Amended And Restated Collateral Trust And Intercreditor Agreement

EXECUTION COPY



AMENDED AND RESTATED COLLATERAL TRUST

AND INTERCREDITOR AGREEMENT



AMENDED AND RESTATED COLLATERAL TRUST AND INTERCREDITOR AGREEMENT dated as of June 27, 2001, as amended and restated as of May 28, 2003, as further amended and restated as of June 5, 2009 (as amended, supplemented or otherwise modified from time to time, this " Agreement "), among RITE AID CORPORATION, a Delaware corporation (" Rite Aid "), each Subsidiary of Rite Aid listed on the signature pages hereto or which becomes a party hereto pursuant to Section 8.11 hereof (each such Subsidiary, individually, a " Subsidiary Guarantor ", and collectively, the " Subsidiary Guarantors "), WILMINGTON TRUST COMPANY, a Delaware banking corporation, as collateral trustee (in such capacity, the " Second Priority Collateral Trustee ") for the holders from time to time of the Second Priority Debt Obligations, CITICORP NORTH AMERICA, INC., a Delaware corporation (" CNAI "), as senior collateral processing agent for the Senior Secured Parties under the Senior Collateral Documents (as further defined in the Definitions Annex attached hereto, the " Senior Collateral Agent "), THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as trustee under the 2017 7.5% Note Indenture, and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as trustee under the 2016 10.375% Note Indenture, and each other Second Priority Representative and Senior Representative which becomes a party hereto pursuant to Section 8.12.



Reference is made to the Senior Debt Documents. The Subsidiary Guarantors have entered into the Senior Subsidiary Guarantee Agreement, pursuant to which they have, jointly and severally, guaranteed the Senior Obligations for the benefit of each Senior Secured Party. Each of the Subsidiary Guarantors has also entered into the Senior Subsidiary Security Agreement and each other Senior Collateral Document to which it is a party to secure, among other things, the Senior Obligations, including its obligations under the Senior Subsidiary Guarantee Agreement, and the Subsidiary Guarantors have pledged collateral to the Senior Collateral Agent under such agreements.



Reference is made to the Second Priority Debt Documents. The Subsidiary Guarantors have entered into the Second Priority Subsidiary Guarantee Agreement, pursuant to which they have, jointly and severally, guaranteed the Second Priority Debt Obligations for the benefit of each Second Priority Debt Party. Each of the Subsidiary Guarantors has also entered into the Second Priority Subsidiary Security Agreement and each other Second Priority Collateral Document to which it is a party to secure, among other things, the Second Priority Debt Obligations, including its obligations under the Second Priority Subsidiary Guarantee Agreement, and the Subsidiary Guarantors have pledged collateral to the Second Priority Collateral Trustee under such agreements.








Rite Aid, the Subsidiary Guarantors and the Second Priority Representatives, on behalf of the Second Priority Debt Parties, have requested the Second Priority Collateral Trustee to act as collateral trustee for the Second Priority Debt Parties hereunder and under the Second Priority Collateral Documents. The Second Priority Collateral Trustee is willing to act as collateral trustee for the Second Priority Debt Parties hereunder and under the Second Priority Collateral Documents on the terms and subject to the conditions set forth in this Agreement.



Rite Aid, the Subsidiary Guarantors and the Senior Representatives, on behalf of the Senior Secured Parties, have requested the Senior Collateral Agent to act as collateral agent for the Senior Secured Parties hereunder and under the Senior Collateral Documents. The Senior Collateral Agent is willing to act as collateral agent for the Senior Secured Parties hereunder and under the Senior Collateral Documents on the terms and subject to the conditions set forth in this Agreement.



