Document:

Exhibit 4.33

 

EXECUTION COPY

 

SECOND PRIORITY INDEMNITY,
SUBROGATION and CONTRIBUTION AGREEMENT dated as of June 27, 2001, as
amended and restated as of May 28, 2003 (as amended, supplemented or
otherwise modified from time to time, this “Agreement”), among RITE AID
CORPORATION, a Delaware corporation (the “Borrower”), each subsidiary of
the Borrower listed on Schedule I hereto (the “Subsidiary Guarantors”) and
WILMINGTON TRUST COMPANY, a Delaware banking corporation, as collateral trustee
(in such capacity, the “Second Priority Collateral Trustee”) for the Second Priority
Debt Parties.

 

Reference is made to the
Second Priority Indemnity, Subrogation and Contribution Agreement dated as of June 27,
2001 (as amended, supplemented or otherwise modified from time to time prior to
the Restatement Effective Date, the “Original Second Priority Indemnity,
Subrogation and Contribution Agreement”), among each subsidiary of
the Borrower listed on Schedule I thereto and the subsidiaries of the
Borrower that became parties thereto as provided in Section 12 thereof
(collectively, the “Original
Subsidiary Guarantors”) and the Second Priority Collateral Trustee. The
Original Subsidiary Guarantors and the Second Priority Collateral Trustee now
wish to amend and restate the Original Second Priority Indemnity, Subrogation
and Contribution Agreement in its entirety as set forth herein. Capitalized
terms used herein and not defined herein shall have the meanings assigned to
such terms in the Definitions Annex annexed hereto (as amended, supplemented or
otherwise modified from time to time and by this reference incorporated herein.

 

Each of the Subsidiary
Guarantors is a wholly owned subsidiary of the Borrower and acknowledges that
it has derived and will continue to derive substantial benefit from the credit
extended under the Second Priority Debt Documents. It is a condition precedent,
among other conditions, to the effectiveness of the Senior Credit Agreement
that the Subsidiary Guarantors execute and deliver an agreement in the form hereof.

 

Accordingly, the Borrower,
each Subsidiary Guarantor and the Second Priority Collateral Trustee agree as
follows:

 

SECTION 1.             Indemnity and Subrogation. In addition
to all such rights of indemnity and subrogation as the Subsidiary Guarantors may have
under applicable law (but subject to Section 3), the Borrower agrees that (a) in
the event a payment shall be made by any Subsidiary Guarantor under the Second
Priority Subsidiary Guarantee Agreement, the Borrower shall indemnify such
Subsidiary Guarantor for the full amount of such payment and such Subsidiary
Guarantor shall be subrogated to the rights of the Person to whom such payment
shall have been made to the extent of such payment and (b) in the event
and to the extent any assets of 

 

1

 

any Subsidiary Guarantor
shall be sold pursuant to any Second Priority Collateral Document to satisfy a
claim of any Second Priority Debt Party, the Borrower shall indemnify such
Subsidiary Guarantor in an amount equal to the greater of the book value or the
fair market value of the assets so sold.

 

SECTION 2.             Contribution and
Subrogation. Each Subsidiary Guarantor (a “Contributing Subsidiary
Guarantor”) agrees (subject to Section 3) that, in the event a
payment shall be made by any other Subsidiary Guarantor under the Second
Priority Subsidiary Guarantee Agreement or assets of any other Subsidiary
Guarantor shall be sold pursuant to any Second Priority Collateral Document to
satisfy a claim of any Second Priority Debt Party, and such other Subsidiary
Guarantor (the “Claiming
Subsidiary Guarantor”) shall not have been fully indemnified by the
Borrower as provided in Section 1, the Contributing Subsidiary Guarantor
shall indemnify the Claiming Subsidiary Guarantor in an amount equal to the
amount of such payment or the greater of the book value or the fair market
value of such assets, as the case may be, in each case multiplied by a
fraction of which the numerator shall be the net worth of the Contributing
Subsidiary Guarantor on May 28, 2003 (or, in the case of any Subsidiary
Guarantor becoming a party hereto pursuant to Section 12 after such date,
the date of the Supplement hereto executed and delivery by such Subsidiary
Guarantor) and the denominator shall be the aggregate net worth of all the
Subsidiary Guarantors on May 28, 2003 (or, in the case of any Subsidiary
Guarantor becoming a party hereto pursuant to Section 12 after such date,
the date of the Supplement hereto executed and delivered by such Subsidiary
Guarantor). Any Contributing Subsidiary Guarantor making any payment to a
Claiming Subsidiary Guarantor pursuant to this Section 2 shall be
subrogated to the rights of such Claiming Subsidiary Guarantor under Section 1
to the extent of such payment.

