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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(E)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934)
RITE AID CORPORATION
(NAME OF ISSUER)
RITE AID CORPORATION
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(TITLE OF CLASS OF SECURITIES)
767754104
(CUSIP NUMBER OF CLASS OF SECURITIES)
FRANKLIN C. BROWN
EXECUTIVE VICE PRESIDENT
GENERAL COUNSEL
RITE AID CORPORATION
30 HUNTER LANE
CAMP HILL, PA 17011
(717) 761-2633
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS
ON BEHALF OF THE PERSON(S) FILING STATEMENT)
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COPY TO:
NANCY A. LIEBERMAN, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 735-3000
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JANUARY 10, 1994
(DATE TENDER OFFER FIRST PUBLISHED, SENT OR GIVEN TO SECURITY HOLDERS)
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CALCULATION OF FILING FEE
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TRANSACTION VALUATION*: $407,000,000 AMOUNT OF FILING FEE: $81,400
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/ / CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY RULE 0-11(A)(2)
AND IDENTIFY THE FILING WITH WHICH THE OFFSETTING FEE WAS PREVIOUSLY PAID.
IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR THE FORM
OR SCHEDULE AND THE DATE OF ITS FILING.
AMOUNT PREVIOUSLY PAID: N/A FILING PARTY: N/A
FORM OR REGISTRATION NO.: N/A DATE FILED: N/A
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*Based upon purchase of 22,000,000 Shares at the maximum tender offer price,
$18.50 per Share
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ITEM 1. SECURITY AND ISSUER.
(a) The Issuer of the securities to which this Issuer Tender Offer
Statement on Schedule 13E-4 (the "Statement") relates is Rite Aid
Corporation, a Delaware corporation (the "Company"), and the address of its
principal executive office is 30 Hunter Lane, Camp Hill, PA 17011.
(b) This Statement relates to a tender offer by the Company to
purchase 22,000,000 shares (or such lesser number of shares as are validly
tendered) of its common stock, par value $1 per share (the "Shares")
(including the associated preferred share purchase rights), at prices, net
to the seller in cash, not greater than $18.50 nor less than $16.00 per
Share, specified by shareholders, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated January 10, 1994 (the
"Offer to Purchase"), and in the related Letter of Transmittal (which
together constitute the "Offer"), copies of which are filed as Exhibits
(a)(1) and (a)(2), respectively. The information set forth in the
"Introduction," "Section 1. Number of Shares; Proration," "Section 8.
Interest of Directors and Executive Officers; Transactions and Arrangements
Concerning the Shares," "Section 10. Background and Purpose of the Offer;
Certain Information About the Company" and "Section 14. Extension of the
Offer; Termination; Amendments" of the Offer to Purchase is incorporated
herein by reference.
(c) The information set forth in "Section 7. Price Range of Shares;
Dividends" of the Offer to Purchase is incorporated herein by reference.
(d) This Statement is being filed by the Issuer.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in "Section 9. Source and Amount of
Funds" of the Offer to Purchase is incorporated herein by reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
The information set forth in the "Introduction" and "Section 10. Background
and Purpose of the Offer; Certain Information About the Company" of the Offer to
Purchase is incorporated herein by reference.
(a)-(j) The information set forth in the "Introduction," "Section 8.
Interest of Directors and Executive Officers; Transactions and Arrangements
Concerning the Shares," "Section 9. Source and Amount of Funds," "Section
10. Background and Purpose of the Offer; Certain Information About the
Company" and "Section 11. Effects of the Offer on the Market for Shares;
Registration under the Exchange Act" of the Offer to Purchase is
incorporated herein by reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth in "Section 8. Interest of Directors and
Executive Officers; Transactions and Arrangements Concerning the Shares" of the
Offer to Purchase is incorporated herein by reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE ISSUER'S SECURITIES.
The information set forth in the "Introduction" and "Section 8. Interest of
Directors and Executive Officers; Transactions and Arrangements Concerning the
Shares" of the Offer to Purchase is incorporated herein by reference.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the "Introduction" and "Section 15. Fees and
Expenses" of the Offer to Purchase is incorporated herein by reference.
1
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ITEM 7. FINANCIAL INFORMATION.
(a)-(b) The information set forth in "Section 10. Background and
Purpose of the Offer; Certain Information About the Company" of the Offer
to Purchase is incorporated herein by reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) The information set forth in "Section 12. Certain Legal Matters;
Regulatory Approvals" of the Offer to Purchase is incorporated herein by
reference.
(c) The information set forth in "Section 11. Effects of the Offer on
the Market for Shares; Registration under the Exchange Act" of the Offer to
Purchase is incorporated herein by reference.
(d) Not applicable.
(e) Reference is hereby made to the Offer to Purchase and the related
Letter of Transmittal, copies of which are attached hereto as Exhibits
(a)(1) and (a)(2), respectively, and incorporated in their entirety herein
by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C> <C>
(a) (1) Offer to Purchase, dated January 10, 1994
(a) (2) Letter of Transmittal
(a) (3) Notice of Guaranteed Delivery
(a) (4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees
(a) (5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
(a) (6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9
(a) (7) Press Release issued by the Company on January 7, 1994
(a) (8) Letter to the Company's Shareholders from Alex Grass, Chairman of the
Board and Chief Executive Officer, and Martin L. Grass, President and
Chief Operating Officer, of the Company, dated January 10, 1994
(a) (9) Summary Advertisement dated January 10, 1994
(b) (1) Letter Agreement dated as of January 7, 1994, among the Company, Morgan
Guaranty Trust Company of New York and J.P. Morgan Securities, Inc.
(c) Not applicable
(d) Not applicable
(e) Not applicable
(f) Not applicable
</TABLE>
2
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
RITE AID CORPORATION
Dated: January 10, 1994 /s/ MARTIN L. GRASS
Name: Martin L. Grass
Title: President and Chief Operating Officer
3
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<TABLE>
<CAPTION>
PAGE IN
SEQUENTIALLY
EXHIBIT NO. DESCRIPTION NUMBERED COPY
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<C> <C> <S> <C>
(a) (1) Offer to Purchase, dated January 10, 1994.......................
(a) (2) Letter of Transmittal...........................................
(a) (3) Notice of Guaranteed Delivery...................................
(a) (4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees..............................................
(a) (5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees..............................
(a) (6) Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9..........................................
(a) (7) Press Release issued by the Company on January 7, 1994..........
(a) (8) Letter to the Company's shareholders from Alex Grass, Chairman
of the Board and Chief Executive Officer, and Martin L. Grass,
President and Chief Operating Officer, of the Company, dated
January 10, 1994................................................
(a) (9) Summary Advertisement dated January 10, 1994....................
(b) (1) Letter Agreement dated as of January 7, 1994, among the Company,
Morgan Guaranty Trust Company of New York and J.P. Morgan
Securities, Inc.................................................
</TABLE>
4
<PAGE> 1
RITE AID CORPORATION
OFFER TO PURCHASE FOR CASH
UP TO 22,000,000 SHARES OF ITS COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
AT A PURCHASE PRICE NOT GREATER THAN $18.50 NOR LESS THAN $16.00 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY,
FEBRUARY 7, 1994, UNLESS THE OFFER IS EXTENDED.
Rite Aid Corporation, a Delaware corporation (the "Company"), hereby
invites its shareholders to tender shares of its common stock, par value $1.00
per share (including the associated preferred share purchase rights (the
"Rights"), the "Shares"), to the Company at prices, net to the seller in cash,
not greater than $18.50 nor less than $16.00 per Share, specified by such
shareholders, upon the terms and subject to the conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which together
constitute the "Offer"). The Company will determine a single per Share price
(not greater than $18.50 nor less than $16.00 per Share) (the "Purchase Price")
that it will pay for Shares validly tendered pursuant to the Offer taking into
account the number of Shares so tendered and the prices specified by tendering
shareholders. The Company will select the Purchase Price which will allow it to
buy 22,000,000 Shares (or such lesser number of Shares as are validly tendered
at prices not greater than $18.50 nor less than $16.00 per Share) pursuant to
the Offer. All Shares validly tendered at prices at or below the Purchase Price
will be purchased at the Purchase Price, net to the seller in cash, upon the
terms and subject to the conditions of the Offer, including the proration terms
hereof. The Offer is not being made to holders of securities convertible into
Shares. The Company will, however, upon the terms and subject to the conditions
of the Offer, accept tenders of Shares that are issued upon conversion of such
securities and validly tendered pursuant to the Offer.
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THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 6.
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NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING SHARES. SHAREHOLDERS MUST MAKE THEIR OWN DECISIONS
WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE PRICE OR
PRICES AT WHICH SHARES SHOULD BE TENDERED. THE COMPANY HAS BEEN ADVISED THAT
NONE OF ITS DIRECTORS OR EXECUTIVE OFFICERS INTENDS TO TENDER ANY SHARES
PURSUANT TO THE OFFER.
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THE DEALER MANAGER FOR THE OFFER IS :
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
January 10, 1994
<PAGE> 2
IMPORTANT
Any shareholder desiring to tender all or any portion of his Shares should
either (1) complete and sign the Letter of Transmittal or a facsimile copy
thereof in accordance with the instructions in the Letter of Transmittal, mail
or deliver it and any other required documents to Harris Trust Company of New
York (the "Depositary"), and either mail or deliver his stock certificates for
such Shares to the Depositary or follow the procedure for book-entry delivery
set forth in Section 3, or (2) request his broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for him. A shareholder
having Shares registered in the name of a broker, dealer, commercial bank, trust
company or other nominee must contact that broker, dealer, commercial bank,
trust company or other nominee if such shareholder desires to tender such
Shares. Shareholders who desire to tender Shares and whose certificates for such
Shares are not immediately available or who cannot comply with the procedure for
book-entry transfer by the expiration of the Offer must tender such Shares by
following the procedures for guaranteed delivery set forth in Section
3. SHAREHOLDERS MUST PROPERLY COMPLETE THE LETTER OF TRANSMITTAL INCLUDING THE
SECTION OF THE LETTER OF TRANSMITTAL RELATING TO THE PRICE AT WHICH THEY ARE
TENDERING SHARES IN ORDER TO EFFECT A VALID TENDER OF THEIR SHARES.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Information Agent or the Dealer Manager at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
COMPANY AS TO WHETHER SHAREHOLDERS SHOULD TENDER OR REFRAIN FROM TENDERING
SHARES PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER
THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL.
