Exhibit 10.5
 
EXECUTION COPY
 
SENIOR SUBSIDIARY SECURITY AGREEMENT
 
SENIOR SUBSIDIARY SECURITY AGREEMENT, dated as of June 27, 2001, as amended and
restated as of June 5, 2009 (as amended, supplemented or otherwise modified from
time to time, this “Agreement”), made by the SUBSIDIARY GUARANTORS identified on
the signature pages hereto and any other Person that becomes a Subsidiary
Guarantor pursuant to the Senior Credit Agreement (as such term is defined
below) (collectively, the “Grantors”), in favor of CITICORP NORTH AMERICA, INC.,
a Delaware corporation (“CNAI”), as Senior Collateral Agent.
 
Reference is made to the Senior Credit Agreement, dated as of June 27, 2001, as
amended and restated as of June 5, 2009 (as amended, supplemented or otherwise
modified from time to time, the “Senior Credit Agreement”), among Rite Aid
Corporation, a Delaware corporation (the “Borrower”), the lenders from time to
time party thereto (the “Senior Lenders”), CNAI, as administrative agent for the
Senior Lenders, and the other agents party thereto.  Reference is also made to
the Senior Subsidiary Security Agreement dated as of June 27, 2001, as amended
and restated as of September 22, 2004 (the “Restatement Effective Date”) (as
amended, supplemented or otherwise modified from time to time prior to the 2009
Restatement Effective Date, the “Original Senior Subsidiary Security Agreement”)
among the Subsidiary Guarantors identified on the signature pages thereto and
each other Person that became a Subsidiary Guarantor pursuant to the Senior
Credit Agreement prior to the 2009 Restatement Effective Date (collectively, the
“Original Grantors”) and Citicorp USA, Inc., a Delaware corporation, as senior
collateral agent (in such capacity, the “Original Senior Collateral Agent”),
pursuant to which the Original Grantors agreed to secure the Senior Obligations
(as defined in the Original Senior Subsidiary Security Agreement).  The Original
Grantors and the Original Senior Collateral Agent now wish to amend and restate
the Original Senior Subsidiary Security Agreement in its entirety as set forth
herein to secure the payment or performance, as the case may be, in full of the
obligations under the Senior Subsidiary Guarantee Agreement.
 
The Senior Lenders have agreed to make Loans to the Borrower, and the Issuing
Banks have agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Senior Credit Agreement.  In addition, from time to time on or after the 2009
Restatement Effective Date, the Borrower may incur Additional Senior Debt
Obligations to one or more Additional Senior Debt Parties pursuant to the
Additional Senior Debt Documents.  Each of the Subsidiary Guarantors has agreed
to guarantee, among other things, all the obligations of the Borrower under the
Senior Credit Agreement and, to the extent specified in the Additional Senior
Debt Documents, the Additional Senior Debt Obligations.  In order to induce the
Senior Lenders to make the Loans, the Issuing Banks to issue Letters of Credit
and Additional Senior Debt Parties to acquire Additional Senior Debt from, or
otherwise extend credit constituting Additional Senior Debt to, the Borrower,
the Grantors have agreed to guarantee the due and punctual payment of the Senior
Obligations pursuant to the
 

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terms of the senior subsidiary guarantee agreement dated as of June 27, 2001, as
amended and restated as of the date hereof (as amended, supplemented or
otherwise modified from time to time, the “Senior Subsidiary Guarantee
Agreement”) among the Borrower, the Subsidiary Guarantors and the Senior
Collateral Agent for the benefit of the Senior Secured Parties.
 
Accordingly, the Grantors and the Senior Collateral Agent, on behalf of
themselves and each Senior Secured Party (and each of their respective
successors and assigns), hereby agree as follows:
 
SECTION 1.  Defined Terms.
 
SECTION 1.01.  Definitions. (a)  Unless otherwise defined herein capitalized
terms used herein shall have the meanings given in the Definitions Annex
attached as Annex 2 hereto (as amended, supplemented or otherwise modified from
time to time), or if not defined therein, as defined in the Senior Credit
Agreement.  All terms defined in the New York UCC (as defined herein) and not
defined in this Agreement shall have the meanings specified therein.
 
(b)  The following terms shall have the following meanings:
 
“Accounts Receivable” means, with respect to each Grantor, all right, title and
interest of such Grantor to Accounts and all of its right, title and interest in
any returned goods, together with all rights, titles, securities and guaranties
with respect thereto, including any rights to stoppage in transit, replevin,
reclamation and resales, and all related security interests, liens and pledges,
whether voluntary or involuntary in each case whether due or become due, whether
now or hereafter arising in the future.
 
“Blocked Account” means each of the accounts established by the applicable
Grantors listed in Section 4 of Schedule 3 to this Agreement and maintained with
a Blocked Account Bank pursuant to a Blocked Account Agreement.
 
“Blocked Account Agreement” means any Blocked Account Agreement between the
Senior Collateral Agent and a Blocked Account Bank substantially in the form of
Schedule 4 to this Agreement.
 
“Blocked Account Bank” means any bank or financial institution that is
satisfactory to the Senior Collateral Agent and the Borrowing Base Agent that
executes and delivers to the Senior Collateral Agent a Blocked Account
Agreement.
 
“Blocked Account Cash Sweep Notice” means a notice in the form attached as
Exhibit A to the Blocked Account Agreement.
 
“Cash Management Accounts” mean, collectively,  (a) the Blocked Accounts, (b)
the Deposit Accounts, (c) the Concentration Account and (d) the Citibank
Concentration Accounts.
 
“Cash Management System” means the system of cash management described in
Schedule 3 to this Agreement.
 
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“Cash Sweep Cash Collateral Account” means the collateral account established as
part of the Cash Management System at Citibank, N.A. and under the sole dominion
and control of the Senior Collateral Agent, Account No. 30429836.
 
“Cash Sweep Notice” means (a) any Blocked Account Cash Sweep Notice and (b) the
Concentration Account Cash Sweep Notice.
 
“Cash Sweep Period” means any period in which funds are transferred from (a) any
Blocked Account to the Concentration Account or any Citibank Concentration
Account, as applicable, pursuant to a Blocked Account Cash Sweep Notice or (b)
the Concentration Account to any Citibank Concentration Account pursuant to a
Concentration Account Cash Sweep Notice.
 
“Citibank Concentration Account” means the account established at Citibank and
under sole dominion and control of the Senior Collateral Agent, CNAI FAO Rite
Aid Concentration Account No. 30582785, together with any similar account
established at Citibank, N.A. for the purpose of collecting funds during a Cash
Sweep Period.
 
“Concentration Account” means the cash collateral account established at
JPMorgan Chase Bank and maintained with the Concentration Account Bank pursuant
to a Concentration Account Agreement, Account No. 9102750222.
 
“Concentration Account Agreement” means a Concentration Account Agreement
between any Subsidiary Guarantor, the Senior Collateral Agent and a bank or
financial institution satisfactory to the Senior Collateral Agent substantially
in the form of Schedule 7 to this Agreement.
 
“Concentration Account Bank” means a bank or financial institution that is
satisfactory to the Senior Collateral Agent and the Borrowing Base Agent that
executes and delivers to the Senior Collateral Agent a Concentration Account
Agreement.
 
“Concentration Account Cash Sweep Notice” means a notice in the form attached as
Exhibit A to the Concentration Account Agreement.
 
“Contracts” means, with respect to each Grantor, all rights of such Grantor
under all contracts and agreements to which such Grantor is a party or under
which such Grantor has any right, title or interest or to which such Grantor or
any property of such Grantor is subject, as the same may from time to time be
amended, supplemented or otherwise modified, including (a) all rights of such
Grantor to receive moneys due and to become due to it thereunder or in
connection therewith, (b) all rights of such Grantor to damages arising out of,
or for, breach or default in respect thereof and (c) all rights of such Grantor
to exercise all remedies thereunder.
 
“Copyright License” means any written agreement, now or hereafter in effect,
granting any right to any third party under any copyright now or hereafter owned
by any Grantor or that such Grantor otherwise has the right to license, or
granting any right to any Grantor under any copyright now or hereafter owned by
any third party, and all rights of such Grantor under any such agreement.
 
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“Copyrights” means all of the following now owned or hereafter acquired by any
Grantor:  (a) all copyright rights in any work subject to the copyright laws of
the United States or any other country, whether as author, assignee, transferee
or otherwise, and (b) all registrations and applications for registration of any
such copyright in the United States or any other country, including
registrations, recordings, supplemental registrations and pending applications
for registration in the United States Copyright Office.
 
“Deposit Account” means, collectively, (a) the Lockbox Account and (b) the
Government Lockbox Account, as well as any demand, time, savings, passbook, or
similar account maintained with a bank or other financial institution.  The term
“Deposit Account” shall not include investment property or accounts evidenced by
an instrument.
 
“Event of Default” means an “Event of Default” as defined in the Senior Credit
Agreement or any Additional Senior Debt Facility.
 
“Government Lockbox Account” means the deposit account and corresponding lockbox
established and maintained at Mellon Bank, N.A., Account No. 1037294 or another
Government Lockbox Account Bank.
 
“Government Lockbox Account Agreement” means any Government Lockbox Account
Agreement between the Senior Collateral Agent and a Government Lockbox Account
Bank substantially in the form of Schedule 6 to this Agreement.
 
“Government Lockbox Account Bank” means any bank or financial institution that
is satisfactory to the Senior Collateral Agent and the Borrowing Base Agent that
executes and delivers to the Senior Collateral Agent a Government Lockbox
Account Agreement.
 
“Indemnitee” means the Senior Secured Parties and their respective officers,
directors, trustees, affiliates and controlling Persons.
 
“Intellectual Property” means all inventions, designs, Patents, Copyrights,
Licenses, Trademarks, trade secrets, confidential or proprietary technical and
business information, know-how, show-how or other data or information, software
and databases and all embodiments or fixations thereof and related
documentation, registrations and franchises, and all additions, improvements and
accessions to, and books and records describing or used in connection with, any
of the foregoing.
 
“Intercompany Advances” means any advances or open accounts owing by the
Borrower or any Subsidiary to any Grantor.
 
“License” means any Patent License, Trademark License, Copyright License or
other license or sublicense agreement to which any Grantor is a party.
 
“Lockbox Account” means the deposit account and corresponding lockbox
established at Mellon Bank, N.A. and maintained with the Lockbox Account Bank
pursuant to a Lockbox Account Agreement, Account No. 0693636.
 
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“Lockbox Account Agreement” means any Lockbox Account Agreement between the
Senior Collateral Agent and a Lockbox Account Bank substantially in the form of
Schedule 5 to this Agreement.
 
“Lockbox Account Bank” means any bank or financial institution that is
satisfactory to the Senior Collateral Agent and the Borrowing Base Agent that
executes and delivers to the Senior Collateral Agent a Lockbox Account
Agreement.
 
“New York UCC” means the Uniform Commercial Code as in effect from time to time
in the State of New York.
 
“Patent License” means any written agreement, now or hereafter in effect,
granting to any third party any right to make, use or sell any invention on
which a patent, now or hereafter owned by any Grantor or that any Grantor
otherwise has the right to license, is in existence, or granting to any Grantor
any right to make, use or sell any invention on which a patent, now or hereafter
owned by any third party, is in existence, and all rights of any Grantor under
any such agreement.
 
“Patents” means all of the following now owned or hereafter acquired by any
Grantor:  (a) all letters patent of the United States or any other country, all
registrations and recordings thereof, and all applications for letters patent of
the United States or the equivalent thereof in any other country, including
registrations, recordings and pending applications in the United States Patent
and Trademark Office or the equivalent thereof in any similar offices in any
other country, and (b) all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.
 
“Prescription Files” means, as to any Grantor, all right, title and interest of
such Grantor in and to all prescription files maintained by it or on its behalf,
including all patient profiles, customer lists, customer information and other
records of prescriptions filled by it, in whatever form and wherever maintained
by it or on its behalf, and all goodwill and other intangible assets arising
from the maintenance of such records and the possession of information contained
therein.
 
“Proceeds” has the meaning specified in Section 9-102 of the New York UCC, and
shall include (a) all cash and negotiable instruments received by or held on
behalf of the Senior Collateral Agent, (b) any claim of any Grantor against any
third party for (and the right to sue and recover for and the rights to damages
or profits due or accrued arising out of or in connection with) (i) past,
present or future infringements of any Patent now or hereafter owned by any
Grantor, or licensed under a Patent License, (ii) past, present or future
infringement or dilution of any Trademark now or hereafter owned by any Grantor
or licensed under a Trademark License or injury to the goodwill associated with
or symbolized by any Trademark now or hereafter owned by any Grantor,
(iii) past, present or future breach of any License and (iv) past, present or
future infringement of any Copyright now or hereafter owned by any Grantor or
licensed under a Copyright License and (c) any and all other amounts from time
to time paid or payable under or in connection with any of the Senior
Collateral.
 
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“Senior Collateral” is defined in Section 2 of this Agreement.
 
“Senior Collateral Account” means any collateral account established by the
Senior Collateral Agent as provided in Section 5.03 or Section 7.02.
 
“Trademark License” means any written agreement, now or hereafter in effect,
granting to any third party any right to use any trademark now or hereafter
owned by any Grantor or that any Grantor otherwise has the right to license, or
granting to any Grantor any right to use any trademark now or hereafter owned by
any third party, and all rights of any Grantor under any such agreement.
 
“Trademarks” means all of the following now owned or hereafter acquired by any
Grantor:  (a) all trademarks, service marks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, trade
dress, logos, other source or business identifiers, designs and general
intangibles of like nature, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all registration and recording
applications filed in connection therewith, including registrations and
registration applications in the United States Patent and Trademark Office or
any similar offices in any State of the United States or any other country or
any political subdivision thereof, and all extensions or renewals thereof, (b)
all goodwill associated therewith or symbolized thereby and (c) all other
assets, rights and interests that uniquely reflect or embody such goodwill.
 
SECTION 1.02.  Other Definitional Provisions.  (a)  The words “hereof,” “herein”
and “hereunder” and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Section references are to this Agreement unless otherwise
specified. The words “include”, “includes” and “including” shall be deemed to be
followed by the phrase “without limitation”.
 
(b)  The meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms.
 
SECTION 2.  Grant of Security Interest.  As security for the payment or
performance, as the case may be, in full of the obligations under the Senior
Subsidiary Guarantee Agreement, each Grantor hereby assigns and pledges to the
Senior Collateral Agent, its successors and assigns, for the ratable benefit of
the Senior Secured Parties, and hereby grants to the Senior Collateral Agent,
its successors and assigns, for the ratable benefit of the Senior Secured
Parties, a security interest in all right, title or interest now owned or at any
time hereafter acquired by such Grantor or in which such Grantor now has or at
any time in the future may acquire any right, title or interest (collectively,
the “Senior Collateral”):
 
(a) all Accounts Receivable and Chattel Paper;
 
(b) all Deposit Accounts;
 
(c) the Cash Management Accounts and the funds on deposit therein;
 
(d) all Contracts;
 
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(e) all Documents;
 
(f) all General Intangibles;
 
(g) all Instruments;
 

(h) all Intellectual Property;
 
(i) all Inventory;
 
(j) all Prescription Files;
 
(k) all books and records pertaining to any and all of the foregoing; and
 
(l) to the extent not otherwise included, all Proceeds and products of any and
all of the foregoing.
 
Nothing contained in this Section 2 is intended to limit any Grantor’s rights to
create Permitted Liens (as defined below).  Notwithstanding anything else
contained in this Section 2 to the contrary, Senior Collateral shall not include
any Equity Interests of any Subsidiary.  Senior Collateral shall not include any
property specified in Section 2(h) above if the granting of a security interest
therein would jeopardize the Grantor’s rights in any pending intent-to-use
applications for Federal Trademark registration.  Furthermore, notwithstanding
anything herein to the contrary, in no event shall the security interest granted
under this Section 2 attach to any lease, license, contract, property rights or
agreement to which each Grantor is a party or any of its rights or interests
thereunder if and for so long as the grant of such security interest shall
constitute or result in (i) the abandonment, invalidation or unenforceability of
any right, title or interest of any Grantor therein or (ii) in a breach or
termination pursuant to the terms of, or a default under, any such lease,
license, contract, property rights or agreement (other than to the extent that
any such term would be rendered ineffective pursuant to Sections 9-406, 9-407,
9-408 or 9-409 of the Uniform Commercial Code (or any successor provision or
provisions) of any relevant jurisdiction or any other applicable law or
principles of equity); provided however that such security interest shall attach
immediately at such time as the condition causing such abandonment, invalidation
or unenforceability shall be remedied and, to the extent severable, shall attach
immediately to any portion of such lease, license, contract, property rights or
agreement that does not result in any of the consequences specified in
clause (i) or (ii) of this sentence.
 
