Document:

exhibit10-3.htm

     

     

     

    Exhibit
10.3

      Amendment No. 11 to
Receivables Financing Agreement

       

      This
AMENDMENT NO. 11 TO RECEIVABLES FINANCING AGREEMENT, dated as of
February 18, 2009 (this “Amendment
Agreement”), is made by and among Rite Aid Funding II (the “Borrower”), CAFCO,
LLC (“CAFCO”),
CRC FUNDING, LLC (“CRC”), Falcon Asset
Securitization Company LLC (“Falcon”), Variable
Funding Capital Company LLC (“Variable”; together
with CAFCO, CRC and Falcon, the “Investors”),
Citibank, N.A. (“Citibank”), JPMorgan
Chase Bank, N.A. (“JPMorgan”) and
Wachovia Bank, National Association (“Wachovia”; together
with Citibank and JPMorgan, the “Banks”), Citicorp
North America, Inc., as program agent (the “Program Agent”),
Citicorp North America, Inc. (“CNAI”), JPMorgan and
Wachovia, as investor agents (CNAI, JPMorgan and Wachovia, in such capacity, the
“Investor
Agents”), Rite Aid Hdqtrs. Funding, Inc. (the “Collection Agent”),
each of the parties named in Schedule III to the Agreement (as defined below) as
originators (the “Originators”) and The
Bank of New York Mellon, as Trustee.

       

      Preliminary
Statements.  (1) The Borrower, the Investors (other than
CRC), the Program Agent, the Banks, the Investor Agents, the Collection Agent,
the Originators and The Bank of New York Mellon, as Trustee are parties to a
Receivables Financing Agreement, dated as of September 21, 2004, as amended
as of September 20, 2005, December 30, 2005, September 19, 2006,
November 9, 2006, February 20, 2007, August 31, 2007,
September 18, 2007, September 16, 2008, January 15, 2009 and
January 22, 2009 (the “Agreement”;
capitalized terms used herein and not otherwise defined herein shall have the
meanings attributed to them in the Agreement).

       

      (2)    The
Borrower, the Investors, the Program Agent, the Banks, the Investor Agents, the
Collection Agent and the Originators wish to amend the Agreement.

       

      NOW,
THEREFORE, the parties agree as follows:

       

      SECTION
1.      Amendments to
Agreement.  As of the Effective Date (as defined below in
Section 2), the Agreement is amended as follows:

       

      1.1     Section
1.01 of the Agreement is amended as follows:

       

      (a)    The
definition of “Alternate Base Rate” is amended by (i) deleting the word “and” at
the end of each sub-clause (i) in each of clauses (a), (b) and (c) therein,
(ii) deleting the period at the end of each sub-clause (ii) in each of
clauses (a), (b) and (c) therein and in lieu thereof inserting the word “; and”,
and (iii) inserting a new sub-clause (iii) in each of clauses (a), (b) and (c)
therein as follows:

       

      “(iii)    the
Eurodollar Rate (without giving effect to clause (b) thereof) for a Fixed Period
of one month beginning on such day (or if such day is not a Business Day, the
immediately preceding Business Day) plus 1.00% per annum.”

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (b)    The
definition of “Bank Commitment” is amended by (i) deleting the amount
“$325,000,000” in clause (a) thereof and replacing it with the amount
“$173,000,000”, (ii) deleting the amount “$125,000,000” in clause (b)
thereof and replacing it with the amount “$66,000,000”, and (iii) deleting
the amount “$200,000,000” in clause (c) thereof and replacing it with the
amount “$106,000,000”.

       

      (c)    The
definition of “Change in Control” is amended by adding the clause “or the Jean
Coutu Group (PJC) Inc. and its Affiliates” after the term “Affiliates,” in the
fourth line thereof.

       

      (d)    The
definition of “Concentration Limit” is amended by deleting the phrase “higher
amount” in the second line thereof and replacing it with the phrase “higher
percentage”.

       

      (e)    Clause
(ix) of the definition of “Eligible Receivable” is amended by adding the phrase
“(except those created by the Second Lien Credit Agreement)” after the words
“Adverse Claim” appearing therein.

       

      (f)     The
definition of “Eurodollar Rate” is amended by (i) inserting the words “the
higher of (a)” after the words “an interest rate per annum equal to” in the
first sentence thereof, (ii) inserting the words “and (b) 3.00% per annum”
before the period at the end of the first sentence thereof, (iii) deleting the
words “In the event such rate” and inserting in lieu thereof the words “In the
event the rate determined in accordance with clause (a) above”, and (iv)
deleting the words “then the Eurodollar Rate” and inserting in lieu thereof the
words “then the rate determined in accordance with clause (a)
above”.

       

      (g)    The
definition of “Facility Amount” is amended by deleting the amount “$650,000,000”
in the first line thereof and replacing it with the amount
“$345,000,000”.

       

      (h)    The
definition of “Intercreditor Agreement” is amended by replacing the reference to
“September 21, 2004” with a reference to “September 22, 2004”.

       

      (i)     The
definition of “Investor Facility Amount” is amended by (i) deleting the
amount “$325,000,000” in clause (a) thereof and replacing it with the
amount “$173,000,000”, (ii) deleting the amount “$125,000,000” in
clause (b) thereof and replacing it with the amount “$66,000,000”, and
(iii) deleting the amount “$200,000,000” in clause (c) thereof and
replacing it with the amount “$106,000,000”.

       

      (j)     The
definition of “Net Receivables Pool Balance” is amended by deleting the text in
lines 7 to 9 beginning with the words “(A) in the case of” and ending with the
words “all other Obligors”.

       

      (k)    The
definition of “Percentage” is restated in its entirety to read as
follows:

       

      “‘Percentage’ of any
Bank means, (a) with respect to Citibank, 50.1449275%, or such amount as reduced
or increased by any Assignment and Acceptance entered into with an Eligible
Assignee, (b) with respect to JPMorgan, 19.1304348%, or such

       

      
        
           

        

        
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      amount
as reduced or increased by any Assignment and Acceptance entered into with an
Eligible Assignee, (c) with respect to Wachovia, 30.7246377%, or such
amount as reduced or increased by any Assignment and Acceptance entered into
with an Eligible Assignee, or (d) with respect to a Bank that has entered into
an Assignment and Acceptance, the amount set forth therein as such Bank’s
Percentage, or such amount as reduced or increased by an Assignment and
Acceptance entered into between such Bank and an Eligible
Assignee.”

       

      (l)     A
new definition of “Second Lien Agent” is added which reads in its entirety as
follows:

       

      “‘Second Lien Agent’
means CNAI in its capacity as administrative agent and collateral processing
agent under the Second Lien Credit Agreement, and any successor to CNAI
thereunder.”

       

      (m)   A
new definition of “Second Lien Borrowing Base Deficiency” is added which reads
in its entirety as follows:

       

      “‘Second Lien Borrowing Base
Deficiency” means, on any date, the excess, if any, of (x) the “Facility
Principal” (as defined in the Second Lien Credit Agreement), over (y) the
“Borrowing Base” (as defined in the Second Lien Credit Agreement).”

       

      (n)    A
new definition of “Second Lien Credit Agreement” is added which reads in its
entirety as follows:

       

      “‘Second Lien Credit
Agreement’ means that certain Credit Agreement dated as of
February 18, 2009 among the Borrower, the Originators, certain lenders
party thereto, HQ, as collection agent, and the Second Lien Agent, as the same
may be amended, modified or restated from time to time.”

