Exhibit 10.2


EXECUTION VERSION


FIRST AMENDMENT AND
RESTATEMENT AND WAIVER dated as of June 4, 2007 (this “Amendment”) to the Amendment and Restatement Agreement dated
as of November 8, 2006 (as amended, supplemented or otherwise modified
from time to time, the “Original Amendment and
Restatement”) relating to the Credit Agreement dated as of June 27,
2001, as amended and restated as of September 30, 2005 (the “Original Credit Agreement”), among Rite Aid Corporation, a
corporation organized under the laws of the State of Delaware (the “Borrower”), the lenders from time to time party thereto (the
“Lenders”), Citicorp North America, Inc.,
as administrative agent and collateral processing agent (in such capacities,
the “Agent”) and Bank of America, N.A., as
syndication agent.


WHEREAS the Borrower, the
Agent and the Required Lenders have agreed, on the terms and subject to the
conditions set forth herein, to amend and restate the Original Amendment and
Restatement in the manner set forth herein.


WHEREAS the Borrower may
form a new wholly owned subsidiary (“Escrow Corp”)
which, if formed, will (i) be the assignee of the Borrower’s rights and
obligations under the Acquisition Agreement (as defined in the Original
Amendment and Restatement), (ii) not be a Subsidiary Loan Party, (iii) issue
notes guaranteed by certain subsidiaries of the Borrower (the “Escrow Notes”) constituting New Notes (as defined in the
Second Restated Credit Agreement) and will deposit the proceeds thereof into a
segregated account under the sole control of the trustee or other escrow agent
(the “Escrow Account”), (iv) grant a
first priority security interest in the Escrow Account for the ratable benefit
of the holders of the Escrow Notes (the “Escrow Account Lien”)
and (v) either (a) merge with and into the Borrower with the Borrower
being the surviving entity and assuming the Escrow Notes (the “Escrow Merger”) or (b) redeem the Escrow Notes if the
Acquisition is not be consummated on or before July 6, 2007 (the “Escrow Note Redemption”).


WHEREAS, if the Borrower
forms the Escrow Corp, the Borrower intends to contribute to Escrow Corp (the “Escrow Contribution”) an amount equal to the difference
between the gross proceeds of the Escrow Notes and the amount that is 100% of
the aggregate principal amount of the Escrow Notes on July 6, 2007 plus
accrued interest on the Escrow Notes to (but not including) the date on which
Escrow Corp redeems the Escrow Notes (the transactions described in this and
the next preceding recital and any related transactions are collectively
referred to as the “Escrow Arrangements”).


NOW, THEREFORE, in
consideration of the above premises and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:


SECTION 1.   Defined
Terms; Interpretation.   (a) Each
capitalized term defined in both the Original Credit Agreement, as amended and
restated in the form set forth in Exhibit A
to Annex I hereto (the “First Restated Credit Agreement”) and the First Restated
Credit Agreement, as amended and restated in the form set forth in Exhibit B to Annex I
hereto (the “Second Restated Credit Agreement”)
and not defined herein shall have the meaning assigned to it (a) in
respect of any period prior to the Second Restatement Effective Date, in the
First Restated Credit Agreement and (b) in respect of any period from and
after the Second Restatement Effective Date, the Second Restated Credit
Agreement. Each capitalized term defined in the Second Restated Credit
Agreement (and not in the First Restated Credit Agreement) and not defined
herein shall have the meaning assigned to it in the Second Restated Credit
Agreement. 


(b)        The rules
of construction specified in Section 1.03 of the Second Restated Credit
Agreement also apply to this Amendment.













SECTION 2. First Amendment and Restatement to the Original Amendment and
Restatement. Effective as of the First Amendment Effective Date (as
defined below), the Original Amendment and Restatement is hereby amended by
restating the Original Amendment and Restatement in the form of the Amendment
and Restatement Agreement attached as Annex I
hereto.


SECTION 3. Waiver.
Effective as of the Waiver Effective Date (as defined below), the Lenders
hereby waive compliance with the provisions of the Credit Agreement by the
Borrower and Escrow Corp, to the extent and only to the extent, necessary to
permit the consummation of the Escrow Arrangements (including permitting the
Escrow Corp not to become a Subsidiary Loan Party) until the earlier of (a) the
Second Restatement Effective Date, (b) July 6, 2007 and (c) the
Escrow Note Redemption.


SECTION 4. Representations and Warranties. The Borrower hereby
represents and warrants to the Agent and the Lenders (as defined in the First
Restated Credit Agreement) that as of the First Amendment Effective Date and
after giving effect hereto:


(a)        This
Amendment has been duly authorized, executed and delivered by the Borrower and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally
and subject to general principles of equity, regardless of whether considered
in a proceeding in equity or at law.


(b)        The representations
and warranties set forth in Article III of the First Restated Credit
Agreement are true and correct in all material respects on and as of the First
Amendment Effective Date, with the same effect as though made on and as of the
First Amendment Effective Date, except to the extent such representations and
warranties expressly relate to an earlier date (in which case such
representations and warranties were true and correct in all material respects
as of such earlier date).


(c)        No
Default (as defined in the First Restated Credit Agreement) or Event of Default
(as defined in the First Restated Credit Agreement) has occurred and is
continuing.


SECTION 5. Effectiveness. (a) The amendment and restatement
contemplated by Section 2 shall become effective as of the first date (the
“First Amendment Effective Date”) on
which:


(i)   The Agent shall have received counterparts hereof duly executed
and delivered by each of the Borrower and the Required Lenders.


(ii)  The Agent shall have received a favorable
legal opinion of each of (i) Skadden, Arps, Slate, Meagher & Flom
LLP, counsel to the Borrower and (ii) Robert Sari, General Counsel of the
Borrower, in each case addressed to the Agent and the Lenders and dated the
First Amendment Effective Date, in substantially the forms of Exhibits J-1
and J-2 to the Original Credit Agreement, modified, however, to address
this Amendment, and covering such other matters relating to the Loan Parties,
the other Senior Loan Documents, the Senior Collateral and the transactions contemplated
hereby to occur on the First Amendment Effective Date as the Agent may
reasonably request, and otherwise reasonably satisfactory to the Agent. The
Borrower hereby requests such counsel to deliver such opinions.


(iii) The Agent shall have received such documents
and certificates as the Agent may reasonably request relating to the
organization, existence and good standing of each Loan Party, the authorization
of this Amendment and the transactions contemplated hereby, all in form and
substance reasonably satisfactory to the Agent.


(iv) To the extent invoiced at least two days prior
to the date hereof, the Agent shall have received payment or reimbursement of
its reasonable out-of-pocket expenses in 



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connection with
this Amendment, including the reasonable fees, charges and disbursements of
counsel for the Agent.


(v)   To the extent invoiced at least two days prior to the date hereof,
CGMI shall have received payment of all fees owed to them by the Borrower in
connection with this Amendment and the transactions contemplated hereby.


(b)        The
waiver contemplated by Section 3 shall become effective as of the first
date (the “Waiver Effective Date”) on which the
Agent shall have received counterparts hereof duly executed and delivered by
each of the Borrower and the Required Lenders.


The Agent shall notify the Borrower and the Lenders of
the First Amendment Effective Date and the Waiver Effective Date and such
notice shall be conclusive and binding.


SECTION 6. Effect of Amendment. (a) Except as expressly set forth
herein, this Amendment shall not by implication or otherwise limit, impair,
constitute a waiver of, or otherwise affect the rights and remedies of the
Agents, the Issuing Banks or the Lenders under the Original Amendment and
Restatement or any other Senior Loan Document, and shall not alter, modify,
amend or in any way affect any of the terms, conditions, obligations, covenants
or agreements contained in the Original Amendment and Restatement or any other
Senior Loan Document, all of which are ratified and affirmed in all respects
and shall continue in full force and effect. Nothing herein shall be deemed to
entitle any Loan Party to a consent to, or a waiver, amendment, modification or
other change of, any of the terms, conditions, obligations, covenants or
agreements contained in the Original Amendment and Restatement or any other
Senior Loan Document in similar or different circumstances.


(b)        On and
after the First Amendment Effective Date, each reference in the Original
Amendment and Restatement to “this Amendment”, “hereunder”, “hereof”, “herein”
or words of like import shall be deemed a reference to this Amendment. This
Amendment shall constitute a “Senior Loan Document” for all purposes of the
First Restated Credit Agreement, the Second Restated Credit Agreement and the
other Senior Loan Documents.


SECTION 7. Expenses. The
Borrower agrees to reimburse the Agent for its reasonable out-of-pocket
expenses in connection with this Amendment, including the reasonable fees,
charges and disbursements of counsel for the Agent.


SECTION 8. Governing Law; Counterparts. (a) This Amendment shall
be governed by and construed in accordance with the laws of the State of New
York.


(b)        This
Amendment may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts together shall
constitute one and the same instrument. Delivery of any executed counterpart of
a signature page to this Amendment by facsimile transmission or other
electronic imaging means shall be as effective as delivery of a manually
executed counterpart hereof.


SECTION 9. Headings. The headings of this Amendment are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.



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IN
WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly
executed and delivered by their respective officers as of the date first above
written.




	
  

  	
  RITE AID CORPORATION,

  
	
   

  	
  by

  	
  /s/ ROBERT B. SARI

  
	
   

  	
   

  	
  Name:

  	
  Robert B. Sari

  
	
   

  	
   

  	
  Title:

  	
  Exec. Vice President, General

  
	
   

  	
   

  	
   

  	
  Counsel and Secretary

  
	
   

  	
  CITICORP NORTH AMERICA,
  INC.,

  
	
   

  	
  as Agent and a Lender,

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  






 



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IN
WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly
executed and delivered by their respective officers as of the date first above
written.




	
  

  	
  RITE AID CORPORATION,

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title: 

  	
   

  
	
   

  	
  CITICORP
  NORTH AMERICA, INC.,

  
	
   

  	
  as Agent and Lender,

  
	
   

  	
  by

  	
  /s/
  JEFFREY NITZ

  
	
   

  	
   

  	
  Name:

  	
  Jeffrey Nitz

  
	
   

  	
   

  	
  Title: 

  	
  Director

  






 



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Lender signature page to

the First Amendment to the Rite Aid

Amendment and Restatement Agreement




	
  To approve the First Amendment and Waiver:

  	
   

  
	
  Name of Lender:

  	
   

  
	
  Bank of
  America, N.A.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  by

  	
  /s/ CHRISTINE HUTCHINSON

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Christine Hutchinson

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  	
   

  	
   

  	
   

  
	
  For
  any Lender requiring a second signature line:

  	
   

  
	
   

  	
  by

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  






 











Lender signature page to

the First Amendment to the Rite Aid

Amendment and Restatement Agreement




	
  To
  approve the First Amendment and Waiver:

  	
   

  
	
  The
  CIT Group/Business Credit, Inc.:

  	
   

  
	
   

  	
   

  	
  /s/
  MARK J. LONG

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  Mark J. Long

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Vice President

  	
   

  	
   

  	
   

  	
   

  






 











Lender signature page to

the First Amendment to the Rite Aid

Amendment and Restatement Agreement




	
  To approve the First Amendment and Waiver:

  	
   

  
	
  Name of Lender:

  	
   

  
	
  Citicorp North America
  Inc.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  by

  	
  /s/ JEFFREY NITZ

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jeffrey Nitz

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Director

  	
   

  	
   

  	
   

  	
   

  
	
  For any Lender requiring
  a second signature line:

  	
   

  
	
   

  	
  by

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  






 











Lender signature page to

the First Amendment to the Rite Aid

Amendment and Restatement Agreement




	
  To approve the First Amendment and Waiver:

  	
   

  
	
  Name of Lender:

  	
   

  
	
  Citizens Bank of Pennsylvania

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  by

  	
  /s/ PAUL A. REBHOLZ

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Paul A. Rebholz

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  	
   

  	
   

  	
   

  	
   

  
	
  For any Lender requiring
  a second signature line:

  	
   

  
	
   

  	
  by

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  






 











Lender signature page to

the First Amendment to the Rite Aid

Amendment and Restatement Agreement




	
  To approve the First Amendment and Waiver:

  	
   

  
	
  Name of Lender:

  	
   

  
	
  General
  Electric Capital Corporation

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  by

  	
  /s/ AMANDA J. VAN HEYST

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Amanda J. Van Heyst

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Duly Authorized Signatory

  	
   

  	
   

  	
   

  	
   

  
	
  For any Lender requiring
  a second signature line:

  	
   

  
	
   

  	
  by

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  






 











Lender signature page to

the First Amendment to the Rite Aid

Amendment and Restatement Agreement




	
  To approve the First Amendment and Waiver:

  	
   

  
	
  Name of Lender:

  	
   

  
	
  GMAC Commercial Finance
  LLC

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  by

  	
  /s/ MICHAEL MALCANGI

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Michael Malcangi

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  	
   

  	
   

  	
   

  
	
  For any Lender requiring
  a second signature line:

  	
   

  
	
   

  	
  by

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  






 











Lender signature page to

the First Amendment to the Rite Aid

Amendment and Restatement Agreement




	
  To approve the First Amendment and Waiver:

  	
   

  
	
  Name of Lender:

  	
   

  
	
  HSBC Business Credit
  (USA) Inc.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  by

  	
  /s/ MATTHEW W. RICKERT

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Matthew W. Rickert

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  	
   

  	
   

  	
   

  
	
  For any Lender requiring
  a second signature line:

  	
   

  
	
   

  	
  by

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  






 











Lender signature page to

the First Amendment to the Rite Aid

Amendment and Restatement Agreement




	
  To approve the First Amendment and Waiver:

  	
   

  
	
  Name of Lender:

  	
   

  
	
  LaSalle Retail Finance

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  by

  	
  /s/ SCOTT J. WOLKOVICH

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Scott J. Wolkovich

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Officer

  	
   

  	
   

  	
   

  	
   

  
	
  For any Lender requiring
  a second signature line:

  	
   

  
	
   

  	
  by

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  






 















Lender signature page to

the First Amendment to the Rite Aid

Amendment and Restatement Agreement




	
  To approve the First Amendment and Waiver:

  	
   

  
	
  Name of Lender:

  	
   

  
	
   

  	
   

  
	
  JPMorgan Chase Bank, N.A.

  	
   

  
	
   

  	
  by

  	
  /s/ CHRISTINE HERRICK

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Christine Herrick

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  	
   

  	
   

  	
   

  
	
  For
  any Lender requiring a second signature line:

  	
   

  
	
   

  	
  by

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  






 











Lender signature page to

the First Amendment to the Rite Aid

Amendment and Restatement Agreement




	
  To
  approve the First Amendment and Waiver:

  	
   

  
	
  Name of Lender:

  	
   

  
	
   

  	
   

  
	
  Manufacturers and Traders
  Trust Company

  	
   

  
	
   

  	
  by

  	
  /s/ TRACEY SAWYER-CALHOUN

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Tracey Sawyer-Calhoun

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  	
   

  	
   

  	
   

  
	
  For
  any Lender requiring a second signature line:

  	
   

  
	
   

  	
  by

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  






 











Lender signature page to

the First Amendment to the Rite Aid

Amendment and Restatement Agreement




	
  To approve the First
  Amendment and Waiver:

  	
   

  
	
  Name of Lender:

  	
   

  
	
   

  	
   

  
	
  Merrill Lynch Capital,

  	
   

  
	
  A Division of Merrill Lynch Business Financial
  Services Inc.

  	
   

  
	
   

  	
  by

  	
  /s/ JAMES BETZ

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  James Betz

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  VP

  	
   

  	
   

  	
   

  	
   

  
	
  For
  any Lender requiring a second signature line:

  	
   

  
	
   

  	
  by

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  






 











Lender signature page to

the First Amendment to the Rite Aid

Amendment and Restatement Agreement




	
  To approve the First Amendment and Waiver:

  	
   

  
	
  Name of Lender:

  	
   

  
	
   

  	
   

  
	
  National City Business
  Credit, Inc.

  	
   

  
	
   

  	
  by

  	
  /s/ KATHRYN ELLERO

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Kathryn Ellero

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  	
   

  	
   

  	
   

  
	
  For
  any Lender requiring a second signature line:

  	
   

  
	
   

  	
  by

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  






 











Lender signature page to

the First Amendment to the Rite Aid

Amendment and Restatement Agreement




	
  To approve the First Amendment and Waiver:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  North Fork Business
  Capital Corporation

  	
   

  
	
   

  	
  by

  	
  /s/ ROBERT WALLACE

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert Wallace

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  	
   

  	
   

  	
   

  
	
  For
  any Lender requiring a second signature line:

  	
   

  
	
   

  	
  by

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  






 











Lender signature page to

the First Amendment to the Rite Aid

Amendment and Restatement Agreement




	
  To approve the First Amendment and Waiver:

  	
   

  
	
  Name of Lender:

  	
   

  
	
   

  	
   

  
	
  N M Rothschild & Sons Limited

  	
   

  
	
   

  	
  by

  	
  /s/ N.A. WOOD

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Nicholas Wood

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Director

  	
   

  	
   

  	
   

  	
   

  
	
  For
  any Lender requiring a second signature line:

  	
   

  
	
   

  	
  by

  	
  /s/ DR. LEWIS

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Dr. Lewis

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  	
   

  	
   

  	
   

  	
   

  






 











Lender signature page to

the First Amendment to the Rite Aid

Amendment and Restatement Agreement



AMSOUTH BANK is now REGIONS BANK




	
  To approve the First Amendment and Waiver:

  	
   

  
	
  Name of Lender:

  	
   

  
	
   

  	
   

  
	
  Regions Bank

  	
   

  
	
   

  	
  by

  	
  /s/ CYNTHIA MARINAS

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Cynthia Marinas

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Attorney In Fact

  	
   

  	
   

  	
   

  	
   

  
	
  For
  any Lender requiring a second signature line:

  	
   

  
	
   

  	
  by

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  






 















Lender signature page to

the First Amendment to the Rite Aid

Amendment and Restatement Agreement




	
  To approve the First Amendment and Waiver:

  	
   

  
	
  Name of Lender:

  	
   

  
	
  RZB Finance LLC

  	
   

  	
   

  
	
   

  	
  by

  	
  /s/ CHRISTOPH HOEDL

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Christoph Hoedl

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Group Vice President

  	
   

  	
   

  	
   

  	
   

  
	
  For
  any Lender requiring a second signature line:

  	
   

  
	
   

  	
  by

  	
  /s/ RANDALL ABRAMS

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Randall Abrams

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  	
   

  	
   

  	
   

  






 











Lender signature page to

the First Amendment to the Rite Aid

Amendment and Restatement Agreement




	
  To approve the First Amendment and Waiver:

  	
   

  
	
  Name of Lender:

  	
   

  
	
  Wachovia Bank, N.A.

  	
   

  	
   

  
	
   

  	
  by

  	
  /s/ THOMAS GRABOSKI

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Thomas Graboski

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Director

  	
   

  	
   

  	
   

  	
   

  
	
  For
  any Lender requiring a second signature line:

  	
   

  
	
   

  	
  by

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  






 











Lender signature page to

the First Amendment to the Rite Aid

Amendment and Restatement Agreement




	
  To approve the First Amendment and Waiver:

  	
   

  
	
  Name of Lender:

  	
   

  
	
  Wells Fargo Foothill, LLC

  	
   

  	
   

  
	
   

  	
  by

  	
  /s/ MARK BRADFORD

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mark Bradford

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  	
   

  	
   

  	
   

  
	
  For
  any Lender requiring a second signature line:

  	
   

  
	
   

  	
  by

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  






 











Lender signature page to

the First Amendment to the Rite Aid

Amendment and Restatement Agreement




	
  To approve the First Amendment and Waiver:

  	
   

  
	
  Name of Lender:

  	
   

  
	
  U.S.
  Bank, National Association

  	
   

  	
   

  
	
   

  	
  by

  	
  /s/ [ILLEGIBLE]

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  AVP

  	
   

  	
   

  	
   

  	
   

  
	
  For
  any Lender requiring a second signature line:

  	
   

  
	
   

  	
  by

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  






 











Lender signature page to

the First Amendment to the Rite Aid

Amendment and Restatement Agreement




	
  To approve the First Amendment and Waiver:

  	
   

  
	
  Name of Lender:

  	
   

  
	
  Union Bank of
  California, N.A.

  	
   

  	
   

  
	
   

  	
  by

  	
  /s/  NANCY
  A. PERKINS

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Nancy A. Perkins

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  	
   

  	
   

  	
   

  
	
  LenderFor
  any Lender requiring a second signature line:

  	
   

  
	
   

  	
  by

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  






 











Lender signature page to

the First Amendment to the Rite Aid

Amendment and Restatement Agreement




	
  To approve the First Amendment and Waiver:

  	
   

  
	
  Name of Lender:

  	
   

  
	
  UPS Capital Corporation

  	
   

  	
   

  
	
   

  	
  by

  	
  /s/  JOHN
  P. HOLLOWAY

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John P. Holloway

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Director of Portfilio Management

  	
   

  	
   

  	
   

  	
   

  
	
  LenderFor
  any Lender requiring a second signature line:

  	
   

  
	
   

  	
  by

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  






 











Tranche 2 Lender signature page to

the First Amendment to the

Amendment and Restatement Agreement

relating to the Rite Aid Credit Agreement




	
  Name of Institution:

  	
   

  	
  Tranche 2 Term Commitment:

  
	
  Bank of America, N.A.

  	
   

  	
  $221MM

  
	
  as a Tranche 2 Lender

  	
   

  	
   

  
	
  by

  	
  /s/
  CHRISTINE HUTCHINSON

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Christine Hutchinson

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  	
   

  
	
  For any Tranche 2 Lender
  requiring a second

  signature line:

  	
   

  	
   

  
	
  by

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  






 











Tranche
2 Lender signature page to

the First Amendment to the

Amendment and Restatement Agreement

relating to the Rite Aid Credit Agreement




	
  Name of Institution:

  	
   

  	
  Tranche 2 Term Commitment:

  
	
  Citicorp North America Inc.

  	
   

  	
  $884,000,000

  
	
  as a Tranche 2 Lender

  	
   

  	
   

  
	
  by

  	
  /s/ JEFFREY NITZ

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Jeffrey Nitz

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Director

  	
   

  	
   

  
	
  For any Tranche 2 Lender
  requiring a second

  signature line:

  	
   

  	
   

  
	
  by

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  






 















ANNEX I


Amendment and Restatement
Agreement
















AMENDMENT AND RESTATEMENT AGREEMENT dated as of November 8,
2006, as amended and restated as of June 4, 2007 (this “Amendment”) relating to the Credit Agreement dated as of June 27,
2001, as amended and restated as of September 30, 2005 (the “Original Credit Agreement”), among Rite Aid Corporation, a
Delaware corporation (the “Borrower”), the
lenders from time to time party thereto (the “Lenders”),
Citicorp North America, Inc., as administrative agent (in such capacity,
the “Administrative Agent”) and collateral
processing agent and Bank of America, N.A., as syndication agent.


RECITALS


A.         Capitalized
terms used herein and not otherwise defined herein shall have the meanings
assigned to such terms in the Original Credit Agreement or, to the extent
specified herein, in the Original Credit Agreement as amended hereby. The rules of
construction specified in Section 1.03 of the Second Restated Credit
Agreement also apply to this Amendment.


B.         The
Borrower established a senior secured term loan facility under the Original
Credit Agreement in an aggregate principal amount of $145,000,000 (the “Tranche 1 Term Facility”, the term loans thereunder, “Tranche 1 Term Loans”), the proceeds of which were utilized (a) to
repay Revolving Loans in an aggregate principal amount of $142,025,000, the
proceeds of which were used to repay $142,025,000 aggregate principal amount of
the Borrower’s 12.50% Senior Secured Notes, which matured on September 15,
2006 (the “12.50% Notes”) and (b) for general
corporate purposes (including the payment of accrued interest).


C.         The
Borrower and The Jean Coutu Group (PJC) Inc. (the “Seller”)
have entered into a Stock Purchase Agreement dated as of August 23, 2006
(the “Acquisition Agreement”), pursuant to
which the Borrower intends to acquire (the “Acquisition”)
all the outstanding Equity Interests in The Jean Coutu Group (PJC) USA, Inc.
(“JCG-USA”) or, if the Seller effects the
Reorganization (as defined in the Acquisition Agreement), all the outstanding
Equity Interests in JCG (PJC) USA, LLC (“JCG LLC”),
which will acquire all the outstanding Equity Interests in JCG-USA in such
Reorganization. For purposes of this Amendment, “Holdings”
means JCG-USA or, if the Reorganization is effected, JCG LLC. Upon consummation
of the Acquisition, Holdings, together with its subsidiaries, will own and
operate the network of retail drugstores conducting business under the Eckerd
and Brooks tradenames (the “Acquired Business”).
On the date on which the Acquisition is consummated pursuant to the Acquisition
Agreement (the “Acquisition Closing Date”), the
Borrower will transfer to the Seller, in consideration of the Acquisition, (i) $2,300,000,000
in cash, subject to certain adjustments, including adjustments in respect to
working capital (as adjusted, the “Cash Consideration”)
and (ii) 250,000,000 shares of common stock of the Borrower.


D.         On the
Acquisition Closing Date, and in order, among other things, to finance a
portion of the Cash Consideration, the Borrower intends (a) to establish
an additional senior secured term loan facility under the First Restated Credit
Agreement (as defined below) in an aggregate principal amount of $1,105,000,000
(the “Tranche 2 Term Facility”, the term loans
thereunder, “Tranche 2 Term Loans”), and (b) to
(i) issue and sell, in one or more public offerings or Rule 144A/Regulation
S or other private placements, one or more tranches of notes (the “New Notes”) in an aggregate principal amount (the “Notes Amount”) equal to $1,220,000,000 or (ii) to the
extent the Borrower does not issue the New Notes in the Notes Amount on or
prior to the Acquisition Closing Date, borrow an amount equal to the Notes
Amount minus the aggregate principal amount of
New Notes that are issued pursuant to the immediately preceding clause (i),
from one or more lenders under a new bridge loan facility (the “Bridge Facility”). The first date following the Acquisition
Closing Date on which a consolidated balance sheet of the Borrower including
the assets of the Acquired Business is filed with the Securities and Exchange
Commission, and on which the applicable conditions set forth in the Second
Restated Credit Agreement (as defined below) are 



 2
 









satisfied or waived, is
referred to as the “Borrowing Base Date”.
The proceeds of the Tranche 2 Term Loans will be used (a) to pay part of
the consideration due to the Seller in connection with the Acquisition, (b) to
pay fees and expenses (including any premiums and amendment fees) incurred in
connection with the Transactions and (c) for general corporate purposes
(including the payment of accrued interest).


E.         The
Borrower requested that the Original Credit Agreement be amended and restated
(the “First Amendment and Restatement”)
substantially in the form of Exhibit A
to this Amendment (the Original Credit Agreement, as so amended and restated,
the “First Restated Credit Agreement”),
effective as of the date on which the Tranche 1 Term Loans are made, on the
terms and subject to the conditions set forth herein.


F.          The
Borrower has further requested that the First Restated Credit Agreement be
further amended and restated (the “Second Amendment and
Restatement”) substantially in the form of Exhibit B
to this Amendment (the First Restated Credit Agreement, as so amended and
restated, the “Second Restated Credit Agreement”),
effective as of the Acquisition Closing Date, to permit the Acquisition, to
establish the Tranche 2 Term Facility, the New Notes and/or the Bridge
Facility, to forgo taking a security interest in assets of the Acquired
Business until the Borrowing Base Date and to effect other modifications to the
First Restated Credit Agreement as contemplated hereby.


G.         The Required Lenders, the Collateral Agent and the
Administrative Agent are willing, on the terms and subject to the conditions
hereof, to effect the First Amendment and Restatement, and the Required Lenders
(as defined in the First Restated Credit Agreement) and the Administrative
Agent are willing, on the terms and subject to the conditions hereof, to effect
the Second Amendment and Restatement.


AGREEMENTS


In consideration of the
foregoing and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:


ARTICLE I


First Amendment and
Restatement


SECTION 1.1.   First Amendment and Restatement of Credit Agreement.   (a) The
Original Credit Agreement and the Definitions Annex is hereby amended and
restated, effective as of the First Restatement Effective Date (as defined
below), substantially in the form of the First Restated Credit Agreement
attached as Exhibit A to this Amendment. The
schedules to the Original Credit Agreement are amended in their entirety to
read in the form of Exhibit A-1
to this Amendment (it being understood that all exhibits to the Original Credit
Agreement, in the forms thereof immediately prior to the First Restatement
Effective Date, shall constitute exhibits to the First Restated Credit
Agreement).


(b)        The
parties hereto authorize an amendment to the Collateral Trust and Intercreditor
Agreement which conforms the definitions annex in the Collateral Trust and
Intercreditor Agreement to the definitions contained in the First Restated
Credit Agreement.


SECTION 1.2.   Tranche 1 Term Loans.   (a) Subject to the terms
and conditions set forth herein, each lender under the Tranche 1 Term Facility
(the “Tranche 1 Lenders”) agrees to make
Tranche 1 Term Loans to the Borrower on the First Restatement Effective Date in
a principal amount equal to such Tranche 1 Lender’s Tranche 1 Term Commitment.
A Person shall become a Tranche 1 Lender and a party to the First Restated
Credit Agreement by executing and delivering to the Administrative Agent, on or
prior to the First Restatement Effective Date, a signature page to this
Amendment as a “Tranche 1 Lender” setting forth the amount of Tranche 1 Term
Loans that such Person commits to make. The “Tranche 1
Term Commitment” of any Tranche 1 Lender will be the amount of such
commitment set forth 



 3
 









in its
signature page to this Amendment or such lesser amount as is allocated to
it by Citigroup Global Markets Inc. (“CGMI”) and
notified to it prior to the First Restatement Effective Date. The commitments
of the Tranche 1 Lenders are several and no Tranche 1 Lender shall be
responsible for any other Tranche 1 Lender’s failure to make Tranche 1 Term Loans.


(b)        The
obligations of each Tranche 1 Lender to make Tranche 1 Term Loans is subject to
the satisfaction of the following conditions:


(i)         The
conditions set forth in paragraphs (a), (b) and (c) of Section 4.02
of the First Restated Credit Agreement shall be satisfied on and as of the
First Restatement Effective Date, and the Tranche 1 Lenders shall have received
a certificate of a Financial Officer, dated the First Restatement Effective
Date, to such effect.


(ii)       The
Collateral and Guarantee Requirement (as defined in the First Restated Credit
Agreement) shall have been satisfied.


(iii)      The
Administrative Agent shall have received a favorable legal opinion of each of (i) Skadden,
Arps, Slate, Meagher & Flom LLP, counsel to the Borrower and (ii) Robert
Sari, General Counsel of the Borrower, in each case addressed to the
Administrative Agent and the Lenders under the First Restated Credit Agreement
and dated the First Restatement Effective Date, in substantially the forms of Exhibits J-1 and J-2 to
the Original Credit Agreement, modified, however, to address the Tranche 1 Term
Loans, this Amendment and the First Restated Credit Agreement, and covering
such other matters relating to the Loan Parties, the other Senior Loan
Documents, the Senior Collateral and the transactions contemplated hereby to
occur on the First Restatement Effective Date as the Administrative Agent may
reasonably request, and otherwise reasonably satisfactory to the Administrative
Agent. The Borrower hereby requests such counsel to deliver such opinions.


(iv)       The
Administrative Agent shall have received such documents and certificates as the
Administrative Agent or its counsel may reasonably request relating to the good
standing of the Borrower and the organization and existence of each Loan Party,
the organizational documents of each Loan Party, the resolutions of each Loan
Party that authorize the transactions contemplated hereby, the incumbency and
authority of the Person or Persons executing and delivering the Amendment and
the other documents contemplated hereby, all in form and substance reasonably
satisfactory to the Administrative Agent.


(v)        The
Lenders (as defined in the First Restated Credit Agreement) shall have received
all documentation and other information required by bank regulatory authorities
under applicable “know your customer” and anti-money laundering rules and
regulations, including the U.S.A. Patriot Act.


(vi)       To the
extent deemed necessary or appropriate by the Administrative Agent, each Senior
Collateral Document shall have been amended to provide the benefits thereof to
the Tranche 1 Term Loans and the obligations of the Loan Parties in connection
therewith on the same basis as such benefits are provided to the Revolving
Exposures.


(vii)     Each
Loan Party that has not executed and delivered this Amendment shall have
entered into a written instrument reasonably satisfactory to the Administrative
Agent pursuant to which it confirms that it consents to this Amendment, and
that the Senior Collateral Documents to which it is party will continue to
apply in respect of the First Restated Credit Agreement and the Senior
Obligations thereunder.


(viii)    The
Borrowing Base Amount on the First Restatement Effective Date shall be no less
than the sum of (A) the aggregate Revolving Exposures on the First
Restatement Effective Date 



 4
 









and (B) the aggregate
principal amount of Tranche 1 Term Loans to be made on the First Restatement
Effective Date. The Administrative Agent shall have received a completed
Borrowing Base Certificate dated the First Restatement Effective Date and
signed by a Financial Officer.


The conditions to effectiveness of the First Amendment
and Restatement set forth in Section 1.3 hereof shall have been satisfied.


SECTION 1.3.   First Restatement Effectiveness.   The First Amendment
and Restatement of the Original Credit Agreement effected hereby shall become
effective as of the first date (the “First Restatement
Effective Date”) on which the following conditions have been
satisfied:


(a)        The
Administrative Agent (or its counsel) shall have received duly executed
counterparts hereof that, when taken together, bear the signatures of (i) the
Borrower, (ii) each Tranche 1 Lender, (iii) the Required Lenders, (iv) the
Collateral Agent and (v) the Administrative Agent. The aggregate amount of
Tranche 1 Term Commitments shall not exceed $145,000,000.


(b)        The
conditions to the making of the Tranche 1 Term Loans set forth in Section 1.2(b) hereof
shall have been satisfied.


(c)        To the
extent invoiced, the Administrative Agent shall have received payment or
reimbursement of its reasonable out-of-pocket expenses in connection with this
Amendment, including the reasonable fees, charges and disbursements of counsel
for the Administrative Agent.


(d)        CGMI
shall have received payment of all fees owed to them by the Borrower on the
First Restatement Effective Date in connection with this Amendment and the
transactions contemplated hereby.


The
Administrative Agent shall notify the Borrower, the Tranche 1 Lenders and the
Lenders of the First Restatement Effective Date and such notice shall be
conclusive and binding. Notwithstanding the foregoing, the First Amendment and
Restatement shall not become effective, and the obligations of the Tranche 1
Lenders hereunder to make Tranche 1 Term Loans will automatically terminate, if
each of the conditions set forth or referred to in Sections 1.2(b) and 1.3
hereof has not been satisfied at or prior to 5:00 p.m., New York City
time, on November 15, 2006.


ARTICLE II


Second Amendment and
Restatement


SECTION 2.1.   Second
Amendment and Restatement of Credit Agreement.   (a) The
First Restated Credit Agreement and the Definitions Annex are hereby amended
and restated, effective as of the Second Restatement Effective Date (as defined
below), substantially in the form of the Second Restated Credit Agreement
attached as Exhibit B to this Amendment. The
schedules to the First Restated Credit Agreement are amended in their entirety
to read in the form of Exhibit B-1
to this Amendment (it being understood that, subject to the amendments
permitted by paragraphs (b), (c) and (d) below, all exhibits to the
First Restated Credit Agreement, in the forms thereof immediately prior to the
Second Restatement Effective Date, shall constitute, together with the Interim
Collateral Documents (as defined in the Second Restated Credit Agreement),
exhibits to the Second Restated Credit Agreement).



 5















(b) The parties hereto authorize an amendment to
the Collateral Trust and Intercreditor Agreement which conforms the definitions
annex in the Collateral Trust and Intercreditor Agreement to the definitions
contained in the Second Restated Credit Agreement.


(c) Effective as of the Second Restatement
Effective Date, the Senior Indemnity, Subrogation and Contribution Agreement is
hereby amended by replacing the first sentence in Section 12 with the
following sentence: “Pursuant to Section 5.11 of the Senior Credit
Agreement, certain wholly-owned Domestic Subsidiaries of the Borrower that were
not in existence on the Restatement Effective Date are required to enter into
the Senior Subsidiary Guarantee Agreement as Subsidiary Guarantors upon
becoming a wholly-owned Domestic Subsidiary.”.


(d) The parties hereto authorize the
Administrative Agent to, and the Administrative Agent may in its sole
discretion, modify the Senior Collateral Documents and the schedules and the
exhibits to the Second Restated Credit Agreement to correct inaccuracies or
omissions in the Senior Collateral Documents and such schedules and exhibits
that result from the consummation of the Transactions (as defined in the Second
Restated Credit Agreement); provided that
no such modification shall be material and adverse to the interests of the Loan
Parties or the Lenders (as defined in the Second Restated Credit Agreement);
and provided further, that, no such
modification shall become effective until the lapse of five Business Days after
the Agent has distributed the modified Senior Collateral Documents, schedules
and exhibits to the Lenders (as defined in the Second Restated Credit
Agreement) without the Required Lenders (as defined in the Second Restated
Credit Agreement) having objected to such modification.


SECTION 2.2.   Tranche 2 Term Loans.   (a) Subject to
the terms and conditions set forth herein and in the Second Restated Credit
Agreement, each lender under the Tranche 2 Term Facility (the “Tranche 2 Lenders”) agrees to make its pro rata share of the Tranche 2 Term Loans,
determined based upon such Tranche 2 Lender’s Tranche 2 Term Commitment. A
Person shall become a Tranche 2 Lender and a party to the First Amendment and
Restatement and Waiver of this Amendment and the Second Restated Credit
Agreement by executing and delivering to the Administrative Agent, on or prior
to the Second Restatement Effective Date, a signature page to the First
Amendment and Restatement and Waiver of this Amendment as a “Tranche 2 Lender”
setting forth the amount of Tranche 2 Term Loans that such Person commits to
make. The “Tranche 2 Term Commitment” of any
Tranche 2 Lender will be the amount of such commitment set forth in its
signature page to the First Amendment and Restatement and Waiver of this
Amendment or such lesser amount as is allocated to it by CGMI and notified to
it prior to the Second Restatement Effective Date. The commitments of the
Tranche 2 Lenders are several and no Tranche 2 Lender shall be responsible for
any other Tranche 2 Lender’s failure to make Tranche 2 Term Loans.


(b) The obligations of each Tranche 2 Lender to
make its pro rata share of the
Tranche 2 Term Loans (determined based upon such Tranche 2 Lender’s Tranche 2
Term Commitment) on the Second Restatement Effective Date is subject to the
satisfaction of the following conditions:


(i) The
Administrative Agent shall have received a borrowing request in a form
acceptable to the Administrative Agent requesting that the Tranche 2 Lenders
make Tranche 2 Term Loans to the Borrower on the Second Restatement Effective
Date in an aggregate principal amount equal to the Second Restatement Date
Amount.


(ii) The Acquisition
shall have been consummated, or shall be consummated substantially
simultaneously with the making of the Tranche 2 Term Loans, in accordance in
all material respects with applicable law and the Acquisition Agreement and
related documentation (and no provision of the Acquisition Agreement shall have
been waived, amended or otherwise modified in a manner material and adverse to
the Lenders without the consent of CGMI).



 6
 









(iii) The Borrower
shall have received (A) gross cash proceeds from the issuance or
incurrence of Indebtedness of the New Notes, Revolving Loans or additional term
loans under the Section 2.21 of the Second Restated Credit Agreement in an
aggregate amount equal to the Notes Amount or (B) to the extent the
Borrower does not issue the New Notes or incur the Revolving Loans or
additional term loans pursuant to clause (A) in the Notes Amount on or
prior to the Second Restatement Effective Date, the Notes Amount minus the
aggregate principal amount of the New Notes issued and the Revolving Loans and
the additional term loans incurred pursuant to clause (A), in gross cash
proceeds from borrowings under the Bridge Facility.


(iv) The Borrower (A) shall
have obtained requisite approval from the Investor Agents and the Program Agent
under the Borrower’s receivables facility under the Receivables Financing
Agreement dated as of September 21, 2004 (the “Receivables
Facility”) for an amendment that will permit the consummation of the
Transactions (as defined in the Second Restated Credit Agreement) without
constituting a Change in Control under the Receivables Facility, will reduce
the requisite availability of Revolving Loans to no more than $100,000,000
until the Borrowing Base Date and will otherwise permit the consummation of the
Transactions (as defined in the Second Restated Credit Agreement) or (B) shall
have obtained, or substantially simultaneously with the making of the Tranche 2
Term Loans to be made on the Second Restatement Effective Date will obtain, a
new tranche of term loans (the “Receivables Incremental
Term Facility”) in an aggregate principal amount of $400,000,000
under the Second Restated Credit Agreement.


(v) On the Second
Restatement Effective Date, (A) all amounts owing under the 12.50% Notes,
the 4.75% Convertible Notes and the 7.125% Notes will have been repaid in full,
(B) Holdings will have outstanding no Indebtedness or preferred Equity
Interests other than (1) its Guarantees of (w) the Second Restated
Credit Agreement including, if applicable, the Receivables Incremental Term
Facility, (x) the New Notes and/or the Bridge Facility, and (y) the
Borrower’s 8.125% Senior Secured Notes due 2010, the Borrower’s 7.50% Senior
Secured Notes due 2015, the Borrower’s 7.50% Senior Secured Notes due 2017, the
Borrower’s 9.25% Senior Notes due 2013 and the Borrower’s 8.625% Senior Notes
due 2015 (collectively, the “Existing Indebtedness to
be Guaranteed”), (2) other Indebtedness permitted by the Second
Restated Credit Agreement and (3) certain preferred Equity Interests, all
of which will be owned by the Borrower, (C) the subsidiaries of Holdings
will have outstanding no Indebtedness or preferred Equity Interests other than (1) their
Guarantees of (x) the Second Restated Credit Agreement including, if
applicable, the Receivables Incremental Term Facility, (y) the New Notes
and/or the Bridge Facility and (z) the Existing Indebtedness to be
Guaranteed, (2) other Indebtedness permitted by the Second Restated Credit
Agreement and (3) solely if the Reorganization is consummated prior to the
Second Restatement Effective Date, certain preferred Equity Interests in Jean
Coutu Holdings (USA) Inc., all of which will be owned by Holdings (both before
and after the consummation of the Reorganization), (D) Holdings will have
outstanding no common Equity Interests other than common Equity Interests owned
by the Borrower and (E) the subsidiaries of Holdings will have outstanding
no common Equity Interests other than common Equity Interests owned by Holdings
or a direct or indirect subsidiary of Holdings.


(vi) Except as
expressly contemplated by the Acquisition Agreement, since March 4, 2006,
there shall not have occurred any Purchaser Material Adverse Effect (as defined
in the Acquisition Agreement) or any fact, occurrence, condition, change,
development, effect, circumstance or event that would, individually or in the
aggregate, be reasonably likely to have or result in a Purchaser Material
Adverse Effect (as defined in the Acquisition Agreement). Since August 23,
2006, there shall not have occurred or come to exist any event, occurrence,
fact, condition, change, development or effect that, individually or in the
aggregate, has had or resulted in or would reasonably be expected to have or
result in a Purchaser Material Adverse Effect (as defined in the 



 7
 









Acquisition
Agreement). Except as expressly contemplated by the Acquisition Agreement or as
set forth in Schedule 2.10 of the Seller Disclosure Schedule (as defined in the
Acquisition Agreement), since May 27, 2006, there shall not have occurred
any Company Material Adverse Effect (as defined in the Acquisition Agreement)
or any fact, occurrence, condition, change, development, effect, circumstance
or event that would, individually or in the aggregate, be reasonably likely to
have or result in a Company Material Adverse Effect (as defined in the
Acquisition Agreement). Since August 23, 2006, there shall not have
occurred or come to exist any event, occurrence, fact, condition, change,
development or effect that, individually or in the aggregate, has had or
resulted in or would reasonably be expected to have or result in a Company
Material Adverse Effect (as defined in the Acquisition Agreement).


(vii) There shall not
be any action, suit or proceeding by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any of the Subsidiaries (including
Holdings or any of its subsidiaries) (A) as to which there is a reasonable
possibility of an adverse determination and that, if adversely determined,
could reasonably be expected to have a Purchaser Material Adverse Effect (as
defined in the Acquisition Agreement), (B) as to which there is a reasonable
possibility of an adverse determination and that, if adversely determined,
could reasonably be expected to have a Company Material Adverse Effect (as
defined in the Acquisition Agreement) or   
(C) which would reasonably be expected to affect the legality,
validity or enforceability of the Senior Loan Documents.


(viii) The Lenders
(as defined in the Second Restated Credit Agreement) shall have received (A) audited
consolidated balance sheets and related statements of operations, shareholders’
equity and cash flows of each of the Borrower and the Acquired Business for
each of the two most recently completed fiscal years (it being understood that
the audit reports for all such financial statements shall not be subject to any
qualifications or limitations with respect to the scope of the audit), which
financial statements for the most recently completed fiscal year shall not
reflect any material and adverse inaccuracy in the financial statements
previously provided to the Lenders (as defined in the Second Restated Credit
Agreement) and (B) unaudited consolidated balance sheets and related
statements of operations and cash flows of each of the Borrower and the
Acquired Business for (1) each subsequent fiscal quarter ended at least 45
days before the Second Restatement Effective Date and (2) to the extent
available (and in any event without footnotes), each fiscal month after the
most recent fiscal period for which financial statements were received by the
Lenders (as defined in the Second Restated Credit Agreement) as described above
and ended at least 30 days before the Second Restatement Effective Date, in
each case prepared in accordance with U.S. generally accepted accounting
principles. In addition, the Lenders (as defined in the Second Restated Credit
Agreement) shall have received a pro forma consolidated
balance sheet of the Borrower as of the date of the most recent balance sheets
delivered pursuant to clauses (A) and (B)(1) above, giving pro forma effect to the Transactions (as
defined in the Second Restated Credit Agreement), which shall not reflect any
material and adverse inaccuracy in the financial statements previously provided
to the Lenders (as defined in the Second Restated Credit Agreement).


(ix) The Lenders (as
defined in the Second Restated Credit Agreement) shall have received
consolidated financial projections for the Borrower and its subsidiaries
(including Holdings and its subsidiaries) for the five-year period ending February 28,
2012, in form and substance reasonably satisfactory to the Lenders (as defined
in the Second Restated Credit Agreement).


(x) All requisite
Governmental Authorities and other third Persons shall have approved or
consented to the transactions contemplated hereby to the extent required and
material, all applicable material waiting or appeal periods (including any
extensions thereof) shall have expired and there shall be no governmental or
judicial action, actual or threatened, that could reasonably be 



 8
 









expected
to restrain, prevent or impose materially burdensome conditions on the
transactions contemplated hereby.


(xi) The Collateral and
Guarantee Requirement (as defined in the Second Restated Credit Agreement) and
the Interim Collateral and Guarantee Requirement (as defined in the Second
Restated Credit Agreement) shall have been satisfied and the Administrative
Agent shall have received (A) a completed Perfection Certificate dated the
Second Restatement Effective Date and signed by an executive officer of the
Borrower or a Financial Officer, together with all attachments
contemplated    thereby, including the
results of a search of the Uniform Commercial Code (or equivalent) filings made
with respect to the Loan Parties and Holdings and its subsidiaries in the
jurisdictions contemplated by the Perfection Certificate and copies of the
financing statements (or similar documents) disclosed by such search and
evidence reasonably satisfactory to the Administrative Agent that the Liens
indicated by such financing statements are permitted by Section 6.02 of
the Second Restated Credit Agreement or have been released and (B) evidence
that the concentration account arrangements contemplated by the Senior
Collateral Documents shall be in full force and effect.


(xii) Intentionally
omitted.


(xiii) The Administrative
Agent shall have received reasonably satisfactory evidence that the insurance
required by Section 5.07 of the Second Restated Credit Agreement is in
effect.


(xiv) The Lenders (as
defined in the Second Restated Credit Agreement) shall have received all
documentation and other information required by bank regulatory authorities
under applicable “know your customer” and anti-money laundering rules and
regulations, including the U.S.A. Patriot Act.


(xv) The Administrative
Agent shall have received a favorable legal opinion of each of (A) Skadden,
Arps, Slate, Meagher & Flom LLP, counsel to the Borrower and (B) Robert
Sari, General Counsel of the Borrower, in each case addressed to the
Administrative Agent and the Lenders under the Second Restated Credit Agreement
and dated the Second Restatement Effective Date, in substantially the forms of Exhibits J-1 and J-2 to the
Original Credit Agreement, modified, however, to address the Loans (as defined
in the Second Restated Credit Agreement), this Amendment and the Second
Restated Credit Agreement, and covering such other matters relating to the Loan
Parties, the other Senior Loan Documents, the Senior Collateral and the
transactions contemplated hereby to occur on the Second Restatement Effective
Date as the Administrative Agent may reasonably request, and otherwise
reasonably satisfactory to the Administrative Agent. The Borrower hereby
requests such counsel to deliver such opinions.


(xvi) The Administrative
Agent shall have received such documents and certificates as the Administrative
Agent or its counsel may reasonably request relating to the organization,
existence and good standing of each Loan Party, the organizational documents of
each Loan Party, the resolutions of each Loan Party that authorize the
transactions contemplated hereby, the incumbency and authority of the Person or
Persons executing and delivering the Amendment and the other documents
contemplated hereby, all in form and substance reasonably satisfactory to the
Administrative Agent.


(xvii) To the extent
deemed necessary or appropriate by the Administrative Agent, each Senior
Collateral Document shall have been amended to provide the benefits thereof to
the Tranche 2 Term Loans and the obligations of the Loan Parties in  connection therewith on the same basis as
such benefits are provided to the Revolving Exposures and the Tranche 1 Term
Loans.


(xviii) Each Loan Party
that has not executed and delivered this Amendment shall have entered into a
written instrument reasonably satisfactory to the Administrative Agent pursuant
to 



 9
 









which it
confirms that it consents to this Amendment, and that the Senior Collateral
Documents to which it is party will continue to apply in respect of the Second
Restated Credit Agreement and the Senior Obligations thereunder.


(xix) The Borrowing Base
Amount on the Second Restatement Effective Date shall be no less than the sum
of (A) the aggregate principal amount of Loans (as defined in the First
Restated Credit Agreement) outstanding on the Second Restatement Effective Date
and (B) the LC Exposure on the Second Restatement Effective Date. The
Administrative Agent shall have received a completed Borrowing Base Certificate
dated the Second Restatement Effective Date and signed by a Financial Officer.


(xx) After giving effect
to the Acquisition and the borrowing of the Tranche 2 Term Loans to be made on
the Second Restatement Effective Date, the Estimated Borrowing Base Amount (as
defined in the Second Restated Credit Agreement) on the Second Restatement
Effective Date shall be no less than the sum of (A) the aggregate
principal amount of Loans (as defined in the Second Restated Credit Agreement)
outstanding on the Second Restatement Effective Date and (B) the LC
Exposure on the Second Restatement Effective Date.


(xxi) The Administrative
Agent shall have received such valuations and appraisals of the assets of the
Acquired Business that will compose the Borrowing Base from Hilco Appraisal
Services, LLC, Washburn & Associates or any other valuation or
appraisal firm reasonably satisfactory to the Administrative Agent, which
valuations and appraisals shall be reasonably satisfactory to the
Administrative Agent.


(xxii) The Administrative
Agent shall have completed a field examination of the assets of the Acquired
Business that will compose the Borrowing Base, the results of which shall be
reasonably satisfactory to the Tranche 2 Term Lenders.


SECTION 2.3.   Second Restatement Effectiveness.   The
Second Amendment and Restatement of the First Restated Credit Agreement
effected hereby shall become effective as of the first date (the “Second Restatement Effective Date”) on which the following
conditions have been satisfied:


(a) The
Administrative Agent (or its counsel) shall have received duly executed
counterparts hereof that, when taken together, bear the signatures of (i) the
Borrower, (ii) each Tranche 2 Lender, (iii) the Required Lenders (as
defined in the First Restated Credit Agreement) and (iv) the
Administrative Agent. The aggregate amount of Tranche 2 Term Commitments shall
not exceed $1,105,000,000.


(b) The
Administrative Agent (or its counsel) shall have received duly executed
counterparts of the Interim Collateral Documents (in each case as defined in
the Second Restated Credit Agreement) that, when taken together, bear the
signatures of each party thereto.


(c) The conditions to
the making of the Tranche 2 Term Loans on the Second Restatement Effective Date
set forth in Section 2.2(b) hereof shall have been satisfied.


(d) To the extent
invoiced at least two days prior to the Second Restatement Effective Date, the
Administrative Agent shall have received payment or reimbursement of its
reasonable out-of-pocket expenses in connection with this Amendment, including
the reasonable fees, charges and disbursements of counsel for the
Administrative Agent.


(e) To the extent
invoiced at least two days prior to the Second Restatement Effective Date, CGMI
shall have received payment of all fees owed to them by the Borrower on the
Second Restatement Effective Date in connection with this Amendment and the
transactions contemplated hereby.



 10
 









The Administrative Agent
shall notify the Borrower, the Tranche 2 Lenders and the Lenders (as defined in
the First Restated Credit Agreement) of the Second Restatement Effective Date
and such notice shall be conclusive and binding. Notwithstanding the foregoing,
the Second Amendment and Restatement shall not become effective, and the obligations
of the Tranche 2 Lenders hereunder to make Tranche 2 Term Loans will
automatically terminate, if each of the conditions set forth or referred to in
Sections 2.2(b) and 2.3 hereof has not been satisfied at or prior to 5:00 p.m.,
New York City time, on the Outside Date (as defined in the Acquisition
Agreement).


SECTION 2.4.   Additional Amendments.   (a) clause (i) of
the proviso in the definition of “Borrowing Base Amount” in Section 1.01
of the Second Restated Credit Agreement is amended to replace the amount “$500,000,000”
with the amount “$800,000,000”.


(b) The amendments effected by Section 2.4(a) hereof
shall become effective as of the first date on which the following conditions
have been satisfied:


(i) The Second
Restatement Effective Date shall have occurred.


(ii) The Administrative Agent (or its counsel)
shall have received duly executed counterparts hereof that, when taken
together, bear the signatures of each Lender (as defined in the Second Restated
Credit Agreement).


ARTICLE III


Miscellaneous


SECTION 3.1.   Representations and Warranties.   (a) To induce
the other parties hereto to enter into this Amendment, the Borrower represents
and warrants to each of the Lenders (as defined in the First Restated Credit
Agreement) and the Administrative Agent that,  
as of the First Restatement Effective Date and after giving effect to
the transactions and amendments to occur on the First Restatement Effective
Date:


(i) This Amendment
has been duly authorized, executed and delivered by the Borrower and constitutes,
and the First Restated Credit Agreement, as amended and restated hereby on the
First Amendment Restatement Date, will constitute, its legal, valid and binding
obligation, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors’ rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.