Each Grantor hereby irrevocably authorizes the Senior Collateral Agent at any
time and from time to time to file in any Uniform Commercial Code jurisdiction
any initial financing statements (including fixture filings) and amendments
thereto without the signature of such Grantor in such form and in such filing
offices as the Senior Collateral Agent reasonably determine, that contain the
information required by Article 9 of the Uniform Commercial Code of each
applicable jurisdiction for the filing of any financing statement or amendment,
including (a) whether the Grantor is an organization, the type of organization
and any organizational identification number issued to the Grantor and (b) in
the case of a financing statement filed as a fixture filing, a sufficient
description of the real property to which such Collateral relates.  The Grantor
agrees to provide such information to the Senior Collateral Agent and the
Borrowing
 
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Base Agent promptly upon request by either of them.  In addition, each Grantor
hereby authorizes and agrees that such financing statements may describe the
Senior Collateral in the same manner as described herein or may contain an
indication or description of collateral that describes such property in any
other manner as the Senior Collateral Agent may determine, in its sole
discretion, is necessary, advisable or prudent to ensure the perfection of the
security interest in the Collateral granted to the Senior Collateral Agent
herein, including describing such property as “all assets now owned or hereafter
acquired” or “all personal property now owned or hereafter acquired.”
 
Each Grantor also ratifies its authorization for the Senior Collateral Agent to
file in any Uniform Commercial Code jurisdiction any initial financing
statements or amendments thereto if filed prior to the Restatement Effective
Date.
 
The Senior Collateral Agent is further authorized to file filings with the
United States Patent and Trademark Office or United States Copyright Office (or
any successor office or any similar office in any other country) or other
documents for the purpose of perfecting, confirming, continuing, enforcing or
protecting the security interest in the Senior Collateral granted by each
Grantor hereunder, without the signature of any Grantor, and naming any Grantor
or the Grantors as debtors and the Senior Collateral Agent as secured parties.
 
Such security interests are granted as security only and shall not subject the
Senior Collateral Agent nor any Senior Secured Party to, or in any way alter or
modify, any obligation or liability of any Grantor with respect to or arising
out of the Senior Collateral.
 
SECTION 3.  Representations and Warranties.  Each Grantor hereby represents and
warrants, as to itself and the Senior Collateral in which the security interest
is created hereunder, that:
 
SECTION 3.01.  Title; No Other Liens.  Except for the security interest granted
to the Senior Collateral Agent for the ratable benefit of the Senior Secured
Parties pursuant to this Agreement and the other Liens (including the Second
Priority Liens) permitted to exist pursuant to the Senior Credit Agreement and
the other Senior Debt Documents (the “Permitted Liens”), each Grantor owns each
item of the Senior Collateral free and clear of any and all Liens or claims of
others (or arrangements reasonably satisfactory to the Senior Collateral Agent
have been made for the timely release or discharge of such Liens).  No security
agreement, financing statement or other public notice with respect to all or any
part of such Senior Collateral is on file or of record in any public office,
except such as have been filed or will be filed, pursuant to this Agreement, in
favor of the Senior Collateral Agent, for the ratable benefit of the Senior
Secured Parties, or in respect of Permitted Liens (or arrangements reasonably
satisfactory to the Senior Collateral Agent have been made for the timely
termination of such agreement or financing statement). Further, no Grantor has
intentionally entered into any contract, lease or license in anticipation of
this Agreement, which by its terms, validly prohibits the granting of a security
interest in the Senior Collateral herein.
 
SECTION 3.02.  Enforceable Obligation; Perfected, First Priority Security
Interests.  This Agreement constitutes a legal, valid and binding obligation of
each Grantor, enforceable against such Grantor in accordance with its terms,
except as enforceability may be limited by
 
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bankruptcy, insolvency, moratorium, reorganization or other similar laws
affecting creditors’ rights generally and except as enforceability may be
limited by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law), and the
security interests granted pursuant to this Agreement (a) upon completion of the
filings and other actions contemplated by or specified in this Agreement (or in
the case of Instruments, delivery to the Senior Collateral Agent or their
designees) shall constitute fully perfected security interests in the Senior
Collateral in favor of the Senior Collateral Agent for the ratable benefit of
the Senior Secured Parties, and (b) are prior and superior in right to all other
Liens (other than Permitted Liens, to the extent that such Permitted Liens are
expressly permitted by the Senior Debt Documents to have priority) on the Senior
Collateral in existence on the 2009 Restatement Effective Date.
 
SECTION 3.03.  Chief Executive Office; Jurisdiction of Incorporation.  As of the
2009 Restatement Effective Date, each Grantor’s chief executive office,
principal place of business and jurisdiction of incorporation is located at the
locations listed in Schedule 8 hereto.
 
SECTION 3.04.  Farm Products.  None of the Senior Collateral constitutes, or is
the Proceeds of, Farm Products (as such term is defined in the Uniform
Commercial Code).
 
SECTION 3.05.  Intellectual Property.  (a)  Schedule 2 lists all Intellectual
Property owned (and registered with the U.S. Copyright Office or the U.S. Patent
and Trademark Office) or licensed by such Grantor in its own name on the
Restatement Effective Date.
 
(b)  On the date hereof, based on information known, or reasonably available to
such Grantor, all Intellectual Property material to the conduct of such
Grantor’s business is valid, subsisting, unexpired and enforceable, has not been
abandoned and does not infringe the intellectual property rights of any other
Person.
 
(c)  Except as set forth in Schedule 2, on the Restatement Effective Date, none
of the Intellectual Property is the subject of any licensing or franchise
agreement pursuant to which such Grantor is the licensor or franchisor.
 
(d)  On the 2009 Restatement Effective Date, based on information known, or
reasonably available to such Grantor, no holding decision or judgment has been
rendered by any Governmental Authority which would materially limit, cancel or
question the validity of, or such Grantor’s rights in, any Intellectual Property
in any respect that could reasonably be expected to have a Material Adverse
Effect.
 
(e)  Except as set forth on Schedule 2, on the Restatement Effective Date, no
action or proceeding is pending, or, to the knowledge of such Grantor,
threatened (i) seeking to materially limit, cancel or question the validity of
any Intellectual Property material to the conduct of such Grantor’s business or
such Grantor’s ownership interest therein, or (ii) which, if adversely
determined, would have a material adverse effect on the value of any
Intellectual Property.
 
SECTION 4.  Covenants.  Each Grantor covenants and agrees with the Senior
Secured Parties that, from and after the 2009 Restatement Effective Date until
this Agreement is terminated and the security interests created hereby are
released:
 
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SECTION 4.01.  Delivery of Instruments.  If an Intercompany Advance owned by
such Grantor shall be or become evidenced by any promissory note, or other
Instrument, upon the request of the Senior Collateral Agent, such promissory
note, or other Instrument shall be immediately delivered to the Senior
Collateral Agent, duly indorsed in a manner reasonably satisfactory to the
Senior Collateral Agent, to be held as Senior Collateral pursuant to this
Agreement.
 
SECTION 4.02.  Maintenance of Insurance.  Each Grantor shall maintain insurance
policies in accordance with the requirements of Section 5.07 of the Senior
Credit Agreement.
 
SECTION 4.03.  Maintenance of Perfected Security Interest; Further
Documentation.  (a)Each Grantor shall maintain the security interests created by
this Agreement as first priority perfected security interests subject only to
Permitted Liens, to the extent such Permitted Liens are expressly permitted by
the Senior Debt Documents to have priority, and shall defend such security
interests against all claims and demands of all Persons whomsoever (other than
those pursuant to Permitted Liens).
 
(b)  At any time and from time to time, upon the written request of the Senior
Collateral Agent or any Borrowing Base Agent, and at the sole expense of a
Grantor, such Grantor shall promptly and duly execute and deliver such further
instruments and documents and take such further action as the Senior Collateral
Agent or any Borrowing Base Agent may reasonably request for the purpose of
obtaining or preserving the full benefits of this Agreement and of the rights
and powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the Uniform Commercial Code in effect
in any jurisdiction with respect to the security interests created hereby.
 
(c)  No Grantor shall intentionally enter into any contract, lease or license
which by its terms would validly prohibit the grant of a security interest in
the Senior Collateral under this Agreement.
 
SECTION 4.04.  Further Identification of Senior Collateral.  Each Grantor shall
furnish to the Senior Collateral Agent from time to time statements and
schedules further identifying and describing the Senior Collateral and such
other reports in connection with such Senior Collateral as the Senior Collateral
Agent may reasonably request, all in reasonable detail.
 
SECTION 4.05.  Senior Collateral Agent’s Liabilities and Expenses;
Indemnification.  (a)  Notwithstanding anything to the contrary provided herein,
neither the Senior Collateral Agent nor any other Senior Secured Party assumes
any liabilities with respect to any claims regarding each Grantor’s ownership
(or purported ownership) of, or rights or obligations (or purported rights or
obligations) arising from, the Senior Collateral or any use (or actual or
alleged misuse) whether arising out of any past, current or future event,
circumstance, act or omission or otherwise, or any claim, suit, loss, damage,
expense or liability of any kind or nature arising out of or in connection with
the Senior Collateral or the production, marketing, delivery, sale or provision
of goods or services under or in connection with any of the Senior
Collateral.  All of such liabilities shall, as between the Senior Collateral
Agent, the Senior Secured Parties and the Grantors, be borne exclusively by the
Grantors unless such liability arises from the gross negligence or willful
misconduct of the Senior Collateral Agent or any Senior Secured Party.
 
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(b)  Each Grantor hereby agrees to pay all reasonable expenses of the Senior
Collateral Agent and the other Senior Secured Parties and to indemnify the
Senior Collateral Agent and the other Senior Secured Parties with respect to any
and all losses, claims, damages, liabilities and related expenses in respect of
this Agreement or the Senior Collateral, in each case to the extent and under
the circumstances the Borrower is required to do so pursuant to Section 9.03 of
the Senior Credit Agreement and any equivalent provision of any Additional
Senior Debt Document.
 
(c)  Any amounts payable as provided hereunder shall be additional Senior
Obligations secured hereby and by the other Senior Collateral
Documents.  Without prejudice to the survival of any other agreements contained
herein, all indemnification and reimbursement obligations contained herein shall
survive the Senior Obligation Payment Date and the termination of this
Agreement.
 
SECTION 4.06.  Intellectual Property.  (a)  Each relevant Grantor (either itself
or through licensees) will (i) continue to use each Trademark material to the
conduct of such Grantor’s business, to the extent that such Grantor’s business
operations continue as to the said goods and/or services (subject to such
Grantor’s reasonable business judgment), sufficient to avoid unintentional
abandonment of any rights in such Trademarks, (ii) maintain as in the past the
quality of products and services offered under such Trademark, (iii) use such
Trademark with the appropriate notice of registration and all other notices and
legends required by applicable law, (iv) not knowingly adopt or use any mark
which is confusingly similar or a colorable imitation of such Trademark unless
the Senior Collateral Agent, for the ratable benefit of the Senior Secured
Parties, shall obtain a perfected security interest in such mark pursuant to
this Agreement, and (v) not knowingly (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby such
Trademark material to the conduct of Grantor’s business may become invalidated
or impaired in any way.
 
(b)  Such Grantor (either itself or through licensees) will not do any act, or
omit to do any act, whereby any Patent material to the conduct of Grantor’s
business may become forfeited, abandoned or dedicated to the public.
 
(c)  Such Grantor (either itself or through licensees) will not knowingly (and
will not permit any licensee or sublicensee thereof to) do any act or knowingly
omit to do any act whereby any portion of the Copyrights material to the conduct
of Grantor’s business may become invalidated or otherwise impaired or fall into
the public domain.
 
(d)  Such Grantor (either itself or through licensees) will not do any act that
knowingly uses any material Intellectual Property to infringe the intellectual
property rights of any other Person.
 
(e)  In a status report provided to the Senior Collateral Agent on a quarterly
basis (“Quarterly Status Report”), such Grantor will indicate whether any
application or registration relating to any material Intellectual Property has
been forfeited, abandoned or dedicated to the public, or of any such
determination or development (including, without limitation, the institution of,
or any such determination or development in, any proceeding in the United States
Patent and Trademark Office, the United States Copyright Office or any court or
tribunal in any
 
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country) regarding such Grantor’s ownership of, or the validity of, any material
Intellectual Property or such Grantor’s right to register the same or to own and
maintain the same.
 
(f)  In the Quarterly Status Report provided to the Senior Collateral Agent
pursuant to Section 4.06(e), such Grantor will report whenever such Grantor,
either by itself or through any agent, employee, licensee or designee, has filed
an application for the registration of any Intellectual Property with the United
States Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any other country or any political subdivision
thereof.  Upon request of the Senior Collateral Agent, such Grantor shall
execute and deliver, and have recorded, any and all agreements, instruments,
documents and papers as the Senior Collateral Agent may request to evidence the
Senior Collateral Agent’s and Senior Secured Parties’ security interest in any
Copyright, Patent or Trademark and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby.
 
(g)  Such Grantor will take all reasonable and necessary steps, including in any
proceeding before the United States Patent and Trademark Office, the United
States Copyright Office or any similar office or agency in any other country or
any political subdivision thereof, to maintain and pursue each application (and
to obtain the relevant registration) and to maintain each registration of the
Intellectual Property material to the conduct of Grantor’s business, including
filing of applications for renewal, affidavits of use and affidavits of
incontestability.
 
(h)  In the event that any Intellectual Property material to the conduct of
Grantor’s business is infringed, misappropriated or diluted by a third party,
such Grantor shall (i) take such actions as such Grantor shall reasonably deem
appropriate under the circumstances to protect such Intellectual Property and
(ii) if such Intellectual Property is of material economic value, promptly
notify the Senior Collateral Agent after it learns thereof and take all
reasonable steps to protect its interests, which may include bringing suit for
infringement, misappropriation or dilution, to seek injunctive relief where
appropriate and to recover any and all damages for such infringement,
misappropriation or dilution.
 
SECTION 4.07.  Cash Management System.  (a)  The Grantors shall at all times
maintain, and each Subsidiary Guarantor shall comply with its obligations under,
the Cash Management System.
 
(b)  Each Grantor shall use its commercially reasonable efforts to cause any
applicable third party to effectuate the Cash Management System.
 
SECTION 5.  Provisions Relating to Accounts.
 
SECTION 5.01.  Grantors Remain Liable under Accounts.  Anything herein to the
contrary notwithstanding, a Grantor shall remain liable under each of the
Accounts to observe and perform all the material conditions and material
obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise to each such Account.  No Senior
Secured Party shall have any obligation or liability under any Account (or any
agreement giving rise thereto) by reason of or arising out of this Agreement or
the receipt by the Senior Collateral Agent or any Senior Secured Party of any
payment relating to such Account pursuant hereto, nor shall any Senior Secured
Party be obligated in any manner to perform any of
 
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the obligations of a Grantor under or pursuant to any Account (or any agreement
giving rise thereto), to make any payment, to make any inquiry as to the nature
or the sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any Account (or any agreement giving rise
thereto), to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
 
SECTION 5.02.  Analysis of Accounts.  In addition to their rights under the
Senior Credit Agreement, the Borrowing Base Agent shall have the right upon the
occurrence and during the continuance of an Event of Default to make test
verifications of the Accounts in any manner and through any medium that they
considers reasonably advisable, and each Grantor shall furnish all such
assistance and information as the Borrowing Base Agent may reasonably require in
connection with such test verifications.  At any time and from time to time upon
the occurrence and during the continuance of an Event of Default, upon the
Borrowing Base Agent’s reasonable request and at the expense of each Grantor,
each Grantor shall immediately request and use commercially reasonable efforts
to cause independent public accountants or others reasonably satisfactory to the
Borrowing Base Agent to furnish to the Borrowing Base Agent reports showing
reconciliations, aging and test verifications of, and trial balances for, the
Accounts.  Upon the occurrence and during the continuance of an Event of
Default, the Senior Collateral Agent in its own name or in the name of others
may communicate with Account Debtors on the Accounts to verify with them to the
Borrowing Base Agent’s reasonable satisfaction the existence, amount and terms
of any Accounts and to direct all payments to the Senior Collateral Agent.  To
the extent reasonably practicable the Borrowing Base Agent will seek to take
such actions through third parties.
 