The Bank of New York Mellon Trust Company, N.A., is executing this Amended and Restated Collateral Trust and Intercreditor Agreement, in its capacity as Trustee and Class Debt Representative of each of the 7.5% Senior Secured Notes due 2017 and 10.375% Senior Secured Notes due 2016 pursuant to its authority under Section 9.02(b) of each of the 2017 7.5% Note Indenture and 2016 10.375% Note Indenture, including without limitation, any one or more of Sections 9.02(b)(ii)(2), (5) and (8). Rite Aid and the Subsidiary Guarantors represent and warrant to the Bank of New York Mellon Trust Company, N.A. that the amendments contained herein being made on the date hereof are authorized and permitted pursuant to one or more of Sections 9.02(b)(ii)(2), 9.02(b)(ii)(5) and 9.02(b)(ii)(8) of each of the 2017 7.5% Note Indenture and the 2016 10.375% Note Indenture.



Accordingly, the parties hereto hereby agree as follows:



ARTICLE I



Definitions



SECTION 1.01. Incorporation by Reference. Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Definitions Annex, which is hereby incorporated by reference herein with the same effect as set forth in its entirety herein.



SECTION 1.02. Certain Definitions. a)As used in this Agreement, the capitalized terms defined in the recitals hereto shall have the meanings specified therein, and the following terms have the meanings specified below:



" Class Debt " is defined in Section 8.12.



" Class Debt Parties " is defined in Section 8.12.



" Class Debt Representative " is defined in Section 8.12.



" Collateral Account " is defined in Section 3.01.





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" Definitions Annex " means the Definitions Annex, dated as of June 5, 2009, annexed hereto (as amended, supplemented or otherwise modified from time to time).



" Distribution Date " means the date on which any funds are distributed by the Senior Collateral Agent or the Second Priority Collateral Trustee in accordance with the provisions of Section 4.01.



" Event of Default " means any "Event of Default" under any Senior Debt Document or any "Event of Default" under any Second Priority Debt Document.



" Fees " means, with respect to the Second Priority Collateral Trustee, the Senior Collateral Agent, any other Senior Representative or any Second Priority Representative, any fees, expenses, reimbursements or indemnifications payable by Rite Aid or any Subsidiary Guarantor to such Person in such capacity.



"Reduction Event" means any Asset Sale or Casualty/Condemnation, in each case solely to the extent a Reduction would be required in connection therewith.



" Second Priority Class Debt " is defined in Section 8.12.



" Second Priority Class Debt Parties " is defined in Section 8.12.



" Second Priority Class Debt Representative " is defined in Section 8.12.



" Secured Documents " means (a) each Senior Debt Document and (b) each Second Priority Debt Document.



" Secured Obligation s" means, without duplication, (a) the Senior Obligations and (b) the Second Priority Debt Obligations.



" Secured Parties " means (a) the Senior Secured Parties and (b) the Second Priority Debt Parties.



" Senior Class Debt " is defined in Section 8.12.



" Senior Class Debt Parties " is defined in Section 8.12.



" Senior Class Debt Representatives " is defined in Section 8.12.



" Triggering Event " means (x) the occurrence of any Event of Default and, as a result thereof, (A) the acceleration (including any automatic acceleration in connection with any Bankruptcy Proceeding) of the principal amount of any Senior Obligations or Second Priority Debt Obligations under the terms of any Senior Debt Document or any Second Priority Debt Document or (B) the commencement of the exercise of remedies in respect of Collateral (it being understood that the exercise by the Senior Collateral Agent of its cash sweep rights pursuant to Section 9.15 of the Senior Credit Agreement shall not be deemed an exercise of remedies in respect of Collateral) and (y) in either case, (i) receipt by the Senior Collateral Agent and the Second Priority Collateral Trustee of written notice thereof from any Senior Representative (in





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the case of any such Event of Default arising under any Senior Debt Document), or (ii) receipt by the Senior Collateral Agent and the Second Priority Collateral Trustee of written notice thereof from any Second Priority Representative (in the case of any such Event of Default arising under any Second Priority Debt Document).



" Trust Estate " means the right, title and interest of the Second Priority Debt Parties under the Second Priority Collateral Documents.