       

      (o)    A
new definition of “Second Lien Intercreditor Agreement” is added which reads in
its entirety as follows:

       

      “‘Second Lien Intercreditor
Agreement’ means that certain Intercreditor Agreement dated as of
February 18, 2009 by and among the Program Agent, the Borrower and the
Second Lien Agent, as the same may be amended, modified or restated from time to
time.”

       

      (p)    The
definition of “Transaction Document” is amended by adding the term “the Second
Lien Intercreditor Agreement,” after the term “the Intercreditor Agreement,” in
the second line thereof.

       

      
        
           

        

        
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      1.2      Section 1.02
of the Agreement is amended by deleting the term “generally accepted accounting
principals” in the second line thereof and replacing it with the term
“GAAP”.

       

      1.3      Section 2.04(a)
of the Agreement is amended by deleting clause (i) thereof, renumbering clause
(ii) thereof as a new clause (i) thereof, deleting the word “and” at the end of
the newly renumbered clause (i) thereof, and inserting a new clause (ii) as
follows:

       

      “(ii)     at
any time that there exists a Second Lien Borrowing Base Deficiency, deposit to
and hold in the Trustee’s Account, in trust for the Beneficiaries and the
Collection Agent, all Collections (which Collections shall thereafter be applied
pursuant to Section 2.04(i)); and”

       

      1.4      Section 2.04(a)(iii)
of the Agreement is amended by inserting the following clause prior to the
semicolon at the end thereof:

       

      “unless
otherwise instructed by the Borrower pursuant to Section 2.04(d) (and if no
such instructions shall have been given by the Borrower, unless otherwise
instructed in writing by the Second Lien Agent, which instructions shall state
that such remaining Collections will be applied to amounts due and owing under
the Second Lien Credit Agreement and otherwise in accordance with the terms of
the Second Lien Credit Agreement)”

       

      1.5      Section 2.04(a)
of the Agreement is amended by inserting the following sentence at the end of
the proviso thereto:

       

      “The
Daily Report delivered by the Collection Agent to the Trustee on each Deposit
Date shall set forth (x) the amount of the Second Lien Borrowing Base Deficiency
and (y) the amount of funds then held in the Trustee’s Account pursuant to any
previous application of clause (ii) of Section 2.04(a) or clause (iii) of
Section 2.04(b).”

       

      1.6      Section 2.04(b)
of the Agreement is amended by inserting the words “during the Revolving Period”
after the first appearance of the words “Fixed Period” in the first sentence
thereof, deleting clause (i) thereof, renumbering clause (ii) thereof as a new
clause (i) thereof, renumbering clause (iii) thereof as a new clause (ii)
thereof, deleting the word “and” at the end of the newly renumbered clause (ii)
thereof, and inserting a new clause (iii) as follows:

       

      “(iii)    at
any time that there exists a Second Lien Borrowing Base Deficiency, deposit to
and hold in the Trustee’s Account, in trust for the Beneficiaries and the
Collection Agent, all Collections (which Collections shall thereafter be applied
pursuant to Section 2.04(i)); and”

       

      1.7      Section 2.04(b)
of the Agreement is amended by inserting the following sentence at the end of
the proviso thereto:

       

      
        
           

        

        
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      “The
Daily Report delivered by the Collection Agent to the Trustee on each Deposit
Date shall set forth (x) the amount of the Second Lien Borrowing Base Deficiency
and (y) the amount of funds then held in the Trustee’s Account pursuant to any
previous application of clause (ii) of Section 2.04(a) or clause (iii) of
Section 2.04(b).”

       

      1.8      Sections 2.04(b)(iv)
and 2.04(c)(iii) of the Agreement are each hereby amended by inserting the
following parenthetical expression prior to the semicolon or period (as
applicable) at the end thereof:

       

      “(unless
otherwise instructed in writing by the Second Lien Agent, which instructions
shall state that such remaining Collections will be applied to amounts due and
owing under the Second Lien Credit Agreement and otherwise in accordance with
the terms of the Second Lien Credit Agreement)”.

       

      1.9      Section
2.04(d) of the Agreement is amended by adding the following phrase prior to the
period at the end thereof:

       

      “for
distribution on account of Facility Principal pursuant to Section
2.04A”.

       

      1.10    The
first paragraph of Section 2.04(e) of the Agreement is amended by inserting
the following proviso prior to the period at the end thereof:

       

      “;
provided, further, that if the
Second Lien Agent shall have otherwise instructed the Trustee in writing as to
the deposit of funds that are to be transferred to the Borrower’s Account or
distributed to the Borrower, the Trustee shall follow such instructions of the
Second Lien Agent, which instructions shall state that such remaining Cure Funds
will be applied to amounts due and owing under the Second Lien Credit Agreement
and otherwise in accordance with the terms of the Second Lien Credit
Agreement.”

       

      1.11    A
new Section 2.04(i) is inserted after Section 2.04(h) as
follows:

       

      “(i)     To
the extent that any amounts have been deposited to the Trustee’s Account
pursuant to Section 2.04(a)(ii) or Section 2.04(b)(iii), such amounts shall be
held in the Trustee’s Account until the earlier of (x) the date on which the
Collection Agent certifies in writing to the Trustee, annexing a Daily Report
evidencing such certification, that there is no Second Lien Borrowing Base
Deficiency, in which case, the Trustee shall promptly deposit into the
Borrower’s Account any amounts then in the Trustee’s Account which were
previously deposited pursuant to Section 2.04(a)(ii) or Section 2.04(b)(iii),
and (y) the date on which the “Cure Period” (as such term is defined in the
Second

       

      
        
           

        

        
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      Lien
Credit Agreement) ends, in which case any amounts then in the Trustee’s Account
which were previously deposited pursuant to Section 2.04(a)(ii) or Section
2.04(b)(iii) shall be available for distribution on the next Distribution Date
pursuant to Section 2.04A and shall be distributed to the Investor Agent’s
Accounts for the ratable distribution to the applicable Investors and Banks, in
reduction of the Facility Principal (regardless of whether such Distribution
Date occurs during the Revolving Period or the Amortization
Period).

       

      1.12    Sections 2.04A(a)(ix)
and 2.04A(b)(viii) of the Agreement are each hereby amended by inserting the
following parenthetical expression prior to the period at the end
thereof:

       

      “(unless
otherwise instructed in writing by the Second Lien Agent, which instructions
shall state that such remaining funds will be applied to amounts due and owing
under the Second Lien Credit Agreement and otherwise in accordance with the
terms of the Second Lien Credit Agreement)”.