SECTION 5.03.  Collections on Accounts.  (a)  The Senior Collateral Agent hereby
authorizes each Grantor to collect the Accounts, and the Senior Collateral Agent
may curtail or terminate said authority at any time after the occurrence and
during the continuance of an Event of Default.  If required by the Senior
Collateral Agent at any time after the occurrence and during the continuance of
an Event of Default, any payments of Accounts, when collected by a Grantor
during the continuance of such an Event of Default, (i) shall be forthwith (and,
in any event, within two Business Days) deposited by such Grantor in the exact
form received, duly indorsed by such Grantor to the Senior Collateral Agent if
required, in a Senior Collateral Account maintained under the sole dominion and
control of and on terms and conditions reasonably satisfactory to the Senior
Collateral Agent, subject to withdrawal by the Senior Collateral Agent as
provided in Section 8.03, and (ii) until so turned over, shall be held by such
Grantor in trust for the Senior Secured Parties, segregated from other funds of
such Grantor.
 
(b)  At the Senior Collateral Agent’s request after the occurrence and during
the continuance of an Event of Default, each Grantor shall deliver to the Senior
Collateral Agent all original and other documents evidencing, and relating to,
the agreements and transactions which gave rise to the Accounts, including all
original orders, invoices and shipping receipts.
 
SECTION 5.04.  Representations and Warranties.  As of the Restatement Effective
Date, the place where each Grantor keeps its records concerning the Accounts is
at the location listed in Schedule 1 hereto.
 
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SECTION 5.05.  Covenants.  (a)  The amount represented by each Grantor to the
Senior Secured Parties from time to time as owing by each account debtor or by
all Account Debtors in respect of the Accounts shall at such time be in all
material respects the correct amount actually owing by such Account Debtor or
debtors thereunder.
 
(b)  Upon the occurrence and during the continuance of an Event of Default, a
Grantor shall not grant any extension of the time of payment of any of the
Accounts Receivable, compromise, compound or settle the same for less than the
full amount thereof, release, wholly or partly, any Person liable for the
payment thereof, or allow any credit or discount whatsoever thereon other than
extensions, credits, discounts, compromises or settlements granted or made in
the ordinary course of business.
 
(c)  Unless a Grantor shall deliver prior written notice, identifying the change
of location for its books and records, such Grantor shall not remove its books
and records from the location specified in Schedule 1.
 
SECTION 5.06.  Deposit Accounts.  For each deposit account that any Grantor at
any time opens or maintains, such Grantor shall, at the Senior Collateral
Agent’s request and option, pursuant to an agreement in form and substance
satisfactory to the Senior Collateral Agent, either (a) cause the depositary
bank to agree to comply at any time with instructions from the Senior Collateral
Agent to such depositary bank directing the disposition of funds from time to
time credited to such deposit account, without further consent of such Grantor,
or (b) arrange for the Senior Collateral Agent to become the customers of the
depositary bank with respect to the deposit account, with the Grantor being
permitted, only with the consent of the Senior Collateral Agent, to exercise
rights to withdraw funds from such deposit account.  The provisions of this
paragraph shall not apply to (i) any deposit account for which any Grantor, the
depositary bank and the Senior Collateral Agent have entered into a cash
collateral agreement specially negotiated among such Grantor, the depositary
bank and the Senior Collateral Agent for the specific purpose set forth therein
and (ii) deposit accounts for which the Senior Collateral Agent are the
depositaries.
 
SECTION 6.  Provisions Relating to Contracts.
 
SECTION 6.01.  Grantors Remain Liable under Contracts.  Anything herein to the
contrary notwithstanding, each Grantor shall remain liable under each Contract
to observe and perform all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with and pursuant to the terms and
provisions of such Contract.  No Senior Secured Party shall have any obligation
or liability under any Contract by reason of or arising out of this Agreement or
the receipt by any such Senior Secured Party of any payment relating to such
Contract pursuant hereto, nor shall any Senior Secured Party be obligated in any
manner to perform any of the obligations of a Grantor under or pursuant to any
Contract, to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any Contract, to present or file any claim, to
take any action to enforce any performance or to collect the payment of any
amounts which may have been assigned to it or to which it may be entitled at any
time or times.
 
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SECTION 6.02.  Communication With Contracting Parties.  Upon the occurrence and
during the continuance of an Event of Default, the Senior Collateral Agent in
their own names or in the name of their nominees may communicate with parties to
the Contracts to verify with them to the Senior Collateral Agent’s reasonable
satisfaction the existence, amount and terms of any Contracts.  To the extent
reasonably practicable the Senior Collateral Agent will seek to take such
actions through third parties.
 
SECTION 7.  Remedies.
 
SECTION 7.01.  Notice to Account Debtors and Contract Parties.  Upon the request
of the Senior Collateral Agent at any time after the occurrence and during the
continuance of an Event of Default, a Grantor shall notify Account Debtors on
the Accounts and parties to the Contracts that the Accounts and the Contracts
have been assigned to the Senior Collateral Agent for the ratable benefit of the
Senior Secured Parties and that payments in respect thereof during the
continuance of such an Event of Default shall be made directly to the Senior
Collateral Agent.
 
SECTION 7.02.  Proceeds to be Turned Over To Senior Collateral Agent.  In
addition to the rights of the Senior Collateral Agent and the Senior Secured
Parties specified in Section 5.03 with respect to payments of Accounts, if an
Event of Default shall occur and be continuing all Proceeds received by a
Grantor consisting of cash, checks and other near-cash items shall upon the
Senior Collateral Agent’s request be held by such Grantor in trust for the
Senior Secured Parties, segregated from other funds of such Grantor, and shall,
upon the Senior Collateral Agent’s request (it being understood that the
exercise of remedies by the Senior Secured Parties in connection with an Event
of Default under clauses (h) and (i) of Article VII of the Senior Credit
Agreement or, after the Senior Loan Obligation Payment Date, the equivalent
provision of any Additional Senior Debt Document shall be deemed to constitute a
request by the Senior Collateral Agent for the purposes of this sentence)
forthwith upon receipt by such Grantor, be turned over to the Senior Collateral
Agent in the exact form received by such Grantor (duly indorsed by such Grantor
to the Senior Collateral Agent, if required) and held by the Senior Collateral
Agent in a Senior Collateral Account maintained under the sole dominion and
control of the Senior Collateral Agent and on terms and conditions reasonably
satisfactory to the Senior Collateral Agent.  All Proceeds while held by the
Senior Collateral Agent in a Senior Collateral Account (or by such Grantor in
trust for the Senior Collateral Agent and the Senior Secured Parties) shall
subject to Section 7.03 continue to be held as collateral security for all the
Senior Obligations and shall not constitute payment thereof until applied as
provided in Section 7.03.
 
SECTION 7.03.  Application of Proceeds.  (a)  So long as the Collateral Trust
and Intercreditor Agreement is in effect, following a Triggering Event (as
defined therein), the proceeds of any sale or other realization upon any
Collateral will be applied as set forth in the Collateral Trust and
Intercreditor Agreement and, if then in effect, the Senior Lien Intercreditor
Agreement.
 
(b)  At all times when the Collateral Trust and Intercreditor Agreement is not
in effect, the proceeds of any sale or other realization upon any Collateral
following an Event of Default will be applied as soon as practicable after
receipt (i) if the Senior Lien Intercreditor Agreement
 
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is then in effect, as provided in Section 2.01 of the Senior Lien Intercreditor
Agreement and (ii) if the Senior Lien Intercreditor Agreement is not then in
effect, as follows:
 
FIRST: to the Senior Collateral Agent in an amount equal to the fees and
expenses of, and reimbursements and indemnifications owed to, the Senior
Collateral Agent pursuant to this Agreement and the Senior Credit Agreement that
are unpaid as of the applicable date of receipt of such proceeds, and to any
Senior Secured Party which has theretofore advanced or paid any such fees and
expenses of, and reimbursements and indemnifications owed to, the Senior
Collateral Agent in an amount equal to the amount thereof so advanced or paid by
such Senior Secured Party pro rata based on the amount of such fees, expenses,
reimbursements and indemnifications (or such advances or payment);
 
SECOND: to the Senior Collateral Agent to reimburse any amounts owing to the
Senior Collateral Agent pursuant to Section 8.03;
 
THIRD: subject to Sections 1.01(b) and 2.01(d) and (e) of the Senior Lien
Intercreditor Agreement (if, at the relevant time, the Senior Lien Intercreditor
Agreement is in effect), to the Senior Collateral Agent, for distribution to the
Senior Secured Parties to be applied to the payment of the Senior Obligations
then due and owing, pro rata based on the amount of Senior Obligations then due
and owing (after giving effect to any payments previously made under this
Section), until the Senior Obligation Payment Date; and
 
FOURTH: to Rite Aid and the Grantors or their successors or assigns, as their
interests may appear, or to whosoever may be lawfully entitled to receive the
same or as a court of competent jurisdiction may direct.
 
SECTION 7.04.  Uniform Commercial Code Remedies.  If an Event of Default shall
have occurred and be continuing, the Senior Collateral Agent, on behalf of the
Senior Secured Parties may exercise, in addition to all other rights and
remedies granted to them in this Agreement and in any other instrument or
agreement securing, evidencing or relating to the Senior Obligations, all rights
and remedies of a senior secured party under the Uniform Commercial
Code.  Without limiting the generality of the foregoing, the Senior Collateral
Agent, without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon a Grantor or any other Person (all and each of which
demands, defenses, advertisements and notices are hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Senior Collateral, or any part thereof, and/or may forthwith sell, lease,
assign, give option or options to purchase, or otherwise dispose of and deliver
the Senior Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker’s board or office of any Senior Secured Party or elsewhere upon
such terms and conditions as the Senior Collateral Agent may deem advisable and
at such prices as they may deem best, for cash or on credit or for future
delivery without assumption of any credit risk.  Any Senior Secured Party shall
have the right upon any such public sale or sales, and, to the extent permitted
by law, upon any such private sale or sales, to purchase the whole or any part
of the Senior Collateral so sold, free of (to the extent permitted by law) any
right or equity of
 
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redemption in a Grantor, which right or equity is hereby, to the extent
permitted by law, waived or released.  Each Grantor further agrees, at the
Senior Collateral Agent’s request, to assemble the Senior Collateral and make it
available to the Senior Collateral Agent at places which the Senior Collateral
Agent shall reasonably select, whether at such Grantor’s premises or
elsewhere.  The Senior Collateral Agent shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses incurred therein or incidental to
the care or safekeeping of any of such Senior Collateral or reasonably relating
to such Senior Collateral or the rights of the Senior Collateral Agent and the
Senior Secured Parties hereunder, including reasonable attorneys’ fees and
disbursements, to the payment in whole or in part of the Senior Obligations, in
accordance with Section 7.03, and only after such application and after the
payment by the Senior Collateral Agent of any other amount required by any
provision of law, including Section 9-615(a)(3) of the Uniform Commercial Code,
need the Senior Collateral Agent account for the surplus, if any, to such
Grantor.  If any notice of a proposed sale or other disposition of such Senior
Collateral shall be required by law, such notice shall be in writing and deemed
reasonable and proper if given at least 10 days before such sale or other
disposition.
 
The Senior Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement.  Upon any sale of the Senior Collateral by the Senior Collateral
Agent (including pursuant to a power of sale granted by statute or under a
judicial proceeding), the receipt of the Senior Collateral Agent or of the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Senior Collateral so sold and such purchaser or purchasers
shall not be obligated to see to the application of any part of the purchase
money paid over to the Senior Collateral Agent or such officer or be answerable
in any way for the misapplication thereof.
 
SECTION 7.05.  Grant of License to Use Intellectual Property.  For the purpose
of enabling the Senior Collateral Agent to exercise rights and remedies under
this Article at such time as the Senior Collateral Agent shall be lawfully
entitled to exercise such rights and remedies, each Grantor hereby grants to the
Senior Collateral Agent an irrevocable, non-exclusive license (exercisable
without payment of royalty or other compensation to the Grantors) to use,
license or sub-license any of the Senior Collateral consisting of Intellectual
Property now owned or hereafter acquired by such Grantor, and wherever the same
may be located, and including in such license reasonable access to all media in
which any of the licensed items may be recorded or stored and to all computer
software and programs used for the compilation or printout thereof.  The use of
such license by the Senior Collateral Agent shall be exercised, at the option of
the Senior Collateral Agent, solely upon the occurrence and during the
continuation of an Event of Default; provided that any license, sub-license or
other transaction entered into by the Senior Collateral Agent in accordance
herewith shall be binding upon the Grantors notwithstanding any subsequent cure
of an Event of Default.
 
SECTION 7.06.  Waiver; Deficiency.  Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Senior
Collateral are insufficient to pay the Senior Obligations and the reasonable
fees and disbursements of any attorneys employed by any Senior Secured Party to
collect such deficiency.
 
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SECTION 7.07.  Cash Sweep Remedies.  The Senior Collateral Agent, on behalf of
the Senior Secured Parties, are entitled to exercise all rights and remedies
granted to them in respect of the Cash Management Accounts in accordance with
Schedule 3 of this Agreement.
 
SECTION 8.  Senior Collateral Agent’s Appointment as Attorneys-in-Fact; Senior
Collateral Agent’s Performance of Grantors’ Obligations.
 
SECTION 8.01.  Powers.  Each Grantor hereby irrevocably constitutes and appoints
the Senior Collateral Agent and any officer or agent thereof, with full power of
substitution, during the continuance of an Event of Default, as its true and
lawful attorneys-in-fact, with full irrevocable power and authority in the place
and stead of such Grantor and in the name of such Grantor or in their own name
from time to time in the Senior Collateral Agent’s discretion, for the purpose
of carrying out the terms of this Agreement, to take any and all appropriate
action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, such Grantor hereby gives the
Senior Collateral Agent the power and right, on behalf of such Grantor, without
notice to or assent by such Grantor, to do the following upon the occurrence and
during the continuance of an Event of Default:
 
(a) in the name of such Grantor or their own names, or otherwise, to take
possession of and indorse and collect any checks, drafts, notes, acceptances or
other instruments for the payment of moneys due under any Account, Instrument,
General Intangible or Contract or with respect to any other Senior Collateral
and to file any claim or to take any other action or proceeding in any court of
law or equity or otherwise deemed appropriate by the Senior Collateral Agent for
the purpose of collecting any and all such moneys due under any Account,
Instrument, General Intangible or Contract or with respect to any other Senior
Collateral whenever payable;
 
(b) in the case of any Intellectual Property, execute and deliver, and have
recorded, any and all agreements, instruments, documents and papers as the
Senior Collateral Agent may request to evidence the Senior Collateral Agent’s
and the Senior Secured Parties’ security interest in such Intellectual Property
and the goodwill and general intangibles of such Grantor relating thereto or
represented thereby;
 
(c) to pay or discharge taxes and Liens levied or placed on or threatened
against the Senior Collateral (other than Permitted Liens), to effect any
repairs or any insurance called for by the terms of this Agreement and to pay
all or any part of the premiums therefor and the costs thereof;
 
(d) to execute, in connection with any sale provided for in Section 7.04, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Senior Collateral;
 
(e) (i) to direct any party liable for any payment under any of the Senior
Collateral to make payment of any and all moneys due or to become due thereunder
directly to the Senior Collateral Agent or as the Senior Collateral Agent shall
direct; (ii) to ask or demand for, collect, receive payment of and receipt for,
any and all moneys, claims and
 
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other amounts due or to become due at any time in respect of or arising out of
any Senior Collateral; (iii) to sign and indorse any invoices, freight or
express bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications, notices and other documents in connection
with any of the Senior Collateral; (iv) to commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Senior Collateral or any thereof and to enforce any
other right in respect of any Senior Collateral; (v) to defend any suit, action
or proceeding brought against any Grantor with respect to any Senior Collateral;
(vi) to settle, compromise or adjust any such suit, action or proceeding and, in
connection therewith, to give such discharges or releases as the Senior
Collateral Agent may deem appropriate; (vii) to the extent permitted by
applicable law, assign any Copyright, Patent or Trademark (along with the
goodwill of the business to which any such Copyright, Patent or Trademark
pertains); and (viii) generally, to use, sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any of the Senior Collateral as
fully and completely as though the Senior Collateral Agent were the absolute
owners thereof for all purposes, and to do, at the Senior Collateral Agent’s
option and at the expense of such Grantor, at any time, or from time to time,
all acts and things which the Senior Collateral Agent reasonably deem necessary
to protect, preserve or realize upon such Senior Collateral and the Senior
Collateral Agent’s and the Senior Secured Parties’ security interests therein
and to effect the intent of this Agreement, all as fully and effectively as such
Grantor might do; and
 
(f) to file any Uniform Commercial Code financing statement, or to take such
other steps, required to perfect or confirm the perfection of any security
interest described herein.
 