 

SECTION 3.             Subordination. Notwithstanding
any provision of this Agreement to the contrary, all rights of the Subsidiary
Guarantors under Sections 1 and 2 and all other rights of indemnity,
contribution or subrogation under applicable law or otherwise shall be fully subordinated
to the indefeasible payment in full in cash of the Second Priority Debt
Obligations. No failure on the part of the Borrower or any Subsidiary
Guarantor to make the payments required by Sections 1 and 2 (or any other
payments required under applicable law or otherwise) shall in any respect limit
the obligations and liabilities of any Subsidiary Guarantor with respect to its
obligations hereunder, and each Subsidiary Guarantor shall remain liable for
the full amount of the obligations of such Subsidiary Guarantor hereunder.

 

SECTION 4.             Termination. This
Agreement shall survive and be in full force and effect (a) so long as any
Second Priority Debt Obligation is outstanding and has not been indefeasibly
paid in full in cash and (b) if at any time payment, or any part thereof,
of any Second Priority Debt Obligation is rescinded or must otherwise be
restored by any Second Priority Debt Party or any Subsidiary Guarantor upon the
bankruptcy or reorganization of the Borrower, any Subsidiary Guarantor or otherwise.

 

SECTION 5.         Governing
Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.

 

2

 

SECTION 6.             No Waiver; Amendment. (a)  No
failure on the part of the Second Priority Collateral Trustee or any
Subsidiary Guarantor to exercise, and no delay in exercising, any right, power
or remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy by the Second Priority
Collateral Trustee or any Subsidiary Guarantor preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. All
remedies hereunder are cumulative and are not exclusive of any other remedies provided
by law. None of the Second Priority Collateral Trustee and the Subsidiary
Guarantors shall be deemed to have waived any rights hereunder unless such
waiver shall be in writing and signed by such parties.

 

(b)         Except as
otherwise provided in the Collateral Trust and Intercreditor Agreement, neither
this Agreement nor any provision hereof may be waived, amended or modified
except pursuant to a written agreement executed by each Subsidiary Guarantor
affected thereby and by the Second Priority Collateral Trustee, with the prior
written consent of the Second Priority Instructing Group, provided
that (i) any provision of this Agreement may be waived by the Second
Priority Instructing Group pursuant to a letter or agreement executed by the
Second Priority Collateral Trustee or by telecopy transmission from the Second
Priority Collateral Trustee, in either case with the prior written consent of
the Second Priority Instructing Group and (ii) any amendment, waiver,
supplement or other modification which by its terms adversely affects the
Second Priority Debt Parties under a particular Second Priority Debt Facility
in a manner materially different from its effect on the other Second Priority
Debt Facilities shall only be effective with the consent of the Second Priority
Representative for each Second Priority Debt Facility so adversely affected.

 

SECTION 7.             Notices. All
communications and notices hereunder shall be in writing and given as provided
in the Second Priority Subsidiary Guarantee Agreement and addressed as
specified therein.

 

SECTION 8.             Binding Agreement;
Assignments. Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the successors
and assigns of such party, and all covenants, promises and agreements by or on
behalf of the parties that are contained in this Agreement shall bind and inure
to the benefit of their respective successors and assigns. Neither the Borrower
nor any Subsidiary Guarantor may assign or transfer any of its rights or
obligations hereunder (and any such attempted assignment or transfer shall be
void) without the prior written consent of the Second Priority Instructing
Group. Notwithstanding the foregoing, at the time any Subsidiary Guarantor is
released from its obligations under the Second Priority Subsidiary Guarantee
Agreement in accordance with such Second Priority Subsidiary Guarantee
Agreement and the Second Priority Debt Documents, such Subsidiary Guarantor
automatically will cease to have any rights or obligations under this
Agreement.

 

SECTION 9.             Survival of Agreement;
Severability. (a)  All covenants and agreements made by the
Borrower and each other Obligor herein and in the certificates or other
instruments prepared or delivered in connection with this Agreement or the
other Second Priority Debt Documents shall be considered to have been relied
upon by the Second Priority Collateral Trustee, the other Second Priority Debt
Parties and each Subsidiary Guarantor and shall survive the effectiveness of
the Second Priority Debt Documents, and shall continue in full force and

 

3

 

effect as long as the
principal of or any accrued interest under any Second Priority Debt Document or
any other fee or amount payable under this Agreement or under any other Second
Priority Debt Document is outstanding and unpaid.