IF GIVEN OR MADE, SUCH RECOMMENDATION, INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
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TABLE OF CONTENTS
<TABLE>
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SECTION PAGE
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Introduction...................................................................... 1
1. Number of Shares; Proration....................................................... 2
2. Tenders by Owners of Fewer than 100 Shares........................................ 4
3. Procedure for Tendering Shares.................................................... 4
4. Withdrawal Rights................................................................. 6
5. Purchase of Shares and Payment of Purchase Price.................................. 7
6. Certain Conditions of the Offer................................................... 8
7. Price Range of Shares; Dividends.................................................. 9
8. Interest of Directors and Executive Officers; Transactions and Arrangements
Concerning the Shares............................................................. 10
9. Source and Amount of Funds........................................................ 10
10. Background and Purpose of the Offer; Certain Information About the Company........ 11
11. Effects of the Offer on the Market for Shares; Registration under the Exchange
Act............................................................................... 20
12. Certain Legal Matters; Regulatory Approvals....................................... 20
13. Certain Federal Income Tax Consequences........................................... 21
14. Extension of the Offer; Termination; Amendments................................... 23
15. Fees and Expenses................................................................. 24
16. Miscellaneous..................................................................... 24
</TABLE>
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TO THE HOLDERS OF COMMON STOCK OF
RITE AID CORPORATION:
The Company hereby invites its shareholders to tender Shares to the Company
at prices, net to the seller in cash, not greater than $18.50 nor less than
$16.00 per Share, specified by such shareholders, upon the terms and subject to
the conditions set forth in the Offer. The Company will determine a single per
Share Purchase Price (not greater than $18.50 nor less than $16.00 per Share)
that it will pay for Shares validly tendered pursuant to the Offer taking into
account the number of Shares so tendered and the prices specified by tendering
shareholders. The Company will select the Purchase Price which will allow it to
buy 22,000,000 Shares (or such lesser number of Shares as are validly tendered
at prices not greater than $18.50 nor less than $16.00 per Share) pursuant to
the Offer. All Shares validly tendered at prices at or below the Purchase Price
will be purchased at the Purchase Price, net to the seller in cash, upon the
terms and subject to the conditions of the Offer, including the proration terms
described below.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 6.
If, before the Expiration Date (as defined in Section 1), more than
22,000,000 Shares (or such greater number of Shares as the Company may elect to
purchase) are validly tendered at or below the Purchase Price, the Company will
accept Shares for purchase first from all Odd Lot Owners (as defined in Section
2) who validly tender all their Shares at or below the Purchase Price and then
on a pro rata basis from all other shareholders who validly tender Shares at or
below the Purchase Price. See Sections 1 and 2. The Company will return all
Shares not purchased under the Offer, including Shares tendered and not
withdrawn at prices greater than the Purchase Price and Shares not purchased
because of proration. Tendering shareholders will not be obligated to pay
brokerage fees or commissions, solicitation fees or, subject to Instruction 7 of
the Letter of Transmittal, stock transfer taxes on the Company's purchase of
Shares pursuant to the Offer. In addition, the Company will pay all fees and
expenses of Donaldson, Lufkin & Jenrette Securities Corporation (the "Dealer
Manager"), Harris Trust Company of New York (the "Depositary") and Morrow & Co.,
Inc. (the "Information Agent") in connection with the Offer. See Section 15.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES.
Shareholders must make their own decisions whether to tender Shares and, if so,
how many Shares to tender and the price or prices at which Shares should be
tendered. The Company has been advised that none of its directors or executive
officers intends to tender any Shares pursuant to the Offer.
The Offer is a part of a major restructuring by the Company. The Company
has authorized the sale of its four non-drugstore businesses (the "Non-Drugstore
Businesses") resulting in an after-tax reserve of $25.6 million for the loss on
the disposal of these discontinued operations and the closing of 200
underperforming drugstores and the disposition of other assets causing a pre-tax
charge of $149.2 million. The Company is making the Offer because the Board of
Directors believes that, given the Company's businesses, assets and prospects
and the current market price of the Shares, the purchase of the Shares pursuant
to the Offer is an attractive investment for the Company. The Non-Drugstore
Businesses are ADAP, an auto parts retailer with 95 stores, Encore Books, which
operates 103 stores, Concord Custom Cleaners with 170 outlets and Sera-Tec
Biologicals, which consists of 33 plasma collection centers providing plasma for
use in therapeutic and diagnostic products. No agreement exists between the
Company and any prospective purchaser concerning such planned dispositions. Any
such sales would also be subject to the identification of persons willing to
purchase one or more of the Non-Drugstore Businesses at prices and upon other
terms deemed acceptable by the Company, as well as the negotiation of definitive
agreements.
The Offer, the sale of the Non-Drugstore Businesses and the closing of 200
underperforming drugstores are intended to enhance shareholder value. Moreover,
the disposition of the Non-Drugstore Businesses will allow the Company better to
focus its resources on the Company's drugstore business.
<PAGE> 4
The Offer provides shareholders who are considering a sale of all or a
portion of their Shares the opportunity to determine the price or prices (not
greater than $18.50 nor less than $16.00 per Share) at which they are willing to
sell their Shares and, if any such Shares are purchased pursuant to the Offer,
to sell those Shares for cash without the usual transaction costs associated
with open-market sales. The Offer also gives shareholders the opportunity to
sell Shares at prices greater than market prices prevailing prior to
announcement of the Offer.
As of January 7, 1994, there were 88,081,859 Shares outstanding, 2,595,756
Shares issuable upon exercise of stock options under the Company's stock option
plans and 6,397,200 Shares issuable upon conversion of the Company's 6 3/4% Zero
Coupon Subordinated Convertible Notes due 2006 (the "Convertible Notes"). The
22,000,000 Shares that the Company is offering to purchase represent
approximately 25% of the Shares outstanding as of January 7, 1994 and
approximately 23% of the fully diluted Shares outstanding as of such date. THE
OFFER IS NOT BEING MADE TO HOLDERS OF THE CONVERTIBLE NOTES. THE COMPANY WILL,
UPON THE TERMS AND SUBJECT TO THE CONDITIONS OF THE OFFER, ACCEPT TENDERS OF
SHARES THAT, IN ACCORDANCE WITH THE TERMS OF SUCH CONVERTIBLE NOTES, ARE ISSUED
UPON CONVERSION OF CONVERTIBLE NOTES AND VALIDLY TENDERED PURSUANT TO THE OFFER.
To the extent Convertible Notes are converted into Shares, but the resulting
Shares are not purchased pursuant to the Offer, holders of Convertible Notes so
converted will have lost all preferential rights of Convertible Notes as
compared to Shares (including, among other things, the priority afforded holders
of Convertible Notes with respect to the distribution of assets upon
liquidation). Each holder of Convertible Notes is urged to consult his own
broker or investment or tax advisor with respect to the Offer. NEITHER THE
COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY HOLDER OF
CONVERTIBLE NOTES AS TO WHETHER TO CONVERT ALL OR ANY PORTION OF HIS CONVERTIBLE
NOTES INTO SHARES OR AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING PURSUANT
TO THE OFFER ALL OR ANY PORTION OF THE SHARES ISSUABLE UPON SUCH CONVERSION.
1. NUMBER OF SHARES; PRORATION.
Upon the terms and subject to the conditions of the Offer, the Company will
accept for payment and purchase 22,000,000 Shares or such lesser number of
Shares as are validly tendered on or prior to the Expiration Date at a price
(determined in the manner set forth below) not greater than $18.50 nor less than
$16.00 per Share. The term "Expiration Date" means 12:00 midnight, New York City
time, on Monday, February 7, 1994, unless the Company, in its sole discretion,
shall have extended the period of time during which the Offer is open, in which
event the term "Expiration Date" shall refer to the latest time and date at
which the Offer, as so extended by the Company, shall expire. See Section 14 for
a description of the Company's right to extend the time during which the Offer
is open and to delay, terminate or amend the Offer. See also Section 6. Subject
to Section 2, if the Offer is over subscribed, Shares tendered at or below the
Purchase Price prior to the Expiration Date will be subject to proration. The
proration period also expires on the Expiration Date.
The Company will, upon the terms and subject to the conditions of the
Offer, determine the Purchase Price (not greater than $18.50 nor less than
$16.00 per Share) that it will pay for Shares validly tendered pursuant to the
Offer taking into account the number of Shares so tendered and the prices
specified by tendering shareholders. The Company will select a single per Share
Purchase Price that will allow it to buy 22,000,000 Shares (or such lesser
number as are validly tendered at prices not greater than $18.50 nor less than
$16.00 per Share) pursuant to the Offer. The Company reserves the right, in its
sole discretion, to purchase more than 22,000,000 Shares pursuant to the Offer.
If (i) the Company increases or decreases the price to be paid for Shares,
increases the number of Shares being sought and any such increase in the number
of Shares being sought exceeds 2% of the outstanding Shares, or decreases the
number of Shares being sought, and (ii) the Offer is scheduled to expire less
than ten business days from and including the date that notice of such increase
or decrease is first published, sent or given in the manner specified in Section
14, the Offer will be extended for ten business days from and including the date
of such notice. For purposes of the Offer, a "business day" means any day other
than a Saturday, Sunday or federal holiday and consists of the time period from
12:01 a.m. through 12:00 midnight, New York City time.
2
<PAGE> 5
In accordance with Instruction 5 of the Letter of Transmittal, each
shareholder desiring to tender Shares must specify the price or prices (not
greater than $18.50 nor less than $16.00 per Share) at which such shareholder is
willing to have the Company purchase his Shares. All Shares purchased pursuant
to the Offer will be purchased at the Purchase Price. All Shares not purchased
pursuant to the Offer, including Shares tendered at prices greater than the
Purchase Price and Shares not purchased because of proration, will be returned
to the tendering shareholders at the Company's expense as promptly as
practicable following the Expiration Date.
If the number of Shares validly tendered prior to the Expiration Date at or
below the Purchase Price is less than or equal to 22,000,000 Shares (or such
greater number of Shares as the Company may elect to purchase pursuant to the
Offer), the Company will, upon the terms and subject to the conditions of the
Offer, purchase at the Purchase Price all Shares so tendered.
Upon the terms and subject to the conditions of the Offer, in the event
that prior to the Expiration Date more than 22,000,000 Shares (or such greater
number of Shares as the Company elects to purchase) are validly tendered at or
below the Purchase Price, the Company will accept Shares for purchase in the
following order of priority:
(a) first, all Shares validly tendered at or below the Purchase Price
prior to the Expiration Date by any Odd Lot Owner who:
(1) tenders all Shares beneficially owned by such Odd Lot Owner at or
below the Purchase Price (partial tenders will not qualify for
this preference); and
(2) completes the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed
Delivery; and
(b) then, after purchase of all of the foregoing Shares, all other
Shares validly tendered at or below the Purchase Price before the
Expiration Date on a pro rata basis, if necessary (with adjustments to
avoid purchases of fractional shares).
In the event that proration of tendered Shares is required, the Company
will determine the final proration factor as promptly as practicable after the
Expiration Date. Proration for each shareholder tendering Shares other than Odd
Lot Owners shall be based on the ratio of the number of Shares tendered by such
shareholder to the total number of Shares tendered by all shareholders other
than Odd Lot Owners. Although the Company does not expect to be able to announce
the final results of such proration until approximately seven New York Stock
Exchange, Inc. (the "NYSE") trading days after the Expiration Date, it will
announce preliminary results of proration by press release as promptly as
practicable after the Expiration Date. Shareholders may obtain such preliminary
information from the Information Agent and may be able to obtain such
information from their brokers or financial advisors.
On April 5, 1989, the Company's Board of Directors declared a dividend
distribution of one Right for each Share outstanding on April 19, 1989 (the
"Record Date"). Shares issued subsequent to the Record Date automatically
receive the Rights. The Rights expire on April 5, 1999 unless redeemed earlier
by the Company. Each Right entitles the registered holder to purchase from the
Company a unit consisting of one two-thousandth of a share of Series A Junior
Participating Preferred Stock of the Company at an exercise price of $60,
subject to adjustment to prevent dilution. The Rights are not currently
exercisable and trade together with the Shares associated therewith. The Rights
will not become exercisable or separately tradeable as a result of the Offer.