(b) The words "hereof", "herein" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof. All references herein to Articles or Sections shall, unless otherwise specified, be deemed to refer to Articles and Sections of this Agreement. As used in this Agreement, the singular shall include the plural as the context requires and the following words and phrases shall have the following meanings: (a) " including " means "including but not limited to"; (b) " provisions " means "provisions, terms, covenants and/or conditions"; (c) " lien " means "lien, charge, encumbrance, security interest, mortgage, deed of trust or deed to secure debt"; (d) " obligation " means "obligation, duty, covenant and/or condition"; and (e) " any of the Mortgaged Property " means "the Mortgaged Property or any part thereof or interest therein".



SECTION 1.03. Amendments to Definitions Annex. The parties hereto hereby agree that any amendment of, supplement to or other modification of any defined terms in the Definitions Annex annexed hereto shall automatically cause the same defined term used in any Senior Debt Document and Second Priority Collateral Document to be similarly so amended, supplemented or otherwise modified, and each Senior Class Debt Representative and the Second Priority Collateral Trustee is hereby directed to execute any documents necessary to effectuate such amendments, supplements or modifications to the applicable Additional Senior Debt Documents and Second Priority Collateral Documents, as applicable.





ARTICLE II



Declaration and Acceptance of Trust; Remedies



SECTION 2.01. Declaration and Acceptance of Trust. The Second Priority Collateral Trustee hereby declares, and each of Rite Aid, the Subsidiary Guarantors and the Second Priority Debt Parties agrees, that the Second Priority Collateral Trustee holds the Trust Estate as trustee in trust under this Agreement for the benefit of the Second Priority Debt Parties as provided herein. By acceptance of the benefits of this Agreement, each Second Priority Debt Party (whether or not a signatory hereto) (i) consents to the appointment of the Second Priority Collateral Trustee as trustee hereunder, (ii) confirms that the Second Priority Collateral Trustee shall have the authority to act as the exclusive agent of such Second Priority Debt Party for enforcement of any remedies under or with respect to any Second Priority Collateral Document and the giving or withholding of any consent or approval relating to any Collateral or any Subsidiary Guarantor's obligations with respect thereto and (iii) agrees that, except as provided in this Agreement, it shall not take any action to enforce any of such remedies or give any such consents or approvals.





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SECTION 2.02. Determinations Relating to Collateral. If (i) the Second Priority Collateral Trustee shall receive any written request from Rite Aid or any Subsidiary Guarantor under any Second Priority Collateral Document for consent or approval with respect to any matter or thing relating to any Collateral or any Subsidiary Guarantor's obligations with respect thereto or (ii) there shall be due to or from the Second Priority Collateral Trustee under the provisions of any Second Priority Collateral Document any material performance or the delivery of any material instrument or (iii) the Second Priority Collateral Trustee shall become aware of any nonperformance by any Subsidiary Guarantor of any covenant or any breach of any representation or warranty set forth in any Second Priority Collateral Document, then, in each such event, the Second Priority Collateral Trustee shall advise the Class Debt Representatives of the matter or thing as to which consent has been requested or the performance or instrument required to be delivered or the nonperformance or breach of which the Second Priority Collateral Trustee has become aware. Until the occurrence of the Senior Obligation Payment Date, the Senior Collateral Agent and the Majority Senior Parties shall have the exclusive authority to direct the Second Priority Collateral Trustee's response to any of the events or circumstances contemplated in clauses (i), (ii) and (iii) above.



SECTION 2.03. Remedies. b)Within five Business Days after the occurrence of a Triggering Event, the Second Priority Collateral Trustee shall notify each of the Representatives and Rite Aid in writing that a Triggering Event exists, specifying the nature of such Triggering Event.