 

(b)         In case any
one or more of the provisions contained in this Agreement should be held
invalid, illegal or unenforceable in any respect, no party hereto shall be
required to comply with such provision for so long as such provision is held to
be invalid, illegal or unenforceable, but the validity, legality and
enforceability of the remaining provisions contained herein shall not in any
way be affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.

 

SECTION 10.       Counterparts. This
Agreement may be executed in counterparts (and by different parties hereto
on different counterparts), each of which shall constitute an original, but all
of which when taken together shall constitute a single contract. This Agreement
shall be effective with respect to any Subsidiary Guarantor when a counterpart bearing
the signature of such Subsidiary Guarantor shall have been delivered to the
Second Priority Collateral Trustee. Delivery of an executed signature page to
this Agreement by facsimile transmission shall be as effective as delivery of a
manually signed counterpart of this Agreement.

 

SECTION 11.       Rules of
Interpretation. Reference in this Agreement to “Articles”, “Sections”,
“Schedules” or “Exhibits” shall be to Articles, Sections, Schedules or Exhibits
of or to this Agreement unless otherwise specifically provided. Any defined
terms may, unless the context otherwise requires, be used in the singular or
plural depending on the reference. “Include” or “includes” and “including”
shall be deemed to be followed by “without limitation” whether or not they are
in fact followed by such words or words of like import. “Writing”, “written”
and comparable terms refer to printing, typing and other means of reproducing
words in a visible form. References to any agreement or contract are to such
agreement or contract as amended, modified or supplemented from time to time in
accordance with the terms hereof and thereof. References to any Person include
the successors and assigns of such Person. References “from” or “through” any
date mean, unless otherwise specified, “from and including” or “through and
including”, respectively.

 

SECTION 12.       Additional Subsidiary
Guarantors. Pursuant to the Second Priority Debt Documents,
certain Domestic Subsidiaries of the Borrower that were not in existence on the
Restatement Effective Date are required to enter into the Second Priority
Subsidiary Guarantee Agreement as a Subsidiary Guarantor upon becoming a wholly
owned Domestic Subsidiary. Upon execution and delivery, after the Restatement
Effective Date, by the Second Priority Collateral Trustee and such a Subsidiary
of an instrument in the form of Annex 1 hereto, such Subsidiary shall
become a Subsidiary Guarantor hereunder with the same force and effect as if
originally named as a Subsidiary Guarantor hereunder. The execution and
delivery of any instrument adding an additional Subsidiary Guarantor as a party
to this Agreement shall not require the consent of any Subsidiary Guarantor
hereunder. The rights and obligations of each Subsidiary Guarantor hereunder
shall remain in full force and effect notwithstanding the addition of any new
Subsidiary Guarantor as a party to this Agreement.

 

4

 

IN WITNESS WHEREOF. the
parties hereto have caused this Second Priority Indemnity, Subrogation and
Contribution Agreement to be executed by their duly authorized officers as of
the date first appearing above.

 

	
   

  	
   

  	
  RITE AID CORPORATION, as
  Borrower,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Robert B. Sari

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EACH OF THE SUBSIDIARIES
  LISTED

  ON SCHEDULE I HERETO, as Subsidiary

  Guarantors

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Robert B. Sari

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WILMINGTON TRUST COMPANY,
  as

  Second Priority Collateral Trustee,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  

 

5

 

IN WITNESS WHEREOF, the
parties hereto have caused this Second Priority Indemnity, Subrogation and
Contribution Agreement to be executed by their duly authorized officers as of
the date first appearing above.

 

	
   

  	
   

  	
  RITE AID CORPORATION, as
  Borrower,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EACH OF THE SUBSIDIARIES
  LISTED

  ON SCHEDULE I HERETO, as Subsidiary

  Guarantors,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WILMINGTON TRUST COMPANY,
  as

  Second Priority Collateral Trustee,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By.