Absent circumstances causing the Rights to become exercisable or separately
tradeable prior to the Expiration Date, the tender of any Shares pursuant to the
Offer will include the tender of the associated Rights. No separate
consideration will be paid for such Rights. Upon the purchase of Shares by the
Company pursuant to the Offer, the sellers of the Shares so purchased will no
longer own the Rights associated with such Shares.
As described in Section 13, the number of Shares that the Company will
purchase from a shareholder may affect the federal income tax consequences to
the shareholder of such purchase and therefore may be relevant to a
shareholder's decision whether to tender Shares.
3
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2. TENDERS BY OWNERS OF FEWER THAN 100 SHARES.
The Company, upon the terms and subject to the conditions of the Offer,
will accept for payment, without proration, all Shares validly tendered on or
prior to the Expiration Date at or below the Purchase Price by or on behalf of
shareholders who beneficially held, as of the close of business on January 6,
1994, and continue to own beneficially as of the Expiration Date, an aggregate
of fewer than 100 Shares ("Odd Lot Owners"). To avoid proration, however, an Odd
Lot Owner must validly tender at or below the Purchase Price all Shares that
such Odd Lot Owner beneficially owns; partial tenders will not qualify for this
preference. This preference is not available to holders of 100 or more Shares,
even if such holders have separate stock certificates for fewer than 100 Shares.
Any Odd Lot Owner wishing to tender all Shares beneficially owned by him free of
proration pursuant to this Offer must complete the section captioned "Odd Lots"
in the Letter of Transmittal and, if applicable, on the Notice of Guaranteed
Delivery. By accepting the Offer, a shareholder owning fewer than 100 Shares
would not only avoid the payment of brokerage commissions but would also avoid
any applicable odd lot discounts payable in a sale of his Shares on a stock
exchange, including the NYSE.
3. PROCEDURE FOR TENDERING SHARES.
Proper Tender of Shares. For Shares to be validly tendered pursuant to the
Offer:
(a) the certificates for such Shares (or confirmation of receipt of
such Shares pursuant to the procedures for book-entry transfer set forth
below), together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) with any required signature guarantees,
and any other documents required by the Letter of Transmittal, must be
received on or before the Expiration Date by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase; or
(b) the tendering shareholder must comply with the guaranteed delivery
procedure set forth below.
As specified in Instruction 5 of the Letter of Transmittal, each
shareholder desiring to tender Shares pursuant to the Offer must properly
indicate in the section captioned "Price (In Dollars) Per Share At Which Shares
Are Being Tendered" on the Letter of Transmittal the price (in multiples of
$.125) at which his Shares are being tendered; provided, however, than an Odd
Lot Owner may check the box in the section entitled "Odd Lots" indicating that
he is tendering all of his Shares at the Purchase Price. Shareholders desiring
to tender Shares at more than one price must complete separate Letters of
Transmittal for each price at which Shares are being tendered, except that the
same Shares cannot be tendered (unless properly withdrawn previously in
accordance with the terms of the Offer) at more than one price. In order to
validly tender Shares, one and only one price box must be checked in the
appropriate section on each Letter of Transmittal.
In addition, Odd Lot Owners who tender all their Shares must complete the
section entitled "Odd Lots" in the Letter of Transmittal and, if applicable, on
the Notice of Guaranteed Delivery in order to qualify for the preferential
treatment available to Odd Lot Owners as set forth in Section 1.
Signature Guarantees and Method of Delivery. No signature guarantee is
required on the Letter of Transmittal (i) if the Letter of Transmittal is signed
by the registered holder of the Shares exactly as the name of the registered
holder appears on the certificate (which term, for purposes of this Section 3,
includes any participant in The Depository Trust Company, the Midwest Securities
Trust Company or the Philadelphia Depository Trust Company (collectively, the
"Book-Entry Transfer Facilities") whose name appears on a security position
listing as the holder of the Shares) tendered therewith, and payment and
delivery are to be made directly to such registered holder, or (ii) if Shares
are tendered for the account of a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc. or a commercial bank or trust company having an office, branch or agency in
the United States (each such entity, an "Eligible Institution"). In all other
cases, all signatures on the Letter of Transmittal must be guaranteed by an
Eligible Institution. See Instruction 1 of the Letter of Transmittal. If a
certificate representing Shares is registered in the name of a person other than
the signer of a Letter of Transmittal, or if payment is to be made, or Shares
not purchased or tendered are to be issued, to a person other than the
registered holder, the certificate must be endorsed or accompanied by an
appropriate stock power, in either case signed exactly as
4
<PAGE> 7
the name of the registered holder appears on the certificate, with the signature
on the certificate or stock power guaranteed by an Eligible Institution. In all
cases, payment for Shares tendered and accepted for payment pursuant to the
Offer will be made only after timely receipt by the Depositary of certificates
for such Shares (or a timely confirmation of a book-entry transfer of such
Shares into the Depositary's account at one of the Book-Entry Transfer
Facilities), a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) with any required signature guarantees and any other
documents required by the Letter of Transmittal. THE METHOD OF DELIVERY OF ALL
DOCUMENTS, INCLUDING STOCK CERTIFICATES, THE LETTER OF TRANSMITTAL AND ANY OTHER
REQUIRED DOCUMENTS, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED.
Federal Income Tax Backup Withholding. To prevent federal income tax
backup withholding equal to 31% of the gross payments made pursuant to the
Offer, each shareholder who does not otherwise establish an exemption from such
withholding must notify the Depositary of such shareholder's correct taxpayer
identification number (or certify that such taxpayer is awaiting a taxpayer
identification number) and provide certain other information by completing a
Substitute Form W-9 (included in the Letter of Transmittal). Foreign
shareholders may be required to submit Form W-8, certifying non-United States
status, in order to avoid backup withholding. See Instructions 12 and 13 of the
Letter of Transmittal.
EACH SHAREHOLDER SHOULD CONSULT HIS OWN TAX ADVISOR AS TO WHETHER SUCH
SHAREHOLDER IS SUBJECT TO OR EXEMPT FROM FEDERAL INCOME TAX WITHHOLDING.
For a discussion of certain other federal income tax consequences to
tendering shareholders, see Section 13.
Book-Entry Delivery. The Depositary will establish an account with respect
to the Shares at each of the Book-Entry Transfer Facilities for purposes of the
Offer within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of the Shares by causing such
facility to transfer such Shares into the Depositary's account in accordance
with such facility's procedure for such transfer. Even though delivery of Shares
may be effected through book-entry transfer into the Depositary's account at one
of the Book-Entry Transfer Facilities, a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees and other required documents must, in any case, be transmitted to and
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase prior to the Expiration Date, or the guaranteed
delivery procedure set forth below must be followed. DELIVERY OF THE LETTER OF
TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO ONE OF THE BOOK-ENTRY TRANSFER
FACILITIES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's certificates are not immediately available (or
the procedures for book-entry transfer cannot be completed on a timely basis) or
time will not permit all required documents to reach the Depositary by the
Expiration Date, such Shares may nevertheless be tendered provided that all of
the following conditions are satisfied:
(a) such tender is made by or through an Eligible Institution;
(b) the Depositary receives (by hand, mail, telegram or facsimile
transmission), on or prior to the Expiration Date, a properly completed and
duly executed Notice of Guaranteed Delivery substantially in the form the
Company has provided with this Offer to Purchase (indicating the price at
which the Shares are being tendered) and includes a guarantee by an
Eligible Institution in the form set forth in such Notice; and
(c) the certificates for all tendered Shares in proper form for
transfer (or confirmation of book-entry transfer of such Shares into the
Depositary's account at one of the Book-Entry Transfer Facilities),
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) and any other documents required by the Letter of
Transmittal, are received by the Depositary within five NYSE trading days
after the date the Depositary receives such Notice of Guaranteed Delivery.
5
<PAGE> 8
Determination of Validity; Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the number of Shares
to be accepted, the price to be paid therefor, the form of documents and the
validity, form, eligibility (including the time of receipt) and acceptance for
payment of any tender of Shares will be determined by the Company, in its sole
discretion, which determination shall be final and binding on all parties. The
Company reserves the absolute right to reject any or all tenders it determines
not to be in proper form or the acceptance of or payment for which may be
unlawful. The Company also reserves the absolute right to waive any of the
conditions of the Offer or any defect or irregularity in the tender of any
particular Shares. No tender of Shares will be deemed to be validly made until
all defects and irregularities have been cured or waived. None of the Company,
the Dealer Manager, the Depositary, the Information Agent or any other person is
or will be obligated to give notice of any defects or irregularities in tenders,
and none of them will incur any liability for failure to give such notice.
Rule 14e-4. It is a violation of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), for a person
(directly or indirectly) to tender shares for his own account unless, at the
time of tender and at the end of the proration period (including any extension
thereof), the person so tendering (i) has a net long position equal to or
greater than the amount of (x) Shares tendered or (y) other securities
immediately convertible into, exercisable, or exchangeable for the amount of
Shares tendered and will acquire such Shares for tender by conversion, exercise
or exchange of such other securities, and (ii) will cause such Shares to be
delivered in accordance with the terms of the Offer. Rule 14e-4 provides a
similar restriction applicable to the tender or guarantee of a tender on behalf
of another person. The tender of Shares pursuant to any one of the procedures
described above will constitute the tendering shareholder's acceptance of the
terms and conditions of the Offer as well as the tendering shareholder's
representation and warranty that (i) such shareholder has a net long position in
the Shares being tendered within the meaning of Rule 14e-4, and (ii) the tender
of such Shares complies with Rule 14e-4. The Company's acceptance for payment of
Shares tendered pursuant to the Offer will constitute a binding agreement
between the tendering shareholder and the Company upon the terms and subject to
the conditions of the Offer.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, the tender of Shares
pursuant to the Offer is irrevocable. Shares tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by the Company, may also be withdrawn after 12:00 midnight,
New York City time, on March 8, 1994.
For a withdrawal to be effective, the Depositary must timely receive (at
one of its addresses set forth on the back cover of this Offer to Purchase) a
written, telegraphic or facsimile transmission notice of withdrawal. Such notice
of withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder, if different from that of the person who tendered such Shares. If the
certificates have been delivered or otherwise identified to the Depositary,
then, prior to the release of such certificates, the tendering shareholder must
also submit the serial numbers shown on the particular certificates evidencing
the Shares to be withdrawn and the signature on the notice of withdrawal must be
guaranteed by an Eligible Institution (except in the case of Shares tendered by
an Eligible Institution). If Shares have been tendered pursuant to the procedure
for book-entry transfer set forth in Section 3, the notice of withdrawal must
specify the name and the number of the account at the applicable Book-Entry
Transfer Facility to be credited with the withdrawn Shares and otherwise comply
with the procedures of such facility. All questions as to the form and validity
(including time of receipt) of notices of withdrawal will be determined by the
Company, in its sole discretion, which determination shall be final and binding
on all parties. None of the Company, the Dealer Manager, the Depositary, the
Information Agent or any other person is or will be obligated to give notice of
any defects or irregularities in any notice of withdrawal, and none of them will
incur any liability for failure to give such notice. Any Shares properly
6
<PAGE> 9
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. Withdrawn Shares may, however, be retendered by the Expiration Date by
again following any of the procedures described in Section 3.