SECTION 8.02.  Performance by Senior Collateral Agent of Grantor’s
Obligations.  If any Grantor fails to perform or comply with any of its
agreements contained herein, the Senior Collateral Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
 
SECTION 8.03.  Grantor’s Reimbursement Obligation.  The expenses of the Senior
Collateral Agent and any other Senior Secured Party, as applicable, reasonably
incurred in connection with actions undertaken as provided in this Section 8,
together with interest thereon at a rate per annum equal to the Default Rate,
from the date payment is demanded by the Senior Collateral Agent to the date
reimbursed by such Grantor, shall be payable by the Borrower to the Senior
Collateral Agent on demand.
 
SECTION 8.04.  Ratification; Power Coupled With An Interest.  Each Grantor
hereby ratifies all that said attorneys shall lawfully do or cause to be done by
virtue hereof.  All powers, authorizations and agencies contained in this
Agreement are coupled with an interest and are irrevocable until this Agreement
is terminated and the security interests created hereby are released.
 
SECTION 9.  Duty of Senior Collateral Agent.  The Senior Collateral Agent’s sole
duty with respect to the custody, safekeeping and physical preservation of the
Senior Collateral in its possession, under Section 9-207 of the Uniform
Commercial Code or otherwise, shall be to deal
 
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with it in the same manner as the Senior Collateral Agent deals with similar
property for its own accounts.  No Senior Secured Party nor any of its
respective directors, officers, employees or agents shall be liable for failure
to demand, collect or realize upon any of the Senior Collateral or for any delay
in doing so or shall be under any obligation to sell or otherwise dispose of any
Senior Collateral upon the request of a Grantor or any other Person or to take
any other action whatsoever with regard to the Senior Collateral or any part
thereof.  The powers conferred on the Senior Secured Parties hereunder are
solely to protect the Senior Secured Parties’ interests in the Senior Collateral
and shall not impose any duty upon any Senior Secured Party to exercise any such
powers.  The Senior Secured Parties shall be accountable only for amounts that
they actually receive as a result of the exercise of such powers, and neither
they nor any of their officers, directors, employees or agents shall be
responsible to any Grantor for any act or failure to act hereunder, except for
their own gross negligence or wilful misconduct.
 
SECTION 10.  Authority of Senior Collateral Agent.  Each Grantor acknowledges
that the rights and responsibilities of the Senior Collateral Agent under this
Agreement with respect to any action taken by the Senior Collateral Agent or the
exercise or non-exercise by the Senior Collateral Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Senior
Collateral Agent and the other Senior Secured Parties, be governed by the Senior
Credit Agreement and by such other agreements with respect thereto as may exist
from time to time among them but, as between the Senior Collateral Agent and the
Grantors, the Senior Collateral Agent shall be conclusively presumed to be
acting as co-agents for the other Senior Secured Parties with full and valid
authority so to act or refrain from acting.
 
SECTION 11.  Notices.  All notices, requests and demands to or upon the Senior
Secured Parties or the Grantors under this Agreement shall be given or made in
accordance with Section 9.01 of the Senior Credit Agreement and addressed as
follows:
 
(a) if to the Senior Collateral Agent, in accordance with Section 9.01 of the
Senior Credit Agreement;
 
(b) if to any Grantor, c/o the Borrower in accordance with Section 9.01 of the
Senior Credit Agreement; provided, however, that after the Senior Loan
Obligation Payment Date, all such notices, requests and demands shall be given
or made in accordance with the Additional Senior Debt Documents pursuant to
which the Additional Senior Debt Obligations of the Controlling Secured Parties
(as defined in the Senior Lien Intercreditor Agreement) were incurred.
 
SECTION 12.  Security Interest Absolute.  All rights of the Senior Collateral
Agent hereunder, the security interest and all obligations of the Grantors
hereunder shall be absolute and unconditional.
 
SECTION 13.  Survival of Agreement.  All covenants, agreements, representations
and warranties made by any Grantor herein and in the certificates or other
instruments prepared or delivered in connection with or pursuant to this
Agreement or any other Senior Debt Document shall be considered to have been
relied upon by the Senior Secured Parties and shall survive the making by the
Senior Lenders of the Loans, the extension of any other credit constituting
Senior
 
20

--------------------------------------------------------------------------------

Obligations, the execution and delivery to the Senior Secured Parties of the
Senior Debt Documents and the issuance of any Letters of Credit or other letter
of credit if the Borrower’s or any Subsidiary’s obligations in respect thereof
constitute Senior Obligations, regardless of any investigation made by the
Senior Secured Parties or on their behalf, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or LC
Disbursement or any Additional Senior Debt, or any other Senior Obligation is
outstanding and unpaid and so long as any Letter of Credit or other letter of
credit if the Borrower’s or any Subsidiary’s obligations in respect thereof
constitute Senior Obligations is outstanding and so long as the Commitments or
any other commitments to provide Additional Senior Debt have not been
terminated.
 
SECTION 14.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION, ACTION OR OTHER PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF
THE OTHER SENIOR DEBT DOCUMENTS.  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY LITIGATION,
ACTION OR OTHER PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER SENIOR DEBT DOCUMENTS, AS APPLICABLE, BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 14.
 
SECTION 15.  Jurisdiction; Consent to Service of Process.  (a)  Each Grantor
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or Federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or the other Senior Debt Documents, or for recognition or enforcement
of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court.  Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.  Nothing in this Agreement shall affect any right that any
Obligor or any Senior Secured Party may otherwise have to bring any action or
proceeding relating to this Agreement or the other Senior Debt Documents against
any Grantor or any Senior Secured Party or its properties in the courts of any
jurisdiction.
 
(b)  Each Grantor and each Senior Secured Party hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the other Senior Debt Documents in any New York State or Federal court.  Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
 
21

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(c)  Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 11.  Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.
 
SECTION 16.  Release.  (a)  This Agreement and the security interest created
hereunder shall terminate when all Senior Obligations have been fully and
indefeasibly paid and when the Senior Secured Parties have no further
Commitments under the Senior Credit Agreement and no further commitments to
provide Additional Senior Debt and no Letters of Credit (or other letters of
credit if the Borrower’s or any Subsidiary’s obligations in respect thereof
constitute Additional Senior Debt Obligations) are outstanding (except pursuant
to cash collateral arrangements satisfactory to the Senior Collateral Agent or
other applicable Senior Representatives), at which time the Senior Collateral
Agent shall execute and deliver to each Grantor, or to such Person or Persons as
such Grantor shall reasonably designate, all Uniform Commercial Code termination
statements and similar documents prepared by such Grantor at its expense which
such Grantor shall reasonably request to evidence such termination.  Any
execution and delivery of termination statements or documents pursuant to this
Section 16(a) shall be without recourse to or warranty by the Senior Collateral
Agent.
 
(b)  All Senior Collateral used, sold, transferred or otherwise disposed of in
accordance with the terms of the Senior Facilities and the Collateral Trust and
Intercreditor Agreement (including pursuant to a waiver or amendment of the
terms thereof) shall be used, sold, transferred or otherwise disposed of free
and clear of the Lien and the security interest created hereunder.  In
connection with the foregoing, (i) the Senior Collateral Agent shall execute and
deliver to each Grantor, or to such Person or Persons as such Grantor shall
reasonably designate, all Uniform Commercial Code termination statements and
similar documents prepared by such Grantor at its expense which such Grantor
shall reasonably request to evidence the release of the Lien and security
interest created hereunder with respect to such Senior Collateral and (ii) any
representation, warranty or covenant contained herein relating to such Senior
Collateral shall no longer be deemed to be made with respect to such used, sold,
transferred or otherwise disposed Senior Collateral.
 
SECTION 17.  Severability.  Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.  The parties hereunder
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions, the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
 
SECTION 18.  Amendments in Writing; No Waiver.  xiii)None of the terms or
provisions of this Agreement may be waived, amended, supplemented or otherwise
modified except by a written instrument executed by the Grantors and the Senior
Collateral Agent, provided that any provision of this Agreement may be waived by
the Majority Senior Parties pursuant to a letter or agreement executed by the
Senior Collateral Agent or by telecopy transmission from the Senior Collateral
Agent.
 
22

--------------------------------------------------------------------------------

(b)  No Senior Secured Party shall by any act (except by a written instrument
pursuant to Section 18(a) hereof) or delay be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof.  No failure to exercise,
nor any delay in exercising, on the part of any Senior Secured Party, any right,
power or privilege hereunder shall operate as a waiver thereof.  No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.  A waiver by any Senior Secured Party of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which such Senior Secured Party would otherwise have on any future
occasion.
 
SECTION 19.  Remedies Cumulative.  The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
 
SECTION 20.  Section Headings.  The section headings used in this Agreement are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
 
SECTION 21.  Successors and Assigns.  This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of each
Grantor and the Senior Secured Parties and their successors and assigns,
provided that this Agreement may not be assigned by any Grantor without the
prior written consent of the Senior Collateral Agent.
 
SECTION 22.  GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
 
SECTION 23.  Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract.  Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.
 
SECTION 24.  Additional Grantors.  Pursuant to Section 5.11 of the Senior Credit
Agreement or comparable provisions of Additional Senior Debt Facilities, certain
wholly owned Domestic Subsidiaries that were not in existence or not a Domestic
Subsidiary on the 2009 Restatement Effective Date are required to enter into
this Agreement as a Grantor upon becoming a Domestic Subsidiary.  Upon execution
and delivery, after the 2009 Restatement Effective Date, by the Senior
Collateral Agent and such a Domestic Subsidiary of an instrument in the form of
Annex 1, such Domestic Subsidiary shall (a) become a Grantor hereunder with the
same force and effect as if originally named as a Grantor hereunder and
(b) become a Subsidiary Guarantor under the Senior Lien Intercreditor Agreement,
if then in effect, with the same force and effect as if originally named as a
Subsidiary Guarantor under the Senior Lien Intercreditor Agreement.  The
execution and delivery of any such instrument shall not require the consent of
any Grantor hereunder or any Subsidiary Guarantor under such Consent.  The
rights and
 
23

--------------------------------------------------------------------------------

obligations of each Grantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Grantor as a party to this Agreement.
 
SECTION 25.  Patient Confidentiality.  The Senior Collateral Agent hereby agrees
on behalf of itself and each Senior Secured Party and any of their designees and
assigns to, and shall take all reasonable steps to, comply with all applicable
state or federal laws or administrative regulations regarding the
confidentiality of patient records and patient medical information they receive
in connection with the transactions described in this Agreement.
 
SECTION 26.  Collateral Trust and Intercreditor Agreement.  Notwithstanding
anything herein to the contrary, the terms of this Agreement, and the rights of
the Senior Collateral Agent and the Senior Secured Parties hereunder, are
subject to the Collateral Trust and Intercreditor Agreement and, if then in
effect, the Senior Lien Intercreditor Agreement.
 
SECTION 27.  Resignation of Senior Collateral Agent.  The Senior Collateral
Agent may at any time resign as Senior Collateral Agent under this Agreement on
the terms and subject to the conditions set forth in Section 4.06 of the Senior
Lien Intercreditor Agreement, if then in effect, and otherwise in accordance
with Article VIII of the Senior Credit Agreement or, after the Senior Loan
Obligation Payment Date, with the equivalent provision of the Additional Senior
Debt Documents pursuant to which the Additional Senior Debt Obligations of the
Controlling Secured Parties (as defined in the Senior Lien Intercreditor
Agreement) were incurred.
 
24

--------------------------------------------------------------------------------

 
IN WITNESS WHEREOF, the undersigned has caused this Senior Subsidiary Security
Agreement to be duly executed and delivered as of the date first above written.
 
 

 
RITE AID CORPORATION,
         
By:
    /s/ Frank Vitrano
 
Name: Frank Vitrano
 
Title:    Senior Executive Vice President,
 
Chief Financial Officer and Chief Administrative Officer:
 
 

 
EACH OF THE SUBSIDIARIES LISTED ON SCHEDULE A HERETO, as Grantors,
 
     
By:
    /s/ Marc Strassler
 
Name: Marc Strassler
 
Title:    Senior Vice President & Assistant Secretary
 
 
   

 
EACH OF THE SUBSIDIARIES LISTED ON SCHEDULE B HERETO, as Grantors,
     
By:
    /s/ Marc Strassler
 
Name: Marc Strassler
 
Title:    Authorized Signatory
       

 
CITICORP NORTH AMERICA, INC., as Senior Collateral Agent,
     
By
    /s/ Brendan Mackay
 
Name: Brendan Mackay
 
Title:   Vice President
       

 

25

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Schedules:
 
Annex 1
Supplement

Annex 2
Definitions Annex

Schedule A
Subsidiary Guarantors

Schedule B
Subsidiary Guarantors

Schedule 1
Records of Accounts

Schedule 2
Copyrights and Copyright Licenses; Patents and Patent Licenses; and Trademarks
and Trademark Licenses

Schedule 3
Cash Management System

Schedule 4
Form of Blocked Account Agreement

Schedule 5
Form of Lockbox Account Agreement

Schedule 6
Form of Government Lockbox Account Agreement

Schedule 7
Form of Concentration Agreement

Schedule 8
Perfection Certificate

 
 

--------------------------------------------------------------------------------

Annex 1
to the Senior Subsidiary
Security Agreement
 
 
 
SUPPLEMENT NO. dated as of [                        ] (this “Supplement”) to the
Senior Subsidiary Security Agreement dated as of June 27, 2001 and amended and
restated as of June 5, 2009 (as amended, supplemented or otherwise modified from
time to time, the “Senior Subsidiary Security Agreement”), between the
SUBSIDIARY GUARANTORS identified on the signature pages thereto and any other
Person that becomes a Subsidiary Guarantor (collectively, the “Grantors”), in
favor of CITICORP NORTH AMERICA, INC., a Delaware banking corporation (“CNAI”),
as Senior Collateral Agent.
 
A.  Reference is made to the (a) Senior Credit Agreement, dated as of June 27,
2001, as amended and restated as of June 5, 2009 (as amended, supplemented or
otherwise modified from time to time, the “Senior Credit Agreement”), among Rite
Aid Corporation, a Delaware corporation (the “Borrower”), the lenders from time
to time party thereto (the “Senior Lenders”), CNAI, as administrative agent for
the Senior Lenders and the other agents party thereto and (b) the Senior
Subsidiary Security Agreement.
 
B.  Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Senior Subsidiary Security Agreement,
including the Definitions Annex (as may be amended, supplemented or otherwise
modified from time to time) and the Senior Credit Agreement.
 
C.  The Grantors have entered into the Senior Subsidiary Security Agreement in
order to induce the Senior Lenders to make Loans and induce the Issuing Banks to
issue Letters of Credit pursuant to, and upon the terms and subject to the
conditions specified in, the Senior Credit Agreement and Additional Senior Debt
Parties to acquire Additional Senior Debt from, or otherwise extend credit
constituting Additional Senior Debt to, the Borrower.  Pursuant to Section 5.11
of the Senior Credit Agreement or comparable provisions of Additional Senior
Facilities, certain wholly owned Domestic Subsidiaries that were not in
existence or not a Domestic Subsidiary on the date thereof are required to enter
into the Senior Subsidiary Security Agreement as a Grantor upon becoming a
Domestic Subsidiary.  Section 24 of the Senior Subsidiary Security Agreement
provides that additional Domestic Subsidiaries may become Grantors under the
Senior Subsidiary Security Agreement by execution and delivery of an instrument
in the form of this Supplement. The undersigned (the “New Grantor”) is a
wholly-owned Domestic Subsidiary and is executing this Supplement in accordance
with the requirements of the Senior Debt Documents to become a Grantor under the
Senior Subsidiary Security Agreement and to consent to the Senior Lien
Intercreditor Agreement and effect its agreement to comply with the terms of the
Consent of Subsidiary Guarantors dated June [     ], 2009, with respect to the
Senior Lien Intercreditor Agreement in accordance with Section 24 of the Senior
Subsidiary Security Agreement in order to induce the Senior
 

--------------------------------------------------------------------------------

Lenders to make additional Loans and the Issuing Banks to issue additional
Letters of Credit and the Additional Senior Debt Parties to acquire Additional
Senior Debt from, or otherwise extend credit constituting Additional Senior Debt
to, the Borrower and as consideration for Loans previously made, Letters of
Credit previously issued and Additional Senior Debt previously issued, incurred
or obtained.
 