(ii) The
representations and warranties set forth in Article III of the First
Restated Credit Agreement are true and correct in all material respects on and
as of the First Restatement Effective Date, with the same effect as though made
on and as of the First Restatement Effective Date, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case such representations and warranties were true and correct in all material
respects as of such earlier date).


(iii) No Default (as
defined in the First Restated Credit Agreement) or Event of Default (as defined
in the First Restated Credit Agreement) has occurred and is continuing.


(b) To induce the other parties hereto to enter
into this Amendment, the Borrower represents and warrants to each of the
Lenders (as defined in the Second Restated Credit Agreement) and the
Administrative Agent that, as of the Second Restatement Effective Date and
after giving effect to the transactions and amendments to occur on the Second
Restatement Effective Date:


(i) This Amendment
has been duly authorized, executed and delivered by the Borrower and
constitutes, and the Second Restated Credit Agreement, as amended and restated
hereby on the 



 11
 









Second
Amendment Restatement Date and as further amended by Section 2.4(a) hereof
on the date such amendments become effective pursuant to Section 2.4(b) hereof,
will constitute, its legal, valid and binding obligation, enforceable against
it in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally
and subject to general principles of equity, regardless of whether considered
in a proceeding in equity or at law.


(ii) The
representations and warranties set forth in Sections 3.01, 3.02, 3.08 and 3.16
of the Second Restated Credit Agreement are true and correct in all material
respects on and as of the Second Restatement Effective Date, with the same
effect as though made on and as of the Second Restatement Effective Date,
except to the extent such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties were true and
correct in all material respects as of such earlier date). The representations
and warranties set forth in Article III of the Second Restated Credit
Agreement (other than those set forth in Sections 3.01, 3.02, 3.04(c), 3.06(a),
3.08, and 3.16 of the Second Restated Credit Agreement) are true and correct on
and as of the Second Restatement Effective Date, except where the failure of
such representations and warranties to be true and correct has not resulted in
and is not reasonably likely to result in a Purchaser Material Adverse Effect
(as defined in the Acquisition Agreement) or a Company Material Adverse Effect
(as defined in the Acquisition Agreement).


(iii) No Default (as
defined in the Second Restated Credit Agreement) or Event of Default (as
defined in the Second Restated Credit Agreement) has occurred and is
continuing.


SECTION 3.2.   Effect of Amendment.   (a) Except as
expressly set forth herein, this Amendment shall not by implication or
otherwise limit, impair, constitute a waiver of, or otherwise affect the rights
and remedies of, the Lenders or the Agents under the Original Credit Agreement,
the First Restated Credit Agreement, the Second Restated Credit Agreement or
any other Senior Loan Document, and shall not alter, modify, amend or in any
way affect any of the terms, conditions, obligations, covenants or agreements
contained in the Original Credit Agreement, the First Restated Credit
Agreement, the Second Restated Credit Agreement or any other Senior Loan
Document, all of which are ratified and affirmed in all respects and shall
continue in full force and effect. Nothing herein shall be deemed to entitle
any Loan Party to a consent to, or a waiver, amendment, modification or other
change of, any of the terms, conditions, obligations, covenants or agreements
contained in the Original Credit Agreement, the First Restated Credit
Agreement, the Second Restated Credit Agreement or any other Senior Loan
Document in similar or different circumstances. This Amendment shall apply to
and be effective only with respect to the provisions of the Original Credit
Agreement, the First Restated Credit Agreement, the Second Restated Credit Agreement
and the other Senior Loan Documents specifically referred to herein.


(b) On and after the First Restatement Effective
Date and the Second Restatement Effective Date, each reference in the Original
Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein”, or words
of like import, and each reference to the Original Credit Agreement, “thereunder”,
“thereof”, “therein” or words of like import in any other Senior Loan Document
shall be deemed a reference to the First Restated Credit Agreement or the
Second Restated Credit Agreement, as the case may be. This Amendment shall
constitute a “Senior Loan Document” for all purposes of the Original Credit
Agreement, the First Restated Credit Agreement, the Second Restated Credit
Agreement and the other Senior Loan Documents.


SECTION 3.3.   Governing Law.   This Amendment shall be governed by and construed in accordance with
the laws of the State of New York.


SECTION 3.4.   Costs and Expenses.   The Borrower agrees
to reimburse the Administrative Agent for its reasonable out-of-pocket expenses
in connection with this Amendment, including the reasonable fees, charges and
disbursements of counsel for the Administrative Agent.



 12
 









SECTION 3.5.   Counterparts.   This Amendment may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall    constitute but one and the same instrument.
Delivery of any executed counterpart of a signature page of this Amendment
by facsimile transmission or other electronic imaging means shall be as
effective as delivery of a manually executed counterpart hereof.


SECTION 3.6.   Headings.   The headings of
this Amendment are for purposes of reference only and shall not limit or
otherwise affect the meaning hereof.



 13














EXHIBIT A


First Restated Credit Agreement















EXHIBIT B


Second Restated Credit Agreement














   
 


 


CREDIT AGREEMENT


dated as of June 27,
2001,


as amended and restated as
of June 4, 2007,


among


RITE AID CORPORATION,


The Lenders Party Hereto,


CITICORP NORTH AMERICA,
INC.,

as Administrative Agent and Collateral Processing Agent,


BANK OF AMERICA, N.A.,

as Syndication Agent,


JPMORGAN CHASE BANK ,
N.A.,

as Co-Documentation Agent,


WELLS FARGO FOOTHILL, LLC,

as Co-Documentation Agent


and


GENERAL ELECTRIC CAPITAL
CORPORATION,

as Co-Documentation Agent






CITIGROUP GLOBAL MARKETS
INC.,

as Lead Arranger and Joint Bookrunner


and


BANC OF AMERICA SECURITIES
LLC,

as Joint Bookrunner



   
 
 [CS&M Ref. No. 8500-406]















TABLE
OF CONTENTS




	
  

  	
   

  	
   

  	
   

  	
  Page

  	
   

  
	
  ARTICLE
  I

  	
   

  
	
  Definitions

  	
   

  
	
  SECTION 1.01.

  	
   

  	
  Defined Terms

  	
   

  	
   

  	
  1

  	
   

  	
   

  
	
  SECTION 1.02.

  	
   

  	
  Classification of
  Loans and Borrowings

  	
   

  	
   

  	
  26

  	
   

  	
   

  
	
  SECTION 1.03.

  	
   

  	
  Terms Generally

  	
   

  	
   

  	
  26

  	
   

  	
   

  
	
  SECTION 1.04.

  	
   

  	
  Accounting Terms;
  GAAP

  	
   

  	
   

  	
  27

  	
   

  	
   

  
	
  SECTION 1.05.

  	
   

  	
  Terms Defined in
  Definitions Annex

  	
   

  	
   

  	
  27

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  
	
  The Credits

  	
   

  
	
  SECTION 2.01.

  	
   

  	
  Commitments

  	
   

  	
   

  	
  27

  	
   

  	
   

  
	
  SECTION 2.02.

  	
   

  	
  Loans and
  Borrowings

  	
   

  	
   

  	
  28

  	
   

  	
   

  
	
  SECTION 2.03.

  	
   

  	
  Requests for
  Borrowings

  	
   

  	
   

  	
  28

  	
   

  	
   

  
	
  SECTION 2.04.

  	
   

  	
  Swingline Loans

  	
   

  	
   

  	
  29

  	
   

  	
   

  
	
  SECTION 2.05.

  	
   

  	
  Letters of Credit

  	
   

  	
   

  	
  30

  	
   

  	
   

  
	
  SECTION 2.06.

  	
   

  	
  Funding of
  Borrowings

  	
   

  	
   

  	
  34

  	
   

  	
   

  
	
  SECTION 2.07.

  	
   

  	
  Interest
  Elections

  	
   

  	
   

  	
  35

  	
   

  	
   

  
	
  SECTION 2.08.

  	
   

  	
  Termination and
  Reduction of Commitments

  	
   

  	
   

  	
  36

  	
   

  	
   

  
	
  SECTION 2.09.

  	
   

  	
  Repayment of
  Loans; Evidence of Indebtedness

  	
   

  	
   

  	
  36

  	
   

  	
   

  
	
  SECTION 2.10.

  	
   

  	
  Amortization and
  Repayment of Term Loans

  	
   

  	
   

  	
  37

  	
   

  	
   

  
	
  SECTION 2.11.

  	
   

  	
  Prepayment of
  Loans

  	
   

  	
   

  	
  37

  	
   

  	
   

  
	
  SECTION 2.12.

  	
   

  	
  Fees

  	
   

  	
   

  	
  39

  	
   

  	
   

  
	
  SECTION 2.13.

  	
   

  	
  Interest

  	
   

  	
   

  	
  40

  	
   

  	
   

  
	
  SECTION 2.14.

  	
   

  	
  Alternate Rate of
  Interest

  	
   

  	
   

  	
  40

  	
   

  	
   

  
	
  SECTION 2.15.

  	
   

  	
  Increased Costs

  	
   

  	
   

  	
  41

  	
   

  	
   

  
	
  SECTION 2.16.

  	
   

  	
  Break Funding
  Payments

  	
   

  	
   

  	
  41

  	
   

  	
   

  
	
  SECTION 2.17.

  	
   

  	
  Taxes

  	
   

  	
   

  	
  42

  	
   

  	
   

  
	
  SECTION 2.18.

  	
   

  	
  Payments
  Generally; Pro Rata Treatment; Sharing of Setoffs

  	
   

  	
   

  	
  43

  	
   

  	
   

  
	
  SECTION 2.19.

  	
   

  	
  Mitigation
  Obligations; Replacement of Lenders

  	
   

  	
   

  	
  44

  	
   

  	
   

  
	
  SECTION 2.20.

  	
   

  	
  Adjustments to
  Borrowing Base Advance Rates

  	
   

  	
   

  	
  45

  	
   

  	
   

  
	
  SECTION 2.21.

  	
   

  	
  Incremental Loans

  	
   

  	
   

  	
  45

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  
	
  Representations and Warranties

  	
   

  
	
  SECTION 3.01.

  	
   

  	
  Organization; Powers

  	
   

  	
   

  	
  46

  	
   

  	
   

  
	
  SECTION 3.02.

  	
   

  	
  Authorization;
  Enforceability

  	
   

  	
   

  	
  46

  	
   

  	
   

  
	
  SECTION 3.03.

  	
   

  	
  Governmental
  Approvals; No Conflicts

  	
   

  	
   

  	
  46

  	
   

  	
   

  
	
  SECTION 3.04.

  	
   

  	
  Financial Condition;
  No Material Adverse Change

  	
   

  	
   

  	
  47

  	
   

  	
   

  
	
  SECTION 3.05.

  	
   

  	
  Properties

  	
   

  	
   

  	
  47

  	
   

  	
   

  
	
  SECTION 3.06.

  	
   

  	
  Litigation and
  Environmental Matters

  	
   

  	
   

  	
  47

  	
   

  	
   

  
	
  SECTION 3.07.

  	
   

  	
  Compliance with
  Laws and Agreements

  	
   

  	
   

  	
  47

  	
   

  	
   

  
	
  SECTION 3.08.

  	
   

  	
  Investment and
  Holding Company Status

  	
   

  	
   

  	
  48

  	
   

  	
   

  
	
  SECTION 3.09.

  	
   

  	
  Taxes

  	
   

  	
   

  	
  48

  	
   

  	
   

  
	
  SECTION 3.10.

  	
   

  	
  ERISA

  	
   

  	
   

  	
  48

  	
   

  	
   

  
	
  SECTION 3.11.

  	
   

  	
  Disclosure;
  Accuracy of Information

  	
   

  	
   

  	
  48

  	
   

  	
   

  







 i
 









 




	
  SECTION 3.12.

  	
   

  	
  Subsidiaries

  	
   

  	
   

  	
  48

  	
   

  	
   

  
	
  SECTION 3.13.

  	
   

  	
  Insurance

  	
   

  	
   

  	
  48

  	
   

  	
   

  
	
  SECTION 3.14.

  	
   

  	
  Labor Matters

  	
   

  	
   

  	
  49

  	
   

  	
   

  
	
  SECTION 3.15.

  	
   

  	
  Solvency

  	
   

  	
   

  	
  49

  	
   

  	
   

  
	
  SECTION 3.16.

  	
   

  	
  Federal Reserve
  Regulations

  	
   

  	
   

  	
  49

  	
   

  	
   

  
	
  SECTION 3.17.

  	
   

  	
  Security
  Interests

  	
   

  	
   

  	
  49

  	
   

  	
   

  
	
  SECTION 3.18.

  	
   

  	
  Use of Proceeds

  	
   

  	
   

  	
  50

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  
	
  Conditions

  	
   

  
	
  SECTION 4.01.

  	
   

  	
  Second Restatement Effective Date

  	
   

  	
   

  	
  50

  	
   

  	
   

  
	
  SECTION 4.02.

  	
   

  	
  Each Credit Event

  	
   

  	
   

  	
  50

  	
   

  	
   

  
	
  SECTION 4.03.

  	
   

  	
  Borrowing Base
  Date

  	
   

  	
   

  	
  51

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  
	
  Affirmative Covenants

  	
   

  
	
  SECTION 5.01.

  	
   

  	
  Financial Statements and Other Information

  	
   

  	
   

  	
  52

  	
   

  	
   

  
	
  SECTION 5.02.

  	
   

  	
  Notices of
  Material Events

  	
   

  	
   

  	
  54

  	
   

  	
   

  
	
  SECTION 5.03.

  	
   

  	
  Information
  Regarding Collateral

  	
   

  	
   

  	
  54

  	
   

  	
   

  
	
  SECTION 5.04.

  	
   

  	
  Existence;
  Conduct of Business

  	
   

  	
   

  	
  54

  	
   

  	
   

  
	
  SECTION 5.05.

  	
   

  	
  Payment of
  Obligations

  	
   

  	
   

  	
  55

  	
   

  	
   

  
	
  SECTION 5.06.

  	
   

  	
  Maintenance of
  Properties

  	
   

  	
   

  	
  55

  	
   

  	
   

  
	
  SECTION 5.07.

  	
   

  	
  Insurance

  	
   

  	
   

  	
  55

  	
   

  	
   

  
	
  SECTION 5.08.

  	
   

  	
  Books and
  Records; Inspection and Audit Rights; Collateral and Borrowing Base Reviews

  	
   

  	
   

  	
  56

  	
   

  	
   

  
	
  SECTION 5.09.

  	
   

  	
  Compliance with
  Laws

  	
   

  	
   

  	
  57

  	
   

  	
   

  
	
  SECTION 5.10.

  	
   

  	
  Use of Proceeds
  and Letters of Credit

  	
   

  	
   

  	
  57

  	
   

  	
   

  
	
  SECTION 5.11.

  	
   

  	
  Additional
  Subsidiaries

  	
   

  	
   

  	
  58

  	
   

  	
   

  
	
  SECTION 5.12.

  	
   

  	
  Further
  Assurances

  	
   

  	
   

  	
  58

  	
   

  	
   

  
	
  SECTION 5.13.

  	
   

  	
  Subsidiaries

  	
   

  	
   

  	
  58

  	
   

  	
   

  
	
  SECTION 5.14.

  	
   

  	
  Intercompany
  Transfers

  	
   

  	
   

  	
  58

  	
   

  	
   

  
	
  SECTION 5.15.

  	
   

  	
  Inventory
  Purchasing

  	
   

  	
   

  	
  58

  	
   

  	
   

  
	
  SECTION 5.16.

  	
   

  	
  Cash Management
  System

  	
   

  	
   

  	
  59

  	
   

  	
   

  
	
  SECTION 5.17.

  	
   

  	
  Termination of
  Factoring Transactions

  	
   

  	
   

  	
  59

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  
	
  Negative Covenants

  	
   

  
	
  SECTION 6.01.

  	
   

  	
  Indebtedness; Certain Equity Securities

  	
   

  	
   

  	
  60

  	
   

  	
   

  
	
  SECTION 6.02.

  	
   

  	
  Liens

  	
   

  	
   

  	
  62

  	
   

  	
   

  
	
  SECTION 6.03.

  	
   

  	
  Fundamental
  Changes

  	
   

  	
   

  	
  63

  	
   

  	
   

  
	
  SECTION 6.04.

  	
   

  	
  Investments,
  Loans, Advances, Guarantees and Acquisitions

  	
   

  	
   

  	
  64

  	
   

  	
   

  
	
  SECTION 6.05.

  	
   

  	
  Asset Sales

  	
   

  	
   

  	
  65

  	
   

  	
   

  
	
  SECTION 6.06.

  	
   

  	
  Sale and
  Leaseback Transactions

  	
   

  	
   

  	
  66

  	
   

  	
   

  
	
  SECTION 6.07.

  	
   

  	
  Hedging
  Agreements

  	
   

  	
   

  	
  66

  	
   

  	
   

  
	
  SECTION 6.08.

  	
   

  	
  Restricted
  Payments; Certain Payments of Indebtedness

  	
   

  	
   

  	
  66

  	
   

  	
   

  
	
  SECTION 6.09.

  	
   

  	
  Transactions with
  Affiliates

  	
   

  	
   

  	
  68

  	
   

  	
   

  
	
  SECTION 6.10.

  	
   

  	
  Restrictive
  Agreements

  	
   

  	
   

  	
  69

  	
   

  	
   

  
	
  SECTION 6.11.

  	
   

  	
  Amendment of
  Material Documents

  	
   

  	
   

  	
  70

  	
   

  	
   

  







 ii
 









 




	
  SECTION 6.12.

  	
   

  	
  Consolidated
  Fixed Charge Coverage Ratio

  	
   

  	
   

  	
  70

  	
   

  	
   

  
	
  SECTION 6.13.

  	
   

  	
  Restrictions on
  Asset Holdings by the Borrower

  	
   

  	
   

  	
  71

  	
   

  	
   

  
	
  SECTION 6.14.

  	
   

  	
  Corporate
  Separateness

  	
   

  	
   

  	
  72

  	
   

  	
   

  






 




	
  ARTICLE VII

  	
   

  
	
  Events of Default

  	
   

  
	
  ARTICLE VIII

  	
   

  
	
  The Agents

  	
   

  
	
  ARTICLE IX

  
	
  Miscellaneous

  	
   

  
	
  SECTION 9.01.

  	
   

  	
  Notices

  	
   

  	
   

  	
  76

  	
   

  	
   

  
	
  SECTION 9.02.

  	
   

  	
  Waivers; Amendments

  	
   

  	
   

  	
  76

  	
   

  	
   

  
	
  SECTION 9.03.

  	
   

  	
  Expenses; Indemnity;
  Damage Waiver

  	
   

  	
   

  	
  78

  	
   

  	
   

  
	
  SECTION 9.04.

  	
   

  	
  Successors and Assigns

  	
   

  	
   

  	
  79

  	
   

  	
   

  
	
  SECTION 9.05.

  	
   

  	
  Survival

  	
   

  	
   

  	
  82

  	
   

  	
   

  
	
  SECTION 9.06.

  	
   

  	
  Integration;
  Effectiveness

  	
   

  	
   

  	
  82

  	
   

  	
   

  
	
  SECTION 9.07.

  	
   

  	
  Severability

  	
   

  	
   

  	
  82

  	
   

  	
   

  
	
  SECTION 9.08.

  	
   

  	
  Right of Setoff

  	
   

  	
   

  	
  83

  	
   

  	
   

  
	
  SECTION 9.09.

  	
   

  	
  Governing Law;
  Jurisdiction; Consent to Service of Process

  	
   

  	
   

  	
  83

  	
   

  	
   

  
	
  SECTION 9.10.

  	
   

  	
  WAIVER OF JURY TRIAL

  	
   

  	
   

  	
  83

  	
   

  	
   

  
	
  SECTION 9.11.

  	
   

  	
  Headings

  	
   

  	
   

  	
  84

  	
   

  	
   

  
	
  SECTION 9.12.

  	
   

  	
  Confidentiality

  	
   

  	
   

  	
  84

  	
   

  	
   

  
	
  SECTION 9.13.

  	
   

  	
  Interest Rate Limitation

  	
   

  	
   

  	
  84

  	
   

  	
   

  
	
  SECTION 9.14.

  	
   

  	
  Collateral Trust and
  Intercreditor Agreement

  	
   

  	
   

  	
  84

  	
   

  	
   

  
	
  SECTION 9.15.

  	
   

  	
  Cash Sweep

  	
   

  	
   

  	
  85

  	
   

  	
   

  
	
  SECTION 9.16.

  	
   

  	
  Electronic
  Communications

  	
   

  	
   

  	
  85

  	
   

  	
   

  
	
  SECTION 9.17.

  	
   

  	
  USA Patriot Act

  	
   

  	
   

  	
  86

  	
   

  	
   

  
	
  SECTION 9.18.

  	
   

  	
  Release of Interim
  Collateral; Termination of Interim Collateral Documents

  	
   

  	
   

  	
  86

  	
   

  	
   

  






 



 iii

















	
  ANNEXES:

  	
   

  	
   

  
	
  Annex 1—Definitions
  Annex

  	
   

  	
   

  
	
  Annex 2—Subordination Terms

  	
   

  	
   

  
	
  SCHEDULES:

  	
   

  	
   

  
	
  Schedule 1.01

  	
  —

  	
  Subsidiary Loan Parties

  
	
  Schedule 2.01

  	
  —

  	
  Commitments

  
	
  Schedule 3.04

  	
  —

  	
  Undisclosed Liabilities

  
	
  Schedule 3.05 (a)

  	
  —

  	
  Properties

  
	
  Schedule 3.05(c)

  	
  —

  	
  Leased Warehouses and Distribution Centers

  
	
  Schedule 3.06(a)

  	
  —

  	
  Litigation

  
	
  Schedule 3.06(b)

  	
  —

  	
  Environmental Matters

  
	
  Schedule 3.07

  	
  —

  	
  Compliance with Laws

  
	
  Schedule 3.09

  	
  —

  	
  Taxes

  
	
  Schedule 3.12

  	
  —

  	
  Subsidiaries

  
	
  Schedule 3.13

  	
  —

  	
  Insurance

  
	
  Schedule 3.14

  	
  —

  	
  Labor

  
	
  Schedule 5.11

  	
  —

  	
  Subsidiaries

  
	
  Schedule 6.01(a)(xii)

  	
  —

  	
  Existing Indebtedness

  
	
  Schedule 6.01(b)

  	
  —

  	
  Equity Issuances

  
	
  Schedule 6.02(xi)

  	
  —

  	
  Liens

  
	
  Schedule 6.04

  	
  —

  	
  Investments

  
	
  Schedule 6.08(a)

  	
  —

  	
  Restricted Payments

  
	
  Schedule 6.09

  	
  —

  	
  Affiliate Transactions

  
	
  EXHIBITS:

  	
   

  	
   

  
	
  Exhibit A-1

  	
  —

  	
  Form of Term Note

  
	
  Exhibit A-2

  	
  —

  	
  Form of Revolving Credit Note

  
	
  Exhibit B

  	
  —

  	
  Form of Borrowing Base Certificate

  
	
  Exhibit C

  	
  —

  	
  Form of Assignment and Acceptance Agreement

  
	
  Exhibit D-1

  	
  —

  	
  Form of Senior Subsidiary Guarantee Agreement

  
	
  Exhibit D-2

  	
  —

  	
  Form of Interim Collateral and Guarantee
  Agreement

  
	
  Exhibit E

  	
  —

  	
  Form of Senior Subsidiary Security Agreement

  
	
  Exhibit F-1

  	
  —

  	
  Form of Senior Indemnity, Subrogation and
  Contribution Agreement

  
	
  Exhibit F-2

  	
  —

  	
  Form of Interim Indemnity, Subrogation and
  Contribution Agreement

  
	
  Exhibit G

  	
  —

  	
  Form of Second Priority Subsidiary Guarantee
  Agreement

  
	
  Exhibit H

  	
  —

  	
  Form of Second Priority Subsidiary Security
  Agreement

  
	
  Exhibit I

  	
  —

  	
  Form of Second Priority Indemnity, Subrogation
  and Contribution Agreement

  
	
  Exhibit J-1

  	
  —

  	
  Form of Opinion of Skadden, Arps, Slate,
  Meagher & Flom LLP, Special New York Counsel to the Borrower

  
	
  Exhibit J-2

  	
  —

  	
  Form of Opinion of Robert Sari, General Counsel
  of the Borrower

  






 



 iv















CREDIT AGREEMENT dated as of June 27, 2001, as  amended and restated as of June 4, 2007
(this “Agreement”),  among RITE AID CORPORATION, a Delaware
corporation, the  LENDERS party hereto,
CITICORP NORTH AMERICA, INC., as  Administrative
Agent and Collateral Processing Agent and BANK 
OF AMERICA, N.A., as Syndication Agent.


On the Effective Date (such term and each other
capitalized term used but  not otherwise
defined in this preamble having the meaning assigned to such term in  Article I below or in the Definitions
Annex), the Borrower, the Administrative Agent, the  Collateral Agent and certain of the Lenders
entered into this Agreement pursuant to  which
certain of the Lenders thereunder agreed to extend credit to the Borrower on a  revolving credit basis and to make term loans
to the Borrower.


On the First Restatement Effective Date, the Tranche 1
Term Lenders  made Tranche 1 Term Loans
in an aggregate principal amount of $145,000,000. The  parties hereto desire to amend this Agreement
and to restate it in its entirety giving effect 
to such amendment.


The Borrower has requested the Tranche 2 Term Lenders
to extend credit  hereunder in the form
of Tranche 2 Term Loans in an aggregate principal amount of  $1,105,000,000, which may be drawn on the
Second Restatement Effective Date.


The proceeds of the Tranche 2 Term Loans will be used (i) to
pay part of  the consideration due to the
Seller in connection with the Acquisition, (ii) to pay fees and  expenses (including any premiums and
amendment fees) incurred in connection with the 
Transactions, and (iii) for general corporate purposes (including
the payment of accrued  interest). The
proceeds of Revolving Loans and Swingline Loans made on or after the  Second Restatement Effective Date will be
used for general corporate purposes, including 
the payment of part of the consideration due to the Seller in connection
with the  Acquisition, the payment of
fees and expenses (including any premiums and amendment  fees) incurred in connection with the
Transactions, the financing of Optional Debt 
Repurchases, permitted capital expenditures, the repurchase of the
Borrower’s and/or its  Subsidiaries’
(including Rite Aid Lease Management Company’s) Preferred Stock and  permitted Restricted Payments, as more fully
described herein. Letters of Credit will be used solely to support payment
obligations of the Borrower and the Subsidiaries incurred  in the ordinary course of business.


Accordingly, in
consideration of the mutual agreements herein contained  and other good and valuable consideration,
the receipt and sufficiency of which are 
hereby acknowledged, the parties hereto agree that this Agreement shall
be amended and  restated to read in its
entirety as follows:


ARTICLE I


Definitions


SECTION 1.01.   Defined Terms.   As
used in this Agreement, the  following
terms have the meanings specified below:


“ABR”, when used
in reference to any Loan or Borrowing, refers to whether such Loan, or the
Loans comprising such Borrowing, are bearing interest at a rate determined by
reference to the Alternate Base Rate.


“Account” means
any right to payment for goods sold or leased or for services rendered, whether
or not earned by performance.


“Account Debtor”
means, with respect to any Account, the obligor with respect to such Account.


“Accounts Receivable
Advance Rate” means the accounts receivable advance rate determined
in accordance with Section 2.20.


“Acquisition”
means the acquisition by the Borrower of all the Equity Interests in Holdings.













“Additional
Lender” has the meaning assigned to such term in Section 2.21.


“Adjusted
LIBO Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/100 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate.


“Adjustment
Date” means the first day of each calendar month.


“Administrative
Agent” means CNAI, in its capacity as administrative agent for the
Lenders.


“Administrative
Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.


“Agents”
means the Administrative Agent and the Collateral Agent.


“Agent
Parties” has the meaning assigned to such term in Section 9.16(c).


“Alternate
Base Rate” means, for any day, a rate per annum equal to the greater
of (a) the Citibank Base Rate in effect on such day and (b) the
Federal Funds Effective Rate in effect on such day plus
1/2 of 1%. Any change in the Alternate Base Rate due to a change in the
Citibank Base Rate or the Federal Funds Effective Rate shall be effective from
and including the effective date of such change in the Citibank Base Rate or
the Federal Funds Effective Rate.


“Amendment
and Restatement Agreement” means the Amendment and Restatement
Agreement dated November 8, 2006 relating to the Original Agreement.


“Applicable
Percentage” means, with respect to any Revolving Lender, the
percentage of the total Revolving Commitments represented by such Lender’s Revolving
Commitment. If the Revolving Commitments have been terminated or expired, the
Applicable Percentages shall be determined based upon the Revolving Commitments
most recently in effect, giving effect to any assignments.


“Applicable Rate” means, on any day, (a) with respect to
any ABR Tranche 2 Term Loan, a rate per annum of 0.75% and, with respect to any
Eurodollar Tranche 2 Term Loan, a rate per annum of 1.75% and (b) with
respect to any ABR Loan (other than a Tranche 2 Term Loan) or Eurodollar Loan
(other than a Tranche 2 Term Loan), as the case may be, the applicable rate per
annum set forth below (expressed in basis points) under the caption “ABR Spread”
or “Eurodollar Spread”, as the case may be, in each case based upon the Average
Revolver Availability determined as of the most recent Adjustment Date; provided that until the first Adjustment Date occurring
after the Original Restatement Effective Date, the Applicable Rate shall be the
applicable rate per annum set forth below in Category 2; and provided further, that during any period after the date that
is 120 days after the Second Restatement Effective Date but prior to the Borrowing
Base Date, the “Applicable Rate” shall mean (i) with
respect to ABR Tranche 2 Term Loans, a rate per annum of 1.25% and (ii) with
respect to Eurodollar Tranche 2 Term Loans, a rate per annum of 2.25%:




	
  RATING:

  	
   

  	
   

  	
   

  	
  ABR Spread

  (bps)

  	
   

  	
  Eurodollar Spread

  (bps)

  	
   

  
	
  Category
  1

  Average Revolver Availability greater than $1,250,000,000

  	
   

  	
   

  	
  25

  	
   

  	
   

  	
   

  	
  125

  	
   

  	
   

  
	
  Category
  2

  Average Revolver Availability greater than $500,000,000 but less than or
  equal to 

  $1,250,000,000

  	
   

  	
   

  	
  50

  	
   

  	
   

  	
   

  	
  150

  	
   

  	
   

  
	
  Category 3

  Average Revolver Availability less than or equal to $500,000,000

  	
   

  	
   

  	
  75

  	
   

  	
   

  	
   

  	
  175

  	
   

  	
   

  






 



 2
 









“Approved
Fund” means (a) with respect to any Lender, a CLO managed by
such Lender or by an Affiliate of such Lender or (b) with respect to any
Lender that is a fund which invests in bank loans and similar extensions of
credit, any other fund that invests in bank loans and similar extensions of
credit and is managed or advised by the same investment advisor as such Lender
or by an Affiliate of such investment advisor.


“Assignment
and Acceptance” means an assignment and acceptance entered into by a
Lender and an assignee (with the consent of any party whose consent is required
by Section 9.04), and accepted by the Administrative Agent, in the form of
Exhibit C or any other form approved by the Administrative Agent.


“Average
Revolver Availability” means, as determined on any Adjustment Date,
the average daily Revolver Availability during the calendar month immediately preceding
such Adjustment Date; provided that
the Average Revolver Availability as determined on the first Adjustment Date
occurring after the Original Restatement Effective Date shall be the average
daily Revolver Availability for the period from the Original Restatement
Effective Date to the day immediately prior to such first Adjustment Date.


“Board”
means the Board of Governors of the Federal Reserve System of the United States
of America.


“Borrower”
means Rite Aid Corporation, a Delaware corporation.


“Borrowing”
means (a) a Loan of the same Class and Type, made, converted or
continued on the same date and, in the case of a Eurodollar Loan, as to which a
single Interest Period is in effect or (b) a Swingline Loan.


“Borrowing Base Amount” means, with respect to the Borrower,
an amount equal to the sum, without duplication, of the following;


(a)                the Accounts Receivable Advance
Rate multiplied by the book value of Eligible Accounts Receivable; plus


(b)                the Pharmaceutical Inventory Advance Rate multiplied
by the Eligible Pharmaceutical Inventory Value; plus


(c)                the Other Inventory Advance Rate multiplied by the
Eligible Other Inventory Value; plus


(d)                the Script Lists Advance Rate multiplied by the
Eligible Script Lists Value; minus


(e)                a reserve in an aggregate amount equal to the Borrower’s
then-current exposure upon early termination under each of its existing and
future Hedging Agreements; minus


(f) any reserves established by the Collateral Agent in the exercise of
its reasonable judgment to reflect Borrowing Base Factors; 


provided,
that, for purposes of determining the Borrowing Base Amount at any date of determination,
the amount set forth in clause (d) of this definition shall not exceed the
lesser of (i) $800,000,000 and (ii) 25% of the Borrowing Base Amount.


The Borrowing Base Amount
shall be computed (i) weekly with respect to Eligible Accounts Receivable
and Eligible Inventory stored at any location other than a distribution center,
(ii) monthly with respect to Eligible Inventory stored at a distribution center
and (iii) annually with respect to Eligible Script Lists, in each case in
accordance with Sections 2.20 and 5.01(f). The Borrowing Base Amount at any
time in effect shall be determined by reference to the Borrowing Base
Certificate most recently delivered pursuant to Section 5.01(f).


“Borrowing
Base Certificate” means a certificate substantially in the form of Exhibit B or in such other form as the Agents may
approve.



 3
 









“Borrowing
Base Date” means the first date after the Second Restatement Effective
Date on which the conditions set forth in Section 4.03 have been
satisfied.


“Borrowing
Base Factors” means landlord’s liens affecting Eligible Inventory,
factors affecting the saleability or collectability of Eligible Accounts Receivable
and Eligible Inventory at retail or in liquidation, factors affecting the
market value of Eligible Inventory, Eligible Accounts Receivable or Eligible
Script Lists, other impediments to the Collateral Agent’s ability to realize
upon the Eligible Accounts Receivable, the Eligible Inventory or the Eligible
Script Lists and other factors affecting the credit value to be afforded the
Eligible Accounts Receivable, the Eligible Inventory and the Eligible Script
Lists.


“Borrowing
Request” means a request by the Borrower for a Borrowing in accordance
with Section 2.03.


“Bridge
Facility” means the bank credit facility, if any, under which loans are
made to the Borrower on the Second Restatement Effective Date in an aggregate principal
amount equal to $1,220,000,000 minus the
aggregate principal amount, if any, of New Notes issued on or prior to the
Second Restatement Effective Date.


“Business
Acquisition” means (i) an Investment by the Borrower or any of the
Subsidiaries in any other Person (including an Investment by way of acquisition
of debt or equity securities of any other Person) pursuant to which such Person
shall become a Subsidiary or shall be merged into or consolidated with the
Borrower or any of the Subsidiaries or (ii) an acquisition by the Borrower
or any of the Subsidiaries of the property and assets of any Person (other than
the Borrower or any of the Subsidiaries) that constitute substantially all the
assets of such Person or any division or other business unit of such Person; provided that the acquisition of prescription files and
Stores and the acquisition of Persons substantially all of whose assets consist
of fewer than 10 Stores, in each case in the ordinary course of business and
not substantially inconsistent with the business projections of the Borrower
and the Subsidiaries delivered to the Lenders on or about the Original
Restatement Effective Date shall not constitute a Business Acquisition.


“Capital
Lease Obligations” of any Person means the obligations of such Person
to pay rent or other amounts under any Capital Lease, which obligations should
be classified and accounted for as capital leases on a balance sheet of such
Person under GAAP, and the amount of such obligations shall be the capitalized
amount thereof determined in accordance with GAAP.


“Cash
Management System” shall have the meaning assigned to such term in
the Senior Subsidiary Security Agreement.


“Cash Sweep
Cash Collateral Account” shall have the meaning assigned to such
term in the Senior Subsidiary Security Agreement.


“Cash Sweep
Notice” shall have the meaning assigned to such term in the Senior
Subsidiary Security Agreement.


“Cash Sweep
Period” shall have the meaning assigned to such term in the Senior
Subsidiary Security Agreement.


“Change in
Control” means (a) the acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person or group (within the meaning of the Securities
Exchange Act of 1934, as amended, and the rules of the SEC thereunder as
in effect on the Second Restatement Effective Date) (other than (i) Green
Equity Investors III, L.P. and its Affiliates or (ii) the Seller and its
Affiliates as a result of the Acquisition), of 30% or more of the outstanding
shares of common stock of the Borrower; (b) at the end of any period of 12
consecutive calendar months, the occupation of a majority of the seats on the
board of directors of the Borrower by Persons who were not members of the board
of directors of the Borrower on the first day of such period; or (c)         the occurrence of a “Change of Control”,
as defined in any Indenture or other agreement that governs the terms of any
Material Indebtedness.



 4
 









“Change in
Law” means (a) the adoption of any law, rule or regulation
after the Original Restatement Effective Date, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the Original Restatement Effective Date or (c) compliance
by any Lender or any Issuing Bank (or, for purposes of Section 2.15(b), by
any lending office of such Lender or by such Lender’s or such Issuing Bank’s
holding company, if any) with any request, guideline or directive (whether or
not having the force of law) of any Governmental Authority made or issued after
the Original Restatement Effective Date.


“Charges”
has the meaning assigned to such term in Section 9.13.


“Citibank
Base Rate” means the rate of interest publicly announced by Citibank,
N.A. in New York City from time to time as the Citibank Base Rate.


“Citibank
Concentration Account” shall have the meaning assigned to such term
in the Senior Subsidiary Security Agreement.


“Class”,
when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are Revolving Loans, Tranche 1 Term
Loans, Tranche 2 Term Loans, or Swingline Loans and, when used in reference to
any Commitment, refers to whether such Commitment is a Revolving Commitment, a
Tranche 1 Term Commitment or a Tranche 2 Term Commitment.


“CLO”
means any entity (whether a corporation, partnership, trust or otherwise) that
is engaged in making, purchasing, holding or otherwise investing in bank loans
and similar extensions of credit in the ordinary course of its business and is administered
or managed by a Lender or an Affiliate of a Lender.


“Code”
means the Internal Revenue Code of 1986, as amended from time to time. “Collateral
Agent” means CNAI, in its capacity as collateral processing agent for the
Lenders.


“Collateral and Guarantee Requirement” means the requirement
that: 


(a)                the Administrative Agent shall have received from
each Subsidiary Loan Party either (i) a counterpart of, or a supplement
to, each Senior Collateral Document duly executed and delivered on behalf of
such Loan Party or (ii) in the case of any Person that becomes a
Subsidiary Loan Party after the Second Restatement Effective Date, a supplement
to each applicable Senior Collateral Document, in the form specified therein,
duly executed and delivered on behalf of such Subsidiary Loan Party;


(b)                (i) all documents and instruments, including
Uniform Commercial Code financing statements, required by law or reasonably
requested by the Administrative Agent to be filed, registered or recorded to
create the Liens intended to be created by the Senior Collateral Documents and
perfect such Liens to the extent required by, and with the priority required
by, this Agreement and the Senior Collateral Documents, shall have been filed,
registered or recorded or delivered to the Administrative Agent for filing,
registration or recording or (ii) the Administrative Agent shall have been
provided with all authorizations, consents and approvals from each Loan Party,
Governmental Authority and other Person reasonably requested by it to file,
record or register all documents and instruments referred to in clause (b)(i) of
this definition; and 


(c)                each Loan Party shall have obtained all consents and
approvals required to be obtained by it in connection with the execution and
delivery of all Senior Collateral Documents to which it is a party, the
performance of its obligations thereunder and the granting by it of the Liens
thereunder.


“Commitment”
means the Revolving Commitments, the Tranche 1 Term Commitments and the Tranche
2 Term Commitments, or any combination thereof (as the context requires).


“Communications”
has the meaning assigned to such term in Section 9.16(a).



 5















“Consolidated Capital
Expenditures” means, for any period, the aggregate amount of
expenditures by the Borrower and its Consolidated Subsidiaries for plant, property
and equipment and prescription files during such period (including any such expenditure
by way of acquisition of a Person or by way of assumption of Indebtedness or
other obligations of a Person, to the extent reflected as plant, property and
equipment or as prescription file assets) minus the
aggregate amount of Net Cash Proceeds received by the Borrower and its
Consolidated Subsidiaries from the sale of Stores to third parties pursuant to
Sale and Leaseback Transactions; provided that
the aggregate amount of expenditures by the Borrower and its Consolidated
Subsidiaries referred to above shall exclude, without duplication, (i) any
such expenditures made for the replacement or restoration of assets to the
extent financed by Casualty/Condemnation Proceeds relating to the asset or
assets being replaced or restored, (ii) any amounts paid to any party
under a lease entered into in connection with a Sale and Leaseback Transaction
with respect to the termination of such lease and the reacquisition by the
Borrower or any of the Subsidiaries of the property subject to such lease and (iii) any
such expenditures made for the purchase or other acquisition from a third party
of Stores, leases and prescription files, but only to the extent that an
equivalent or greater amount is received from such third party as consideration
for the sale or other disposition to such third party of Stores, leases and/or
prescription files of a substantially equivalent value closed at substantially the
same time as, and entered into as part of a single related transaction with,
such purchase or acquisition (and if a lesser amount is received from such
third party as consideration for such sale or other disposition, then the
amount of Consolidated Capital Expenditures for purposes hereof shall be the
expenditures made net of the consideration received); provided
further that Consolidated Capital Expenditures shall in no case be less
than zero.


“Consolidated EBITDA”
means, for any period, without duplication, Consolidated Net Income for such
period, plus (a) to the extent deducted in
determining Consolidated Net Income for such period, the aggregate amount of (i) consolidated
interest expenses, whether cash or non-cash, and charges, commissions,
discounts, yield and other similar fees and charges incurred pursuant to
Factoring Transactions or by Securitization Vehicles in connection with
Securitizations which are payable to any Person other than a Loan Party, and
any other amounts comparable to or in the nature of interest under any
Securitization or Factoring Transaction, including losses on the sale of Securitization
Assets in a Securitization accounted for as a “true sale” or Factoring Assets in
a Factoring Transaction accounted for as a “true sale,” (ii) provision for
income taxes, (iii) depreciation and amortization, (iv) LIFO
Adjustments which reduced such Consolidated Net Income, (v) store closing
and non-cash impairment expenses, (vi) any other nonrecurring charge to
the extent such nonrecurring charge does not involve any cash expenditure
during such period, (vii) non-cash compensation expenses related to stock
option and restricted stock employee benefit plans, (viii) the non-cash
interest component, as adjusted from time to time, in respect of reserves, (ix) all
costs, fees, charges and expenses incurred in connection with the Transactions,
(x) all charges incurred relating to the investigation of the Borrower by
the United States Attorney’s Office and the United States Department of Labor
and all amounts paid in satisfaction of any judgment, fine or settlement resulting therefrom, (xi)
all costs and litigation expenses incurred in connection with litigation,
investigations and other proceedings relating to the business conduct and
practices of the former management of the Borrower and (xii) all Integration
Expenses, and minus (b) to the extent not
deducted in determining Consolidated Net Income for such period, the aggregate
amount of (i) any cash expenditure during such period in connection with
which a nonrecurring charge was taken and added back to Consolidated Net Income
pursuant to clause (a) above in calculating Consolidated EBITDA in any
prior period and (ii) LIFO Adjustments which increased such Consolidated
Net Income.


“Consolidated Fixed Charge
Coverage Ratio” means, for any period, the ratio of (i) Consolidated
EBITDA plus Consolidated Rent less Consolidated Capital Expenditures plus
Integration Capital Expenditures to (ii) Consolidated Interest Charges plus Consolidated Rent plus cash
dividends paid pursuant to Section 6.08(a), in each case for such period
and determined in accordance with GAAP.



 6
 









“Consolidated Interest Charges”
means, for any period, the aggregate amount of interest charges, whether
expensed or capitalized, incurred or accrued during such period by the Borrower
and its Consolidated Subsidiaries, solely to the extent paid or payable
(whether during or after such period) in cash (i) minus
non-cash interest expenses during such period related to (x) litigation
reserves, (y) closed store liability reserves, if any, and (z) self-insurance
reserves and (ii) plus, to the
extent not otherwise included in such interest charges, commissions, discounts,
yield and other similar fees and charges incurred pursuant to Factoring
Transactions or by Securitization Vehicles in connection with Securitizations
which are payable to any Person other than a Loan Party, and any other amounts
comparable to or in the nature of interest under any Securitization or
Factoring Transaction, including losses on the sale of Securitization Assets in
a Securitization accounted for as a “true sale” or Factoring Assets in a
Factoring Transaction accounted for as a “true sale”.


“Consolidated Net Income”
means, for any period, the net income (or loss) of the Borrower and its
Consolidated Subsidiaries (exclusive of (a) extraordinary items of gain or
loss during such period or gains or losses from Indebtedness modifications
during such period, (b) any gain or loss in connection with any Asset Sale
during such period, other than sales of inventory in the ordinary course of
business, but in the case of any loss only to the extent that such loss does not
involve any current or future cash expenditure, (c) the cumulative effect
of accounting changes during such period and (d) net income or loss
attributable to any Investments in Persons other than Affiliates of the
Borrower), determined on a consolidated basis for such period in accordance
with GAAP.


“Consolidated Rent”
means, for any period, the consolidated rental expense of the Borrower and its
Consolidated Subsidiaries for such period, and including in any event rental
costs of closed stores for such period whether or not reflected as an expense
in the determination of Consolidated Net Income for such period.


“Consolidated Subsidiary”
means, with respect to any Person, at any date, any Subsidiary or other entity
the accounts of which would, in accordance with GAAP, be consolidated with
those of such Person in its consolidated financial statements if such statements
were prepared as of such date.


“Control” means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled”
have meanings correlative thereto. 


“CNAI” means
Citicorp North America, Inc.


“Direct Delivery Vendor”
has the meaning assigned to such term in the Intercompany Inventory Purchase
Agreement.


“Default” means
any event or condition which constitutes an Event of Default or which upon
notice, lapse of time or both would, unless cured or waived, become an Event of
Default. 


“Definitions Annex”
means the definitions annex attached hereto as Annex 1 (as the same may be
amended, supplemented or otherwise modified from time to time).


“Deposit Account”
shall have the meaning assigned to such term in the Senior Subsidiary Security
Agreement.


“dollars” or “$” refers to lawful money of the United States of America.


“Eligible Accounts
Receivable” means, at any date of determination, all Accounts that
satisfy at the time of creation and continue to meet the same at the time of such determination the criteria
established from time to time by the Collateral Agent in its reasonable
judgment to reflect Borrowing Base Factors. On the Second Restatement Effective
Date, those criteria are:



 7
 









(a) such Account constitutes an “account” or “chattel
paper” within the meaning of the Uniform Commercial Code of the state in which
the Account is located;


(b) all payments on such Account are by the terms
of such Account due not later than 90 days after the date of service (i.e., the transaction date) and are otherwise on terms that
are normal and customary in the business of the Borrower and the Subsidiaries;


(c) such Account has been billed and has not
remained unpaid for more than 120 days following the date of service;


(d) such Account is denominated in dollars;


(e) such Account arose from a completed, outright
and lawful sale of goods or the completed performance of services by the
applicable Subsidiary Loan
Party and accepted by the applicable Account Debtor, and the amount of such
Account has been properly recognized as revenue on the books of the applicable
Subsidiary Loan Party;


(f) such Account is owned solely by a Subsidiary
Guarantor (and has not been transferred pursuant to a Securitization or a
Factoring Transaction);


(g) the proceeds of such Account are payable
solely to a Deposit Account which (A) is under the control of the
Collateral Agent and (B) has not been released or transferred in
accordance with Section 5.16 or otherwise;


(h) such Account arose in the ordinary course of
business of the applicable Subsidiary Loan Party; 


(i) not more than 50% of the aggregate amount of
Accounts from the same Account Debtor and any Affiliates thereof remain unpaid
for more than 120 days following the date of service;


(j) to the knowledge of the Borrower and the
Subsidiaries, no event of death, bankruptcy, insolvency or inability to pay
creditors generally of the Account Debtor of such Account has occurred, and no
notice thereof has been received;


(k) payment of such Account is not being disputed
by the Account Debtor thereof;


(l) such Account complies in all material
respects with the requirements of all applicable laws and regulations, whether
Federal, state or local, including the Federal Consumer Credit Protection Act,
the Federal Truth in Lending Act and Regulation Z of the Federal Reserve Board;


(m) with respect to such Account, the Account
Debtor (i) is organized in the United States (or, if such Account Debtor
is not organized in the United States, such Account is supported by a letter of
credit approved by the Collateral Agent in favor of the applicable Subsidiary
Loan Party) and (ii) is not an Affiliate or Subsidiary or an Affiliate of
any of the Subsidiaries;


(n) such Account is subject to a perfected first
priority security interest in favor of the Collateral Agent for the benefit of
the Lenders pursuant to the Senior Collateral Documents and is not subject to
any other Lien (other than the Second Priority Lien);


(o) with respect to any such Account for an
amount greater than $5,000,000, the Account Debtor has not been disapproved by
the Required Lenders (based, on the Required Lenders’ reasonable judgment, upon
the creditworthiness of such Account Debtor);


(p) the representations and warranties contained
in the Senior Loan Documents with respect to such Account are true and correct
in all material respects; and



 8
 









(q) such Account is in full force and effect and
constitutes a legal, valid and binding obligation of the Account Debtor,
enforceable against such Account Debtor in accordance with its terms.


“Eligible Inventory”
means, at any date of determination, all inventory (as defined in the Uniform
Commercial Code) owned by any Subsidiary Loan Party that satisfies at the time
of such determination the criteria established from time to time by the Collateral
Agent in its reasonable judgment to reflect Borrowing Base Factors. On the Second
Restatement Effective Date, Eligible Inventory shall exclude, without duplication, the following:


(a) any such inventory that has been shipped to a
customer, even if on a consignment or “sale or return” basis, or is otherwise
not in the possession or control of or any Subsidiary Loan Party or a
warehouseman or bailee of any Subsidiary Loan Party;


(b) any inventory against which any Subsidiary
Loan Party has taken a reserve, to the extent of such reserve, to the extent
specified by the Collateral Agent from time to time in its reasonable judgment
to reflect Borrowing Base Factors;


(c) any inventory that has been discontinued or
is otherwise of a type (SKU) not currently offered for sale on a regular basis
by the Subsidiary Loan Parties
(including any such inventory obtained in connection with a Business Acquisition)
to the extent specified by the Collateral Agent from time to time in its
reasonable judgment to reflect Borrowing Base Factors;


(d) any inventory not located in the United
States or otherwise not subject to a valid and perfected Lien under the Senior
Collateral Documents, subject to no prior or equal Lien;


(e) any supply, scrap or obsolete inventory or
inventory that is otherwise unsaleable;


(f) any inventory that is past its expiration
date, is damaged or not in good condition, is a sample used for marketing
purposes or does not meet all material standards imposed by any governmental
authority having regulatory authority over such inventory, except in each case to the extent of
its net realizable value as determined by the Collateral Agent from time to
time in its reasonable judgment;


(g) any inventory that is subject to any
licensing, patent, royalty, trademark, trade name or copyright agreement with
any third Person from whom the Borrower or any of its Subsidiaries has received
notice of a dispute in respect of such agreement, to the extent that the
Collateral Agent determines, in its reasonable judgment, that such dispute
could be expected to prevent the sale of such inventory;


(h) any inventory which is subject to a
negotiable document of title which has not been delivered to the Administrative
Agent;


(i) any inventory to the extent that such
inventory is not comprised of readily marketable materials of a type
manufactured, consumed or held for resale by the Subsidiary Loan Parties in the
ordinary course of business;


(j) any inventory to the extent that such
inventory consists of raw materials, component parts and/or work-in-progress;


(k) any inventory in respect of which the
applicable representations and warranties in the Senior Loan Documents are not
true and correct in all material respects;


(l) any inventory to which the Subsidiary Loan
Parties do not have good title or any inventory which a Subsidiary Loan Party
holds on consignment or on a “sale or return” basis; and



 9
 









(m) any inventory (as notified by the Collateral
Agent to the Borrower) that the Collateral Agent has, in its reasonable
judgment, deemed ineligible in order to reflect Borrowing Base Factors;


provided, however,
that no inventory which is stored at a distribution center leased by the Borrower
or any other Person shall be considered “Eligible Inventory” unless each of the
waivers obtained pursuant to the Original Agreement from the lessor of each
leased distribution center of the Subsidiary Loan Parties of any statutory,
common law or contractual landlord’s lien with respect to any inventory of any
Subsidiary Loan Party (other than with respect to inventory located at leased
warehouses having a value in the aggregate not to exceed $40,000,000) shall be
in full force and effect (or the Collateral Agent shall have granted a waiver
to such compliance).


“Eligible Other Inventory
Value” means, at any date of determination, an amount equal to (i) the
cost of Eligible Inventory that is Other Inventory (less
any appropriate reserve for obsolete Other Inventory and any profits accrued in
connection with transfers of Other Inventory between the Borrower and the
Subsidiaries or between Subsidiaries) at such date, in dollars, determined in
accordance with GAAP consistently applied and on a basis consistent with that
used in the preparation of the most recent audited consolidated financial
statements of the Borrower and its Consolidated Subsidiaries delivered to the
Lenders pursuant to Section 5.01(a) multiplied
by (ii) the Net Orderly Liquidation Rate with respect to such
Other Inventory.


“Eligible Pharmaceutical
Inventory Value” means, at any date of determination, an amount
equal to (i) the cost of Eligible Inventory that is Pharmaceutical Inventory
(less any appropriate reserve for
obsolete Pharmaceutical Inventory and any profits accrued in connection with
transfers of Pharmaceutical Inventory between the Borrower and the Subsidiaries
or between Subsidiaries) at such date, in dollars, determined in accordance
with GAAP consistently applied and on a basis consistent with that used in the
preparation of the most recent audited consolidated financial statements of the
Borrower and its Consolidated Subsidiaries delivered to the Lenders pursuant to
Section 5.01(a) multiplied by (ii) the
Net Orderly Liquidation Rate with respect to such Pharmaceutical Inventory.


“Eligible Script Lists”
means, at any date of determination, all lists owned and maintained on such
date by the Subsidiary Loan Parties setting forth Persons (and addresses,
telephone numbers or other contact information therefor) who currently purchase
or otherwise obtain, in any Store owned or operated by any Subsidiary Loan Party,
medication required to be dispensed by a licensed professional.


“Eligible Script Lists
Value” means, at any date of determination, the liquidation value of
the Eligible Script Lists in dollars, as most recently determined in connection
with an appraisal performed for purposes of this Agreement by Washburn &
Associates or such other appraisal firm satisfactory to the Collateral Agent.