       

      1.13    The
last paragraph of Section 2.04A(b) of the Agreement is amended by deleting
the words “provided, however” and
inserting in lieu thereof the following:

       

      “;
provided, however, that if the
Second Lien Agent shall have otherwise instructed the Trustee in writing as to
the deposit of funds that are to be transferred to the Borrower’s Account or
distributed to the Borrower, the Trustee shall follow such instructions of the
Second Lien Agent, which instructions shall state that such remaining funds will
be applied to amounts due and owing under the Second Lien Credit Agreement and
otherwise in accordance with the terms of the Second Lien Credit Agreement;
provided, further,”

       

      1.14    Section 4.01(h)
the Agreement is amended in its entirety to read as follows:

       

      “(h)   
The Borrower is the legal and beneficial owner of the Transferred Assets and
Related Security free and clear of any Adverse Claim except those created by the
Second Lien Credit Agreement.  The Program Agent for the benefit of
the Investors and the Banks has a valid and perfected first priority security
interest in each Transferred Asset now existing or hereafter arising and in the
Related Security and Collections with respect thereto.  No effective
financing statement or other instrument similar in effect covering any
Collateral is on file in any recording office, except those relating to the
Credit Agreement, the Second Lien Credit Agreement and the Indentures, all of
which the Borrower represents relate to security interests that are subject to
the Intercreditor Agreement and the Second Lien Intercreditor

       

      
        
           

        

        
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      Agreement,
those filed by the Second Lien Agent pursuant to the Second Lien Credit
Agreement, those filed in favor of the Program Agent relating to this Agreement
and those filed pursuant to the Purchase Agreements.  Each Transferred
Asset characterized in any Borrower Report or other written statement made by or
on behalf of the Borrower as an Eligible Receivable or Eligible Participation
Interest, or as included in the Net Receivables Pool Balance is, as of the date
of such Borrower Report or other statement (or, if applicable, as of a date
certain specified in such report), an Eligible Receivable or Eligible
Participation Interest, or properly included in the Net Receivables Pool
Balance.”

       

      1.15    Section 5.01(d)
of the Agreement is amended in its entirety to read as follows:

       

      “(d)  Sales, Liens,
Etc.  Except for the security interest created hereunder and
the security interest created under the Second Lien Credit Agreement in favor of
the Second Lien Agent, the Borrower will not sell, assign (by operation of law
or otherwise) or otherwise dispose of, or create or suffer to exist any Adverse
Claim upon or with respect to any Collateral, or upon or with respect to any
account to which any Collections of any Pool Receivable or Participated
Receivable are sent, or assign any right to receive income in respect
thereof.”

       

      1.16    Clauses (xiii)
and (xiv) of Section 5.01(k) of the Agreement are each hereby amended by
deleting the term “Funding Agents” where it appears therein and replacing it
with the term “Investor Agents”.

       

      1.17    Section 5.01(n)
of the Agreement is amended in its entirety to read as follows:

       

      “(n)  Nature of
Business.  The Borrower will not engage in any business other
than the purchase or acquisition of Transferred Assets, Related Security and
Collections from Cayman SPE I and the transactions contemplated by this
Agreement and by the Second Lien Credit Agreement.  The Borrower will
not create or form any Subsidiary.”

       

      1.18    Section
5.01(q) of the Agreement is amended in its entirety to read as
follows:

       

      “(q)  Debt.  The
Borrower will not incur any Debt, other than any Debt incurred pursuant to this
Agreement or the Second Lien Credit Agreement.”

       

      1.19    New
Sections 5.01(u), 5.01(v), 5.01(w) and 5.01(x) are inserted in the appropriate
location as follows:

       

      “(u)    Amendments to the Second
Lien Credit Agreement.  The Borrower may agree or consent to
any amendment, supplement or

       

      
        
           

        

        
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      modification
to the Second Lien Loan Documents (as defined in the Second Lien Intercreditor
Agreement) in accordance with their terms, in each case, without the consent of,
or prior notice to the Program Agent or the First Lien Claimholders (as defined
in the Second Lien Intercreditor Agreement); provided, however, that any
such amendment, supplement or modification shall not, without the consent of the
Program Agent and each Investor Agent:

       

      (i)     increase
the aggregate principal amount of loans or other extensions of credit under the
Second Lien Loan Documents (as defined in the Second Lien Intercreditor
Agreement) or commitments therefor so that the aggregate principal amount of
such loans or other extensions of credit and commitments is in excess of
$225,000,000;

       

      (ii)    modify
the method of computing interest or increase the interest rate (including by any
increase in the “applicable margin” or similar component of the interest rate)
or yield provisions applicable to the Second Lien Obligations (as defined in the
Second Lien Intercreditor Agreement) or any commitment fee, facility fee,
utilization fee, or similar fee so that the combined interest rate and fees are
increased by more than 2% per annum in the aggregate (excluding increases
resulting from (A) increases in the underlying reference rate not caused by
any amendment, supplement or modification of the Second Lien Credit Agreement,
or (B) accrual of interest at the rate applicable following an “Event of
Default” under the Second Lien Credit Agreement as in effect on the date
hereof);

       

      (iii)   change
any representations, warranties, covenants, defaults, events of default or other
provisions (including the addition of defaults or events of default not
contained in the Second Lien Loan Documents (as defined in the Second Lien
Intercreditor Agreement) as of the date hereof) in any manner that makes them
more restrictive as to the Borrower, except to make conforming changes to match
changes made to the First Lien Loan Documents (as defined in the Second Lien
Intercreditor Agreement), on substantially similar economic terms;

       

      (iv)   change
to earlier dates any dates upon which payments of principal or interest are due
thereon or otherwise alter any provisions that decrease the weighted average
life to maturity;

       

      (v)    change
the prepayment, redemption, or defeasance provisions thereof if the effect of
such change is to require any new

       

      
        
           

        

        
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      payment
or accelerate the payment date of any existing payment obligation;
or

       

      (vi)   change
or amend any other term of the Second Lien Loan Documents (as defined in the
Second Lien Intercreditor Agreement) if such change or amendment would result in
a default under this Agreement, increase the obligations of the Borrower or
confer additional rights on any Second Lien Claimholder (as defined in the
Second Lien Intercreditor Agreement) in a manner adverse in any respect to any
of the First Lien Claimholders (as defined in the Second Lien Intercreditor
Agreement).

       

      (v)    Notice of
Amendments.  In the event the Second Lien Loan Documents (as
defined in the Second Lien Intercreditor Agreement) are amended, supplemented or
otherwise modified, the Borrower shall provide a copy of each such amendment,
supplement or modification to the Program Agent at least five (5) Business Days
prior to the effective date thereof.”

       

      (w)   Refinancing of Second Lien
Obligations.  The Borrower will not refinance the Debt under
the Second Lien Credit Agreement unless (i) the Program Agent and each
Investor Agent have consented thereto or the terms of such refinanced Debt, if
contained in an amendment to the Second Lien Credit Agreement, would not require
the consent of the Program Agent and the Investor Agents pursuant to
Section 5.01(u) and (ii) the holders of such refinanced Debt (or an agent
for such holders) agree in writing, at or prior to the time of such refinancing,
to be bound by the terms of the Second Lien Intercreditor
Agreement.

       

      (x)    Prepayment of the Second
Lien Obligations.  The Borrower will not make any optional
prepayment, in whole or in part, of the principal amount of the Debt outstanding
under the Second Lien Credit Agreement unless (i) the Program Agent and
each Investor Agent have consented thereto or (ii) such prepayment is a
prepayment in full in connection with a refinancing permitted by
Section 5.01(w) and the principal amount of the refinanced Debt outstanding
immediately following the refinancing is equal to the principal amount of the
Debt prepaid.

       

      1.20    Section
6.06(d) of the Agreement is amended by (i) deleting the words “, except as
provided in the second to last sentence of this Section 6.06(d)” at the end of
the first paragraph thereof. and (ii) deleting in their entirety the second and
third sentences of the second paragraph thereof.

       

      
        
           

        

        
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      1.21    Section 7.01(d)
of the Agreement is amended by deleting the reference to “5.01(p) or 5.01(q)”
therein and inserting in lieu thereof a reference to “5.01(p), 5.01(q), 5.01(u),
5.01(w) or 5.01(x)”.