If the Company extends the Offer, is delayed in its purchase of Shares or
is unable to purchase Shares pursuant to the Offer for any reason, then, without
prejudice to the Company's rights under the Offer, the Depositary may, subject
to applicable law, retain on behalf of the Company all tendered Shares, and the
Shares may not be withdrawn except to the extent tendering shareholders are
entitled to withdrawal rights as described in this Section 4.
5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE.
Upon the terms and subject to the conditions of the Offer, the Company will
determine the Purchase Price it will pay for validly tendered Shares taking into
account the number of Shares tendered and the prices specified by tendering
shareholders and will accept for payment (and thereby purchase) Shares validly
tendered at or below the Purchase Price as soon as practicable after the
Expiration Date. For purposes of the Offer, the Company will be deemed to have
accepted for payment (and therefore purchased), subject to proration, Shares
which are tendered at or below the Purchase Price and not withdrawn when, as and
if it gives oral or written notice to the Depositary of its acceptance of such
Shares for payment pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer, the Company will
purchase and pay a single per Share Purchase Price for 22,000,000 Shares
(subject to increase or decrease as provided in Section 1 and Section 14) or
such lesser number of Shares as are validly tendered at prices not greater than
$18.50 nor less than $16.00 per Share, as promptly as practicable after the
Expiration Date.
Payment for Shares purchased pursuant to the Offer will be made by
depositing the aggregate Purchase Price therefor with the Depositary, which will
act as agent for tendering shareholders for the purpose of receiving payment
from the Company and transmitting payment to the tendering shareholders. In the
event of proration, the Company will determine the proration factor and pay for
those tendered Shares accepted for payment as soon as practicable after the
Expiration Date; however, the Company does not expect to be able to announce the
final results of any such proration until approximately seven NYSE trading days
after the Expiration Date. Certificates for all Shares not purchased, including
all Shares tendered at prices greater than the Purchase Price and Shares not
purchased due to proration, will be returned (or, in the case of Shares tendered
by book-entry transfer, such Shares will be credited to the account maintained
with one of the Book-Entry Transfer Facilities by the participant therein who so
delivered such Shares) as soon as practicable after the Expiration Date or
termination of the Offer without expense to the tendering shareholder. Under no
circumstances will the Company pay interest on the Purchase Price. In addition,
if certain events occur, the Company may not be obligated to purchase Shares
pursuant to the Offer. See Section 6.
The Company will pay all stock transfer taxes, if any, payable on the
transfer to it of Shares purchased pursuant to the Offer; provided, however,
that (i) if payment of the Purchase Price is to be made to, or (ii) (in the
circumstances permitted by the Offer) if unpurchased Shares are to be registered
in the name of, any person other than the registered owner, or if tendered
certificates are registered in the name of any person other than the person
signing the Letter of Transmittal, the amount of all stock transfer taxes, if
any (whether imposed on the registered owner or such other person), payable on
account of the transfer to such person will be deducted from the Purchase Price
unless evidence satisfactory to the Company of the payment of such taxes or
exemption therefrom is submitted. See Instruction 7 of the Letter of
Transmittal.
THE COMPANY MAY BE REQUIRED TO WITHHOLD AND REMIT TO THE INTERNAL REVENUE
SERVICE (THE "IRS"), 31% OF THE GROSS PROCEEDS PAID TO ANY TENDERING SHAREHOLDER
OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY AND SIGN THE SUBSTITUTE FORM W-9
INCLUDED IN THE LETTER OF TRANSMITTAL. SEE SECTION 3.
7
<PAGE> 10
6. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, the Company shall not be
required to accept for payment, purchase or pay for any Shares tendered, and may
terminate or amend the Offer or may postpone the acceptance for payment of, the
purchase of and the payment for, Shares tendered, subject to Rule 13e-4(f) under
the Exchange Act (see Section 14), if at any time on or after January 3, 1994,
and at or before the time of purchase of any such Shares, any of the following
events shall have occurred (or shall have been determined by the Company to have
occurred) which, in the Company's sole judgment in any such case and regardless
of the circumstances (including any action or omission to act by the Company),
makes it inadvisable to proceed with the Offer or with such purchase or payment:
(a) there shall have been threatened, instituted or pending any action
or proceeding by any government or governmental, regulatory or
administrative agency or authority or tribunal or any other person,
domestic or foreign, or before any court or governmental, regulatory or
administrative authority or agency or tribunal, domestic or foreign, which:
(1) challenges the making of the Offer, the acquisition of Shares pursuant
to the Offer or otherwise relates in any manner to the Offer or (2) in the
Company's sole judgment, could materially affect the business, condition
(financial or other), income, operations or prospects of the Company and
its subsidiaries, taken as a whole, or otherwise materially impair in any
way the contemplated future conduct of the business of the Company or any
of its subsidiaries or materially impair the Offer's contemplated benefits
to the Company; or
(b) there shall have been any action threatened or taken, or approval
withheld, or any statute, rule, regulation, judgment, order or injunction
threatened, proposed, sought, promulgated, enacted, entered, amended,
enforced or deemed to be applicable to the Offer or the Company or any of
its subsidiaries, by any court or any government or governmental,
regulatory or administrative authority or agency or tribunal, domestic or
foreign, which, in the Company's sole judgment, would or might directly or
indirectly: (1) make the acceptance for payment of, or payment for, some or
all of the Shares illegal or otherwise restrict or prohibit consummation of
the Offer, (2) delay or restrict the ability of the Company, or render the
Company unable, to accept for payment or pay for some or all of the Shares,
(3) materially impair the contemplated benefits of the Offer to the Company
or (4) materially affect the business, condition (financial or other),
income, operations or prospects of the Company and its subsidiaries, taken
as a whole, or otherwise materially impair in any way the contemplated
future conduct of the business of the Company or any of its subsidiaries;
or
(c) there shall have occurred: (1) the declaration of any banking
moratorium or suspension of payments in respect of banks in the United
States, (2) any general suspension of trading in, or limitation on prices
for, securities on any United States national securities exchange or in the
over-the-counter market, (3) the commencement of a war, armed hostilities
or any other national or international crisis directly or indirectly
involving the United States, (4) any limitation (whether or not mandatory)
by any governmental, regulatory or administrative agency or authority on,
or any event which, in the Company's sole judgment, might affect, the
extension of credit by banks or other lending institutions in the United
States, (5) any significant decrease in the market price of the Shares or
in the general level of market prices of equity securities in the United
States or abroad or any change in the general political, market, economic
or financial conditions in the United States or abroad that could have a
material adverse effect on the Company's business, operations or prospects
or the trading in the Shares or that, in the sole judgment of the Company,
makes it inadvisable to proceed with the Offer or (6) in the case of any of
the foregoing existing at the time of the commencement of the Offer, in the
Company's sole judgment, a material acceleration or worsening thereof; or
(d) any change shall have occured or be threatened in the business,
condition (financial or other), income, operations, Share ownership or
prospects of the Company and its subsidiaries, taken as a whole, which, in
the Company's sole judgment, is or may be material to the Company or any
other event shall have occurred which, in the Company's sole judgment,
materially impairs the Offer's contemplated benefits; or
8
<PAGE> 11
(e) a tender or exchange offer for any or all of the Shares (other
than the Offer), or any merger, business combination or other similar
transaction with or involving the Company or any subsidiary, shall have
been proposed, announced or made by any person; or
(f) (i) any entity, "group" (as that term is used in Section 13(d)(3)
of the Exchange Act) or person shall have acquired or proposed to acquire
beneficial ownership of more than 5% of the outstanding Shares (other than
any such person, entity or group who have filed a Schedule 13D or Schedule
13G with the Securities and Exchange Commission (the "Commission") on or
before January 3, 1994), (ii) any such entity, group or person who have
filed a Schedule 13D or Schedule 13G with the Commission on or before
January 3, 1994 shall have acquired or proposed to acquire beneficial
ownership of an additional 2% or more of the outstanding Shares or (iii)
any person, entity or group shall have filed a Notification and Report Form
under the Hart Scott Rodino Antitrust Improvements Act of 1976 or made a
public announcement reflecting an intent to acquire the Company or any of
its subsidiaries or any of their respective assets or securities other than
in connection with a transaction authorized by the Board of Directors of
the Company with respect to the sale of any of the four Non-Drugstore
Businesses.
The foregoing conditions are for the Company's sole benefit and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition (including any action or inaction by the Company) or may be waived by
the Company in whole or in part. The Company's failure at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right and
each such right shall be deemed an ongoing right which may be asserted at any
time and from time to time. Any determination by the Company concerning the
events described in this Section 6 shall be final and shall be binding on all
parties.
7. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are traded principally on the NYSE and are also traded on the
Pacific Stock Exchange, Incorporated (the "PSE"), in each case under the symbol
"RAD." The following table sets forth for the calendar periods indicated the
high and low closing per Share sales prices on the NYSE Composite Tape as
reported in published financial sources and the dividends paid per Share:
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
------ ------ ---------
<S> <C> <C> <C>
1992:
1st Quarter....................................................... $22 1/2 $20 5/8 0.1375
2nd Quarter....................................................... 22 1/8 19 3/8 0.1375
3rd Quarter....................................................... 23 19 3/8 0.1375
4th Quarter....................................................... 24 21 1/4 0.1375
1993:
1st Quarter....................................................... 21 1/2 19 3/8 0.1500
2nd Quarter....................................................... 19 3/8 17 1/2 0.1500
3rd Quarter....................................................... 18 3/4 15 1/4 0.1500
4th Quarter....................................................... 16 1/2 15 1/4 0.1500
1994:
1st Quarter (through January 7)................................... 18 5/8 16 3/8 0.1500
</TABLE>
On January 6, 1994, the last trading day prior to the announcement of the
Offer, the closing per Share sales price as reported on the NYSE Composite Tape
was $17 1/8. On January 7, 1994, the last full trading day prior to the
commencement of the Offer, the closing per Share sales price as reported on the
NYSE Composite Tape was $18 5/8. THE COMPANY URGES SHAREHOLDERS TO OBTAIN
CURRENT QUOTATIONS OF THE MARKET PRICE OF THE SHARES.
9
<PAGE> 12
8. INTEREST OF DIRECTORS AND EXECUTIVE OFFICERS; TRANSACTIONS AND ARRANGEMENTS
CONCERNING THE SHARES.
As of January 7, 1994, the Company's directors and executive officers as a
group beneficially owned (including pursuant to options) an aggregate of
5,518,371 Shares (approximately 6.1% of the outstanding Shares including Shares
issuable upon the exercise of options). Such ownership includes 1,682,500 Shares
(approximately 1.9% of the outstanding Shares including Shares issuable upon the
exercise of options) as of January 7, 1994 subject to stock options which are
held by directors and executive officers. If the Company purchases 22,000,000
Shares (or approximately 25% of the Shares outstanding at January 7, 1994)
pursuant to the Offer and no executive officer or director tenders Shares
pursuant to the Offer, then after the purchase of Shares pursuant to the Offer,
the Company's executive officers and directors as a group would beneficially own
approximately 8.1% of the outstanding Shares including Shares issuable upon the
exercise of options. The Company has been advised that no director or executive
officer of the Company intends to tender any Shares pursuant to the Offer.
Based upon the Company's records and upon information provided to the
Company by its directors, executive officers and affiliates, neither the Company
nor any of its subsidiaries nor, to the best of the Company's knowledge, any of
the directors or executive officers of the Company, nor any associates of any of
the foregoing, has effected any transactions in the Shares during the 40
business day period prior to the date hereof.