Accordingly, the Senior Collateral Agent and the New Grantor agree as follows:
 
SECTION 1.  In accordance with Section 24 of the Senior Subsidiary Security
Agreement, the New Grantor by its signature below becomes a Grantor under the
Senior Subsidiary Security Agreement with the same force and effect as if
originally named therein as a Grantor and the New Grantor hereby agrees to all
the terms and provisions of the Senior Subsidiary Security Agreement applicable
to it as a Grantor thereunder. Each reference to a “Grantor” in the Senior
Subsidiary Security Agreement shall be deemed to include the New Grantor. The
Senior Subsidiary Security Agreement is hereby incorporated herein by reference.
 
SECTION 2.  The New Grantor represents and warrants to the Senior Secured
Parties that this Supplement has been duly authorized, executed and delivered by
it and constitutes its legal, valid and binding obligation, enforceable against
it in accordance with its terms, subject to the effects of applicable
bankruptcy, insolvency or similar laws affecting creditors’ rights generally and
equitable principles of general applicability.
 
SECTION 3.  This Supplement may be executed in two or more counterparts, each of
which shall constitute an original, but all of which, when taken together, shall
constitute but one instrument. This Supplement shall become effective when the
Senior Collateral Agent shall have received counterparts of this Supplement
that, when taken together, bear the signatures of the New Grantor and the Senior
Collateral Agent.
 
SECTION 4.  Except as expressly supplemented hereby, the Senior Subsidiary
Security Agreement shall remain in full force and effect.
 
SECTION 5.  THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
 
SECTION 6.  In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect,
neither party hereto shall be required to comply with such provision for so long
as such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein and in the Senior Subsidiary Security Agreement shall not in any way be
affected or impaired. The parties hereto shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
 
2

--------------------------------------------------------------------------------

 
 
SECTION 7.  All communications and notices hereunder shall be in writing and
given as provided in Section 11 of the Senior Subsidiary Security Agreement.
 
 
3

--------------------------------------------------------------------------------

 
Annex 1
to the Senior Subsidiary
Security Agreement
 
 
IN WITNESS WHEREOF, the New Grantor and the Senior Collateral Agent have duly
executed this Supplement to the Senior Subsidiary Security Agreement as of the
day and year first above written.
 

 
[NAME OF NEW GRANTOR],
     
by
  
 
Name:
 
Title:   
       

 

 

 
CITICORP NORTH AMERICA, INC., as Senior Collateral Agent,
     
by
  
 
Name:
 
Title:  
       

 

 
 

--------------------------------------------------------------------------------

Annex 2
to the Senior Subsidiary
Security Agreement
 
 
 
DEFINITIONS ANNEX
 
 
 

--------------------------------------------------------------------------------

Schedule A
to the Senior Subsidiary
Security Agreement
 
 

 
SUBSIDIARY GUARANTORS
 

 
 
1.
112 Burleigh Avenue Norfolk, LLC

 
2.
1515 West State Street Boise, Idaho, LLC

 
3.
1740 Associates, L.L.C.

 
4.
3581 Carter Hill Road–Montgomery Corp.

 
5.
4042 Warrensville Center Road – Warrensville Ohio, Inc.

 
6.
5277 Associates, Inc.

 
7.
537 Elm Street Corp.

 
8.
5600 Superior Properties, Inc.

 
9.
657-659 Broad St. Corp.

 
10.
764 South Broadway-Geneva, Ohio, LLC

 
11.
Ann & Government Streets - Mobile, Alabama, LLC

 
12.
Apex Drug Stores, Inc.

 
13.
Broadview and Wallings-Broadview Heights Ohio, Inc.

 
14.
Brooks Pharmacy, Inc.

 
15.
Central Avenue and Main Street - Petal, MS, LLC

 
16.
Eagle Managed Care Corp.

 
17.
Eckerd Corporation

 
18.
Eckerd Fleet, Inc.

 
19.
EDC Drug Stores, Inc.

 
20.
Eighth and Water Streets – Urichsville, Ohio, LLC

 
21.
England Street-Asheland Corporation

 
22.
Fairground, L.L.C.

 
 

--------------------------------------------------------------------------------

 
23.
GDF, Inc.

 
24.
Genovese Drug Stores, Inc.

 
25.
Gettysburg and Hoover-Dayton, Ohio, LLC

 
26.
Harco, Inc.

 
27.
K & B Alabama Corporation

 
28.
K & B Louisiana Corporation

 
29.
K & B Mississippi Corporation

 
30.
K & B Services, Incorporated

 
31.
K & B Tennessee Corporation

 
32.
K&B Texas Corporation

 
33.
K & B, Incorporated

 
34.
Keystone Centers, Inc.

 
35.
Lakehurst and Broadway Corporation

 
36.
Maxi Drug North, Inc.

 
37.
Maxi Drug South, L.P.

 
38.
Maxi Drug, Inc.

 
39.
Maxi Green Inc.

 
40.
Mayfield & Chillicothe Roads – Chesterland, LLC

 
41.
MC Woonsocket, Inc.

 
42.
Munson & Andrews, LLC

 
43.
Name Rite, L.L.C.

 
44.
Northline & Dix – Toledo – Southgate, LLC

 
45.
P.J.C. Distribution, Inc.

 
46.
P.J.C. Realty Co., Inc.

 
47.
Patton Drive and Navy Boulevard Property Corporation

 
 
2

--------------------------------------------------------------------------------

 
48.
Paw Paw Lake Road & Paw Paw Avenue–Coloma, Michigan, LLC

 
49.
PDS-1 Michigan, Inc.

 
50.
Perry Distributors, Inc.

 
51.
Perry Drug Stores, Inc.

 
52.
PJC Dorchester Realty LLC

 
53.
PJC East Lyme Realty LLC

 
54.
PJC Haverhill Realty LLC

 
55.
PJC Hermitage Realty LLC

 
56.
PJC Hyde Park Realty LLC

 
57.
PJC Lease Holdings, Inc.

 
58.
PJC Manchester Realty LLC

 
59.
PJC Mansfield Realty LLC

 
60.
PJC New London Realty LLC

 
61.
PJC of Cranston, Inc.

 
62.
PJC of East Providence, Inc.

 
63.
PJC of Massachusetts, Inc.

 
64.
PJC of Rhode Island, Inc.

 
65.
PJC of Vermont Inc.

 
66.
P.J.C. of West Warwick, Inc.

 
67.
PJC Peterborough Realty LLC

 
68.
PJC Providence Realty LLC

 
69.
PJC Realty MA, Inc.

 
70.
PJC Realty N.E. LLC

 
71.
PJC Revere Realty LLC

 
72.
PJC Special Realty Holdings, Inc.

 
 
3

--------------------------------------------------------------------------------

 
73.
Ram-Utica, Inc.

 
74.
RDS Detroit, Inc.

 
75.
Read's Inc.

 
76.
Rite Aid Drug Palace, Inc.

 
77.
Rite Aid Hdqtrs. Corp.

 
78.
Rite Aid of Alabama, Inc.

 
79.
Rite Aid of Connecticut, Inc.

 
80.
Rite Aid of Delaware, Inc.

 
81.
Rite Aid of Florida, Inc.

 
82.
Rite Aid of Georgia, Inc.

 
83.
Rite Aid of Illinois, Inc.

 
84.
Rite Aid of Indiana, Inc.

 
85.
Rite Aid of Kentucky, Inc.

 
86.
Rite Aid of Maine, Inc.

 
87.
Rite Aid of Maryland, Inc.

 
88.
Rite Aid of Massachusetts, Inc.

 
89.
Rite Aid of Michigan, Inc.

 
90.
Rite Aid of New Hampshire, Inc.

 
91.
Rite Aid of New Jersey, Inc.

 
92.
Rite Aid of New York, Inc.

 
93.
Rite Aid of North Carolina, Inc.

 
94.
Rite Aid of Ohio, Inc.

 
95.
Rite Aid of Pennsylvania, Inc.

 
96.
Rite Aid of South Carolina, Inc.

 
97.
Rite Aid of Tennessee, Inc.

 
 
4

--------------------------------------------------------------------------------

 
98.
Rite Aid of Vermont, Inc.

 
99.
Rite Aid of Virginia, Inc.

 
100.
Rite Aid of Washington, D.C., Inc.

 
101.
Rite Aid of West Virginia, Inc.

 
102.
Rite Aid Realty Corp.

 
103.
Rite Aid Rome Distribution Center, Inc.

 
104.
Rite Aid Services, L.L.C.

 
105.
Rite Aid Transport, Inc.

 
106.
RX Choice, Inc.

 
107.
Seven Mile and Evergreen – Detroit, LLC

 
108.
Silver Springs Road – Baltimore, Maryland/One, LLC

 
109.
Silver Springs Road – Baltimore, Maryland/Two, LLC

 
110.
State & Fortification Streets – Jackson, Mississippi, LLC

 
111.
State Street and Hill Road – Gerard, Ohio, LLC

 
112.
The Lane Drug Company

 
113.
Thrift Drug Services, Inc.

 
114.
Thrift Drug, Inc.

 
115.
Thrifty Corporation

 
116.
Thrifty PayLess, Inc.

 
117.
Tyler and Sanders Roads, Birmingham - Alabama, LLC

 

5

--------------------------------------------------------------------------------

Schedule B
to the Senior Subsidiary
Security Agreement
 
 
SUBSIDIARY GUARANTORS
 
 
 
 
1.
Rite Fund, Inc.

 
 
2.
Rite Investments Corp.

 
 
3.
Rite Aid Hdqtrs. Funding, Inc.

 
 
4.
EDC Licensing, Inc.

 
 
5.
JCG Holdings (USA), Inc.

 
 
6.
JCG (PJC) USA, LLC

 
 
7.
The Jean Coutu Group (PJC) USA, Inc.

 
 

 

--------------------------------------------------------------------------------

Schedule 1
to the Senior Subsidiary
Security Agreement
 
 
RECORDS OF ACCOUNTS
 
Description
 
 

--------------------------------------------------------------------------------

Schedule 2
to the Senior Subsidiary
Security Agreement
 
 
COPYRIGHTS REGISTRATIONS AND COPYRIGHT LICENSES
 

 
PATENTS AND PATENT LICENSES
 

 
TRADEMARK REGISTRATIONS AND TRADEMARK LICENSES
 

 
PENDING ACTIONS
 

--------------------------------------------------------------------------------

Schedule 3
to the Senior Subsidiary
Security Agreement
 
 
CASH MANAGEMENT SYSTEM
 
SECTION 8.  Accounts.  (a)(i) Unless such agreements are in full force and
effect as of the Restatement Effective Date, no later than 30 days after the
Restatement Effective Date (or such later date as may be agreed by the Borrowing
Base Agent), each Grantor shall, upon the request of the Borrowing Base Agent,
cause:
 
(A) each Blocked Account Bank to execute and deliver an updated Blocked Account
Agreement in respect of each Blocked Account; and
 
(B) each Concentration Account Bank to execute and deliver an updated
Concentration Account Agreement in respect of the Concentration Account.
 
(ii)  In addition, no later than 30 days after the termination of any
Securitization or Factoring Transaction (or such later date as may be agreed by
the Senior Collateral Agent), each Grantor shall, upon the request of the Senior
Collateral Agent, cause:
 
(C) each Lockbox Account Bank to execute and deliver a new Lockbox Account
Agreement in respect of each Lockbox Account; and
 
(D) each Government Lockbox Account Bank to execute and deliver a new Government
Lockbox Account Agreement in respect of each Government Lockbox Account.
 
(b)  On each Business Day, each Grantor will transfer, directly or indirectly
substantially all of the funds credited to each of its depositary accounts in
same day funds, to a Blocked Account (including during a Cash Sweep Period) in
accordance with its customary business practice.
 
(c)  After the termination of any Securitization or Factoring Transaction, each
Grantor shall cause all payments in the Government Lockbox Account to be
deposited into the Lockbox Account as promptly as possible and in any event no
later than the Business Day on which such payments become available in the
Government Lockbox Account (including during a Cash Sweep Period).
 
(d)  Except as provided in the Senior Credit Agreement or, after the Senior Loan
Obligation Payment Date, the applicable Additional Senior Debt Document with
respect to Deposit Accounts relating to a Securitization or Factoring
Transaction, each Cash Management Account is, and shall remain, under the sole
dominion and control of the Senior Collateral Agent. Each Grantor acknowledges
and agrees that:
 
(i) during a Cash Sweep Period such Grantor has no right of withdrawal from any
Cash Management Account except that:
 

--------------------------------------------------------------------------------

(A) the relevant Grantors shall be permitted to instruct any Blocked Account
Bank to transfer all amounts deposited in or credited to any Blocked Account to
the Concentration Account in accordance with the applicable Blocked Account
Agreement, and
 
(B) the relevant Grantor shall be permitted to instruct the Concentration
Account Bank to transfer all amounts deposited in or credited to the
Concentration Account in accordance with the Concentration Account Agreement;
 
(ii) the funds on deposit in the Cash Management Accounts shall continue to be
collateral security for all of the Senior Obligations.
 
(e)  Prior to the delivery of a Cash Sweep Notice, the Grantor is free to
withdraw funds on deposit in or credited to the Blocked Accounts and the
Concentration Account in such amounts and with such frequency as the Grantor may
from time to time determine, without notice to or consent from the Senior
Collateral Agent.
 
SECTION 9.  Cash Sweep.  (a)  The Senior Collateral Agent shall immediately be
entitled to deliver Cash Sweep Notices upon the conditions specified in Section
9.15(a) in the Senior Credit Agreement.
 
(b)  Upon delivery of:
 
(i) a Blocked Account Cash Sweep Notice from the Senior Collateral Agent, the
balance of each Blocked Account shall be forwarded to the Concentration Account,
each Business Day or the next Business Day (as permitted by the applicable
Blocked Account Agreement), in same day funds, for so long as such Blocked
Account Cash Sweep Notice shall be in effect; and
 
(ii) a Concentration Account Cash Sweep Notice from the Senior Collateral Agent,
the balance of the Concentration Account shall be forwarded to a Citibank
Concentration Account, each Business Day (or the next Business Day (as permitted
by the Concentration Account Agreement)), in same day funds, for so long as such
Concentration Account Cash Sweep Notice shall be in effect.
 
(c)  On each Business Day during a Cash Sweep Period, the Senior Collateral
Agent shall use funds on deposit in any Citibank Concentration Account as
follows:
 
(i) after the occurrence of a Triggering Event, in accordance with the
provisions of Section 4.01(a) of the Collateral Trust and Intercreditor
Agreement, as applicable; and
 
(ii) at any other time, first, to repay the Revolving Borrowings (without any
Reduction of the Commitments) and second, to be deposited into the Cash Sweep
Cash Collateral Account for the benefit of the Senior Secured Parties, as
collateral for the payment and performance of the Senior Obligations. The
 
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Senior Collateral Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over the Cash Sweep Cash Collateral
Account.  Deposits in the Cash Sweep Cash Collateral Account shall be invested
in Permitted Investments, to be selected by the Senior Collateral Agent in their
sole discretion, and interest earned on such deposits shall be deposited in such
account as additional collateral for the payment and performance of the Senior
Obligations.  Interest or profits, if any, on such investments shall accumulate
in such account.  Upon termination of any Cash Sweep Period, funds in the Cash
Sweep Cash Collateral Account shall be released to the Concentration Account
within three Business Days after the end of such Cash Sweep Period.
 
(d)  The Senior Collateral Agent shall be required to automatically rescind any
Cash Sweep Notice upon the conditions specified in Section 9.15(b) of the Senior
Credit Agreement.
 