(b) Until the Senior Obligation Payment Date, the Senior Collateral Agent and the Majority Senior Parties shall have the exclusive right to exercise any right or remedy with respect to the Collateral and shall have the exclusive right to determine and direct the time, method and place for exercising such right or remedy or conducting any proceeding with respect thereto. Following the Senior Obligation Payment Date, the Second Priority Collateral Trustee and the Second Priority Instructing Group shall have the exclusive right to exercise any right or remedy with respect to the Collateral, and the Second Priority Instructing Group shall have the exclusive right to direct the time, method and place of exercising or conducting any proceeding for the exercise of any right or remedy available to the Second Priority Collateral Trustee with respect to the Collateral, or of exercising any trust or power conferred on the Second Priority Collateral Trustee, or for the taking of any other action authorized by the Second Priority Collateral Documents; provided , however , that nothing in this Section shall impair the right of the Second Priority Collateral Trustee in its discretion to take any action deemed proper by the Second Priority Collateral Trustee and which is not inconsistent with the terms hereof or any such direction by the Second Priority Instructing Group.



(c) In the event the Second Priority Collateral Trustee receives written notice from the Second Priority Instructing Group of any direction given pursuant to paragraph (b) of this Section, the Second Priority Collateral Trustee will give prompt written notice thereof to each Second Priority Representative. The Senior Collateral Agent will give the Second Priority Collateral Trustee and each Second Priority Representative prompt written notice of the occurrence of the Senior Obligation Payment Date.



SECTION 2.04. Right to Make Advances. If an advance of funds shall at any time be required for the preservation or maintenance of any Collateral, the Senior Collateral





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Agent, the Second Priority Collateral Trustee or any Secured Party shall be entitled to make such advance after notice to Rite Aid and the Representatives of its intention to do so but without notice to any other Secured Party. Each such advance shall be reimbursed, with interest accrued from the date such advance was made at the Default Rate, by Rite Aid upon demand by the Senior Collateral Agent, the Second Priority Collateral Trustee or such Secured Party, and if Rite Aid fails to comply with any such demand, out of the proceeds of any Collateral in accordance with the provisions of Section 4.01(b). If any Secured Party shall receive any funds which, under this Section 2.04, belong to the Senior Collateral Agent, the Second Priority Collateral Trustee or any other Secured Party, such Secured Party shall remit such funds promptly to the Senior Collateral Agent or the Second Priority Collateral Trustee for distribution to itself or such other Secured Party, as the case may be, and before such remittance shall hold such funds in trust for the Senior Collateral Agent, the Second Priority Collateral Trustee or such other Secured Party, as the case may be.



SECTION 2.05. Nature of Secured Parties' Rights. All of the Secured Parties shall be bound by any instruction or direction given by the Instructing Group pursuant to this Agreement.





ARTICLE III



Collateral Accounts



SECTION 3.01. Collateral Accounts. The Second Priority Collateral Trustee shall establish and, at all times thereafter until all Second Priority Debt Obligations have been paid in full, there shall be maintained with the Second Priority Collateral Trustee a separate collateral trust account (each, a " Collateral Account ? and collectively, the " Collateral Accounts ") in the name of each of the Second Priority Representatives for the benefit of the Second Priority Debt Parties for which such Second Priority Representative is acting. The Second Priority Collateral Trustee shall deposit in such Collateral Accounts only such funds as are distributable to the relevant Second Priority Representative (or Second Priority Debt Parties for which such Representative acts) in accordance with the provisions of this Agreement. All such funds on deposit in the Collateral Accounts shall be held, applied and disbursed by the Second Priority Collateral Trustee as part of the Trust Estate in accordance with the terms of this Agreement.