Except as set forth in this Offer to Purchase, neither the Company nor, to
the best of the Company's knowledge, any of its affiliates, directors or
executive officers, or any of the executive officers or directors of its
subsidiaries, is a party to any contract, arrangement, understanding or
relationship with any other person relating, directly or indirectly, to the
Offer with respect to any securities of the Company (including, but not limited
to, any contract, arrangement, understanding or relationship concerning the
transfer or the voting of any such securities, joint ventures, loan or option
arrangements, puts or calls, guaranties of loans, guaranties against loss or the
giving or withholding of proxies, consents or authorizations).
9. SOURCE AND AMOUNT OF FUNDS.
Assuming that the Company purchases 22,000,000 Shares pursuant to the Offer
at a Purchase Price of $18.50 per Share, the Company expects the maximum
aggregate cost, including all fees and expenses applicable to the Offer, to be
approximately $409,000,000. The Company plans to obtain all funds needed for the
Offer through unsecured borrowings from a syndicate of financial institutions
led by Morgan Guaranty Trust Company of New York ("Morgan"). Morgan has
committed to provide the Company with a $250 million 364-day revolving credit
facility (the "$250 Million Facility") and a $350 million five-year revolving
credit facility (the "$350 Million Facility," and collectively with the $250
Million Facility, the "Credit Facilities"). This commitment is subject to the
negotiation, execution and delivery of mutually acceptable definitive loan
documentation. A copy of the commitment letter is filed as an Exhibit to the
Schedule 13E-4 and is incorporated herein by reference. The Credit Facilities
will replace existing $100 million and $300 million credit agreements.
Loans made under the Credit Facilities will bear interest, at the Company's
option, (a) at a rate equal to the sum of the applicable margin and (i) the
London inter-bank offered rate ("LIBOR"), (ii) certificate of deposit rate
("CD") or (iii) Base Rate (the greater of Morgan's prime rate and the sum of
federal funds rate and 50 basis points), or (b) at a rate determined by a
competitive bid system among the financial institutions party to the Credit
Facilities. The interest rate for LIBOR and CD loans varies with the interest
period chosen by the Company: the Company may choose interest periods of, in the
case of LIBOR, one, two, three or six months, and in the case of CD, 30, 60, 90
or 180 days. The current interest rate for three month LIBOR is approximately
3.37% per annum and for 90 day CD is approximately 3.25% per annum. Morgan's
current prime rate is 5.50% per annum.
The applicable margins and certain fees payable by the Company are subject
to adjustment based on the Company's rating from time to time by Standard &
Poors Corporation and Moody's Investors Service, Inc. The margin on loans made
pursuant to the $250 Million Facility ranges, in the case of LIBOR, from 27 to
75 basis points, and in the case of CD, from 39.5 to 67.5 basis points. The
margin on loans made pursuant to
10
<PAGE> 13
the $350 Million Facility ranges, in the case of LIBOR, from 25 to 75 basis
points, and in the case of CD, from 37.5 to 67.5 basis points. No margin is
payable under either of the Credit Facilities for loans bearing interest at the
Base Rate. The Company will pay a utilization fee of 6.25 basis points per annum
on all borrowings in excess of 50% of either Credit Facility. The Company will
also pay facility fees (ranging from 8 to 20 basis points per annum) and fees on
the commitment (ranging from zero to five basis points per annum) and the unused
portion of the Credit Facilities (ranging from 8 to 25 basis points per annum).
The Credit Facilities will include representations and warranties,
covenants, events of default and other terms customary to financings of this
type.
The Company expects to repay the borrowings used to purchase Shares
pursuant to the Offer through, depending on business and market conditions,
public or private offerings of securities, additional bank borrowings,
internally generated funds, the proceeds of the sales of the Non-Drugstore
Businesses or other financings, or such combination of the foregoing as the
Company may deem appropriate. See "Pro Forma Financial Information" for further
information concerning the assumed cost of funds for the Offer.
10. BACKGROUND AND PURPOSE OF THE OFFER; CERTAIN INFORMATION ABOUT THE COMPANY.
Rite Aid Corporation operates one of the nation's largest chain of
drugstores, serving customers at 2,679 convenient locations in 23 eastern
states. Personal pharmacy service is the cornerstone of Rite Aid's business,
with prescription sales currently totaling over 50% of drugstore sales. Other
shopping advantages include an extensive selection of personal care items,
over-the-counter medications, seasonal merchandise and a quality line of Rite
Aid brand products.
Rite Aid's Non-Drugstore Businesses are operated through the Specialty
Retailing Division and the Medical Services Division. The Specialty Retailing
Division includes American Discount Auto Parts, with 95 retail stores in six New
England states, Encore Books with 103 stores in six mid-Atlantic states, and
Concord Custom Cleaners with 170 dry cleaning locations in 11 midwestern and
southeastern states.
The Medical Services Division consists of Sera-Tec Biologicals with 33
plasma collection centers that provide plasma for medical, diagnostic and
therapeutic use.
The Company's principal executive offices are located at 30 Hunter Lane,
Camp Hill, Pa. 17011, and the Company's telephone number is (717) 761-2633.
The Offer is a part of a major restructuring by the Company. The Company
has authorized the sale of its four Non-Drugstore Businesses resulting in an
after-tax reserve of $25.6 million for the loss on the disposal of these
discontinued operations and the closing of 200 underperforming drugstores and
the disposition of other assets causing a pre-tax charge of $149.2 million. The
Company is making the Offer because the Board of Directors believes that, given
the Company's businesses, assets and prospects and the current market price of
the Shares, the purchase of the Shares pursuant to the Offer is an attractive
investment for the Company. No agreement exists between the Company and any
prospective purchaser concerning such planned dispositions. Any such sales would
also be subject to the identification of persons willing to purchase one or more
of the Non-Drugstore Businesses at prices and upon other terms deemed acceptable
by the Company, as well as the negotiation of definitive agreements.
The Offer, the sale of the Non-Drugstore Businesses and the closing of 200
underperforming drugstores are intended to enhance shareholder value. Moreover,
the disposition of the Non-Drugstore Businesses will allow the Company better to
focus its resources on the Company's Drugstore business.
11
<PAGE> 14
In connection with the Offer, the Company's Board authorized the Company to
adjust the exercise price of its outstanding employee stock options, as of the
consummation of the Offer, to equal the Purchase Price.
The Offer provides shareholders who are considering a sale of all or a
portion of their Shares the opportunity to determine the price or prices (not
greater than $18.50 nor less than $16.00 per Share) at which they are willing to
sell their Shares and, if any such Shares are purchased pursuant to the Offer,
to sell those Shares for cash without the usual transaction costs associated
with open-market sales. The Offer also allows shareholders to sell a portion of
their Shares while retaining a continuing equity interest in the Company if they
so desire. Any shareholders owning an aggregate of less than 100 Shares whose
Shares are purchased pursuant to the Offer not only will avoid any payment of
brokerage commissions, but also will avoid any applicable odd lot discounts
payable on sales of odd lots on a stock exchange, including the NYSE. The Offer
also gives shareholders the opportunity to sell Shares at prices greater than
market prices prevailing prior to announcement of the Offer. To the extent the
purchase of Shares in the Offer results in a reduction in the number of
shareholders of record, the costs of the Company for services to shareholders
may be reduced.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ANY OR ALL OF
SUCH SHAREHOLDER'S SHARES AND HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY SUCH
RECOMMENDATION. SHAREHOLDERS ARE URGED TO EVALUATE CAREFULLY ALL INFORMATION IN
THE OFFER, CONSULT THEIR OWN INVESTMENT AND TAX ADVISORS AND MAKE THEIR OWN
DECISIONS WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE
PRICE OR PRICES AT WHICH SHARES SHOULD BE TENDERED.
Following completion of the Offer, the Company may repurchase additional
Shares in the open market, in privately negotiated transactions or otherwise.
Any such purchases may be on the same terms or on terms which are more or less
favorable to shareholders than the terms of the Offer. Rule 13e-4 under the
Exchange Act prohibits the Company and its affiliates from purchasing any
Shares, other than pursuant to the Offer, until at least ten business days after
the Expiration Date. Any possible future purchases by the Company will depend on
many factors, including the market price of the Shares, the results of the
Offer, the Company's business and financial position and general economic and
market conditions.
Shares the Company acquires pursuant to the Offer will be held in the
Company's treasury and will be available for the Company to issue without
further shareholder action (except as required by applicable law or the rules of
the securities exchanges on which the Shares are listed). Such Shares could be
issued without shareholder approval for such purposes as, among others, the
acquisition of other businesses, the raising of additional capital for use in
the Company's business, the distribution of stock dividends and the
implementation of employee benefit plans.
SUMMARY HISTORICAL FINANCIAL INFORMATION
Set forth below is certain summary historical consolidated financial
information of the Company. The summary financial information is derived from
the audited consolidated financial statements as reported in the Company's
Annual Report and Form 10-K for the years ended February 27, 1993 and February
29, 1992 and the unaudited consolidated financial statements as reported in the
Company's Quarterly Report on Form 10-Q for the period ended November 27, 1993.
More comprehensive financial information is included in such reports, and the
financial information that follows is qualified by reference to such documents
and all of the financial statements and related notes contained therein.
12
<PAGE> 15
RITE AID CORPORATION
SUMMARY HISTORICAL FINANCIAL INFORMATION
(IN MILLIONS, EXCEPT PER SHARE AND RATIO AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED 39 WEEKS ENDED
--------------------------- ---------------------------
FEBRUARY 27, FEBRUARY 29, NOVEMBER 27, NOVEMBER 28,
1993 1992 1993 1992
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
SUMMARY OF CONSOLIDATED INCOME:
Net sales....................................... $ 4,085 $ 3,748 $ 3,181 $ 2,977
Cost of goods sold and operating expenses....... 3,837 3,505 3,022 2,811
------------ ------------ ------------ ------------
Operating income................................ 248 243 159 166
Interest expense................................ 33 41 24 25
------------ ------------ ------------ ------------
Income before income taxes...................... 215 202 135 141
Income taxes.................................... 82 78 54 54
------------ ------------ ------------ ------------
Net income...................................... $ 133 $ 124 $ 81 $ 87
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Per share:
Net income.................................... $ 1.51 $ 1.43 $ .92 $ .99
Net book value................................ $ 11.76 $ 10.82 $ 12.23 $ 11.40
Common dividends.............................. $ .5625 $ .5125 $ .4500 $ .4125
Weighted average number of common shares
outstanding (thousands)....................... 87,933 86,917 88,079 87,899
Ratio of earnings to fixed charges.............. 3.78 3.47 3.28 3.45
------------ ------------ ------------ ------------
SUMMARY OF CONSOLIDATED FINANCIAL POSITION:
Total current assets............................ $ 1,092 $ 1,013 $ 1,201 $ 1,127
Total current liabilities....................... 281 290 346 306
Total intangible assets......................... 146 146 141 146
Total assets.................................... 1,875 1,734 2,055 1,894
Debt due after one year......................... 489 428 558 517
Total liabilities............................... 839 784 977 890
Common stockholders' equity..................... 1,036 950 1,078 1,004
</TABLE>
13
<PAGE> 16
PRO FORMA FINANCIAL INFORMATION
The following unaudited Pro Forma financial information reflects
transactions regarding the restructuring program, including consummation of the
Offer on the basis of stock repurchase prices of $16.00 and $18.50 per Share,
reclassification of Rite Aid's four Non-Drugstore Businesses to discontinued
operations, closure of 200 underperforming drugstores and disposition of other
assets. The Unaudited Pro Forma Consolidated Statements of Earnings give effect
to such transactions as if they had occurred at the beginning of the periods
presented. The Unaudited Pro Forma Consolidated Statements of Financial Position
give effect to the transactions as if they had occurred on the respective
Consolidated Statements of Financial Position dates. The Pro Forma information
should be read in conjunction with the summary historical financial information
and does not purport to be indicative of the results which may be obtained in
the future or which would actually have been obtained had the Offer and the
divestitures occurred as of the dates indicated.