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Bruce L. Bisson

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
								

 

6

 

Annex 1 to

the Second Priority Indemnity, Subrogation
and

Contribution Agreement

 

SUPPLEMENT NO. [ ]
dated as of [ ], to the Second Priority Indemnity, Subrogation and Contribution
Agreement dated as of June 27, 2001, as amended and restated as of May 28,
2003 (as amended, supplemented or otherwise modified from time to time, the “Second Priority
Indemnity, Subrogation and Contribution Agreement”), among RITE AID
CORPORATION, a Delaware corporation (the “Borrower”), each Subsidiary of
the Borrower listed on Schedule I thereto (the “Subsidiary Guarantors”), and
WILMINGTON TRUST COMPANY, a Delaware banking corporation (“Wilmington”),
as collateral trustee (the “Second Priority Collateral Trustee”) for the holders from
time to time of the Second Priority Debt Obligations.

 

A.                                   Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Second Priority
Indemnity, Subrogation and Contribution Agreement.

 

B.                                     The Borrower and the Subsidiary Guarantors have entered into
the Second Priority Indemnity, Subrogation and Contribution Agreement as a
condition precedent to the effectiveness of the Senior Credit Agreement. Pursuant
to the Second Priority Debt Documents, certain Domestic Subsidiaries of the
Borrower that were not in existence on the Restatement Effective Date are
required to enter into the Second Priority Subsidiary Guarantee Agreement as a
Subsidiary Guarantor upon becoming a wholly-owned Domestic Subsidiary.
Section 12 of the Second Priority Indemnity, Subrogation and Contribution
Agreement provides that additional Domestic Subsidiaries of the Borrower may become
Subsidiary Guarantors under the Second Priority Indemnity, Subrogation and
Contribution Agreement by execution and delivery of an instrument in the form of
this Supplement. The undersigned Subsidiary of the Borrower (the “New Subsidiary
Guarantor”) is executing this Supplement in accordance with the
requirements of the Second Priority Debt Documents to become a Subsidiary
Guarantor under the Second Priority Indemnity, Subrogation and Contribution
Agreement.

 

Accordingly, the Second Priority Collateral Trustee
and the New Subsidiary Guarantor agree as follows:

 

SECTION 1.   In accordance with Section 12
of the Second Priority Indemnity, Subrogation and Contribution Agreement, the
New Subsidiary Guarantor by its signature below becomes a Subsidiary Guarantor
under the Second Priority Indemnity, Subrogation and Contribution Agreement
with the same force and effect as if originally named therein as a Subsidiary
Guarantor and the New Subsidiary Guarantor hereby agrees to all the terms and
provisions of the Second Priority Indemnity, Subrogation and Contribution
Agreement applicable to it as a Subsidiary Guarantor thereunder. Each reference
to a “Subsidiary Guarantor” in the Second Priority Indemnity, Subrogation and
Contribution Agreement shall be

 

7

 

deemed to include the New Subsidiary Guarantor. The Second
Priority Indemnity, Subrogation and Contribution Agreement is hereby
incorporated herein by reference.

 

SECTION 2.   The New Subsidiary
Guarantor represents and warrants to the Second Priority Collateral Trustee and
the other Second Priority Debt Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.

 

SECTION 3.   This Supplement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which
when taken together shall constitute a single contract. This Supplement shall
become effective when the Second Priority Collateral Trustee shall have
received counterparts of this Supplement that, when taken together, bear the
signatures of the New Subsidiary Guarantor and the Second Priority Collateral
Trustee. Delivery of an executed signature page to this Supplement by
facsimile transmission shall be as effective as delivery of a manually signed
counterpart of this Supplement.

 

SECTION 4.   Except as expressly
supplemented hereby, the Second Priority Indemnity, Subrogation and
Contribution Agreement shall remain in full force and effect.

 

SECTION 5.                            THIS SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

SECTION 6.   In case any one or
more of the provisions contained in this Supplement should be held invalid,
illegal or unenforceable in any respect, neither party hereto shall be required
to comply with such provision for so long as such provision is held to be invalid,
illegal or unenforceable, but the validity, legality and enforceability of the
remaining provisions contained herein and in the Second Priority Indemnity,
Subrogation and Contribution Agreement shall not in any way be affected or
impaired. The parties hereto shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.

 

SECTION 7.   All communications
and notices hereunder shall be in writing and given as provided in Section 7
of the Second Priority Indemnity, Subrogation and Contribution Agreement. All
communications and notices hereunder to the New Subsidiary Guarantor shall be
given to it at the address set forth under its signature.

 

SECTION 8.   The New Subsidiary
Guarantor agrees to reimburse the Second Priority Collateral Trustee for its
reasonable out-of-pocket expenses in connection with this Supplement, including
the reasonable fees, other charges and disbursements of counsel for the Second
Priority Collateral Trustee.