(e)  The Senior Collateral Agent reserves the right to send as many Cash Sweep
Notices to the extent that it is entitled to do so under paragraph (a) of this
Section 2.
 
SECTION 10.  Collections.  (a) Each Grantor agrees to notify and direct promptly
 
(i) subject to paragraph (ii) below, each Account Debtor and every other Person
obligated to make payments to any Blocked Account or Deposit Account, as
applicable, to make all such payments to such Blocked Account or Deposit
Account, as applicable; provided that, prior to the termination of any
Securitization or Factoring Transaction, only Account Debtors making payment in
respect of Securitization Assets or Factoring Assets shall be notified to make
payments to Deposit Account number 0693636.  Each Grantor shall use all
commercially reasonable efforts to cause each Account Debtor and every other
Person identified in the preceding sentence to make all payments owing to any
Grantor to a Blocked Account or Deposit Account, as applicable; and
 
(ii) each Account Debtor which is a Governmental Authority (and only such
Account Debtors) to make all payments owing to any Grantor to the Government
Lockbox Account.
 
(b)  In the event that any Grantor directly receives any remittances or payments
on Accounts Receivable or any other obligation, notwithstanding the arrangements
for payment directly into the Blocked Accounts or the Deposit Accounts, such
remittances and payments shall be held in trust for the benefit of the Senior
Collateral Agent and the other Senior Secured Parties and shall be segregated
from other funds of such Grantor, subject to the Lien granted by the Senior
Subsidiary Security Agreement, and such Grantor shall cause such remittances and
payments to be deposited into the applicable Blocked Account or Deposit Account
as soon as practicable after such Grantor’s receipt thereof.  The foregoing
provisions of this paragraph shall not apply to any Securitization
 
3

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Assets or Factoring Assets that have been transferred pursuant to a
Securitization or Factoring Transaction permitted by the terms of the Senior
Credit Agreement.
 
SECTION 11.  Accounts.  (a)  The following are the Blocked Accounts:
 

 
Blocked Account Bank
Account Numbers
   
 
 
   
 
 
   
 
 
 

(b)  The following are the initial Deposit Accounts:
 

 
Account Holder
Account Details
   
 
 
   
 
 
 

(c)  The following is the Concentration Account:
 

 
Account Holder
Account Details
   
 
 
 

 
4

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Schedule 4
to the Senior Subsidiary
Security Agreement
 
 
[FORM OF]
 
BLOCKED ACCOUNT AGREEMENT
 
[Date]
 
[Blocked Account Bank]
 
[address]
 

 
Ladies and Gentlemen:
 
Reference is made to (a) account no. [                ] maintained with you (the
“Blocked Account Bank”) by [                           ] (the “Grantor”) into
which funds are deposited from time to time (the “Blocked Account”) and (b) the
Senior Subsidiary Security Agreement dated as of June 27, 2001 and amended and
restated as of June 5, 2009 (as amended, supplemented or otherwise modified from
time to time, the “Senior Subsidiary Security Agreement”),  among the Subsidiary
Guarantors (such term and each other capitalized term used but not defined
herein having the meaning assigned to such term in the Senior Subsidiary
Security Agreement, including the Definitions Annex, the Senior Credit Agreement
and, after the Senior Loan Obligation Payment Date, the applicable Additional
Senior Debt Document) and the Senior Collateral Agent.
 
Pursuant to the Senior Subsidiary Security Agreement, the Grantor has granted to
the Senior Collateral Agent, for the benefit of the Senior Secured Parties, a
perfected security interest in certain property of the Grantor, including, the
Blocked Account.
 
The Grantor hereby transfers to the Senior Collateral Agent exclusive ownership
and control of, and all of its right, title and interest in and to, the Blocked
Account and all funds and other property on deposit therein. By executing this
Blocked Account Agreement, the Blocked Account Bank acknowledges that the Senior
Collateral Agent now have exclusive ownership and control of the Blocked
Account, that all funds in the Blocked Account shall be transferred to the
Senior Collateral Agent as provided herein, that the Blocked Account is being
maintained by the Blocked Account Bank for the benefit of the Senior Collateral
Agent and that all amounts and other property therein are held by the Blocked
Account Bank as custodian for the Senior Collateral Agent.
 
Except as provided in paragraphs (e), (f) and (l) below, the Blocked Account
shall not be subject to deduction, setoff, banker’s lien, counterclaim, defense,
recoupment or any other right in favor of any Person or entity other than the
Senior Collateral Agent. By executing this Blocked Account Agreement the Blocked
Account Bank also acknowledges that, as of the date hereof, the Blocked Account
Bank has received no
 

--------------------------------------------------------------------------------

 
notice of any other pledge or assignment of the Blocked Account and the Blocked
Account Bank agrees with the Senior Collateral Agent as follows:
 
(a) Notwithstanding anything to the contrary or any other agreement relating to
the Blocked Account, the Blocked Account is and will be maintained for the
benefit of the Senior Collateral Agent, will be entitled “Citicorp North
America, Inc., as Senior Collateral Agent under the Senior Subsidiary Security
Agreement dated as of June 27, 2001 and amended and restated as of June 5, 2009
Account” and will be subject to written instructions only from an authorized
officer of the Senior Collateral Agent (except as expressly provided otherwise
herein).
 
(b) The Blocked Account Bank agrees to give the Senior Collateral Agent prompt
notice if the Blocked Account shall become subject to any writ, judgment,
warrant of attachment, execution or similar process.
 
(c) [A post office box (the “Lockbox”) has been rented in the name of the
Grantor at the [                                post office and the address to
be used for such Lockbox is:
 
[Insert address]
 
The Blocked Account Bank’s authorized representatives will have access to the
Lockbox under the authority given by the Grantor to the post office and will
make regular pick-ups from the Lockbox timed to gain maximum benefit of early
presentation and availability of funds.  The Blocked Account Bank will endorse
and process all checks received in the Lockbox and deposit such checks (to the
extent eligible) in the Blocked Account in accordance with the procedures set
forth below .]
 
(d) The Blocked Account Bank will follow its operating procedures for the
handling of any [checks received from the Lockbox] or other remittance received
in the Blocked Account that contains restrictive endorsements, irregularities
(such as a variance between the written and numerical amounts), undated or
postdated items, missing signatures, incorrect payees and the like.
 
(e) The Blocked Account Bank will endorse and process all eligible checks and
other remittance items not covered by paragraph (d) and deposit such checks and
remittance items in the Blocked Account.
 
(f) The Blocked Account Bank will mail all checks returned unpaid because of
uncollected or insufficient funds under appropriate advice to the Grantor (with
a copy of the notification of return to the Senior Collateral Agent). The
Blocked Account Bank may charge the Blocked Account for the amounts of any
returned check that has been previously credited to the Blocked Account. To the
extent insufficient funds remain in the Blocked Account to cover any such
 
2

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returned check, the Grantor shall indemnify the Blocked Account Bank for the
uncollected amount of such returned check upon your demand.
 
(g) The Blocked Account Bank will maintain a record of all checks and other
remittance items received in the Blocked Account on a daily basis and, in
addition to providing the Grantor with photostatic copies thereof, vouchers,
enclosures and the like of such checks and remittance items, furnish to the
Senior Collateral Agent a monthly statement setting forth the amounts deposited
in and withdrawn from the Blocked Account and shall furnish such other
information relating to the Blocked Account at such times as shall be reasonably
requested by the Senior Collateral Agent to:  Citicorp North America, Inc., as
Senior Collateral Agent, [          ], Attention: [                      ], with
a copy to the Grantor.
 
(h) Prior to the delivery of a written notice from the Senior Collateral Agent
in the form of Exhibit A hereto (the “Blocked Account Cash Sweep Notice”), the
Grantor is free to withdraw funds from the Blocked Account in such amounts and
with such frequency as the Grantor may from time to time determine, without
notice to or consent from the Senior Collateral Agent.
 
(i) From and after delivery to the Blocked Account Bank of a Blocked Account
Cash Sweep Notice and until the Blocked Account Bank is notified in writing by
the Senior Collateral Agent that the Blocked Account Cash Sweep Notice is no
longer in effect (a “Blocked Account Cash Sweep Period”), the Grantor will have
no control over the use of, or any right to withdraw any amount from, to draw
upon, or to otherwise exercise any power with respect to the Blocked Account,
except that the Grantor shall be permitted to instruct the Blocked Account Bank
only with respect to the transfer of funds from the Blocked Account to the
Concentration Account (as defined below) in accordance with paragraph (k) below.
 
(j) During a Blocked Account Cash Sweep Period, the Blocked Account Bank shall
transfer, in same day funds, on each Business Day, all funds, if any on deposit
in, or otherwise to the credit of, the Blocked Account to the account listed
below (the “Concentration Account”) in accordance with paragraph (k) below,
provided that funds on deposit that are subject to collection may be transmitted
promptly upon collection:
 
ABA Number:
[name and address of Grantor’s bank]
 
Account Name:
Concentration Account
 
Account Number:
Reference:
Attn:
 
3

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or to such other account as the Senior Collateral Agent may from time to time,
or at any time, designate in writing.
 
(k) During a Blocked Account Cash Sweep Period, (i) the Grantor shall provide
written instructions to the Blocked Account Bank on each Business Day to
transfer all funds on deposit in, or otherwise credited to, the Blocked Account
to the Concentration Account; (ii) to the extent there are any available
balances in the Blocked Account at the end of any Business Day which have not
been transferred pursuant to clause (i) of this paragraph, the Grantor shall
provide, on the next Business Day, written instructions for the transfer of such
available balances from the Blocked Account to the Concentration Account; and
(iii) if the Grantor does not provide the written instructions pursuant to
clause (ii) of this paragraph, the Blocked Account Bank shall automatically
initiate such transfer described in clause (ii) of this paragraph and all other
transfers from the Blocked Account to the Concentration Bank without further
direction from the Grantor until otherwise notified by the Senior Collateral
Agent.
 
(l) All customary service charges and fees with respect to the Blocked Account
shall be debited to the Blocked Account. In the event insufficient funds remain
in the Blocked Account to cover such customary service charges and fees, the
Grantor shall pay and indemnify the Blocked Account Bank for the amounts of such
customary service charges and fees.  Neither the Senior Collateral Agent nor the
Senior Secured Parties shall have any liability for the payment of any such fees
in respect of the Blocked Account.
 
This letter agreement shall be binding upon and shall inure to the benefit of
the Blocked Account Bank, the Grantor, the Senior Collateral Agent, the Senior
Secured Parties referred to in the Senior Subsidiary Security Agreement and
their respective successors, transferees and assigns of any of the foregoing.
This letter agreement may not be modified or terminated except upon the mutual
consent of the Senior Collateral Agent, the Grantor and the Blocked Account
Bank.  The Blocked Account Bank may terminate the letter agreement only upon 45
days’ prior written notice to the Grantor and the Senior Collateral Agent. The
Senior Collateral Agent may terminate this letter agreement at any time.  So
long as any Senior Obligations remain outstanding and the Commitments are still
outstanding, upon such termination the Blocked Account Bank shall close the
Blocked Account and transfer all funds in the Blocked Account to the Senior
Collateral Agent at the Concentration Account or as otherwise directed by the
Senior Collateral Agent.  After any such termination, the Blocked Account Bank
shall nonetheless remain obligated promptly to transfer to the Concentration
Account or as the Senior Collateral Agent may otherwise direct all funds and
other property received in respect of the Blocked Account.
 
This letter agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement. Delivery of an executed counterpart
of a signature page to this letter
 
4

--------------------------------------------------------------------------------

agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this letter agreement.
 
This letter agreement supersedes all prior agreements, oral or written, with
respect to the subject matter hereof and may not be amended, modified or
supplemented except by a writing signed by the Senior Collateral Agent, the
Grantor and the Blocked Account Bank.
 
This letter agreement shall be governed by, and construed in accordance with,
the law of the State of New York.
 
5

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Schedule 4
to the Senior Subsidiary
Security Agreement
 
 
Upon acceptance of this letter agreement it will be the valid and binding
obligation of the Grantor, the Senior Collateral Agent, and the Blocked Account
Bank, in accordance with its terms.
 

 
Very truly yours,
 
[      ]
     
By:
  
 
Name:
 
Title:   
       

 

 

 
CITICORP NORTH AMERICA, INC., as Senior Collateral Agent,
     
by
  
 
Name:
 
Title:  
       

 

Acknowledged and agreed to as of
 
the date first above written:
 
 
[                                                         ]
 
 
By
     
Name:
   
Title:
             

 

--------------------------------------------------------------------------------

Exhibit A
to the Blocked Account Agreement
 
 
BLOCKED ACCOUNT CASH SWEEP NOTICE
 

 
[Blocked Account Bank]
[Address]
 
Re:           Account No. [        ] (the “Blocked Account”)
 

 
Ladies and Gentlemen:
 
Reference is made to the Blocked Account and that certain Blocked Account
Agreement dated June 27, 2001 and amended and restated as of June [    ], 2009
(as amended, supplemented or otherwise modified from time to time, the “Blocked
Account Agreement”) among the Blocked Account Bank, the Grantor and the Senior
Collateral Agent. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to them in the Blocked Account Agreement.
 
The Senior Collateral Agent hereby notifies you that, in accordance with certain
provisions of the Senior Subsidiary Security Agreement, from and after the date
of this notice, you are hereby directed to transfer (by wire transfer or other
method of transfer mutually acceptable to you and the Senior Collateral Agent)
to the Senior Collateral Agent, in same day funds, on each Business Day, the
entire balance in the Blocked Account to the Concentration Account specified in
paragraph (j) of the Blocked Account Agreement (or to such other account as the
Senior Collateral Agent may from time to time, or at any time, designate in
writing) until you are notified in writing by the Senior Collateral Agent that
this Blocked Account Cash Sweep Notice is no longer effective.
 

 
Very truly yours,
 
CITICORP NORTH AMERICA, INC, as Senior Collateral Agent,
     
By:
  
 
Name:
 
Title:  
       

 
 

--------------------------------------------------------------------------------

Schedule 5
to the Senior Subsidiary
Security Agreement
 

 
[FORM OF]
 
LOCKBOX ACCOUNT AGREEMENT
 
[Date]
 
[Mellon Bank, N.A.
Document Control Group Manager
500 Ross Street
Mellon Client Service Center
Room 154-1380
Pittsburgh, PA 15262-001]
Ladies and Gentlemen:
 
Reference is made to (a) account number [       ] and corresponding lockbox and
data automation system maintained with Mellon Bank, N.A. (“you” or the “Lockbox
Account Bank”) by [         ] (the “Grantor”) into which funds are deposited
from time to time (the “Lockbox Account”) and (b) the Senior Subsidiary Security
Agreement dated as of June 27, 2001 and amended and restated as of June
[        ], 2009 (as amended, supplemented or otherwise modified from time to
time, the “Senior Subsidiary Security Agreement”) among the Subsidiary
Guarantors (such term and each other capitalized term used but not defined
herein having the meaning assigned to such term in the Senior Subsidiary
Security Agreement, including the Definitions Annex and Senior Credit Agreement
referred to therein) and the Senior Collateral Agent.
 
The Grantor hereby confirms its irrevocable and unconditional instruction to you
that, until receipt of a written notice from the Senior Collateral Agent to the
contrary, you shall follow exclusively the instructions of the Senior Collateral
Agent with respect to the Lockbox Account without further consent by the Grantor
or any other Person and that the Lockbox Account shall be under the sole
dominion and control of the Senior Collateral Agent.  Notwithstanding anything
to the contrary or any other agreement relating to the Lockbox Account, the
Lockbox Account is and will be maintained for the benefit of the Senior
Collateral Agent, will be entitled “blocked account for the benefit of Citicorp
North America, Inc., as Senior Collateral Agent under the Senior Subsidiary
Agreement dated as of June 27, 2001 and amended and restated as of June [     ],
2009 Account” and will be subject to written instructions only from an
authorized officer of the Senior Collateral Agent.
 
The Grantor also hereby notifies you that the Senior Collateral Agent shall be
irrevocably entitled to exercise any and all rights in respect of, or in
connection with, the Lockbox Account, including, without limitation, the right
to specify when payments are to be made out of, or in connection with, the
Lockbox Account.  The Senior Collateral Agent hereby instructs you, until you
receive notice from the Senior Collateral Agent
 

--------------------------------------------------------------------------------

changing this instruction, to transfer, in same day funds, on each Business Day,
all funds, if any on deposit in, or otherwise to the credit of, the Lockbox
Account to the account listed below, provided that funds on deposit in the
Lockbox Account that are subject to collection may be transmitted properly upon
collection.
 