14
<PAGE> 17
RITE AID CORPORATION
SUMMARY UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE THIRTY-NINE WEEKS ENDED NOVEMBER 27, 1993
(IN MILLIONS, EXCEPT PER SHARE AND RATIO AMOUNTS)
<TABLE>
<CAPTION>
@ $16.00 PER SHARE
39 WEEKS PRO FORMA --------------------------
ENDED ADJUSTMENTS FOR 39 WEEKS PRO FORMA
NOVEMBER -------------------------------- ENDED ADJUSTMENTS
27, DISCONTINUED CORPORATE NOVEMBER 27, FOR SHARES
1993 OPERATIONS(A) RESTRUCTURING(B) 1993 REPURCHASED(C) PRO FORMA
-------- ------------- ---------------- ------------ -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
NET SALES
Retail drug.............. $2,982 $2,982 $ 2,982
Specialty retailing...... 153 $(153)
Medical services......... 46 (46)
-------- ------ ------ ---------
Total.................. 3,181 (199) 2,982 2,982
-------- ------ ------ ---------
COST OF GOODS SOLD AND
OPERATING EXPENSES
Retail drug.............. 2,839 $ 149 2,988 2,988
Specialty retailing...... 144 (144)
Medical services......... 39 (39)
-------- ------ ------ ------ ---------
Total.................. 3,022 (183) 149 2,988 2,988
-------- ------ ------ ------ ---------
Operating income (loss).... 159 (16) (149) (6) (6)
Interest expense........... 24 (4) 20 $ 17 37
-------- ------ ------ ------ ------- ---------
Income (loss) from
continuing operations
before income taxes...... 135 (12) (149) (26) (17) (43)
Income taxes (benefit)..... 54 (4) (58) (8) (7) (15)
-------- ------ ------ ------ ------- ---------
Income from continuing
operations............... 81 (8) (91) (18) (10) (28)
DISCONTINUED OPERATIONS,
NET OF INCOME TAXES
Income from operations... 8 8 8
Loss on disposal......... (26) (26) (26)
-------- ------ ------ ------ ------- ---------
Net income (loss).......... $ 81 $ (26) $ (91) $ (36) $ (10) $ (46)
-------- ------ ------ ------ ------- ---------
-------- ------ ------ ------ ------- ---------
EARNINGS (LOSS) PER SHARE
Continuing operations.... $ .92 $(.09) $(1.03) $ (.20) $ (.43)
Discontinued
operations............. (.21) (.21) (.27)
-------- ------ ------ ------ ---------
Net income (loss)........ $ .92 $(.30) $(1.03) $ (.41) $ (.70)
-------- ------ ------ ------ ---------
-------- ------ ------ ------ ---------
Average Common Shares
Outstanding
(thousands)............ 88,079 88,079 (22,000) 66,079
Ratio of earnings from
continuing operations to
fixed charges............ 3.28 .50 .38
Ratio of earnings from
continuing operations to
fixed charges excluding
restructuring charge..... 3.28 3.37 2.54
<CAPTION>
@ $18.50 PER SHARE
---------------------------
PRO FORMA
ADJUSTMENTS
FOR SHARES
REPURCHASED(C) PRO FORMA
--------------- ---------
<S> <C> <C>
NET SALES
Retail drug.............. $ 2,982
Specialty retailing......
Medical services.........
---------
Total.................. 2,982
---------
COST OF GOODS SOLD AND
OPERATING EXPENSES
Retail drug.............. 2,988
Specialty retailing......
Medical services.........
---------
Total.................. 2,988
---------
Operating income (loss).... (6)
Interest expense...........$ 19 39
------- ---------
Income (loss) from
continuing operations
before income taxes...... (19 ) (45)
Income taxes (benefit)..... (8 ) (16)
------- ---------
Income from continuing
operations............... (11 ) (29)
DISCONTINUED OPERATIONS,
NET OF INCOME TAXES
Income from operations... 8
Loss on disposal......... (26)
------- ---------
Net income (loss)..........$ (11 ) $ (47)
------- ---------
------- ---------
EARNINGS (LOSS) PER SHARE
Continuing operations.... $ (.44)
Discontinued
operations............. (.27)
---------
Net income (loss)........ $ (.71)
---------
---------
Average Common Shares
Outstanding
(thousands)............ (22,000 ) 66,079
Ratio of earnings from
continuing operations to
fixed charges............ .37
Ratio of earnings from
continuing operations to
fixed charges excluding
restructuring charge..... 2.46
</TABLE>
See "Notes to the Unaudited Pro Forma Financial Information".
15
<PAGE> 18
RITE AID CORPORATION
SUMMARY UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED FEBRUARY 27, 1993
(IN MILLIONS, EXCEPT PER SHARE AND RATIO AMOUNTS)
<TABLE>
<CAPTION>
@ $16.00 PER SHARE
--------------------------
ADJUSTMENTS FOR PRO FORMA PRO FORMA
YEAR ENDED --------------------------- YEAR ENDED ADJUSTMENTS
FEBRUARY 27, DISCONTINUED CORPORATE FEBRUARY 27, FOR SHARES
1993 OPERATIONS(A) RESTRUCTURING(B) 1993 REPURCHASED(C) PRO FORMA
------------ -------- ---------------- ------------ -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
NET SALES
Retail drug............... $3,834 $3,834 $ 3,834
Specialty retailing....... 190 $ (190 )
Medical services.......... 61 (61 )
------ -------- ------ ---------
Total................... 4,085 (251 ) 3,834 3,834
------ -------- ------ ---------
COST OF GOODS SOLD AND
OPERATING EXPENSES
Retail drug............... 3,603 $ 149 3,752 3,752
Specialty retailing....... 181 (181 )
Medical services.......... 53 (53 )
------ -------- ------ ------ ---------
Total................... 3,837 (234 ) 149 3,752 3,752
------ -------- ------ ------ ---------
Operating income (loss)..... 248 (17 ) (149) 82 82
Interest expense............ 33 (4 ) 29 $ 22 51
------ -------- ------ ------ ------- ---------
Income (loss) from
continuing operations
before income taxes....... 215 (13 ) (149) 53 (22) 31
Income taxes (benefit)...... 82 (5 ) (58) 19 (8) 11
------ -------- ------ ------ ------- ---------
Income from continuing
operations................ 133 (8 ) (91) 34 (14) 20
DISCONTINUED OPERATIONS, NET
OF INCOME TAXES
Income from operations.... 8 8 8
Loss on disposal.......... (26 ) (26) (26)
------ -------- ------ ------ ------- ---------
Net income (loss)........... $ 133 $ (26 ) $ (91) $ 16 $ (14) $ 2
------ -------- ------ ------ ------- ---------
------ -------- ------ ------ ------- ---------
EARNINGS (LOSS) PER SHARE
Continuing operations..... $ 1.51 $ (.09 ) $(1.03) $ .39 $ .30
Discontinued operations... (.21 ) (.21) (.27)
------ -------- ------ ------ ---------
Net income (loss)......... $ 1.51 $ (.30 ) $(1.03) $ .18 $ .03
------ -------- ------ ------ ---------
------ -------- ------ ------ ---------
Average Common Shares
Outstanding (thousands)... 87,933 87,933 (22,000) 65,933
Ratio of earnings from
continuing operations to
fixed charges............. 3.78 1.78 1.34
Ratio of earnings from
continuing operations to
fixed charges excluding
restructuring charge...... 3.78 3.97 3.00
<CAPTION>
@ $18.50 PER SHARE
---------------------------
PRO FORMA
ADJUSTMENTS
FOR SHARES
REPURCHASED(C) PRO FORMA
--------------- ---------
<S> <C> <C>
NET SALES
Retail drug............... $ 3,834
Specialty retailing.......
Medical services..........
---------
Total................... 3,834
---------
COST OF GOODS SOLD AND
OPERATING EXPENSES
Retail drug............... 3,752
Specialty retailing.......
Medical services..........
---------
Total................... 3,752
---------
Operating income (loss)..... 82
Interest expense............$ 25 54
------- ---------
Income (loss) from
continuing operations
before income taxes....... (25 ) 28
Income taxes (benefit)...... (10 ) 9
------- ---------
Income from continuing
operations................ (15 ) 19
DISCONTINUED OPERATIONS, NET
OF INCOME TAXES
Income from operations.... 8
Loss on disposal.......... (26)
------- ---------
Net income (loss)...........$ (15 ) $ 1
------- ---------
------- ---------
EARNINGS (LOSS) PER SHARE
Continuing operations..... $ .29
Discontinued operations... (.27)
---------
Net income (loss)......... $ .02
---------
---------
Average Common Shares
Outstanding (thousands)... (22,000 ) 65,933
Ratio of earnings from
continuing operations to
fixed charges............. 1.30
Ratio of earnings from
continuing operations to
fixed charges excluding
restructuring charge...... 2.90
</TABLE>
See "Notes to the Unaudited Pro Forma Financial Information".