       

      1.22    Section 7.01(k)
of the Agreement is amended in its entirety to read as follows:

       

      (k)
(i) An “Event of Termination” or “Facility Termination Date” shall occur under
any Purchase Agreement or any Purchase Agreement shall cease to be in full force
or effect, or (ii) an “Event of Default” shall occur under the Second Lien
Credit Agreement, or (iii) the Second Lien Agent shall deliver to the Program
Agent a notice of the type described in Section 3.1(a)(1) of the Second Lien
Intercreditor Agreement (which triggers the start of the “Standstill Period”
thereunder).”

       

      1.23    Section 7.01(q)
of the Agreement is amended in its entirety to read as follows:

       

      “(q) Any
Governmental Entity Receivables Account Notice or “Governmental Entity
Receivables Account Notice” (as defined in the Second Lien Credit Agreement)
shall be revoked or revised.”

       

      1.24    The
proviso in the final paragraph of Section 7.01 of the Agreement is amended by
(i) deleting the reference to “paragraph (g) of this Section 7.01” and
replacing it with a reference to “paragraph (g) of this Section 7.01 or clause
(iii) of paragraph (k) of this Section 7.01”, and (ii) after the words “the
Commitment Termination Date shall occur”, inserting the words “and, in the case
of an event described in paragraph (g),”.

       

      1.25    Section
11.05 of the Agreement is amended by inserting a new clause (c) in the
appropriate location as follows:

       

      “(c)    The
Collection Agent and each Originator hereby agrees that it will not institute
against, or join any other Person in instituting against, the Borrower any
proceeding of the type referred to in Section 7.01(g) so long as there
shall not have elapsed one year plus one day since the later of the Facility
Termination Date and the date on which all Obligations shall have been paid in
full.”

       

      1.26    A
new Section 11.14 of the Agreement is inserted in the appropriate location as
follows:

       

      Section
11.14     Second Lien Intercreditor
Agreement.  Notwithstanding anything herein to the contrary,
the exercise of certain rights and remedies by the Program Agent hereunder is
subject to the provisions of the Second Lien Intercreditor
Agreement.  In the event of any conflict between the terms of the
Second Lien Intercreditor Agreement and this Agreement, the terms of the Second
Lien Intercreditor Agreement shall govern and control.

       

      
        
           

        

        
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      1.27    Schedule I (Deposit Banks
and Account Banks) to the Agreement is amended by deleting the contents
thereof and inserting in lieu thereof the following:

       

      Mellon
Bank, N.A.

      500
Ross Street, Room 154-1380

      Pittsburgh,
PA 15262-0001

      Attn:
Document Control Group Manager

       

      Account
Number: 0693636

      Account
Number: 103-7294

       

      1.28    Schedule II (Credit and
Collection Policy), and Schedule V (Material
Litigation) to the Agreement are each amended in their entirety to read
as set forth in Schedule II and Schedule V, respectively, to this Amendment
Agreement.

       

      SECTION
2.      Conditions to
Effectiveness  This Amendment Agreement shall become effective
when the following documents have been delivered to the Program Agent, each in
form and substance satisfactory to the Program Agent and the Investor Agents
(the “Effective
Date”):

       

      (a)    fully
executed counterparts of this Amendment Agreement;

       

      (b)    fully
executed counterparts of the Second Lien Intercreditor Agreement;

       

      (c)    fully
executed copies of an amendment and/or restatement of the Intercreditor
Agreement;

       

      (d)    fully
executed counterparts of an omnibus amendment to each of the Parent
Undertakings;

       

      (e)    fully
executed counterparts of amendments to each of the Deposit Account Agreement and
the Governmental Entity Receivables Agreement;

       

      (f)     fully
executed counterparts of an omnibus amendment to each of the Purchase
Agreements;

       

      (g)    copies
of executed copies of the Second Lien Credit Agreement and all related
documents; and

       

      (h)    favorable
opinions of Skadden, Arps, Slate, Meagher & Flom LLP, as counsel for the
Borrower, the Predecessor Purchasers, the Parent and the other Originators, as
to such matters as the Program Agent or any Investor Agent may reasonably
request.

       

      SECTION
3.      Representations and
Warranties.  Each of the Borrower and the Collection Agent
represents and warrants that each of the representations and warranties
contained in Section 4.01 and Section 4.02, respectively, of the
Agreement (after giving effect to this Amendment Agreement) are correct in all
material respects on and as of the date of this Amendment Agreement as though
made on and as of such date.

       

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      

       

      SECTION
4.      Confirmation of
Agreement.  Each reference in the Agreement to “this Agreement”
or “the Agreement” shall mean the Agreement as amended by this Amendment
Agreement, and as hereafter amended or restated.  Except as herein
expressly amended, the Agreement is ratified and confirmed in all respects and
shall remain in full force and effect in accordance with its terms.

       

      SECTION
5.      Confirmation of Parent
Undertakings.  The Parent, by its signature below, hereby
confirms and agrees that notwithstanding the effectiveness of this Amendment
Agreement, after giving effect to the amendments thereto on the date of the
Amendment Agreement (a) the Parent Undertakings shall continue to be in full
force and effect and shall apply to the Agreement as amended as contemplated by
this Amendment Agreement, and (b) the Parent Undertakings are hereby ratified
and confirmed.

       

      SECTION
6.      Consent to Amendments of
Purchase Agreements.  Pursuant to the provisions of
Section 5.01(m) of each  of the Agreement, the Tertiary Purchase
Agreement and the Secondary Purchase Agreement , each of the Program Agent and
each Investor Agent hereby consents to the amendments to the Purchase Agreements
referred to in clause (f) of Section 2.

       

      SECTION
7.      Authorization of Second Lien
Intercreditor Agreement.  Each Investor, each Bank and each
Investor Agent authorizes the Program Agent to enter into the Second Lien
Intercreditor Agreement as agent on its behalf.

       

      SECTION
8.      Costs and
Expenses.  The Borrower agrees to pay on demand all reasonable
costs and expenses in connection with the preparation, execution and delivery of
this Amendment Agreement and any other documents to be delivered hereunder,
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Program Agent, the Investor Agents, the Investors, the Banks and
the Trustee with respect thereto.

       

      SECTION
9.      GOVERNING
LAW.  THIS AMENDMENT AGREEMENT SHALL, IN ACCORDANCE WITH
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK,  BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES THEREOF
THAT WOULD CALL FOR THE APPLICATION OF THE LAWS OF ANY OTHER
JURISDICTION.

       

      SECTION
10.    Execution in
Counterparts.  This Amendment Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which when taken together shall constitute one and the same
agreement.  Delivery of an executed counterpart of a signature page to
this Amendment Agreement by facsimile or by electronic transmission in portable
document format (.pdf) shall be effective as delivery of a manually executed
counterpart of this Amendment Agreement.

       

      [Remainder
of this page intentionally left blank]

       

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

      IN
WITNESS WHEREOF, the parties have caused this Amendment Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.