SECTION 3.02. Investment of Funds. The Second Priority Collateral Trustee shall invest and reinvest funds on deposit in the Collateral Accounts at any time in Permitted Investments as directed in writing by Rite Aid, and the investment earnings thereon shall, so long as no Event of Default shall have occurred and be continuing, be paid to Rite Aid monthly; provided , however , that if any party other than a holder of Second Priority Debt Obligations claims entitlement to any such investment earnings, the same shall not be released to Rite Aid but shall continue to be held and reinvested by the Second Priority Collateral Trustee pending receipt by the Second Priority Collateral Trustee of joint instructions signed by Rite Aid and such party or a nonappealable court judgment determining the disposition of such earnings. Rite Aid shall bear the risk of loss on any investment made hereunder (except for such losses that





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result from the gross negligence or wilful misconduct of the Second Priority Collateral Trustee in failing to follow proper investment instructions given by Rite Aid pursuant to this Section) and shall, upon demand of the Second Priority Collateral Trustee to Rite Aid, deliver immediately available funds to the Second Priority Collateral Trustee in an amount equal to such loss or losses.





ARTICLE IV



Application of Certain Amounts

Mandatory Prepayments



SECTION 4.01. Application of Proceeds of Collateral After Triggering Event. c)If, following a Triggering Event, any Collateral is sold or otherwise realized upon (whether pursuant to the exercise of any remedy set forth in any Collateral Document, in a Bankruptcy Proceeding or otherwise), the proceeds in respect of such Collateral shall be applied as soon as practicable after receipt as follows:



FIRST: to the Second Priority Collateral Trustee and the Senior Collateral Agent in an amount equal to the Fees thereof which are unpaid as of the applicable Distribution Date and to any Senior Secured Party which has theretofore advanced or paid any such Fees in an amount equal to the amount thereof so advanced or paid by such Senior Secured Party, pro rata based on the amounts of such Fees (or such advance or payment);



SECOND: to the Second Priority Collateral Trustee, the Senior Collateral Agent and any other Senior Secured Party to reimburse to the Second Priority Collateral Trustee, the Senior Collateral Agent and such other Senior Secured Party for the amount of any advance made pursuant to Section 2.04 hereof (with interest thereon at the Default Rate), pro rata based on the amounts so advanced;



THIRD: to the Senior Collateral Agent, for distribution to the Senior Secured Parties to be applied to the payment of the Senior Obligations, pro rata based on the amount of Senior Obligations then due and owing, until the Senior Obligation Payment Date;



FOURTH: to the trustee, administrative agent, security agent or similar agent under each Second Priority Debt Facility, if any, in an amount equal to the Fees thereof which are unpaid as of the applicable Distribution Date and to any Second Priority Debt Party which has theretofore advanced or paid any such Fees in an amount equal to the amount thereof so advanced or paid, pro rata based on the amounts of such Fees (or such advance or payment);



FIFTH: to the trustee, administrative agent, security agent or similar agent under each Second Priority Debt Facility and to any Second Priority Debt Party to reimburse such Second Priority Representative or such Second Priority Debt Party for the amount of any advance made pursuant to Section 2.04 hereof (with interest thereon at the Default Rate), pro rata based on the amounts so advanced;





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SIXTH: to the trustee, administrative agent, security agent or similar agent under each Second Priority Debt Facility for distribution to the Second Priority Debt Parties to be applied to the payment of the Second Priority Debt Obligations, pro rata based on the amount of Second Priority Debt Obligations then due and owing, until all the Second Priority Debt Obligations have been paid in full; and



SEVENTH: after payment in full of all Secured Obligations, to Rite Aid and the Subsidiary Guarantors or their successors or assigns, as their interests may appear, or to whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.



(b) Whenever pursuant to the foregoing provisions of this Section any proceeds are required to be distributed to any Second Priority Representative, then the Second Priority Collateral Trustee or the Senior Collateral Agent, as the case may be, shall effect such distribution only upon receiving written notification from the Second Priority Instructing Group as to the identities of the Second Priority Representatives entitled to receive such distribution and the amounts or percentages of such distribution to which each such Second Priority Representative is entitled and, if requested by the Second Priority Collateral Trustee or the Senior Collateral Agent, the amount of outstanding Second Priority Debt Obligations then due and owing to Second Priority Debt Parties for which each such Second Priority Representative is acting on the basis of which such amounts to be distributed are to be determined. Each of the Second Priority Collateral Trustee and the Senior Collateral Agent shall be fully protected in, and shall not incur or have any liability as a result of, relying on such written notification received by it.