 

8

 

IN WITNESS WHEREOF, the New Subsidiary Guarantor and
the Second Priority Collateral Trustee have duly executed this Supplement to
the Second Priority Indemnity, Subrogation and Contribution Agreement as of the
day and year first above written.

 

	
   

  	
   

  	
  [NAME OF NEW SUBSIDIARY
  GUARANTOR],

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WILMINGTON TRUST COMPANY,
  as Second

  Priority Collateral Trustee,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  

 

9

 

Schedule I

to Supplement No.      
to the Second Priority Indemnity,

Subrogation and Contribution Agreement

 

Subsidiary Guarantors

 

10

 

ANNEX 2

 

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.

 

“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 (i) in the case of a transaction
involving a Capital Lease, the amount as of such date of Capital Lease
Obligations with respect thereto and (ii) 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.

 

1

 

“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 Restatement
Effective Date; provided, however, that (i) the aggregate
consideration received therefor (including the fair market value of any
non-cash consideration) shall not exceed $75,000,000 in any fiscal year of Rite
Aid (calculated without regard to Sale and Leaseback Transactions permitted by Section 6.01(vii),
(xii) and (xiii) of the Senior Credit Agreement) and (ii) 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.

 

“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.

 

“Capital Markets Transaction” means the
receipt by the Borrower or a Subsidiary of proceeds 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, other than
any proceeds received by the Borrower or a Subsidiary in respect of and
issuance or incurrence of (A) Indebtedness or Attributable Debt pursuant
to Sections 6.01(a)(v), (vi), (vii), (viii), (xii) or (xiii) of the Senior
Credit Agreement or (B) Refinancing Indebtedness pursuant to Section 6.01(a)(ii) of
the Senior Credit Agreement.

 

“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 

 

2

 

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 Agents 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 ownership of voting securities, by
contract or otherwise, and the terms “Controlling” and “Controlled” shall 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).

 

“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.

 

3

 

“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, (b) the
Indenture dated as of August 1, 1993, between Rite Aid and Morgan Guaranty
Trust Company of New York, as trustee, (c) the Indenture dated as September 10,
1997, between Rite Aid and Harris Trust and Savings Bank, as trustee and (d) the
Indenture dated as of September 22, 1998, between Rite Aid and Harris
Trust and Savings Bank, as trustee.

 

“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.

 

“8.125% 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.

 

“11.25% Senior Notes” means the 11.25% Senior
Notes of the Borrower due 2008 issued pursuant to the Unsecured Note Indenture
and any Registered Equivalent Notes issued in exchange therefor.

 

“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.

 

“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

 

4

 

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.

 

“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.

 

“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
Revolving Commitments, Revolving Credit Exposure, unused Term Loan Commitments
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.

 

“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

 

5

 

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 any Capital Markets Transaction, an amount
equal to the cash proceeds received by the Borrower or any of the Subsidiaries
from or in respect of such Capital Markets Transaction, 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 Capital Markets
Transaction; and

 

(c)                                  with respect to a Casualty/Condemnation, the amount of
Casualty/Condemnation Proceeds.

 

“9.5% Note Indenture” means the Indenture
dated as of February 12, 2003 among Rite Aid, the Subsidiary Guarantors
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.

 

“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.

 

6

 

“9.25% Notes” means the 9.25% Senior
Unsecured Notes of Rite Aid due 2013 issued pursuant to the 9.25% Note
Indenture and any Registered Equivalent Notes issued in exchange therefor.

 

“Obligors” means Rite Aid, the Subsidiary
Guarantors, the Subsidiary Loan Parties and any other Person who is liable for
any of the Secured Obligations.

 

“Permitted Disposition” means any of the
following:

 

(i)                                     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;

 

(ii)                                  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;

 

(iii)                               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);

 

(iv)                              Basket Asset Sales; and

 

(v)                                 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 (i) direct obligations of the United States or any agency
thereof, or obligations guaranteed by the United States or any agency thereof, (ii) commercial
paper rated at least A-1 by S&P and P-1 by Moody’s, (iii) 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, (iv) repurchase
agreements with respect to securities described in clause (i) above
entered into with an office of a bank or trust company meeting the criteria
specified in clause (iii) above, provided in each case that such
investment matures within one year from the date of acquisition thereof by such
Person or (v) money market mutual funds at least 80% the assets of which
are held in investments referred to in clauses (i) through (iv) 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, (i) the permanent repayment of outstanding loans (or obligations
in respect of Attributable Debt) under such Debt Facility, (ii)

 

7

 

the permanent reduction of
outstanding lending commitments under such Debt Facility or (iii) 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).