“Environmental Laws”
means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments,
injunctions, notices or binding agreements issued, promulgated or entered into
by any Governmental Authority, relating in any way to the environment,
preservation or reclamation of natural resources, the management, release or
threatened release of any Hazardous Material or to health and safety matters.


“Environmental Liability”
means all liabilities, obligations, damages, losses, claims, actions, suits,
judgments, orders, fines, penalties, fees, expenses and costs, (including
administrative oversight costs, natural resource damages and remediation costs),
whether contingent or otherwise, arising out of or relating to: (a) compliance
or non-compliance with any Environmental Law, (b) the generation, use,
handling, transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release
of any Hazardous Materials or (e) any contract, agreement or other 



 10
 









consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.


“Equity Interests”
means shares of capital stock, partnership interests, membership interests in a
limited liability company, beneficial interests in a trust or other equity
ownership interests in a Person. “ERISA” means the Employee Retirement Income
Security Act of 1974, as amended from time to time.


“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended from time to time.


“ERISA Affiliate”
means any trade or business (whether or not incorporated) that, together with the
Borrower, is treated as a single employer under Section 414(b) or (c) of
the Code or, solely for purposes of Section 302 of ERISA and Section 412
of the Code, is treated as a single employer under Section 414 of the
Code.


“ERISA Event”
means (a) any “reportable event”, as defined in Section 4043 of ERISA
or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an “accumulated funding deficiency” (as
defined in Section 412 of the Code or Section 302 of ERISA), whether
or not waived; (c) the filing pursuant to Section 412(d) of the
Code or Section 303(d) of ERISA of an application for a waiver of the
minimum funding standard with respect to any Plan; (d) the incurrence by
the Borrower or any of its ERISA Affiliates of any liability under Title IV of
ERISA with respect to the termination of any Plan; (e) the receipt by the
Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any
notice relating to an intention to terminate any Plan or Plans or to appoint a
trustee to administer any Plan; (f) the incurrence by the Borrower or any
of its ERISA Affiliates of any liability with respect to the withdrawal or partial
withdrawal from any Plan or Multiemployer Plan; (g) the receipt by the
Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer
Plan from the Borrower or any ERISA Affiliate of any notice, concerning the
imposition of Withdrawal Liability or a determination that a Multiemployer Plan
is, or is expected to be, insolvent or in reorganization, within the meaning of
Title IV of ERISA; or (h) the existence of any event or condition that
could reasonably be expected to constitute grounds under ERISA for the
termination of, or the appointment of a trustee to administer, any Plan.


“Estimated Borrowing Base
Amount” means the Borrowing Base Amount; provided
that for this purpose the assets and properties of Holdings and its subsidiaries
shall be deemed to have been pledged, on a first priority basis, to the Collateral
Agent for the benefit of the Lenders pursuant to the Senior Collateral Documents.


“Eurodollar”,
when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Adjusted LIBO Rate.


“Event of Default”
has the meaning assigned to such term in Article VII.


“Excess Cash Flow”
means, for any fiscal year, without duplication, of:


(a) net cash proceeds from operating activities
adjusted by net (repayments to) proceeds from accounts receivable
securitization as reflected in the statement of cash flows to the financial statements of
the Borrower filed with the SEC for the applicable fiscal year; minus


(b) the sum of (i) Consolidated Capital
Expenditures for such fiscal year (except to the extent attributable to the
incurrence of Capital Lease Obligations or synthetic lease obligations or
otherwise financed by incurring Long-Term Indebtedness (exclusive of Revolving
Loans), by issuing Equity Interests (exclusive of any issuance of Equity
Interests to the Borrower or any of the Subsidiaries and any amounts prepaid
pursuant to Section 2.11(c)(ii)), through the receipt of capital
contributions (other than capital contributions made by the Borrower or any of
the Subsidiaries) or 



 11
 









using the proceeds of any
disposition of assets outside the ordinary course of business or other proceeds
not included in Consolidated Net Income) plus (ii) cash consideration paid
during such fiscal year to make acquisitions or other capital investments
(except to the extent financed by incurring Long-Term Indebtedness (exclusive
of Revolving Loans), by issuing Equity Interests (other than to the Borrower or
any of the Subsidiaries), through the receipt of capital contributions (other
than capital contributions made by the Borrower or any of the Subsidiaries) or
using the proceeds of any disposition of assets outside the ordinary course of
business or other proceeds not included in Consolidated Net Income); minus


(c) the aggregate principal amount of Long-Term
Indebtedness repaid or prepaid (other than Refinancing Indebtedness) by the
Borrower and its Consolidated Subsidiaries during such fiscal year, excluding
Indebtedness in respect of Revolving Loans (except to the extent accompanied by
a corresponding reduction in Revolving Commitments pursuant to Section 2.08)
and Letters of Credit.


“Excluded Taxes”
means, with respect to any Agent, any Lender, any Issuing Bank or any other recipient
of any payment to be made by or on account of any obligation of the Borrower
hereunder, (a) income or franchise taxes imposed on (or measured by) its
net income by the United States of America, or by the jurisdiction under the
laws of which such recipient is organized or in which its principal office is
located or, in the case of any Lender, in which its applicable lending office
is located, (b) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction described in
clause (a) above and (c) in the case of a Foreign Lender (other than
an assignee pursuant to a request by the Borrower under Section 2.19(b)),
any withholding tax that (i) is in effect and would apply to amounts
payable to such Foreign Lender at the time such Foreign Lender becomes a party
to this Agreement (or designates a new lending office), except to the extent
that such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from the Borrower with respect to any withholding tax pursuant to Section 2.17(a),
or (ii) is attributable to such Foreign Lender’s failure to comply with Section 2.17(e).


“Existing Guaranteed
Unsecured Indebtedness” means Indebtedness outstanding as of the
Second Restatement Effective Date under the 9.25% Notes and the 8.625% Notes.


“Existing Non-Guaranteed
Indebtedness” means Indebtedness outstanding as of the Second
Restatement Effective Date under the Borrower’s 6.125% Notes due 2008, the
Borrower’s 6.875% Senior Debentures due 2013, the Borrower’s 7.70% Notes due
2027 and the Borrower’s 6.875% Notes due 2028.


“Existing Second Priority
Debt” means Indebtedness outstanding as of the Second Restatement
Effective Date under the 8.125% Notes, the 7.5% Notes and the 2017 7.5% Notes.


“Factoring Assets”
means any accounts receivable owed to the Borrower or any Subsidiary (whether
now existing or arising or acquired in the future) arising in the ordinary
course of business from the sale of goods or services, all collateral securing such
accounts receivable, all contracts and contract rights and all guarantees or
other obligations in respect of such accounts receivable, all proceeds of such
accounts receivable and other assets (including contract rights) which are of
the type customarily transferred in connection with the factoring of accounts
receivable and which are sold, transferred or otherwise conveyed by the
Borrower or a Subsidiary pursuant to a Factoring Transaction permitted by this
Agreement.


“Factoring Notice”
means a written notice delivered by the Borrower to the Administrative Agent at
least 30 days after the termination of any Securitization program indicating
that the Borrower or its Subsidiaries intend to engage in a Factoring Transaction.



 12















“Factoring Transaction”
means any transaction or series of transactions entered into by the Borrower
and any Subsidiaries pursuant to which the Borrower or such Subsidiaries sells,
conveys or otherwise transfers (or purports to sell, convey or otherwise transfer)
Factoring Assets of the Borrower or such Subsidiaries to a non-related third
party factor on market terms as determined in good faith by the senior
management of the Borrower; provided that (i) no
portion of any Indebtedness deemed to exist as a result of such Factoring
Transaction (x) is incurred or Guaranteed by the Borrower or any other
Subsidiary (in each case, other than as permitted pursuant to Section 6.01(a)(xvi)),
(y) is recourse to the Borrower or any other Subsidiary (in each case,
other than as permitted pursuant to Section 6.01(a)(xvi)) and (z) is
secured (contingently or otherwise) by any Lien on assets of the Borrower or
any other Subsidiary (other than by the Factoring Assets to be sold, conveyed
or transferred to the third party factor), (ii) such Factoring Transaction
is consummated pursuant to customary contracts, arrangements or agreements
entered into with respect to the sale, purchase and servicing of Factoring Assets
on market terms for similar factoring, and (iii) in connection with such
Factoring Transaction, the third party factor enters into an intercreditor
arrangement reasonably acceptable to the Collateral Agent.


“Federal Funds Effective
Rate” means, for any day, the weighted average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day that is a Business
Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the
quotations for such day for such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by it.


“Financial Covenant
Effectiveness Period” means each period on or after the Second
Restatement Effective Date commencing on and including any date on which Revolver
Availability is less than $100,000,000 and ending on and excluding the first
day thereafter, if any, which is the 30th consecutive calendar day on which
Revolver Availability is equal to or greater than $100,000,000.


“Financial Officer”
means the chief financial officer, principal accounting officer, treasurer, vice
president of financial accounting or controller of the Borrower. 


“Financial Statement
Delivery Date” means the first date after the Second Restatement
Effective Date on which a consolidated balance sheet of the Borrower including
the assets of Holdings and its subsidiaries is filed with the SEC.


“First Amendment to the
Amendment and Restatement” means the First Amendment dated as of June 4,
2007 to the Amendment and Restatement Agreement.


“First Amendment Effective
Date” shall have the meaning assigned to such term in the First
Amendment to the Amendment and Restatement.


“Foreign Lender”
means any Lender that is organized under the laws of a jurisdiction other than
that in which the Borrower is located. For purposes of this definition, the
United States of America, each State thereof and the District of Columbia shall
be deemed to constitute a single jurisdiction.


“GAAP” means
generally accepted accounting principles in the United States of America.


“Government Lockbox Account”
shall have the meaning assigned to such term in the Senior Subsidiary Security
Agreement.


“Government Lockbox Account
Agreement” shall have the meaning assigned to such term in the
Senior Subsidiary Security Agreement.


“Government Lockbox Account
Bank” shall have the meaning assigned to such term in the Senior
Subsidiary Security Agreement.



 13
 









“Governmental Authority”
means the government of the United States of America, any other nation or any
political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other
entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.


“Grantor” shall
have the meaning assigned to such term in the Senior Subsidiary Security
Agreement.


“Hazardous Materials”
means (a) petroleum products and byproducts, asbestos, urea formaldehyde
foam insulation, polychlorinated biphenyls, radon gas, chlorofluorocarbons and
all other ozone-depleting substances, or (b) any chemical, material,
substance, waste, pollutant or contaminant that is prohibited, limited or regulated
by or pursuant to any Environmental Law.


“Hedging Agreement”
means any rate swap transaction, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index swap, equity or equity
index option, bond option, interest rate option, foreign exchange transaction,
cap transaction, floor transaction, collar transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any other similar transaction
(including any option with respect to any of the foregoing transactions) or any
combination of the foregoing transactions.


“Holdings” means
The Jean Coutu Group (PJC) USA, Inc., a corporation organized under the
laws of the State of Delaware or, if the Reorganization (as defined in the
Stock Purchase Agreement dated as of August 23, 2006, pursuant to which
the Borrower intends to acquire all the outstanding Equity Interests in
Holdings) is consummated prior to the Second Restatement Effective Date, JCG
(PJC) USA, LLC, a limited liability company organized under the laws of the
State of Delaware.


“HIPAA” has the
meaning assigned to such term in Section 3.07.


“Incremental Commitment”
has the meaning assigned to such term in Section 2.21.


“Incremental Facility”
has the meaning assigned to such term in Section 2.21.


“Incremental Facility
Amendment” has the meaning assigned to such term in Section 2.21.


“Indemnified Taxes”
means Taxes other than Excluded Taxes.


“Inside Indebtedness”
means Indebtedness of the Borrower or any Subsidiary (other than intercompany
Indebtedness permitted by Section 6.01(a)(iii)) which matures on or before the
Tranche 2 Term Maturity Date and any portion of any other Indebtedness subject
to scheduled amortization on or before the Tranche 2 Term Maturity Date.


“Integration Capital
Expenditures” means, for any period, all capital expenditures that (a) are
directly attributable to the integration of the acquisition of Holdings and its
subsidiaries and (b) will not recur once the integration of such acquisition
of Holdings and its subsidiaries is complete.


“Integration Expenses”
means, for any period, all expenses that (a) are directly attributable to
the integration of the acquisition of Holdings and its subsidiaries and (b) will
not recur once the integration of such acquisition of Holdings and its subsidiaries
is complete.


“Interest Election Request”
means a request by the Borrower to convert or continue a Revolving Borrowing or
a Term Borrowing in accordance with Section 2.07.


“Interest Payment Date”
means (a) with respect to any ABR Loan (other than a Swingline Loan), the
last day of each March, June, September and December, (b) with
respect to any Eurodollar Loan, the last day of the Interest Period applicable
to the Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months’ duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months’ duration after the first day of such 



 14
 









Interest Period, and (c) with
respect to any Swingline Loan, the day that such Loan is required to be repaid.


“Interest Period”
means, with respect to any Eurodollar Borrowing, the period commencing on the
date of such Borrowing and ending (x) on the numerically corresponding day
in the calendar month that is one, two, three or six and, if agreed to by all
Lenders in the applicable Class, nine or 12 months thereafter, (y) in the
case of Revolving Loans, seven days thereafter or (z) in the case of
Revolving Loans, six weeks thereafter if, at the time of the relevant
Borrowing, all Lenders participating therein agree to make an interest period
of such duration available, in each case as the Borrower may elect; provided that (i) if any Interest Period would end on a
day other than a Business Day, such Interest Period shall be extended to the
next succeeding Business Day (unless, in the case of Interest Periods of one,
two, three or six months, such next succeeding Business Day would fall in the
next calendar month, in which case such Interest Period shall end on the next preceding
Business Day), (ii) any Interest Period of one, two, three or six months
that commences on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the last calendar month of
such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period and (iii) there shall be no more than two
Revolving Loans with a seven day Interest Period at any time outstanding. For
purposes hereof, the date of a Borrowing initially shall be the date on which
such Borrowing is made and thereafter shall be the effective date of the most
recent conversion or continuation of such Borrowing.


“Interim Collateral and
Guarantee Requirement” means the requirement that:


(a) the Administrative Agent shall have received
from each of Holdings and its domestic subsidiaries either (i) a
counterpart of, or a supplement to, each Interim Collateral Document duly
executed and delivered on behalf of such party or (ii) in the case of any
Person that becomes a domestic subsidiary of Holdings after the Second
Restatement Effective Date but before the Borrowing Base Date, a supplement to
each applicable Interim Collateral Document, in the form specified therein,
duly executed and delivered on behalf of such party;


(b) the Administrative Agent shall have received
from each Subsidiary Loan Party either (i) a counterpart of, or a
supplement to, the Interim Subsidiary Loan Party Guarantee Agreement duly
executed and delivered on behalf of such party or (ii) in the case of any
Person that becomes a Subsidiary Loan Party after the Second Restatement
Effective Date but before the Borrowing Base Date, a supplement to the Interim
Subsidiary Loan Party Guarantee Agreement, in the form specified therein, duly
executed and delivered on behalf of such party;


(c) all outstanding Equity Interests in each
domestic subsidiary of Holdings shall have been pledged pursuant to the Interim
Collateral and Guarantee Agreement and the Collateral Agent shall have received
certificates or other instruments representing all such Equity Interests (to
the extent certificated), together with undated stock powers or other instruments
of transfer with respect thereto endorsed in blank;


(d) (i) all documents and instruments,
including Uniform Commercial Code financing statements, required by law or
reasonably requested by the Administrative Agent to be filed, registered or
recorded to create the Liens intended to be created by the Interim Collateral
Documents and perfect such Liens to the extent required by, and with the
priority required by, this Agreement and the Interim Collateral Documents,
shall have been filed, registered or recorded or delivered to the
Administrative Agent for filing, registration or recording or (ii) the
Administrative Agent shall have been provided with all authorizations, consents
and approvals from each of Holdings and its domestic subsidiaries, Governmental
Authority and other Person reasonably requested by it to file, record or
register all documents and instruments referred to in clause (d)(i) of
this definition; and



 15
 









(e) each of Holdings and its domestic
subsidiaries shall have obtained all consents and approvals required to be
obtained by it in connection with the execution and delivery of all Interim
Collateral Documents to which it is a party, the performance of its obligations
thereunder and the granting by it of the Liens thereunder.


“Inventory” has
the meaning assigned to such term in the Intercompany Inventory Purchase Agreement.


“Investment” by
any Person in any other Person means (i) any direct or indirect loan,
advance or other extension of credit or capital contribution to or for the account of such other Person (by
means of any transfer of cash or other property to any Person or any payment
for property or services for the account or use of any Person, or otherwise), (ii) any
direct or indirect purchase or other acquisition of any Equity Interests, bond,
note, debenture or other debt or equity security or evidence of Indebtedness,
or any other ownership interest (including, any option, warrant or any other
right to acquire any of the foregoing), issued by such other Person, whether or
not such acquisition is from such or any other Person, (iii) any direct or
indirect payment by such Person on a Guarantee of any obligation of or for the
account of such other Person or any direct or indirect issuance by such Person
of such a Guarantee (provided, however, that for purposes of Section 6.04, payments
under Guarantees not exceeding the amount of the Investment attributable to the
issuance of such Guarantee will not be deemed to result in an increase in the
amount of such Investment) or (iv) any other investment of cash or other
property by such Person in or for the account of such other Person. Any
repurchase by the Borrower of its own Equity Interests or Indebtedness shall
not constitute an Investment for purposes of this Agreement. The amount of any
Investment shall be the original principal or capital amount thereof less all
returns of principal or equity thereon (and without adjustment by reason of the
financial condition of such other Person) and shall, if made by the transfer or
exchange of property other than cash, be deemed to have been made in an
original principal or capital amount equal to the fair market value of such
property at the time of such transfer or exchange.


“Issuing Bank Agreement”
has the meaning assigned to such term in Section 2.05(i).


“Issuing Banks”
means CNAI, JPMorgan Chase Bank, N.A., Bank of America, N.A. and any other
Lender designated as an Issuing Bank in accordance with the provisions of Section 2.05(k),
in each case in its capacity as an issuer of Letters of Credit hereunder, and
its successors in such capacity as provided in Section 2.05(i). An Issuing
Bank may, in its discretion, arrange for one or more Letters of Credit to be
issued by Affiliates of such Issuing Bank, in which case the term “Issuing
Banks” shall include any such Affiliate with respect to Letters of Credit
issued by such Affiliate.


“Joint Venture”
means, with respect to any Person, at any date, any other Person in whom such
Person directly or indirectly holds an Investment consisting of an Equity Interest, and whose
financial results would not be consolidated under GAAP with the financial
results of such Person on the consolidated financial statements of such Person,
if such statements were prepared in accordance with GAAP as of such date.


“LC Commitment”
means, with respect to each Issuing Bank, the commitment of such Issuing Bank
to issue Letters of Credit pursuant to Section 2.05. The initial amount of each
Issuing Bank’s LC Commitment is set forth on Schedule
2.01 or in such Issuing Bank’s Issuing Bank Agreement.


“LC Disbursement”
means a payment made by an Issuing Bank pursuant to a Letter of Credit.


“LC Exposure”
means, at any time, the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit at such time plus (b) the
aggregate amount of all
LC Disbursements that have not yet been reimbursed by or on behalf of the
Borrower at such time. The LC Exposure of any Revolving Lender at any time
shall be its Applicable Percentage of the total LC Exposure at such time.



 16
 









“Lenders” means
the Persons listed on Schedule 2.01
as having a Revolving Commitment, a Tranche 1 Term Commitment or a Tranche 2
Term Commitment and any other Person that shall have become a party hereto
pursuant to an Assignment and Acceptance, other than any such Person that
ceases to be a party hereto pursuant to an Assignment and Acceptance. Unless
the context otherwise requires, the term “Lenders” includes the Swingline
Lender.


“Letter of Credit”
means any letter of credit issued pursuant to this Agreement.


“Leverage Ratio”
means, on any date, the ratio of (a) Total Indebtedness as of such date to
(b) Consolidated EBITDA for the period of the four fiscal quarters most
recently completed on or prior to such date.


“LIBO Rate”
means, with respect to any Eurodollar Borrowing for any Interest Period, the
rate appearing on Page 3750 of the Telerate Service (or on any successor
or substitute page of such Service, or any successor to or substitute for
such Service, providing rate quotations comparable to those currently provided
on such page of such Service, as determined by the Administrative Agent from
time to time for purposes of providing quotations of interest rates applicable
to dollar deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, as the rate for dollar deposits with a maturity comparable to such
Interest Period. In the event that such rate is not available at such time for
any reason, then the “LIBO Rate” with
respect to such Eurodollar Borrowing for such Interest Period shall be the rate
rounded upwards, if necessary, to the next 1/100 of 1% at which dollar deposits
of $5,000,000 and for a maturity comparable to such Interest Period are offered
by the principal London office of the Administrative Agent in immediately
available funds in the London interbank market at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest Period.


“LIFO Adjustments”
means, for any period, the net adjustment to costs of goods sold for such
period required by the Borrower’s LIFO inventory method, determined in
accordance with GAAP.


“Loan Parties”
means the Borrower and the Subsidiary Loan Parties.


“Loans” means
the loans made by the Lenders to the Borrower pursuant to this Agreement.


“Lockbox Account”
shall have the meaning assigned to such term in the Senior Subsidiary Security
Agreement.


“Long-Term Indebtedness”
means any Indebtedness that, in accordance with GAAP, constitutes (or, when
incurred, constituted) a long-term liability.


“Margin Stock”
means “margin stock”, as such term is defined in Regulation U of the Board.


“Material Adverse Effect”
means a material adverse effect on (a) the business, assets, operations,
properties, condition (financial or otherwise), or prospects of the Borrower
and the Subsidiaries, taken as a whole, (b) the ability of any Loan Party
to perform any of its material obligations under any Senior Loan Document to
which it is a party or (c) the legality, validity or enforceability of the
Senior Loan Documents (including, without limitation, the validity,
enforceability or priority of security interests granted thereunder) or the
rights of or benefits available to the Lenders under any Senior Loan Document.


“Material Indebtedness”
means Indebtedness (other than the Loans and Letters of Credit), or obligations
in respect of one or more Hedging Agreements, of any one or more of the
Borrower and the Subsidiaries in an aggregate principal amount exceeding
$50,000,000. For purposes of this definition, the “principal amount” of the obligations
of the Borrower or any Subsidiary in respect of any Hedging Agreement at any
time shall be the maximum aggregate amount (giving effect to any netting agreements)
that the Borrower or such Subsidiary would be required to pay if such Hedging
Agreement were terminated at such time.



 17
 









“Maximum Rate”
has the meaning assigned to such term in Section 9.13.


“Multiemployer Plan”
means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.


“Net Proceeds”
means, with respect to any event (a) the cash proceeds received in respect
of such event including (i) any cash received in respect of any noncash proceeds,
but only as and when received, (ii) in the case of a casualty, insurance proceeds
and (iii) in the case of a condemnation or similar event, condemnation
awards and similar payments, net of (b) the
sum of (i) all reasonable fees and out-of-pocket expenses paid by the
Borrower and the Subsidiaries to third parties (other than Affiliates) in
connection with such event, (ii) in the case of a sale, transfer or other
disposition of an asset (including pursuant to a sale and leaseback transaction
or a casualty or a condemnation or similar proceeding), the amount of all
payments required to be made by the Borrower and the Subsidiaries as a result
of such event to repay Indebtedness (other than Loans) secured by such asset
and (iii) the amount of all taxes paid (or reasonably estimated to be
payable) by the Borrower and the Subsidiaries, and the amount of any reserves
established by the Borrower and the Subsidiaries to fund contingent liabilities
reasonably estimated to be payable, in each case during the year that such
event occurred or the next succeeding year and that are directly attributable
to such event (as determined reasonably and in good faith by a Financial
Officer).


“Net Orderly Liquidation
Rate” means, with respect to any type of inventory, at any date of
determination, the net orderly liquidation rate with respect to such type of
inventory, expressed as a percentage of carrying cost after giving effect to reserves,
as determined by Hilco Appraisal Services, LLC (or another appraisal firm chosen
by the Collateral Agent) in connection with the most recent appraisal of
inventory of the Borrower and the Subsidiaries.


“New Notes”
means one or more tranches of the Borrower’s notes issued or sold on or about
the Second Restatement Effective Date in one or more public offerings or Rule 144A/Regulation
S offerings or other private placements.


“Offer Period” has
the meaning assigned to such term in Section 2.21.


“Operating Subsidiary”
has the meaning assigned to such term in the Intercompany Inventory Purchase
Agreement.


“Optional Debt Repurchase”
means any optional or voluntary repurchase, redemption, retirement or
defeasance for cash by the Borrower or any Subsidiary of any publicly-traded Indebtedness of
the Borrower.


“Original Agreement”
means this Agreement, including all amendments hereto and waivers hereof
effective prior to the Second Restatement Effective Date, as in effect
immediately prior to the Second Restatement Effective Date.


“Other Inventory”
means all inventory other than Pharmaceutical Inventory.


“Other Inventory Advance
Rate” means the other inventory advance rate determined in
accordance with Section 2.20.


“Other Taxes”
means any and all present or future recording, stamp, documentary, excise,
transfer, sales, property or similar taxes, charges or levies arising from any
payment made under any Senior Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Senior Loan Document.


“Outside Indebtedness”
means Indebtedness of the Borrower or any Subsidiary (other than intercompany
Indebtedness permitted by Section 6.01(a)(iii)) that matures after the
Tranche 2 Term Maturity Date, including the amount of any scheduled amortization
after the Tranche 2 Term Maturity Date.



 18















“Parent Undertaking”
means an agreement by the Borrower to cause a Subsidiary other than a
Securitization Vehicle to perform its obligations under the instruments
governing a Securitization which agreement (a) contains terms that are customarily
included in securitizations of accounts receivable involving comparable companies
and (b) does not provide for any Guarantee of payment or other credit
support in respect of Securitization Assets or Third Party Interests.


“Participant”
has the meaning assigned to such term in Section 9.04(c)(i).


“PBGC” means the
Pension Benefit Guaranty Corporation referred to and defined in ERISA and any
successor entity performing similar functions.


“Perfection Certificate”
means a certificate in the form of Schedule 8 to the Senior Subsidiary Security
Agreement or any other form approved by the Agents.


“Permitted Encumbrances” means:


(a) Liens imposed by
law for taxes that are not yet due or are being contested in compliance with Section 5.05;


(b) carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens
imposed by law, arising in the ordinary course of business and securing
obligations that are not overdue by more than 60 days or are being contested in
compliance with Section 5.05;


(c) pledges and deposits
made in the ordinary course of business in compliance with workers’
compensation, unemployment insurance and other social security laws or
regulations;


(d) deposits to
secure the performance of bids, trade contracts, leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature, in each case in the ordinary course of business;


(e) judgment liens in
respect of judgments that do not constitute an Event of Default under clause (k) of
Article VII;


(f) easements, zoning
restrictions, rights-of-way and similar encumbrances on real property imposed
by law or arising in the ordinary course of business that do not secure any
monetary obligations and do not materially detract from the value of the
affected property or interfere with the ordinary conduct of business of the
Borrower or any Subsidiary;


(g) licenses,
sublicenses, leases or subleases granted in the ordinary course of business
with respect to real property; and


(h) landlord Liens
arising by law securing obligations not overdue by more than 60 days or being
contested in good faith;


provided that the term “Permitted Encumbrances” shall
not include any Lien securing Indebtedness.


“Permitted Second Priority
Debt” means Second Priority Debt of the Borrower; provided that (a) the terms of any such Indebtedness,
and of any agreement entered into and of any instrument issued in connection
therewith, are otherwise permitted by the Senior Loan Documents, (b) if
such Indebtedness is issued or incurred to refinance existing Indebtedness,
such Indebtedness has a later maturity and a longer weighted average life than
such existing Indebtedness, (c) such Indebtedness bears an interest rate
not in excess of the market interest rate with respect to such type of Indebtedness
as of the time of its issuance or incurrence, (d) at the option of the Borrower,
such Indebtedness may contain market call and make-whole provisions as of the
time of its issuance or incurrence, (e) the senior management of the
Borrower determines in good faith that such Indebtedness contains covenants
(including with respect to amortization and convertibility) and events of
default on market terms and (f) notwithstanding clause (ii) of the 



 19
 









definition of “Second
Priority Debt”, such Indebtedness may mature prior to the date that is three
months after the Tranche 2 Term Maturity Date.


“Permitted Unsecured
Indebtedness” means unsecured Indebtedness of the Borrower; provided that (a) the terms of any such Indebtedness,
and of any agreement entered into and of any instrument issued in connection
therewith, are otherwise permitted by the Senior Loan Documents, (b) if
such Indebtedness is issued or incurred to refinance existing Indebtedness,
such Indebtedness has a later maturity and a longer weighted average life than
such existing Indebtedness, (c) such Indebtedness bears an interest rate
not in excess of the market interest rate with respect to such type of Indebtedness
as of the time of its issuance or incurrence, (d) at the option of the Borrower,
such Indebtedness may contain market call and make-whole provisions as of the
time of its issuance or incurrence and (e) the senior management of the
Borrower determines in good faith that such Indebtedness contains covenants
(including with respect to amortization and convertibility) and events of
default on market terms.


“Person” means
any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental Authority or other
entity.


“Pharmaceutical Inventory”
means all inventory consisting of products that can be dispensed only on order
of a licensed professional.


“Pharmaceutical Inventory
Advance Rate” means the pharmaceutical inventory advance rate
determined in accordance with Section 2.20.


“Plan” means any
employee pension benefit plan (other than a Multiemployer Plan) subject to the
provisions of Title IV of ERISA or Section 412 of the Code or Section 302
of ERISA, and in respect of which the Borrower or any ERISA Affiliate has any
liability or is (or, if such plan were terminated, would under Section 4069
of ERISA be deemed to be) an “employer” as defined in Section 3(5) of
ERISA.


“Platform” has
the meaning assigned to such term in Section 9.16(b).


“Preferred Stock”
means, with respect to any corporation, capital stock issued by such
corporation that is entitled to a preference or priority, in respect of dividends
or distributions upon liquidation, over some other class of capital stock
issued by such corporation.


“Prepayment Event” means:


(a) any sale, transfer or other
disposition (including pursuant to a sale and leaseback transaction) of any
property or asset of the Borrower or any Subsidiary, other than (i) sales,
transfers or other dispositions described in clauses (i), (iii), (iv), (vi) and
(vii) of Section 6.05, (ii) sales, transfers or other
dispositions described in clause (v) of Section 6.05 to the extent
the resulting aggregate Net Proceeds from all such sales, transfers or other
dispositions do not exceed $50,000,000 and (iii) other sales, transfers or
dispositions resulting in aggregate Net Proceeds not exceeding $10,000,000
during any fiscal year of the Borrower; or


(b) any casualty or other insured
damage to, or any taking under power of eminent domain or by condemnation or
similar proceeding of, any property or asset of the Borrower or any Subsidiary;
or


(c) the issuance by the Borrower
or any Subsidiary of any Equity Interests, or the receipt by the Borrower or
any Subsidiary of any capital contribution, other than (i) any such
issuance of Equity Interests to, or receipt of any such capital contribution
from, the Borrower or a Subsidiary or (ii) any such issuance of Equity
Interests to the extent the proceeds of such issuance are used to fund a
Business Acquisition; or


(d) the incurrence by the Borrower
or any Subsidiary of any Indebtedness, other than (i) Indebtedness
described in clauses (i), (ii), (iii), (iv), (v), (vi), (ix), (x), (xi), (xii),
(xiii), (xiv), (xv), 



 20
 









(xvi), (xvii) and (xviii) of Section 6.01(a), (ii) extensions,
renewals, refinancings or replacements of Indebtedness described in clauses (vii) and
(viii) of Section 6.01(a) and (iii) Indebtedness described
in clauses (vii) and (viii) of Section 6.01(a) to the
extent the proceeds of such Indebtedness are used to fund a Business Acquisition.


“Qualified Preferred Stock”
means Preferred Stock of the Borrower that does not require any cash payment
(including in respect of redemptions or repurchases), other than in respect of
cash dividends, before the date that is six months after the Tranche 2 Term
Maturity Date.


“Refinancing Indebtedness”
means Indebtedness (which shall be deemed to include Attributable Debt solely
for the purposes of this definition) issued or incurred (including by means of
the extension or renewal of existing Indebtedness) to extend, renew or
refinance existing Indebtedness or Attributable Debt (“Refinanced
Debt”); provided that (i) the
terms of any such Indebtedness, and of any agreement entered into and of any
instrument issued in connection therewith, are otherwise permitted by the Senior
Loan Documents, (ii) such extending, renewing or refinancing Indebtedness
is in an original aggregate principal amount not greater than the aggregate
principal amount of, and unpaid interest on, the Refinanced Debt plus the
amount of any premiums paid thereon and fees and expenses associated therewith,
(iii) such Indebtedness (x) does not mature or require scheduled
payments of principal prior to the date that is three months after the Tranche
2 Term Maturity Date and (y) has a later maturity and a longer weighted
average life than the Refinanced Debt, (iv) such Indebtedness bears an
interest rate not in excess of the market interest rate with respect to such
type of Indebtedness as of the time of its issuance or incurrence, (v) at the
option of the Borrower, such Indebtedness may contain market call and
make-whole provisions as of the time of its issuance or incurrence, (vi) if
the Refinanced Debt or any Guarantees thereof are subordinated to the Senior
Obligations (or prior to the Borrowing Base Date the Interim Obligations), such
Indebtedness shall be subordinated to the Senior Obligations or the Interim
Obligations, as the case may be, on terms no less favorable, taken as a whole,
to the holders of the Senior Obligations or the Interim Obligations, as the
case may be, than the subordination terms of such Refinanced Debt or Guarantees
thereof (and no Loan Party, Holdings, nor any of its subsidiaries that has not
guaranteed such Refinanced Debt guarantees such Indebtedness), (vii) the
senior management of the Borrower determines in good faith that such
Indebtedness contains covenants (including with respect to amortization and
convertibility) and events of default on market terms, (viii) such Indebtedness
is benefited by Guarantees (if any) which, taken as a whole, are not materially
less favorable to the Lenders than the Guarantees (if any) in respect of such Refinanced
Debt, (ix) if such Refinanced Debt or any Guarantees thereof are secured, such
Indebtedness and any Guarantees thereof are either unsecured or secured only by
such property or assets as secured the Refinanced Debt and Guarantees thereof
and not any additional property or assets of the Borrower or any Subsidiary
(other than (A) property or assets acquired after the issuance or
incurrence of such Refinancing Indebtedness that would have been subject to the
Lien securing refinanced Indebtedness if such Indebtedness had not been
refinanced, (B) additions to the property or assets subject to the Lien
and (C) the proceeds of the property or assets subject to the Lien), (x) if
such Refinanced Debt and any Guarantees thereof are unsecured, such
Indebtedness and Guarantees thereof are also unsecured and (xi) any Net Cash
Proceeds of such Indebtedness are used no later than 45 days following receipt
thereof to repay the Refinanced Debt and pay any accrued interest, fees,
premiums (if any) and expenses in connection therewith.


“Register” has
the meaning set forth in Section 9.04.


“Related Parties”
means, with respect to any specified Person, such Person’s Affiliates and the
directors, officers, employees, agents, trustees and advisors of such Person
and such Person’s Affiliates.


“Repurchase Expenditures”
means, with respect to any Optional Debt Repurchase, the aggregate amount of
expenditures made or required to be made to effect such Optional Debt
Repurchase, including without limitation payments on account of principal,
premium and fees payable to holders of the Indebtedness purchased or reacquired
in connection with such Optional Debt Repurchase, but excluding 



 21
 









payments representing
accrued interest to the date of such Optional Debt Repurchase and excluding fees
and expenses paid to third parties in connection therewith.


“Required Lenders”
means, at any time, Lenders having Revolving Exposures, outstanding Term Loans
and unused Commitments representing more than 50% of the sum of the total
Revolving Exposures, outstanding Term Loans and unused Commitments at such
time.


“Requirement of Law”
means, with respect to any Person, the charter and by-laws or other
organizational or governing documents of such Person, and any law, rule or
regulation (including Environmental Laws, the Code and ERISA) or order, decree or
other determination of an arbitrator or a court or other Governmental Authority
applicable to or binding upon such Person or any of its property or assets or
to which such Person or any of its property or assets is subject.


“Restricted Payment”
means any dividend or other distribution (whether in cash, securities or other
property, except dividends payable solely in shares of the Borrower’s common
stock or Qualified Preferred Stock) with respect to any Equity Interests in the
Borrower or any Subsidiary, or any payment (whether in cash, securities or
other property, except payments made solely with common equity), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement, acquisition,
cancelation or termination of any Equity Interests in the Borrower or any Subsidiary
or any option, warrant or other right to acquire any such Equity Interests in
the Borrower or any Subsidiary; provided that
in no event shall any exchange of Qualified Preferred Stock with other
Qualified Preferred Stock be deemed a Restricted Payment.


“Revolver Availability”
means, on any date of determination, the maximum amount of Revolving Loans that
could be made to the Borrower on such date pursuant to Section 2.01(b) pursuant
to the use of unused Commitments on such date.


“Revolving Availability
Period” means the period from and including the Second Restatement
Effective Date to but excluding the earlier of the Revolving/Tranche 1 Term
Maturity Date and the date of termination of the Revolving Commitments.


“Revolving Commitment”
means, with respect to each Lender, the commitment, if any, of such Lender to
make Revolving Loans and to acquire participations in Letters of Credit and
Swingline Loans hereunder, expressed as an amount representing the maximum
aggregate amount of such Lender’s Revolving Exposure hereunder, as such commitment
may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced
or increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04. The initial amount of each Lender’s Revolving
Commitment is set forth on Schedule 2.01,
or in the Assignment and Acceptance pursuant to which such Lender shall have
assumed its Revolving Commitment, as applicable. The aggregate amount of the
Lenders’ Revolving Commitments on the Second Restatement Effective Date is
$1,750,000,000.


“Revolving Exposure”
means, with respect to any Lender at any time, the sum of the outstanding
principal amount of such Lender’s Revolving Loans and its LC Exposure and
Swingline Exposure at such time.


“Revolving Lender”
means a Lender with a Revolving Commitment or, if the Revolving Commitments
have terminated or expired, a Lender with a Revolving Exposure.


“Revolving Loan”
means a Loan made pursuant to clause (b) of Section 2.01.


“Revolving/Tranche 1 Term Maturity Date” means September 30,
2010.


“Script Lists Advance Rate”
means the Script Lists advance rate determined in accordance with Section 2.20.



 22
 









“Second Priority Debt”
means any Indebtedness (including the 8.125% Notes, 7.5% Notes and the 2017
7.5% Notes) incurred by Rite Aid and Guaranteed by the Subsidiary Guarantors on
or after the Effective Date pursuant to the Second Priority Subsidiary
Guarantee Agreement (i) which is secured by the Second Priority Collateral
on a pari passu basis (other than as provided
by the terms of the applicable Second Priority Debt Documents) with the other
Second Priority Debt Obligations and (ii) if issued on or after the Second
Restatement Effective Date, matures after the date that is three months after
the Tranche 2 Term Maturity Date; provided, however, that (A) such Indebtedness is permitted to be
incurred, secured and Guaranteed on such basis by each Senior Loan Document and
each Second Priority Debt Document and (B) the Representative for the
holders of such Second Priority Debt shall have become party to the Collateral
Trust and Intercreditor Agreement pursuant to, and by satisfying the conditions
set forth in, Section 8.12 thereof. Second Priority Debt shall include any
Registered Equivalent Notes issued in exchange thereof.


“Second Restatement Date
Amount” means the aggregate principal amount of Tranche 2 Loans that
the Borrower is permitted under instruments governing its Indebtedness to, on
the Second Restatement Effective Date, borrow and secure by the Liens created
under the Interim Collateral Documents.


“Securitization”
means any transaction or series of transactions entered into by the Borrower
and any Subsidiaries pursuant to which the Borrower or such Subsidiaries sell,
convey or otherwise transfer (or purport to sell, convey or otherwise transfer)
Securitization Assets to a Securitization Vehicle or another Subsidiary which sells,
conveys or otherwise transfers (or purports to sell, convey or otherwise
transfer) Securitization Assets to a Securitization Vehicle, and such
Securitization Vehicle finances the acquisition of such Securitization Assets (i) with
proceeds from the issuance of Third Party Interests, (ii) with Sellers’
Retained Interests, (iii) with proceeds from the sale or collection of
Securitization Assets previously purchased by such Securitization Vehicle or (iv) with
proceeds from the sale of Securitization Assets to another Securitization
Vehicle. For purposes of this Agreement, the “amount” or “principal amount” of
any Securitization shall be deemed at any time to be (1) the aggregate principal
or stated amount of the Third Party Interests (which stated amount may be described
as a “net investment”, “capital”, “invested amount” or similar term reflecting the
amount invested in any beneficial interest constituting a Third Party Interest)
incurred or issued pursuant to such Securitization, in each case outstanding at
such time, or (2) in the case of any Securitization in respect of which no
such principal or stated amount is determinable, the cash purchase price paid
by the buyer in connection with its purchase of Third Party Interests less the
amount of collections received in respect of such Third Party Interests and
paid to such buyer, excluding any amounts applied to purchase fees or discount
or in the nature of interest.


“Securitization Assets”
means any accounts receivable owed to the Borrower or any Subsidiary (whether
now existing or arising or acquired in the future) arising in the ordinary
course of business from the sale of goods or services, all collateral securing
such accounts receivable, all contracts and contract rights and all guarantees
or other obligations in respect of such accounts receivable, all proceeds of
such accounts receivable and other assets (including contract rights) which are
the type customarily transferred in connection with securitizations of accounts
receivable and which are sold, transferred or otherwise conveyed (or purported
to be sold, transferred or otherwise conveyed) by the Borrower or a Subsidiary
to a Securitization Vehicle in connection with a Securitization permitted by
Sections 6.01 and 6.05.


“Securitization Vehicle”
means a Person that is a direct or indirect wholly owned Subsidiary used solely
for the purpose of effecting one or more Securitizations to which the Borrower
and/or Subsidiaries and/or another Securitization Vehicle transfer Securitization
Assets and which, in connection with such Securitization either issues Third
Party Interests or transfers such Securitization Assets to another
Securitization Vehicle that issues Third Party Interests; provided,
in each case, that (i) each such Person shall engage in no business other
than the purchase of Securitization Assets pursuant to Securitizations
permitted by Sections 6.01 and 6.05, the issuance of Third Party Interests and
any activities reasonably related thereto, (ii) no portion of the
Indebtedness or other obligations (contingent or otherwise) of such 



 23
 









Person (x) is
Guaranteed by the Borrower or any other Subsidiary, other than any Guarantee of
obligations (other than of principal of, or interest on, Indebtedness) that may
be deemed to exist solely by virtue of Standard Securitization Undertakings, (y) is
recourse to the Borrower or any other Subsidiary other than by virtue of
Standard Securitization Undertakings and (z) is secured (contingently or otherwise)
by any Lien on assets of the Borrower or any other Subsidiary other than by virtue
of Standard Securitization Undertakings, (iii) such Person has no
contract, agreement, arrangement or understanding with the Borrower or any
other Subsidiary other than (A) customary contracts, arrangements or
agreements entered into with respect to the sale, purchase and servicing of
Securitization Assets on market terms for similar securitization transactions
and (B) Guarantees and pledges of security as required by the Senior Loan
Documents and the Second Priority Debt Documents and (iv) neither the Borrower
nor any Subsidiary has any obligations to maintain or preserve such Person’s financial
condition or cause it to achieve certain levels of operating results other than
pursuant to Standard Securitization Undertakings.


“Seller” means
The Jean Coutu Group (PJC) Inc., a corporation organized under the laws of
Quebec.


“Sellers’ Retained
Interests” means the debt or equity interests held by the Borrower
or any Subsidiary in a Securitization Vehicle to which Securitization Assets have
been transferred (or purported to have been transferred) in a Securitization
permitted by Sections 6.01 and 6.05, including any such debt or equity received
in consideration for the Securitization Assets transferred.


“Series E Preferred
Stock” means the Borrower’s 7% Series E mandatory convertible
preferred stock issued prior to the Second Restatement Effective Date.


“Series G Preferred
Stock” means the Borrower’s 7% Series G cumulative, convertible
pay-in-kind preferred stock held by Green Equity Investors III, L.P. or one of
its Affiliates on the Second Restatement Effective Date.


“Series H Preferred
Stock” means the Borrower’s 6% Series H cumulative, convertible
pay-in-kind preferred stock held by Green Equity Investors III, L.P. or one of
its Affiliates on the Second Restatement Effective Date.


“Series I Preferred
Stock” means the Borrower’s 5.5% Series I mandatory convertible
preferred stock issued prior to the Second Restatement Effective Date.


“Standard Securitization
Undertakings” means representations, warranties, covenants and
indemnities made by the Borrower or a Subsidiary in connection with Securitizations
permitted by Sections 6.01 and 6.05 which representations, warranties, covenants
and indemnities are customarily included in securitizations of accounts receivable
involving comparable companies.


“Statutory Reserve Rate”
means a fraction (expressed as a decimal), the numerator of which is the number
one and the denominator of which is the number one minus
the aggregate of the maximum reserve percentages expressed as a decimal (including
any marginal, special, emergency or supplemental reserves) established by the Board
to which the Administrative Agent is subject with respect to eurocurrency
funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of
the Board). Such reserve percentages shall include those imposed pursuant to
such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency
funding and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D or any comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.


“Store” means
any retail store (which may include any real property, fixtures, equipment,
inventory and script files related thereto) operated, or to be operated, by any
Subsidiary Loan Party (and, prior to the Borrowing Base Date, Holdings or any
of its subsidiaries).



 24















“subsidiary”
means, with respect to any Person (the “parent”) at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent’s consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as
any other corporation, limited liability company, partnership, association or
other entity of which securities or other ownership interests representing more
than 50% of the ordinary voting power or, in the case of a partnership, more
than 50% of the general partnership interests are, as of such date, owned,
controlled or held by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.


“Subsidiary”
means any subsidiary of the Borrower.


“Subsidiary Loan Party”
means each Subsidiary set forth on Schedule 1.01 hereto
and any wholly-owned Domestic Subsidiary, including any Securitization Vehicle that
is a Domestic Subsidiary, that owns any assets consisting of inventory,
accounts receivable, intellectual property, or script lists; provided that (a) no Subsidiary that engages solely in
the Borrower’s pharmacy benefits management business shall be deemed a
Subsidiary Loan Party and (b) Holdings and its subsidiaries shall not be Subsidiary
Loan Parties prior to the Borrowing Base Date.


“Supermajority Lenders”
means, at any time, Lenders having Revolving Exposures, outstanding Term Loans
and unused Commitments representing more than 66-2/3% of the aggregate
Revolving Exposures, outstanding Term Loans and unused Commitments of all
Lenders at such time.


“Swingline Exposure”
means, at any time, the aggregate principal amount of all Swingline Loans outstanding
at such time. The Swingline Exposure of any Lender at any time shall be its
Applicable Percentage of the total Swingline Exposure at such time.


“Swingline Lender”
means CNAI, in its capacity as the lender of Swingline Loans hereunder.


“Swingline Loan”
means a Loan made pursuant to Section 2.04.


“Taxes” means
any and all present or future taxes, levies, imposts, duties, deductions,
charges or withholdings imposed by any Governmental Authority.


“Term Loans”
means the Tranche 1 Term Loans and the Tranche 2 Term Loans, or any combination
thereof (as the context requires).


“Third Party Interests”
means, with respect to any Securitization, notes, bonds or other debt
instruments, beneficial interests in a trust, ownership interests (including
any fractional undivided interests) in a pool or pools of accounts receivable
or other interests or securities issued or sold for cash consideration by a
Securitization Vehicle to banks, investors or other financing sources (other
than the Borrower or its Subsidiaries) the proceeds of which are used to
finance, in whole or in part, the purchase by such Securitization Vehicle of
accounts receivables or other Securitization Assets in a Securitization.


“Total Indebtedness”
means, as of any date, the sum of the aggregate principal amount of
Indebtedness of the Borrower and its Consolidated Subsidiaries outstanding as
of such date, in the amount that would be reflected on a balance sheet prepared
as of such date on a consolidated basis in accordance with GAAP plus, without duplication, the aggregate outstanding amount
of Third Party Interests (which amount may be described as a “net investment”, “capital”,
“invested amount”, “principal amount” or similar term reflecting the aggregate
amount invested in beneficial interests constituting Third Party Interests).


“Tranche 1 Term Lender”
means a Lender with a Tranche 1 Term Commitment or an outstanding Tranche 1
Term Loan.


“Tranche 2 Term Lender”
means a Lender with a Tranche 2 Term Commitment or an outstanding Tranche 2
Term Loan.



 25
 









“Tranche 1 Term Loans”
means Loans made or deemed made under clause (a) of Section 2.01.


“Tranche 2 Term Loans”
means Loans made or deemed made under clause (c) of Section 2.01.


“Tranche 1 Term Commitment”
means, with respect to each Lender, the commitment, if any, of such Lender to
make a Tranche 1 Term Loan hereunder on the First Restatement Effective Date,
expressed as an amount representing the maximum principal amount of the Tranche
1 Term Loans to be made by such Lender hereunder, as such commitment may be (a) reduced
from time to time pursuant to Section 2.08 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender pursuant
to Section 9.04. The initial amount of each Lender’s Tranche 1 Term Commitment
is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Tranche 1 Term Commitment, as applicable. The aggregate amount of the Lenders’
Tranche 1 Term Commitments on the First Restatement Effective Date is $145,000,000.


“Tranche 2 Term Commitment”
means, with respect to each Lender, the commitment, if any, of such Lender to
make a Tranche 2 Term Loan hereunder on the Second Restatement Effective Date,
expressed as an amount representing the maximum principal amount of the Tranche
2 Term Loans to be made by such Lender hereunder, as such commitment may be (a) reduced
from time to time pursuant to Section 2.08 and (b) reduced or increased
from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04.
The initial amount of each Lender’s Tranche 2 Term Commitment is set forth on
Schedule 2.01, or in the Assignment and Acceptance pursuant to which such
Lender shall have assumed its Tranche 2 Term Commitment, as applicable. The
aggregate amount of the Lenders’ Tranche 2 Term Commitments on the Second
Restatement Effective Date is $1,105,000,000.


“Tranche 2 Term Maturity
Date” means June 4, 2014.


“Transactions”
means the execution, delivery and performance by the Borrower, the Subsidiary
Loan Parties and Holdings and its subsidiaries, as applicable, of the Amendment
and Restatement Agreement and each other document contemplated thereby to be
executed on the Second Restatement Effective Date or the Borrowing Base Date to
which it is a party, the borrowing of Tranche 2 Term Loans, the use of proceeds
thereof and the other transactions to be effected on the Second Restatement
Effective Date (including the Acquisition).


“Type”, when
used in reference to any Loan or Borrowing, refers to whether the rate of
interest on such Loan, or on the Loans comprising such Borrowing, is determined
by reference to the Adjusted LIBO Rate or the Alternate Base Rate.


“USA Patriot Act”
means the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001.


“Withdrawal Liability”
means liability to a Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are defined in Title IV
of ERISA.


SECTION 1.02.   Classification of Loans and
Borrowings.   For purposes of this Agreement, Loans may be
classified and referred to by Class (e.g., a “Revolving
Loan”) or by Type (e.g., a “Eurodollar
Loan”) or by Class and Type (e.g., a “Eurodollar
Revolving Loan”). Borrowings also may be classified and referred to by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a “Eurodollar Borrowing”) or by Class and Type (e.g., a “Eurodollar Revolving Borrowing”).


SECTION 1.03.   Terms Generally.   The
definitions of terms herein shall apply equally to the singular and plural
forms of the terms defined. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation”. The word “will” shall be construed to have the same meaning and
effect as the word “shall”. Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document herein
shall be 



 26
 









construed as referring to
such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein); provided, however, that
amendments to the Indentures and the Second Priority Debt Documents after the
Second Restatement Effective Date shall be effective for purposes of references
thereto in this Agreement and the other Senior Loan Documents only if such amendments
are permitted hereunder or are consented to in writing for such purpose by the
Required Lenders (or such other percentage of the Lenders as may be specified herein),
(b) any reference herein to any Person shall be construed to include such Person’s
successors and assigns, (c) the words “herein”, “hereof” and “hereunder”,
and words of similar import, shall be construed to refer to this Agreement in
its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words “asset” and “property” shall be construed
to have the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract
rights.


SECTION 1.04.   Accounting Terms; GAAP.   Except
as otherwise expressly provided herein, all terms of an accounting or financial
nature shall be construed in accordance with GAAP, as in effect from time to
time; provided that, if the Borrower notifies
the Administrative Agent that the Borrower requests an amendment to any
provision hereof to eliminate the effect of any change occurring after the
Second Restatement Effective Date in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision shall
be interpreted on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.


SECTION 1.05.   Terms
Defined in Definitions Annex.   Capitalized terms used in this
Agreement that are not defined in Section 1.01 shall have the meanings assigned
to such terms in the Definitions Annex (but any definition of such a term in
the Definitions Annex shall be disregarded for purposes hereof if such term is
also defined in Section 1.01).


ARTICLE II


The Credits


SECTION 2.01.   Commitments.   (a) Subject
to the terms and conditions set forth herein, each Lender made a Tranche 1 Term
Loan to the Borrower on the First Restatement Effective Date in an aggregate
principal amount not exceeding its Tranche 1 Term Commitment. Amounts repaid or
prepayed in respect of Tranche 1 Term Loans may not be reborrowed.


(b) Subject to the terms and conditions set forth
herein, each Lender agrees to make Revolving Loans to the Borrower from time to
time during the Revolving Availability Period in an aggregate principal amount
that will not result in such Lender’s Revolving Exposure exceeding the lesser
of (i) such Lender’s Revolving Commitment and (ii) such Lender’s
Applicable Percentage of an amount equal to (A) the Borrowing Base Amount
in effect at such time minus (B) the
sum of (1) the outstanding Tranche 1 Term Loans at such time and (2) prior
to the Borrowing Base Date, zero and from and after the Borrowing Base Date,
the outstanding Tranche 2 Term Loans at such time. Within the foregoing limits
and subject to the terms and conditions set forth herein, the Borrower may
borrow, prepay and reborrow Revolving Loans.


(c) Subject to the terms and conditions set forth
herein, each Lender agrees to make its pro rata share of the
Tranche 2 Term Loans to be made to the Borrower on the Second Restatement
Effective Date (determined based upon such Tranche 2 Lender’s Tranche 2 Term
Commitment). The aggregate 



 27
 









principal amount of Tranche
2 Term Loans to be made on the Second Restatement Effective Date by any Lender
shall not exceed such Lender’s Tranche 2 Term Commitment. Amounts repaid or prepayed
in respect of Tranche 2 Term Loans may not be reborrowed.