16
<PAGE> 19
RITE AID CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION
NOVEMBER 27, 1993
(IN MILLIONS, EXCEPT PER SHARE AND RATIO AMOUNTS)
<TABLE>
<CAPTION>
@ $16.00 PER SHARE
-------------------------
ADJUSTMENTS FOR PRO FORMA
NOVEMBER -------------------------------------------- PRO FORMA ADJUSTMENTS
27, DISCONTINUED RESERVE FOR CORPORATE NOVEMBER 27, FOR SHARES
1993 OPERATIONS(A) DISPOSAL(A) RESTRUCTURING(B) 1993 REPURCHASED(C) PRO FORMA
---------- ------------- ----------- ---------------- ------------ -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Cash.................. $ 7 $ (4) $ 3 $ 3
Accounts and notes
receivable.......... 209 (10) 199 199
Inventories........... 962 (83) 879 879
Prepaid expenses...... 23 (2) 21 21
---------- ----- ------ ---------
Total current
assets............ 1,201 (99) 1,102 1,102
Property, plant and
equipment........... 1,251 (88) 1,163 1,163
Accumulated
depreciation and
amortization........ 580 (34) 546 546
---------- ----- ------ ---------
Property, plant
and equipment,
net............. 671 (54) 617 617
Excess cost over
underlying equity in
subsidiaries........ 36 (20) 16 16
Lease acquisition
costs............... 105 (4) 101 101
---------- ----- ------ ---------
Total
intangibles..... 141 (24) 117 117
Other assets.......... 42 (2) 40 40
Net assets of
discontinued
operations.......... 157 $ (42) 115 115
---------- ----- ----- ------ ---------
Total assets...... $ 2,055 $ (22) $ (42) $1,991 $ 1,991
---------- ----- ----- ------ ---------
---------- ----- ----- ------ ---------
Current maturities of
long-term
debt................ $ 31 $ 31 $ 31
Accounts payable...... 238 $ (12) 226 226
Income taxes.......... 29 (3) 26 26
Accrued expenses...... 48 (3) 45 45
---------- ----- ------ ---------
Total current
liabilities..... 346 (18) 328 328
Long-term debt less
current
maturities.......... 558 558 $ 352 910
Restructuring
reserve............. $149 149 149
Deferred income
taxes............... 73 (4) $ (16) (58) (5) (5)
---------- ----- ----- ----- ------ ------ ---------
Total
liabilities..... 977 (22) (16) 91 1,030 352 1,382
Common stock.......... 90 90 90
Additional paid-in
capital............. 60 60 60
Retained earnings..... 949 (26) (91) 832 832
Treasury stock........ (21 ) (21) (352) (373)
---------- ----- ----- ------ ------ ---------
Total
stockholders'
equity.......... 1,078 (26) (91) 961 (352) 609
---------- ----- ----- ----- ------ ------ ---------
Total liabilities
and
stockholders'
equity.......... $ 2,055 $ (22) $ (42) $ -- $1,991 $ -- $ 1,991
---------- ----- ----- ----- ------ ------ ---------
---------- ----- ----- ----- ------ ------ ---------
Working capital....... $ 855 $ 774 $ 774
Total debt............ $ 589 $ 589 $ 941
Book value per
share............... $ 12.23 $10.91 $ 9.22
Debt/Debt and
Equity.............. 35.3% 38.0% 60.7%
Pro Forma Total
Debt(d)............. $ 816
Pro Forma Debt/Pro
Forma Debt and
Equity(d)........... 57.3%
<CAPTION>
@ $18.50 PER SHARE
--------------------------
PRO FORMA
ADJUSTMENTS
FOR SHARES
REPURCHASED(C) PRO FORMA
--------------- ---------
<S> <C> <C>
Cash.................. $ 3
Accounts and notes
receivable.......... 199
Inventories........... 879
Prepaid expenses...... 21
---------
Total current
assets............ 1,102
Property, plant and
equipment........... 1,163
Accumulated
depreciation and
amortization........ 546
---------
Property, plant
and equipment,
net............. 617
Excess cost over
underlying equity in
subsidiaries........ 16
Lease acquisition
costs............... 101
---------
Total
intangibles..... 117
Other assets.......... 40
Net assets of
discontinued
operations.......... 115
---------
Total assets...... $ 1,991
---------
---------
Current maturities of
long-term
debt................ $ 31
Accounts payable...... 226
Income taxes.......... 26
Accrued expenses...... 45
---------
Total current
liabilities..... 328
Long-term debt less
current
maturities..........$ 407 965
Restructuring
reserve............. 149
Deferred income
taxes............... (5)
------ ---------
Total
liabilities..... 407 1,437
Common stock.......... 90
Additional paid-in
capital............. 60
Retained earnings..... 832
Treasury stock........ (407 ) (428)
------ ---------
Total
stockholders'
equity.......... (407 ) 554
------ ---------
Total liabilities
and
stockholders'
equity..........$ -- $ 1,991
------ ---------
------ ---------
Working capital....... $ 774
Total debt............ $ 996
Book value per
share............... $ 8.38
Debt/Debt and
Equity.............. 64.3%
Pro Forma Total
Debt(d)............. $ 871
Pro Forma Debt/Pro
Forma Debt and
Equity(d)........... 61.1%
</TABLE>
See "Notes to the Unaudited Pro Forma Financial Information".
17
<PAGE> 20
RITE AID CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FEBRUARY 27, 1993
(IN MILLIONS, EXCEPT PER SHARE AND RATIO AMOUNTS)
<TABLE>
<CAPTION>
@ $16.00 PER SHARE
ADJUSTMENTS FOR -------------------------
------------------------------------------- PRO FORMA
FEBRUARY PRO FORMA ADJUSTMENT
27 DISCONTINUED RESERVE FOR CORPORATE FEBRUARY 27 FOR SHARES
1993 OPERATIONS(A) DISPOSAL(A) RESTRUCTURING(B) 1993 REPURCHASED(C) PRO FORMA
---------- ------------ ----------- ---------------- ------------ -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Cash................... $ 5 $ (3) $ 2 $ 2
Accounts and notes
receivable........... 196 (10) 186 186
Inventories............ 863 (71) 792 792
Prepaid expenses....... 28 (1) 27 27
---------- ----- ------ ---------
Total current
assets........... 1,092 (85) 1,007 1,007
Property, plant and
equipment............ 1,132 (78) 1,054 1,054
Accumulated
depreciation and
amortization......... 533 (30) 503 503
---------- ----- ------ ---------
Property, plant and
equipment, net..... 599 (48) 551 551
Excess cost over
underlying equity in
subsidiaries......... 37 (21) 16 16
Lease acquisition
costs................ 109 (4) 105 105
---------- ----- ------ ---------
Total
intangibles...... 146 (25) 121 121
Other assets........... 38 (3) 35 35
Net assets of
discontinued
operations........... 143 $ (42) 101 101
---------- ----- ----- ------ ---------
Total assets....... $ 1,875 $(18) $ (42) $1,815 $ 1,815
---------- ----- ----- ------ ---------
---------- ----- ----- ------ ---------
Current maturities of
long-term debt....... $ 31 $ 31 $ 31
Accounts payable....... 175 $ (7) 168 168
Income taxes........... 36 (4) 32 32
Accrued expenses....... 39 (3) 36 36
---------- ----- ------ ---------
Total current
liabilities...... 281 (14) 267 267
Long-term debt less
current maturities... 489 489 $ 352 841
Restructuring
reserve.............. $149 149 149
Deferred income
taxes................ 69 (4) $ (16) (58) (9) (9)
---------- ----- ----- ----- ------ ------ ---------
Total
liabilities...... 839 (18) (16) 91 896 352 1,248
Common stock........... 90 90 90
Additional paid-in
capital.............. 59 59 59
Retained earnings...... 908 (26) (91) 791 791
Treasury stock......... (21 ) (21) (352) (373)
---------- ----- ----- ------ ------ ---------
Total stockholders'
equity........... 1,036 (26) (91) 919 (352) 567
---------- ----- ----- ----- ------ ------ ---------
$ 1,875 $(18) $ (42) $ -- $1,815 $ -- $ 1,815
---------- ----- ----- ----- ------ ------ ---------
---------- ----- ----- ----- ------ ------ ---------
Working capital........ $ 811 $ 740 $ 740
Total debt............. $ 520 $ 520 $ 872
Book value per share... $ 11.76 $10.44 $ 8.59
Debt/Debt and Equity... 33.4% 36.1% 60.6%
Pro Forma Total
Debt(d).............. $ 747
Pro Forma Debt/Pro
Forma Debt and
Equity(d)............ 56.8%
<CAPTION>
@ $18.50 PER SHARE
--------------------------
PRO FORMA
ADJUSTMENT
FOR SHARES
REPURCHASED(C) PRO FORMA
--------------- ---------
<S> <C> <C>
Cash................... $ 2
Accounts and notes
receivable........... 186
Inventories............ 792
Prepaid expenses....... 27
---------
Total current
assets........... 1,007
Property, plant and
equipment............ 1,054
Accumulated
depreciation and
amortization......... 503
---------
Property, plant and
equipment, net..... 551
Excess cost over
underlying equity in
subsidiaries......... 16
Lease acquisition
costs................ 105
---------
Total
intangibles...... 121
Other assets........... 35
Net assets of
discontinued
operations........... 101
---------
Total assets....... $ 1,815
---------
---------
Current maturities of
long-term debt....... $ 31
Accounts payable....... 168
Income taxes........... 32
Accrued expenses....... 36
---------
Total current
liabilities...... 267
Long-term debt less
current maturities...$ 407 896
Restructuring
reserve.............. 149
Deferred income
taxes................ (9)
------ ---------
Total
liabilities...... 407 1,303
Common stock........... 90
Additional paid-in
capital.............. 59
Retained earnings...... 791
Treasury stock......... (407 ) (428)
------ ---------
Total stockholders'
equity........... (407 ) 512
------ ---------
$ -- $ 1,815
------ ---------
------ ---------
Working capital........ $ 740
Total debt............. $ 927
Book value per share... $ 7.75
Debt/Debt and Equity... 64.4%
Pro Forma Total
Debt(d).............. $ 802
Pro Forma Debt/Pro
Forma Debt and
Equity(d)............ 61.0%
</TABLE>
See "Notes to the Unaudited Pro Forma Financial Information".
18
<PAGE> 21
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION
(a) The adjustments for discontinued operations reflect the planned sale of
Rite Aid's four Non-Drugstore businesses which include American Discount Auto
Parts, Encore Books, Concord Custom Cleaners and Sera-Tec Biologicals. The
resulting loss on disposition of these operations is estimated to be $26
million, net of income tax benefit of $16 million.
(b) The corporate restructuring adjustment is a pre-tax $149 million charge
for the closing of 200 under-performing drugstores and the disposition of other
assets.
(c) The adjustments for shares repurchased give effect to the purchase of
22,000,000 shares at $16.00 and $18.50 per share, excluding related fees and
expenses. The adjustments also reflect the effect of borrowing the full purchase
price of the shares at an assumed rate of 6.25%. The 6.25% is a blended rate
based upon the Company's intention, at some future time, to finance a portion of
the additional debt on a long-term basis. Additionally, interest savings have
been imputed on dividends that would have not been paid as a result of the
shares repurchased, calculated at a weighted average commercial paper rate.
(d) Pro Forma Total Debt and Pro Forma Debt/Pro Forma Debt and Equity
reflect the reduction of debt with assumed net proceeds of $125 million from the
sale of the Non-Drugstore businesses. No agreement exists between the Company
and any prospective purchaser concerning such planned disposition. No assurances
can be given as to the amount or timing of the receipt of any proceeds of any
such planned dispositions. See Section 10.
19
<PAGE> 22
Additional Information. The Company is subject to the informational
requirements of the Exchange Act and in accordance therewith files periodic
reports, proxy statements and other information with the Commission relating to
its business, financial condition and other matters. The Company is required to
disclose in such proxy statements and reports certain information, as of
particular dates, concerning the Company's directors and officers, their
remuneration, stock options granted to them, the principal owners of the
Company's securities and any material interest of such persons in transactions
with the Company. The Company has also filed an Issuer Tender Offer Statement on
Schedule 13E-4 (the "Schedule 13E-4") with the Commission, which includes
certain additional information relating to the Offer.
Such material may be inspected at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and also should be available for inspection and copying at the
following regional offices of the Commission: Seven World Trade Center, New
York, New York 10048 and Northwestern Atrium Center, 500 West Madison, Suite
1400, Chicago, Illinois 60661. Reports, proxy materials and other information
about the Company are also available at the offices of the NYSE, 20 Broad
Street, New York, New York 10005 and the PSE, 301 Pine Street, San Francisco,
California 94104. Copies may also be obtained by mail for prescribed rates from
the Commission's Public Reference Room, 450 Fifth Street, N.W., Washington, D.C.
20549. The Schedule 13E-4 will not be available at the Commission's regional
offices.
11. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE
EXCHANGE ACT.