       

      
        
          
            	 
      	
                    RITE
      AID FUNDING II

                  
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
                    By:

                  	/s/
      James J. Comitale	 
      
	 
      	 
      	
                    Name:
      James J. Comitale

                  
	 
      	 
      	
                    Title:   
      Vice President

                  
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
                    CAFCO,
      LLC

                  
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
                    By:

                  	
                    Citicorp
      North America,

                    Inc.,
      as Attorney-in-Fact

                  
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                    By:

                  	/s/
      Tom Sullivan	 
      
	 
      	 
      	 
      	
                    Name:
      Tom Sullivan

                  
	 
      	 
      	 
      	
                    Title:    Director,
      VP

                  
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
                    CRC
      FUNDING, LLC

                  
	 
      	 
      	 
      	 
      	 
      
	 
      	
                    By:

                  	
                    Citicorp
      North America,

                    Inc.,
      as Attorney-in-Fact

                  
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                    By:

                  	/s/
      Tom Sullivan 	 
      
	 
      	 
      	 
      	
                    Name:
      Tom Sullivan

                  
	 
      	 
      	 
      	
                    Title:   
      Director, VP

                  

          

        

      

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        
          
            
              
                
                  
                    	 
      	 
      	 
      	 
      	 
      
	 
      	
                            FALCON
      ASSET SECURITIZATION

                              COMPANY
      LLC

                          
	 
      	 
      	 
      	 
      	 
      
	 
      	
                            By:

                          	
                            JPMorgan
      Chase Bank, N.A., its

                            attorney-in-fact

                          
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
                            By:

                          	/s/
      John M. Kuhns	 
      
	 
      	 
      	
                            Name: 
      John M. Kuhns

                          	 
      
	 
      	 
      	
                            Title:    
      Exec Director

                          	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
                            VARIABLE
      FUNDING CAPITAL

                            COMPANY
      LLC

                          
	 
      	 
      	 
      	 
      	 
      
	 
      	
                            By:

                          	
                            Wachovia
      Capital Markets, LLC, as Attorney-in-Fact

                          
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                            By:

                          	/s/
      Douglas R. Wilson, Sr.	 
      
	 
      	 
      	 
      	
                            Name:
      Douglas R. Wilson, Sr.

                          	 
      
	 
      	 
      	 
      	
                            Title:   
      Director

                          	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
                            CITICORP
      NORTH AMERICA, INC.,

                              as
      Program Agent and as an Investor Agent

                          
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
                            By:

                          	/s/
      Tom Sullivan	 
      
	 
      	 
      	
                            Name:
      Tom Sullivan

                          	 
      
	 
      	 
      	
                            Title:   
      Director, VP

                          	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
                            CITIBANK,
      N.A.

                          
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
                            By:

                          	/s/
      Tom Sullivan	 
      
	 
      	 
      	
                            Name:
      Tom Sullivan

                          	 
      
	 
      	 
      	
                            Title:   
      Director, VP

                          	 
      

                  

                

              

            

          

        

      

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        
          
            
              
                
                  
                    
                      
                        	 
      	
                                JPMORGAN
      CHASE BANK, N.A.

                                  as
      a Bank and as an Investor Agent

                              
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
                                By:

                              	/s/
      John M. Kuhns	 
      
	 
      	 
      	
                                Name:
      John M. Kuhns

                              	 
      
	 
      	 
      	
                                Title:   
      Exec Director

                              	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
                                WACHOVIA
      BANK, NATIONAL ASSOCIATION

                                  as
      a Bank and as an Investor Agent

                              
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
                                By:

                              	/s/
      Michael J. Landry	 
      
	 
      	 
      	
                                Name: 
      Michael J. Landry

                              	 
      
	 
      	 
      	
                                Title:    
      Vice President

                              	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
                                RITE
      AID HDQTRS. FUNDING INC.

                              
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
                                By:

                              	/s/
      James J. Comitale	 
      
	 
      	 
      	
                                Name:
      James J. Comitale

                              	 
      
	 
      	 
      	
                                Title:   
      Vice President

                              	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
                                THE
      BANK OF NEW YORK MELLON

                                  as
      Trustee

                              
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
                                By:

                              	/s/
      Jared Fischer	 
      
	 
      	 
      	
                                Name:
      Jared Fischer

                              	 
      
	 
      	 
      	
                                Title:   
      Assistant Treasurer

                              	 
      

                      

                    

                  

                

              

            

          

        

      

      

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        	 
      	
                RITE
      AID CORPORATION

              
	 
      	
                RITE
      AID OF CONNECTICUT, INC.

              
	 
      	
                RITE
      AID OF DELAWARE, INC.

              
	 
      	
                RITE
      AID OF GEORGIA, INC.

              
	 
      	
                RITE
      AID OF INDIANA, INC.

              
	 
      	
                RITE
      AID OF KENTUCKY, INC.

              
	 
      	
                RITE
      AID OF MAINE, INC.

              
	 
      	
                RITE
      AID OF MARYLAND, 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 OHIO, INC.

              
	 
      	
                RITE
      AID OF PENNSYLVANIA, 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.

              
	 
      	
                KEYSTONE
      CENTERS, INC.

              
	 
      	
                THE
      LANE DRUG COMPANY

              
	 
      	
                RITE
      AID DRUG PALACE, INC.

              
	 
      	
                THRIFTY
      PAYLESS, INC.

              
	 
      	
                HARCO,
      INC.

              
	 
      	
                PERRY
      DRUG STORES, INC.

              
	 
      	
                APEX
      DRUG STORES, INC.

              
	 
      	
                PDS-1
      MICHIGAN, INC.

              
	 
      	
                RDS
      DETROIT, INC.

              
	 
      	
                K
      & B ALABAMA CORPORATION

              
	 
      	
                K
      & B LOUISIANA CORPORATION

              
	 
      	
                K
      & B MISSISSIPPI CORPORATION

              
	 
      	
                K
      & B TENNESSEE CORPORATION

              
	 
      	
                ECKERD
      CORPORATION

              
	 
      	
                GENOVESE
      DRUG STORES, INC.

              
	 
      	
                EDC
      DRUG STORES, INC.

              
	 
      	
                MAXI
      DRUG, INC.

              
	 
      	
                MAXI
      DRUG SOUTH, L.P.

              
	 
      	
                MAXI
      DRUG NORTH, INC.

              
	 
      	
                MAXI
      GREEN, INC.

              
	 
      	
                THRIFT
      DRUG, INC.

              

      

      

      
        
          
            
              
                
                  
                    	 	 	 	 
	 	 	 	 
	 
      	
                            By:

                          	/s/
      Robert B. Sari	 
      
	 
      	 
      	
                            Name:
      Robert B. Sari

                          	 
      
	 
      	 
      	
                            Title:   
      Exec. VP and Gen. Counsel of Rite Aid

                                      
      Corporation

                                       VP
      as to all other originatorsex10-1.htm

    
      Exhibit
10.1

       

      

       

      SIXTH
AMENDMENT TO

       

      AMENDED
AND RESTATED CREDIT AGREEMENT

       

      September
28, 2007

       

      PEI
Holdings, Inc.

      680
North Lakeshore Drive

      Chicago,
Illinois  60611

       

      Ladies
and Gentlemen:

       

      Reference
is hereby made to that certain Amended and Restated Credit Agreement, dated as
of April 1, 2005, among PEI Holdings, Inc., a Delaware corporation
("Borrower"), the financial institutions from time to time party thereto
("Lenders"), and Bank of America, N.A., as Agent for Lenders ("Agent") (as
amended, supplemented or otherwise modified to date, the "Credit
Agreement").  Unless otherwise defined herein, capitalized terms used
herein shall have the meanings provided to such terms in the Credit
Agreement.