SECTION 2.02.   Loans and Borrowings.   (a) Each
Loan (other than a Swingline Loan) shall be made as part of a Borrowing
consisting of Loans of the same Class and Type made by the Lenders ratably
in accordance with the amounts of their Commitments of the applicable Class. The
failure of any Lender to make any Loan required to be made by it shall not
relieve any other Lender of its obligations hereunder; provided
that the Commitments of the Lenders are several and no Lender shall be responsible
for any other Lender’s failure to make Loans as required.


(b) Subject to Section 2.14, each Revolving
Borrowing and Term Borrowing shall be comprised entirely of ABR Loans or
Eurodollar Loans as the Borrower may request in accordance herewith. Each
Swingline Loan shall be an ABR Loan. Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided that
any exercise of such option shall not affect the obligation of the Borrower to
repay such Loan in accordance with the terms of this Agreement.


(c) At the commencement of each Interest Period
for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount
that is an integral multiple of $1,000,000 and not less than $5,000,000. At the
time that each ABR Borrowing is made, such Borrowing shall be in an aggregate
amount that is an integral multiple of $1,000,000 and not less than $5,000,000;
provided that an ABR Revolving Borrowing
may be in an aggregate amount that is equal to the entire unused balance of the
total Revolving Commitments or that is required to finance the reimbursement of
an LC Disbursement as contemplated by Section 2.05(e). Each Swingline Loan
shall be in an amount that is an integral multiple of $1,000,000. Borrowings of
more than one Class and Type may be outstanding at the same time; provided that there shall not at any time be more than a
total of 10 Eurodollar Borrowings outstanding.


(d) Notwithstanding any other provision of this
Agreement, the Borrower shall not be entitled to request, or to elect to
convert or continue, any Revolving Borrowing, Tranche 1 Term Borrowing or
Tranche 2 Term Borrowing if the Interest Period requested with respect thereto
would end after the Revolving/Tranche 1 Term Maturity Date or the Tranche 2
Term Maturity Date, as the case may be.


SECTION 2.03.   Requests for Borrowings.   To
request a Borrowing, the Borrower shall notify the Administrative Agent of such
request by telephone (a) in the case of a Eurodollar Borrowing, not later
than 11:00 a.m., New York City time, three Business Days before the date
of the proposed Borrowing or (b) in the case of an ABR Borrowing, not
later than (1) 10:30 a.m., New York City time, on the Business Day of
the proposed Borrowing, in the case of Borrowings to be made on the same day as
such notice is given or (2) 12:00 noon, New York City time, on the
Business Day before the proposed Borrowing, in the case of all other
Borrowings. Each such telephonic Borrowing Request shall be irrevocable and
shall be confirmed promptly by hand delivery or telecopy to the Administrative
Agent of a written Borrowing Request in a form approved by the Administrative
Agent and signed by the Borrower. Each such telephonic and written Borrowing
Request shall specify the following information in compliance with Section 2.02:


(i) whether the requested Borrowing is to be a
Revolving Borrowing, a Tranche 1 Term Borrowing or a Tranche 2 Term Borrowing;


(ii) the aggregate amount of such Borrowing;


(iii) the date of such Borrowing, which shall be a
Business Day;


(iv) whether such Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing;



 28
 









(v) in the case of a Eurodollar Borrowing, the
initial Interest Period to be applicable thereto, which shall be a period
contemplated by the definition of the term “Interest Period”; and


(vi) the location and number of the Borrower’s
account to which funds are to be disbursed, which shall comply with the
requirements of Section 2.06. 


If no election as to the Type of Borrowing is
specified, then the requested Borrowing shall be an ABR Borrowing. If no
Interest Period is specified with respect to any requested Eurodollar
Borrowing, then the Borrower shall be deemed to have selected an Interest
Period of one month’s duration. Promptly following receipt of a Borrowing Request
in accordance with this Section, the Administrative Agent shall advise each Lender
of the details thereof and of the amount of such Lender’s Loan to be made as
part of the requested Borrowing.


SECTION 2.04.   Swingline Loans.   (a) Subject
to the terms and conditions set forth herein, the Swingline Lender may, in its
sole discretion, make Swingline Loans to the Borrower from time to time during
the Revolving Availability Period in an aggregate principal amount at any time
outstanding that will not result in (i) the aggregate principal amount of
outstanding Swingline Loans exceeding $100,000,000 or (ii) the sum of the
total Revolving Exposures exceeding the lesser of (A) the total Revolving
Commitments at such time and (B) the Borrowing Base Amount in effect at
such time minus the sum of (1) the
outstanding Tranche 1 Term Loans at such time and (2) prior to the
Borrowing Base Date, zero and from and after the Borrowing Base Date, the
outstanding Tranche 2 Term Loans at such time; provided
that (i) the Swingline Lender shall not be required to make a Swingline
Loan to refinance an outstanding Swingline Loan and (ii) the Swingline
Lender shall not have any obligation, under this Agreement or otherwise, to
make any Swingline Loan requested by the Borrower hereunder and may, in its
sole discretion, decline to make a requested Swingline Loan. Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, prepay and reborrow Swingline Loans.


(b) To request a Swingline Loan, the Borrower
shall notify the Administrative Agent of such request by telephone (confirmed
by telecopy), not later than 1:00 p.m., New York City time, on the day of
a proposed Swingline Loan. Each such notice shall be irrevocable and shall
specify the requested date (which shall be a Business Day) and amount of the
requested Swingline Loan. The Administrative Agent will promptly advise the
Swingline Lender of any such notice received from the Borrower. The Swingline
Lender shall make each Swingline Loan available to the Borrower by means of a
wire transfer to an account designated by the Borrower (or, in the case of a
Swingline Loan made to finance the reimbursement of an LC Disbursement as
provided in Section 2.05(e), by remittance to the relevant Issuing Bank)
by 3:00 p.m., New York City time, on the requested date of such Swingline
Loan.


(c) Interest on each Swingline Loan shall be
payable on the Interest Payment Date with respect thereto.


(d) The Administrative Agent shall (i) at
any time when Swingline Loans in an aggregate principal amount of $10,000,000
or more are outstanding, at the request of the Swingline Lender in its sole
discretion, or (ii) on the date that is seven days after the date on which
a Swingline Loan was made, deliver on behalf of the Borrower a Borrowing
Request pursuant to Section 2.03 for an ABR Revolving Borrowing in the amount
of such Swingline Loans; provided, however, that
the obligations of the Lenders to fund such Borrowing shall not be subject to
the conditions set forth in Section 4.02.



 29















(e)        The
Swingline Lender may by written notice given to the Administrative Agent not
later than 12:00 noon, New York City time, on any Business Day require the
Revolving Lenders to acquire participations on such Business Day in all or a
portion of the Swingline Loans outstanding. Such notice shall specify the
aggregate amount of Swingline Loans in which Revolving Lenders will
participate. Promptly upon receipt of such notice (but no later than 2:00 p.m.,
New York City time, on such Business Day), the Administrative Agent will give
notice thereof to each Revolving Lender, specifying in such notice such Lender’s
Applicable Percentage of such Swingline Loan or Loans. Each Revolving Lender
hereby absolutely and unconditionally agrees, upon timely receipt of notice as
provided above, to pay to the Administrative Agent, for the account of the
Swingline Lender, such Lender’s Applicable Percentage of such Swingline Loan or
Loans. Each Revolving Lender acknowledges and agrees that its obligation to acquire
participations in Swingline Loans pursuant to this paragraph is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including the occurrence
and continuance of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever. Each Revolving Lender shall comply with its obligation
under this paragraph by wire transfer of immediately available funds, in the
same manner as provided in Section 2.06 with respect to Loans made by such
Lender (and Section 2.06 shall apply, mutatis mutandis,
to the payment obligations of the Revolving Lenders), and the Administrative
Agent shall promptly pay to the Swingline Lender the amounts so received by it from
the Revolving Lenders. The Administrative Agent shall notify the Borrower of
any participations in any Swingline Loan acquired pursuant to this paragraph,
and thereafter payments in respect of such Swingline Loan shall be made to the
Administrative Agent and not to the Swingline Lender. Any amounts received by
the Swingline Lender from the Borrower (or other Person on behalf of the
Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender
of the proceeds of a sale of participations therein shall be promptly remitted
to the Administrative Agent, and any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to
the Revolving Lenders that shall have made their payments pursuant to this paragraph
and to the Swingline Lender, as their interests may appear. The purchase of
participations in a Swingline Loan pursuant to this paragraph shall not relieve
the Borrower of any default in the payment thereof.


SECTION 2.05.   Letters
of Credit.   (a)   General.   Subject to the terms and conditions set forth
herein, the Borrower may request the issuance of (and the applicable Issuing
Bank, as specified by the Borrower, will issue) Letters of Credit for its own account,
in a form reasonably acceptable to the Administrative Agent and the relevant Issuing
Bank, at any time and from time to time during the Revolving Availability Period.
In the event of any inconsistency between the terms and conditions of this Agreement
and the terms and conditions of any form of letter of credit application or other
agreement submitted by the Borrower to, or entered into by the Borrower with,
an Issuing Bank relating to any Letter of Credit, the terms and conditions of
this Agreement shall control.


(b)   Notice of Issuance, Amendment,
Renewal, Extension; Certain Conditions.   To request the
issuance of a Letter of Credit (or the amendment, renewal or extension of an
outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or
transmit by electronic communication, if arrangements for doing so have been approved
by the applicable Issuing Bank) to the relevant Issuing Bank and the Administrative
Agent (reasonably in advance of the requested date of issuance, amendment,
renewal or extension) a notice requesting the issuance of a Letter of Credit, or
identifying the Letter of Credit to be amended, renewed or extended, and
specifying the date of issuance, amendment, renewal or extension (which shall
be a Business Day), the date on which such Letter of Credit is to expire (which
shall comply with paragraph (c) of this Section), the amount of such
Letter of Credit, the name and address of the beneficiary thereof and such
other information as shall be necessary to prepare, amend, renew or extend such
Letter of Credit. If requested by an Issuing Bank, the Borrower also shall
submit a letter of credit application on such Issuing Bank’s standard form in
connection with any request for a Letter of Credit. A Letter of Credit shall be
issued, amended, renewed or extended only if (and upon issuance, 



 30
 









amendment, renewal or
extension of each Letter of Credit the Borrower shall be deemed to represent
and warrant that), after giving effect to such issuance, amendment, renewal or
extension (i) the total LC Exposure shall not exceed $450,000,000, (ii) the
amount of the LC Exposure attributable to Letters of Credit issued by the
applicable Issuing Bank will not exceed the LC Commitment of such Issuing Bank
and (iii) the total Revolving Exposures shall not exceed the lesser of (A) the
total Revolving Commitments at such time and (B) the Borrowing Base Amount in
effect at such time minus the sum
of (1) the outstanding Tranche 1 Term Loans at such time and (2) prior
to the Borrowing Base Date, zero and from and after the Borrowing Base Date,
the outstanding Tranche 2 Term Loans at such time.


(c)   Expiration Date.   Each
Letter of Credit shall expire at or prior to the close of business on the
earlier of (i) the date that is one year after the date of the issuance of
such Letter of Credit (or, in the case of any renewal or extension thereof, one
year after such renewal or extension) and (ii) the date that is five
Business Days prior to the Revolving/Tranche 1 Term Maturity Date.


(d)   Participations.   By
the issuance of a Letter of Credit (or an amendment to a Letter of Credit
increasing the amount thereof) and without any further action on the part of
the applicable Issuing Bank or the Lenders, such Issuing Bank hereby grants to each
Revolving Lender, and each Revolving Lender hereby acquires from such Issuing Bank,
a participation in such Letter of Credit in an amount equal to such Lender’s Applicable
Percentage of the aggregate amount available to be drawn under such Letter of
Credit. In consideration and in furtherance of the foregoing, each Revolving
Lender hereby absolutely and unconditionally agrees to pay to the
Administrative Agent, for the account of the applicable Issuing Bank, such
Lender’s Applicable Percentage of each LC Disbursement made by such Issuing
Bank and not reimbursed by the Borrower on the date due as provided in
paragraph (e) of this Section, or of any reimbursement payment required to
be refunded to the Borrower for any reason. Each Revolving Lender acknowledges
and agrees that its obligation to acquire participations pursuant to this paragraph
in respect of Letters of Credit is absolute and unconditional and shall not be affected
by any circumstance whatsoever, including any amendment, renewal or extension
of any Letter of Credit or the occurrence and continuance of a Default or reduction
or termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.


(e)   Reimbursement.   If
any Issuing Bank shall make any LC Disbursement in respect of a Letter of
Credit, the Borrower shall reimburse such LC Disbursement by paying to the
Administrative Agent an amount equal to such LC Disbursement not later than
3:30 p.m., New York City time, on the date that such LC Disbursement is
made, if the Borrower shall have received notice of such LC Disbursement prior
to 10:00 a.m., New York City time, on such date, or, if such notice has
not been received by the Borrower prior to such time on such date, then not
later than 1:00 p.m., New York City time, on the Business Day immediately
following the day that the Borrower receives such notice; provided
that, if such LC Disbursement is not less than $5,000,000, the Borrower may,
subject to the conditions to borrowing set forth herein, request in accordance
with Section 2.03 or 2.04 that such payment be financed with an ABR
Revolving Borrowing or Swingline Loan in an equivalent amount and, to the
extent so financed, the Borrower’s obligation to make such payment shall be discharged
and replaced by the resulting ABR Revolving Borrowing or Swingline Loan. If the
Borrower fails to make such payment when due, the Administrative Agent shall notify
each Revolving Lender of the applicable LC Disbursement, the payment then due from
the Borrower in respect thereof and such Lender’s Applicable Percentage
thereof. Promptly following receipt of such notice, each Revolving Lender shall
pay to the Administrative Agent its Applicable Percentage of the payment then
due from the Borrower, in the same manner as provided in Section 2.06 with
respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the
Revolving Lenders), and the Administrative Agent shall promptly pay to the relevant
Issuing Bank the amounts so received by it from the Revolving Lenders. Promptly
following receipt by the Administrative Agent of any payment from the Borrower
pursuant to this paragraph, the Administrative Agent shall distribute such payment
to such Issuing Bank or, to the extent that Revolving 



 31
 









Lenders have made payments
pursuant to this paragraph to reimburse such Issuing Bank, then to such Lenders
and such Issuing Bank as their interests may appear. Any payment made by a Revolving
Lender pursuant to this paragraph to reimburse an Issuing Bank for any LC Disbursement
(other than the funding of ABR Revolving Loans or a Swingline Loan as contemplated
above) shall not constitute a Loan and shall not relieve the Borrower of its obligation
to reimburse such LC Disbursement.


(f)   Obligations Absolute.   The
Borrower’s obligation to reimburse LC Disbursements as provided in paragraph (e) of
this Section shall be absolute, unconditional and irrevocable, and shall
be performed strictly in accordance with the terms of this Agreement under any
and all circumstances whatsoever and irrespective of (i) any lack of
validity or enforceability of any Letter of Credit or this Agreement, or any term
or provision therein or herein, (ii) any draft or other document presented
under a Letter of Credit proving to be forged, fraudulent or invalid in any
respect or any statement therein being untrue or inaccurate in any respect, (iii) payment
by any Issuing Bank under a Letter of Credit against presentation of a draft or
other document that does not comply with the terms of such Letter of Credit or (iv) any
other event or circumstance whatsoever, whether or not similar to any of the
foregoing, that might, but for the provisions of this Section, constitute a
legal or equitable discharge of, or provide a right of setoff against, the
Borrower’s obligations hereunder. None of the Administrative Agent, any Lender
or any Issuing Bank, or any of their Related Parties, shall have any liability
or responsibility by reason of or in connection with the issuance or transfer
of any Letter of Credit or any payment or failure to make any payment
thereunder (irrespective of any of the circumstances referred to in the
preceding sentence), or any error, omission, interruption, loss or delay in
transmission or delivery of any draft, notice or other communication under or
relating to any Letter of Credit (including any document required to make a
drawing thereunder), any error in interpretation of technical terms or any
consequence arising from causes beyond the control of the relevant Issuing
Bank; provided that the foregoing shall not be
construed to excuse such Issuing Bank from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the fullest extent
permitted by applicable law) suffered by the Borrower that are caused by such Issuing
Bank’s gross negligence or wilful misconduct (as determined by a court of competent
jurisdiction by a final and non-appealable judgment) in determining whether drafts
and other documents presented under a Letter of Credit comply with the terms thereof.
The parties hereto expressly agree that, in the absence of gross negligence or wilful
misconduct on the part of an Issuing Bank (as determined by a court of
competent jurisdiction by a final and non-appealable judgment), such Issuing
Bank shall be deemed to have exercised care in each such determination. In
furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of a Letter of Credit, an
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.


(g)   Disbursement Procedures.   The
applicable Issuing Bank shall, promptly following its receipt thereof, examine
all documents purporting to represent a demand for payment under a Letter of
Credit. The applicable Issuing Bank shall promptly notify the Administrative
Agent and the Borrower by telephone (confirmed by telecopy) of such demand for
payment and whether such Issuing Bank has made or will make an LC Disbursement
thereunder; provided that any failure to give or
delay in giving such notice shall not relieve the Borrower of its obligation to
reimburse the Issuing Bank and the Revolving Lenders with respect to any such
LC Disbursement.


(h)   Interim Interest.   If
an Issuing Bank shall make any LC Disbursement, then, unless the Borrower shall
reimburse such LC Disbursement in full on the date such LC Disbursement is
made, the unpaid amount thereof shall bear interest, for each day from and including
the date such LC Disbursement is made to but excluding the date that the
Borrower reimburses such LC Disbursement, at the rate per 



 32
 









annum then applicable to ABR
Revolving Loans; provided that, if the Borrower
fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of
this Section, then Section 2.13(c) shall apply. Interest accrued pursuant
to this paragraph shall be for the account of the applicable Issuing Bank,
except that interest accrued on and after the date of payment by any Revolving
Lender pursuant to paragraph (e) of this Section to reimburse such
Issuing Bank shall be for the account of such Lender to the extent of such
payment.


(i)   Resignation or Replacement of the
Issuing Bank.   An Issuing Bank may resign at any time by giving
180 days’ prior written notice to the Administrative Agent, the Borrower and
the Lenders, and an Issuing Bank may be replaced at any time by written
agreement (an “Issuing Bank Agreement”) among
the Borrower, the Administrative Agent, the replaced Issuing Bank and the
successor Issuing Bank, which shall set forth the LC Commitment of such Issuing
Bank. The Administrative Agent shall notify the Lenders of any such replacement
of an Issuing Bank. At the time any such replacement shall become effective, the
Borrower shall pay all unpaid fees accrued for the account of the replaced
Issuing Bank pursuant to Section 2.12(b). From and after the effective
date of any such replacement, (i) the successor Issuing Bank shall have
all the rights and obligations of an Issuing Bank under this Agreement with
respect to Letters of Credit to be issued thereafter and (ii) references
herein to the term “Issuing Bank” shall be deemed to refer to such successor or
to any previous Issuing Bank, or to such successor and all previous Issuing
Banks, as the context shall require. After the replacement of an Issuing Bank
hereunder, the replaced Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank under this
Agreement with respect to Letters of Credit issued by it prior to such
replacement, but shall not be required to issue additional Letters of Credit.


(j)   Cash Collateralization.   If
any Event of Default shall occur and be continuing, on the Business Day that
the Borrower receives notice from the Administrative Agent or the Required
Lenders (or, if the maturity of the Loans has been accelerated, Revolving Lenders
with LC Exposure representing greater than 50% of the total LC Exposure)
demanding the deposit of cash collateral pursuant to this paragraph, the
Borrower shall (or shall cause Subsidiary Loan Parties to) deposit in an
account with the Administrative Agent, in the name of the Administrative Agent
and for the benefit of the Lenders, an amount in cash equal to the total LC
Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral
shall become effective immediately, and such deposit shall become immediately
due and payable, without demand or other notice of any kind, upon the occurrence
of any Event of Default with respect to the Borrower or any Subsidiary Loan Party
described in clause (h) or (i) of Article VII. The Borrower also
shall (or shall cause Subsidiary Loan Parties and, prior to the Borrowing Base
Date, Holdings and its subsidiaries to) deposit cash collateral pursuant to
this paragraph as and to the extent required by Section 2.11(b), and any
such cash collateral so deposited and held by the Administrative Agent
hereunder shall constitute part of the Borrowing Base Amount for purposes of
determining compliance with Section 2.11(b). Each such deposit shall be held
by the Administrative Agent as collateral for the payment and performance of
the obligations of the Borrower under this Agreement. The Administrative Agent
shall have exclusive dominion and control, including the exclusive right of
withdrawal, over such account. The Administrative Agent shall, at the Borrower’s
risk and expense, invest all such deposits in Permitted Investments chosen in
the sole discretion of the Administrative Agent after consultation with the
Borrower, provided that no consultation shall be required
if a Default has occurred and is continuing. Other than any interest earned in respect
of the investment of such deposits, such deposits shall not bear interest.
Interest or profits, if any, on such investments shall accumulate in such
account. Moneys in such account shall be applied by the Administrative Agent to
reimburse each Issuing Bank for LC Disbursements for which it has not been
reimbursed and, to the extent not so applied, shall be held for the
satisfaction of the reimbursement obligations of the Borrower for the LC
Exposure at such time or, if the maturity of the Loans has been accelerated
(but subject to the consent of Revolving Lenders with LC Exposure representing
greater than 50% of the total LC Exposure), be applied to satisfy the Senior Obligations.
If the Borrower is required to provide an amount of cash 



 33
 









collateral hereunder as a
result of the occurrence of an Event of Default, such amount (to the extent not
applied as aforesaid) shall be returned to the Borrower within three Business
Days after all Events of Default have been cured or waived (or, during a Cash
Sweep Period, paid into the Citibank Concentration Account). If the Borrower is
required to provide an amount of cash collateral hereunder pursuant to Section 2.11(b),
such amount (to the extent not applied as aforesaid) shall be returned to the
Borrower as and to the extent that, after giving effect to such return, the
Borrower would remain in compliance with Section 2.11(b) and no Default
shall have occurred and be continuing. Unless and except to the extent that the
deposit of cash collateral directly by the Borrower would not result in an
obligation to grant a security interest in such cash collateral to the holders
of other outstanding Indebtedness of the Borrower, the Borrower will cause
Subsidiary Loan Parties (and, prior to the Borrowing Base Date, Holdings and
its subsidiaries) to deposit all cash collateral required to be deposited
pursuant to this Section 2.05(j) or Section 2.11(b).


(k)   Additional Issuing Banks   The
Borrower may, at any time and from time to time with the consent of the
Administrative Agent (which consent shall not be unreasonably withheld) and
such Lender, designate one or more additional Lenders to act as an issuing bank
under the terms of this Agreement. Any Lender designated as an issuing bank
pursuant to this clause (k) shall be deemed to be an “Issuing Bank” (in addition
to being a Lender) in respect of Letters of Credit issued or to be issued by
such Lender, and, with respect to such Letters of Credit, such term shall
thereafter apply to the other Issuing Banks and such Lender in its capacity as
an Issuing Bank.


(l)   Reporting by Issuing Banks to the
Administrative Agent.   At the end of each week and otherwise
upon request of the Administrative Agent, each Issuing Bank shall provide the
Administrative Agent with a certificate identifying the Letters of Credit issued
by such Issuing Bank and outstanding on such date, the amount and expiration date
of each such Letter of Credit, the beneficiary thereof, the amount, if any,
drawn under each such Letter of Credit and any other information reasonably
requested by the Administrative Agent with respect to such Letters of Credit.
The Administrative Agent shall promptly enter all such information received by
it pursuant to this Section 2.05(l) in the Register.


SECTION 2.06.   Funding
of Borrowings.   (a) Each Lender shall make each Loan to be
made by it hereunder on the proposed date thereof by wire transfer of immediately
available funds by 12:00 noon, New York City time, to the account of the Administrative
Agent most recently designated by it for such purpose by notice to the Lenders;
provided that Swingline Loans shall be
made as provided in Section 2.04. The Administrative Agent will make such
Loans available to the Borrower by wire transfer, in like funds, to an account
designated by the Borrower in the applicable Borrowing Request. Wire transfers
to the Borrower of all Loans (other than Swingline Loans and same-day ABR
Revolving Borrowings) shall be made no later than 1:00 p.m., New York City
time. Wire transfers to the Borrower of Swingline Loans and same-day ABR Revolving
Borrowings shall be made no later than 4:00 p.m., New York City time.


(b)        Unless
the Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender’s share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with paragraph (a) of this Section and may, in reliance
upon such assumption, make available to the Borrower a corresponding amount. In
such event, if a Lender has not in fact made its share of the applicable
Borrowing available to the Administrative Agent, then the applicable Lender and
the Borrower severally agree to pay to the Administrative Agent forthwith on
demand such corresponding amount with interest thereon, for each day from and
including the date such amount is made available to the Borrower to but
excluding the date of payment to the Administrative Agent, at (i) in the case
of such Lender, the greater of the Federal Funds Effective Rate and a rate determined
by the Administrative Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of the Borrower, the interest rate
applicable to ABR Revolving Loans. If 



 34
 









such Lender pays such
amount to the Administrative Agent, then such amount shall constitute such
Lender’s Loan included in such Borrowing.


SECTION 2.07.   Interest
Elections.   (a) Each Borrowing initially shall be of the
Type specified in the applicable Borrowing Request and, in the case of a Eurodollar
Borrowing, shall have an initial Interest Period as specified in such Borrowing
Request. Thereafter, the Borrower may elect to convert such Borrowing to a
different Type or to continue such Borrowing and, in the case of a Eurodollar
Borrowing, may elect Interest Periods therefor, all as provided in this
Section. The Borrower may elect different options with respect to different
portions of the affected Borrowing, in which case each such portion shall be
allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing. This Section shall not apply to Swingline Borrowings, which
may not be converted or continued.


(b)        To
make an election pursuant to this Section, the Borrower shall notify the
Administrative Agent of such election by telephone by the time that a Borrowing
Request would be required to be made under Section 2.03 if the Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrower.


(c)        Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02 and
paragraph (f) of this Section:


(i)         the
Borrowing to which such Interest Election Request applies and, if different
options are being elected with respect to different portions thereof, the portions
thereof to be allocated to each resulting Borrowing (in which case the information
to be specified pursuant to clauses (iii) and (iv) below shall be specified
for each resulting Borrowing);


(ii)       the
effective date of the election made pursuant to such Interest Election Request,
which shall be a Business Day;


(iii)      whether
the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
and


(iv)       if the
resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be
applicable thereto after giving effect to such election, which shall be a
period contemplated by the definition of the term “Interest Period”.


If any such
Interest Election Request requests a Eurodollar Borrowing but does not specify
an Interest Period, then the Borrower shall be deemed to have selected an
Interest Period of one month’s duration.


(d)        Promptly
following receipt of an Interest Election Request, the Administrative Agent
shall advise each Lender of the details thereof and of such Lender’s portion of
each resulting Borrowing.


(e)        If the
Borrower fails to deliver a timely Interest Election Request with respect to a
Eurodollar Borrowing prior to the end of the Interest Period applicable thereto,
then, unless such Borrowing is repaid as provided herein, at the end of such Interest
Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding
any contrary provision hereof, if an Event of Default has occurred and is continuing
and the Administrative Agent, at the request of the Required Lenders, so notifies
the Borrower, then, so long as an Event of Default is continuing (i) no outstanding
Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless
repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the
end of the Interest Period applicable thereto.



 35















(f)         A Revolving Borrowing, Tranche 1 Term Borrowing or Tranche 2
Term Borrowing may not be converted to or continued as a Eurodollar Borrowing
if after giving effect thereto the Interest Period therefor would end after the
Revolving/Tranche 1 Term Maturity Date or the Tranche 2 Term Maturity Date, as
the case may be.


SECTION 2.08.   Termination
and Reduction of Commitments.   (a) Unless previously
terminated in accordance with the terms of this Agreement, (i) the Tranche
1 Term Commitments shall terminate at 5:00 p.m., New York City time on the
First Restatement Effective Date, (ii) the Revolving Commitments shall
terminate on the Revolving/Tranche 1 Term Maturity Date and (iii) the
Tranche 2 Term Commitments shall terminate at 5:00 p.m., New York City
time on the Second Restatement Effective Date.


(b)        The Borrower may at any time terminate, or from time to time
reduce, the Commitments of any Class; provided that (i) each
reduction of the Commitments of any Class shall be in an amount that is an
integral multiple of $1,000,000 and not less than $5,000,000 and (ii) the
Borrower shall not terminate or reduce the Revolving Commitments if, after
giving effect to any concurrent prepayment of the Revolving Loans in accordance
with Section 2.11, the total Revolving Exposures would exceed the total Revolving
Commitments.


(c)        The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) of
this Section at least one Business Day prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any such notice, the Administrative
Agent shall advise the Lenders of the contents thereof. Each notice delivered
by the Borrower pursuant to this Section shall be irrevocable; provided
that a notice of voluntary termination of the Revolving Commitments delivered
by the Borrower may state that such notice is conditioned upon the
effectiveness of other credit facilities, in which case such notice may be
revoked by the Borrower (by notice to the Administrative Agent on or prior to
the specified effective date) if such condition is not satisfied. Any
termination or reduction of the Commitments of any Class shall be permanent.
Each reduction of the Commitments of any Class shall be made ratably among
the Lenders in accordance with their Commitments of such Class.


SECTION 2.09.   Repayment
of Loans; Evidence of Indebtedness.   (a) The Borrower
hereby unconditionally promises to pay (i) to the Administrative Agent for
the account of each Tranche 1 Term Lender the then unpaid principal amount of
the Tranche 1 Term Loan of such Lender as provided in Section 2.10, (ii) to
the Administrative Agent for the account of each Revolving Lender the then
unpaid principal amount of each Revolving Loan of such Lender on the
Revolving/Tranche 1 Term Maturity Date, (iii) to the Swingline Lender the
then unpaid principal amount of each Swingline Loan on the earlier of (A) the
Revolving/Tranche 1 Term Maturity Date and (B) the date that is seven days
after the date on which such Swingline Loan was made; provided that on each
date that a Revolving Borrowing is made, the Borrower shall repay all Swingline
Loans that were outstanding on the date such Borrowing was requested and (iv) to
the Administrative Agent for the account of each Tranche 2 Term Lender the then
unpaid principal amount of the Tranche 2 Term Loan of such Lender as provided
in Section 2.10.


(b)        Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the Indebtedness of the Borrower to
such Lender resulting from each Loan made by such Lender, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.


(c)        The Administrative Agent shall maintain accounts in which it
shall record (i) the amount of each Loan made hereunder, the Class and
Type thereof and the Interest Period, if any, applicable thereto, (ii) the
amount of any principal or interest due and payable or to become due and
payable from the Borrower to each Lender hereunder and (iii) the amount of
any sum received by the Administrative Agent hereunder for the account of the
Lenders and each Lender’s share thereof.



 36
 









(d)        The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie
evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative
Agent to maintain such accounts or any error therein shall not in any manner
affect the obligation of the Borrower to repay the Loans in accordance with the
terms of this Agreement.


(e)        Any Lender may request that Loans of any Class made by
it be evidenced by a promissory note. In such event, the Borrower shall
prepare, execute and deliver to such Lender a promissory note payable to the
order of such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in the form attached hereto as Exhibit A-1
or A-2, as applicable, or in such other form approved by the
Administrative Agent and the Borrower. Thereafter, the Loans evidenced by such promissory
note and interest thereon shall at all times (including after assignment pursuant
to Section 9.04) be represented by one or more promissory notes in such
form payable to the order of the payee named therein (or, if such promissory
note is a registered note, to such payee and its registered assigns).


SECTION 2.10.   Amortization
and Repayment of Term Loans.   (a) The Borrower shall repay
to the Administrative Agent for the ratable account of the Tranche 2 Term
Lenders 0.25% of the initial aggregate principal amount of the Tranche 2 Term Loans
on the last Business Day of each March, June, September and December, commencing
on the first such date to occur on or after the first anniversary of the Second
Restatement Effective Date (which installments shall be reduced as a result of
the application of prepayments in accordance with the order of priority set
forth in paragraph (c) of this Section).


(b)        To the extent not previously paid, all Tranche 1 Term Loans
shall be due and payable on the Revolving/Tranche 1 Term Maturity Date. To the
extent not previously paid, all Tranche 2 Term Loans shall be due and payable
on the Tranche 2 Term Maturity Date.


(c)        Any prepayment of a Tranche 2 Term Borrowing pursuant to Section 2.11(b),
(c) or (d) shall be applied to reduce the subsequent scheduled repayments
of such Borrowings to be made pursuant to this Section as follows: first, in order of their maturity for the next fiscal year
after such prepayment and second, to the extent
of any excess, on a pro rata basis to the remaining scheduled
repayments.


(d)        Prior to any repayment of any Term Borrowing hereunder, the Borrower
shall select the Borrowing or Borrowings to be repaid and shall notify the Administrative
Agent by telephone (confirmed by telecopy) of such selection not later than
11:00 a.m., New York City time, three Business Days before the scheduled
date of such repayment. Each repayment of a Borrowing shall be applied ratably
to the Loans included in the repaid Borrowing. Repayments of Term Borrowings
shall be accompanied by accrued interest on the amount repaid.


SECTION 2.11.   Prepayment
of Loans.   (a) The Borrower shall have the right, at any
time and from time to time, to prepay any Borrowing in whole or in part, subject
to the requirements of this Section; provided, however, that any partial prepayment made pursuant to this Section 2.11(a) shall
be in a principal amount that is a multiple of $1,000,000 and not less than
$5,000,000.


(b)   (i)   In the
event and on each date that the sum of (A) the total Revolving Exposures
on such date, (B) the outstanding Tranche 1 Term Loans on such date and (C) if
such date is prior to the Borrowing Base Date, zero and, if such date is on or
after the Borrowing Base Date, the outstanding Tranche 2 Term Loans on such
date exceed the then-current Borrowing Base Amount, the Borrower shall on each
such date apply an amount equal to such excess as follows: first,
to prepay Revolving Borrowings or Swingline Loans, second,
to the extent of any remaining excess or, if no Revolving Borrowings or
Swingline Loans are outstanding, to make a deposit in a cash collateral account
maintained by the Administrative Agent pursuant to Section 2.05(j) to
be held as security for the Borrower’s obligations in respect of Letters of
Credit and third, to the extent of any remaining
excess, to prepay Term Borrowings on a pro rata basis (determined
based upon the sum of the outstanding Term Loans at such time).



 37
 









      (ii)   In
the event and on each date that the total Revolving Exposures exceed the total
Revolving Commitments, the Borrower shall on such date apply an amount equal to
such excess first, to prepay Revolving Borrowings or
Swingline Borrowings and second, to the
extent of any remaining excess, or if no Revolving Borrowings or Swingline
Loans are outstanding, to a cash collateral account maintained by the
Administrative Agent pursuant to Section 2.05(j) to be held as
security for the Borrower’s obligations in respect of Letters of Credit.


(c)        In the event and on each occasion that any Net Proceeds are
received by or on behalf of the Borrower or any Subsidiary in respect of any
Prepayment Event, the Borrower shall, within three Business Days after such Net
Proceeds are received, prepay Tranche 2 Term Borrowings in an aggregate amount
equal to (i) 100% of the Net Proceeds resulting from prepayment events
described in clauses (a), (b) and (d) of the definition of “Prepayment
Event” and (ii) 50% of the Net Proceeds resulting from prepayment events
described in clause (c) of the definition of “Prepayment Event”; provided that if at the time any (x) Net Proceeds
resulting from prepayment events described in clause (a) of the definition
of “Prepayment Events” are received and the Revolver Availability is less than
$900,000,000 (or, if such time is prior to the Borrowing Base Date,
$475,000,000) or (y) Net Proceeds resulting from any Prepayment Event are received
during a Cash Sweep Period, such Net Proceeds will be applied as follows: first, to prepay Revolving Borrowings or Swingline Loans and
second, to the extent of any remaining
excess, to prepay Tranche 2 Term Borrowings; provided
further that, in the case of any prepayment event described in
clause (a) or (b) of the definition of “Prepayment Event”, if the
Borrower shall elect to apply the Net Proceeds from such event (or a portion
thereof specified in such certificate), within 365 days after receipt of such
Net Proceeds, to acquire real property, equipment or other tangible assets to
be used in the business of the Borrower and the Subsidiaries, and certifying
that no Default has occurred and is continuing, then no prepayment shall be
required pursuant to this paragraph in respect of the Net Proceeds in respect
of such event (or the portion of such Net Proceeds specified in such
certificate, if applicable), except to the extent of any such Net Proceeds
therefrom that have not been so applied by the end of such 365 day period, at
which time a prepayment shall be required in an amount equal to such Net
Proceeds that have not been so applied.


(d)        Following the end of each fiscal year of the Borrower,
commencing with the fiscal year ending February 29, 2008, the Borrower
shall prepay Tranche 2 Term Borrowings in an aggregate amount equal to (i) if
on the last day of such fiscal year the Leverage Ratio is greater than or equal
to 4.50 to 1.00, 50% of the Excess Cash Flow for such fiscal year, (ii) if
on the last day of such fiscal year the Leverage Ratio is greater than or equal
to 4.00 to 1.00 but less than 4.50 to 1.00, 25% of the Excess Cash Flow for such
fiscal year and (iii) if on the last day of such fiscal year the Leverage
Ratio is less than 4.00 to 1.00, 0% of the Excess Cash Flow for such fiscal
year. Each prepayment pursuant to this paragraph shall be made on or before the
date on which financial statements are delivered pursuant to Section 5.01
with respect to the fiscal year for which Excess Cash Flow is being calculated
(and in any event within 90 days after the end of such fiscal year).


(e)        Prior to any optional or mandatory prepayment of Borrowings hereunder,
the Borrower shall select the Borrowing or Borrowings to be prepaid and shall specify
such selection in the notice of such prepayment pursuant to paragraph (f) of
this Section.


(f)         The Borrower shall notify the Administrative Agent (and, in
the case of prepayment of a Swingline Loan, the Swingline Lender) by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York
City time, three Business Days before the date of prepayment, (ii) in the
case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New
York City time, one Business Day before the date of prepayment or (iii) in
the case of prepayment of a Swingline Loan, not later than 12:00 noon, New York
City time, on the date of prepayment. Each such notice shall be irrevocable and
shall specify the prepayment date, the Borrowings to be prepaid and the principal
amount of each Borrowing or portion 



 38
 









thereof to be
prepaid and, in the case of a mandatory prepayment, a reasonably detailed
calculation of the amount of such prepayment; provided
that, if a notice of optional prepayment is given in connection with a conditional
notice of termination of the Revolving Commitments as contemplated by Section 2.08,
then such notice of prepayment may be revoked if such notice of termination is
revoked in accordance with Section 2.08. Promptly following receipt of any
such notice (other than a notice relating solely to Swingline Loans), the
Administrative Agent shall advise the Lenders of the contents thereof. Each
partial prepayment of any Borrowing shall be in an amount that would be
permitted in the case of an advance of a Borrowing of the same Type as provided
in Section 2.02, except as necessary to apply fully the required amount of
a mandatory prepayment. Each prepayment of a Borrowing shall be applied ratably
to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied
by accrued interest to the extent required by Section 2.13.


SECTION 2.12.   Fees.   (a) The
Borrower agrees to pay to the Administrative Agent for the account of each
Revolving Lender a commitment fee, which shall accrue at the rate of 0.25% per
annum on the daily unused amount of the Revolving Commitment of such Lender
during the period from and including the Original Restatement Effective Date to
but excluding the date on which such Commitment terminates. Accrued commitment
fees shall be payable in arrears on the last day of March, June, September and
December of each year and on the date on which the Revolving Commitments
terminate, commencing on the first such date to occur after the Original
Restatement Effective Date. All commitment fees shall be computed on the basis
of a year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day). For purposes of
computing commitment fees pursuant to this Section 2.12(a), a Revolving
Commitment of a Lender shall be deemed to be used to the extent of the
outstanding Revolving Loans and LC Exposure of such Lender (and the Swingline
Exposure of such Lender shall be disregarded for such purpose).


(b)        The Borrower agrees to pay (i) to the Administrative
Agent for the account of each Revolving Lender a participation fee with respect
to its participations in Letters of Credit, which shall accrue at the same
Applicable Rate as in effect from time to time for interest on Eurodollar
Revolving Loans on the daily amount of such Lender’s LC Exposure (excluding any
portion thereof attributable to unreimbursed LC Disbursements) during the
period from and including the Original Restatement Effective Date to but excluding
the later of the date on which such Lender’s Revolving Commitment terminates
and the date on which such Lender ceases to have any LC Exposure, and (ii) to
each Issuing Bank a fronting fee, which shall accrue at the rate of 0.25% per
annum on the daily outstanding amount of such Issuing Bank’s Letters of Credit
during the period from and including the Original Restatement Effective Date to
but excluding the later of the date of termination of the Revolving Commitments
and the date on which there ceases to be any LC Exposure, as well as such
Issuing Bank’s standard fees with respect to the issuance, amendment, renewal
or extension of any Letter of Credit or processing of drawings thereunder.
Participation fees and fronting fees accrued through and including the last day
of March, June, September and December of each year shall be payable
on the third Business Day following such last day, commencing on the first such
date to occur after the Original Restatement Effective Date; provided that all
such fees shall be payable on the date on which the Revolving Commitments
terminate and any such fees accruing after the date on which the Revolving
Commitments terminate shall be payable on demand. Any other fees payable to an
Issuing Bank pursuant to this paragraph shall be payable within 10 days after
demand. All participation fees and fronting fees shall be computed on the basis
of a year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).


(c)        The Borrower agrees to pay to the Administrative Agent and
the Collateral Agent, for their own accounts, fees payable in the amounts and
at the times separately agreed upon between the Borrower and the Administrative
Agent or the Collateral Agent, as the case may be.


(d)        All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the relevant
Issuing Bank, in the case of fees payable to it) for distribution, 



 39
 









in the case of
commitment fees and participation fees, to the Lenders entitled thereto. Fees
paid shall not be refundable under any circumstances.


SECTION 2.13.   Interest.   (a) The
Loans comprising each ABR Borrowing (including each Swingline Loan) shall bear
interest at the Alternate Base Rate plus the
Applicable Rate.


(b)        The Loans comprising each Eurodollar Borrowing shall bear
interest at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Rate.


(c)        Notwithstanding the foregoing, upon the occurrence and during
the continuation of an Event of Default, at the option of the Administrative
Agent or at the request of the Required Lenders, the Borrower shall pay
interest on all of the Senior Obligations (and, prior to the Borrowing Base
Date, the Interim Obligations) to but excluding the date of actual payment,
after as well as before judgment, (i) in the case of principal, at a rate
per annum equal to 2% plus the rate
otherwise applicable to such Loan as provided in the preceding paragraphs of
this Section and (ii) in the case of any other amount, at a rate per
annum equal to 2% plus the rate applicable to ABR
Revolving Loans as provided in paragraph (a) of this Section.


(d)        Accrued interest on each Loan shall be payable in arrears on
each Interest Payment Date for such Loan and (i) in the case of Tranche 1
Term Loans, on the Revolving/Tranche 1 Term Maturity Date, (ii) in the
case of Revolving Loans, the earlier of the Revolving/Tranche 1 Term Maturity
Date and the date on which all Revolving Commitments hereunder are terminated
and (iii) in the case of Tranche 2 Term Loans, on the Tranche 2 Term
Maturity Date; provided that (i) interest
accrued pursuant to paragraph (c) of this Section shall be payable on
demand, (ii) in the event of any repayment or prepayment of any Loan
(other than a prepayment of an ABR Revolving Loan prior to the end of the
Revolving Availability Period), accrued interest on the principal amount repaid
or prepaid shall be payable on the date of such repayment or prepayment and (iii) in
the event of any conversion of any Eurodollar Loan prior to the end of the
current Interest Period therefor, accrued interest on such Loan shall be
payable on the effective date of such conversion, together with any amounts due
and payable pursuant to Section 2.16.


(e)        All interest hereunder shall be computed on the basis of a
year of 360 days, except that interest computed by reference to the Alternate
Base Rate at times when the Alternate Base Rate is based on the Citibank Base
Rate shall be computed on the basis of a year of 365 days (or 366 days in a
leap year), and in each case shall be payable for the actual number of days
elapsed (including the first day but excluding the last day). The applicable
Alternate Base Rate or Adjusted LIBO Rate shall be determined by the Administrative
Agent, and such determination shall be conclusive absent manifest error.


SECTION 2.14.   Alternate
Rate of Interest.   If prior to the commencement of any Interest
Period for a Eurodollar Borrowing:


(a)        the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable means
do not exist for ascertaining the Adjusted LIBO Rate for such Interest Period;
or


(b)        the Administrative Agent is advised by the Required Lenders
that the Adjusted LIBO Rate for such Interest Period will not adequately and
fairly reflect the cost to such Lenders of making or maintaining their Loans
included in such Borrowing for such Interest Period; 


then the Administrative
Agent shall give notice thereof to the Borrower and the Lenders by telephone or
telecopy as promptly as practicable thereafter and, until the Administrative
Agent notifies the Borrower and the Lenders that the circumstances giving rise
to such notice no longer exist, (i) any Interest Election Request that
requests the conversion of any Borrowing to, or continuation of any Borrowing
as, a Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing
Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR
Borrowing.



 40
 









SECTION 2.15.   Increased
Costs.   (a) If any Change in Law shall:


(i)         impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender (except any such reserve requirement
reflected in the Adjusted LIBO Rate) or any Issuing Bank; or


(ii)       impose on any Lender or any Issuing Bank
or the London interbank market any other condition affecting this Agreement or
Eurodollar Loans made by such Lender or any Letter of Credit or participation
therein; 


and
the result of any of the foregoing shall be to increase the cost to such Lender
of making or maintaining any Eurodollar Loan (or of maintaining its obligation
to make any such Loan) or to increase the cost to such Lender or such Issuing
Bank of participating in, issuing or maintaining any Letter of Credit or to
reduce the amount of any sum received or receivable by such Lender or such
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or such Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or such Issuing
Bank, as the case may be, for such additional costs incurred or reduction suffered.


(b)        If any Lender or any Issuing Bank determines that any Change
in Law regarding capital requirements has or would have the effect of reducing
the rate of return on such Lender’s or such Issuing Bank’s capital or on the
capital of such Lender’s or such Issuing Bank’s holding company, if any, as a
consequence of this Agreement or the Loans made by, or participations in
Letters of Credit held by, such Lender, or the Letters of Credit issued by such
Issuing Bank, to a level below that which such Lender or such Issuing Bank or
such Lender’s or such Issuing Bank’s holding company could have achieved but
for such Change in Law (taking into consideration such Lender’s or such Issuing
Bank’s policies and the policies of such Lender’s or such Issuing Bank’s
holding company with respect to capital adequacy), then from time to time the
Borrower will pay to such Lender or such Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or such Issuing
Bank or such Lender’s or such Issuing Bank’s holding company for any such
reduction suffered. Each Lender will promptly notify the Borrower and the
Administrative Agent of any event of which it has knowledge that will entitle
such Lender to compensation pursuant to this Section 2.15; provided that the failure to provide such notification will
not affect such Lender’s rights to compensation hereunder.


(c)        A certificate of a Lender or an Issuing Bank setting forth
the amount or amounts necessary to compensate such Lender or such Issuing Bank
or its holding company, as the case may be, as specified in paragraph (a) or
(b) of this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender or such
Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.


(d)        Failure or delay on the part of any Lender or any Issuing
Bank to demand compensation pursuant to this Section shall not constitute
a waiver of such Lender’s or such Issuing Bank’s right to demand such
compensation; provided that the Borrower shall
not be required to compensate a Lender or an Issuing Bank pursuant to this Section for
any increased costs or reductions incurred more than 270 days prior to the date
that such Lender or such Issuing Bank, as the case may be, notifies the
Borrower of the Change in Law giving rise to such increased costs or reductions
and of such Lender’s or such Issuing Bank’s intention to claim compensation
therefor; provided further that, if the Change in
Law giving rise to such increased costs or reductions is retroactive, then the
270-day period referred to above shall be extended to include the period
of retroactive effect thereof.


SECTION 2.16.   Break
Funding Payments.   In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest Period
applicable thereto (including as a result of an Event of Default), (b) the
conversion of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto, (c) the failure to borrow, convert, continue or
prepay any Eurodollar Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be 



 41
 









revoked under Section 2.11(f) and
is revoked in accordance therewith), or (d) the assignment of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrower pursuant to Section 2.19,
then, in any such event, the Borrower shall compensate each Lender for the
loss, cost and expense attributable to such event. In the case of a Eurodollar
Loan, such loss, cost or expense to any Lender shall be deemed to consist of an
amount determined by such Lender to be the excess, if any, of (i) the
amount of interest which would have accrued on the principal amount of such
Loan had such event not occurred, at the Adjusted LIBO Rate that would have
been applicable to such Loan, for the period from the date of such event to the
last day of the then current Interest Period therefor (or, in the case of a
failure to borrow, convert or continue, for the period that would have been the
Interest Period for such Loan), over (ii) the amount of interest which
would accrue on such principal amount for such period at the interest rate
which such Lender would bid were it to bid, at the commencement of such period,
for dollar deposits of a comparable amount and period from other banks in the
eurodollar market. A certificate of any Lender setting forth any amount or
amounts that such Lender is entitled to receive pursuant to this Section shall
be delivered to the Borrower and shall be conclusive absent manifest error. The
Borrower shall pay such Lender the amount shown as due on any such certificate
within 10 days after receipt thereof.


SECTION 2.17.   Taxes.   (a) Any
and all payments by or on account of any obligation of the Borrower hereunder
or under any other Senior Loan Document shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required to deduct
any Indemnified Taxes or Other Taxes from such payments, then (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section) the Agent, Lender or Issuing Bank (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions and (iii) the Borrower
shall pay the full amount deducted to the relevant Governmental Authority in accordance
with applicable law.


(b)        In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.


(c)        The Borrower shall indemnify the Administrative Agent, each
Lender and each Issuing Bank, within 10 days after written demand therefor, for
the full amount of any Indemnified Taxes or Other Taxes paid by the
Administrative Agent, such Lender or such Issuing Bank, as the case may be, on
or with respect to any payment by or on account of any obligation of the
Borrower hereunder or under any other Senior Loan Document (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such Indemnified
Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or liability
delivered to the Borrower by a Lender or an Issuing Bank, or by the Administrative
Agent on its own behalf or on behalf of a Lender or an Issuing Bank, shall be
conclusive absent manifest error.


(d)        As soon as practicable after any payment of Indemnified Taxes
or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy
of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.



 42















(e) Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the
jurisdiction in which the Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall
deliver to the Borrower (with a copy to the Administrative Agent), at the time
or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate, provided that such Foreign Lender
has received written notice from the Borrower advising it of the availability
of such exemption or reduction and supplying all applicable documentation.


SECTION 2.18.   Payments Generally; Pro Rata
Treatment; Sharing of Setoffs.   (a) The Borrower shall
make each payment required to be made by it hereunder or under any other Senior
Loan Document (whether of principal, interest, fees or reimbursement of LC
Disbursements, or of amounts payable under Section 2.15, 2.16 or 2.17, or
otherwise) prior to the time expressly required hereunder or under such other
Senior Loan Document for such payment (or, if no such time is expressly
required, prior to 2:00 p.m., New York City time), on the date when due,
in immediately available funds, without setoff or counterclaim. Any amounts
received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 388 Greenwich
Street, New York, NY 10013, except payments to be made directly to an Issuing
Bank or Swingline Lender as expressly provided herein and except that payments
pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the
Persons entitled thereto and payments pursuant to other Senior Loan Documents
shall be made to the Persons specified therein. The Administrative Agent shall
distribute any such payments received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof. If any payment
under any Senior Loan Document shall be due on a day that is not a Business Day,
the date for payment shall be extended to the next succeeding Business Day,
and, in the case of any payment accruing interest, interest thereon shall be
payable for the period of such extension. All payments under each Senior Loan
Document shall be made in dollars.


(b) If at any time insufficient funds are received by
and available to the Administrative Agent to pay fully all amounts of
principal, unreimbursed LC Disbursements, interest and fees then due hereunder,
such funds shall be applied (i) first, towards
payment of interest and fees then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of interest and fees then due
to such parties, and (ii) second, towards
payment of principal and unreimbursed LC Disbursements then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
principal and unreimbursed LC Disbursements then due to such parties.


(c) If any Lender shall, by exercising any right of
setoff or counterclaim or otherwise, obtain payment in respect of any principal
of or interest on any of its Loans or participations in LC Disbursements or
Swingline Loans resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Loans and participations in LC
Disbursements and Swingline Loans and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the Loans
and participations in LC Disbursements and Swingline Loans of other Lenders to
the extent necessary so that the benefit of all such payments shall be shared
by the Lenders ratably in accordance with the aggregate relative amounts of
principal of and accrued interest on their Loans and participations in LC
Disbursements and Swingline Loans; provided that (i) if
any such participations are purchased and all or any portion of the payment
giving rise thereto is recovered, such participations shall be rescinded and
the purchase price restored to the extent of such recovery, without interest,
and (ii) the provisions of this paragraph shall not be construed to apply
to any payment made by the Borrower pursuant to and in accordance with the
express terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans or participations in LC Disbursements to any assignee or 



 43
 









participant, other than to
the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions
of this paragraph shall apply). The Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may exercise
against the Borrower rights of setoff and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrower
in the amount of such participation.


(d) Unless the Administrative Agent shall have
received notice from the Borrower prior to the date on which any payment is due
to the Administrative Agent for the account of the Lenders or the Issuing Bank
hereunder that the Borrower will not make such payment, the Administrative
Agent may assume that the Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to
the Lenders or an Issuing Bank, as the case may be, the amount due. In such
event, if the Borrower has not in fact made such payment, then each of the
Lenders or such Issuing Bank, as the case may be, severally agrees to repay to
the Administrative Agent forthwith on demand the amount so distributed to such
Lender or such Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date
of payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.


(e) If any Lender shall fail to make any payment
required to be made by it pursuant to Section 2.04(c), 2.05(d) or
(e), 2.06(b), 2.18(d) or 9.03(c), then the Administrative Agent may, in
its discretion (notwithstanding any contrary provision hereof), apply any
amounts thereafter received by the Administrative Agent for the account of such
Lender to satisfy such Lender’s obligations under such Sections until all such
unsatisfied obligations are fully paid.