SECTION 4.02. Payment Provisions. For the purposes of applying the provisions of Section 4.01, all interest, fees and other amounts to be paid on any of the Secured Obligations pursuant to the terms of any Secured Document shall, as among the Secured Parties and regardless of whether any such interest, fees or other amounts are or would be recognized or allowed as a claim in any bankruptcy or similar proceeding, be treated as due and owing on the Secured Obligations.



SECTION 4.03. Certain Mandatory Prepayments of Senior Credit Agreement . d)In the event that the Borrower or any of its Subsidiaries shall at any time, or from time to time (but in the case of any sale or disposition of Collateral, only prior to the occurrence of a Triggering Event), receive any Net Cash Proceeds of any Reduction Event, the Borrower shall, in accordance with and to the extent required by the provisions of the Senior Credit Agreement and, to the extent not inconsistent with the provisions of the Senior Credit Agreement and the other Senior Debt Documents, apply an amount equal to such Net Cash Proceeds to Reductions to the Senior Debt Facilities established under the Senior Credit Agreement and the other Senior Debt Documents. So long as no Triggering Event has occurred and is continuing, Net Cash Proceeds of a Reduction Event in excess of those applied in accordance with the foregoing provision of this paragraph shall be applied in accordance with any applicable provisions of the Senior Debt Documents and Second Priority Debt Documents.



(b) In the event the Borrower or any of its Subsidiaries shall, at any time after the occurrence of a Triggering Event, receive any Net Cash Proceeds of any Reduction Event which





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are attributable to Collateral, such Net Cash Proceeds shall be subject to and applied in accordance with the provisions of Section 4.01(a).



(c) Notwithstanding the foregoing, any payment made or to be made by any Subsidiary Guarantor in respect of Second Priority Debt Obligations subsequent to the occurrence of a Triggering Event other than from the proceeds of Collateral shall be subject to, and only made in accordance with, the subordination provisions of the Second Priority Subsidiary Guarantee Agreement.



(d) For the avoidance of doubt, Section 4.03(a) does not itself create any Lien nor does it alter the priorities of Liens which are created by the other Senior Debt Documents and Second Priority Debt Documents.



SECTION 4.04. Cash Sweep; Certain Enforcement Proceeds. e)Notwithstanding the foregoing provisions of this Article IV, at all times during a Cash Sweep Period prior to the occurrence of a Triggering Event, the funds on deposit in the Citibank Concentration Account (as such terms are defined in the Senior Subsidiary Security Agreement as in effect on the 2009 Restatement Effective Date) may be applied in accordance with the provisions of the Senior Credit Agreement, as in effect on the 2009 Restatement Effective Date. After the occurrence of a Triggering Event, funds on deposit in the Citibank Concentration Account consisting of proceeds of Collateral shall be applied in accordance with the provisions of Section 4.01(a). The Borrower and the Subsidiary Guarantors will not deposit funds representing Net Cash Proceeds from Reduction Events in the Citibank Concentration Account or into accounts that are swept into the Citibank Concentration Account pursuant to the Senior Loan Documents.



(b) Notwithstanding the foregoing, for purposes of this Article IV, any proceeds of enforcement of the Second Priority Subsidiary Guarantee Agreement against any Subsidiary Guarantor shall be deemed proceeds of Senior Collateral.





ARTICLE V



Subordination



SECTION 5.01. Perfection and Priority of Security Interests . f)Any and all security interests, assignments, pledges, mortgages, deeds of trust, deeds to secure debt and other liens, charges or encumbrances now existing or hereafter created or arising in favor of the Second Priority Collateral Trustee for the benefit of the Second Priority Debt Parties with respect to the Collateral and securing the Second Priority Debt Obligations are expressly junior in priority, operation and effect to any and all security interests, assignments, pledges and other liens ...