BA Number:                                    
[name and address of Grantor’s bank]
 
Account Name:                                   
Concentration Account
for the Rite Aid Senior
Subsidiary Security Agreement

Account Number:                                
Reference:                                           
Attn:                                                    
 
[or to such other account as the Senior Collateral Agent and the Grantor may
designate in writing.]
 
The Grantor also hereby notifies the Lockbox Account Bank that, as collateral
security for the Senior Obligations, the undersigned Subsidiary Guarantors
granted to the Grantor and the Grantor hereby assigns to the Senior Collateral
Agent a continuing security interest in (i) the Lockbox Account, (ii) all
contract rights and privileges in respect to the Lockbox Account, (iii) all
cash, checks, money orders and other items of value on deposit in the Lockbox
Account and (iv) all proceeds of the foregoing.
 
By executing this Lockbox Account Agreement, and so long as the Grantor shall
have any obligations to the Senior Collateral Agent or their assigns, you
irrevocably agree not to assert, claim or endeavor to exercise, irrevocably bar
and estop yourself from asserting, claiming or exercising, and acknowledge that
you have not heretofore received a notice, writ, order or any form of legal
process from any other party asserting, claiming or exercising, any right of
set-off, banker’s lien, control or other purported form of claim with respect to
the Lockbox Account or funds or other items from time to time therein.  Except
for your right to debit the Lockbox Account as described herein, you hereby
expressly subordinate all your rights to the Lockbox Account or funds or other
items therein, to all rights of the Senior Collateral Agent.
 
All customary fees, charges and expenses for the maintenance and provision of
services in conjunction with the Lockbox Account are the responsibility of the
Grantor.  In the event that the Grantor does not pay such customary fees,
charges and expenses due to the Lockbox Account Bank within ten (10) days after
the due date, the Lockbox Account Bank is authorized to charge the Lockbox
Account for such fees.  In addition, any overdrafts with respect to the Lockbox
Account shall be debited, at any time and from time to time, to the Lockbox
Account in such amounts as may be required to pay such overdrafts, without
recourse to the Senior Collateral Agent.  The Senior Collateral Agent shall have
no right to the sums so debited by the Lockbox Account Bank.  In the
 
2

--------------------------------------------------------------------------------

event insufficient funds remain in the Lockbox Account to cover any overdrafts,
the Grantor shall pay and indemnify the Lockbox Account Bank for the amounts of
any overdrafts.  The Senior Collateral Agent shall not have any liability for
the payment of any fees or charges in respect of the Lockbox Account, including
customary service charges and fees and any overdrafts.
 
The Grantor and the Senior Collateral Agent agree that the Lockbox Account Bank
may debit the Lockbox Account for any items (including, but not limited to,
checks, drafts, Automatic Clearinghouse (ACH) credits or wire transfers or other
electronic transfers or credits) deposited or credited to the Lockbox Account
which may be returned or otherwise not collected and, subject to the preceding
paragraph, for all charges, fees, commissions and expenses incurred by the
Lockbox Account Bank in providing services or otherwise in connection
herewith.  The Lockbox Account Bank may charge the Lockbox Account as permitted
herein at such times as are in accordance with the Lockbox Account Bank’s
customary practice for the chargeback of returned items and expenses.  In the
event the Lockbox Account Bank is unable to obtain sufficient funds for such
charges to cover returned items, or reversed or returned credits, or any other
items not collected and any other charges, expenses, or commissions incurred by
the Lockbox Account Bank in providing the services (referred to as a “cost” or
“costs”), the Grantor shall indemnify the Lockbox Account Bank for all amounts
related to the above described costs incurred by the Lockbox Account Bank.  The
Senior Collateral Agent agrees that if there are insufficient funds in the
Lockbox Account, the Grantor has not reimbursed the Lockbox Account Bank for the
amounts described in this paragraph and the Lockbox Account Bank has transferred
funds to the Senior Collateral Agent, then the Senior Collateral Agent agrees to
reimburse the Lockbox Account Bank (for any returned items described in this
paragraph but not for charges, fees or commissions incurred therewith) within
ten (10) business days after demand by the Lockbox Account Bank.  The Senior
Collateral Agent’s obligations under this paragraph shall terminate 120 days
after the termination of this Lockbox Account Agreement.
 
Notwithstanding any other provision of this Lockbox Account Agreement, unless
the Lockbox Account Bank is grossly negligent or engages in wilful misconduct in
performance or non-performance in connection with this Lockbox Account Agreement
and the Lockbox Account, the Lockbox Account Bank shall not be liable to any
Party hereto or any other person or entity for any action or failure to act
under or in connection with this Lockbox Account Agreement.  The Grantor agrees
to indemnify and hold the Lockbox Account Bank harmless from any claims,
damages, losses or expenses incurred by any party in connection herewith; in the
event the Lockbox Account Bank breaches the standard of care set forth herein,
the Grantor and the Senior Collateral Agent each expressly agrees that the
Lockbox Account Bank’s liability shall be limited to damages directly caused by
such breach and in no event shall the Lockbox Account Bank be liable for any
incidental, indirect, punitive or consequential damages or attorney’s fees
whatsoever.
 
Notwithstanding any other provision of this Lockbox Account Agreement, the
Lockbox Account Bank shall not be liable for any failure, inability to perform,
or delay in performance hereunder, if such failure, inability, or delay is due
to an act of God, war,
 
3

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civil commotion, governmental action, fire, explosion, strikes, other industrial
disturbance, equipment malfunction, action, non-action or delayed action on the
part of the Grantor or the Senior Collateral Agent or of any other entity or any
other causes that are beyond the Lockbox Account Bank’s reasonable control.
 
You hereby represent that you have not, prior to the date hereof, entered into
any agreement (which is currently in effect) pursuant to which you agreed that
you would comply with instructions of any person (other than the Senior
Collateral Agent) directing disposition of the funds in the Lockbox Account.
 
You agree to give the Senior Collateral Agent and the Grantor prompt notice if
the Lockbox Account becomes subject to any writ, judgment, warrant of
attachment, execution or similar process served upon you.
 
This Lockbox Account Agreement may not be modified or terminated by the Grantor
unless, in the case of a modification, the prior written consent of the Senior
Collateral Agent and the Lockbox Account Bank is obtained and, in the case of
termination, the prior written consent of the Senior Collateral Agent is
obtained.  The Lockbox Account Bank may terminate this Lockbox Account Agreement
upon thirty (30) days’ prior written notice to the Grantor and the Senior
Collateral Agent.  The Senior Collateral Agent may terminate this Lockbox
Account Agreement at any time.  Upon any such termination, any collected and
available balances in the Lockbox Account will be transferred in accordance with
the Senior Collateral Agent’s instructions, and incoming mail with respect to
the Lockbox Account received by the Lockbox Account Bank after such termination
shall be forwarded  for a period not to exceed ninety (90) days in accordance
with the Senior Collateral Agent’s instructions.  The Grantor’s obligations
under this Lockbox Account Agreement to indemnify, hold harmless and pay amounts
owed (and the Grantor’s obligation to reimburse the Lockbox Account Bank for any
returned items) shall survive the termination of this Lockbox Account Agreement.
 
[This Lockbox Account Agreement shall be governed by the laws of the State of
New York.]
 
The terms and conditions of the services, attached as Exhibit A, is made part of
this Lockbox Account Agreement with respect to matters not explicitly covered in
this Lockbox Account Agreement.  To the extent there is a conflict between this
Lockbox Account Agreement and the terms and conditions of services, this Lockbox
Account Agreement shall take precedence.
 
This Lockbox Account Agreement shall become effective immediately upon its
execution by all parties hereto.  Any notice permitted or required hereunder
shall be in writing and shall be deemed to have been duly given if sent by
Personal delivery, express or first class mail, or facsimile addressed, in the
case of notice to the Lockbox Account Bank, to:
 
4

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[Mellon Bank, N.A.
Document Control Group Manager
Mellon Client Service Center
500 Ross Street
Room 154-1380
Pittsburgh, PA 15262-0001]
Phone:  (412) 234-4172
Fax:  (412) 236-7419
and, in the case of notice to the Grantor, to:
 
30 Hunter Lane
Camp Hill, PA 17011
Phone: [                    ]
Fax: [                    ]
Attn: Rite Aid Funding LLC/ Rite Aid Treasury
 
and, in the case of notice to the Senior Collateral Agent to:
 
[                         ]
Fax: [                         ]
Attn: [                         ]
 
or to such other address or addresses as the party to receive notice may provide
in writing to the other party in accordance with this paragraph.  The Lockbox
Account Bank shall have no duty or obligation to inquire into the authenticity
or effectiveness of any such notice received pursuant to this Lockbox Account
Agreement.
 
This Lockbox Account Agreement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute and are the same agreement.  Delivery of an executed
counterpart of a signature page to this Lockbox Account Agreement by telecopier
shall be effective as delivery of a manually executed counterpart of this
Lockbox Account Agreement.
 
Please agree to the terms of, and acknowledge receipt of, this Lockbox Account
Agreement by signing in the space provided below.
 

 
Very truly yours,
 
[NAME OF SUBSIDIARY GUARANTOR]
     
By:
  
 
Name:
 
Title:  
       

 
 
5

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By:___________________, on behalf of
     each of the above listed companies
 
By:____________________, on behalf of
     each of the above listed companies
        Name:
     Name:
   

 

 
Agreed and acknowledged:
 
[MELLON BANK, N.A.]
 
By:__________________________
Name:
Title:
 
 
CITICORP NORTH AMERICA, INC., as Senior Collateral Agent,
 
By:__________________________
Name:
Title:
 
 

 

 
6

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Schedule 6
to the Senior Subsidiary
Security Agreement
 
GOVERNMENT LOCKBOX ACCOUNT AGREEMENT
 
[Date]
 
[Mellon Bank, N.A.
Document Control Group Manager
Mellon Client Service Center
500 Ross Street
Room 154-1380
Pittsburgh, PA 15262-0001]
Ladies and Gentlemen:
 
Reference is made to (a) account no. [     ] and corresponding lockbox and data
automation system maintained with Mellon Bank, N.A. (“you” or the “Government
Lockbox Account Bank”) by [                            ] (the “Grantor”) into
which funds are deposited from time to time (the “Government Lockbox”) and (b)
the Senior Subsidiary Security Agreement dated as of June 27, 2001 and amended
and restated as of June [     ], 2009 (as amended, supplemented or otherwise
modified from time to time, the “Senior Subsidiary Security Agreement”), among
the Subsidiary Guarantors (such term and each other capitalized term used and
not otherwise defined herein having the meaning assigned to such term in the
Senior Subsidiary Security Agreement including the Definitions Annex and the
Senior Credit Agreement referred to therein and, after the Senior Loan
Obligation Payment Date, the applicable Additional Senior Debt Document) and the
Senior Collateral Agent.
 
The Grantor hereby provides the following revocable instruction with respect to
the Government Lockbox Account (the “Standing Revocable Instruction”): the
Government Lockbox Account Bank shall transfer from the Government Lockbox
Account daily, via a zero balance service as described in the terms and
conditions of the services, attached as Exhibit A, all available funds held in
the Government Lockbox Account to account no. [         ] at Mellon Bank, N.A.
in the name of the Grantor for Citicorp North America, Inc., as Senior
Collateral Agent (which account is under the sole dominion and control of the
Senior Collateral Agent).  This Standing Revocable Instruction is revocable by
the Grantor at any time and for any reason by providing written instructions to
the Government Lockbox Account Bank (with a copy to the Senior Collateral
Agent), signed by the undersigned (which writing may be by facsimile and upon
which you may conclusively rely), whereupon the Government Lockbox Account Bank
shall follow, without further inquiry, such contrary written instruction and not
the Standing Revocable Instruction, provided, however, that revocation of such
Standing Revocable Instruction shall not be effective until the later of (a)
three Business Days after it is given or (b) the date the Grantor provides
identification reasonably acceptable to the Senior Collateral Agent and the
Government Lockbox Account Bank of the collections then in the Government
Lockbox Account with respect to which the Obligor is a
 

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Governmental Entity and with respect to which the Obligor is not a Governmental
Entity, in which latter case the said revocation shall not be effective.
 
The Grantor also hereby notifies the Government Lockbox Account Bank that, as
collateral security for the Senior Obligations, the undersigned Subsidiary
Guarantors granted to the Grantor and the Grantor hereby assigns to the Senior
Collateral Agent a continuing security interest in (i) the Government Lockbox
Account, (ii) all contract rights and privileges in respect to the Government
Lockbox Account, (iii) all cash, checks, money orders and other items of value
on deposit in the Government Lockbox Account and (iv) all proceeds of the
foregoing.
 
By executing this Government Lockbox Account Agreement, and so long as the
Grantor shall have any obligations to the Senior Collateral Agent or their
assigns, you irrevocably agree not to assert, claim or endeavor to exercise,
irrevocably bar and estop yourself from asserting, claiming or exercising, and
acknowledge that you have not heretofore received a notice, writ, order or any
form of legal process from any other party asserting, claiming or exercising,
any right of set-off, banker’s lien, control or other purported form of claim
with respect to the Government Lockbox Account or funds or other items from time
to time therein.  Except for your right to debit the Government Lockbox Account
as described herein, you hereby expressly subordinate all your rights to the
Government Lockbox Account or funds or other items therein, to all rights of the
Grantor and the Senior Collateral Agent.
 
All customary fees, charges and expenses for the maintenance and provision of
services in conjunction with the Government Lockbox Account are the
responsibility of the Grantor.  In the event that the Grantor does not pay such
customary fees, charges and expenses due to the Government Lockbox Account Bank
within ten (10) days after the due date, the Government Lockbox Account Bank is
authorized to charge the Government Lockbox Account for such fees.  In addition,
any overdrafts with respect to the Government Lockbox Account shall be debited,
at any time and from time to time, to the Government Lockbox Account in such
amounts as may be required to pay such overdrafts, without recourse to the
Senior Collateral Agent.  The Senior Collateral Agent shall have no right to the
sums so debited by the Government Lockbox Account Bank.  In the event
insufficient funds remain in the Lockbox Account to cover any overdrafts, the
Grantor shall pay and indemnify the Government Lockbox Account Bank for the
amounts of any overdrafts.  The Senior Collateral Agent shall not have any
liability for the payment of any fees or charges in respect of the Government
Lockbox Account, including customary service charges and fees and any
overdrafts.
 
The Grantor and the Senior Collateral Agent agree that the Government Lockbox
Account Bank may debit the Government Lockbox Account for any items (including,
but not limited to, checks, drafts, Automatic Clearinghouse (ACH) credits or
wire transfers or other electronic transfers or credits) deposited or credited
to the Government Lockbox Account which may be returned or otherwise not
collected and, subject to the preceding paragraph, for all charges, fees,
commissions and expenses incurred by the Government Lockbox Account Bank in
providing services or otherwise in connection herewith.  The Government Lockbox
Account Bank may charge the Government Lockbox Account as
 
2

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permitted herein at such times as are in accordance with the Government Lockbox
Account Bank’s customary practice for the chargeback of returned items and
expenses.  In the event the Government Lockbox Account Bank is unable to obtain
sufficient funds for such charges to cover returned items, or reversed or
returned credits, or any other items not collected and any other charges,
expenses, or commissions incurred by the Government Lockbox Account Bank in
providing the services (referred to as a “cost” or “costs”) the Grantor shall
indemnify the Government Lockbox Account Bank for all amounts related to the
above described costs incurred by the Government Lockbox Account Bank.  The
Senior Collateral Agent agrees that if the Grantor has not reimbursed the
Government Lockbox Account Bank for the amounts described in this paragraph and
the Government Lockbox Account Bank has transferred funds to the Senior
Collateral Agent, then the Senior Collateral Agent agrees to reimburse the
Government Lockbox Account Bank (for any returned items described in this
paragraph but not for charges, fees or commissions incurred therewith) within
ten business days after demand by the Government Lockbox Account Bank.  The
Senior Collateral Agent’s obligations under this paragraph shall terminate 120
days after the termination of this Government Lockbox Account Agreement.
 