SECTION 2.19.   Mitigation Obligations; Replacement
of Lenders.   (a) If any Lender requests compensation under
Section 2.15, or if the Borrower is required to pay any additional amount
to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 2.17, then such Lender shall use reasonable efforts to
designate a different lending office for funding or booking its Loans hereunder
or to assign its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15
or 2.17, as the case may be, in the future and (ii) would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous
to such Lender. The Borrower hereby agrees to pay all reasonable costs and
expenses incurred by any Lender in connection with any such designation or
assignment.


(b) If (i) any Lender requests compensation under
Section 2.15, (ii) the Borrower is required to pay any additional
amount to any Lender or any Governmental Authority for the account of any
Lender pursuant to Section 2.17, (iii) any Lender defaults in its
obligation to fund Loans hereunder or (iv) any Lender refuses to consent
to any amendment or waiver of any Senior Loan Document requested by the
Borrower that requires the consent of all Lenders, and such amendment or waiver
is consented to by the Supermajority Lenders, then the Borrower may, at its
sole expense and effort, upon notice to such Lender and the Administrative
Agent, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in Section 9.04),
all its interests, rights and obligations under this Agreement to an assignee
that shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that (i) the
Borrower shall have received the prior written consent of the Administrative
Agent (and, if a Revolving Commitment is being assigned, the Issuing Banks and
the Swingline Lender), which consent shall not unreasonably be withheld, (ii) such
Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and participations in LC Disbursements and Swingline
Loans, accrued interest thereon, accrued fees and all other amounts payable to
it hereunder, from the assignee (to the extent of such outstanding principal
and accrued interest and fees) or the Borrower (in the case of all other
amounts) and (iii) in the case of any 



 44
 









such assignment resulting
from a claim for compensation under Section 2.15 or payments required to
be made pursuant to Section 2.17, such assignment will result in a
material reduction in such compensation or payments. A Lender shall not be
required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrower to require such assignment and delegation cease to apply.


SECTION 2.20.   Adjustments to Borrowing Base Advance
Rates.   (a) As of the Second Restatement Effective Date,
the Accounts Receivable Advance Rate will be 85%, the Pharmaceutical Inventory
Advance Rate will be 85%, the Other Inventory Advance Rate will be 80% and the
Scripts List Advance Rate will be 30%.


(b) Any increase in the Pharmaceutical Inventory
Advance Rate, the Other Inventory Advance Rate, the Accounts Receivable Advance
Rate or the Script Lists Advance Rate above that would result in any rate in
excess of the initially applicable rate set forth in Section 2.20(a) will
in each case require the consent of all the Lenders.


(c) The Collateral Agent, in the exercise of its
reasonable judgment to reflect Borrowing Base Factors, may (i) reduce the
Accounts Receivable Advance Rate, the Pharmaceutical Inventory Advance Rate,
the Other Inventory Advance Rate and the Script Lists Advance Rate from time to
time and (ii) thereafter increase such rate to a rate not in excess of the
applicable rate set forth in Section 2.20(a).


(d) The Administrative Agent will give prompt written
notice to the Borrower and the Lenders of any adjustments effected pursuant to
this Section 2.20.


SECTION 2.21.   Incremental
Loans.   At any time after the Second Restatement Effective Date
prior to the Tranche 2 Term Maturity Date, the Borrower may, by notice to the
Administrative Agent (which shall promptly deliver a copy to each of the
Lenders), request the addition to this Agreement of a new tranche of term
loans, or an incremental revolving credit facility or any combination thereof
(the “Incremental Facilities”); provided, however, that
both (x) at the time of any such request and (y) upon the
effectiveness of any such Incremental Facility, no Default shall exist and the
Borrower shall, if a Financial Covenant Effectiveness Period is then occurring,
be in compliance with Section 6.12 (calculated, in the case of clause (y),
on a pro forma basis to give effect to any borrowing under the Incremental
Facility and any substantially simultaneous repayments of Revolving Loans). The
Incremental Facilities shall (i) be in an aggregate principal amount not
in excess of $350,000,000, (ii) rank pari passu in
right of payment and of security with the other Loans, (iii) if such
Incremental Facility is a term loan facility, amortize in a manner, and be
subject to mandatory prepayments (if any) on terms, acceptable to the Agents,
and mature no earlier than the Tranche 2 Term Maturity Date, (iv) bear
interest at the market interest rate, as determined at the time such
Incremental Facility becomes effective, (v) have such other pricing as may
be agreed by the Borrower and the Administrative Agent and (vi) otherwise
be treated hereunder no more favorably than the Revolving Loans (or, after the
Revolving/Tranche 1 Term Maturity Date, the Tranche 2 Term Loans); provided, that the terms and provisions applicable to the
Incremental Facilities may provide for additional or different financial or
other covenants applicable only during periods after the Tranche 2 Term
Maturity Date. At no time shall the sum of (i) the aggregate amount of
loans outstanding under the Incremental Facilities at such time, (ii) the
total Revolving Exposure at such time, (iii) the outstanding Tranche 1
Term Loans at such time and (iv) the outstanding Tranche 2 Term Loans at
such time exceed the Borrowing Base Amount (or, if prior to the Borrowing Base
Date, the Estimated Borrowing Base Amount) in effect at such time, and the
proceeds of the Incremental Facilities shall be used solely for the purposes
set forth in Section 5.10 and the preamble. Such notice shall set forth
the requested amount and class of Incremental Facilities, and shall offer each
Lender the opportunity to offer a commitment (the “Incremental
Commitment”) to provide a portion of the Incremental Facility by
giving written notice of such offered commitment to the Administrative Agent
and the Borrower within a time period (the “Offer  Period”) to be specified in the Borrower’s notice; provided, however, that
no existing Lender will be 



 45
 









obligated to
subscribe for any portion of such commitments. In the event that, at the
expiration of the Offer Period, Lenders shall have provided commitments in an
aggregate amount less than the total amount of the Incremental Facility
initially requested by the Borrower, the Borrower may request that Incremental
Facility commitments be made in a lesser amount equal to such commitments
and/or shall have the right to arrange for one or more banks or other financial
institutions (any such bank or other financial institution being called an “Additional Lender”) to extend commitments to provide a
portion of the Incremental Facility in an aggregate amount equal to the
unsubscribed amount of the initial request; provided that
each Additional Lender shall be subject to the approval of the Administrative
Agent (such consent not to be unreasonably withheld); and provided
further that the Additional Lenders
shall be offered the opportunity to provide the Incremental Facility only on
terms previously offered to the existing Lenders pursuant to the immediately
preceding sentence. Commitments in respect of Incremental Facilities will
become Commitments under this Agreement pursuant to an amendment to this
Agreement (such an amendment, an “Incremental Facility
Amendment”) executed by each of the Borrower and each Subsidiary
Loan Party (and, prior to the Borrowing Base Date, Holdings and each of its
subsidiaries), each Lender agreeing to provide such Commitment, if any, each
Additional Lender, if any, and the Administrative Agent. The effectiveness of
any Incremental Facility Amendment shall be subject to the satisfaction on the
date thereof of each of the conditions set forth in Section 4.02 of the
Original Agreement as in effect immediately prior to the First Restatement
Effective Date.


ARTICLE III


Representations and
Warranties


The Borrower represents and warrants to the Lenders
that:


SECTION 3.01.   Organization; Powers.   Each
of the Borrower and the Subsidiaries is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, has all
requisite power and authority to carry on its business as now conducted and,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, is qualified to
do business in, and is in good standing in, every jurisdiction where such
qualification is required.


SECTION 3.02.   Authorization; Enforceability.   The
Transactions to be entered into by each Loan Party are within such Loan Party’s
corporate powers and have been duly authorized by all necessary corporate and,
if required, stockholder action. This Agreement has been duly executed and
delivered by the Borrower and constitutes, and each other Senior Loan Document
to which any Loan Party is to be a party, when executed and delivered by such
Loan Party, will constitute, a legal, valid and binding obligation of the
Borrower or such Loan Party (as the case may be), enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally
and subject to general principles of equity, regardless of whether considered
in a proceeding in equity or at law.


SECTION 3.03.   Governmental Approvals; No Conflicts.   The
Transactions (a) do not require any consent or approval of, registration
or filing with, or any other action by, any Governmental Authority, except such
as have been obtained or made and are in full force and effect and except
filings necessary to perfect Liens created under the Senior Loan Documents, (b) will
not violate any applicable law or regulation or the charter, by-laws or other
organizational documents of the Borrower or any of the Subsidiaries or any
order of any Governmental Authority, (c) will not violate or result in a
default under any indenture, agreement or other instrument evidencing or
governing Indebtedness or any other material agreement binding upon the
Borrower or any Subsidiary or its assets, or give rise to a right thereunder to
require any payment to be made by the Borrower or any Subsidiary, and (d) will
not result in the creation 



 46
 









or imposition of any Lien
on any asset of the Borrower or any Subsidiary, except Liens created under the
Senior Loan Documents and the Second Priority Collateral Documents.


SECTION 3.04.   Financial Condition; No Material
Adverse Change.   (a) The Borrower has heretofore furnished
to the Lenders its consolidated balance sheet and statements of income,
stockholders equity and cash flows as of and for the fiscal year ended March 3,
2007, reported on by Deloitte & Touche LLP. Such financial statements
present fairly the financial position and results of operations and cash flows
of the Borrower and its Consolidated Subsidiaries as of such dates and for such
periods in accordance with GAAP.


(b) Except as disclosed (i) in the financial
statements referred to in paragraph (a) above or the notes thereto, (ii) in
the Borrower’s report or Form 10-K for the fiscal year ended March 3,
2007 or (iii) on Schedule 3.04, after giving effect to the Transactions,
none of the Borrower or the Subsidiaries has, as of the Second Restatement
Effective Date, any material contingent liabilities, unusual long-term loan
commitments or unrealized losses.


(c) Since March 3, 2007, there has been no
material adverse change in the business, assets, operations, properties,
condition (financial or otherwise), or prospects of the Borrower and the
Subsidiaries, taken as a whole.


SECTION 3.05.   Properties.   (a) Each
of the Borrower and the Subsidiaries has good and marketable title to, or valid
leasehold interests in, all its real and personal property material to its
business, except (i) for minor defects in title that do not interfere with
its ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes and (ii) as set forth on Schedule
3.05(a). All such real and personal property are free and clear of all Liens,
other than Liens permitted by Section 6.02.


(b) Each of the Borrower and the Subsidiaries owns, or
is licensed to use, all trademarks, tradenames, copyrights, patents and other
intellectual property material to its business, and the use thereof by the
Borrower and the Subsidiaries does not infringe upon the rights of any other
Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.


(c) Schedule 3.05(c) sets forth the address of
every leased warehouse or distribution center in which inventory owned by the
Borrower or any Subsidiary is located as of the Second Restatement Effective
Date.


SECTION 3.06.   Litigation and Environmental Matters.   (a) Except
as set forth on Schedule 3.06(a), there are no actions, suits or proceedings by
or before any arbitrator or Governmental Authority pending against or, to the
knowledge of the Borrower, threatened against or affecting the Borrower or any
of the Subsidiaries (i) as to which there is a reasonable possibility of
an adverse determination and that, if adversely determined, could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect or (ii) that involve any of the Senior Loan Documents or the
Transactions.


(b) Except as set forth on Schedule 3.06(b) and
except with respect to any other matters that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, neither the Borrower nor any of the Subsidiaries (i) has failed to
comply with any Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required under any Environmental Law, (ii) has
become subject to any Environmental Liability, (iii) has received notice
of any claim with respect to any Environmental Liability or (iv) knows of
any basis for any Environmental Liability.


SECTION 3.07.   Compliance with Laws and Agreements.   Except
as set forth on Schedule 3.07, each of the Borrower and the Subsidiaries is in
compliance with all laws, regulations and orders of any Governmental Authority
applicable to it or its property (including, without limitation, the Health 



 47
 









Insurance Portability and
Accountability Act of 1996 (“HIPAA”) and all other material healthcare laws and
regulations) and all indentures, agreements and other instruments binding upon
it or its property or assets, except where the failure to be so, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect. No Default has occurred and is continuing.


SECTION 3.08.   Investment and Holding Company
Status.   Neither the Borrower nor any of the Subsidiaries is an
“investment company” as defined in, or subject to regulation under, the
Investment Company Act of 1940.


SECTION 3.09.   Taxes.   Each of the
Borrower and the Subsidiaries has timely filed or caused to be filed all United
States Federal income tax returns and reports and all other material tax
returns and reports required to have been filed and has paid or caused to be
paid all material Taxes due pursuant to such returns or pursuant to any assessment
received by the Borrower or any Subsidiary, except (i) where the payment
of any such Taxes is being contested in good faith by appropriate proceedings
and for which the Borrower or such Subsidiary, as applicable, has set aside on
its books adequate reserves and (ii) as set forth on Schedule 3.09. The
charges, accruals and reserves on the books of the Borrower and its
Consolidated Subsidiaries in respect of Taxes or charges imposed by a
Governmental Authority are, in the opinion of the Borrower, adequate.


SECTION 3.10.   ERISA.   No ERISA
Event has occurred or is reasonably expected to occur that, when taken together
with all other ERISA Events for which liability is reasonably expected to
result, could reasonably be expected to result in liability exceeding
$50,000,000. The minimum funding standards of ERISA and the Code with respect
to each Plan have been satisfied. The present value of all accumulated benefit
obligations under each Plan (based on the assumptions used for purposes of Statement
of Financial Accounting Standards No. 87) did not, as of the date of the
most recent financial statements reflecting such amounts, exceed by more than
$50,000,000 the fair market value of the assets of such Plan, and the present
value of all accumulated benefit obligations of all underfunded Plans (based on
the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $50,000,000 the fair
market value of the assets of all such underfunded Plans.


SECTION 3.11.   Disclosure; Accuracy of Information.   (a) As
of the Second Restatement Effective Date, none of the reports, financial
statements, certificates or other information furnished by or on behalf of any
Loan Party to any Agent or any Lender in connection with the negotiation of
this Agreement or any other Senior Loan Document or delivered hereunder or
thereunder (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided that,
with respect to projected financial information, the Borrower represents only
that such information was prepared in good faith based upon assumptions
believed to be reasonable at the time.


(b) Each Borrowing Base Certificate that has been or
will be delivered to the Collateral Agent, the Administrative Agent or any
Lender is and will be complete and correct in all material respects.


SECTION 3.12.   Subsidiaries.   Schedule
3.12 sets forth the name of, and the ownership interest of the Borrower in,
each Subsidiary and identifies each Subsidiary that is a Subsidiary Loan Party,
in each case as of the Second Restatement Effective Date. As of the Second Restatement
Effective Date, each of the Subsidiaries is an “Unrestricted Subsidiary” as
defined in, and for all purposes of, the Indentures.


SECTION 3.13.   Insurance.   Schedule
3.13 sets forth a description of all liability, property and casualty insurance
maintained by or on behalf of the Borrower and the Subsidiaries as of the
Second Restatement Effective Date. As of the Second Restatement Effective Date,
all premiums in respect of such insurance have been paid. The Borrower and the
Subsidiaries have insurance in such amounts and 



 48
 









covering such risks and
liabilities as are in accordance with normal industry practice and as required
by the Senior Loan Documents. The Borrower reasonably believes that the
insurance maintained by or on behalf of the Borrower and the Subsidiaries is
adequate.


SECTION 3.14.   Labor Matters.   Except
as set forth on Schedule 3.14, as of the Second Restatement Effective Date,
there are no strikes, lockouts or slowdowns against the Borrower or any
Subsidiary pending or, to the knowledge of the Borrower, threatened which could
reasonably be expected to result in a Material Adverse Effect. Except as set
forth on Schedule 3.14, the hours worked by and payments made to employees of
the Borrower and the Subsidiaries have not been in violation in any material
respect of the Fair Labor Standards Act or any other applicable Federal, state,
local or foreign law dealing with such matters. Except as set forth on Schedule
3.14, all payments due from the Borrower or any Subsidiary, or for which any
claim may be made against the Borrower or any Subsidiary, on account of wages
and employee health and welfare insurance and other benefits, have been paid or
accrued as a liability on the books of the Borrower or such Subsidiary. Except
as set forth on Schedule 3.14, the consummation of the Transactions will not
give rise to any right of termination or right of renegotiation on the part of
any union under any collective bargaining agreement to which the Borrower or
any Subsidiary is bound.


SECTION 3.15.   Solvency.   Immediately
after the consummation of the Transactions to occur on the Second Restatement
Effective Date (including the making of each Loan made on the Second
Restatement Effective Date and after giving effect to the application of the
proceeds of such Loans), (a) the fair value of the assets of the Borrower and
the other Loan Parties, taken as a whole, at a fair valuation, will exceed
their debts and liabilities, subordinated, contingent or otherwise; (b) the
present fair saleable value of the property of the Borrower and the other Loan
Parties, taken as a whole, will be greater than the amount that will be
required to pay the probable liability of their debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities become
absolute and matured; (c) the Borrower and the other Loan Parties taken as
a whole, will be able to pay their debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured; and (d) the Borrower and the other Loan Parties will not have
unreasonably small capital with which to conduct the business in which they are
engaged as such business is now conducted and is proposed to be conducted
following the Second Restatement Effective Date.


SECTION 3.16.   Federal Reserve Regulations.   (a) Neither
the Borrower nor any Subsidiary is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
buying or carrying Margin Stock.


(b) No part of the proceeds of any Loan or any Letter
of Credit will be used by the Borrower or any Subsidiary, whether directly or
indirectly, and whether immediately, incidentally or ultimately, for any
purpose that entails a violation of, or that is inconsistent with, the
provisions of Regulation T, U or X of the Board.


SECTION 3.17.   Security Interests.   (a) The
Senior Subsidiary Security Agreement is effective to create in favor of the
Collateral Agent, for the ratable benefit of the Senior Secured Parties, a
legal, valid and enforceable security interest in the Senior Collateral subject
to such agreement and, when financing statements in appropriate form are filed
in the offices specified on Schedule 6 to the Perfection Certificate, such
security interest shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the grantors thereunder in the
Senior Collateral, to the extent perfection can be obtained by filing Uniform
Commercial Code financing statements, in each case prior and superior in right
to any other Person to the extent perfection can be obtained by filing Uniform
Commercial Code financing statements, other than with respect to the rights of
Persons pursuant to Liens expressly permitted by Section 6.02.



 49















(b) The Interim Collateral and Guarantee
Agreement is effective to create in favor of the Collateral Agent, for the
ratable benefit of the Interim Secured Parties, a legal, valid and enforceable
security interest in the Interim Collateral subject to such agreement and (i) when
the Interim Collateral constituting certificated securities (as defined in the
Uniform Commercial Code) is delivered to the Collateral Agent thereunder together
with instruments of transfer duly endorsed in blank, the security interest of
the Collateral Agent therein will constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the pledgors in such
Interim Collateral, prior and superior in right to any other Person subject
only to Permitted Encumbrances and (ii) when financing statements in
appropriate form are filed in the offices specified in the Perfection Certificate
delivered on the Second Restatement Effective Date, the security interest of the
Collateral Agent will constitute a fully perfected Lien on and security in all
right, title and interest of the Grantors (as defined in the Interim Collateral
Agreement) in the remaining Interim Collateral to the extent perfection can be
obtained by filing Uniform Commercial Code financing statements, prior and
superior in right to any other Person subject only to Permitted Encumbrances.


SECTION 3.18.   Use of
Proceeds.   The Borrower will use the proceeds of the Loans and
will request the issuance of Letters of Credit only for the purposes specified
in the preamble to this Agreement and set forth in Section 5.10.


ARTICLE IV


Conditions


SECTION 4.01.   Second Restatement Effective Date.   Without
affecting the rights of the Borrower or any Subsidiary hereunder at all times
prior to the Second Restatement Effective Date, the amendment and restatement
in the form hereof of the Original Agreement and the obligations of the Lenders
to make Loans and acquire participations in Letters of Credit and Swingline
Loans and of the Issuing Banks to issue Letters of Credit hereunder shall not
become effective until the date on which the conditions set forth in Sections
2.2(b) and 2.3 of the Amendment and Restatement Agreement shall have been
satisfied.


It is understood and agreed that no term of the
amendment and restatement contemplated hereby shall be effective until the
Second Restatement Effective Date occurs, and that the Original Agreement shall
continue in full force and effect without regard to the amendment and
restatement contemplated hereby until the Second Restatement Effective Date.


SECTION 4.02.   Each Credit Event.   The
obligation of each Revolving Lender to make a Revolving Loan on the occasion of
any Revolving Borrowing after the Second Restatement Effective Date, and of
each Issuing Bank to issue, amend, renew or extend any Letter of Credit after
the Second Restatement Effective Date, is subject to receipt of the request
therefore in accordance herewith and to the satisfaction of the following
conditions (each Borrowing and each issuance, amendment, renewal or extension
of a Letter of Credit (for purposes of this Section, an “issuance”) shall be deemed
to constitute a representation and warranty by Borrower on the date thereof as
to the matters specified in paragraphs (a), (b) and (c) of this
Section): 


(a) the representations and warranties of the
Loan Parties contained in each Senior Loan Document are true and correct in all
material respects on and as of the date of such Borrowing or issuance, before
and after giving effect to such Borrowing or issuance and to the application of
the proceeds therefrom, as though made on and as of such date (except to the
extent any such representation or warranty expressly relates to an earlier
date, in which case such representation and warranty shall have been true and
correct in all material respects as of such earlier date);


(b) no event has occurred and is continuing, or
would result from such Borrowing or issuance or from the application of the
proceeds therefrom, that constitutes a Default or an Event 



 50
 









of Default and such
Borrowing or issuance would not result in a violation of the amount of secured
Indebtedness permitted under the Second Priority Debt Documents; and


(c) after giving effect to such Borrowing or
issuance the Borrowing Base Amount shall be equal to or greater than the sum of
(i) the total Revolving Exposures, (ii) the outstanding Tranche 1
Term Loans and (iii) if prior to the Borrowing Base Date, zero and, if on
or after the Borrowing Base Date, the outstanding Tranche 2 Term Loans.


SECTION 4.03.   Borrowing Base Date.   The
“Borrowing Base Date” will occur on the first date on which the following
conditions have been satisfied:


(a) The Financial Statement Delivery Date shall
have occurred.


(b) The Administrative Agent shall have received
a favorable legal opinion of each of (i) Skadden, Arps, Slate, Meagher &
Flom LLP, counsel to the Borrower and (ii) Robert Sari, General Counsel of
the Borrower, in each case addressed to the Administrative Agent and the
Lenders and dated as of such date, covering such matters relating to the Loan
Parties, this Agreement, the other Senior Loan Documents and the Senior
Collateral as the Administrative Agent may reasonably request, and otherwise
reasonably satisfactory to the Administrative Agent. The Borrower hereby requests
such counsel to deliver such opinions.


(c) The Collateral and Guarantee Requirement
shall have been satisfied in respect of Holdings and its subsidiaries and the
Administrative Agent shall have received (i) a completed Perfection
Certificate dated as of such date and signed by an executive officer or
Financial Officer together with all attachments contemplated thereby, including
the results of a search of the Uniform Commercial Code (or equivalent) filings
made with respect to Holdings and its subsidiaries in the jurisdictions
contemplated by the Perfection Certificate and copies of the financing
statements (or similar documents) disclosed by such search and (ii) evidence
reasonably satisfactory to the Administrative Agent that the Liens disclosed by
such search are permitted by Section 6.02 or have been released.


(d) Each Subsidiary Loan Party shall have entered
into a written instrument reasonably satisfactory to the Administrative Agent
pursuant to which it confirms that the Senior Collateral Documents to which it
is party will continue to apply in respect of this Agreement and the Senior
Obligations (as such term is defined in respect of the period after the
Borrowing Base Date).


(e) After the satisfaction of the Collateral and
Guarantee Requirement in respect of Holdings and its subsidiaries on the
Borrowing Base Date, the Borrowing Base Amount on such date shall be no less
than the sum of (i) the total Revolving Exposures on such date, (ii) the
outstanding Tranche 1 Term Loans on such date and (iii) the outstanding
Tranche 2 Term Loans on such date. The Administrative Agent shall have received
a completed Borrowing Base Certificate dated as of such date and signed by a Financial
Officer.


(f) To the extent
invoiced, the Administrative Agent shall have received payment or reimbursement
of its reasonable out-of-pocket expenses, including the reasonable fees,
charges and disbursements of counsel for the Administrative Agent.


ARTICLE V


Affirmative
Covenants


Until the Commitments have expired or been terminated
and the principal of and interest on each Loan and all fees payable hereunder
shall have been paid in full and all Letters of Credit shall have expired,
terminated or been cash collateralized and all LC Disbursements shall have been
reimbursed, the Borrower covenants and agrees with the Lenders that:



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SECTION 5.01.   Financial Statements and Other
Information.   The Borrower will furnish to the Administrative
Agent and each Lender:


(a) as soon as available and in any event within
105 days (or such earlier date that is 10 days after the then-current filing
deadline for the Borrower’s Annual Report on Form 10-K) after the
end of each fiscal year of the Borrower, its audited consolidated balance sheet
and related statements of income and cash flows as of the end of and for such
year, setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on by Deloitte & Touche LLP or
another registered independent public accounting firm of recognized national
standing (without a “going concern” or like qualification or exception and
without any material qualification or exception as to the scope of such audit) to
the effect that such consolidated financial statements present fairly in all material
respects the financial position, results of operations and cash flows of the Borrower
and its Consolidated Subsidiaries on a consolidated basis in accordance with
GAAP;


(b) as soon as available and in any event within
50 days (or such earlier date that is five days after the then-current filing
deadline for the Borrower’s Quarterly Report on Form 10-Q) after the
end of each of the first three fiscal quarters of each fiscal year of the
Borrower, its consolidated balance sheet as of the end of such fiscal quarter
and related statements of income for such fiscal quarter and of income and cash
flows for the then elapsed portion of such fiscal year, setting forth in each
case in comparative form the figures for the corresponding period or periods of
(or, in the case of the balance sheet, as of the end of) the previous fiscal
year;


(c) concurrently with any delivery of financial
statements under clause (a) or (b) above, a certificate of a
Financial Officer (i) certifying as to whether a Default has occurred and,
if a Default has occurred, specifying the details thereof and any action taken
or proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed calculations demonstrating (x) compliance with Section 6.08(c) and
(y) the Borrower’s ratio under Section 6.12, (iii) stating whether
any change in GAAP or in the application thereof has occurred since the date of
the Borrower’s audited financial statements referred to in Section 3.04 and,
if any such change has occurred, specifying the effect of such change on the financial
statements accompanying such certificate, (iv) identifying any Subsidiary
formed or acquired since the end of the fiscal quarter immediately preceding
the most recent fiscal quarter covered by such financial statements, (v) identifying
any change in a Subsidiary Loan Party’s (and, prior to the Borrowing Base Date,
Holding’s and any of its subsidiaries’) name, form of organization or
jurisdiction of organization, including as a result of any merger transaction,
since the end of the fiscal quarter immediately preceding the most recent
fiscal quarter covered by such financial statements, (vi) setting forth
the aggregate amount of Optional Debt Repurchases made by the Borrower during the
most recent fiscal quarter covered by such financial statements, identifying
the Indebtedness repurchased, redeemed, retired or defeased and specifying the provisions
of Section 6.08(b) or (c) pursuant to which each such Optional
Debt Repurchase was effected and quantifying the amounts effected under each
such provision, (vii) setting forth the amount and type of Indebtedness
issued or incurred and Securitizations (or increases in the amounts thereof)
and Factoring Transactions consummated during the most recent fiscal quarter
covered by such financial statements, (viii) identifying, with respect to
all Indebtedness of the Borrower and the Subsidiaries outstanding on the date
of the most recent balance sheet included in such financial statements, the
clause of Section 6.01(a) pursuant to which such Indebtedness is then
permitted to be outstanding, (ix) setting forth the amount of Restricted
Payments made during the most recent fiscal quarter covered by such financial
statements and the provision of Section 6.08(a) pursuant to which such
Restricted Payments were made, and (x) setting forth the aggregate sale
price of Eligible Script Lists sold since the most recent date on which the
Eligible Script Lists Value was provided to the Lenders in the event aggregate
sale price for all Eligible Script Lists sold since such date of determination
exceeds 5% of the most recently determined Eligible Script Lists Value;



 52
 









(d) concurrently with any delivery of financial
statements under clause (a) above, a certificate of the accounting firm
that reported on such financial statements (i) stating whether they
obtained knowledge during the course of their examination of such financial
statements of any Default and (ii) confirming the calculations set forth
in the officer’s certificate delivered simultaneously therewith pursuant to
clause (c)(ii) above (which certificate may be limited to the extent
required by accounting rules or guidelines);


(e) within three Business Days after the end of
each fiscal month of the Borrower, a certificate of a Financial Officer setting
forth in reasonable detail a description of each disposition of assets not in
the ordinary course of business for which the book value or fair market value
of the assets of the Borrower or the Subsidiaries disposed or the consideration
received therefor was greater than $10,000,000;


(f) within 14 Business Days after the end of each
fiscal month of the Borrower, a Borrowing Base Certificate showing the
Borrowing Base Amount as of the close of business on the last day of such
fiscal month, certified as complete and correct by a Financial Officer; provided that a Borrowing Base Certificate shall be
delivered by the Borrower to the Administrative Agent and each Lender within
four Business Days after the end of a fiscal week of the Borrower if at any time
during such fiscal week the Revolver Availability is less than or equal to $200,000,000
(with the amount with respect to Eligible Inventory stored at distribution
centers included in the Borrowing Base Amount shown on such Borrowing Base
Certificate delivered under this proviso being the amount computed as of the
close of business on the last day of the Borrower’s most recent fiscal month
for which such amount is available, which computation shall be completed within
14 Business Days after the end of each fiscal month of the Borrower);


(g) no later than 60 days following the end of
each fiscal year of the Borrower (or, in the reasonable discretion of the
Administrative Agent, no later than 30 days thereafter), forecasts for the
Borrower and its Consolidated Subsidiaries of (i) quarterly consolidated
balance sheet data and related consolidated statements of income and cash flows
for each quarter in the next succeeding fiscal year and (ii) consolidated
balance sheet data and related consolidated statements of income and cash flows
for each of the five fiscal years immediately following such fiscal year (but
excluding any fiscal year ending after 2013);


(h) promptly after the same become publicly
available, copies of all periodic and other reports, proxy statements and other
materials filed by the Borrower or any Subsidiary with the SEC, or with any
national securities exchange, or distributed by the Borrower to its
shareholders generally, as the case may be; and


(i) promptly following any request therefor, such
other information regarding the financial condition, business or identity of
the Borrower or any Subsidiary, or compliance with the terms of any Senior Loan
Document, as any Agent, at the request of any Lender, may reasonably request,
including any information to be provided pursuant to Section 9.17.


Information required to be delivered pursuant to
clauses (a), (b) and (h) shall be deemed to have been delivered on
the date on which the Borrower provides notice to the Lenders that such
information has been posted on the Borrower’s website on the Internet at www.riteaid.com,
at www.sec.gov/edgar/searchedgar/webusers.htm or at another website identified
in such notice and accessible by the Lenders without charge; provided that (i) such notice may be included in a
certificate delivered pursuant to clause (c) and (ii) the Borrower
shall deliver paper copies of the information referred to in clauses (a), (b) and
(h) to any Lender which requests such delivery.



 53
 









SECTION 5.02.   Notices of Material Events.   The
Borrower will furnish to the Administrative Agent and each Lender prompt
written notice after any officer of the Borrower obtains knowledge of any of
the following:


(a) the occurrence of any Default;


(b) the filing or commencement of any action,
suit or proceeding by or before any arbitrator or Governmental Authority
against or affecting the Borrower or any Affiliate thereof that could
reasonably be expected to result in a Material Adverse Effect;


(c) the occurrence of any ERISA Event;


(d) any Lien (other than security interests
created under any Senior Loan Document or Second Priority Debt Document or
Permitted Encumbrances) on any material portion of the Senior Collateral (or,
prior to the Borrowing Base Date, the Interim Collateral);


(e) the occurrence of any other event which could
reasonably be expected to have a material adverse effect on the security
interests created by the Senior Loan Documents or on the aggregate value of the
Senior Collateral (or, prior to the Borrowing Base Date, the Interim
Collateral); and


(f) any other development that results in, or
could reasonably be expected to result in, a Material Adverse Effect.


Each notice delivered under this Section shall be
accompanied by a statement of a Financial Officer or other executive officer of
the Borrower setting forth the details of the event or development requiring
such notice and any action taken or proposed to be taken with respect thereto.


SECTION 5.03.   Information Regarding Collateral.   (a) The
Borrower will furnish to the Administrative Agent prompt written notice of any
change (i) in any Loan Party’s corporate name, (ii) in the location
of any Loan Party’s jurisdiction of incorporation or organization, (iii) in
any Loan Party’s form of organization or (iv) in any Loan Party’s Federal
Taxpayer Identification Number or other identification number assigned by such
Loan Party’s jurisdiction of incorporation or formation. The Borrower agrees
not to effect or permit any change referred to in the preceding sentence unless
all filings have been made under the Uniform Commercial Code or otherwise that
are required in order for the Administrative Agent to continue at all times
following such change to have a valid, legal and perfected security interest in
all the Senior Collateral (and, prior to the Borrowing Base Date, the Interim
Collateral). The Borrower also agrees promptly to notify the Agents if any
material portion of the Senior Collateral is damaged or destroyed.


(b) Each year, at the time of delivery of annual
financial statements with respect to the preceding fiscal year pursuant to
clause (a) of Section 5.01, the Borrower shall deliver to the Agents
a certificate of the chief legal officer of the Borrower (i) setting forth the
information required pursuant to Section 1 of the Perfection Certificate or
confirming that there has been no change in such information since the date of
the Perfection Certificate delivered on the Second Restatement Effective Date or
the date of the most recent certificate delivered pursuant to this Section and
(ii) certifying that all Uniform Commercial Code financing statements
(including fixture filings, as applicable) or other appropriate filings,
recordings or registrations, including all refilings, rerecordings and
reregistrations, containing a description of the Senior Collateral have been
filed of record in each governmental, municipal or other appropriate office in
each jurisdiction identified pursuant to clause (i) above to the extent
necessary to protect and perfect the security interests under the Senior
Subsidiary Security Agreement for a period of not less than 18 months after the
date of such certificate (except as noted therein with respect to any
continuation statements to be filed within such period).


SECTION 5.04.   Existence; Conduct of Business.   Except
as otherwise permitted by this Agreement, the Borrower will continue, and will
cause each Subsidiary to continue, to engage in business 



 54
 









of the same general type
as now conducted by the Borrower and the Subsidiaries. The Borrower will, and
will cause each of the Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges, franchises, patents,
copyrights, trademarks and trade names, in each case material to the conduct of
its business; provided that the foregoing shall
not prohibit any merger, consolidation, liquidation, dissolution or sale of
assets permitted under Section 6.03.


SECTION 5.05.   Payment of Obligations.   The
Borrower will, and will cause each of the Subsidiaries to, pay its Indebtedness
and other obligations, including Tax liabilities, which, if unpaid, could
result in a material Lien on any of their properties or assets, before the same
shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b) the
Borrower or such Subsidiary has set aside on its books adequate reserves with respect
thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.


SECTION 5.06.   Maintenance of Properties.   The
Borrower will, and will cause each of the Subsidiaries to, keep and maintain
all property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted.


SECTION 5.07.   Insurance.   (a) The
Borrower will, and will cause each of the Subsidiaries to, maintain (either in
the name of the Borrower or in such Subsidiary’s own name), with financially
sound and reputable insurance companies insurance in such amounts (with no
greater risk retention) and against such risks as are customarily maintained by
companies of established repute engaged in the same or similar businesses
operating in the same or similar locations. The Borrower will furnish to the
Lenders, upon request of the Agents, information in reasonable detail as to the
insurance so maintained.


(b) The Borrower will, and will cause each of the
Subsidiaries to, maintain such insurance in a coverage amount of not less than
90% of the coverage amount as of the Original Restatement Effective Date, with
deductibles, risks covered and other provisions (other than the amount of
premiums) not materially less favorable to the Borrower and the Subsidiaries as
of the Original Restatement Effective Date.


(c) The Borrower will, and will cause each of the
Subsidiary Loan Parties (and, prior to or on the Borrowing Base Date, Holdings
and its subsidiaries) to, (i) cause all such policies to be endorsed or
otherwise amended to include a “standard” or “New York” lender’s loss payable
endorsement, in form and substance satisfactory to the Agents, which
endorsement shall provide that, from and after the Original Restatement Effective
Date if the insurance carrier shall have received written notice from the Administrative
Agent of the occurrence of an Event of Default, the insurance carrier shall pay
all proceeds otherwise payable to the Borrower and any other Loan Party under
such policies directly to the Collateral Agent for application pursuant to the
Collateral Trust and Intercreditor Agreement; (ii) cause all such policies
to provide that neither the Borrower, the Administrative Agent, either
Collateral Agent nor any other party shall be a coinsurer thereunder and to
contain a “Replacement Cost Endorsement”, without any deduction for
depreciation, and such other provisions as the Agents may reasonably require
from time to time to protect their interests; (iii) deliver broker’s
certificates to the Collateral Agent; (iv) cause each such policy to
provide that it shall not be canceled or not renewed by reason of nonpayment of
premium upon not less than 10 days’ prior written notice thereof by the insurer
to the Administrative Agent (giving the Administrative Agent the right to cure
defaults in the payment of premiums) or for any other reason upon not less than
30 days’ prior written notice thereof by the insurer to the Administrative
Agent; and (v) deliver to the Administrative Agent, before the cancellation
or nonrenewal of any such policy of insurance, a copy of a renewal or replacement
policy (or other evidence of renewal of a policy previously delivered to the Administrative
Agent), together with evidence reasonably satisfactory to the Agents of payment
of the premium therefor.



 55















(d)        In
connection with the covenants set forth in this Section, it is agreed that:


(i)         none
of the Agents, the Lenders, or their agents or employees shall be liable for
any loss or damage insured by the insurance policies required to be maintained
under this Section, and (A) the Borrower and each Subsidiary Loan Party
(and, prior to the Borrowing Base Date, Holdings and each of its subsidiaries)
shall look solely to their insurance companies or any other parties other than
the aforesaid parties for the recovery of such loss or damage and (B) such
insurance companies shall have no rights of subrogation against the Agents, the
Lenders or their agents or employees. If, however, the insurance policies do not
provide waiver of subrogation rights against such parties, as required above, then
the Borrower hereby agrees, to the extent permitted by law, to waive its right of
recovery, if any, against the Agents, the Lenders and their agents and employees;
and


(ii)       the
designation of any form, type or amount of insurance coverage by the Agents or
the Required Lenders under this Section shall in no event be deemed a
representation, warranty or advice by the Agents or the Lenders that such
insurance is adequate for the purposes of the business of the Borrower and the
Subsidiaries or the protection of their properties.


(e)        The
Borrower will, and will cause each of the Subsidiaries to, permit any
representatives that are designated by a Collateral Agent to inspect the
insurance policies maintained by or on behalf of the Borrower and the
Subsidiaries and inspect books and records related thereto and any properties
covered thereby. The Borrower shall pay the reasonable fees and expenses of any
representatives retained by a Collateral Agent to conduct any such inspection.


SECTION 5.08.   Books
and Records; Inspection and Audit Rights; Collateral and Borrowing Base
Reviews.   (a) The Borrower will, and will cause each of the
Subsidiaries to, keep proper books of record and account in which full, true
and correct entries are made of all dealings and transactions in relation to
its business and activities. The Borrower will, and will cause each of the
Subsidiaries to, permit any representatives designated by any Lender (at such
Lender’s expense, unless a Default has occurred and is continuing, in which
case at the Borrower’s expense), and after such Lender has consulted the
Administrative Agent with respect thereto, to visit and inspect its properties,
to examine and make extracts from its books and records, and to discuss its affairs,
finances and condition with its officers and independent accountants, all at
such reasonable times and as often as reasonably requested.


(b)        The
Borrower will, and will cause each of the Subsidiaries to, permit any
representatives designated by any Collateral Agent (including any consultants,
field examiners, accountants, lawyers and appraisers retained by such
Collateral Agent) to conduct (i) a field examination of the Senior
Collateral at or about the end of each fiscal quarter of the Borrower, (ii) an
appraisal of the Borrower’s computation of the assets included in the Borrowing
Base Amount and the Estimated Borrowing Base at or about the end of each fiscal
year of the Borrower, (iii) an appraisal of the Eligible Script Lists at or
about the end of the fiscal quarter ending August 31 of each fiscal year
of the Borrower and (iv) other evaluations and appraisals of the Borrower’s
computation of the Borrowing Base Amount and the Estimated Borrowing Base
Amount and the assets included in therein, all at such reasonable times and as
often as reasonably requested. The Borrower shall pay the reasonable fees and
expenses of any representatives retained by any Collateral Agent to conduct any
such evaluation or appraisal. The Administrative Agent shall promptly deliver
to the Lenders copies of all such appraisals and other information provided to
the Borrower in connection with such evaluations and appraisals.


(c)        The
Borrower will, and will cause each of the Subsidiaries to, in connection with
any evaluation and appraisal relating to the computation of the Borrowing Base
Amount or the Estimated Borrowing Base Amount, maintain such additional
reserves (for purposes of computing the Borrowing Base Amount or the Estimated
Borrowing Base Amount) in respect of Eligible Accounts Receivable and Eligible
Inventory and make such other adjustments to its parameters for including Eligible
Accounts 



 56
 









Receivable, Eligible
Inventory and Eligible Script Lists in the Borrowing Base Amount and the
Estimated Borrowing Base Amount as the Collateral Agent shall require based
upon the results of such evaluation and appraisal in its reasonable judgment to
reflect Borrowing Base Factors.


SECTION 5.09.   Compliance with Laws.   The
Borrower will, and will cause each of the Subsidiaries to, comply in all material
respects with all laws, rules, regulations and orders of any Governmental
Authority applicable to it or its property, including all Environmental Laws,
HIPAA and all other material healthcare laws and regulations, except where the
necessity of compliance therewith is contested in good faith by appropriate
proceedings or to the extent that any failures so to comply, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.


SECTION 5.10.   Use of
Proceeds and Letters of Credit.   (a) The proceeds of the
Tranche 2 Term Loans will be used by the Borrower for the purposes set forth in
the preamble hereto.


(b)        The
proceeds of the Revolving Loans, Swingline Loans and loans under the
Incremental Facilities made on or after the Second Restatement Effective Date will
be used by the Borrower as set forth in the preamble and for general corporate purposes,
including:


(i)         payment
of part of the consideration due to the Seller in connection with the Acquisition;


(ii)       payment
of fees and expenses (including any premiums and amendment fees) incurred in
connection with the Transactions;


(iii)      loans
or other transfers to Rite Aid Hdqtrs. Corp. for purposes of financing
inventory purchases pursuant to the Intercompany Inventory Purchase Agreement
and advancing funds to Subsidiary Loan Parties for their general corporate
purposes, including working capital, Consolidated Capital Expenditures and
Business Acquisitions permitted pursuant to Section 6.04;


(iv)       transfers
to an operating account for the payment of operating expenses (including rent,
utilities, taxes, wages, repair and similar expenses) of, and intercompany
Investments permitted under Section 6.04 in, the Borrower or any
Subsidiary Loan Party;


(v)        payment
by the Borrower of principal, interest, fees and expenses with respect to its
Indebtedness when due (including associated costs, fees and expenses) and
payment of the Borrower’s taxes, administrative, operating and other expenses;


(vi)       dividends
permitted to be made in respect of the Equity Interests listed on Schedule 6.08(a) or
described in Section 6.08(a); (vii) repurchase shares of the Borrower’s
Preferred Stock pursuant to Section 6.08(a);


(viii)    payment
of principal, interest, fees and expenses with respect to Third Party Interests
in accordance with the terms thereof; and (ix) the financing of Optional
Debt Repurchases, permitted capital expenditures, the repurchase of the
Borrower’s and/or its Subsidiaries’ (including Rite Aid Lease Management Company’s)
Preferred Stock and permitted Restricted Payments.


(c)        Letters
of Credit will be used solely to support payment obligations of the Borrower
and the Subsidiaries incurred in the ordinary course of business.


(d)        No
proceeds of Loans will be used to prepay commercial paper prior to the maturity
thereof and no such proceeds will be used, directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of buying or carrying any Margin Stock.
The Borrower will ensure that no such use of Loan proceeds and no issuance of Letters
of Credit will entail any violation of Regulation T, U or X of the Board.



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SECTION 5.11.   Additional Subsidiaries.   If
any additional wholly-owned Domestic Subsidiary is formed or acquired after the
Second Restatement Effective Date, and (i) if such Subsidiary is required
to become a Subsidiary Loan Party hereunder, the Borrower will, within three
Business Days after such Subsidiary is formed or acquired, notify the
Administrative Agent and the Lenders thereof and cause the Collateral and Guarantee
Requirement to be satisfied with respect to such Subsidiary, including each Securitization
Vehicle which is a Domestic Subsidiary, but excluding any Subsidiary that engages
solely in the pharmacy benefits management business, and (ii) if such
Subsidiary is a subsidiary of Holdings and such Subsidiary is formed or
acquired prior to the Borrowing Base Date, the Borrower will, within three
Business Days after such Subsidiary is formed or acquired, notify the
Administrative Agent and the Lenders thereof and cause the Interim Collateral
and Guarantee Requirement to be satisfied with respect to such Subsidiary,
including each Securitization Vehicle which is a Domestic Subsidiary, but
excluding any Subsidiary that engages solely in the pharmacy benefits management
business. Notwithstanding any other provision of this Agreement, (i) no Domestic
Subsidiary listed on Schedule 5.11 shall be required to become a Subsidiary Loan
Party (it being understood and agreed that Schedule 5.11 shall not include any Securitization
Vehicle that is a Domestic Subsidiary), (ii) no Domestic Subsidiary shall be
required to become a Subsidiary Loan Party unless and until such time as such Subsidiary
has assets in excess of $1,000,000 or acquires assets in excess of $1,000,000 or
has revenue in excess of $500,000 per annum and (iii) neither Holdings nor
any of its subsidiaries shall be required to become a Subsidiary Loan Party
until the Borrowing Base Date.


SECTION 5.12.   Further
Assurances.   (a) The Borrower will, and will cause each
Subsidiary Loan Party to, execute any and all further documents, financing statements,
agreements and instruments, and take all such further actions (including the filing
and recording of financing statements, fixture filings, deeds of trust and
other documents), which may be required under any applicable law, or which any
Collateral Agent or the Required Lenders may reasonably request, to cause the
Collateral and Guarantee Requirement to be and remain satisfied, all at the
expense of the Loan Parties. The Borrower also agrees to provide to the
Collateral Agent, from time to time upon request, evidence reasonably
satisfactory to the Collateral Agent as to the perfection and priority of the
Liens created or intended to be created by the Senior Collateral Documents.


(b)        The
Borrower will cause Holdings and each of its domestic subsidiaries to execute
any and all further documents, agreements and instruments, and take all such
further actions, which may be required under any applicable law, or which any
Collateral Agent or the Required Lenders may reasonably request, to cause the Interim
Collateral and Guarantee Requirement to be and remain satisfied at all times
prior to the Borrowing Base Date, all at the expense of the Borrower. The
Borrower also agrees to provide to the Collateral Agent, from time to time upon
request, evidence reasonably satisfactory to the Collateral Agent as to the
perfection and priority of the Liens created or intended to be created by the
Interim Collateral Documents.


SECTION 5.13.   Subsidiaries.   The
Borrower will cause all of the Subsidiaries that own Eligible Accounts
Receivable, Eligible Inventory or Eligible Script Lists (and, prior to the
Borrowing Base Date, Holdings and its subsidiaries) to be and at all times
remain “Unrestricted Subsidiaries” as defined in, and for all purposes of, each
of the Effective Date Indentures and will deliver such documents to the
trustees under each such Effective Date Indenture and take such actions
thereunder as may be necessary to effect the foregoing.


SECTION 5.14.   Intercompany Transfers.   The Borrower
shall maintain accounting systems capable of tracing intercompany transfers of
funds and other assets.


SECTION 5.15.   Inventory
Purchasing.   (a) The Borrower shall, and shall cause each
Subsidiary party to the Intercompany Inventory Purchase Agreement to, at all times
maintain in all material respects the vendor inventory purchasing system and
the intercompany inventory purchasing system in accordance 



 58
 









with the terms of
the Intercompany Inventory Purchase Agreement. The Borrower shall cause each
Subsidiary which owns or acquires any Senior Collateral consisting of inventory
to be party to the Intercompany Inventory Purchase Agreement. Notwithstanding
the foregoing, the Borrower shall only be required to cause Holdings and its
subsidiaries to comply with the foregoing as soon as reasonably practicable
after the Second Restatement Effective Date (but in any event by the Borrowing
Base Date).


(b)        The
Borrower shall not permit any Operating Subsidiary to purchase any Inventory from
any Direct Delivery Vendor other than (i) the acquisition of inventory from
McKesson Corporation (or any Persons that replace McKesson Corporation, in whole
or in part, and sell or otherwise provide inventory substantially similar to
inventory sold or otherwise provided by McKesson Corporation) consistent with
past practice and (ii) food-stuffs, beverages, periodicals, greeting cards
and similar items which are either paid for in cash substantially concurrently
with the time of delivery or otherwise consistent with past practice.


SECTION 5.16.   Cash
Management System.   (a) The Borrower will cause each
Subsidiary Loan Party to at all times maintain a Cash Management System that complies
with Schedule 3 of the Senior Subsidiary Security Agreement. The Borrower will
cause each Subsidiary Loan Party to comply with each obligation thereof under
the Cash Management System. The Borrower will cause each Subsidiary Loan Party
to comply with each of its obligations under the Cash Management System, and
shall cause each Subsidiary Loan Party to use its best efforts to cause any
applicable third party to effectuate the Cash Management System.
Notwithstanding the foregoing, the Borrower shall only be required to cause
Holdings and its subsidiaries to comply with the foregoing as soon as
reasonably practicable after the Second Restatement Effective Date (but in any event
by the Borrowing Base Date).


(b)        Each
party hereto authorizes the Administrative Agent and the Collateral Agent to (i) permit
the creation by the Grantors of accounts that receive payments in respect of
the Securitization Assets and/or Factoring Assets (but not other payments) and (ii) release
the security interest of the Collateral Agent for the ratable benefit of the
Senior Secured Parties in the Lockbox Account, the Governmental Lockbox Account
and/or any accounts created pursuant to clause (i) of this paragraph from
the Cash Management System and transfer control of the Lockbox Account, the Governmental
Lockbox Account and/or any accounts created pursuant to clause (i) of this
paragraph to (A) any Person in connection with a Factoring Transaction
permitted by this Agreement for so long as a Factoring Transaction is ongoing
or (B) any Person for the benefit of holders of Third Party Interests in
respect of a Securitization permitted by this Agreement for as long as any
Third Party Interests are outstanding.


SECTION 5.17.   Termination
of Factoring Transactions.   If an Event of Default has occurred
and the Collateral Agent has elected to exercise any remedies under the Senior
Collateral Documents as a result thereof, the Borrower shall, and shall cause each
of its Subsidiaries to, terminate all existing Factoring Transactions and cease
to engage in any further Factoring Transactions; provided,
however, that neither the Borrower nor
any such Subsidiary shall be required hereby to repurchase any Factoring Assets
previously sold, transferred or otherwise conveyed pursuant to any such
Factoring Transaction.


ARTICLE VI


Negative Covenants


Until the Commitments have expired or terminated and
the principal of and interest on each Loan and all fees payable hereunder have
been paid in full and all Letters of Credit have expired, terminated or been
cash collateralized and all LC Disbursements shall have been reimbursed, the
Borrower covenants and agrees with the Lenders that:



 59
 









SECTION 6.01.   Indebtedness;
Certain Equity Securities.   (a) The Borrower will not, and
will not permit any Subsidiary to, create, incur, assume or permit to exist any
Indebtedness, any Attributable Debt in respect of any Sale and Leaseback Transaction
or any Third Party Interests except:


(i)         Indebtedness
under the Senior Loan Documents;


(ii)       unsecured
Indebtedness of the Borrower that is not Guaranteed by any Subsidiary, that
does not mature or require scheduled payments of principal prior to the date
that is three months after the Tranche 2 Term Maturity Date, and that has
covenants and events of default which are determined in good faith by the senior
management of the Borrower to be on market terms, and Refinancing Indebtedness
issued in respect of such Indebtedness;


(iii)      Indebtedness
of the Borrower and the Subsidiaries in respect of intercompany Investments
permitted under Section 6.04; provided that
such Indebtedness is subordinated to the Senior Obligations (and, prior to the Borrowing
Base Date, the Interim Obligations) pursuant to terms substantially the same as
those forth on Annex 2 hereto;


(iv)       Existing
Non-Guaranteed Indebtedness;


(v)        Existing
Second Priority Debt;


(vi)       Existing
Guaranteed Unsecured Indebtedness;


(vii)     Permitted
Second Priority Debt incurred after the Second Restatement Effective Date in an
aggregate principal amount, together with the aggregate principal amount of
Indebtedness incurred pursuant to clause (viii) of this Section 6.01(a),
not in excess of $1,500,000,000 at any time outstanding; provided
that the aggregate principal amount of Permitted Second Priority Debt incurred
under this clause which matures or requires scheduled payments of principal
prior to the date that is three months after the Tranche 2 Term Maturity Date,
together with the aggregate principal amount of any Permitted Unsecured Indebtedness
incurred under clause (viii) of this Section 6.01(a) which
matures or requires schedule payments of principal prior to the date that is
three months after the Tranche 2 Term Maturity Date, shall not exceed
$750,000,000 at any time outstanding;


(viii)    Permitted
Unsecured Indebtedness incurred after the Second Restatement Effective Date in
an aggregate principal amount, together with the aggregate principal amount of
Indebtedness incurred pursuant to clause (vii) of this Section 6.01(a),
not in excess of $1,500,000,000 at any time outstanding; provided
that the aggregate principal amount of Permitted Unsecured Indebtedness
incurred under this clause which matures or requires scheduled payments of
principal prior to the date that is three months after the Tranche 2 Term
Maturity Date, together with the aggregate principal amount of any Permitted
Second Priority Debt incurred under clause (vii) of this Section 6.01(a)
which matures or requires schedule payments of principal prior to the date that
is three months after the Tranche 2 Term Maturity Date, shall not exceed $750,000,000
at any time outstanding;


(ix)       Indebtedness
secured by Liens on real property or Attributable Debt incurred in connection
with Sale and Leaseback Transactions involving real property; provided that any such Indebtedness, or any such lease
entered into in connection with the Sale and Leaseback Transaction giving rise
to such Attributable Debt, shall have a maturity date or termination date, as
the case may be, after the date that is three months after the Tranche 2 Term
Maturity Date; and provided  further that the aggregate principal amount of Indebtedness
and Attributable Debt incurred pursuant to this clause (ix) shall not
exceed $600,000,000 at any time outstanding;


(x)        Refinancing
Indebtedness issued in respect of Indebtedness or Attributable Debt permitted
under clauses (iv), (v), (vi), (xv) and (xviii);



 60
 









(xi)       endorsements
of negotiable instruments for deposit or collection or similar transactions in
the ordinary course of business;


(xii)     Indebtedness
for borrowed money and Capital Lease Obligations existing on the Second
Restatement Effective Date (other than Second Priority Debt and Indebtedness
referred to in clauses (ii), (iv), (v) and (vi) above) and set forth
on Schedule 6.01(a)(xii), but not any
extensions, renewals, refinancings or replacements of such Indebtedness;


(xiii)    Capital
Lease Obligations with respect to leases existing on the Second Restatement
Effective Date that were accounted for as operating leases on the Original
Restatement Effective Date and thereafter reclassified as Capital Lease
Obligations;


(xiv)     Indebtedness
(including Capital Lease Obligations) and Attributable Debt in respect of Sale
and Leaseback Transactions in respect of equipment financing or leasing in the
ordinary course of business of the Borrower and the Subsidiaries consistent
with past practices;


(xv)      purchase
money Indebtedness (including Capital Lease Obligations) and Attributable Debt
in respect of Sale and Leaseback Transactions in each case incurred to finance
the acquisition, development, construction or opening of any Store after the
Second Restatement Effective Date; provided that
such Indebtedness or Attributable Debt (A) is incurred not later than 24
months following the completion of the acquisition, development, construction
or opening of such Store, (B) any Lien securing such Indebtedness or
Attributable Debt is limited to the Store financed with the proceeds thereof, and
(C) is incurred in connection with a transaction that is substantially
consistent with the business plan of the Borrower provided to the Lenders prior
to the Second Restatement Effective Date;


(xvi)     (A) Third
Party Interests issued by Securitization Vehicles in Securitizations permitted
by Section 6.05, and Indebtedness represented by such Third Party
Interests and (B) Indebtedness of the Borrower or its Subsidiaries that may
be deemed to exist solely by virtue of a Factoring Transaction permitted by this
Agreement; provided that the aggregate amount of
all Securitizations plus the aggregate
amount of Indebtedness permitted by clause (B) shall not exceed $950,000,000
at any time outstanding;


(xvii)   Indebtedness
of Subsidiaries other than Securitization Vehicles that may be deemed to exist
solely by virtue of Standard Securitization Undertakings entered into by such
Subsidiaries as sellers of Securitization Assets in Securitizations permitted
by paragraph (xvi) above;


(xviii)  Indebtedness
under the New Notes and/or the Bridge Facility, in an aggregate principal
amount not in excess of the amount equal to $1,220,000,000, and Guarantees by
Subsidiaries of such Indebtedness (and Refinancing Indebtedness of such
Indebtedness);


(xix)     Guarantees
by Subsidiaries of the Existing Second Priority Debt (and Refinancing
Indebtedness of Existing Second Priority Debt), the Existing Guaranteed
Unsecured Indebtedness (and Refinancing Indebtedness of Existing Guaranteed
Unsecured Indebtedness) and any Indebtedness under clause (vii) or (viii) of
this Section 6.01(a); and


(xx)      Indebtedness
of Holdings in respect of letters of credit assumed in connection with the
Acquisition in an aggregate principal amount not in excess of (A) $75,000,000
at any time outstanding prior to any date that is 60 days after the Second
Restatement Effective Date and (B) $10,000,000 at any time outstanding on
or after any date that is 60 days after the Second Restatement Effective Date but
prior to 120 days after the Second Restatement Effective Date.


