7. Indebtedness and Credit Agreements

Following is a summary of indebtedness and lease financing obligations at June 1, 2013 and March 2, 2013:

	June 1, 2013			March 2, 2013

Secured Debt:
Senior secured revolving credit facility due February 2018		542,000			665,000
Tranche 6 Term Loan due February 2020		1,161,000			1,161,000
8.00% senior secured notes (senior lien) due August 2020		650,000			650,000
7.5% senior secured notes (second lien) due March 2017		500,000			500,000
Tranche 1 Term Loan (second lien) due August 2020		470,000			470,000
10.25% senior secured notes (second lien) due October 2019 ($270,000 face value less unamortized discount of $1,313 and $1,364)		268,687			268,636
Other secured		5,267			5,298

		3,596,954			3,719,934
Guaranteed Unsecured Debt:
9.5% senior notes due June 2017 ($810,000 face value less unamortized discount of $5,203 and $5,529)		804,797			804,471
9.25% senior notes due March 2020 ($902,000 face value plus unamortized premium of $4,591 and $4,759)		906,591			906,759

		1,711,388			1,711,230
Unguaranteed Unsecured Debt:
8.5% convertible notes due May 2015		64,188			64,188
7.7% notes due February 2027		295,000			295,000
6.875% fixed-rate senior notes due December 2028		128,000			128,000

		487,188			487,188
Lease financing obligations		116,135			115,179

Total debt		5,911,665			6,033,531
Current maturities of long-term debt and lease financing obligations		(43,401	)		(37,311	)

Long-term debt and lease financing obligations, less current maturities	$	5,868,264		$	5,996,220

Credit Facility

The Company has a senior secured credit facility that consists of a $1,795,000 revolving credit facility and a $1,161,000 senior secured term loan (the "Tranche 6 Term Loan"). Borrowings under the revolving credit facility bear interest at a rate per annum between LIBOR plus 2.25% and LIBOR plus 2.75%, if the Company chooses to make LIBOR borrowings, or between Citibank's base rate plus 1.25% and Citibank's base rate plus 1.75% in each case based upon the amount of revolver availability as defined in the senior secured credit facility. The Company is required to pay fees between 0.375% and 0.50% per annum on the daily unused amount of the revolver, depending on the amount of revolver availability. Amounts drawn under the revolver become due and payable on February 21, 2018. The Tranche 6 Term Loan matures on February 21, 2020 and currently bears interest at a rate per annum equal to LIBOR plus 3.00%, if the Company chooses to make LIBOR borrowings, or at Citibank's base rate plus 2.00%. The Tranche 6 Term Loan is subject to a 1.00% LIBOR floor per annum.

The Company's ability to borrow under the revolver is based upon a specified borrowing base consisting of accounts receivable, inventory and prescription files. At June 1, 2013, the Company had $542,000 of borrowings outstanding under the revolver and had letters of credit outstanding against the revolver of $112,523, which resulted in additional borrowing capacity of $1,140,477.

The senior secured credit facility contains certain restrictions on the ability of the Company and the subsidiary guarantors to accumulate cash on hand, and under certain circumstances, requires the funds in the Company's deposit accounts to be applied first to the repayment of outstanding revolving loans under the senior secured credit facility and then to be held as Collateral for the senior obligations.

The senior credit facility restricts the amount of secured and unsecured debt the Company may have outstanding in addition to borrowings under the senior secured credit facility and existing indebtedness, subject to limitations on the amount of such debt that shall mature or require scheduled payments of principal prior to May 21, 2020. The senior secured credit facility allows the Company to incur an unlimited amount of unsecured debt with a maturity beyond May 21, 2020. However, the Company's second priority secured term loan facilities and the indentures that govern the Company's secured and guaranteed unsecured notes contain restrictions on the amount of additional secured and unsecured debt that can be incurred by the Company. The Company could not incur any additional secured debt assuming a fully drawn revolver and the outstanding letters of credit. The ability to issue additional unsecured debt under the second priority secured term loan facilities and the indentures is generally governed by an interest coverage ratio test. As of June 1, 2013, we had the ability to issue additional unsecured debt under the second lien credit facility and other indentures.

The senior secured credit facility contains additional covenants which place restrictions on the incurrence of debt, the payments of dividends, sale of assets, mergers and acquisitions and the granting of liens. The credit facility has a financial covenant, which is the maintenance of a fixed charge coverage ratio. The covenant requires that, if availability on the revolving credit facility is less than $150,000, the Company must maintain a minimum fixed charge coverage ratio of 1.00 to 1.00. As of June 1, 2013, the Company was in compliance with this financial covenant. The senior secured credit facility also provides for customary events of default.

The Company also has a second priority secured term loan facility, which includes a $470,000 second priority secured term loan (the "Tranche 1 Term Loan"). The Tranche 1 Term Loan matures on August 21, 2020 and currently bears interest at a rate per annum equal to LIBOR plus 4.75%, if the Company chooses to make LIBOR borrowings, or at Citibank's base rate plus 3.75%. The Tranche 1 Term Loan is subject to a 1.00% LIBOR floor per annum.

On June 21, 2013, the Company entered into a new second priority secured term loan facility, which includes a $500,000 second priority secured term loan (the "Tranche 2 Term Loan"). The Company used net proceeds from the Tranche 2 Term Loan, borrowings under its revolving credit facility and available cash to repurchase and repay all of the Company's outstanding $500,000 aggregate principal of 7.5% senior secured notes due 2017. See Note 12.

Substantially all of Rite Aid Corporation's 100 percent owned subsidiaries guarantee the obligations under the senior secured credit facility, second priority secured term loan facilities, secured guaranteed notes and unsecured guaranteed notes. The senior secured credit facility, second priority secured term loan facilities and secured guaranteed notes are secured, on a senior or second priority basis, as applicable, by a lien on, among other things, accounts receivable, inventory and prescription files of the subsidiary guarantors. The subsidiary guarantees related to the Company's senior secured credit facility, second priority secured term loan facilities and secured guaranteed notes and, on an unsecured basis, the unsecured guaranteed notes are full and unconditional and joint and several, and there are no restrictions on the ability of the Company to obtain funds from its subsidiaries. Also, the Company has no independent assets or operations, and subsidiaries not guaranteeing the credit facility, second priority secured term loan facilities and applicable notes are minor. Accordingly, condensed consolidating financial information for the Company and subsidiaries is not presented.

Other Transactions

On July 2, 2013, the Company issued $810,000 of its 6.75% senior notes due 2021. The Company intends to use the net proceeds from the 6.75% notes, borrowings under its revolving credit facility and available cash to repurchase and repay all of the Company's outstanding $810,000 aggregate principal of 9.5% senior notes due 2017. See Note 12.

Maturities

The aggregate annual principal payments of long-term debt for the remainder of fiscal 2014 and thereafter are as follows: 2014—$13,975; 2015—$11,610; 2016—$75,798; 2017—$511,610; 2018—$1,363,610 and $3,820,852 thereafter.