       

      Borrower
has requested that Agent and Lenders agree to amend the Credit Agreement in
certain respects, and Agent and Lenders have agreed to such amendments, on the
terms, and subject to the conditions, contained herein.

       

      Therefore,
Borrower, Agent and Lenders hereby agree as follows:

       

      1.      
     Amendments to Credit
Agreement.  Subject to the satisfaction of the conditions set
forth in Section 3 hereof, the Credit Agreement is hereby amended as
follows:

       

      (a)           The
definition of "Base Amount" contained in Section 1.01 of the Credit Agreement is
hereby amended and restated in its entirety as follows:

       

      "
'Base Amount'
means 85% of Net Worth as of December 31, 2006, as reflected in Borrower's 10-K
filing as of such date."

       

      (b)           The
definition of "Increase Amount" contained in Section 1.01 of the Credit
Agreement is hereby amended and restated in its entirety as
follows:

       

      "
'Increase
Amount' means 50% of Net Income for the period from January 1, 2007
through the last day of the applicable quarter, excluding negative results from
any quarter, if any."

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      (c)           The
definition of "Letter of Credit Sublimit" contained in Section 1.01 of the
Credit Agreement is hereby amended by deleting the reference to "$30,000,000"
and replacing it with a reference to "$50,000,000".

       

      (d)           The
definition of "Maturity Date" contained in Section 1.01 of the Credit Agreement
is hereby amended and restated in its entirety as follows:

       

      "
'Maturity Date'
means September 28, 2010."

       

      (e)           The
definition of "Net Worth" contained in Section 1.01 of the Credit Agreement is
hereby amended and restated in its entirety as follows:

       

      "
'Net Worth'
means the total assets of Playboy and its Restricted Subsidiaries plus non-cash charges
of up to $35,000,000 associated with the impairment of goodwill of Playboy and
its Restricted Subsidiaries less Total
Liabilities of Playboy and its Subsidiaries, all determined on a consolidated
basis and in accordance with GAAP."

       

      (f)           The
new definition of "Sixth Amendment Closing Date" is hereby inserted into Section
1.01 of the Credit Agreement in appropriate alphabetical order, as
follows:

       

      "
'Sixth Amendment
Closing Date' means September 28, 2007."

       

      (g)           The
following Section 2.15 is hereby added to the Credit Agreement in the
appropriate numeric order:

       

      "2.15                 Aggregate Commitment Increase
Option.

       

      From
and after the Sixth Amendment Closing Date, Borrower shall have the right from
time to time to notify Agent and Lenders in writing that it wishes to increase
(an "Increase") the Aggregate Commitment by an aggregate amount of up to
Twenty-Five Million Dollars ($25,000,000) in one or more increases, each in a
minimum amount of not less than Ten Million Dollars ($10,000,000) and Five
Million Dollars ($5,000,000) increments in excess thereof.  Each such
Increase shall become effective at the date specified in such written notice,
but in any event not less than 20 days after the date such notice is received by
Agent, so long as (a) no Default or Event of Default is in existence on
such effective date and (b) the Borrower, at its option, either
(i) obtains the consent of the then-existing Lenders to increase their
Commitments by the aggregate amount of such Increase, (ii) obtains the
consent of other third party financial institutions reasonably acceptable to
Agent and Borrower ("New Lenders") to provide new Commitments in the aggregate
amount of such Increase or (iii) obtains the consents of a combination of
then-existing Lenders and New Lenders to provide the aggregate amount of such
Increase by increasing their Commitments or providing new Commitments, as
applicable.  Any Increase or portion of an 

       

      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      

       

      Increase
provided by then-existing Lenders shall be effected by an amendment to this
Agreement; the addition of new Commitments by New Lenders shall be effected by
an amendment to this Agreement; provided all such amendments will be effective
with only the signatures of the Agent, the Borrower, each then-existing Lender
increasing its commitment and each New Lender, notwithstanding anything in Section 10.01 to the
contrary.  The then-existing Lenders providing any portion of the
Increase or the New Lenders, as applicable, shall accept an assignment from the
existing Lenders, and the existing Lenders shall make an assignment to the
then-existing Lenders providing any portion of the Increase or the New Lenders,
as applicable, of a direct interest in each then outstanding Committed Loan such
that, after giving effect thereto, all credit exposure hereunder is held ratably
by the Lenders in proportion of their respective Commitments.  In each
case, Borrower will issue to each affected Lender new Revolving Notes to the
extent required by Section
10.07(c)."

       

      (h)           Section
2.05(d) of the Credit Agreement is hereby amended by deleting the reference to
"clauses (a)-(r)" and replacing it with a reference to "clauses
(a)-(s)".

       

      (i)           Section
5.12 of the Credit Agreement is hereby amended by deleting each reference to the
"Closing Date" and replacing it with a reference to the "Sixth Amendment Closing
Date".

       

      (j)           Section
6.09(a) of the Credit Agreement is hereby amended by deleting the reference to
"March 31, 2005" and replacing it with a reference to "September 30,
2007".

       

      (k)           Section
6.09(c) of the Credit Agreement is hereby amended and restated in its entirety
as follows:

       

      "(c)           Capital Expenditures.
Not to spend or incur obligations (including the total amount of any capital
leases) to acquire fixed assets, excluding any such obligations incurred as a
result of the build-out of office space ("Build-Out Obligations") which has been
reimbursed by the applicable landlord (provided that the Borrower, Playboy and
Restricted Subsidiaries of Playboy may exclude any Build-Out Obligations for the
fiscal year in which such Build-Out Obligations are incurred to the extent the
Borrower, Playboy or the applicable Restricted Subsidiary reasonably expects the
applicable landlord to reimburse such Person for such Build-Out Obligations
within six months of the date such Build-Out Obligations are incurred; provided
further, that, to the extent the applicable landlord does not so reimburse the
Borrower, Playboy or the applicable Restricted Subsidiary by the last day of
such six month period (such last day, the "Reimbursement Deadline") for such
Build-Out Obligations (such unreimbursed amounts are hereinafter referred to as
the "Unreimbursed Amounts"), the Borrower shall include such Unreimbursed
Amounts in the amount of obligations incurred for purposes of this
Section 6.09(c) (to the extent previously excluded) for the fiscal year in
which 

       

      
        
           

        

        
          -3-

          
            

          

        

        
           

        

      

       

      such
Reimbursement Deadline occurs; provided further that, to the extent that the
applicable landlord later reimburses the Borrower, Playboy or the applicable
Restricted Subsidiary for any previously Unreimbursed Amounts, then any
subsequent reimbursements of previously Unreimbursed Amounts may be deducted for
purposes of calculating the amount of obligations incurred for purposes of this
Section 6.09(c) for the fiscal year in which reimbursement is actually
received), for more than Twenty Million Dollars ($20,000,000) in any single
fiscal year on a consolidated basis."

       

      (l)           Section
6.10 of the Credit Agreement is hereby amended and restated in its entirety as
follows:

       

      "6.10                      Additional
Guarantors.