(b)        The
Borrower will not, nor will it permit any Subsidiary to, issue any Preferred
Stock or other preferred Equity Interests, other than Qualified Preferred Stock
of the Borrower, Third Party 



 61
 









Interests issued by
Securitization Vehicles, and other preferred Equity Interests issued and
outstanding on the Second Restatement Effective Date and set forth on Schedule
6.01(b).


SECTION 6.02.   Liens.   (a) The
Borrower will not, and will not permit any Subsidiary to, create, incur, assume
or permit to exist any Lien on any property or asset now owned or hereafter
acquired by it, or assign or sell any income or revenues (including accounts
receivable) or rights in respect of any thereof, except:


(i)         Liens
created under the Senior Loan Documents;


(ii)       Permitted
Encumbrances;


(iii)      any
Lien created or permitted by the Second Priority Collateral Documents with
respect to the Second Priority Debt Obligations in favor of the Second Priority
Debt Parties; provided that (A) such Lien
is created simultaneously with or after an equivalent Lien under the Senior
Collateral Documents on the applicable Senior Collateral, (B) such Lien is
subject to the Collateral Trust and Intercreditor Agreement, (C) any Lien
on the proceeds of such Senior Collateral is permitted by the Collateral Trust
and Intercreditor Agreement and (D) such Second Priority Debt Obligations
are permitted to be incurred under Section 6.01(a);


(iv)       intentionally
omitted; 


(v)        any
Lien securing Indebtedness of a Subsidiary owing to a Subsidiary Loan Party;


(vi)       any
Lien securing Attributable Debt and other payment obligations under leases
incurred in connection with a Sale and Leaseback Transaction permitted pursuant
to Section 6.01(a)(xiv) or (xv) and Section 6.06; provided that such Liens attach only to the equipment, real
property or other assets subject to such Sale and Leaseback Transaction;


(vii)     any
Lien on real property securing Indebtedness permitted and incurred under Section 6.01(a)(ix);


(viii)    any
Lien securing Capital Lease Obligations permitted and incurred under Section 6.01(a)(xiii),
provided that such Lien is limited to
the equipment or other property subject to leases existing on the Original
Restatement Effective Date that were subsequently reclassified as Capital Lease
Obligations;


(ix)       any
Lien on equipment securing Indebtedness incurred to finance such equipment
pursuant to Section 6.01(a)(xiv);


(x)        Liens
securing Indebtedness permitted and incurred under Section 6.01(a)(xv), provided that such Liens apply only to the property or other
assets acquired, developed or constructed, as the case may be, with the
proceeds of such Indebtedness;


(xi)       Liens
existing on the Second Restatement Effective Date and identified on
Schedule 6.02(xi); provided, that
such Liens do not attach to any property other than the property identified on
such Schedule and secure only the obligations they secured on the Second
Restatement Effective Date;


(xii)     any
Lien (A) on Net Cash Proceeds that are required to be applied to the
repayment of Second Priority Debt Obligations in accordance with the Collateral
Trust and Intercreditor Agreement or (B) that arises pursuant to any provisions
in any Second Priority Debt Document equivalent to Section 10.14 of the
12.5% Note Indenture;



 62















(xiii)    Liens
securing Refinancing Indebtedness permitted under Section 6.01(a), to the
extent that the Indebtedness being refinanced was originally secured in
accordance with this Section 6.02; provided that
such Lien does not apply to any additional property or assets of the Borrower
or any Subsidiary (other than (i) property or assets acquired after the
issuance or incurrence of such Refinancing Indebtedness that would have been
subject to the Lien securing refinanced Indebtedness if such Indebtedness had
not been refinanced, (ii) additions to the property or assets subject to
the Lien and (iii) the proceeds of the property or assets subject to the
Lien);


(xiv)     Liens
on property or assets acquired pursuant to Section 6.04(vi), (x) or
(xiii); provided that (A) such Liens apply
only to the property or other assets subject to such Liens at the time of such
acquisition and (B) such Liens existed at the time of such acquisition and
were not created in contemplation thereof;


(xv)      put and
call agreements with respect to Equity Interests acquired or created in
connection with Joint Ventures permitted pursuant to Section 6.04(x) or
(xiii); provided that neither the Borrower nor
any Subsidiary shall be permitted to enter into any such agreement that
requires or, upon the occurrence of any event or condition, contingent or
otherwise, may require the Borrower or any Subsidiary Loan Party (or, prior to
the Borrowing Base Date, Holdings or any of its subsidiaries) to repurchase
Equity Interests, Indebtedness or otherwise expend any amounts on or prior to
the Tranche 2 Term Maturity Date (other than as permitted under Section 6.04(x) or
(xiii));


(xvi)     (A) Liens
on Securitization Assets transferred or purported to be transferred to
Securitization Vehicles securing Third Party Interests issued in Securitizations
permitted by Sections 6.01 and 6.05, (B) Liens on account receivables not
purchased by a Securitization Vehicle, which Liens (i) are granted in
connection with Securitizations permitted by Sections 6.01 and 6.05, (ii) are
granted pursuant to Standard Securitization Undertakings, (iii) are
perfected prior to an Event of Default and (iv) secure Third Party
Interests issued in Securitizations permitted by Sections 6.01 and 6.05 and (C) Liens
on Factoring Assets transferred or purported to be transferred in Factoring
Transactions permitted by this Agreement; and


(xvii)   Liens
(other than Liens securing Indebtedness) that are not otherwise permitted under
any other provision of this Section 6.02(a); provided,
that the fair market value of the property and assets with respect to which
such Liens are granted shall not at any time exceed $40,000,000.


(b)        Notwithstanding
anything in clause (a) of this Section 6.02, the Borrower may not
grant or otherwise permit to exist Liens on any cash or cash equivalents that
secure the Senior Obligations or are otherwise held by the Lenders or the Administrative
Agent pursuant to Section 2.05(k) or 9.15.


SECTION 6.03.   Fundamental Changes.   Without
limiting the restrictions on Business Acquisitions set forth in Section 6.04,
the Borrower will not, and will not permit any Subsidiary Loan Party (or, prior
to the Borrowing Base Date, Holdings or any of its subsidiaries) to, merge into
or consolidate with any other Person, or permit any other Person to merge into
or consolidate with it, or liquidate or dissolve, except that, if at the time
thereof and immediately after giving effect thereto no Default shall have occurred
and be continuing (i) any Person may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation, provided, that if such other Person is a Subsidiary Loan
Party, it shall have no assets that constitute Senior Collateral, (ii) any
Person may merge into a Subsidiary Loan Party in a transaction in which such
Subsidiary Loan Party is the surviving corporation and (iii) any
Subsidiary Loan Party may liquidate or dissolve if such liquidation or
dissolution is not materially disadvantageous to the Lenders; provided that (A) any such merger involving a Person
that is not a whollyowned Subsidiary immediately prior to such merger shall not
be permitted to engage in such merger unless also permitted by 



 63
 









Section 6.04 and (B) the
Borrower and the applicable Subsidiary Loan Party shall comply with the
provisions of Section 5.11 with respect to any Subsidiary acquired
pursuant to this Section 6.03.


SECTION 6.04.   Investments,
Loans, Advances, Guarantees and Acquisitions.   The Borrower
will not, and will not permit any of the Subsidiaries to, make any Investment
in, or Guarantee any obligations of, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) any assets of any
other Person constituting a business unit, except:


(i)         Permitted
Investments;


(ii)       Investments
of the Borrower, the Subsidiary Loan Parties and Holdings and its subsidiaries
set forth on Schedule 6.04;


(iii)      Guarantees
of Indebtedness and/or Guarantees consisting of Indebtedness permitted by Section 6.01;


(iv)       Investments
received in connection with the bankruptcy or reorganization of, or settlement
of delinquent accounts and disputes with, customers and suppliers, in each case
in the ordinary course of business;


(v)        Investments
by (A) the Borrower or any Subsidiary Loan Party in Subsidiary Loan
Parties and (B) prior to the Borrowing Base Date, Holdings in its subsidiaries
and subsidiaries of Holdings in Holdings or any other subsidiary of Holdings; provided that the Borrower and such Subsidiary Loan Party or
Holdings and such subsidiary of Holdings, as the case may be, shall comply with
the applicable provisions of Section 5.11 with respect to any newly formed
Subsidiary;


(vi)       Investments
consisting of non-cash consideration received in connection with any Asset Sale
permitted by Section 6.05;


(vii)     Investments
by the Subsidiaries in the Borrower; provided that
the proceeds of such Investments are used for a purpose set forth in Section 5.10(b);


(viii)    prior
to the Borrowing Base Date, Investments by the Borrower or any Subsidiary Loan
Party in Holdings and its subsidiaries;


(ix)       usual
and customary loans and advances to employees, officers and directors of the
Borrower and the Subsidiaries;


(x)        Investments
by the Borrower or any of the Subsidiaries in Joint Ventures in an amount not
to exceed $15,000,000 in the aggregate in any fiscal year of the Borrower;


(xi)       Investments
in charitable foundations organized under Section 501(c) of the Code in an
amount not to exceed $7,500,000 in the aggregate in any calendar year;


(xii)     any
Investment consisting of a Hedging Agreement permitted by Section 6.07;


(xiii)    Business
Acquisitions and Investments that are not otherwise permitted under any other
provision of this Section 6.04; provided that (A) at
the time of such Business Acquisition or Investment no Default has occurred and
is continuing or would result therefrom and (B) immediately after giving
effect to any such Business Acquisition or Investment, the Revolver
Availability is greater than $100,000,000;


(xiv)     Investments
consisting of Sellers’ Retained Interests in Securitizations permitted by
Sections 6.01 and 6.05; and


(xv) (A) Investments by the Borrower or a
Subsidiary in connection with a Securitization permitted pursuant to this
Agreement and (B) any Investment or other Guarantee that may be 



 64
 









deemed made by the
Borrower due to the fact that a Parent Undertaking has been entered into in
respect of a Securitization permitted pursuant to the Agreement.


SECTION 6.05.   Asset
Sales.   The Borrower will not, and will not permit any of the
Subsidiary Loan Parties (and, prior to the Borrowing Base Date, Holdings or any
of its subsidiaries) to, conduct any Asset Sale, including any sale of any
Equity Interest owned by it and any sale of Securitization Assets in connection
with a Securitization, nor will the Borrower permit any of the Subsidiary Loan
Parties (and, prior to the Borrowing Base Date, Holdings or any of its
subsidiaries) to issue any additional Equity Interest in such Subsidiary,
except:


(i)         Permitted
Dispositions;


(ii)       any
Asset Sale (other than a Sale and Leaseback Transaction, the issuance of Equity
Interests, sales or contributions of Securitization Assets in a Securitization
or sales of Factoring Assets in Factoring Transactions) for fair value not in
the ordinary course of business;


(iii)      any
sale, transfer or disposition to a third party of Stores, leases and prescription
files closed at substantially the same time as, and entered into as part of a
single related transaction with, the purchase or other acquisition from such third
party of Stores, leases and prescription files of a substantially equivalent value;


(iv)       any
issuance of (A) Equity Interests of any Subsidiary Loan Party by such
Subsidiary Loan Party to the Borrower or any other Subsidiary Loan Party and (B) prior
to the Borrowing Base Date, any issuance of Equity Interests of Holdings by
Holdings to the Borrower and any issuance of Equity Interests of any subsidiary
of Holdings by such subsidiary to Holdings or any other subsidiary of Holdings;


(v)        any
Sale and Leaseback Transaction permitted pursuant to Section 6.01(a)(ix),
(xiv) or (xv) and Section 6.06;


(vi)       sales
or contributions of Securitization Assets to Securitization Vehicles in
connection with Securitizations, provided that (a) each
such Securitization is effected on market terms as determined in good faith by
the senior management of the Borrower, (b) the aggregate amount of all
such Securitizations plus the
aggregate amount of Indebtedness permitted by Section 6.01(a)(xvi)(B) does
not exceed $950,000,000 at any time outstanding, (c) the aggregate amount
of the Sellers’ Retained Interests in such Securitizations does not exceed an
amount at any time outstanding that is customary for similar transactions and (d) the
proceeds to each such Securitization Vehicle from the issuance of Third Party
Interests are applied substantially simultaneously with receipt thereof to the
purchase from Subsidiary Loan Parties of Securitization Assets; provided that, in the case of clause (d), the Securitization
Vehicle may use a portion of such proceeds to pay a customary collection agent
fee in connection with such Securitization to the extent such fee is permitted
pursuant to Section 6.09(f);


(vii)     unless
otherwise restricted by Section 5.17, sales of Factoring Assets in
connection with Factoring Transactions; provided that (i) a
Factoring Notice with respect to such Factoring Transaction has been delivered
by the Borrower to the Administrative Agent and (ii) each such Factoring
Transaction is effected on market terms as determined in good faith by the
senior management of the Borrower; and


(viii)    the
sale, transfer or other disposition of assets or properties of Holdings and its
subsidiaries required by any Governmental Authority as a condition to its
consent or forbearance from opposing the consummation of the Transactions.


provided that, with respect to
sales, transfers or dispositions under clause (ii), (v) or (viii), and
with respect to any net consideration received from any transaction described
in clause (iii), (1) at least 75% of the 



 65
 









consideration therefor shall consist of cash and (2) the
aggregate fair market value of all assets sold, transferred or disposed of in
reliance upon clauses (ii) and (v) shall not exceed $200,000,000 in
any fiscal year of the Borrower; provided  further that subject to the condition set forth in clause (1) above,
additional assets with an aggregate fair market value not in excess of
$450,000,000 may be sold, transferred or disposed of in any fiscal year of the
Borrower in reliance upon clauses (ii) and (v) if the Borrower reinvests,
or causes the applicable Subsidiary Loan Party (or, prior to the Borrowing Base
Date, if applicable, Holdings or any of its subsidiaries) to reinvest, Net Cash
Proceeds received in connection therewith in Business Acquisitions or the
purchase of Stores or prescription files within 365 days after the receipt
thereof.


SECTION 6.06.   Sale and Leaseback Transactions.   The
Borrower will not, and will not permit any of the Subsidiaries to, enter into
any Sale and Leaseback Transaction, except for Sale and Leaseback Transactions
permitted by and effected pursuant to Section 6.01(a)(ix), (xiv) or (xv)
which do not result in Liens other than Liens permitted pursuant to Section 6.02(a).


SECTION 6.07.   Hedging Agreements.   The
Borrower will not, and will not permit any of the Subsidiaries to, incur or at
any time be liable with respect to any monetary liability under any Hedging
Agreements, unless such Hedging Agreements (i) are entered into for bona
fide hedging purposes of the Borrower, any Subsidiary Loan Party or, prior to
the Borrowing Base Date, Holdings or any of its subsidiaries (as determined in
good faith by the senior management of the Borrower), (ii) correspond in terms
of notional amount, duration, currencies and interest rates, as applicable, to Indebtedness
of the Borrower or any Subsidiary Loan Party (or, prior to the Borrowing Base
Date, Holdings or any of its subsidiaries) permitted to be incurred under
Section 6.01(a) or to business transactions of the Borrower and the
Subsidiary Loan Parties (and, prior to the Borrowing Base Date, Holdings and
its subsidiaries) on customary terms entered into in the ordinary course of
business and (iii) do not exceed an amount equal to the aggregate principal
amount of the Senior Obligations and the Second Priority Debt Obligations (and,
prior to the Borrowing Base Date, the Interim Obligations).


SECTION 6.08.   Restricted
Payments; Certain Payments of Indebtedness.   (a) The
Borrower will not, nor will it permit any Subsidiary to, declare or make, or
agree to pay or make, directly or indirectly, any Restricted Payment, or incur
any obligation (contingent or otherwise) to do so, except (i) the Borrower
may declare and pay dividends with respect to its common stock or Qualified
Preferred Stock payable solely in additional shares of its common stock or
Qualified Preferred Stock, (ii) Subsidiaries (other than those directly
owned, in whole or part, by the Borrower) may declare and pay dividends ratably
with respect to their common stock, (iii) the Borrower may declare and pay
cash dividends with respect to its common stock and effect repurchases,
redemptions or other Restricted Payments with respect to its common stock,
together in an aggregate amount in any fiscal year of the Borrower not to
exceed 50% of Consolidated Net Income (if positive) for the immediately
preceding fiscal year of the Borrower; provided that immediately
prior and after giving effect to any such payment no Default or Event of Default
shall have occurred and be continuing and, immediately after giving effect to
any such payment, the Borrower shall have Revolver Availability of more than
$100,000,000, (iv) the Borrower may pay cash dividends in an amount not to
exceed $60,000,000 in any fiscal year of the Borrower with respect to the Series E
Preferred Stock, Series I Preferred Stock or any other Qualified Preferred
Stock; provided that (x) immediately prior
and after giving effect to any such payment, no Default or Event of Default
shall have occurred and be continuing and (y) only so long as a Financial
Covenant Effectiveness Period is then occurring, the Consolidated Fixed Charge
Coverage Ratio for the period of four consecutive fiscal quarters most recently
ended on or prior to the date of such payment, calculated on a pro forma basis
as if such payment were made on the last day of such period (and excluding any
such payments previously made pursuant to this clause during such four quarter
period but attributed for purposes of this calculation to the last day of a
prior period which day does not occur in such four quarter period) is not less than
the ratio applicable to such period of four fiscal quarters under Section 6.12,
(v) the Borrower and the Subsidiaries may make 



 66
 









Restricted Payments
consisting of the repurchase or other acquisition of shares of, or options to
purchase shares of, capital stock of the Borrower or any of its Subsidiaries
from employees, former employees, directors or former directors of the Borrower
or any Subsidiary (or their permitted transferees), in each case pursuant to
stock option plans, stock plans, employment agreements or other employee
benefit plans approved by the board of directors of the Borrower; provided that no Default has occurred and is continuing; and
provided  further
that the aggregate amount of such Restricted Payments made after the Original
Restatement Effective Date shall not exceed $10,000,000, (vi) the Subsidiaries
may declare and pay cash dividends to the Borrower; provided
that the Borrower shall, within a reasonable time following receipt of any such
payment, use all of the proceeds thereof for a purpose set forth in Section 5.10(b) (including
the payment of dividends required or permitted pursuant to this Section 6.08(a)),
(vii) the Borrower and the Subsidiaries may declare and pay cash dividends
with respect to the Equity Interests set forth on Schedule 6.08(a) to the
extent, and only to the extent, required pursuant to the terms of such Equity
Interests or any other agreement in effect on the Effective Date and (viii) so
long as no Default or Event of Default has occurred and is continuing or would
result therefrom, the Borrower may redeem or repurchase shares of the Borrower’s
and/or its Subsidiaries’ (including Rite Aid Lease Management Company’s)
Preferred Stock (A) solely with Net Cash Proceeds received by the Borrower
from issuances of its common stock after the Original Restatement Effective
Date, provided that any such repurchase or
redemption is effected within 150 days after the receipt of such proceeds or (B) with
other funds available to the Borrower if, immediately after giving effect to
any such redemption or repurchase, the Borrower shall have Revolver
Availability of more than $100,000,000.


(b)        The
Borrower will not, nor will it permit any Subsidiary to, make or agree to pay
or make, directly or indirectly, any payment or other distribution (whether in cash,
securities or other property) of or in respect of principal of or interest on
any Indebtedness, or any payment or other distribution (whether in cash,
securities or other property), including any sinking fund or similar deposit,
on account of the purchase, redemption, retirement, acquisition, cancelation or
termination of any Indebtedness, except:


(i)         payments
or prepayments of Indebtedness created under the Senior Loan Documents;


(ii)       payments
of regularly scheduled interest and principal payments as and when due in
respect of any Indebtedness permitted pursuant to Section 6.01(a);


(iii)      prepayments
of Indebtedness permitted pursuant to clause (vii), (viii) or (ix) of Section 6.01(a) with
the proceeds of Indebtedness permitted pursuant to clause (vii), (viii) or
(ix) of Section 6.01(a);


(iv)       payments
of secured Indebtedness that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such Indebtedness;


(v)        provided
no Default has occurred and is continuing or would result therefrom, Optional
Debt Repurchases of Inside Indebtedness and, to the extent permitted by
paragraph (c) of this Section, Optional Debt Repurchases of Outside Indebtedness;


(vi)       repurchases,
exchanges or redemptions of Indebtedness for consideration consisting solely of
common stock of the Borrower or Qualified Preferred Stock;


(vii)     prepayments
of Capital Lease Obligations in connection with the sale, closing or relocation
of Stores;


(viii)    prepayments
of Indebtedness in connection with the incurrence of Refinancing Indebtedness
permitted pursuant to Section 6.01(a)(ii) or (x);


(ix)       prepayments
of Indebtedness permitted pursuant to Section 6.01(a)(iii), if permitted
by the subordination provisions applicable to such Indebtedness; and



 67
 









(x)        unless
an Event of Default shall have occurred and be continuing, mandatory
prepayments of Indebtedness and interest under the New Notes and/or the Bridge
Facility.


(c)        The
Borrower and the Subsidiaries will not effect Optional Debt Repurchases of
Outside Indebtedness unless immediately prior and after giving effect to any
such Optional Debt Repurchases, (x) no Default or Event of Default shall
have occurred and be continuing and (y) the Borrower shall have Revolver
Availability of more than $100,000,000.


SECTION 6.09.   Transactions
with Affiliates.   The Borrower will not, and will not permit
any Subsidiary to, directly or indirectly, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except:


(a)        payment
of compensation to directors, officers, and employees of the Borrower and the
Subsidiaries in the ordinary course of business;


(b)        payments
in respect of transactions required to be made pursuant to agreements or
arrangements in effect on the Second Restatement Effective Date and set forth
on Schedule 6.09;


(c)        transactions
involving the acquisition of inventory in the ordinary course of business; provided that (i) the terms of such transaction are (A) set
forth in writing, (B) in the best interests of the Borrower or such
Subsidiary, as the case may be, and (C) no less favorable to the Borrower
or such Subsidiary, as the case may be, than those that could be obtained in a comparable
arm’s length transaction with a Person that is not an Affiliate of the Borrower
or a Subsidiary and, (ii) if such transaction involves aggregate payments
or value in excess of $75,000,000, the board of directors of the Borrower
(including a majority of the disinterested members of the board of directors)
approves such transaction and, in its good faith judgment, believes that such
transaction complies with clauses (i)(B) and (C) of this paragraph;


(d)        (i) transactions
between or among the Borrower and/or one or more Subsidiary Loan Parties, (ii) sales
of Securitization Assets to Securitization Vehicles in Securitizations
permitted by Sections 6.01 and 6.05, (iii) prior to the Borrowing Base
Date, transactions between or among (A) the Borrower or any Subsidiary
Loan Party, on one hand, and Holdings or any of its subsidiaries, on the other
hand, (B) Holdings, on one hand, and any subsidiary of Holdings, on the other
hand, and (C) any subsidiary of Holdings, on one hand, and any other subsidiary
of Holdings, on the other hand, (iv) transactions under, involving, related
to and/or in connection with the Acquisition and documents related thereto including,
(A) the Stock Purchase Agreement, dated as of August 23, 2006, by and
between the Borrower and The Jean Coutu Group (PJC) Inc., (B) the Stockholder
Agreement, dated as of August 23, 2006, between the Borrower, The Jean
Coutu Group (PJC) Inc., Jean Coutu, Marcelle Coutu, Francois J. Coutu, Michel
Coutu, Louis Coutu, Sylvie Coutu and Marie-Josée Coutu and (C) the Registration
Rights Agreement, dated as of August 23, 2006, by and between the Borrower
and The Jean Coutu Group (PJC) Inc. and (v) the Transition Services Agreement,
dated as of June 4, 2007, by and between the Borrower and the Seller; provided that the terms of the transactions referred to in
clauses (iii), (iv) and (v) above are in the best interest of the
Borrower, such Subsidiary Loan Party or Holdings or any such subsidiary of
Holdings which is a party thereto, as the case may be;


(e)        issuances
of Preferred Stock of the Borrower (and transactions that are necessary to
effect such issuances) in respect of pay-in-kind obligations of the Borrower
relating to Series G Preferred Stock or Series H Preferred Stock; and


(f)         any
other Affiliate transaction not otherwise permitted pursuant to this Section 6.09;
provided that (i) the terms of such
transaction are (A) set forth in writing, (B) in the best interests
of the Borrower or such Subsidiary, as the case may be, and (C) no less
favorable to the Borrower or 



 68
 









such Subsidiary, as the
case may be, than those that could be obtained in a comparable arm’s length transaction
with a Person that is not an Affiliate of the Borrower or a Subsidiary, (ii) if
such transaction involves aggregate payments or value in excess of $25,000,000
in any consecutive 12-month period, the board of directors of the Borrower
(including a majority of the disinterested members of the board of directors)
approves such transaction and, in its good faith judgment, believes that such transaction
complies with clauses (i)(B) and (C) of this paragraph and (iii) if
such transaction (other than any transaction necessary for the redemption or exchange
of the Borrower’s Series G Preferred Stock or Series H Preferred
Stock) involves aggregate payments or value in excess of $50,000,000 in any consecutive
12-month period, the Borrower obtains a written opinion from an independent
investment banking firm or appraiser of national prominence, as appropriate, to
the effect that such transaction is fair to the Borrower or such Subsidiary, as
the case may be, from a financial point of view.


SECTION 6.10.   Restrictive
Agreements.   (a) The Borrower will not, and will not
permit any Subsidiary to, enter into any agreement which imposes a limitation
on the incurrence by the Borrower and the Subsidiaries of Liens that (i) would
restrict any Subsidiary from granting Liens on any of its assets (including
assets in addition to the then-existing Senior Collateral and, prior to the
Borrowing Base Date, the then-existing Interim Collateral, to secure the Senior
Obligations, the Second Priority Obligations and, prior to the Borrowing Base
Date, the Interim Obligations) or (ii) is more restrictive, taken as a
whole, than the limitation on Liens set forth in this Agreement except, in each
case, (A)(u) the Senior Loan Documents, (w) agreements with respect
to Indebtedness secured by Liens permitted by Section 6.02(a) restricting
the ability to transfer or grant Liens on the assets securing such
Indebtedness, (x) agreements with respect to Second Priority Debt (1) containing
provisions described in clauses (i) and/or (ii) above that are not
materially more restrictive, taken as a whole, than those of the 8.125% Note Indenture
as in effect on the Second Restatement Effective Date or (2) requiring
that such Indebtedness be secured by assets in respect of which Liens are
granted to secure other Indebtedness (provided that
in the case of any such assets subject to a Senior Lien, such Indebtedness will
be required to be secured only with a Second Priority Lien); provided, however, that
the Second Priority Debt Documents relating to any such Indebtedness may not
contain terms requiring any Liens be granted with respect to Senior Collateral consisting
of cash or Permitted Investments pledged pursuant to Section 2.05(j) of
this Agreement or Section 5 of the Senior Subsidiary Guarantee Agreement
or otherwise required to be provided upon the occurrence of a default under any
bank credit facility to secure obligations in respect of letters of credit
issued thereunder, (y) agreements with respect to unsecured Indebtedness
governed by indentures or by credit agreements or note purchase agreements with
institutional investors permitted by this Agreement containing terms that are
not materially more restrictive, taken as a whole, than those of the 9.25% Note
Indenture as in effect on the Second Restatement Effective Date and (z) the
New Notes and/or the Bridge Facility, (B) customary restrictions contained
in purchase and sale agreements limiting the transfer of the subject assets
pending closing, (C) customary non-assignment provisions in leases and
other contracts entered into in the ordinary course of business, (D) pursuant
to applicable law, (E) agreements in effect as of the Second Restatement
Effective Date and not entered into in contemplation of the transactions
effected in connection with the closing of the Original Agreement, (F) the
Indentures, in each case when originally entered into, (G) any restriction
existing under agreements relating to assets acquired by the Borrower or a
Subsidiary in a transaction permitted hereby; provided
that such agreements existed at the time of such acquisition, were not put into
place in anticipation of such acquisition and are not applicable to any assets
other than assets so acquired, (H) any restriction existing under any
agreement of a Person acquired as a Subsidiary pursuant to Section 6.03 or
Section 6.04(a)(xiii); provided that
any such agreement existed at the time of such acquisition, was not put into place
in anticipation of such acquisition and was not applicable to any Person or
assets other than the Person or assets so acquired and (I) customary
restrictions and conditions contained in agreements 



 69
 









relating to
Securitizations permitted hereunder, provided that such
restrictions and conditions apply only to Securitization Vehicles and to the Securitization
Assets that are subject to such Securitizations.


(b)        The
Borrower will not, and will not permit any Subsidiary to, enter into or suffer
to exist or become effective any consensual encumbrance or restriction on the
ability of any Subsidiary to (i) make Restricted Payments in respect of
any Equity Interests of such Subsidiary held by, or pay any Indebtedness owed
to, the Borrower or any other Subsidiary, (ii) make any Investment in the
Borrower or any other Subsidiary, or (iii) transfer any of its assets to
the Borrower or any other Subsidiary, except for (A) any restriction
existing under (1) the Senior Loan Documents or existing on the Second
Restatement Effective Date under the Indentures, (2) the indenture or
agreement governing any Refinancing Indebtedness in respect of Indebtedness set
forth in clause (1) above or (3) agreements with respect to Indebtedness
permitted by this Agreement containing provisions described in clauses (i), (ii) and
(iii) above that are not materially more restrictive, taken as a whole,
than those of the 8.125% Note Indenture or, alternatively, the 9.25% Note
Indenture, in each case as in effect on the Second Restatement Effective Date, (B) customary
non-assignment provisions in leases and other contracts entered into in the
ordinary course of business, (C) as required by applicable law, (D) customary
restrictions contained in purchase and sale agreements limiting the transfer of
the subject assets pending closing, (E) any restriction existing under agreements
relating to assets acquired by the Borrower or a Subsidiary in a transaction permitted
hereby; provided that such agreements existed at
the time of such acquisition, were not put into place in anticipation of such
acquisition and are not applicable to any assets other than assets so acquired,
(F) any restriction existing under any agreement of a Person acquired as a
Subsidiary pursuant to Section 6.03 or Section 6.04(a)(xiii); provided any such agreement existed at the time of such
acquisition, was not put into place in anticipation of such acquisition and was
not applicable to any Person or assets other than the Person or assets so
acquired, (G) agreements with respect to Indebtedness secured by Liens
permitted by Section 6.02 that restrict the ability to transfer the assets
securing such Indebtedness, (H) customary restrictions and conditions
contained in agreements relating to Securitizations permitted hereunder, provided that such restrictions and conditions apply only to
Securitization Vehicles and to the Securitization Assets that are subject to
such Securitizations and (I) any restriction existing under the New Notes and/or
the Bridge Facility.


SECTION 6.11.   Amendment
of Material Documents.   (a) The Borrower will not, nor
will it permit any Subsidiary to, amend, modify or waive any Second Priority
Security Document or any of its rights thereunder without the consent of the Collateral
Agent, other than modifications to such agreements in connection with (i) the
joinder of additional Subsidiary Loan Parties effected by the execution of
supplements to such agreements and (ii) the inclusion of additional Second
Priority Debt permitted pursuant to Section 6.01(a)(vii) constituting
Secured Obligations (as defined in the Second Priority Security Agreement)
under such agreements. The Borrower will not, nor will it permit any Subsidiary
to, amend, modify or waive any instrument governing the New Notes or the Bridge
Facility and any related security documents, or any of its rights under any of
the foregoing without the consent of the Collateral Agent, other than amendments,
modifications and waivers that are not material and adverse to the interests of
the Lenders.


(b)        The
Borrower will not, and will not permit any Subsidiary party to the Intercompany
Inventory Purchase Agreement to, amend, terminate, or otherwise modify the
Intercompany Inventory Purchase Agreement in any manner materially adverse to
the Lenders or their interests under the Senior Loan Documents without the
prior written approval of the Collateral Agent; provided,
however, that the foregoing shall not
limit the Borrower’s responsibilities pursuant to Section 3.2 of the
Intercompany Inventory Purchase Agreement.


SECTION 6.12.   Consolidated
Fixed Charge Coverage Ratio.   The Borrower will not permit the
Consolidated Fixed Charge Coverage Ratio for the period of four consecutive
fiscal quarters most recently 



 70
 









ended
on or prior to any day during a Financial Covenant Effectiveness Period to be
less than the ratio set forth below opposite the period that includes the last
day of such four quarter period:




	
  Four Fiscal Quarter Period Ending

  	
   

  	
   

  	
   

  	
  Ratio

  	
   

  
	
  December 3, 2006 through March 3, 2007

  	
   

  	
  1.00 to 1.00

  	
   

  
	
  March 4, 2007 through June 2, 2007

  	
   

  	
  1.00 to 1.00

  	
   

  
	
  June 3, 2007 through September 1, 2007

  	
   

  	
  1.00 to 1.00

  	
   

  
	
  September 2, 2007 through December 1, 2007

  	
   

  	
  1.00 to 1.00

  	
   

  
	
  December 2, 2007 through March 1, 2008

  	
   

  	
  1.00 to 1.00

  	
   

  
	
  March 2, 2008 through May 31, 2008

  	
   

  	
  1.00 to 1.00

  	
   

  
	
  June 1, 2008 through August 30, 2008

  	
   

  	
  1.00 to 1.00

  	
   

  
	
  August 31, 2008 through November 29, 2008

  	
   

  	
  1.05 to 1.00

  	
   

  
	
  November 30, 2008 through February 28,
  2009

  	
   

  	
  1.05 to 1.00

  	
   

  
	
  March 1, 2009 through May 30, 2009

  	
   

  	
  1.05 to 1.00

  	
   

  
	
  May 31, 2009 through August 29, 2009

  	
   

  	
  1.05 to 1.00

  	
   

  
	
  August 30, 2009 through November 28, 2009

  	
   

  	
  1.05 to 1.00

  	
   

  
	
  November 29, 2009 through February 27,
  2010

  	
   

  	
  1.15 to 1.00

  	
   

  
	
  February 28, 2010 through May 29, 2010

  	
   

  	
  1.15 to 1.00

  	
   

  
	
  May 30, 2010 through August 28, 2010

  	
   

  	
  1.15 to 1.00

  	
   

  
	
  August 29, 2010 through November 27, 2010

  	
   

  	
  1.15 to 1.00

  	
   

  
	
  November 28, 2010 through February 26,
  2011

  	
   

  	
  1.15 to 1.00

  	
   

  
	
  February 27, 2011 through May 28, 2011

  	
   

  	
  1.15 to 1.00

  	
   

  
	
  May 29, 2011 through the Tranche 2 Term Maturity
  Date

  	
   

  	
  1.25 to 1.00

  	
   

  






 


SECTION 6.13.   Restrictions
on Asset Holdings by the Borrower.   The Borrower will not at
any time:


(i)         make
or hold any Investments other than investments in the Equity Interests of the
Subsidiaries (including any distributions or other assets received in respect
thereto), intercompany advances to Subsidiaries and Investments permitted by
clause (iii) below;


(ii)       acquire
or hold any Stores, other capital assets, inventory or accounts receivable,
other than any real estate which the Borrower holds only as lessor and which is
leased and operated by another Person; or


(iii)      acquire
or hold cash, cash equivalents, Permitted Investments or balances in bank
accounts, other than such amounts as are reasonably anticipated (at the time so
acquired or held) to be utilized within five Business Days to pay costs,
expenses and other obligations of the Borrower referred to in Section 5.10(b).



 71















SECTION 6.14.   Corporate Separateness.   The Borrower will, and will cause
each Subsidiary to, take all necessary steps to maintain its identity as a
separate legal entity from other Persons and to make it manifest to third
parties that it is an entity with assets and liabilities distinct from those of
each of other Person.


ARTICLE
VII


Events
of Default


If any of the following
events (“Events of Default”) shall occur:


(a) the Borrower
shall fail to pay any principal of any Loan or any reimbursement obligation in
respect of any LC Disbursement when and as the same shall become due and
payable, whether at the due date thereof or at a date fixed for prepayment
thereof or otherwise;


(b) the Borrower
shall fail to pay any interest on any Loan or any fee or any other amount
(other than an amount referred to in clause (a) of this Article) payable
under this Agreement or any other Senior Loan Document, when and as the same
shall become due and payable, and such failure shall continue unremedied for a
period of five days;


(c) any
representation or warranty made or deemed made by or on behalf of the Borrower
or any Subsidiary in or in connection with any Senior Loan Document or any
amendment or modification thereof or waiver thereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with any Senior Loan Document or any amendment or modification
thereof or waiver thereunder, shall prove to have been incorrect in any
material respect when made or deemed made;


(d) the Borrower
shall fail to observe or perform any covenant, condition or agreement contained
in Section 5.02(a), 5.10, 5.11, 5.15 or 5.16 or in Article VI;


(e) any Loan Party
(and, prior to the Borrowing Base Date, Holdings or any of its subsidiaries)
shall fail to observe or perform any covenant, condition or agreement contained
in any Senior Loan Document (other than those specified in clause (a), (b) or
(d) of this Article), and such failure shall continue unremedied (i) in
the case of covenants contained in Section 5.08, for five days, (ii) in
the case of covenants contained in Sections 5.01 and 5.02(b), (c) and (f),
for 10 days and (iii) in the case of any other covenant, for a period of
20 days after notice thereof has been delivered by the Administrative Agent to
the Borrower (which notice shall be given promptly at the request of any
Lender);


(f) the Borrower or
any Subsidiary shall fail to make any payment (whether of principal or interest
and regardless of amount) in respect of any Material Indebtedness, including
any obligation to reimburse letter of credit obligations or to post cash
collateral with respect thereto, when and as the same shall become due and
payable or within any applicable grace period;


(g) any event or
condition occurs that results in any Material Indebtedness becoming due prior
to its scheduled maturity or that enables or permits (with or without the
giving of notice, the lapse of time or both) the holder or holders of any
Material Indebtedness or any trustee or agent on its or their behalf to cause any
Material Indebtedness to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, prior to its scheduled maturity; provided that this clause (g) shall not apply to
secured Indebtedness that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such Indebtedness;


(h) an involuntary
proceeding shall be commenced or an involuntary petition shall be filed seeking
(i) liquidation, reorganization or other relief in respect of the Borrower
or any Subsidiary or its Indebtedness, or of a substantial part of its assets,
under any Federal, state or foreign bankruptcy, insolvency, receivership or
similar law now or hereafter in effect or (ii) the appointment 



 72
 









of a receiver,
trustee, custodian, sequestrator, conservator or similar official for the Borrower
or any Subsidiary or for a substantial part of its assets, and, in any such case,
such proceeding or petition shall continue undismissed for 60 days or an order
or decree approving or ordering any of the foregoing shall be entered;


(i) the Borrower or
any Subsidiary shall (i) voluntarily commence any proceeding or file any
petition seeking liquidation, reorganization or other relief under any Federal,
state or foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition
described in clause (h) of this Article, (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for the Borrower or any Subsidiary or for a substantial
part of its assets, (iv) file an answer admitting the material allegations
of a petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;


(j) the Borrower or
any Subsidiary shall become unable to, or admits in writing its inability or
fails to, generally pay its debts as they become due;


(k) one or more
judgments for the payment of money in an aggregate amount in excess of
$75,000,000 shall be rendered against the Borrower, any Subsidiary or any
combination thereof and the same shall remain undischarged for a period of 30
consecutive days during which execution shall not be effectively stayed, or any
action shall be legally taken by a judgment creditor to attach or levy upon any
assets of the Borrower or any Subsidiary to enforce any such judgment;


(l) (i) the
Borrower or any ERISA Affiliate shall fail to pay when due an amount or amounts
aggregating in excess of $15,000,000 which it shall have become liable to pay
under Section 302 or Title IV of ERISA; or notice of intent to terminate a
Plan shall be filed under Title IV of ERISA by the Borrower or any ERISA
Affiliate, any plan administrator or any combination of the foregoing; or the
PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007 of ERISA) in respect
of, or to cause a trustee to be appointed to administer, any Plan; or a condition
shall exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Plan must be terminated; or there shall occur a complete
or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5) of
ERISA, with respect to, one or more Multiemployer Plans which could cause the
Borrower and/or one or more ERISA Affiliates to incur a current payment
obligation in excess of $75,000,000; or (ii) any other ERISA Event shall
have occurred that, in the opinion of the Required Lenders, when taken together
with all other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Borrower, the ERISA Affiliates and the Subsidiaries
in an aggregate amount exceeding $75,000,000;


(m) (i) any Lien
purported to be created under any Senior Collateral Document or Interim
Collateral Document shall cease to be a valid and perfected Lien on any
material portion of the Senior Collateral or, prior to the Borrowing Base Date,
the Interim Collateral, as the case may be, with the priority required by the
Senior Loan Documents, except as a result of the sale or other disposition of the
applicable Collateral in a transaction permitted under the Senior Loan Documents,
or the Borrower or any Subsidiary shall so assert in writing, or (ii) any
Senior Loan Document shall become invalid, or the Borrower or any Subsidiary
shall so assert in writing;


(n) a Change in
Control shall occur; or


(o) any Subsidiary
Loan Party shall amend or revoke any instruction in the Government Lockbox
Account Agreement to any Government Lockbox Account Bank in respect of a
Government Lockbox Account unless (i) the Administrative Agent shall have
given its prior written 



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consent
or (ii) the Government Lockbox Account is then under the control of any
other Person pursuant to Section 5.16;


then, and in every such
event (other than an event with respect to the Borrower or any Subsidiary Loan
Party (or, prior to the Borrowing Base Date, Holdings or any of its subsidiaries)
described in clause (h) or (i) of this Article), and at any time
thereafter during the continuance of such event, the Administrative Agent may,
and at the request of the Required Lenders shall, by notice to the Borrower,
take either or both of the following actions, at the same or different times: (i) terminate
the Commitments, and thereupon the Commitments shall terminate immediately, and
(ii) declare the Loans then outstanding to be due and payable in whole (or
in part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower;
and in case of any event with respect to the Borrower or any Subsidiary Loan
Party (and, prior to the Borrowing Base Date, Holdings or any of its
subsidiaries) described in clause (h) or (i) of this Article, the
Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall automatically become due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower.


ARTICLE
VIII


The
Agents


Each of the Lenders and
each Issuing Bank hereby irrevocably appoints (i) the Administrative Agent
as its agent and authorizes the Administrative Agent to take such actions on
its behalf and to exercise such powers as are delegated to the Administrative
Agent by the terms of the Senior Loan Documents, together with such actions and
powers as are reasonably incidental thereto and (ii) the Collateral Agent
as its agent and authorizes the Collateral Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Collateral Agent by
the terms of the Senior Loan Documents, together with such actions and powers
as are reasonably incidental thereto.


The financial institutions
serving as the Agents hereunder shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it
were not an Agent, and such financial institutions and their Affiliates may
accept deposits from, lend money to and generally engage in any kind of business
with the Borrower or any Subsidiary or any Affiliate of any of the foregoing as
if they were not Agents hereunder.


No Agent shall have any
duties or obligations except those expressly set forth in the Senior Loan
Documents. Without limiting the generality of the foregoing, (a) no Agent
shall be subject to any fiduciary or other implied duties, regardless of whether
a Default has occurred and is continuing, (b) no Agent shall have any duty
to take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated by the Senior Loan
Documents that such Agent is required to exercise in writing by the Required
Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 2.20 or 9.02) and
(c) except as expressly set forth in the Senior Loan Documents, no Agent
shall have any duty to disclose, and no Agent shall be liable for the failure
to disclose, any information relating to the Borrower or any of the
Subsidiaries that is communicated to or obtained by the financial institution
serving as such Agent or any of its Affiliates in any capacity. No Agent shall
be liable for any action taken or not taken by it with the consent or at the
request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section 2.20
or 9.02) or in the absence of its own gross negligence or wilful misconduct (as
determined by a court of competent jurisdiction by final and non-appealable 



 74
 









judgment).
No Agent shall be deemed to have knowledge of any Default unless and until written
notice thereof is given to such Agent by the Borrower or a Lender, as
applicable, and no Agent shall be responsible for or have any duty to ascertain
or inquire into (i) any statement, warranty or representation made in or
in connection with any Senior Loan Document, (ii) the contents of any
certificate, report or other document delivered thereunder or in connection
therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth in any Senior Loan Document, (iv) the
validity, enforceability, effectiveness or genuineness of any Senior Loan
Document or any other agreement, instrument or document or (v) the
satisfaction of any condition set forth in Article IV or elsewhere in any
Senior Loan Document, other than to confirm receipt of items expressly required
to be delivered to such Agent.


Each Agent shall be
entitled to rely upon, and shall not incur any liability for relying upon, any
notice, request, certificate, consent, statement, instrument, document or other
writing believed by it to be genuine and to have been signed or sent by the
proper Person. Each Agent also may rely upon any statement made to it orally or
by telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon. Any Agent may consult with legal
counsel (who may be counsel for the Borrower), independent accountants and
other experts selected by it, and shall not be liable for any action taken or
not taken by it in accordance with the advice of any such counsel, accountants
or experts.


Each Agent may perform any
and all of its duties and exercise any and all of its rights and powers by or
through any one or more sub-agents appointed by such Agent. Any Agent and any
such sub-agent may perform any and all of its duties and exercise any and all
of its rights and powers through their Related Parties. The exculpatory
provisions of the preceding paragraphs shall apply to any such sub-agent and to
the Related Parties of any Agent and any such sub-agent, and shall apply to
their activities in connection with the syndication of the credit facilities
provided for herein as well as activities as an Agent.


Subject to the appointment
and acceptance of a successor Agent as provided in this paragraph, any Agent
may resign at any time by notifying the Lenders, the Issuing Banks and the
Borrower. Upon any such resignation, the Required Lenders shall have the right,
in consultation with the Borrower, to appoint a successor. If no successor
shall have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the Lenders and the
Issuing Banks, appoint a successor Agent (which shall be a financial
institution with an office in New York, New York, or an Affiliate of any such
financial institution). Upon the acceptance of its appointment as an Agent
hereunder by a successor, such successor shall succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations hereunder.
The fees payable by the Borrower to a successor Agent shall be the same as
those payable to its predecessor unless otherwise agreed between the Borrower
and such successor. After an Agent’s resignation hereunder, the provisions of
this Article and Section 9.03 shall continue in effect for the
benefit of such retiring Agent, its sub-agents and their respective Related Parties
in respect of any actions taken or omitted to be taken by any of them while it
was acting as Agent.


Each Lender acknowledges
that it has, independently and without reliance upon any Agent or any other
Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this Agreement.
Each Lender also acknowledges that it will, independently and without reliance
upon any Agent or any other Lender and based on such documents and information
as it shall from time to time deem appropriate, continue to make its own decisions
in taking or not taking action under or based upon this Agreement, any other Senior
Loan Document or related agreement or any document furnished hereunder or thereunder.


Each party hereto
authorizes the Administrative Agent to enter into customary intercreditor
agreements in connection with Securitizations and Factoring Transactions
permitted under this Agreement.



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ARTICLE
IX


Miscellaneous


SECTION 9.01.   Notices.   Except in the case of notices and other communications
expressly permitted to be given by telephone, all notices and other communications
provided for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopy, as
follows:


(a) Rite Aid
Corporation, 30 Hunter Lane Camp Hill, PA 17011, Attention of General Counsel
(Telecopy No. 717-760-7867; email address: rsari@riteaid.com);


(b) if to the
Administrative Agent, (i) in respect of matters of an operational nature,
to Citicorp North America, Inc., 388 Greenwich Street, New York, NY 10013,
Attention of Dana Fuski Dugan (Telecopy No. 212-994-0894; email
address: dana.a.fuskidugan@citigroup.com, with a copy to oploanswebadmin@citigroup.com)
and (ii) in respect of all other matters, to Citicorp North America, Inc.,
388 Greenwich Street, New York, NY 10013, Attention of Jeffrey Nitz (Telecopy No. 212-816-2613;
email address: jeffrey.nitz@citigroup.com, with a copy to oploanswebadmin@citigroup.com);


(c) if to the Syndication Agent, to Bank of
America, N.A., Bank of America Retail Group, 40 Broad Street, Boston, MA 02109,
Attention of Christine Hutchinson (Telecopy No. 617-434-4339;
email address: christine.hutchinson@bankofamerica.com);


(d) if to the Issuing Banks, to (i) Citicorp
North America, Inc., 388 Greenwich Street, New York, NY 10013, Attention
of Jeffrey Nitz (Telecopy No. 212- 816-2613; email address:
jeffrey.nitz@citigroup.com) and (ii) JPMorgan Chase Bank, N.A., 270 Park
Avenue, New York, NY 10017, Attention of Teri Streusand (Telecopy No. 212-270-6637;
email address: teri.streusand@jpmorgan.com);


(e) if to the Swingline Lender, to it at Citicorp
North America, Inc., 388 Greenwich Street, New York, NY 10013, Attention
of Jeffrey Nitz (Telecopy No: 212-816-2613; email address:
jeffrey.nitz@citigroup.com); and


(f) if to any other Lender, to it at its address
(or telecopy number) set forth in its Administrative Questionnaire.


Any party hereto may
change its address or telecopy number for notices and other communications
hereunder by notice to the other parties hereto. All notices and other communications
given to any party hereto in accordance with the provisions of this Agreement
shall be deemed to have been given on the date of receipt.


SECTION 9.02.   Waivers; Amendments.   (a) No failure or delay by
any Agent, any Issuing Bank or any Lender in exercising any right or power
hereunder or under any other Senior Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power,
or any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Agents, the Issuing Banks and
the Lenders hereunder and under the other Senior Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of any Senior Loan Document or consent to any
departure by any Loan Party therefrom shall in any event be effective unless
the same shall be permitted by paragraph (b) of this Section, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. Without limiting the generality of the foregoing,
the making of a Loan or issuance of a Letter of Credit shall not be construed
as a waiver of any Default, regardless of whether any Agent, any Lender or any
Issuing Bank may have had notice or knowledge of such Default at the time.



