Aid's obligations under the February 2003
Notes rather than Restricted Subsidiaries, (b) Rite Aid may
not permit any Restricted Subsidiary that is not a
Subsidiary guarantor to Incur any Debt if the proceeds are
used, directly or indirectly, to Refinance any Debt of Rite
Aid or any Subsidiary guarantor, (c) Rite Aid may not, and
may not permit any Subsidiary guarantor to, Incur, directly
or indirectly, any Debt sharing the collateral on a first
priority basis that is subordinate or junior in right of
payment to any other Debt of Rite Aid or any Subsidiary
guarantor and (d) certain reclassifications of indebtedness
are not deemed Incurrences of indebtedness.
Limitation on Restricted Payments Substantially similar, but the reference date is reset to
the issue date of the February 2003 Notes. Also, under the
February 2003 Notes an Investment with Rite Aid Common Stock
is a Permitted Investment.
Limitation on Liens The 11 1/4% Notes permit Liens (other than Permitted Liens)
only if the 11 1/4% Notes will be secured by such Lien
equally and ratably with (or prior to) all other Debt
secured by such Lien. The February 2003 Notes prohibit
Liens, other than Permitted Liens. In addition, if Rite Aid
or any Subsidiary guarantor creates any additional Lien upon
any Property to secure any Debt sharing collateral with the
February 2003 Notes, it must concurrently grant a second
priority Lien (subject to Permitted Liens) upon such
Property as security for the
1
February 2003 Notes or Subsidiary guarantees of the February
2003 Notes (except (a) as currently required by the 12.5%
Senior Secured Notes due 2006 of Rite Aid (the "12.5%
Notes") and the Senior Secured (Shareholder) Notes due 2006
of Rite Aid (the "Shareholder Notes") with respect to
proceeds of certain collateral dispositions and (b) to the
extent such Property constitutes cash or cash equivalents
securing only letter of credit obligations under Credit
Facilities following a default).
In addition, the aggregate amount of secured obligations
that may share the collateral on a senior basis to the
February 2003 Notes is limited to $2,700 million and the
aggregate amount of secured Debt permitted under the $2,900
million general Debt baskets is reduced by the amount of
February 2003 Notes, 12.5% Notes and Shareholder Notes
outstanding. These limits may fluctuate based upon
fluctuations of the principal Debt basket (substantially as
under the 113% Notes).
Under the February 2003 Notes, Rite Aid will not, and will
not permit any of its Subsidiaries to, secure any public
Debt with a Lien on collateral securing the February 2003
Notes unless the Lien is pari passu with the first priority
obligations or with the February 2003 Notes (i.e., not
layered between them).
The definition of Permitted Liens is substantially similar
except that any Property securing Debt under the principal
Debt baskets must also secure the February 2003 Notes on a
second priority basis and any Property securing the 12.5%
Notes or Shareholder Notes must also secure the February
2003 Notes on an equal and ratable basis.
Limitation on Asset Sales and Substantially similar except that the February 2003 Notes
Specified Collateral Dispositions provide that (a) to the extent the proceeds from specified
collateral dispositions will be allocated pursuant to the
terms of any other second priority debt obligations to Repay
or provide for the Repayment of such second priority Debt
obligations, a pro rata portion of such proceeds must be
allocated to Repay the February 2003 Notes pursuant to an
asset sales prepayment offer and (b) if the assets that were
the subject of an asset disposition constituted collateral
and Rite Aid reinvests in Additional Assets or Expansion
Capital Expenditures, then such Additional Assets must be
pledged as collateral or the improved assets subject to the
Expansion Capital Expenditures must constitute collateral,
in each case securing the February 2003
2
Notes or Subsidiary guarantees of the February 2003 Notes.
Limitation on Restrictions on Substantially similar, but the reference date is reset to
Distributions from Restricted the issue date of the February 2003 Notes.
Subsidiaries
Limitation on Transactions Substantially similar.
with Affiliates
Limitation on Sale and Substantially similar.
Leaseback Transactions
Designation of Restricted and Substantially similar.
Unrestricted Subsidiaries
Guarantees by Subsidiaries Unlike the 11 1/4% Notes, under the February 2003 Notes (a)
Rite Aid will cause each Subsidiary that becomes or is a
party to the senior subsidiary guarantee agreement or the
second priority subsidiary guarantee agreement or an obligor
with respect to any of the Debt sharing collateral with the
February 2003 Notes (except for certain foreign
Subsidiaries) to become a Subsidiary guarantor of the
February 2003 Notes by becoming a party to the second
priority subsidiary guarantee agreement and the collateral
trust and intercreditor agreement, (b) the requirement that
a Restricted Subsidiary guaranteeing Debt of Rite Aid also
guarantee the February 2003 Notes is subject to fewer
exceptions and (c) no Subsidiary guarantor of the February
2003 Notes may guarantee, directly or indirectly, (1) any
Debt of Rite Aid that is subordinate or junior in right of
payment to any other Debt of Rite Aid unless such guarantee
is expressly subordinate in right of payment to its
Subsidiary guarantee of the February 2003 Notes or (2) any
Debt of Rite Aid other than first priority obligations
unless such guarantee is expressly subordinate in right of
payment to or ranks pari passu with, the Subsidiary
guarantee of such Subsidiary guarantor.
Additional Security Documents If Rite Aid or any Subsidiary executes and delivers in
respect of any Property any documents or instruments to
secure Debt or other obligations that at the time share
collateral with the February 2003 Notes, then Rite Aid will,
or will cause such Subsidiary to, execute and deliver
substantially identical documents or instruments in order to
vest in the second priority collateral trustee a perfected
second priority security interest (subject to Permitted
Liens and the collateral trust and intercreditor agreement)
in such Property for the benefit of the second priority
collateral trustee on behalf of
3
the holders of the February 2003 Notes.
Merger, Consolidation and Substantially similar except that under the February 2003
Sale of Property Notes, in addition to Rite Aid, similar but less restrictive
provisions apply to Subsidiary guarantors of the February
2003 Notes.
Events of Default Substantially similar except that under the February 2003
Notes, an Event of Default includes (a) any Subsidiary
guarantee ceasing to be in full force and effect and such
default continues for 10 days after notice or any Subsidiary
guarantor denies or disaffirms its obligations under its
Subsidiary guarantee, (b) the material impairment of the
security interests under the second priority collateral
documents or any security interest being declared invalid or
unenforceable or Rite Aid or any of its Subsidiaries
asserting, in any court of competent jurisdiction, that any
such security interest is invalid or unenforceable (subject
to certain exceptions) and (c) an event of default under the
provision of the 12.5% Notes that are similar to (a) and (b)
above so long as the 12.5% Notes are outstanding.
Change of Control Put Substantially similar.
Redemption Substantially similar (the February 2003 Notes may be
redeemed within the first four years of the issuance of such
Notes at a specified "make-whole" premium; after four years,
the February 2003 Notes may be redeemed at declining
redemption prices). Any redemption price, whether by
make-whole, equity offering or otherwise may differ from the
redemption prices included in the 11 1/4% Notes.
Amendment Substantially similar except that under the February 2003
Notes, these provisions also relate to collateral documents
and releases of collateral and guarantees and the holders of
the February 2003 Notes will be deemed to consent to certain
amendments, including amendments of the agreements governing
the collateral and the guarantees granted by the
Subsidiaries and releases of guarantees and collateral.
4
EXHIBIT C
Form of Amendment to
--------------------
Synthetic Lease Facility
------------------------
See attached.