       

      Notify
Agent at the time that any Person becomes a Wholly-Owned Restricted Subsidiary
of Playboy; and promptly thereafter, cause each such Person that (i) at the
time such notice is given (A) owns at least 10% of the book value of the
combined assets of all of the Wholly-Owned Restricted Subsidiaries of Playboy
(calculated as of the most recent month end for which financial statements are
available) or (B) is otherwise requested by Agent or (ii) at the time
such notice is given earns at least 10% of the combined earnings of all of the
Wholly-Owned Restricted Subsidiaries of Playboy during any 12 month period
(calculated as of the most recent month end for which financial statements are
available) or (C) is otherwise requested by Agent, (a) other than a
Foreign Subsidiary, to become a Guarantor by executing and delivering to Agent a
Loan Guaranty or Loan Guaranty joinder in a form reasonably acceptable to Agent,
(b) other than a Foreign Subsidiary, to deliver to Agent documents
reasonably necessary to grant to Agent (and permit Agent to perfect) a Lien on
the personal property of such Person to the extent permitted herein, (c) to
cause the appropriate Person to deliver to Agent a Pledge Agreement granting to
Agent a Lien on the Equity Interests of such Person (excluding China and
Gibraltar, unless otherwise agreed by Agent and Borrower) and (d) to
deliver to Agent documents of the types referred to in clause (iv) of Section 4.01(a) and
favorable opinions of counsel (including in-house counsel) to such Person (which
shall cover, among other things, the legality, validity, binding effect and
enforceability of the documentation referred to in clauses (a), (b) and (c)), as
applicable, all in form, content and scope reasonably satisfactory to Agent;
provided, that compliance with clauses (b), (c) and (d) of this Section 6.10 shall
not be required with respect to any Person until 60 days after request therefor
by Agent (which request may be made by Agent in its sole discretion); provided
further that, if any Person becomes a Wholly-Owned Restricted Subsidiary of
Playboy after the Sixth Amendment Closing Date (other than Foreign Subsidiaries)
but does not meet the thresholds set forth in clauses (i) or (ii) above at the
time the Borrower gives the Agent notification thereof, but subsequently such
Person meets the thresholds set forth in clause (i) or (ii) above, or the Agent
otherwise requests,

       

      
        
           

        

        
          -4-

          
            

          

        

        
           

        

      

       

      the
Agent may request the Borrower thereafter to cause the requirements of clauses
(a), (b), (c) and (d) above to be met with respect to such Person within 60 days
of any request therefor by the Agent and the Borrower shall cause such
requirements to be satisfied in accordance with such request.  The
Borrower shall deliver to the Agent, concurrently with the delivery of the
financial statements referred to in Section 6.01(a) and the Compliance
Certificate delivered with respect thereto, with respect to each Person that
becomes a Wholly-Owned Restricted Subsidiary of Playboy (other than a Foreign
Subsidiary) after the Sixth Amendment Closing Date, a calculation of
(i) the book value of the assets of such Wholly-Owned Restricted Subsidiary
as a percentage of the book value of the combined assets of all of the
Wholly-Owned Restricted Subsidiaries of Playboy (calculated as of the most
recent month end for which financial statements are available) and (ii) the
percentage of the earnings of such Wholly-Owned Restricted Subsidiary as a
percentage of the combined earnings of all of the Wholly-Owned Restricted
Subsidiaries of Playboy (calculated for the most recently ended 12 month period
for which financial statements are available)."

       

      (m)         Section
7.01(ee) of the Credit Agreement is hereby amended and restated in its entirety
as follows:

       

      "(ee)      Liens
not otherwise permitted hereunder securing Indebtedness in a principal amount at
any time outstanding not in excess of $15,000,000."

       

      (n)          Section
7.02(i) of the Credit Agreement is hereby amended and restated in its entirety
as follows:

       

      "(i)        Investments
made after the Sixth Amendment Closing Date in joint ventures to which Playboy,
Borrower or a Restricted Subsidiary of Playboy is party and not otherwise
permitted hereunder, in an aggregate amount not to exceed $20,000,000, so long
as each such joint venture is in the same or a similar line of business as
Playboy, Borrower or a Restricted Subsidiary;"

       

      (o)          Section
7.02(n) of the Credit Agreement is hereby amended and restated in its entirety
as follows:

       

      "(n)        advances
to officers, directors and employees of Borrower and Subsidiaries made after the
Sixth Amendment Closing Date in an aggregate amount not to exceed $2,000,000 at
any time outstanding;"

       

      (p)           Section
7.02(q) of the Credit Agreement is hereby amended and restated in its entirety
as follows:

       

      "(q)        Investments
existing on the Sixth Amendment Closing Date and set forth on Schedule 7.02 and any
modification, replacement, renewal or 

       

      
        
           

        

        
          -5-

          
            

          

        

        
           

        

      

       

      extension
thereof; provided, that the amount of the original investment is not increased
except by the terms of such investment or as otherwise permitted by this Section
7.02;"

       

      (q)           Section
7.02(s) of the Credit Agreement is hereby amended and restated in its entirety
as follows:

       

      "(s)        Investments
not otherwise permitted hereunder in any Person having an aggregate fair market
value (measured on the date each such Investment was made and without giving
effect to subsequent changes in value), when taken together with all other
Investments made pursuant to this clause (s) since the Sixth Amendment Closing
Date, do not exceed $25,000,000."

       

      (r)           Section
7.03(c) of the Credit Agreement is hereby amended and restated in its entirety
as follows:

       

      "(c)        Indebtedness
outstanding on the Sixth Amendment Closing Date and listed on Schedule
7.03;"

       

      (s)           Section
7.03(d) of the Credit Agreement is hereby amended and restated in its entirety
as follows:

       

      "(d)        Indebtedness
in respect of Capital Lease Obligations, Synthetic Lease Obligations, mortgage
financings and purchase money obligations to acquire, construct or improve fixed
or capital assets within the limitations set forth in Section 7.01(g);
provided, however, that the
aggregate principal amount of all such Indebtedness incurred after the Sixth
Amendment Closing Date at any one time outstanding shall not exceed
$7,500,000."

       

      (t)           
Section 7.03(i) of the Credit Agreement is hereby amended and restated in its
entirety as follows:

       

      "(i)         the
incurrence by Foreign Subsidiaries after the Sixth Amendment Closing Date of
Indebtedness in an aggregate principal amount at any time outstanding not to
exceed $5,000,000;"

       

      (u)           Section
7.05(a) of the Credit Agreement is hereby amended and restated in its entirety
as follows:

       

      "(a)        (i) any
single transaction or series of related transactions that involves assets having
a fair market value of less than $5,000,000 and an aggregate fair market value
for all such Dispositions (A) in the period from the Sixth Amendment
Closing Date through and including December 31, 2007 of less than
$7,500,000 and (B) in any other fiscal year of less than $7,500,000 and
(ii) any Dispositions made in the period from January 1, 2007 up to
but excluding the Sixth Amendment Closing Date;"

       

      
        
           

        

        
          -6-

          
            

          

        

        
           

        

      

       

      (v)           Section
7.05 of the Credit Agreement is further amended by (i) deleting the word
"and" from the end of Section 7.05(r), (ii) renumbering clause (s) as
clause (t) and (iii) inserting the following as a new clause
(s):

       

      "(s)        the
sale of all of the stock and/or all or part of the assets of Andrita Studios,
Inc.; provided
that the terms of such sale are acceptable to Agent in its reasonable
discretion; and"

       

      (w)          Section
7.06(e) of the Credit Agreement is hereby amended and restated in its entirety
as follows:

       