 

“Reduction Event” means each of the
following:

 

(i)   any Senior Collateral Disposition or any
other Asset Sale, except in each case any Permitted Disposition or in
connection with any Sale and Leaseback Transaction permitted under Section 6.01(a)(vii),
(xii) or (xiii) of the Senior Credit Agreement;

 

(ii)   any Casualty/Condemnation; and

 

(iii)   any Capital Markets Transaction; provided,
however, that Capital Markets Transactions (or portions thereof)
consummated on or after the Restatement Date resulting in receipt of initial
cumulative Net Cash Proceeds in the amount of up to $500,000,000 shall not be
deemed to constitute Reduction Events (except to the extent cumulative Net Cash
Proceeds in excess of such amount are generated by any such Capital Markets
Transaction); and provided further, however, that any Capital
Markets Transaction or portions thereof the Net Cash Proceeds of which are
required (without regard to this proviso) to be applied to Reductions pursuant
to clause (i) of the first sentence of Section 2.11(d) will in
any event be deemed to constitute Reduction Events and will be disregarded for
purposes of calculations when such $500,000,000 limit has been reached.

 

“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 each of the Senior
Collateral Agents and the Second Priority Representatives.

 

“Restatement Effective Date” means the date
on which the Senior Credit Agreement becomes effective pursuant to its terms.

 

“Restatement Date Indentures” mean,
collectively, (a) the Unsecured Note Indenture, (b) the 12.5% Note
Indenture, (c) the 9.5% Note Indenture, (d) the 8.125% Note
Indenture, (e) the 9.25% Note Indenture and (f) the 4.75% Note
Indenture.

 

“Rite Aid” means Rite Aid Corporation, a
Delaware corporation, and its successors.

 

8

 

“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 12.5% Notes, 9.5% Notes and 8.125% 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 with the
other Second Priority Debt Obligations and (ii) if issued on or after the
Restatement Effective Date, matures after April 30, 2008; 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.

 

9

 

“Second Priority Debt Obligations” means with
respect to any series, issue or class of Second Priority Debt, (i) all
principal of, and interest (including without limitation, any interest which
accrues after the 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, (ii) all other amounts payable to the related
Second Priority Debt Parties under the related Second Priority Debt Documents
and (iii) 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 Second Priority 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 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 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 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 Restatement Effective Date) in favor
of the Second Priority Collateral Trustee for the benefit of the Second
Priority Debt Parties.

 

“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.

 

10

 

“Senior Collateral” means all the “Collateral”
as defined in any Senior Collateral Document.

 

“Senior Collateral Agents” means Citicorp
North America, Inc. and JPMorgan Chase Bank, each in its capacity as a
senior collateral processing co-agent under the Senior Collateral Documents,
and their successors.

 

“Senior Collateral Disposition” means (i) 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 Lien with respect thereto in connection with such sale, transfer
or other disposition), other than a Permitted Disposition or (ii) 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 May 28, 2003, among Rite Aid, the Senior Lenders
and Citicorp North America, Inc., as administrative agent and as Senior
Collateral Agents for the Senior Lenders.

 

“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 Restatement Effective
Date) and the Senior Collateral Agents.

 

“Senior Hedging Agreement” means any Hedging
Agreement entered into with Rite Aid or any Subsidiary, if the applicable
counterparty was a Senior Lender or an Affiliate thereof (i) on the
Effective Date, in the case of any Hedging Agreement entered into prior to the
Restatement Effective Date, or (ii) at the time the Hedging Agreement was
entered into, in the case of any Hedging Agreement entered into on or after the
Restatement Effective Date.

 

“Senior Lender” means a “Lender” as defined
in the Senior Credit Agreement.

 

“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 and the Senior Collateral Documents.