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(b) Neither this
Agreement nor any other Senior Loan Document nor any provision hereof or
thereof may be waived, amended or modified except, in the case of this
Agreement, pursuant to an agreement or agreements in writing entered into by
the Borrower and the Required Lenders or, in the case of any other Senior Loan
Document, pursuant to an agreement or agreements in writing entered into by the
Administrative Agent and the Loan Party or Loan Parties that are parties
thereto, in each case with the consent of the Required Lenders; provided that (i) no such agreement shall change any provision
of any Senior Loan Document in a manner that by its terms adversely affects the
rights of Lenders holding Loans of any Class differently than those
holding Loans of any other Class, without the written consent of Lenders
holding a majority in interest of the outstanding Loans and unused Commitments
of each affected Class and (ii) any waiver, amendment or modification
of this Agreement that by its terms affects the rights or duties under this
Agreement of one or more Classes of Lenders (but not the other Class or Classes
of Lenders) may be effected by an agreement or agreements in writing entered into
by the Borrower and requisite percentage in interest of the affected Class or
Classes of Lenders that would be required to consent thereto under this Section
if such Class  or Classes of Lenders were
the only Class or Classes of Lenders hereunder at the time; and provided further that no such agreement shall (i) increase
the Commitment of any Lender without the written consent of such Lender, (ii) reduce
or forgive the principal amount of any Loan or LC Disbursement or reduce the
rate of interest thereon, or reduce any fees payable hereunder, without the
written consent of each Lender affected thereby, (iii) postpone the
maturity of any Loan, or any scheduled date of payment of the principal amount
of any Term Loan under Section 2.10, or the required date of reimbursement
of any LC Disbursement, or any date for the payment of any interest or fees
payable hereunder, or reduce the amount of, waive or excuse any such payment,
or postpone the scheduled date of expiration of any Commitment, without the
written consent of each Lender affected thereby, (iv) amend Section 2.18(b) or
(c) in a manner that would alter the pro
rata sharing of payments required thereby, without the written
consent of each Lender, (v) amend the proviso of the definition of “Borrowing
Base Amount” or the definition of “Account Receivable Advance Rate”, “Pharmaceutical
Inventory Advance Rate”, “Other Inventory Advance Rate” or “Script Lists
Advance Rate” without the written consent of each Lender, (vi) subordinate
the priority of the Lien granted to the Collateral Agent pursuant to the Senior
Loan Documents without the written consent of each Lender, (vii) change
any of the provisions of this Section or the percentage set forth in the
definition of “Required Lenders”, “Supermajority Lenders” or any other
provision of any Senior Loan Document specifying the number or percentage of
Lenders (or Lenders of any Class) required to waive, amend or modify any rights
thereunder or make any determination or grant any consent thereunder, without
the written consent of each Lender (or each Lender of such Class, as the case
may be), (viii) release the Borrower or any Subsidiary Loan Party from its
Guarantee under the Senior Subsidiary Guarantee Agreement (except as expressly
provided in the Senior Subsidiary Guarantee Agreement or in Section 9.18),
or limit its liability in respect of such Guarantee, without the written consent
of each Lender, (ix) prior to the Borrowing Base Date, release any
Subsidiary Loan Party from its Guarantee under the Interim Subsidiary Loan
Party Guarantee Agreement (except as expressly provided in the Interim
Subsidiary Loan Party Guarantee Agreement), or limit its liability in respect
of such Guarantee, without the written consent of each Lender, (x) prior
to the Borrowing Base Date, release Holdings or any of its subsidiaries from
its Guarantee under the Interim Collateral and Guarantee Agreement (except as
expressly provided in the Interim Collateral and Guarantee Agreement), or limit
its liability in respect of such Guarantee, without the written consent of each
Lender (xi) release all or substantially all of the Senior Collateral from the
Liens under the Senior Collateral Documents, without the written consent of
each Lender, (xii) prior to the Borrowing Base Date, release all or
substantially all of the Interim Collateral from the Liens under the Interim
Collateral Documents, without the written consent of each Lender or (xiii)
amend Section 2.21 to increase the permitted Incremental Facilities to in excess
of $350,000,000, without the written consent of the Supermajority Lenders; and provided further, that no such agreement shall amend, modify
or otherwise affect the rights or duties of any Agent, the Issuing Banks or the
Swingline Lender without the prior written consent of such Agent, the Issuing
Banks or the Swingline Lender, as the case may be. 



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Notwithstanding the
foregoing, any provision of this Agreement may be amended by an agreement in
writing entered into by the Borrower, the Required Lenders and the
Administrative Agent (and, if their rights or obligations are affected thereby,
the Issuing Banks and the Swingline Lender) if (i) by the terms of such
agreement the Commitment of each Lender not consenting to the amendment
provided for therein shall terminate upon the effectiveness of such amendment
and (ii) at the time such amendment becomes effective, each Lender not
consenting thereto receives payment in full of the principal of and interest
accrued on each Loan made by it and all other amounts owing to it or accrued
for its account under this Agreement.


(c) Notwithstanding
the foregoing, (i) Senior Collateral shall be released from the Lien under
the Senior Collateral Documents from time to time as necessary to effect any
sale of Senior Collateral permitted by the Senior Loan Documents, and the Administrative
Agent shall execute and deliver all release documents reasonably requested to
evidence such release; provided that
arrangements satisfactory to the Administrative Agent shall have been made for
application of the cash proceeds thereof in accordance with Section 2.11,
if required, and for the pledge of any non-cash proceeds thereof pursuant to
the Senior Collateral Documents, (ii) the accounts created pursuant to clause
(i) of Section 5.16(b), the Lockbox Account and/or the Governmental
Lockbox Account may be released by the Administrative Agent and transferred in
accordance with Section 5.16, (iii) if a Subsidiary Loan Party ceases
to be a Subsidiary in accordance with this Agreement, or ceases to own any
property that constitutes Senior Collateral, at the request of and at the
expense of the Borrower, such Subsidiary Loan Party shall be released from the
Senior Subsidiary Guarantee Agreement, the Senior Subsidiary Security Agreement
and each other Senior Loan Document to which it is a party and (iv) prior
to the Borrowing Base Date, if Holdings or any of its subsidiaries ceases to be
a Subsidiary in accordance with this Agreement or ceases to own any property
that constitutes Interim Collateral, at the request of and at the expense of
the Borrower, such party shall be released from the Interim Collateral
Documents and the Senior Loan Documents to which it is a party.


SECTION 9.03.   Expenses; Indemnity; Damage Waiver.   (a) The Borrower
shall pay (i) all reasonable out-of-pocket expenses incurred by the Agents
and their Affiliates, including the reasonable fees, charges and disbursements
of counsel for the Agents, in connection with the syndication of the credit
facilities provided for herein, the preparation and administration of the
Senior Loan Documents or any amendments, modifications or waivers of the
provisions thereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), (ii) all reasonable out-of-pocket expenses
incurred by any Issuing Bank in connection with the issuance, amendment, renewal
or extension of any Letter of Credit or any demand for payment thereunder and (iii) all
out-of-pocket expenses incurred by any Agent, any Issuing Bank or any Lender, including
the fees, charges and disbursements of counsel for any Agent, any Issuing Bank or
any Lender, in connection with the enforcement or protection of its rights
under or in connection with the Senior Loan Documents, including its rights
under this Section, or in connection with the Loans made or Letters of Credit
issued hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit.


(b) The Borrower
shall indemnify each Agent, each Issuing Bank and each Lender, and each Related
Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including the fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of any
Senior Loan Document, the performance by the parties to the Senior Loan Documents
of their respective obligations thereunder or the consummation of the Transactions
or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit
or the use of the proceeds therefrom (including any refusal by an Issuing Bank
to honor a demand for payment under a Letter of Credit if the documents 



 78
 









presented
in connection with such demand do not strictly comply with the terms of such
Letter of Credit), (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property currently or formerly owned or
operated by the Borrower or any of the Subsidiaries, or any Environmental
Liability related in any way to the Borrower or any of the Subsidiaries, or (iv) any
actual or prospective claim, litigation, investigation or proceeding relating
to any of the foregoing, whether based on contract, tort or any other theory
and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent jurisdiction
by final and nonappealable judgment to have resulted from the gross negligence
or wilful misconduct of such Indemnitee.


(c) To the extent
that the Borrower fails to pay any amount required to be paid by it to any
Agent, any Issuing Bank or any Lender under paragraph (a) or (b) of
this Section, each Lender severally agrees to pay to such Agent, such Issuing
Bank or such Lender, as the case may be, such Lender’s pro rata share (determined as of the time
that the applicable unreimbursed expense or indemnity payment is sought) of
such unpaid amount; provided that
the unreimbursed expense or indemnified loss, claim, damage, liability or
related expense, as the case may be, was incurred by or asserted against such Agent,
such Issuing Bank or such Lender in its capacity as such. For purposes hereof,
a Lender’s “pro rata share” shall
be determined based upon its share of the sum of the total Revolving Exposures,
outstanding Term Loans and unused Commitments at the time.


(d) To the extent
permitted by applicable law, the Borrower shall not assert, and hereby waives,
any claim against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any
other Senior Loan Document or any other agreement or instrument contemplated
hereby or thereby, the Transactions, any Loan or Letter of Credit or the use of
the proceeds thereof.


(e) All amounts due
under this Section shall be payable not later than 10 Business Days after
written demand therefor.


SECTION 9.04.   Successors
and Assigns.   (a) The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby (including any Affiliate of
any Issuing Bank that issues any Letter of Credit), except that the Borrower
may not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender (and any attempted assignment
or transfer by the Borrower without such consent shall be null and void).
Nothing in this Agreement, expressed or implied, shall be construed to confer
upon any Person (other than the parties hereto, their successors and assigns
permitted hereby (including any Affiliate of any Issuing Bank that issues any
Letter of Credit) and, to the extent expressly contemplated hereby, the Related
Parties of each of the Agents, the Issuing Banks and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.


(b) (i) Subject
to the conditions set forth in paragraph (b)(ii) below, any Lender may
assign to one or more assignees all or a portion of its rights and obligations
under this Agreement (including all or a portion of its Commitments and the
Loans at the time owing to it), with the prior written consent (such consent
not to be unreasonably withheld or delayed) of:


(A) the Borrower; provided that no consent of the Borrower shall be required
for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or,
if an Event of Default under clause (a), (b), (h), or (i) of
Article VII has occurred and is continuing, any other assignee; and


(B) the
Administrative Agent; provided that
no consent of the Administrative Agent shall be required for an assignment to
an assignee that is a Lender, an Affiliate of a Lender or an Approved Fund.



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(ii) Assignments shall be subject to the
following additional conditions:


(A) except in the case of an assignment to a
Lender, an Affiliate of a Lender or an Approved Fund, the amount of the
Commitment or Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Administrative Agent) shall not be less than (1) with
respect to Revolving Commitments and Revolving Loans, $5,000,000 and (2) with
respect to Tranche 1 Term Loan Commitments, Tranche 2 Term Commitments, Tranche
1 Term Loans and Tranche 2 Term Loans, $1,000,000 or, in each case, if smaller,
the entire remaining amount of the assigning Lender’s Commitment or Loans,
unless each of the Borrower and the Administrative Agent shall otherwise
consent; provided that (i) no such consent
of the Borrower shall be required if an Event of Default has occurred and is
continuing and (ii) in the event of concurrent assignments to two or more
assignees that are Affiliates of one another, or to two or more Approved Funds
managed by the same investment advisor or by affiliated investment advisors,
all such concurrent assignments shall be aggregated in determining compliance
with this subsection;


(B) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement;


(C) the parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Acceptance, together
with a processing and recordation fee of $3,500; provided
that, in the event of concurrent assignments to two or more assignees that are
Affiliates of one another, or by or to two or more Approved Funds managed by
the same investment advisor or by affiliated investment advisors, only one such
fee shall be payable; and


(D) the assignee, if it shall not be a Lender,
shall deliver to the Administrative Agent an Administrative Questionnaire.


(iii) Subject to acceptance and recording thereof
pursuant to paragraph (b)(iv) of this Section, from and after the
effective date specified in each Assignment and Acceptance the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Acceptance, be released from
its obligations under this Agreement (and, in the case of an Assignment and Acceptance
covering all of the assigning Lender’s rights and obligations under this Agreement,
such Lender shall cease to be a party hereto but shall continue to be entitled to
the benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any assignment or transfer
by a Lender of rights or obligations under this Agreement that does not comply
with this Section 9.04 shall be treated for purposes of this Agreement as
a sale by such Lender of a participation in such rights and obligations in
accordance with paragraph (c) of this Section.


(iv) The Administrative Agent, acting for this
purpose as an agent of the Borrower, shall maintain at one of its offices a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”).
The entries in the Register shall be conclusive, and the Borrower, the Agents,
the Issuing Banks and the Lenders may treat each Person whose name is recorded
in the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall
be available for inspection by the Borrower, any other Agent, any Issuing Bank
and any Lender at any reasonable time and from time to time upon reasonable
prior notice.



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(v) Upon its receipt of a duly completed
Assignment and Acceptance executed by an assigning Lender and an assignee, the
assignee’s completed Administrative Questionnaire (unless the assignee shall
already be a Lender hereunder), the processing and recordation fee referred to
in paragraph (b) of this Section and any written consent to such
assignment required by paragraph (b) of this Section, the Administrative
Agent shall accept such Assignment and Acceptance and record the information
contained therein in the Register. No assignment shall be effective for purposes
of this Agreement unless it has been recorded in the Register as provided in
this paragraph.


(vi) By executing and delivering an Assignment
and Acceptance, the assigning Lender thereunder and the assignee thereunder
shall be deemed to confirm to and agree with each other and the other parties
hereto as follows: (A) such assigning Lender warrants that it is the legal
and beneficial owner of the interest being assigned thereby free and clear of
any adverse claim and that its Commitment and the outstanding balances of its
Loans, in each case without giving effect to assignments thereof that have not
become effective, are as set forth in such Assignment and Acceptance; (B) except
as set forth in clause (A) above, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Senior Loan Document or any other instrument or document
furnished pursuant hereto or thereto, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of any of the foregoing, or
the financial condition of the Loan Parties or the performance or observance by
the Loan Parties of any of their obligations under this Agreement or under any
other Senior Loan Document or any other instrument or document furnished
pursuant hereto or thereto; (C) each of the assignee and the assignor
represents and warrants that it is legally authorized to enter into such
Assignment and Acceptance; (D) such assignee confirms that it has received
a copy of this Agreement, together with copies of any amendments or consents
entered into prior to the date of such Assignment and Acceptance and copies of
the most recent financial statements delivered pursuant to Section 5.01
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance; (E) such assignee will independently and without reliance upon
the Agents, such assigning Lender or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement; (F) such assignee appoints and authorizes the Agents to take
such action as agents on its behalf and to exercise such powers under this Agreement
and the other Senior Loan Documents as are delegated to them by the terms hereof
and thereof, together with such powers as are reasonably incidental thereto;
and (G) such assignee agrees that it will perform in accordance with their
terms all the obligations that by the terms of this Agreement are required to
be performed by it as a Lender.


(c) (i) Any Lender may, without the consent
of or notice to the Borrower, the Agents, the Issuing Banks or the Swingline
Lender, sell participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s rights
and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (A) such
Lender’s obligations under this Agreement shall remain unchanged, (B) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (C) the Borrower, the Agents, the
Issuing Banks and the other Lenders shall continue to deal solely and directly
with such Lender in connection with such Lender’s rights and obligations under
this Agreement. Any agreement or instrument pursuant to which a Lender sells
such a participation shall provide that such Lender shall retain the sole right
to enforce this  Agreement and to approve
any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to 



 81
 









Section 9.02(b)(i), (ii) or
(iii) that affects such Participant. Subject to paragraph (c)(ii) of
this Section, the Borrower agrees that each Participant shall be entitled to
the benefits of Sections 2.15, 2.16 and 2.17 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 9.08 as though it were a Lender,
provided such Participant agrees to be subject to Section 2.18(c) as
though it were a Lender.


(ii) A Participant shall not be entitled to
receive any greater payment under Section 2.15 or 2.17 than the applicable
Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to such
Participant is made with the Borrower’s prior written consent. A Participant
that would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 2.17 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the benefit
of the Borrower, to comply with Section 2.17(e) as though it were a
Lender.


(d) Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including, without limitation, any pledge or
assignment to secure obligations to a Federal Reserve Bank, and this Section shall
not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.


(e) In the case of any Lender that is a fund that
invests in bank loans, such Lender may, without the consent of the Borrower or
the Administrative Agent, assign or pledge all or any portion of its rights
under the Senior Loan Documents, including the Loans and promissory notes or
any other instrument evidencing its rights as a Lender under the Senior Loan
Documents, to any holder of, trustee for, or any other representative of
holders of obligations owed or securities issued by such fund, as security for
such obligations or securities; provided that
any foreclosure or similar action by such trustee or representative shall be subject
to the provisions of this Section 9.04 concerning assignments.


SECTION 9.05.   Survival.   All covenants, agreements,
representations and warranties made by the Loan Parties in the Senior Loan
Documents and in the certificates or other instruments delivered in connection
with or pursuant to this Agreement or any other Senior Loan Document shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of the Senior Loan Documents and the making
of any Loans and issuance of any Letters of Credit, regardless of any investigation
made by any such other party or on its behalf and notwithstanding that the Administrative
Agent, any Issuing Bank or any Lender may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is extended
hereunder, and shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any fee or any other amount payable
under this Agreement is outstanding and unpaid or any Letter of Credit is
outstanding and so long as the Commitments have not expired or terminated. The
provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall
survive and remain in full force and effect regardless of the consummation of
the transactions contemplated hereby, the repayment of the Loans, the
expiration or termination of the Letters of Credit and the Commitments or the termination
of this Agreement or any provision hereof.


SECTION 9.06.   Integration; Effectiveness.   This
Agreement, the other Senior Loan Documents and any separate letter agreements
with respect to fees payable to the Administrative Agent constitute the entire
contract among the parties relating to the subject matter hereof and supersede
any and all previous agreements and understandings, oral or written, relating
to the subject matter hereof. This Agreement shall become effective as provided
in Section 4.01.


SECTION 9.07.   Severability.   Any
provision of this Agreement held to be invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, 



 82
 









illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.


SECTION 9.08.   Right of Setoff.   If
an Event of Default shall have occurred and be continuing, each Lender and each
of its Affiliates is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other obligations at any time owing by such Lender or Affiliate to or for the  credit or the account of the Borrower against
any of and all the obligations of the Borrower now or hereafter existing under
this Agreement held by such Lender, irrespective of whether or not such Lender
shall have made any demand under this Agreement and although such obligations
may be unmatured. The rights of each Lender under this Section are in
addition to other rights and remedies (including other rights of setoff) which
such Lender may have.


SECTION 9.09.   Governing Law; Jurisdiction; Consent
to Service of Process.   (a) This Agreement shall be
construed in accordance with and governed by the law of the State of New York.


(b) The Borrower hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to any Senior Loan Document, 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 or any other Senior Loan Document shall affect any
right that any Agent, the Issuing Bank or any Lender may otherwise have to
bring any action or proceeding relating to this Agreement or any other Senior
Loan Document against the Borrower or its properties in the courts of any
jurisdiction.


(c) The Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which 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
any other Senior Loan Document in any court referred to in paragraph (b) of
this Section. 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.


(d) Each party to this Agreement irrevocably
consents to service of process in the manner provided for notices in Section 9.01.
Nothing in this Agreement or any other Senior Loan Document will affect the
right of any party to this Agreement to serve process in any other manner
permitted by law.


SECTION 9.10.   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 ANY LEGAL PROCEEDING DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER SENIOR
LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED
ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT
IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.



 83
 









SECTION 9.11.   Headings.   Article and
Section headings and the Table of Contents used herein are for convenience
of reference only, are not part of this Agreement and shall not affect the
construction of, or be taken into consideration in interpreting, this
Agreement.


SECTION 9.12.   Confidentiality.   Each
of the Agents, the Issuing Banks and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates’ directors, officers,
trustees, employees and agents, including accountants, legal counsel and other advisors
(it being understood that the Persons to whom such disclosure is made will be informed
of the confidential nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or any other Senior Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any
assignee of or Participant in, or any prospective assignee of or Participant in,
any of its rights or obligations under this Agreement, (g) with the
consent of the Borrower, (h) to any pledgee referred to in Section 9.04(d) or
any direct or indirect contractual counterparty in any Hedging Agreement (or to
any such contractual counterparty’s professional advisor), so long as such
pledgee or contractual counterparty (or such professional advisor) agrees to be
bound by the provisions of this Section 9.12, or (i) to the extent
such Information (i) becomes publicly available other than as a result of
a breach of this Section or (ii) becomes available to any Agent, any
Issuing Bank or any Lender on a nonconfidential basis from a source other than
the Borrower. For the purposes of this Section, “Information”
means all information received from the Borrower relating to the Borrower or
its business, other than any such information that is available to any Agent,
any Issuing Bank or any Lender on a nonconfidential basis prior to disclosure
by the Borrower. Any Person required to maintain the confidentiality of Information
as provided in this Section shall be considered to have complied with its obligation
to do so if such Person has exercised the same degree of care to maintain the confidentiality
of such Information as such Person would accord to its own confidential information.
Notwithstanding anything in this Agreement or in any other Senior Loan Document
to the contrary, the Borrower and each Lender (and each employee, representative
or other agent of the Borrower) may disclose to any and all persons, without
limitation of any kind, the U.S. tax treatment and U.S. tax structure of the Transactions
and all materials of any kind (including opinions or other tax analyses) that are
provided to the Borrower relating to such U.S. tax treatment and U.S. tax
structure.


SECTION 9.13.   Interest
Rate Limitation.   Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts which are treated as interest on such
Loan under applicable law (collectively the “Charges”),
shall exceed the maximum lawful rate (the “Maximum Rate”)
which may be contracted for, charged, taken, received or reserved by the Lender
holding such Loan in accordance with applicable law, the rate of interest payable
in respect of such Loan hereunder, together with all Charges payable in respect
thereof, shall be limited to the Maximum Rate and, to the extent lawful, the
interest and Charges that would have been payable in respect of such Loan but
were not payable as a result of the operation of this Section shall be
cumulated and the interest and Charges payable to such Lender in respect of
other Loans or periods shall be increased (but not above the Maximum Rate
therefor) until such cumulated amount, together with interest thereon at the
Federal Funds Effective Rate to the date of repayment, shall have been received
by such Lender.


SECTION 9.14.   Collateral
Trust and Intercreditor Agreement.   Each Lender, each Issuing
Bank and each Agent hereby authorizes each Agent to enter into the Collateral
Trust and Intercreditor Agreement, each other Senior Collateral Document and each
other Interim Collateral Document on its behalf, and agrees that the
Administrative Agent and the Collateral Agent may enforce the rights and
remedies of the Lenders under each Senior Loan Document to the extent provided
in the Collateral Trust 



 84
 









and Intercreditor
Agreement, each other Senior Collateral Document and each other Interim Collateral
Document.


SECTION 9.15.   Cash
Sweep.   (a) On any day on which (i) an Event of Default
exists or (ii) the lesser of (x) the average Revolving Commitments
(after deducting the average total Revolving Exposure) over any 30-day
period and (y) the average Borrowing Base Amount (after deducting the sum
of (1) the average total Revolving Exposure, (2) the average
outstanding Tranche 1 Term Loans and (3) if prior to the Borrowing Base
Date, zero, or if on or after the Borrowing Base Date, the average outstanding
Tranche 2 Term Loans) over any 30-day period, in each case, together with
all amounts then on deposit in the Cash Sweep Cash Collateral Account, is less
than $75,000,000, then the Administrative Agent, upon its determination or upon
request by the Required Lenders, shall immediately be entitled to deliver Cash
Sweep Notices.


(b) During a Cash
Sweep Period, if (i) there is no Event of Default and (ii) the lesser
of (x) the average Revolving Commitments (after deducting the average total
Revolving Exposure) over any 30-day period and (y) the average
Borrowing Base Amount (after deducting the sum of (1) the average total
Revolving Exposure, (2) the average outstanding Tranche 1 Term Loans and (3) if
prior to the Borrowing Base Date, zero, or if on or after the Borrowing Base
Date, the average outstanding Tranche 2 Term Loans) over any 30-day
period, in each case, together with all amounts then on deposit in the Cash
Sweep Cash Collateral Account, is greater than $100,000,000, then the Administrative
Agent shall automatically rescind any Cash Sweep Notice and shall be prohibited
from delivering any other Cash Sweep Notice (unless and until the occurrence of
the events set forth in paragraph (a) of this Section).


(c) The
Administrative Agent reserves the right to send a Cash Sweep Notice on each
occasion of the occurrence of the events set forth in Section 9.15(a).


SECTION 9.16.   Electronic
Communications.   (a) Notwithstanding anything in any
Senior Loan Document to the contrary, the Borrower hereby agrees that it will
use its reasonable best efforts to provide to the Administrative Agent all information,
documents and other materials that it is obligated to furnish to the Administrative
Agent pursuant to the Senior Loan Documents, including, without limitation, all
notices, requests, financial statements, financial and other reports, certificates
and other information materials, but excluding any such communication that (i) relates
to a request for a new, or a conversion of an existing, Borrowing or other extension
of credit (including any election of an interest rate or Interest Period
relating thereto), (ii) relates to the payment of any principal or other
amount due under any Senior Loan Document prior to the scheduled date therefor,
(iii) provides notice of any Default or Event of Default under any Senior
Loan Document or (iv) is required to be delivered to satisfy any condition
set forth in Section 4.01 and/or 4.02 (all such non-excluded communications
being referred to herein collectively as the “Communications”),
by transmitting the Communications in an electronic/soft medium in a format
acceptable to the Administrative Agent to oploanswebadmin@citigroup.com, with a
copy to jeffrey.nitz@citigroup.com. In addition, the Borrower agrees to
continue to provide the Communications to the Administrative Agent in the
manner specified in the Senior Loan Documents, but only to the extent requested
by the Administrative Agent.


(b) The Borrower
further agrees that the Administrative Agent may make the Communications
available to the Lenders by posting the Communications on Intralinks, Fixed
Income Direct or a substantially similar electronic transmission system (each
such system, a “Platform”). The Borrower
acknowledges that the distribution of material through an electronic medium is
not necessarily secure and that there are confidentiality and other risks
associated with such distribution.


(c) EACH PLATFORM IS PROVIDED “AS IS” AND “AS
AVAILABLE”. THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR
COMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF ANY PLATFORM, AND EXPRESSLY
DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY
OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY 



 85
 









WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, NONINFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER
CODE DEFECTS, IS MADE BY THE AGENT PARTIES IN CONNECTION WITH THE
COMMUNICATIONS OR ANY PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR
ANY OF ITS AFFILIATES OR ANY OF THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ADVISORS OR REPRESENTATIVES (COLLECTIVELY, THE “AGENT PARTIES”) HAVE ANY
LIABILITY TO THE BORROWER, ANY OTHER LOAN PARTY, ANY LENDER OR ANY OTHER PERSON
OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, DIRECT OR
INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES
(WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF THE BORROWER’S OR THE ADMINISTRATIVE
AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE
EXTENT THE LIABILITY OF ANY AGENT PARTY IS FOUND IN A FINAL NON-APPEALABLE
JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM
SUCH AGENT PARTY’S GROSS NEGLIGENCE OR WILFUL MISCONDUCT.


(d) The Administrative
Agent agrees that the receipt of the Communications by it at its e-mail address
set forth in Section 9.01 shall constitute effective delivery of the
Communications to the Administrative Agent for purposes of this Section. Each
Lender agrees that notice to it (as provided in the next sentence) specifying
that the Communications have been posted to a Platform shall constitute effective
delivery of the Communications to such Lender for purposes of this Section. Each
Lender agrees (i) to notify the Administrative Agent in writing (including
by electronic communication) from time to time of such Lender’s e-mail address
to which the foregoing notice may be sent by electronic transmission and (ii) that
the foregoing notice may be sent to such e-mail address.


(e) Nothing in this Section 9.16
shall prejudice the right of the Administrative Agent or any Lender to give any
notice or other communication pursuant to any Senior Loan Document in any other
manner specified in such Senior Loan Document.


SECTION 9.17.   USA
Patriot Act.   Each Lender and each Issuing Bank hereby notifies
the Borrower that pursuant to the requirements of the USA Patriot Act, it is
required to obtain, verify and record information that identifies the Borrower,
which information includes the name and address of the Borrower and other
information that will allow such Lender or Issuing Bank to identify the
Borrower in accordance with its requirements. The Borrower shall promptly,
following a request by the Administrative Agent, any Lender or any Issuing
Bank, provide all documentation and other information that the Administrative
Agent, such Lender or such Issuing Bank reasonably requests in order to comply
with its ongoing obligations under applicable “know your customer” and anti-money
laundering rules and regulations, including the USA Patriot Act.


SECTION 9.18.   Release
of Interim Collateral; Termination of Interim Collateral Documents.   Upon
the occurrence of the Borrowing Base Date, the security interests granted in
the Interim Collateral, and the guarantees made, under the Interim Collateral
Documents shall be automatically released, and the Interim Collateral Documents
shall automatically terminate in accordance with their terms. In connection with
the release of security interests granted in the Interim Collateral, and the
guarantees made, under the Interim Collateral Documents, the Tranche 2 Lenders
hereby authorize the Borrower (or its counsel) to file, register or record all
documents and instruments, including amendments to Uniform Commercial Code
financing statements, required by law, advisable or reasonably requested by the
Borrower, and agree to execute and deliver all further instruments and
documents and take all further action that may be necessary or that the
Borrower may reasonably request in order to effectuate such release, all at the
expense of the Borrower. For the avoidance of doubt, the foregoing does not
authorize the Borrower to take any action that would result in the release of
the security interests granted in the Interim Collateral under the Interim
Collateral Documents prior to the Borrowing Base Date.



 86














Schedule 1.01


Subsidiary
Loan Parties


	
  112 Burleigh Avenue Norfolk,
  LLC

  
	
  1515 West State Street Boise, Idaho, LLC

  
	
  1740 Associates, L.L.C.

  
	
  3581
  Carter Hill Road—Montgomery Corp.

  
	
  4042 Warrensville Center Road—Warrensville
  Ohio, Inc.

  
	
  5277 Associates, Inc.

  
	
  537 Elm Street Corp.

  
	
  5600 Superior Properties, Inc.

  
	
  657-659 Broad St. Corp.

  
	
  764 South Broadway—Geneva,
  Ohio, LLC

  
	
  Ann & Government Streets—Mobile,
  Alabama, LLC

  
	
  Apex Drug Stores, Inc.

  
	
  Broadview and Wallings—Broadview
  Heights Ohio, Inc.

  
	
  Central Avenue and Main Street—Petal,
  MS, LLC

  
	
  Eagle Managed Care Corp.

  
	
  Eighth and Water Streets—Urichsville,
  Ohio, LLC

  
	
  England Street—Asheland Corporation

  
	
  Fairground, L.L.C.

  
	
  GDF, Inc.

  
	
  Gettysburg and Hoover—Dayton,
  Ohio, LLC

  
	
  Harco, Inc.

  
	
  K & B Alabama Corporation

  
	
  K & B Louisiana Corporation

  
	
  K & B Mississippi Corporation

  
	
  K & B Services, Incorporated

  
	
  K & B Tennessee Corporation

  
	
  K & B, Incorporated

  
	
  K & B Texas Corporation

  
	
  Keystone Centers, Inc.

  
	
  Lakehurst and Broadway Corporation

  
	
  Mayfield & Chillicothe
  Roads—Chesterland,
  LLC

  
	
  Munson & Andrews,
  LLC

  
	
  Name Rite, L.L.C.

  
	
  Northline & Dix—Toledo—Southgate,
  LLC

  
	
  Patton Drive and Navy Boulevard Property Corporation

  
	
  Paw Paw Lake Road & Paw Paw
  Avenue—Coloma,
  Michigan, LLC

  
	
  PDS-1 Michigan, Inc.

  
	
  Perry Distributors, Inc.

  
	
  Perry Drug Stores, Inc.

  
	
  Ram-Utica, Inc.

  
	
  RDS Detroit, Inc.

  
	
  Read’s Inc.

  
	
  Rite Aid Drug Palace, Inc.

  
	
  Rite Aid Hdqtrs. Corp.

  
	
  Rite Aid Hdqtrs. Funding, Inc.

  
	
  Rite Aid of Alabama, Inc.

  
	
  Rite Aid of Connecticut, Inc.

  
	
  Rite Aid of Delaware, Inc.

  
	
  Rite Aid of Florida, Inc.

  












 


	
  Rite Aid of Georgia, Inc,

  
	
  Rite Aid of Illinois, Inc.

  
	
  Rite Aid of Indiana Inc.

  
	
  Rite Aid of Kentucky, Inc.

  
	
  Rite Aid of Maine, Inc.

  
	
  Rite Aid of Maryland, Inc.

  
	
  Rite Aid of Massachusetts, Inc.

  
	
  Rite Aid of Michigan, Inc.

  
	
  Rite Aid of New Hampshire, Inc.

  
	
  Rite Aid of New Jersey, Inc.

  
	
  Rite Aid of New York, Inc.

  
	
  Rite Aid of North Carolina, Inc.

  
	
  Rite Aid of Ohio, Inc.

  
	
  Rite Aid of Pennsylvania, Inc.

  
	
  Rite Aid of South Carolina, Inc.

  
	
  Rite Aid of Tennessee, Inc.

  
	
  Rite Aid of Vermont, Inc.

  
	
  Rite Aid of Virginia, Inc.

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

  
	
  Rite Aid of West Virginia, Inc.

  
	
  Rite Aid Realty Corp.

  
	
  Rite Aid Rome Distribution Center, Inc.

  
	
  Rite Aid Services, L.L.C.

  
	
  Rite Aid Transport, Inc.

  
	
  Rite Fund, Inc.

  
	
  Rite Investments Corp.

  
	
  RX Choice, Inc.

  
	
  Seven Mile and Evergreen—Detroit, LLC

  
	
  Silver Springs Road—Baltimore, Maryland/One, LLC

  
	
  Silver Springs Road—Baltimore, Maryland/Two, LLC

  
	
  State & Fortification
  Streets—Jackson, Mississippi,
  LLC

  
	
  State Street and Hill Road—Gerard, Ohio, LLC

  
	
  The Lane Drug Company

  
	
  Thrifty Corporation

  
	
  Thrifty PayLess, Inc.

  
	
  Tyler and Sanders Roads, Birmingham—Alabama, LLC

  
	
  The Jean Coutu Group
  (PJC) USA, Inc.

  
	
  PJC Realty N.E. LLC

  
	
  Brooks Pharmacy, Inc.

  
	
  PJC of Massachusetts, Inc.

  
	
  PJC of Cranston, Inc.

  
	
  PJC of East Providence, Inc.

  
	
  PJC of Vermont Inc.

  
	
  PJC of Rhode Island, Inc.

  
	
  MC Woonsocket, Inc.

  
	
  P.J.C. Distribution, Inc.

  
	
  PJC Lease Holdings, Inc.

  
	
  P.J.C. Realty Co., Inc.

  
	
  PJC Realty MA, Inc.

  
	
  P.J.C. of West Warwick, Inc.

  
	
  JCG Holdings (USA), Inc.

  
	
  Eckerd Corporation

  












 


	
  Genovese Drug Stores, Inc.

  
	
  Thrift Drug, Inc.

  
	
  EDC Licensing, Inc.

  
	
  Eckerd Fleet, Inc.

  
	
  EDC Drug Stores, Inc.

  
	
  Thrift Drug Services, Inc.

  
	
  Maxi Drug, Inc.

  
	
  Maxi Green Inc.

  
	
  Maxi Drug North, Inc.

  
	
  Maxi Drug South, L.P.

  
	
  PJC Special Realty Holdings, Inc.

  
	
  PJC Manchester Realty LLC

  
	
  PJC Dorchester Realty LLC

  
	
  PJC Revere Realty LLC

  
	
  PJC Mansfield Realty LLC

  
	
  PJC Hyde Park Realty LLC

  
	
  PJC Haverhill Realty LLC

  
	
  PJC Peterborough Realty LLC

  
	
  PJC Providence Realty LLC

  
	
  PJC New London Realty LLC

  
	
  PJC East Lyme Realty LLC

  
	
  PJC Hermitage Realty LLC

  
	
  JCG (PJC) USA, LLC

  



 















Schedule
2.01: Commitments


	
  Lender

  	
   

  	
   

  	
   

  	
  Commitment

  	
   

  
	
  Citicorp North America, Inc.

  	
   

  	
  $

  	
  552,500,000

  	
   

  
	
  Bank of America,
  N.A.

  	
   

  	
  $

  	
  552,500,000

  	
   

  
	
  Total:

  	
   

  	
  $

  	
  1,105,000,000

  	
   

  



 















Schedule 3.04


Undisclosed
Liabilities


None.















Schedule 3.05(a)


Properties


None.















Schedule 3.05(c)


Leased
Warehouses and Distribution Centers


	
  Rite Aid Corporation

  	
   

  	
  Harco, Inc.

  	
   

  	
  Cottondale Industrial

  	
   

  	
  10390 Technology Drive

  Cottondale, AL 35453

  	
   

  	
  Tuscaloosa

  
	
  Rite Aid Rome

  Distribution Center, Inc.

  	
   

  	
  Rite Aid of New York,
  Inc.

  	
   

  	
  New York Distribution
  Center (Utica)

  	
   

  	
  2007
  Beechgrove Place

  Utica, NY 13501

  	
   

  	
  Oneida

  
	
  Thrifty Payless, Inc.

  	
   

  	
  Thrifty PayLess, Inc.

  	
   

  	
  Wilsonville Distribution
  Center

  	
   

  	
  29555
  S.W. Boones Ferry
  Road

  Wilsonville, OR 97070

  	
   

  	
  Clackamas

  
	
  Thrifty Payless, Inc.

  	
   

  	
  Thrifty PayLess, Inc.

  	
   

  	
  Woodland Distribution
  Center

  	
   

  	
  280
  N. Pioneer Avenue

  Woodland, CA 95776

  	
   

  	
  Yolo

  
	
  Rite Aid of West Virginia, Inc.

  	
   

  	
  Rite Aid of West Virginia, Inc.

  	
   

  	
  Dunbar, WV

  	
   

  	
  Charles Avenue and Jordan
  Street

  West Dunbar, WV

  	
   

  	
  Kanawa

  
	
  Rite Aid of Maryland,
  Inc.

  	
   

  	
  Rite Aid of Maryland,
  Inc.

  	
   

  	
  Riverside Business Park

  	
   

  	
  1351
  Brass Mill Road

  Belcamp, MD 21017

  	
   

  	
  Harford

  
	
  Eckerd Corporation

  	
   

  	
  Eckerd Corporation

  	
   

  	
  Mid-Atlantic

  	
   

  	
  355
  Walt Sanders
  Memorial Drive

  Shenandoah, GA 30265

  	
   

  	
  Coweta

  
	
  Eckerd Corporation

  	
   

  	
  Eckerd Corporation

  	
   

  	
  Mid-Atlantic

  	
   

  	
  4017
  Chesapeake Drive

  Charlotte, NC 28216

  	
   

  	
  Mecklenburg

  
	
  Eckerd Corporation

  	
   

  	
  Eckerd Corporation

  	
   

  	
  Northeast

  	
   

  	
  Geoffrey Road and Kresge
  Road

  Fairless Hills, PA 19030-4317

  	
   

  	
  Bucks

  



 















Schedule 3.06(a)


Litigation


We are subject from time to time to lawsuits and
governmental investigations arising in the ordinary course of business,
including employment related lawsuits arising form alleged violations of
certain State and Federal laws. Some of these suits purport to have been
determined to be class or collective actions and/or seek substantial damages.
In the opinion of our management, these matters are adequately covered by
insurance or, if not so covered, are without merit or are of such nature or
involve amounts that would not have a material adverse effect on our financial
condition, results of operations or cash flows if decided adversely.















Schedule 3.06(b)


Environmental
Matters


None.















Schedule 3.07


Compliance with
Laws


None.















Schedule 3.09


Taxes


None.
















Schedule 3.12


Subsidiaries


	
   Entity Name

   	
    

   	
    

   	
    

   	
   Borrower Ownership Interest

   (direct or indirect)

   	
    

   	
   Subsidiary

   Loan Party?

   	
    

   
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  112 Burleigh
  Avenue Norfolk, LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  1515 West State Street
  Boise, Idaho, LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  1740 Associates, L.L.C.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  3581 Carter Hill Road—Montgomery Corp.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  4042 Warrensville Center
  Road—Warrensville Ohio, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  5277
  Associates, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  537 Elm Street Corp.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  5600 Superior Properties, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  657-659 Broad
  St. Corp.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  764 South
  Broadway—Geneva, Ohio, LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  912 Elmwood
  Avenue—Buffalo, LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  N

  	
   

  	
   

  
	
  Ann & Government
  Streets—Mobile, Alabama, LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Apex Drug
  Stores, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Broadview and Wallings—Broadview
  Heights Ohio, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Central Avenue and Main
  Street—Petal, MS, LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Drug Palace, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  N

  	
   

  	
   

  
	
  Eagle Managed Care Corp.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  East Stone Drive and
  Bloomingdale Pike—Kingsport, Tennessee, LLC        

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  N

  	
   

  	
   

  
	
  Eighth and Water
  Streets—Urichsville, Ohio, LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  England Street—Asheland
  Corporation

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Euclid and Wilder
  Roads—Bay City, LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  N

  	
   

  	
   

  
	
  Fairground, L.L.C.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Fiona One Corp.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  N

  	
   

  	
   

  
	
  GDF, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Gettysburg and
  Germantown, LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  N

  	
   

  	
   

  
	
  Gettysburg and Hoover—Dayton,
  Ohio, LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Grand River & Fenkell, LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  N

  	
   

  	
   

  
	
  Harco, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  K & B
  Alabama Corporation

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  K & B
  Louisiana Corporation

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  K & B
  Mississippi Corporation

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  K & B
  Services, Incorporated

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  K & B
  Tennessee Corporation

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  K & B, Incorporated

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  K&B Texas
  Corporation

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Keystone
  Centers, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Lakehurst and Broadway
  Corporation

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Louisville
  Avenue & North
  18th Street—Monroe, Louisiana LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  N

  	
   

  	
   

  
	
  Main and McPherson—Clyde,
  LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  N

  	
   

  	
   

  
	
  Mayfield & Chillicothe
  Roads—Chesterland, LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Munson & Andrews,
  LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Name Rite, L.L.C.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  




 1
 









 


	
  Northline & Dix—Toledo—Southgate,
  LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Patton Drive and Navy
  Boulevard Property Corporation

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Paw Paw Lake
  Road & Paw Paw Avenue—Coloma, Michigan, LLC 

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  PDS-1
  Michigan, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Perry
  Distributors, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Perry Drug
  Stores, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  RA 5—Points, LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  N

  	
   

  	
   

  
	
  RA Indian River/Kempsville, LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  N

  	
   

  	
   

  
	
  Ram-Utica, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  RDS Detroit, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Read’s Inc.

  	
   

  	
   

  	
  99.9

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Richfield Road—Flint,
  Michigan, LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  N

  	
   

  	
   

  
	
  Richmond Road and
  Monticello Boulevard—Richmond Heights, Ohio, LLC  

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  N

  	
   

  	
   

  
	
  Rite Aid Drug
  Palace, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid Funding I

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  N

  	
   

  	
   

  
	
  Rite Aid Funding II

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  N

  	
   

  	
   

  
	
  Rite Aid Hdqtrs. Corp.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid Hdqtrs.
  Funding, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid Lease
  Management Company

  	
   

  	
   

  	
  84

  	
  %

  	
   

  	
   

  	
  N

  	
   

  	
   

  
	
  Rite Aid of
  Alabama, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid of
  Connecticut, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid of
  Delaware, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid of
  Florida, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid of Georgia,
  Inc,

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid Health
  Solutions, LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  N

  	
   

  	
   

  
	
  Rite Aid of
  Illinois, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid of Indiana Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid of
  Kentucky, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid of
  Maine, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid of
  Maryland, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid of
  Massachusetts, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid of
  Michigan, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid of New
  Hampshire, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid of New
  Jersey, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid of New
  York, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid of North
  Carolina, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid of
  Ohio, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid of
  Pennsylvania, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid of South
  Carolina, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid of
  Tennessee, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid of
  Vermont, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid of
  Virginia, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

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

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid of West
  Virginia, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid Realty Corp.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid Rome
  Distribution Center, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  




 2
 









 


	
  Rite Aid Services, L.L.C.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Aid
  Transport, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Fund, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Investments Corp.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Rite Investments Corp.,
  LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  N

  	
   

  	
   

  
	
  Route 1 & Hood Road—Fredericksburg, LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  N

  	
   

  	
   

  
	
  Route 202 at Route 124
  Jaffrey—New Hampshire, LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  N

  	
   

  	
   

  
	
  Rx Choice, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  RX USA, Inc.

  	
   

  	
   

  	
  80

  	
  %

  	
   

  	
   

  	
  N

  	
   

  	
   

  
	
  Seven Mile and
  Evergreen—Detroit, LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Silver Springs Road—Baltimore,
  Maryland/One, LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Silver Springs Road—Baltimore,
  Maryland/Two, LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  State & Fortification
  Streets—Jackson, Mississippi, LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  State Street and Hill
  Road—Gerard, Ohio, LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  The Lane Drug Company

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  39/41
  Hightstown Road, LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  N

  	
   

  	
   

  
	
  Thrifty Corporation

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Thrifty
  PayLess, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Tyler and Sanders Roads,
  Birmingham—Alabama, LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Brooks
  Pharmacy, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Eckerd Corporation

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  EDC Licensing, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Genovese Drug
  Stores, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  JCG Holdings
  (USA), Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Maxi Drug
  North, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Maxi Drug, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  P.J.C. Distribution, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  P.J.C. Realty
  Co., Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  PJC Lease
  Holdings, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  PJC Special Realty
  Holdings, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  The Jean Coutu Group
  (PJC) USA, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Thrift Drug
  Services, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Thrift Drug, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Eckerd Fleet, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  PJC of
  Massachusetts, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  PJC Realty MA, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  EDC Drug
  Stores, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  MC Woonsocket, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  PJC of
  Cranston, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  PJC of East
  Providence, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  PJC of Rhode
  Island, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  P.J.C. of West
  Warwick, Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  Maxi Green Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  PJC of Vermont Inc.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  JCG (PJC) USA, LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  PJC Dorchester Realty
  LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  PJC East Lyme Realty LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  PJC Haverhill Realty LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  




 3
 









 


	
  PJC Hermitage Realty LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  PJC Hyde Park Realty LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  PJC Manchester Realty LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  PJC Mansfield Realty LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  PJC New London Realty
  LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  PJC Peterborough Realty
  LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  PJC Providence Realty
  LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  PJC Realty N.E., LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  PJC Revere Realty LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  
	
  PJC Peterborough Realty
  I1 LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  N

  	
   

  	
   

  
	
  PJC Essex Realty LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  N

  	
   

  	
   

  
	
  PJC Norwich Realty LLC

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  N

  	
   

  	
   

  
	
  Maxi Drug South, L.P.

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  Y

  	
   

  	
   

  



 



 4















Schedule 3.13


SCHEDULE OF CASUALTY-PROPERTY INSURANCE

RITE AID CORPORATION

May 17, 2007—Policy periods ending on 6/1/07 will be renewed




	
   

   	
    

   	
   COVERAGE

   	
    

   	
   POLICY #

   	
    

   	
   CARRIER

   	
    

   	
   BROKER

   	
    

   	
   AMOUNT OF LIMIT

   	
    

   	
   POLICY PERIOD

   	
    

   	
   ANNUAL

   PREM AND/OR RATE

   
	
  1

  	
   

  	
  AIRCRAFT

  	
   

  	
  GM 3999738-03

  	
   

  	
  ILLINOIS

  	
   

  	
  EH&D

  	
   

  	
  $200.0 MILLION
  LIABILITY

  	
   

  	
  10/30/06-10/30/07

  	
   

  	
  $172,882

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  NATIONAL

  	
   

  	
   

  	
   

  	
  $50.0 MILLION WAR
  RISK

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  INSURANCE

  	
   

  	
   

  	
   

  	
  3rd PARTY—NON
  PASSENGER

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  COMPANY

  	
   

  	
   

  	
   

  	
  $25.0
  THOUSAND/PERSON—MED PAY

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $250.0 THOUSAND
  ADMITTED LIA.

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  ALL RISK PHYSICAL
  DAMAGE

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  ALL RISK GROUND AND FLIGHT

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  NO DEDUCTIBLE

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  AUTOMOBILE

  	
   

  	
  TCZJCAP120D8153TIL07

  	
   

  	
  TRAVELERS

  	
   

  	
  AON

  	
   

  	
  $5.0
  MILLION CSL

  	
   

  	
  01/01/07-01/01/08

  	
   

  	
  $766,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  NO COLLISION OR
  COMP

  	
   

  	
   

  	
   

  	
  $250,000
  DEDUCTIBLE

  
	
  3

  	
   

  	
  OCEAN MARINE

  	
   

  	
  NO1208548
  002

  	
   

  	
  Indemnity

  	
   

  	
  AON

  	
   

  	
  $4.0
  MILLION/VESSEL

  	
   

  	
  06/01/07-06/01/08

  	
   

  	
  $50,400

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Insurance

  	
   

  	
   

  	
   

  	
  $400.0 THOUSAND ON
  DECK

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Company of

  	
   

  	
   

  	
   

  	
  $4.0 MILLION PER
  AIRCRAFT

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  North America

  	
   

  	
   

  	
   

  	
  $50.0 THOUSAND
  MAIL OR PARCEL POST

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  3D POLICY

  	
   

  	
  429CP0500

  	
   

  	
  St.
  Paul Fire

  	
   

  	
  MARSH

  	
   

  	
  LIMIT:
  $10.0 MILLION

  	
   

  	
  11/01/06-11/01/07

  	
   

  	
  $90,000

  
	
   

  	
   

  	
  (CRIME)

  	
   

  	
   

  	
   

  	
  & Marine

  	
   

  	
   

  	
   

  	
  DEDUCTIBLE: $500.0
  THOUSAND

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  D&O

  	
   

  	
  713-20-56

  	
   

  	
  AIG

  	
   

  	
  MARSH

  	
   

  	
  $15.0
  MILLION

  	
   

  	
  03/31/07-03/31/08

  	
   

  	
  $1,375,000

  
	
  

  	
   

  	
  INCLUDES

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $2.0 MILLION
  DEDUCTIBLE

  	
   

  	
   

  	
   

  	
  (Includes TRIA)

  
	
  

  	
   

  	
  BROOKS/ECKERD

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  D&O EXCESS

  	
   

  	
  EC09001183

  	
   

  	
  TRAVELERS

  	
   

  	
  MARSH

  	
   

  	
  $15.0 MILLION

  	
   

  	
  03/31/07-03/31/08

  	
   

  	
  ($440,000

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  EXCESS OF $15.0
  million

  	
   

  	
   

  	
   

  	
  Included above)

  
	
  

  	
   

  	
  D&O EXCESS

  	
   

  	
  DOC9035115-00

  	
   

  	
  ZURICH

  	
   

  	
  MARSH

  	
   

  	
  $10.0 MILLION

  	
   

  	
  03/31/07-03/31/08

  	
   

  	
  ($220,000

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  EXCESS OF $30.0
  MILLION

  	
   

  	
   

  	
   

  	
  Included above)

  
	
   

  	
   

  	
  D&O EXCESS

  	
   

  	
  COO7162/002

  	
   

  	
  AWAC

  	
   

  	
  MARSH

  	
   

  	
  $10.0 MILLION

  	
   

  	
  03/31/07-03/31/08

  	
   

  	
  ($165,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  EXCESS OF
  $40.0 MILLION

  	
   

  	
   

  	
   

  	
  Included above)

  
	
  

  	
   

  	
  D&O EXCESS

  	
   

  	
  ELU97350-07

  	
   

  	
  XL*

  	
   

  	
  MARSH

  	
   

  	
  $15.0 MILLION

  	
   

  	
  03/31/07-03/31/08

  	
   

  	
  ($180,000

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  EXCESS of $50.0
  MILLION

  	
   

  	
   

  	
   

  	
  Included above)

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (*SIDE A EXCESS
  COVERAGE)

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  D&O EXCESS

  	
   

  	
  713-44-92

  	
   

  	
  AIG*

  	
   

  	
  MARSH

  	
   

  	
  $10.0 MILLION

  	
   

  	
  03/31/07-03/31/08

  	
   

  	
  ($110,000

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  EXCESS of $65.0
  MILLION

  	
   

  	
   

  	
   

  	
  Included above)

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (*SIDE OF EXCESS
  COVERAGE)

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
  Executive Risk

  	
   

  	
  A07SC2645000

  	
   

  	
  GREAT

  	
   

  	
  AON

  	
   

  	
  $5.0
  MILLION

  	
   

  	
  03/19/07-03/19/10

  	
   

  	
  $20,075.00

  
	
   

  	
   

  	
  (Kidnap/Ransom/

  	
   

  	
   

  	
   

  	
  AMERICAN

  	
   

  	
   

  	
   

  	
  (EACH LOSS)

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Extortion)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
  FIDUCIARY

  	
   

  	
  EC09001185

  	
   

  	
  TRAVELERS

  	
   

  	
  MARSH

  	
   

  	
  $5.0 MILLION

  	
   

  	
  03/31/07-03/31/08

  	
   

  	
  $52,500

  
	
  

  	
   

  	
  LIABILITY

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $250.0 THOUSAND
  DEDUCTIBLE

  	
   

  	
   

  	
   

  	
  (Includes TRIA)

  
	
  7A

  	
   

  	
  Excess

  	
   

  	
  U706-70004

  	
   

  	
  U.S.