Notwithstanding any other provision of this Government Lockbox Account
Agreement, unless the Government Lockbox Account Bank is grossly negligent or
engages in wilful misconduct in performance or non-performance in connection
with this Government Lockbox Account Agreement and the Government Lockbox
Account, the Lockbox Account Bank shall not be liable to any Party hereto or any
other person or entity for any action or failure to act under or in connection
with this Lockbox Account Agreement.  The Grantor agrees to indemnify and hold
the Government Lockbox Account Bank harmless from any claims, damages, losses or
expenses incurred by any party in connection herewith; in the event the
Government Lockbox Account Bank breaches the standard of care set forth herein,
the Grantor and the Senior Collateral Agent each expressly agrees that the
Government Lockbox Account Bank’s liability shall be limited to damages directly
caused by such breach and in no event shall the Government Lockbox Account Bank
be liable for any incidental, indirect, punitive or consequential damages or
attorney’s fees whatsoever.
 
Notwithstanding any other provision of this Government Lockbox Account
Agreement, the Government Lockbox Account Bank shall not be liable for any
failure, inability to perform, or delay in performance hereunder, if such
failure, inability, or delay is due to an act of God, war, civil commotion,
governmental action, fire, explosion, strikes, other industrial disturbance,
equipment malfunction, action, non-action or delayed action on the part of the
Grantor or the Senior Collateral Agent or of any other entity or any other
causes that are beyond the Government Lockbox Account Bank’s reasonable control.
 
You hereby represent that you have not, prior to the date hereof, entered into
any agreement (which is currently in effect) pursuant to which you agreed that
you would comply with instructions of any person (other than the Grantor and the
Senior Collateral Agent) directing disposition of the funds in the Government
Lockbox Account.
 
3

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You agree to give the Senior Collateral Agent and the Grantor prompt notice if
the Government Lockbox Account becomes subject to any writ, judgment, warrant of
attachment, execution or similar process served upon you.
 
This Government Lockbox Account Agreement may not be modified or terminated by
the Grantor unless, in the case of a modification, the prior written consent of
the Senior Collateral Agent and the Government Lockbox Account Bank is obtained
and, in the case of termination, the prior written consent of the Senior
Collateral Agent is obtained.  The Government Lockbox Account Bank may terminate
this Government Lockbox Account Agreement upon thirty (30) days’ prior written
notice to the Grantor and the Senior Collateral Agent.  Upon any such
termination, any collected and available balances in the Government Lockbox
Account will be transferred in accordance with the Grantor’s instructions, and
incoming mail with respect to the Government Lockbox Account received by the
Government Lockbox Account Bank after such termination shall be forwarded  for a
period not to exceed ninety (90) days in accordance with the Senior Collateral
Agent’s instructions.  The Senior Collateral Agent may terminate this Government
Lockbox Account Agreement at any time.  The Grantor’s obligations under this
Government Lockbox Account Agreement to indemnify, hold harmless and pay amounts
owed (and the Senior Collateral Agent’s obligation to reimburse the Government
Lockbox Account Bank for any returned items) shall survive the termination of
this Government Lockbox Account Agreement.
 
This Government Lockbox Account Agreement shall be governed by the laws of the
State of New York.
 
The terms and conditions of the services, attached as Exhibit A, is made part of
this Government Lockbox Account Agreement with respect to matters not explicitly
covered in this Government Lockbox Account Agreement.  To the extent there is a
conflict between this Government Lockbox Account Agreement and the terms and
conditions of services, this Government Lockbox Account Agreement shall take
precedence.
 
This Government Lockbox Account Agreement shall become effective immediately
upon its execution by all parties hereto.  Any notice permitted or required
hereunder shall be in writing and shall be deemed to have been duly given if
sent by personal delivery, express or first class mail, or facsimile addressed,
in the case of notice to the Government Lockbox Account Bank, to:
 
[Mellon Bank, N.A.
Document Control Group Manager
Mellon Client Service Center
500 Ross Street
Room 154-1380
Pittsburgh, PA 15262-0001
Phone: (412) 234-4172
Fax: (412) 236-7419]
 
4

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and, in the case of notice to the Grantor, to:
 
30 Hunter Lane
Camp Hill, PA 17011
Phone: [                    ]
Fax: [                    ]
Attn: Rite Aid Funding LLC/ Rite Aid Treasury
 
and, in the case of notice to the Senior Collateral Agent, to:
 
[                         ]
Fax: [                         ]
Attn: [                         ]
 
or to such other address or addresses as the party to receive notice may provide
in writing to the other party in accordance with this paragraph.  The Government
Lockbox Account Bank shall have no duty or obligation to inquire into the
authenticity or effectiveness of any such notice received pursuant to this
Government Lockbox Account Agreement.
 
This Government Lockbox Account Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which when
taken together shall constitute and are the same agreement.  Delivery of an
executed counterpart of a signature page to this Government Lockbox Account
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Government Lockbox Account Agreement.
 
Please agree to the terms of, and acknowledge receipt of, this Government
Lockbox Account Agreement by signing in the space provided below.
 

 
Very truly yours,
 
[NAME OF SUBSIDIARY GUARANTOR]
     
By:
  
 
Name:
 
Title:  
       

 
5

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By:___________________, on behalf of
     each of the above listed companies
 
By:____________________, on behalf of
     each of the above listed companies
        Name:
     Name:
   

Agreed and acknowledged:
[MELLON BANK, N.A.]
 
By:__________________________
     Name:
     Title:
 
CITICORP NORTH AMERICA, INC., as Senior Collateral Agent,
 
By:__________________________
     Name:
     Title:
 

6

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Schedule 7
to the Senior Subsidiary
Security Agreement
 
 
[FORM OF]
 
CONCENTRATION ACCOUNT AGREEMENT
 
[Date]
 
[Concentration Account Bank]
[address]
 
Ladies and Gentlemen:
 
Reference is made to (a) account no. [                ] maintained with you (the
“Concentration Account Bank”) by [                           ] (the “Grantor”)
into which funds are deposited from time to time (the “Concentration Account”)
and (b) the Senior Subsidiary Security Agreement dated as of June 27, 2001 and
amended and restated as of June [   ], 2009 (as amended, supplemented or
otherwise modified from time to time, the Senior Subsidiary Security
Agreement”),  among the Subsidiary Guarantors (such term and each other
capitalized term used but not defined herein having the meaning assigned to such
term in the Senior Subsidiary Security Agreement, including the Definitions
Annex and Senior Credit Agreement referred to therein and, after the Senior Loan
Obligation Payment Date, the applicable Additional Senior Debt Document) and the
Senior Collateral Agent.
 
Pursuant to the Senior Subsidiary Security Agreement, the Grantor has granted to
the Senior Collateral Agent, for the benefit of the Senior Secured Parties, a
perfected security interest in certain property of the Grantor, including the
Concentration Account.
 
The Grantor hereby transfers to the Senior Collateral Agent exclusive ownership
and control of, and all of its right, title and interest in and to, the
Concentration Account and all funds and other property on deposit therein. By
executing this Concentration Account Agreement, the Concentration Account Bank
acknowledges that the Senior Collateral Agent now have exclusive ownership and
control of the Concentration Account, that all funds in the Concentration
Account shall be transferred to the Senior Collateral Agent as provided herein,
that the Concentration Account is being maintained by the Concentration Account
Bank for the benefit of the Senior Collateral Agent and that all amounts and
other property therein are held by the Concentration Account Bank as custodian
for the Senior Collateral Agent.
 
Except as provided in paragraphs (e), (f) and (j) below, the Concentration
Account shall not be subject to deduction, setoff, banker’s lien, counterclaim,
defense, recoupment or any other right in favor of any Person or entity other
than the Senior Collateral Agent. By executing this Concentration Account
Agreement, the Concentration Account Bank also acknowledges that, as of the date
hereof, the
 

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Concentration Account Bank has received no notice of any other pledge or
assignment of the Concentration Account and the Concentration Account Bank
agrees with the Senior Collateral Agent as follows:
 
(a) Notwithstanding anything to the contrary or any other agreement relating to
the Concentration Account, the Concentration Account is and will be maintained
for the benefit of the Senior Collateral Agent, will be entitled “Citicorp North
America, Inc., as Senior Collateral Agent under the Senior Subsidiary Security
Agreement dated as of June 27, 2001 and amended and restated as of June 5, 2009
Account” and will be subject to written instructions only from authorized
officers of the Senior Collateral Agent (except as expressly provided otherwise
herein).
 
(b) The Concentration Account Bank agrees to give the Senior Collateral Agent
prompt notice if the Concentration Account shall become subject to any writ,
judgment, warrant of attachment, execution or similar process.
 
(c) [A post office box (the “Lockbox”) has been rented in the name of the
Grantor at the [                                   post office and the address
to be used for such Lockbox is:
 
[Insert address]
 
The Concentration Account Bank’s authorized representatives will have access to
the Lockbox under the authority given by the Grantor to the post office and will
make regular pick-ups from the Lockbox timed to gain maximum benefit of early
presentation and availability of funds.  The Concentration Account Bank will
endorse process all checks received in the Lockbox and deposit such checks (to
the extent eligible) in the Concentration Account in accordance with the
procedures set forth below .]
 
(d) The Concentration Account Bank will follow its usual operating procedures
for the handling of any [checks received from the Lockbox] or other remittance
received in the Concentration Account that contains restrictive endorsements,
irregularities (such as a variance between the written and numerical amounts),
undated or postdated items, missing signatures, incorrect payees and the like.
 
(e) The Concentration Account Bank will endorse and process all eligible checks
and other remittance items not covered by paragraph (d) and deposit such checks
and remittance items in the Concentration Account.
 
(f) The Concentration Account Bank will mail all checks returned unpaid because
of uncollected or insufficient funds under appropriate advice to the Grantor
(with a copy of the notification of return to the Senior Collateral Agent). The
Concentration Account Bank may charge the Concentration Account for the amounts
of any returned check that has been previously credited to the Concentration
Account. To the extent insufficient funds remain in the
 
2

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Concentration Account to cover any such returned check, the Grantor shall
indemnify the Concentration Account Bank for the uncollected amount of such
returned check upon your demand.
 
(g) The Concentration Account Bank will maintain a record of all checks and
other remittance items received in the Concentration Account on a daily basis
and, in addition to providing the Grantor with photostatic copies thereof,
vouchers, enclosures and the like of such checks and remittance items, furnish
to the Senior Collateral Agent a monthly statement setting forth the amounts
deposited in and withdrawn from the Concentration Account and shall furnish such
other information relating to the Concentration Account at such times as shall
be reasonably requested by the Senior Collateral Agent to:  Citicorp North
America, Inc., as Senior Collateral Agent, 388 Greenwich Street, New York, New
York 10013, Attention: [          ], with a copy to the Grantor.
 
(h) Prior to the delivery of a written notice from the Senior Collateral Agent
in the form of Exhibit A hereto (the “Concentration Account Cash Sweep Notice”),
the Grantor is free to withdraw funds from the Concentration Account in such
amounts and with such frequency as the Grantor may from time to time determine,
without notice to or consent from the Senior Collateral Agent.
 
(i) From and after delivery to the Concentration Account Bank of a Concentration
Account Cash Sweep Notice and until the Concentration Account Bank is notified
in writing by the Senior Collateral Agent that the Concentration Account Cash
Sweep Notice is no longer in effect (a “Concentration Account Cash Sweep
Period”), the Grantor will have no control over the use of, or any right to
withdraw any amount from, to draw upon, or to otherwise exercise any power with
respect to the Concentration Account.
 
(j) During a Concentration Account Cash Sweep Period, the Concentration Account
Bank shall transfer, in same day funds, on each Business Day, all funds, if any
on deposit in, or otherwise to the credit of, the Concentration Account to the
account listed below (the “Citibank Concentration Account”) or to such other
account as the Senior Collateral Agent may from time to time designate in
writing, provided that funds on deposit that are subject to collection may be
transmitted promptly upon collection to:
 
ABA Number:                                    
[Citicorp North America, Inc.
388 Greenwich Street
New York, NY 10013]
Account Name: Citibank Concentration Account
Account Number:                               
Reference:                                           
Attn:                                                    
 

3

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(k) All customary service charges and fees with respect to the Concentration
Account shall be debited to the Concentration Account. In the event insufficient
funds remain in the Concentration Account to cover such customary service
charges and fees, the Grantor shall pay and indemnify the Concentration Account
Bank for the amounts of such customary service charges and fees.  Neither the
Senior Collateral Agent nor the Senior Secured Parties shall have any liability
for the payment of any fees or charges in respect of the Concentration Account.
 
This letter agreement shall be binding upon and shall inure to the benefit of
the Concentration Account Bank, the Grantor, the Senior Collateral Agent, the
Senior Secured Parties referred to in the Senior Subsidiary Security Agreement
and their respective successors, transferees and assigns of any of the
foregoing. This letter agreement may not be modified or terminated except upon
the mutual consent of the Senior Collateral Agent, the Grantor and the
Concentration Account Bank.  The Concentration Account Bank may terminate the
letter agreement only upon 45 days’ prior written notice to the Grantor and the
Senior Collateral Agent. The Senior Collateral Agent may terminate this letter
agreement at any time.  So long as any Senior Obligations remain outstanding and
the Commitments are still outstanding, upon such termination the Concentration
Account Bank shall close the Concentration Account and transfer all funds in the
Concentration Account to the Senior Collateral Agent at the Citibank
Concentration Account or as otherwise directed by the Senior Collateral
Agent.  After any such termination, the Concentration Account Bank shall
nonetheless remain obligated promptly to transfer to the Concentration Account,
or as the Senior Collateral Agent may otherwise direct, all funds and other
property received in respect of the Concentration Account.
 
This letter agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement. Delivery of an executed counterpart
of a signature page to this letter agreement by telecopier shall be effective as
delivery of a manually executed counterpart of this letter agreement.
 
This letter agreement supersedes all prior agreements, oral or written, with
respect to the subject matter hereof and may not be amended, modified or
supplemented except by a writing signed by the Senior Collateral Agent, the
Grantor and the Concentration Account Bank.
 
This letter agreement shall be governed by, and construed in accordance with,
the law of the State of New York.
 
4

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Upon acceptance of this letter agreement, it will be the valid and binding
obligation of the Grantor, the Senior Collateral Agent, and the Concentration
Account Bank, in accordance with its terms.
 

 
Very truly yours,
 
[        ]
     
By:
  
 
Name:
 
Title:  
   
 
 
 

 

 
CITICORP NORTH AMERICA, INC, as Senior Collateral Agent,
     
By:
  
 
Name:
 
Title:  
       

 
 

 
Acknowledged and agreed to as of
the date first above written:
 
[                                                         ]
 
By:  __________________________                                         
Name:
Title:
 
5

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Exhibit A
to the Concentration Account Agreement
 
 
CONCENTRATION ACCOUNT CASH SWEEP NOTICE
 

 
[Concentration Account Bank]
 
[Address]
 
Re:           Account No. [        ] (the “Concentration Account”)
 
Ladies and Gentlemen:
 
Reference is made to the Concentration Account and that certain Concentration
Account Agreement dated June 27, 2001 and amended and restated as of June 5,
2009 (as amended, supplemented or otherwise modified from time to time, the
“Concentration Account Agreement”) among the Concentration Account Bank, the
Grantor and the Senior Collateral Agent. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to them in the
Concentration Account Agreement.
 
The Senior Collateral Agent hereby notifies you that, in accordance with certain
provisions of the Senior Subsidiary Security Agreement, from and after the date
of this notice, you are hereby directed to transfer (by wire transfer or other
method of transfer mutually acceptable to you and the Senior Collateral Agent)
to the Senior Collateral Agent, in same day funds, on each Business Day, the
entire balance in the Concentration Account to the Citibank Concentration
Account specified in paragraph (j) of the Concentration Account Agreement (or to
such other account as the Senior Collateral Agent may from time to time, or at
any time, designate in writing) until you are notified in writing by the Senior
Collateral Agent that this Concentration Account Cash Sweep Notice is no longer
effective.
 
 

 
Very truly yours,

 
CITICORP NORTH AMERICA, INC, as Senior Collateral Agent,
     
By:
  
 
Name:
 
Title:  
       

 

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Schedule 8
to the Senior Subsidiary
Security Agreement
 

PERFECTION CERTIFICATE
 
 

 
 

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