 

11

 

“Senior Obligation Payment Date” means the
date on which (i) the Senior Obligations have been paid in full, (ii) all
lending commitments under the Senior Credit Agreement have been terminated and (iii) 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 (i) the
principal of each loan made under the Senior Credit Agreement, (ii) all
reimbursement and cash collateralization obligations in respect of letters of
credit issued under the Senior Credit Agreement, (iii) all monetary
obligations of the Borrower or any Subsidiary under each Senior Hedging
Agreement entered into (x) prior to the Restatement Effective Date with
any counterparty that was a Senior Lender (or an Affiliate thereof) on the Restatement
Effective Date or (y) on or after the Effective Date with any counterparty
that was a Senior Lender (or an Affiliate thereof) at the time such Senior
Hedging Agreement was entered into, (iv) 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 reorganization of the Borrower
or any Subsidiary Loan Party, whether or not allowed or allowable as a claim in
such proceeding), (v) all other amounts payable by the Borrower or any
Subsidiary under the Senior Loan Documents and (vi) all increases,
renewals, extensions and Refinancings of the foregoing.

 

“Senior Secured Parties” means each party to
the Senior Credit Agreement other than any Senior 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.

 

“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 Restatement Effective Date) in favor of the Senior Collateral
Agents 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 Restatement Effective Date) in favor of the Senior Collateral
Agents 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 corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by the Borrower.

 

“Subsidiary Guarantor” means each Subsidiary
that is party to any Second Priority Collateral Document.

 

12

 

“Subsidiary Loan Party” means each Subsidiary
that is party to any Senior Collateral Document.

 

“Triggering Event” shall have the meaning
assigned to such term in the Collateral Trust and Intercreditor Agreement.

 

“12.5% Note Exchange Agreement” means the
Note Exchange Agreement entered into as of June 27, 2001, by and among
Rite Aid and the entities listed on Schedule I to the agreement relating
to the issuance of the Exchange Notes in exchange for $152,025,000 principal
amount of Rite Aid’s 10.5% Senior Secured Notes due 2002.

 

“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% Note Registration Rights Agreement”
means the Exchange and Registration Rights Agreement, dated as of June 27,
2001, among Rite Aid, each of the Subsidiary Guarantors and the Holders from
time to time as provided therein.

 

“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.

 

“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.

 

“Unsecured Note Indenture” means the
Indenture dated as of June 27, 2001, between Rite Aid and BNY Midwest
Trust Company, as trustee, relating to the 11.25% Senior Notes.

 

13

 

Schedule I

 

Subsidiary
Guarantors

 

112
Burleigh Avenue Norfolk, LLC

1515
West State Street Boise, Idaho, LLC

1525
Cortyou Road - Brooklyn Inc.

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.

Baltimore/Annapolis
Boulevard and Governor Richie Highway-Glen Burnie, Maryland. LLC

Broadview
and Wallings- Broadview Heights Ohio, Inc.

Central
Avenue and Main Street - Petal, MS, LLC

Dominion
Action Four Corporation

Dominion
Action One Corporation

Dominion
Action Three Corporation

Dominion
Action Two Corporation

Dominion
Drug Stores Corp.

Drug
Fair, Inc.

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

Gratiot &
Center - Saginaw Township, Michigan, 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

 

1

 

Name
Rite, L.L.C.

Northline &
Dix - Toledo - Southgate. LLC

Ocean
Acquisition Corporation

P.L.D.
Enterprises. Inc.

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.

PL
Xpress, Inc.

Portfolio
Medical Services Inc.

Ram-Utica, Inc.

RDS
Detroit, Inc.

Read’s
Inc.

Rite
Aid Drug Palace, Inc.

Rite
Aid Hdqtrs. Corp.

Rite
Aid of Alabama, Inc.

Rite
Aid of Connecticut, Inc.

Rite
Aid of Delaware, Inc.

Rite
Aid of Florida, Inc.

Rite
Aid of Georgia, Inc.

Rite
Aid of Illinois, Inc.

Rite
Aid of Indiana, Inc.

Rite
Aid of Kentucky, Inc.

Rite
Aid of 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 Virginia, 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
Aid Venturer #1, Inc.

Rite
Fund, Inc.

Rite
Investments Corp.

 

2

 

Rx
Choice, Inc.

Seven
Mile and Evergreen - Detroit, LLC

Silver
Springs Road - Baltimore, Maryland/One, LLC

Silver
Springs Road - Baltimore, Maryland/Two, LLC

Sophie
One Corp.

State &
Fortification Streets - Jackson, Mississippi, LLC

State
Street and Hill Road - Gerard, Ohio. LLC

Super
Ice Cream Suppliers, Inc.

Super
Pharmacy Network. Inc.

Super
Tobacco Distributors, Inc.

The
Lane Drug Company

The
Muir Company Thrifty Corporation

Thrifty
PayLess, Inc.

