Rite Aid 2010 Annual Report Download - page 85

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RITE AID CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
For the Years Ended February 27, 2010, February 28, 2009 and March 1, 2008
(In thousands, except per share amounts)
11. Indebtedness and Credit Agreement (Continued)
2015 and bears interest at a rate per annum equal to, at the Company’s option, either (a) an adjusted
LIBOR rate (with a LIBOR floor of 3.00% per annum) plus 6.50% or (b) Citibank’s base rate (with a
floor of 4.00% per annum) plus 5.50%. The Company must make mandatory prepayments of the
Tranche 4 Term Loan with the proceeds of certain asset dispositions (subject to certain limitations),
with a portion of any excess cash flow generated by the Company (as defined in the senior secured
credit facility) and with the proceeds of certain issuances of equity and debt (subject to certain
exceptions). If at any time there is a shortfall in the Company’s borrowing base under the senior
secured credit facility, prepayment of the Tranche 4 Term Loan may also be required. All prepayments
of the Tranche 4 Term Loan occurring on or prior to the third anniversary of the initial borrowing of
the Tranche 4 Term Loan are subject to a prepayment premium in an amount equal to (i) 5.0% of the
principal amount prepaid if such prepayment occurs on or prior to the first anniversary of such
borrowing, (ii) 3.0% of the principal amount prepaid if such prepayment occurs on or prior to the
second anniversary of such borrowing and (iii) 1.0% of the principal amount prepaid if such
prepayment occurs on or prior to the third anniversary of such borrowing.
The senior secured credit facility also restricts the Company and the subsidiary guarantors from
accumulating cash on hand in excess of $200,000 at any time when revolving loans are outstanding (not
including cash located in the Company’s store deposit accounts, cash necessary to cover the Company’s
current liabilities and certain other exceptions) and from accumulating cash on hand with revolver
borrowings in excess of $100,000 over three consecutive business days. The senior secured credit facility
also states that if at any time (other than following the exercise of remedies or acceleration of any
senior obligations or second priority debt and receipt of a triggering notice by the senior collateral
agent from a representative of the senior obligations or the second priority debt) either (a) an event of
default exists under the Company’s senior secured credit facility or (b) the sum of revolver availability
under the Company’s senior secured credit facility and certain amounts held on deposit with the senior
collateral agent in a concentration account is less than $100,000 for three consecutive business days (a
‘‘cash sweep period’’), the funds in our deposit accounts will be swept to a concentration account with
the senior collateral agent and will be applied first to repay outstanding revolving loans under the
senior secured credit facility, and then held as Collateral for the senior obligations until such cash
sweep period is rescinded pursuant to the terms of the Company’s senior secured credit facility.
The senior secured credit facility allows the Company to have outstanding, at any time, up to
$1,500,000 in secured second priority debt and unsecured debt in addition to borrowings under the
senior secured credit facility and existing indebtedness, provided that not in excess of $750,000 of such
secured second priority debt and unsecured debt shall mature or require scheduled payments of
principal prior to three months after June 4, 2014. The senior secured credit facility allows the
Company to incur an unlimited amount of unsecured debt with a maturity beyond three months after
June 4, 2014; however other debentures limit the amount of unsecured debt that can be incurred if
certain interest coverage levels are not met at the time of incurrence of said debt. The senior secured
facility also allows, so long as the senior secured credit facility is not in default, for the repurchase of
any debt with a maturity on or before June 4, 2014, and for the voluntary repurchase of debt with a
maturity after June 4, 2014, if the Company maintains availability on the revolving credit facility of at
least $100,000.
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