      "(e)        so
long as no Default or Event of Default is in existence or would result
therefrom, any Equity Interests of Playboy or any Restricted Subsidiary of
Playboy held by (a) any member of Playboy's (or any of its Restricted
Subsidiaries') management pursuant to any management equity subscription
agreement or stock option agreement or (b) any employee benefit plan for
employees, directors or former directors, may be repurchased, redeemed,
defeased, acquired or retired, provided that
exclusive of the Equity Interests described on Schedule 7.06(e), the
aggregate amount of cash consideration paid for all such repurchased, redeemed,
defeased, acquired or retired Equity Interests shall not exceed $250,000 in any
twelve-month period commencing after the Sixth Amendment Closing Date, with any
unused portion available for future periods;"

       

      (x)           Section
7.06(n) of the Credit Agreement is hereby amended and restated in its entirety
as follows:

       

      "(n)        so long as no Default or Event of
Default is in existence or would result therefrom, Playboy, Borrower and the
Restricted Subsidiaries may make Restricted Payments not otherwise permitted
hereunder in an amount not to exceed $5,000,000 in the aggregate during the
period (i) up to but excluding the Sixth Amendment Closing Date and
(ii) in an amount not to exceed $5,000,000 in the aggregate during the
period from the Sixth Amendment Closing Date through and including the Maturity
Date."

       

      (y)           Section
7.11(c) of the Credit Agreement is hereby amended and restated in its entirety
as follows:

       

      "(c)        advances
to employees made after the Sixth Amendment Closing Date for moving,
entertainment and travel expenses, drawing accounts and similar expenditures in
the ordinary course of business and in any case in an aggregate amount
outstanding not exceeding $2,000,000 at any time;"

       

       

      
        
           

        

        
          -7-

          
            

          

        

        
           

        

      

       

      (z)           Section
10.07(b)(v) of the Credit Agreement is hereby amended and restated in its
entirety as follows:

       

      "(v)        except
in the case of an assignment to a Lender or an Affiliate of a Lender, if no
Default or Event of Default has occurred and is then continuing, Borrower
consents to such assignment (such consent not to be unreasonably withheld or
delayed)"

       

      (aa)         Schedules
5.12, 7.02 and 7.03 to the Credit Agreement are amended and restated in their
entirety in the forms of the corresponding Schedules attached hereto as Exhibit
A.

       

      2.        
   Scope.  Except
as amended hereby, the Credit Agreement remains unchanged and in full force and
effect.

       

      3.       
    Effectiveness.  This
Sixth Amendment to Amended and Restated Credit Agreement (the "Amendment") shall
be effective when executed by Lenders and Agent and agreed to by Borrower, and
returned to Agent, together with the following, all in form and substance
reasonably satisfactory to Agent:

       

      (a)           the
agreements, instruments and documents set forth on Exhibit B hereto
(other than as provided in Section 5 hereof); and

       

      (b)           payment
to Agent of an upfront fee equal to $87,500, for the benefit of Lenders in
accordance with their respective Pro Rata Shares.

       

      4.       
    Representations and
Warranties. To induce Lenders to execute and deliver this Amendment,
Borrower hereby represents and warrants to Lenders on the date hereof that,
after giving effect to this Amendment:

       

      (a)           All
representations and warranties contained in the Loan Agreement and the other
Loan Documents are true and correct in all material respects on and as of the
date of this Amendment, except to the extent such representations and warranties
expressly relate solely to an earlier date (in which case such representations
and warranties shall be true and accurate in all material respects as of such
earlier date), and except that the representations and warranties contained in
subsections (a) and (b) of Section 5.05 shall be
deemed to refer to the most recent statements furnished pursuant to clauses (a)
and (b), respectively, of Section
6.01.

       

      (b)           No
Default or Event of Default has occurred which is continuing.

       

      (c)           Since
December 31, 2006, no event or circumstance has occurred that has had or would
reasonably be expected to have a Material Adverse Effect.

       

      (d)           This
Amendment, and the Loan Agreement, as amended hereby, constitute valid and
binding obligations of Borrower and are enforceable against Borrower in
accordance with their respective terms, except as enforceability may be limited
by applicable 

       

      
        
           

        

        
          -8-

          
            

          

        

        
           

        

      

       

      bankruptcy,
insolvency, reorganization, moratorium or similar Laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).

       

      (e)           The
execution and delivery by Borrower of this Amendment does not require the
consent or approval of any Person, except such consents and approvals as have
been obtained except for any such approval, consent, exemption, authorization or
other action, or notice of filing that has been made, obtained or given or that
if not obtained would not be reasonably likely to have a Material Adverse
Effect.

       

      5.       
    Post-Closing
Agreements. Borrower hereby agrees to deliver, or cause to be delivered,
the following items to Agent on or before October 12, 2007, each in form and
substance reasonably satisfactory to Agent, and Borrower hereby agrees that any
failure to do so shall constitute an Event of Default under the Credit Agreement
unless the time for such delivery is postponed by Agent in its sole
discretion:

       

      (a)           Fully-executed
certified board resolutions of Playboy authorizing the execution of the
Reaffirmation of Guaranty of even date herewith among Guarantors and Agent (the
"Reaffirmation"); and

       

      (b)           A
legal opinion with respect to the execution by Playboy of the
Reaffirmation.

       

      6.       
    Severability.  If
any provision of this Amendment or the other Loan Documents is held to be
illegal, invalid or unenforceable, (a) the legality, validity and
enforceability of the remaining provisions of this Amendment and the other Loan
Documents shall not be affected or impaired thereby and (b) the parties
shall endeavor in good faith negotiations to replace the illegal, invalid, or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the illegal, invalid or unenforceable
provisions.  The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

       

      7.        
   Counterparts.  This
Amendment may be executed in one or more counterparts, each of which shall
constitute an original, but all of which taken together shall be one and the
same instrument.

       

      
        
           

        

        
          -9-

          
            

          

        

        
           

        

      

       

      8.         
  Governing
Law.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS; PROVIDED THAT BORROWER,
AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL
LAW.

       

      
        	 
      	
                Very
      truly yours,

              
	 
      	 
      
	 
      	
                BANK
      OF AMERICA, N.A., as Agent

              
	 
      	 
      
	 
      	 
      
	 
      	
                By

              	
                /s/
      Michael Brashler

              
	 
      	
                Its

              	
                Vice
      President

              

      

      

      

      
        	 
      	
                BANK
      OF AMERICA, N.A., as a Lender

              
	 
      	 
      
	 
      	 
      
	 
      	
                By

              	
                /s/
      Craig W. McGuire

              
	 
      	
                Its

              	
                Senior
      Vice President

              

      

      

      

      
        	 
      	
                LASALLE
      BANK NATIONAL ASSOCIATION,

              
	 
      	
                as
      a Lender

              
	 
      	 
      
	 
      	 
      
	 
      	
                By

              	
                /s/
      Sara Flynn

              
	 
      	
                Its

              	
                Officer

              

      

      

      

      

      
        	
                ACKNOWLEDGED
      AND AGREED TO

              
	
                THIS
      28th DAY OF SEPTEMBER, 2007:

              
	 
      
	
                PEI
      HOLDINGS, INC., as Borrower

              
	 
      
	 
      
	
                By

              	
                /s/
      Robert D. Campbell

              	 
      
	
                Its

              	
                Treasurer

              	 
      

      

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
EXHIBIT
A

       

      Updated
Schedules

       

      See
attached.

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      EXHIBIT
B

       

      Closing
Checklist

       

      See
attached.

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