Tyler
and Sanders Roads, Birmingham - Alabama, LLC

Virginia
Corporation

 

3Exhibit
10.8

 

AMENDMENT NO. 2 TO

EMPLOYMENT AGREEMENT

 

THIS
AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT (“Amendment No. 2”), by and
between Rite Aid Corporation, a Delaware corporation (the “Company”) and Robert
G. Miller (“Executive”) is dated as of April 28, 2008 and shall be subject
to and become effective on the close of business on the date (hereinafter, the “Effective
Date”) of Executive’s re-election as a director at the Company’s 2008 annual
general meeting (“AGM”) of stockholders (the “2008 AGM Date”).

 

WHEREAS,
Executive and Company have previously entered into that certain Employment
Agreement dated as of April 9, 2003, as supplemented by side letters dated
February 12, 2002, February 10, 2004 and November 28, 2006 from
Company’s counsel to Executive and as amended by Amendment No. 1 dated as
of April 28, 2005 (collectively, the “Employment Agreement”);

 

WHEREAS,
the Company desires to secure the continued services of Executive following the
2008 AGM Date; and

 

WHEREAS,
the Board of Directors, based on the recommendation of the Nominating and
Governance Committee, intends to nominate Executive to be re-elected as a
director at the 2008 AGM for a three-year term through the 2011 AGM Date;

 

NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Company and Executive hereby agree as
follows:

 

1.
Defined Terms. Subject to earlier termination in accordance with the
provisions of Section 4 of the Employment Agreement, as amended hereby,
the terms “Employment Period” and “Extended Term” mean the period commencing on
the Effective Date and ending on the later of (i) June 30, 2009 and (ii) the
date one year after the 2008 AGM Date, superseding and modifying any
conflicting or inconsistent provision in the Employment Agreement. Any
extension of the Extended Term after such period shall be subject to mutual
agreement between the Company and Executive. 
All other capitalized terms used herein and not otherwise defined shall
have the respective meanings set forth in the Employment Agreement.

 

2.
Amendment of Section 2-Agreement of Employment.  Nothing in the Employment Agreement as
amended hereby shall affect Executive’s continued service on the Board through
the 2011 AGM Date, subject to Executive’s re-election as a director on the 2008
AGM Date and Executive’s being able and willing to serve through the balance of
such term. During and until the expiration or termination of the Extended Term,
Executive shall not receive any annual director fees payable to non-employee
directors.

 

3.
Duties.  During the Extended Term,
Executive will continue to assist management in setting strategic goals and
business planning; consult with the chief executive officer and other executive
officers on other matters as reasonably requested and assist with strategic
decisions.  Executive shall devote such
attention and time as he believes in good faith shall be reasonably 

 

 

necessary
to carry out his duties, provided in no event shall Executive’s duties (or his
travel on Company business) be inconsistent with his personal and other
business activities from time-to-time, including his current full-time
employment as chief executive officer of Albertson’s LLC.

 

4.
Compensation.  From and after the
2008 AGM Date until expiration or termination of the Extended Term, Executive
shall receive monthly base salary of $5,000 (pro-rated for any partial
month).  Executive shall also continue to
be entitled to continuation of the benefits as provided under the Employment
Agreement, except as set forth in the next succeeding sentence, and
continuation of the deferred compensation under the Employment Agreement.  From and after the Effective Date, Executive
shall no longer receive the perquisites set forth in clauses (i), (ii) and
(iv) of the second sentence of Section 3(c) of the Original
Employment Agreement, as amended, but the remaining benefits under Section 3(c) of
the Original Employment Agreement, as amended, shall remain in full force and
effect.

 

5.  Employment Agreement to
Remain in Effect. Except as modified by this Amendment No. 2, the
Employment Agreement shall remain in full force and effect in accordance with
its terms.  In the event of a conflict
between the provisions of this Amendment No. 2 and the Employment
Agreement, this Amendment No. 2 shall be controlling.  The provisions of Sections 10, 11, 12 and 13
of the Original Employment Agreement shall be incorporated by reference into
this Amendment No 1 as if set forth herein.

 

IN WITNESS WHEREOF, Executive has hereunto set Executive’s hand and,
pursuant to due authorization, the Company has caused this Amendment No. 2
to be executed in its name and on its behalf, all as of the date and year first
above written.

 

	
   

  	
  RITE
  AID CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Robert
  B. Sari

  
	
   

  	
  Its:

  	
  Senior
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Robert
  G. Miller

  

 

2

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