  	
   

  	
  EH&D

  	
   

  	
  $5.0 MILLION

  	
   

  	
  03/03/06-03/31/07

  	
   

  	
  $42,735

  
	
   

  	
   

  	
  Fiduciary

  	
   

  	
   

  	
   

  	
  SPECIALTY

  	
   

  	
   

  	
   

  	
  EXCESS OF $5.0 MILLION

  	
   

  	
   

  	
   

  	
   

  







 1
 









 




	
  8

  	
   

  	
  ALL RISKS

  	
   

  	
  875 5096

  	
   

  	
  Lexington

  	
   

  	
  AON

  	
   

  	
  PRIMARY $5MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $2,800,000

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
  Insurance Co

  	
   

  	
   

  	
   

  	
  100.0%

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $250,000 / $500,000
  DEDUCTIBLE

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  XPP5346960-01

  	
   

  	
  Steadfast

  	
   

  	
  AON

  	
   

  	
  $70MM x $30MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $361,111.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
  Insurance Co

  	
   

  	
   

  	
   

  	
  10.0%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  875 5093

  	
   

  	
  Lexington

  	
   

  	
  AON

  	
   

  	
  $20MM x $30MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $1,031,250.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
  Insurance Co

  	
   

  	
   

  	
   

  	
  37.5%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  DPB00524A

  	
   

  	
  Everest

  	
   

  	
  AON

  	
   

  	
  $20MM x $30MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $175,000.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
  Reinsurance

  	
   

  	
   

  	
   

  	
  8.75%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (Bermuda) Ltd

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  CRXD 3610949a

  	
   

  	
  ACE American

  	
   

  	
  AON

  	
   

  	
  $20MM x $30MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $385,000.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
  Insurance Co

  	
   

  	
   

  	
   

  	
  17.50%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  WB0600563

  	
   

  	
  Lloyd’s

  	
   

  	
  AON

  	
   

  	
  $20MM x $30MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $370,588.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  17.50%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  78-A3-XP-00000061-00

  	
   

  	
  Princeton

  	
   

  	
  AON

  	
   

  	
  $25MM x $50MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $75,000.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
  E & S Co

  	
   

  	
   

  	
   

  	
  5.00%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  MAN2X70782

  	
   

  	
  Montpelier

  	
   

  	
  AON

  	
   

  	
  $25MM x $50MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $630,000.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
  Reinsurance

  	
   

  	
   

  	
   

  	
  20.00%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Ltd

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  WB0600567

  	
   

  	
  Hannover Re

  	
   

  	
  AON

  	
   

  	
  $25MM x $50MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $75,294.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  4.00%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  PDII46450211

  	
   

  	
  Lancashire

  	
   

  	
  AON

  	
   

  	
  $25MM x $50MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $250,000.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
  Insurance Co

  	
   

  	
   

  	
   

  	
  10.00%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Ltd

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  WB0600565

  	
   

  	
  Lloyd’s

  	
   

  	
  AON

  	
   

  	
  $25MM x $50MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $691,765.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  24.50%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  GEP1617

  	
   

  	
  Lloyd’s (GEP)

  	
   

  	
  AON

  	
   

  	
  $50MM x $50MM

  	
   

  	
  06/01/06-6/01/07

  	
   

  	
  $125,000.00

  
	
  

  	
   

  	
  PROPERY

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  5.00%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  78-A3-XP-00000062-00

  	
   

  	
  Princeton

  	
   

  	
  AON

  	
   

  	
  $25MM x $75MM

  	
   

  	
  06/01/06-6/01/07

  	
   

  	
  $60,000.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
  E & S Co

  	
   

  	
   

  	
   

  	
  5.00%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  ESP001594900

  	
   

  	
  Arch

  	
   

  	
  AON

  	
   

  	
  $25MM x $75MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $70,000.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
  Specialty

  	
   

  	
   

  	
   

  	
  4.00%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Insurance Co

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  12508-1302-PRMAN-

  	
   

  	
  Max Re Ltd

  	
   

  	
  AON

  	
   

  	
  $25MM x $75MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $250,000.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
  2006

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  20.00%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  LHD347355

  	
   

  	
  Landmark

  	
   

  	
  AON

  	
   

  	
  $25MM x $75MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $112,500.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
  American

  	
   

  	
   

  	
   

  	
  6.00%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  RMP288602087

  	
   

  	
  Continental

  	
   

  	
  AON

  	
   

  	
  $25MM x $75MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $300,000.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
  Casualty Co

  	
   

  	
   

  	
   

  	
  20.00%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  WB0600564

  	
   

  	
  Lloyd’s

  	
   

  	
  AON

  	
   

  	
  $25MM x $75MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $529,412.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  30.00%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  XPP5346960-01

  	
   

  	
  Steadfast

  	
   

  	
  AON

  	
   

  	
  $100MM x $100MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $66,667.90

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
  Insurance Co

  	
   

  	
   

  	
   

  	
  20.00%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  78-A3-XP00000063-00

  	
   

  	
  Princeton

  	
   

  	
  AON

  	
   

  	
  $100MM x $100MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $60,000.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
  E & S Co

  	
   

  	
   

  	
   

  	
  15.00%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  GEP1617

  	
   

  	
  Lloyd’s (GEP)

  	
   

  	
  AON

  	
   

  	
  $100MM x $100MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $12,500.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  2.50%

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ALL RISKS

  	
   

  	
  WB0600566

  	
   

  	
  Lloyd’s

  	
   

  	
  AON

  	
   

  	
  $400MM x $100MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $80,000.00

  
	
   

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  10.00%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  WB0600583

  	
   

  	
  Hannover Re

  	
   

  	
  AON

  	
   

  	
  $400MM x $100MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $40,000.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  5.00%

  	
   

  	
   

  	
   

  	
   

  







 2
 









 




	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  WB0600583

  	
   

  	
  Swiss Re

  	
   

  	
  AON

  	
   

  	
  $400MM x $100MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $100,000.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  12.50%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  RMP 288602087

  	
   

  	
  Continental

  	
   

  	
  AON

  	
   

  	
  $400MM x $100MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $90,000.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
  Casualty Co

  	
   

  	
   

  	
   

  	
  11.25%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  OGP9253870

  	
   

  	
  Great

  	
   

  	
  AON

  	
   

  	
  $400MM x $100MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $10,000.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
  American

  	
   

  	
   

  	
   

  	
  1.25%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Insurance Co

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  US6333

  	
   

  	
  Commonwealth

  	
   

  	
  AON

  	
   

  	
  $400MM x $100MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $40,000.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
  Insurance Co

  	
   

  	
   

  	
   

  	
  5.00%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  PDII46450211

  	
   

  	
  Lancashire

  	
   

  	
  AON

  	
   

  	
  $400MM x $100MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $140,000.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
  Insurance Co

  	
   

  	
   

  	
   

  	
  17.50%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Ltd

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  XPP5346960-D1

  	
   

  	
  Steadfast

  	
   

  	
  AON

  	
   

  	
  $300MM x $200MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $77,778.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
  Insurance Co

  	
   

  	
   

  	
   

  	
  20.00%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  78-A3-XP-00000064-00

  	
   

  	
  Princeton

  	
   

  	
  AON

  	
   

  	
  $300MM x $200MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $140,000.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
  E & S Co

  	
   

  	
   

  	
   

  	
  15.00%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  ALL RISKS

  	
   

  	
  ESP001594100

  	
   

  	
  Arch

  	
   

  	
  AON

  	
   

  	
  $300MM x $200MM

  	
   

  	
  06/01/06-06/01/07

  	
   

  	
  $15,000.00

  
	
  

  	
   

  	
  PROPERTY

  	
   

  	
   

  	
   

  	
  Specialty

  	
   

  	
   

  	
   

  	
  2.50%

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Insurance Co

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
  GENERAL

  LIABILITY INC.

  DRUGGIST

  LIABILITY

  	
   

  	
  XSLG21734822

  	
   

  	
  ACE AMERICAN

  INSURANCE CO.

  	
   

  	
  MARSH

  	
   

  	
  $4.0 MIL/$15.0
  MIL, INCLUDING A

  $1.0 MIL/$1.0 MIL CORRIDOR

  DEDUCTIBLE EXCESS $2.0 MIL SELF

  INSURED RETENTION

  	
   

  	
  01/01/07-01/01/08

  	
   

  	
  $3,278,283

  
	
  9A

  	
   

  	
  MICHIGAN LIQUOR

  	
   

  	
  HD0G21735000

  	
   

  	
  ACE AMERICAN

  	
   

  	
  MARSH

  	
   

  	
  $50,000/$50,000
  INCLUDING A

  	
   

  	
  01/01/07-01/01/08

  	
   

  	
  $5,000

  
	
  

  	
   

  	
  LIABILITY

  	
   

  	
   

  	
   

  	
  INSURANCE CO.

  	
   

  	
   

  	
   

  	
  $50,000 DEDUCTIBLE

  	
   

  	
   

  	
   

  	
   

  
	
  10

  	
   

  	
  UMBRELLA

  	
   

  	
  9834593

  	
   

  	
  NATIONAL

  	
   

  	
  MARSH

  	
   

  	
  $50.0 MIL/$50.0
  MIL EXCESS ACE’S

  	
   

  	
  01/01/07-01/01/08

  	
   

  	
  $2,850,000

  
	
   

  	
   

  	
  LIABILITY (LEAD

  	
   

  	
   

  	
   

  	
  UNION FIRE

  	
   

  	
   

  	
   

  	
  PRIMARY

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LAYER)

  	
   

  	
   

  	
   

  	
  INSURANCE

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UMBRELLA

  	
   

  	
  0800009494L107A

  	
   

  	
  XL INSURANCE

  	
   

  	
  MARSH

  	
   

  	
  $50.0 MIL/$50.0 MIL
  EXCESS AIG’S

  	
   

  	
  01/01/07-01/01/08

  	
   

  	
  $370,000

  
	
   

  	
   

  	
  LIABILITY

  	
   

  	
   

  	
   

  	
  AMERICA, INC.

  	
   

  	
   

  	
   

  	
  UMBRELLA

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (2ND LAYER)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UMBRELLA

  	
   

  	
  XCPG23575085

  	
   

  	
  ACE AMERICAN

  	
   

  	
  MARSH

  	
   

  	
  $25.0 MIL/$25.0 MIL
  EXCESS XL’S

  	
   

  	
  01/01/07-01/01/08

  	
   

  	
  $145,637

  
	
   

  	
   

  	
  LIABILITY

  	
   

  	
   

  	
   

  	
  INSURANCE CO.

  	
   

  	
   

  	
   

  	
  UMBRELLA

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (3RD LAYER)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UMBRELLA

  	
   

  	
  LQ1B7198643017

  	
   

  	
  LIBERTY

  	
   

  	
  MARSH

  	
   

  	
  $25.0 MIL/$25.0 MIL
  EXCESS ACE’S

  	
   

  	
  01/01/07-01/01/08

  	
   

  	
  $65,000

  
	
   

  	
   

  	
  LIABILITY

  	
   

  	
   

  	
   

  	
  INSURANCE

  	
   

  	
   

  	
   

  	
  UMBRELLA

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (4TH LAYER)

  	
   

  	
   

  	
   

  	
  UNDERWRITERS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  INC.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11

  	
   

  	
  PUNITIVE 

  	
   

  	
  5247793

  	
   

  	
  STARR EXCESS

  	
   

  	
  MARSH/

  	
   

  	
  $50.0 MIL
  “WRAPPING AROUND” AIG’S

  	
   

  	
  01/01/07-01/01/08

  	
   

  	
  $300,000

  
	
  

  	
   

  	
  DAMAGES ONLY

  	
   

  	
   

  	
   

  	
  INTERNATIONAL

  	
   

  	
  BERMUDA

  	
   

  	
  LEAD UMBRELLA PROGRAM

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  WRAP-AROUND

  	
   

  	
   

  	
   

  	
  LIABILITY

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  POLICY

  	
   

  	
   

  	
   

  	
  INS. CO. LTD.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11A

  	
   

  	
  PUNITIVE

  	
   

  	
  IE00013373LI07A

  	
   

  	
  XL EUROPE

  	
   

  	
  MARSH /

  	
   

  	
  $50.0 MIL/$50.0 MIL
  “WRAPPING

  	
   

  	
  01/01/07-01/01/08

  	
   

  	
  $54,500

  
	
   

  	
   

  	
  DAMAGES WRAP -

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  BERMUDA

  	
   

  	
  AROUND” XL’S UMBRELLA
  PROGRAM

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  AROUND POLICY

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  







 3
 









 




	
  12

  	
   

  	
  GENERAL

  	
   

  	
  PRIMARY:

  	
   

  	
  LIBERTY

  	
   

  	
  ALLIANT

  	
   

  	
  $5.0 MIL

  	
   

  	
  03/14/07-03/14/08

  	
   

  	
  $126,705

  
	
  

  	
   

  	
  LIABILITY

  	
   

  	
  EGL-BO-1$4126-016

  	
   

  	
  SURPLUS

  	
   

  	
  INSURANCE

  	
   

  	
  $15,000.00 SIR/OCCURRENCE

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  STRIP MALLS—

  	
   

  	
   

  	
   

  	
  INSURANCE

  	
   

  	
  SERVICES

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  “COMMON AREAS”

  	
   

  	
   

  	
   

  	
  CORP.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
  EXCESS:

  	
   

  	
  ST. PAUL

  	
   

  	
  ALLIANT

  	
   

  	
  $5.0 MIL

  	
   

  	
  03/14/07-03/14/08

  	
   

  	
  $22,786

  
	
  

  	
   

  	
   

  	
   

  	
  QI09100320

  	
   

  	
  TRAVELERS

  	
   

  	
  INSURANCE

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  SERVICES

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13

  	
   

  	
  N.Y. STATE DBL

  	
   

  	
  BINDER

  	
   

  	
  AM. GEN/AIG

  	
   

  	
  EH&D

  	
   

  	
  STATUTORY

  	
   

  	
  02/1/03 - OPEN

  	
   

  	
  .60/$100 PAYROLL

  
	
  14

  	
   

  	
  WORKMAN’S COMP

  	
   

  	
  TC2JUB-120D2216-07
  (ALL

  	
   

  	
  TRAVELERS

  	
   

  	
  A.J.

  	
   

  	
  STATUTORY W.C.

  	
   

  	
  01/01/07-01/01/08

  	
   

  	
  $38,575,000

  
	
  

  	
   

  	
  EXCLUDES WV

  	
   

  	
  OTHER STATES) TRJUB-

  	
   

  	
   

  	
   

  	
  GALLAGHER

  	
   

  	
  $2.0 MILLION E.L.

  	
   

  	
   

  	
   

  	
  INCLUDES $31.0

  
	
  

  	
   

  	
   

  	
   

  	
  121D0449-07 (AZ & MA)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $500,000 DEDUCTIBLE

  	
   

  	
   

  	
   

  	
  MILLION LOSS FUND

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  DEPOSIT

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  INCLUDED ABOVE

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14A

  	
   

  	
  EXCESS WORKERS

  	
   

  	
  TWXJ-UB-120D622-7-07

  	
   

  	
  TRAVELERS

  	
   

  	
  A.J.

  	
   

  	
  LIMIT-STATUTORY-EXCESS
  WC

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (OH, OR & WA)

  	
   

  	
  (OH, OR, WA)

  	
   

  	
   

  	
   

  	
  GALLAGHER

  	
   

  	
  RETAINED LIMIT $500,000

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LIMIT-$2.0 MILLION
  EXCESS

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  EMPLOYERS LIABILITY

  	
   

  	
   

  	
   

  	
   

  
	
  14B

  	
   

  	
  EXCESS WORKERS

  	
   

  	
  WC10031180-03

  	
   

  	
  BREICKSTREET

  	
   

  	
  A.J.

  	
   

  	
  STATUTORY W.C.

  	
   

  	
  01/1/07-01/1/08

  	
   

  	
  $291,068.00

  
	
   

  	
   

  	
  (NV)

  	
   

  	
   

  	
   

  	
  MUTUAL

  	
   

  	
  GALLAGHER

  	
   

  	
  $250,000 DEDUCTIBLE

  	
   

  	
   

  	
   

  	
   

  
	
  15

  	
   

  	
  BONDS

  	
   

  	
  VARIOUS

  	
   

  	
  VARIOUS

  	
   

  	
  AON

  	
   

  	
  VARIOUS

  	
   

  	
  VARIOUS

  	
   

  	
  VARIOUS

  
	
  16

  	
   

  	
  STORAGE TANK

  	
   

  	
  7514294

  	
   

  	
  COMMERCE &

  	
   

  	
  MARSH

  	
   

  	
  $5.0 MILLION

  	
   

  	
  09/1/06-09/1/07

  	
   

  	
  $20,233.76

  
	
   

  	
   

  	
  THIRD-PARTY

  	
   

  	
   

  	
   

  	
  INDUSTRY

  	
   

  	
   

  	
   

  	
  $25,000 DEDUCTIBLE

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LIABILITY

  	
   

  	
   

  	
   

  	
  INSURANCE

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CORRECTIVE

  	
   

  	
   

  	
   

  	
  COMPANY

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ACTION &

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CLEANUP

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17

  	
   

  	
  PRIVACY

  	
   

  	
  HO TMT 2309903.7

  	
   

  	
  LLOYD’S/

  	
   

  	
  ALLIANT

  	
   

  	
  $10.0 MILLION

  	
   

  	
  02/15/07-02/15/08

  	
   

  	
  $225,000.00

  
	
  

  	
   

  	
  PROTECTION

  	
   

  	
   

  	
   

  	
  HISCOX

  	
   

  	
  INS.

  	
   

  	
  $1.0 MILLION DEDUCTIBLE

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  (CYBER

  	
   

  	
   

  	
   

  	
  SYNDICATES

  	
   

  	
  SERVICES

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  LIABILITY)

  	
   

  	
   

  	
   

  	
  LTD.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  






 



 4














Schedule 3.14


Labor


None.















Schedule 5.11


Excluded
Subsidiaries


912 Elmwood Avenue—Buffalo,
LLC


Drug Palace, Inc.


East
Stone Drive and Bloomingdale Pike—Kingsport, Tennessee, LLC


Euclid
and Wilder Roads—Bay City, LLC


Fiona
One Corp.


39/41 Hightstown Road, LLC


Gettysburg
and Germantown, LLC


Grand
River & Fenkell,
LLC


Louisville
Avenue & North
18th Street—Monroe,
Louisiana LLC


Main
and McPherson—Clyde, LLC


RA  5-Points,
LLC


RA  Indian
River/Kempsville, LLC


Richfield
Road—Flint, Michigan, LLC


Richmond
Road and Monticello Boulevard—Richmond Heights, Ohio, LLC


Rite
Aid Funding I*


Rite
Aid Funding II*


Rite
Aid Health Solutions, LLC**


Rite
Aid Lease Management Company


Rite
Investments Corp., LLC


Route
1 & Hood
Road—Fredericksburg,
LLC


Route
202 at Route 124 Jaffrey-New Hampshire, LLCR


Rx  USA, Inc.


PJC
Peterborough Realty II LLC


PJC
Essex Realty LLC


PJC Norwich Realty LLC






*                    Entities
that are part of the Securitization.


**             Entity
is Pharmacy Benefit Manager















Schedule 6.01(a)(xii)


Existing lndebtedness




	
   

  	
   

  	
  As of 6/1/07

  	
   

  
	
   

  	
   

  	
  (US Dollars)

  	
   

  
	
  IDB—Pontiac Whse

  	
   

  	
  478,000

  	
   

  
	
  Rome Note Payable

  	
   

  	
  44,012

  	
   

  
	
  M.H. Parsons and Sons Lumber Co.

  	
   

  	
  12,000

  	
   

  
	
  Emerson’s
  Pharmacy

  	
   

  	
  57,158

  	
   

  
	
  PL Properties
  (TPI related)

  	
   

  	
  54,441

  	
   

  
	
  Tandy Corporation

  	
   

  	
  581,782

  	
   

  
	
  Misc. TPI related
  debt

  	
   

  	
  23,540

  	
   

  
	
  Total Existing lndebtedness excluding Capital Lease
  Obligations

  	
   

  	
  1,250,933

  	
   

  
	
  Capital Lease Obligations—Rite Aid

  	
   

  	
  188,101,000

  	
   

  
	
  Capital Lease
  Obligations—Brooks
  Eckerd

  	
   

  	
  22,918,418

  	
   

  
	
  Total Capital Lease Obligations

  	
   

  	
  211,019,418

  	
   

  
	
  Total Existing
  lndebtedness including Capital Lease Obligations

  	
   

  	
  212,270,351

  	
   

  






 















Schedule 6.01(b)


Equity
Issuances


1.   Rite
Aid Lease Management Company, 213,000 shares of Class A, Cumulative
Preferred Stock.















Schedule 6.02(xi)


Liens


1.                 Liens in favor of
GNC with respect to certain inventory, goods, merchandise and other personal
property which may now or hereafter be placed in the possession of certain Subsidiaries
by GNC, or any of its successors, parents, or affiliates, which are held for sale,
nor or hereafter in the possession, custody or control of such Subsidiary,
wherever located, which are manufactured by GNC, or any of its successors,
parent, or affiliates, or carrying the trade name or trade style of GNC, or any
of its successors, parents or affiliates and all proceeds from the sale or
other disposition of the foregoing.


2.                 Mortgages as set
forth in chart following.











Mortgages


(Schedule 6.02(xi)
continued)


	
  #

  	
   

  	
  Store

  	
   

  	
  City, State

  (County)

  	
   

  	
  Title and

  Date of

  Document

  	
   

  	
  Mortgagor

  	
   

  	
  Mortgagee

  	
   

  	
  Mortgage

  Amount

  	
   

  	
  Payment Term 

  (Payment Amount)

  	
   

  	
  Comments

  
	
  1.

  	
   

  	
  507

  	
   

  	
  Pottsville, PS

  

  (Schuylkill)

  	
   

  	
  Mortgage dated 9/22/94

  	
   

  	
  Rite Aid of Pennsylvania, Inc.

  	
   

  	
  Bima Inc.

  	
   

  	
  $600,000

  	
   

  	
  Commencing October 22, 1994.

  

  Final payment date: September 22, 2004

  

  ($6,661.23 per year)

  	
   

  	
   

  
	
  2.

  	
   

  	
  1768

  	
   

  	
  Northampton, PA

  

  (Northampton)

  	
   

  	
  Motgage dated 5/6/60

  	
   

  	
  Robert Kosc

  	
   

  	
  Irving Goldberg and Helen Goldberg

  	
   

  	
  $2,000

  	
   

  	
   

  	
   

  	
  Payment amount and schedule is not stated in the mortgage.

  



 















Schedule 6.04


Investments


Certain cash and in-kind investments made to date by
Rite Aid Hdqtrs. Corp. in Verispan, L.L.C, a joint venture designed to gather
and sell pharmaceutical data. Rite Aid Hdqtrs. Corp. currently holds an approximate 5% equity interest in this venture, and has no obligation to make
any additional contributions of capital or assets.















Schedule 6.08(a)


Restricted Pavments


1.                 Rite
Aid Lease Management Company, 213,000 shares of Class A, Cumulative
Preferred Stock in the quarterly
dividend amount of $1.75 per
share,


2.                 Rite
Aid Risk Management Corp., 1,000 shares of Class C, Cumulative Participating
Voting Preferred Stock and 1,000 shares of Class D, Cumulative Participating Voting Preferred Stock each in the quarterly
dividend amount of $8.00 per share.*






*                    As
of the First Restatement Effective Date, these shares are retired.















Schedule 6.09


Affiliate
Transactions


1.                 Letter Agreement,
effective January 1, 2003, with Leonard Green & Partners L.P. relating to management services,
as the same may be amended, extended, renewed or restated from time to time,
subject to limitations set forth in Section 6.08.


2.                 Transition
Services Agreement, effective on closing of the transaction to acquire the
Brooks and Eckerd drugstore chains, with The Jean Coutu Group (PJC) Inc. to
provide transition services, as the same may be amended, extended, renewed or
restated fiom time to time, subject to the limitations set forth in section
6.09.
















ANNEX 1

to Second Restated Credit Agreement


DEFINITIONS ANNEX


This is the Definitions Annex referred to in the
Senior Loan Documents and the Second Priority Debt Documents. Each capitalized
term used herein shall have the meaning assigned to it below or, if not defined
herein, the meaning assigned to it in the applicable Senior Loan Document or
Second Priority Debt Document. The meanings given to terms defined herein shall
be equally applicable to both the singular and plural forms of such terms.


References to any agreement are to such agreement as
amended, modified or supplemented from time to time in accordance with the
terms thereof and of each Senior Loan Document and Second Priority Debt
Document containing restrictions or imposing conditions on the amendment,
modification or supplementing of such agreement.


“2017 7.5% Notes”
means the 7.5% Senior Secured Notes of the Borrower due 2017 issued pursuant to
the 2017 7.5% Note Indenture.


“2017 7.5% Note Indenture”
means the Indenture dated as of February 21, 2007, among Rite Aid, the
Subsidiary Guarantors and The Bank of New York Trust Company, N.A., as trustee,
relating to the 2017 7.5% Notes.


“4.75% Convertible Notes”
means the 4.75% Convertible Notes of the Borrower due 2006 issued pursuant to
the 4.75% Note Indenture and any Registered Equivalent Notes issued on exchange
thereof.


“4.75% Note Indenture”
means the Indenture dated as of November 19, 2001, between Rite Aid and
BNY Midwest Trust Company, as trustee, relating to the 4.75% Convertible Notes.


“7.5% Notes”
means the 7.5% Senior Secured Notes of the Borrower due 2015 issued pursuant to
the 7.5% Note Indenture and any Registered Equivalent Notes issued in exchange
therefor.


“7.5% Note Indenture”
means the Indenture dated as of January 11, 2005, among Rite Aid, the
Subsidiary Guarantors and BNY Midwest Trust Company, as trustee, relating to
the 7.5% Notes.


“8.125% Notes”
means the 8.125% Senior Secured Notes of the Borrower due 2010 issued pursuant
to the 8.125% Note Indenture and any Registered Equivalent Notes issued in
exchange therefor.


“8.125% Note Indenture”
means the Indenture dated as of April 22, 2003, among Rite Aid, the
Subsidiary Guarantors and BNY Midwest Trust Company, as trustee, relating to
the 8.125% Notes.


“8.625% Notes”
means the 8.625% Senior Notes of the Borrower due 2015 issued pursuant to the
8.625% Note Indenture.


“8.625% Note Indenture”
means the Indenture dated February 21, 2007, among Rite Aid, the
Subsidiary Guarantors and The Bank of New York Trust Company, N.A., as trustee,
relating to the 8.625% Notes.


“9.25% Notes”
means the 9.25% Senior Notes of the Borrower due 2013 issued pursuant to the
9.25% Note Indenture and any Registered Equivalent Notes issued in exchange
therefor.


“9.25% Note Indenture”
means the Indenture dated as of May 20, 2003, between Rite Aid and BNY
Midwest Trust Company, as Trustee, relating to the 9.25% Notes.


“9.5% Note Indenture”
means the Indenture dated as of February 12, 2003, among Rite Aid, the
Subsidiary Guarantors named therein and BNY Midwest Trust Company, as trustee,
relating to the 9.5% Notes.













“9.5% Notes”
means the 9.5% Senior Secured Notes of Rite Aid due 2011 issued pursuant to the
9.5% Note Indenture and any Registered Equivalent Notes issued in exchange
therefor.


“12.5% Note Indenture”
means the Indenture dated as of June 27, 2001, among Rite Aid, the
Subsidiary Guarantors and U.S. Bank and Trust, as trustee, relating to the 12.5%
Notes.


“12.5% Notes”
means the 12.5% Senior Secured Notes due 2006 of Rite Aid issued on the
Effective Date pursuant to the 12.5% Note Indenture.


“Affiliate”
means, when used with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.


“Asset Sale”
means any sale, lease, assignment, transfer or other disposition (including
pursuant to a Sale and Leaseback Transaction) of any property or asset (whether
now owned or hereafter acquired, whether in one transaction or a series of transactions
and whether by way of merger or otherwise) of the Borrower or any Subsidiary
(including of any Equity Interest in a Subsidiary).


“Attributable Debt”
means, as to any particular Capital Lease or Sale and Leaseback Transaction
under which the Borrower or any Subsidiary is at the time liable, as of any
date as of which the amount thereof is to be determined (a) in the case of
a transaction involving a Capital Lease, the amount as of such date of Capital
Lease Obligations with respect thereto and (b) in the case of a Sale and
Leaseback Transaction not involving a Capital Lease, the then present value of
the minimum rental obligations under such Sale and Leaseback Transaction during
the remaining term thereof (after giving effect to any extensions at the option
of the lessor) computed by discounting the rental payments at the actual
interest factor included in such payments or, if such interest factor cannot be
readily determined, at the rate per annum that would be applicable to a Capital
Lease of the Borrower having similar payment terms. The amount of any rental payment
required to be made under any such Sale and Leaseback Transaction not involving
a Capital Lease may exclude amounts required to be paid by the lessee on account
of maintenance and repairs, insurance, taxes, assessments, utilities, operating
and labor costs and similar charges, whether or not characterized as rent. Any
determination of any rate implicit in the terms of a Capital Lease or a lease
in a Sale and Leaseback Transaction not involving a Capital Lease made in
accordance with generally accepted financial practices by the Borrower shall be
binding and conclusive absent manifest error.


“Bankruptcy Proceeding”
means any proceeding under Title 11 of the U.S. Code or any other Federal, state
or foreign bankruptcy, insolvency, reorganization, receivership or similar law.


“Basket Asset Sale”
means any sale, transfer or disposition (including a Sale and Leaseback
Transaction not involving any Mortgaged Property) of office locations, Stores or
other personal or real property (including any improvements thereon), whether
or not constituting Mortgaged Property, or leasehold interest therein for fair
value in the ordinary course of business consistent with past practice and not
inconsistent with the business plan delivered to the Senior Lenders prior to
the Original Restatement Effective Date; provided, however, that (a) the aggregate consideration received
therefor (including the fair market value of any non-cash consideration) shall
not exceed $200,000,000 in any fiscal year of Rite Aid (calculated without
regard to Sale and Leaseback Transactions permitted by Section 6.01(ix),
(xiv) and (xv) of the Senior Credit Agreement) and (b) except with respect
to any net consideration received from any sale, transfer or disposition to a
third Person of Stores, leases and prescription files closed at substantially the
same time as, and entered into as part of a single related transaction with,
the purchase or other acquisition from such third Person of Stores, leases and
prescription files of a substantially equivalent value, at least 75% of such
consideration shall consist of cash.


“Borrower” means
Rite Aid.



 2
 









“Business Day”
means any day other than a Saturday, Sunday or day on which commercial banks in
New York City or Chicago, Illinois are authorized or required by law to close; provided, however, that
when used in connection with a Eurodollar Loan, the term “Business Day”
shall also exclude any day on which banks are not open for dealings in dollar
deposits in the London interbank market.


“Capital Lease”
means any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which, in accordance with GAAP,
should be capitalized on the lessee’s balance sheet.


“Casualty/Condemnation”
means any event that gives rise to Casualty/ Condemnation Proceeds.


“Casualty/Condemnation
Proceeds” means


(a) any insurance proceeds under any insurance
policies or otherwise with respect to any casualty or other insured damage to any
properties or assets of the Borrower or the Subsidiaries; and


(b) any proceeds received by the Borrower or any
Subsidiary in connection with any action or proceeding for the taking of any
properties or assets of the Borrower or the Subsidiaries, or any part thereof
or interest therein, for public or quasi-public use under the power of eminent
domain, by reason of any similar public improvement or condemnation proceeding;


minus, in each case (i) any
fees, commissions and expenses (including the costs of adjustment and
condemnation proceedings) and other costs paid or incurred by the Borrower or
any Subsidiary in connection therewith, (ii) the amount of income taxes reasonably
estimated to be payable as a result of any gain recognized in connection with the
receipt of such payment or proceeds and (iii) the amount of any
Indebtedness (or Attributable Debt), other than the Senior Obligations,
together with premium or penalty, if any, and interest thereon (or comparable
obligations in respect of Attributable Debt), that is secured by a Lien on (or
if Attributable Debt, the lease of) the properties or assets in question and
that has priority over both the Senior Lien and the Second Priority Lien, that
is required to be repaid as a result of the receipt by the Borrower or a
Subsidiary of such payments or proceeds; provided, however, that no such proceeds shall constitute Casualty/Condemnation
Proceeds to the extent that such proceeds are (A) reinvested in other like
fixed or capital assets within 270 days of the Casualty/Condemnation that gave rise
to such proceeds or (B) committed to be reinvested in other like fixed or
capital assets within 270 days of such Casualty/Condemnation, with diligent
pursuit of such reinvestment, and reinvested in such assets within 365 days of
such Casualty/ Condemnation.


“Citibank” means
Citibank, N.A.


“Collateral”
means the Senior Collateral and the Second Priority Collateral.


“Collateral Documents”
means the Senior Collateral Documents and the Second Priority Collateral
Documents.


“Collateral Trust and
Intercreditor Agreement” means the Amended and Restated Collateral
Trust and Intercreditor Agreement, dated as of June 27, 2001, as amended
and restated as of May 28, 2003, among Rite Aid, the Subsidiary
Guarantors, the Second Priority Collateral Trustee, the Senior Collateral Agent
and each other Representative.


“Control” means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled”
have meanings correlative thereto.


“Debt Facility”
means the Senior Credit Agreement and any Second Priority Debt Facility, or any
combination thereof (as the context requires).



 3
 









“Default Rate”
means a rate per annum (computed on the basis of the actual number of days
elapsed over a year of 365 or 366 days, as the case may be) equal to the sum of
(a) the rate of interest publicly announced by Citibank in New York, New
York, from time to time as its “base rate” plus (b) 2.00%.


“Domestic Subsidiary”
means any Subsidiary incorporated or organized under the laws of the United
States of America, any State thereof or the District of Columbia.


“Effective Date”
means June 27, 2001.


“Effective Date Indentures”
mean, collectively, (a) the Indenture dated as of December 21, 1998,
between Rite Aid and Harris Trust and Savings Bank, as trustee and (b) the
Indenture dated as of August 1, 1993, between Rite Aid and Morgan Guaranty
Trust Company of New York, as trustee.


“First Restatement
Effective Date” means November 8, 2006.


“Guarantee” of
or by any Person (the “guarantor”)
means any obligation, contingent or otherwise, of the guarantor guaranteeing or
having the economic effect of guaranteeing any Indebtedness or other obligation
of any other Person (the “primary obligor”)
in any manner, whether directly or indirectly, and including any obligation of the
guarantor, direct or indirect, (a) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or other
obligation or to purchase (or to advance or supply funds for the purchase of)
any security for the payment thereof, (b) to purchase or lease property,
securities or services for the purpose of assuring the owner of such
Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay
such Indebtedness or other obligation or (d) as an account party in
respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that
the term Guarantee shall not include endorsements for collection or deposit in
the ordinary course of business.


“Indebtedness”
of any Person means, without duplication, (a) all obligations of such
Person for borrowed money or with respect to deposits or advances of any kind, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar instruments,
(c) all obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person, (d) all
obligations of such Person in respect of the deferred purchase price of property
or services (excluding current accounts payable incurred in the ordinary course
of business), (e) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien on property owned or acquired by such Person, whether
or not the Indebtedness secured thereby has been assumed, (f) all Guarantees
by such Person of Indebtedness of others, (g) all Capital Lease
Obligations of such Person, (h) all obligations, contingent or otherwise,
of such Person as an account party in respect of letters of credit and letters
of guaranty and (i) all obligations, contingent or otherwise, of such
Person in respect of bankers’ acceptances. The Indebtedness of any Person shall
include the Indebtedness of any other entity (including any partnership in
which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person’s ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.


“Indentures”
mean, collectively, the Effective Date Indentures and the Restatement Date
Indentures.


“Instructing Group”
means, until the Senior Obligation Payment Date, the Required Lenders and,
thereafter, the Second Priority Instructing Group.



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“Intercompany Inventory
Purchase Agreement” means the Intercompany Inventory Purchase
Agreement dated as of June 12, 2000 (as amended), among the Borrower, Rite
Aid Hdqtrs. Corp., the Distribution Subsidiaries named therein and the Operating
Subsidiaries named therein.


“Interim Collateral”
means “Collateral”, as defined in any Interim Collateral Document.


“Interim Collateral and
Guarantee Agreement” means the Interim Collateral and Guarantee
Agreement dated as of June 4, 2007, among Holdings and its subsidiaries (including
subsidiaries that become parties thereto after the Second Restatement Effective
Date) and the Senior Collateral Agent.


“Interim Collateral
Documents” means the Interim Collateral and Guarantee Agreement, the
Interim Subsidiary Loan Party Guarantee Agreement and each of the security
agreements and other instruments and documents executed and delivered by the Subsidiary
Loan Parties, Holdings or any of their subsidiaries, as applicable, pursuant to
any of the foregoing or pursuant to the Senior Credit Agreement or for purposes
of providing collateral security or credit support for any Interim Obligation.


“Interim Obligations”
means (a) the aggregate principal amount of the Tranche 2 Term Loans
outstanding as a result of the borrowings made on the Second Restatement Effective
Date, (b) all interest on such outstanding Tranche 2 Term Loans
(including, without limitation any interest which accrues after the
commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of the Borrower, any Subsidiary Loan
Party, Holdings or any of its subsidiaries, whether or not allowed or allowable
as a claim in such proceeding), (c) all other amounts payable by the Borrower
or any Subsidiary under the Senior Loan Documents in respect of such Tranche 2
Term Loans and (d) all increases, renewals, extensions and Refinancings of
the foregoing.


“Interim Secured Parties”
means the Tranche 2 Lenders and the beneficiaries of each indemnification
obligation undertaken by Rite Aid, any other Loan Party or Holdings or any of
its subsidiaries under any Senior Loan Document in respect of the Tranche 2
Term Loans, and the successors and permitted assigns of each of the foregoing.


“Interim Subsidiary Loan
Party Guarantee Agreement” means the Interim Subsidiary Loan Party
Guarantee Agreement dated as of June 4, 2007, among the Subsidiary Loan
Parties and the Senior Collateral Agent for the benefit of the Interim Secured
Parties.


“Lien” means,
with respect to any asset, (a) any mortgage, deed of trust, lien, pledge,
hypothecation, encumbrance, charge or security interest in, on or of such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, Capital Lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call
or similar right of a third party with respect to such securities.


“Majority Senior Parties”
means the Required Lenders (as defined in the Senior Credit Agreement), or with
respect to any waiver, amendment or request, Senior Lenders having such amount
of unused Commitments, Revolving Exposures and outstanding Term Loans as may be
required under the Senior Credit Agreement to approve the same.


“Moody’s” means
Moody’s Investors Service, Inc., or any successor to its business of
rating debt securities.



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“Net Cash Proceeds” means:


(a) with
respect to any Asset Sale, an amount equal to the cash proceeds received by the
Borrower or any of the Subsidiaries from or in respect of such Asset Sale
(including, when received, any cash proceeds received in respect of any noncash
proceeds of any Asset Sale), less the sum of


(i) reasonable costs and expenses paid or
incurred in connection with such transaction, including, without limitation,
any underwriting brokerage or other customary selling commissions and
reasonable legal, advisory and other fees and expenses (including title and
recording expenses, associated therewith), payments of unassumed liabilities
relating to the assets sold and any severance and termination costs;


(ii) the amount of any Indebtedness (or
Attributable Debt), together with premium or penalty, if any, and accrued
interest thereon (or comparable obligations in respect of Attributable Debt)
secured by a Lien on (or if Attributable Debt, the lease of) any asset disposed
of in such Asset Sale and discharged from the proceeds thereof, but only to the
extent such Lien has priority over the Senior Lien and the Second Priority Lien;


(iii) any taxes actually paid or to be payable by
such Person (as estimated by a senior financial or accounting officer of the
Borrower, giving effect to the overall tax position of the Borrower) in respect
of such Asset Sale; and


(iv) the portion of such cash proceeds which the
Borrower determines in good faith and reasonably should be reserved for post-closing
adjustments, including, without limitation, indemnification payments and
purchase price adjustments, provided, that on the date that all such
post-closing adjustments have been determined, the amount (if any) by which the
reserved amount in respect of such Asset Sale exceeds the actual post-closing
adjustments payable by the Borrower or any of the Subsidiary Loan Parties shall
constitute Net Cash Proceeds on such date;


(b) with respect to the proceeds received by the
Borrower or a Subsidiary from or in respect of an issuance in the public or
private capital markets of long-term debt securities, of equity securities or
of equity-linked (e.g., trust preferred) securities,
an amount equal to the cash proceeds received by the Borrower or any of the
Subsidiaries from or in respect of such issuance, less any reasonable transaction
costs, including investment banking and underwriting fees, discounts and
commissions and any other expenses (including legal fees and expenses) reasonably
incurred by such Person in respect of such issuance;


(c) with respect to any Securitization, an amount
equal to the cash proceeds received by the Borrower or any of the Subsidiary
from or in respect of such Securitization, less any reasonable transaction
costs, including investment banking and underwriting fees, discounts and commissions
and any other expenses (including legal fees and expenses) reasonably incurred
by such Person in respect of such Securitization; and


(d) with respect to a Casualty/Condemnation, the
amount of Casualty/Condemnation Proceeds.


“Obligors” means
Rite Aid, the Subsidiary Guarantors, the Subsidiary Loan Parties and any other
Person who is liable for any of the Secured Obligations.



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“Original Restatement
Effective Date” means September 30, 2005.


“Permitted Disposition” means any of the following, other
than sales of Securitization Assets in a Securitization:


(a) dispositions of inventory at retail, cash, cash
equivalents and other cash management investments and obsolete, unused,
uneconomic or unnecessary equipment or inventory, in each case in the ordinary
course of business;


(b) a disposition to a Subsidiary Loan Party, provided that if the property subject to such disposition
constitutes Collateral immediately before giving effect to such disposition,
such property continues to constitute Collateral subject to the Senior Lien and
the Second Priority Lien;


(c) a sale or discount, in each case without recourse
and in the ordinary course of business, of overdue Accounts (as defined in the
Senior Credit Agreement) arising in the ordinary course of business, but only
to the extent such Accounts are no longer Eligible Accounts Receivable (as
defined in the Senior Credit Agreement) and such sale or discount is in
connection with the compromise or collection thereof consistent with customary
industry practice (and not as part of any bulk sale);


(d) Basket Asset Sales; and


(e) sales of Accounts Receivable (as defined in the
Senior Subsidiary Security Agreement) relating to worker’s compensation claims
to collection agencies pursuant to the Borrower’s customary cash management
procedures.


“Permitted Investments”
means any investment by any Person in (a) direct obligations of the United
States or any agency thereof, or obligations guaranteed by the United States or
any agency thereof, (b) commercial paper rated at least A-1 by
S&P and P-1 by Moody’s, (c) time deposits with, including
certificates of deposit issued by, any office located in the United States of
any bank or trust company which is organized or licensed under the laws of the
United States or any state thereof and has capital, surplus and undivided
profits aggregating at least $500,000,000, (d) repurchase agreements with respect
to securities described in clause (a) above entered into with an office of
a bank or trust company meeting the criteria specified in clause (c) above,
provided in each case that such investment matures within one year from the
date of acquisition thereof by such Person or (e) money market mutual
funds at least 80% the assets of which are held in investments referred to in
clauses (a) through (d) above (except that the maturities of certain
investments held by any such money market funds may exceed one year so long as
the dollar-weighted average life of the investments of such money market mutual
fund is less than one year).


“Reduction”
means, when applied to any Debt Facility, (a) the permanent repayment of
outstanding loans (or obligations in respect of Attributable Debt) under such
Debt Facility, (b) the permanent reduction of outstanding lending
commitments under such Debt Facility or (c) the permanent cash
collateralization of outstanding letters of credit under such facility
(together with the termination of any lending commitments utilized by such
letters of credit).


“Refinance”
means, with respect to any issuance of Indebtedness, to replace, renew, extend,
refinance, repay, refund, repurchase, redeem, defease or retire, or to issue Indebtedness
in exchange or as a replacement therefor. “Refinanced” and
“Refinancing” shall have correlative
meanings.


“Registered Equivalent
Notes” means, with respect to any notes originally issued in a Rule 144A
or other private placement transaction under the Securities Act of 1933, substantially
identical notes issued in a dollar for dollar exchange therefor pursuant to an exchange
offer registered with the SEC.


“Representatives”
means the Senior Collateral Agent and the Second Priority Representatives.



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“Restatement Date Indentures”
mean, collectively, (a) the 7.5% Note Indenture, (b) the 2017 7.5%
Note Indenture, (c) the 8.125% Note Indenture, (d) the 8.625% Note Indenture
and (e) the 9.25% Note Indenture.


“Rite Aid” means
Rite Aid Corporation, a Delaware corporation, and its successors.


“S&P” means
Standard & Poor’s Ratings Services, a division of The McGraw- Hill
Companies, Inc., or any successor to its business of rating debt
securities.


“Sale and Leaseback
Transaction” means any arrangement whereby the Borrower or a
Subsidiary shall sell or transfer any office building (including its
headquarters), distribution center, manufacturing plant, warehouse, Store,
equipment or other property, real or personal, now or hereafter owned by the
Borrower or a Subsidiary with the intention that the Borrower or any Subsidiary
rent or lease the property sold or transferred (or other property of the buyer
or transferee substantially similar thereto).


“SEC” means the
United States Securities and Exchange Commission and any successor agency
thereto.


“Second Priority Collateral”
means all the “Second Priority Collateral” as defined in any Second Priority
Collateral Document.


“Second Priority Collateral
Documents” means the Second Priority Subsidiary Security Agreement,
the Second Priority Subsidiary Guarantee Agreement, the Second Priority
Indemnity, Subrogation and Contribution Agreement, the Collateral Trust and Intercreditor
Agreement and each of the security agreements and other instruments and documents
executed and delivered by any Subsidiary Guarantor pursuant to any of the foregoing
for purposes of providing collateral security or credit support for any Second Priority
Debt Obligation or obligation under the Second Priority Subsidiary Guarantee Agreement.


“Second Priority Collateral
Trustee” means Wilmington Trust Company, in its capacity as
collateral trustee under the Collateral Trust and Intercreditor Agreement and the
Second Priority Collateral Documents, and its successors.


“Second Priority Debt”
means any Indebtedness (including the 8.125% Notes, the 7.5% Notes and the 2017
7.5% Notes) incurred by Rite Aid and Guaranteed by the Subsidiary Guarantors on
or after the Effective Date pursuant to the Second Priority Subsidiary
Guarantee Agreement (i) which is secured by the Second Priority Collateral
on a pari passu basis (other than as provided
by the terms of the applicable Second Priority Debt Documents) with the other
Second Priority Debt Obligations and (ii) if issued on or after the
Original Restatement Effective Date, matures the date that is three months
after the Tranche 2 Term Maturity Date; provided, however,
that (A) such Indebtedness is permitted to be incurred, secured and
Guaranteed on such basis by each Senior Loan Document and each Second Priority
Debt Document and (B) the Representative for the holders of such Second
Priority Debt shall have become party to the Collateral Trust and Intercreditor
Agreement pursuant to, and by satisfying the conditions set forth in, Section 10.12
thereof. Second Priority Debt shall include any Registered Equivalent Notes
issued in exchange thereof.


“Second Priority Debt
Documents” means, with respect to any series, issue or class of
Second Priority Debt, the promissory notes, indentures and other operative agreements
or instruments evidencing or governing such Debt, including the Second Priority
Collateral Documents.


“Second Priority Debt
Facility” means the indenture or other governing agreement or
instrument with respect to any Second Priority Debt.


“Second Priority Debt
Obligations” means with respect to any series, issue or class of
Second Priority Debt, (a) all principal of, and interest (including
without limitation, any interest which accrues after the 



 8
 









commencement of any
Bankruptcy Proceeding, whether or not allowed or allowable as a claim in any
such proceeding) payable with respect to such Second Priority Debt, (b) all
other amounts payable to the related Second Priority Debt Parties under the
related Second Priority Debt Documents and (c) any renewals or extensions
of the foregoing.


“Second Priority Debt
Parties” means with respect to any series, issue or class of Second
Priority Debt, the holders of such Debt, any trustee or agent therefor under
any related Second Priority Debt Documents and the beneficiaries of each
indemnification obligation undertaken by Rite Aid or any Obligor under any
related Second Priority Debt Documents, but shall not include the Loan Parties
or any Controlled Affiliates thereof (unless such Loan Party or Controlled
Affiliate is a holder of such Debt, a trustee or agent therefore or beneficiary
of such an indemnification obligation named as such in a Second Priority Debt
Document).


“Second Priority Indemnity,
Subrogation and Contribution Agreement” means the Amended and
Restated Second Priority Indemnity, Subrogation and Contribution Agreement,
dated as of June 27, 2001, as amended and restated as of May 28, 2003
among Rite Aid, the Subsidiary Guarantors and the Second Priority Collateral
Trustee.


“Second Priority
Instructing Group” means Second Priority Representatives with respect
to Second Priority Debt Facilities under which at least a majority of the then aggregate
amount of Second Priority Debt Obligations are outstanding.


“Second Priority Lien”
means the Liens on the Second Priority Collateral in favor of the Second
Priority Debt Parties under the Second Priority Collateral Documents.


“Second Priority
Representative” means, in respect of a Second Priority Debt Facility,
the trustee, administrative agent, security agent or similar agent under each Second
Priority Debt Facility, as the case may be, and each of their successors in
such capacities.


“Second Priority Subsidiary
Guarantee Agreement” means the Amended and Restated Second Priority
Subsidiary Guarantee Agreement, dated as of June 27, 2001, as amended and
restated as of May 28, 2003, made by the Subsidiary Guarantors (including any
additional Subsidiary Guarantor becoming party thereto after the Original Restatement
Effective Date) in favor of the Second Priority Collateral Trustee for the benefit
of the Second Priority Debt Parties.


“Second Priority Subsidiary
Security Agreement” means the Amended and Restated Second Priority
Subsidiary Security Agreement, dated as of June 27, 2001, as amended and
restated as of May 28, 2003, made by the Subsidiary Guarantors (including any
additional Subsidiary Guarantor becoming party thereto after the Original Restatement
Effective Date) in favor of the Second Priority Collateral Trustee for the benefit
of the Second Priority Debt Parties.


“Second Restatement
Effective Date” means the date on which the Senior Credit Agreement
becomes effective pursuant to its terms.


“Secured Obligations”
means the Senior Obligations and the Second Priority Debt Obligations.


“Secured Parties”
means the Senior Secured Parties and the Second Priority Debt Parties.


“Senior Collateral”
means all the “Collateral” as defined in any Senior Collateral Document.


“Senior Collateral Agent”
means Citicorp North America, Inc., in its capacity as the senior
collateral processing agent under the Senior Collateral Documents and the Interim
Collateral Documents, as the case may be, and its successors.


“Senior Collateral
Disposition” means (a) any sale, transfer or other disposition
of Senior Collateral (including any property or assets that would constitute
Senior Collateral but for the release of the Senior 



 9
 









Lien with respect thereto
in connection with such sale, transfer or other disposition), other than a
Permitted Disposition or (b) a Casualty/Condemnation with respect to
Senior Collateral.


“Senior Collateral Documents”
means the Senior Subsidiary Security Agreement, the Senior Subsidiary Guarantee
Agreement, the Senior Indemnity, Subrogation and Contribution Agreement, the
Collateral Trust and Intercreditor Agreement and each of the security
agreements and other instruments and documents executed and delivered by any
Subsidiary Guarantor pursuant to any of the foregoing or pursuant to the Senior
Credit Agreement or for purposes of providing collateral security or credit
support for any Senior Obligation or obligation under the Senior Subsidiary
Guarantee Agreement.


“Senior Credit Agreement”
means the Amended and Restated Senior Credit Agreement, dated as of June 27,
2001, as amended and restated as of June 4, 2007 and as may be further
amended, restated or otherwise modified from time to time, among Rite Aid, the
Senior Lenders, the Tranche 2 Lenders, Citicorp North America, Inc., as administrative
agent and as Senior Collateral Agent and Bank of America, N.A., as syndication
agent for the Senior Lenders and the Tranche 2 Lenders.


“Senior Hedging Agreement”
means any Hedging Agreement entered into with Rite Aid or any Subsidiary, if
the applicable counterparty was a Senior Lender, a Tranche 2 Lender or an
Affiliate thereof (a) on the Original Restatement Effective Date, in the case
of any Hedging Agreement entered into prior to the Original Restatement
Effective Date or (b) at the time the Hedging Agreement was entered into,
in the case of any Hedging Agreement entered into on or after the Original
Restatement Effective Date.


“Senior Indemnity,
Subrogation and Contribution Agreement” means the Amended and
Restated Senior Indemnity, Subrogation and Contribution Agreement, dated as of June 27,
2001, as amended and restated as of May 28, 2003, among Rite Aid, the
Subsidiary Guarantors (including Subsidiary Guarantors becoming party thereto
after the Original Restatement Effective Date) and the Senior Collateral Agent.


“Senior Lender”
means a “Lender” as defined in the Senior Credit Agreement; provided that, prior to the Borrowing Base Date, the term
Senior Lender shall not include any such “Lender” in its capacity as a Tranche
2 Lender.


“Senior Lien”
means the Liens on the Senior Collateral in favor of the Senior Secured Parties
under the Senior Collateral Documents.


“Senior Loan Documents”
means the Senior Credit Agreement, the Notes referred to in the Senior Credit
Agreement, each Senior Hedging Agreement, the Senior Collateral Documents and,
prior to the Borrowing Base Date, the Interim Collateral Documents.


“Senior Obligation Payment
Date” means the date on which (a) the Senior Obligations have
been paid in full, (b) all lending commitments under the Senior Credit Agreement
have been terminated and (c) there are no outstanding letters of credit
issued under the Senior Credit Agreement other than such as have been fully
cash collateralized under documents and arrangements satisfactory to the issuer
of such letters of credit.


“Senior Obligations”
means (a) the principal of each loan made under the Senior Credit
Agreement, (b) all reimbursement and cash collateralization obligations in
respect of letters of credit issued under the Senior Credit Agreement, (c) all
monetary obligations of the Borrower or any Subsidiary under each Senior
Hedging Agreement entered into (i) prior to the Original Restatement Effective
Date with any counterparty that was a Senior Lender (or an Affiliate thereof)
on the Original Restatement Effective Date or (ii) on or after the
Original Restatement Effective Date with any counterparty that was a Senior Lender
(or an Affiliate thereof) at the time such Senior Hedging Agreement was entered
into, (d) all interest on the loans, letter of credit reimbursement, fees
and other obligations under the Senior Credit Agreement or such Senior Hedging
Agreements (including, without limitation any interest which accrues after the
commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or 



 10
 









reorganization of the Borrower,
any Subsidiary Loan Party, Holdings or any of its subsidiaries, whether or not allowed
or allowable as a claim in such proceeding), (e) all other amounts payable
by the Borrower or any Subsidiary under the Senior Loan Documents and (f) all
increases, renewals, extensions and Refinancings of the foregoing; provided that, prior to the Borrowing Base Date, the term
Senior Obligations shall not include any amount included in the definition of
the term Interim Obligations.


“Senior Secured Parties”
means each party to the Senior Credit Agreement other than any Loan Party, each
counterparty to a Senior Hedging Agreement, the beneficiaries of each
indemnification obligation undertaken by Rite Aid or any other Loan Party under
any Senior Loan Document, and the successors and permitted assigns of each of
the foregoing; provided that, prior to the
Borrowing Base Date, the term Senior Secured Parties shall not include any
Interim Secured Parties.


“Senior Subsidiary
Guarantee Agreement” means the Amended and Restated Senior
Subsidiary Guarantee Agreement, made by the Subsidiary Guarantors (including Subsidiary
Guarantors that become parties thereto after the Original Restatement Effective
Date) in favor of the Senior Collateral Agent for the benefit of the Senior Secured
Parties, as such agreement may be amended, supplemented or otherwise modified
from time to time.


“Senior Subsidiary Security
Agreement” means the Amended and Restated Senior Subsidiary Security
Agreement, made by the Subsidiary Guarantors (including Subsidiary Guarantors
that become parties thereto after the Original Restatement Effective Date) in
favor of the Senior Collateral Agent for the benefit of the Senior Secured
Parties, as such agreement may be amended, supplemented or otherwise modified
from time to time.


“Subsidiary”
means any subsidiary of the Borrower.


“Subsidiary Guarantor”
means each Subsidiary that is party to any Second Priority Collateral Document.


“Subsidiary Loan Party”
means each Subsidiary set forth on Schedule 1.01
to the Senior Credit Agreement and any wholly-owned Domestic Subsidiary,
including any Securitization Vehicle that is a Domestic Subsidiary, that owns
any assets consisting of inventory, accounts receivable, intellectual property,
or script lists; provided that (a) no Subsidiary
that engages solely in the Borrower’s pharmacy benefits management business
shall be deemed a Subsidiary Loan Party and (b) Holdings and its
subsidiaries shall not be Subsidiary Loan Parties prior to the Borrowing Base
Date.


“Triggering Event”
shall have the meaning assigned to such term in the Collateral Trust and
Intercreditor Agreement.


“Uniform Commercial Code”
or “UCC” means, unless otherwise specified,
the Uniform Commercial Code as from time to time in effect in the State of New
York.



 11