The Company's purchase of Shares pursuant to the Offer will reduce the
number of Shares that might otherwise trade publicly and is likely to reduce the
number of shareholders. Nonetheless, the Company anticipates that there will
still be a sufficient number of Shares outstanding and publicly traded following
the Offer to ensure a continued trading market in the Shares. Based on the
published guidelines of the NYSE and the PSE, the Company does not believe that
its purchase of Shares pursuant to the Offer will cause its remaining shares to
be delisted from any such exchange.
The Shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit on the collateral of the Shares. The Company believes that,
following the repurchase of Shares pursuant to the Offer, the Shares will
continue to be "margin securities" for purposes of the Federal Reserve Board's
margin regulations.
The Shares are registered under the Exchange Act which requires, among
other things, that the Company furnish certain information to its shareholders
and to the Commission and comply with the Commission's proxy rules in connection
with meetings of the Company's shareholders. The Company believes that its
purchase of Shares pursuant to the Offer will not result in the Shares becoming
eligible for deregistration under the Exchange Act.
12. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
The Company is not aware of any license or regulatory permit that appears
to be material to its business that might be adversely affected by its
acquisition of Shares as contemplated in the Offer or of any approval or other
action by any government or governmental, administrative or regulatory authority
or agency, domestic or foreign, that would be required for the Company's
acquisition or ownership of Shares as contemplated by the Offer. Should any such
approval or other action be required, the Company currently contemplates that it
will seek such approval or other action. The Company cannot predict whether it
may determine that it is required to delay the acceptance for payment of, or
payment for, Shares tendered pursuant to the Offer pending the outcome of any
such matter. There can be no assurance that any such approval or other action,
if needed, would be obtained or would be obtained without substantial conditions
or that the failure to obtain any such approval or other action might not result
in adverse consequences to the Company's business. The Company's obligations
under the Offer to accept for payment and pay for Shares are subject to certain
conditions. See Section 6.
20
<PAGE> 23
13. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following summary is a general discussion of certain of the United
States federal income tax consequences of the Offer. This summary is based upon
laws, regulations, rulings and decisions now in effect, all of which are subject
to change, possibly retroactively. No ruling as to any matter discussed in this
summary has been requested or received from the IRS.
EACH SHAREHOLDER IS URGED TO CONSULT AND RELY ON THE SHAREHOLDER'S OWN TAX
ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES TO THE SHAREHOLDER OF TENDERING
SHARES PURSUANT TO THE OFFER.
In General. A shareholder's exchange of Shares for cash pursuant to the
Offer will be a taxable transaction for federal income tax purposes, and may
also be a taxable transaction under applicable state, local, foreign or other
tax laws. This summary does not discuss any aspects of state, local, foreign or
other tax laws. Certain shareholders (including insurance companies, tax-exempt
organizations, financial institutions, broker dealers and shareholders who have
acquired their Shares upon the exercise of options or otherwise as compensation)
may be subject to special rules not discussed below. For purposes of this
discussion, shareholders are assumed to hold their Shares as capital assets.
Treatment as a Sale or Exchange. Under Section 302 of the Internal Revenue
Code of 1986, as amended (the "Code"), a transfer of Shares to the Company
pursuant to the Offer will, as a general rule, be treated as a sale or exchange
of the Shares (rather than as a corporate distribution) if the receipt of cash
upon the sale (a) is "substantially disproportionate" with respect to the
shareholder, (b) results in a "complete termination" of the shareholder's
interest in the Company or (c) is "not essentially equivalent to a dividend"
with respect to the shareholder. These tests (the "Section 302 tests") are
explained more fully below.
If any of the Section 302 tests is satisfied, a tendering shareholder will
recognize capital gain or loss equal to the difference between the amount of
cash received by the shareholder pursuant to the Offer and the shareholder's
basis in the Shares sold pursuant to the Offer. If the Shares have been held for
more than one year, the gain or loss will be long-term capital gain or loss.
Therefore, a tendering Shareholder may wish to take the various bases and
holding periods of his Shares, if such characteristics are not uniform, into
account in determining which Shares to tender.
Constructive Ownership of Stock. In determining whether any of the Section
302 tests is satisfied, a shareholder must take into account not only Shares
actually owned by the shareholder, but also Shares that are constructively owned
pursuant to Section 318 of the Code. Under Section 318, a shareholder may
constructively own Shares actually owned, and in some cases constructively
owned, by certain related individuals and entities in which the shareholder has
an interest, or, in the case of shareholders that are entities, by certain
individuals or entities that have an interest in the shareholder, as well as any
Shares the shareholder has a right to acquire by exercise of an option or by the
conversion or exchange of a security, such as the Convertible Securities. With
respect to option and convertible security attribution, the IRS takes the
position that Shares constructively owned by a shareholder by reason of a right
on the shareholder's part to acquire the Shares from the Company are not to be
considered outstanding for purposes of applying the Section 302 tests to other
shareholders; however, there are both contrary and supporting judicial decisions
with respect to this issue.
The Section 302 Tests. One of the following tests must be satisfied in
order for the exchange of shares pursuant to the Offer to be treated as a sale
rather than as a dividend distribution.
a. Substantially Disproportionate Test. The receipt of cash by a
shareholder will be substantially disproportionate with respect to the
shareholder if the percentage of the outstanding Shares actually and
constructively owned by the shareholder immediately following the exchange of
Shares pursuant to the Offer (treating Shares exchanged pursuant to the Offer
as not outstanding) is less than 80% of the percentage of the outstanding
Shares actually and constructively owned by the shareholder immediately before
the exchange (treating Shares exchanged pursuant to the Offer as outstanding).
21
<PAGE> 24
b. Complete Termination Test. The receipt of cash by a shareholder will
be a complete termination of the shareholder's interest if either (i) all of
the Shares actually and constructively owned by the shareholder are sold
pursuant to the Offer or (ii) all of the Shares actually owned by the
shareholder are sold pursuant to the Offer and the shareholder is eligible to
waive, and effectively waives, the attribution of Shares constructively owned
by the shareholder in accordance with the procedures described in Section
302(c)(2) of the Code. Shareholders considering making such an election should
do so in consultation with their own tax advisors.
c. Not Essentially Equivalent to a Dividend Test. The receipt of cash by
a shareholder will not be essentially equivalent to a dividend if the
shareholder's exchange of Shares pursuant to the Offer results in a
"meaningful reduction" of the shareholder's proportionate interest in the
Company. Whether the receipt of cash by a shareholder will result in a
meaningful reduction of the shareholder's proportionate interest will depend
on the shareholder's particular facts and circumstances. However, in the case
of a small minority shareholder, even a small reduction may satisfy this test
where, as expected in the case of the Offer, payments will not be pro rata
with respect to all outstanding Shares. The IRS has indicated in a published
ruling that, in the case of a small minority shareholder of a publicly held
corporation who exercises no meaningful control over corporate affairs, a
reduction in the shareholder's proportionate interest in the corporation from
.0001118% to .0001081% would constitute a meaningful reduction.
Although the issue is not free from doubt, a shareholder may be able to
take into account acquisitions or dispositions of Shares (including market
purchases and sales) substantially contemporaneous with the Offer in determining
whether any of the Section 302 tests is satisfied.
In the event that the Offer is oversubscribed, the Company's purchase of
Shares pursuant to the Offer will be prorated. Thus, in such case even if all
the Shares actually and constructively owned by a shareholder are tendered
pursuant to the Offer, not all of the Shares will be purchased by the Company,
which in turn may affect the shareholder's ability to satisfy the Section 302
tests.
Treatment as a Dividend. If none of the Section 302 tests is satisfied
and, as anticipated (although there can be no assurances), the Company has
sufficient earnings and profits, a tendering shareholder will be treated as
having received a dividend includible in gross income in an amount equal to the
entire amount of cash received by the shareholder pursuant to the Offer. This
amount will not be reduced by the shareholder's basis in the Shares exchanged
pursuant to the Offer, and (except as described below for corporate shareholders
eligible for the dividends-received deduction) the shareholder's basis in those
Shares will be added to the shareholder's basis in his remaining Shares. No
assurance can be given that any of the Section 302 tests will be satisfied as to
any particular shareholder, and thus no assurance can be given that any
particular shareholder will not be treated as having received a dividend taxable
as ordinary income. Any cash received for Shares pursuant to the Offer in excess
of the Company's earnings and profits will be treated, first, as a non-taxable
return of capital to the extent of the shareholder's basis for such
shareholder's Shares, and, thereafter, as a capital gain to the extent it
exceeds such basis.
Special Rules for Corporate Shareholders. To the extent that the exchange
of Shares by a corporate shareholder is treated as a dividend, the shareholder
generally will be entitled to a dividends-received deduction equal to 70% of the
dividend, subject to applicable limitations, including those relating to
"debt-financed portfolio stock" under Section 246A of the Code and to the 45-day
holding period requirement of Section 246(c) of the Code. Also, since it is
expected that purchases pursuant to the Offer will not be pro rata as to all
shareholders, any amount treated as a dividend to a corporate shareholder
generally is expected to constitute an "extraordinary dividend" subject to the
provisions of Section 1059 of the Code (except as may otherwise be provided in
regulations yet to be promulgated by the Treasury Department). Under Section
1059 of the Code, a corporate shareholder must reduce the tax basis of all such
shareholder's stock (but not below zero) by the portion of any "extraordinary
dividend" that is equal to the deduction allowable under the
22
<PAGE> 25
dividends received deduction rules, and, if such portion exceeds the
shareholder's tax basis for the stock, must treat any such excess as additional
gain on the subsequent sale or other disposition of such stock.
Backup Withholding. See Section 3 concerning the potential application of
federal backup withholding.
Foreign Shareholders. The Company will assume that the exchange is a
dividend as to foreign shareholders and will therefore withhold federal income
tax at a rate equal to 30% of the gross proceeds paid to a foreign shareholder
or his agent pursuant to the Offer, unless the Depositary determines that a
reduced rate of withholding is available pursuant to a tax treaty or that an
exemption from withholding is applicable because the gross proceeds are
effectively connected with the conduct of a trade or business by the foreign
shareholder within the United States. For this purpose, a foreign shareholder is
any shareholder that is not (a) a citizen or resident of the United States, (b)
a corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, or (c) any
estate or trust the income of which is subject to United States federal income
taxation regardless of the source of such income.
Generally, the determination of whether a reduced rate of withholding is
applicable is made by reference to a foreign shareholder's address or to a
properly completed Form 1001 furnished by the shareholder, and the determination
of whether an exemption from withholding is available on the grounds that gross
proceeds paid to a foreign shareholder are effectively connected with a United
States trade or business is made on the basis of a properly completed Form 4224
furnished by the shareholder. The Depositary will determine a foreign
shareholder's eligibility for a reduced rate of, or exemption from, withholding
by reference to the shareholder's address and any Forms 1001 or 4224 submitted
to the Depositary by a foreign shareholder unless facts and circumstances
indicate that such reliance is not warranted or unless applicable law requires
some other method for determining whether a reduced rate of withholding is
applicable. These forms can be obtained from the Depositary. See the
instructions to the Letter of Transmittal.
A foreign shareholder with respect to whom tax has been withheld may be
eligible to obtain a refund of all or a portion of the withheld tax if the
shareholder satisfies one of the Section 302 tests for capital gain treatment or
is otherwise able to establish that no tax or a reduced amount of tax was due.
Foreign shareholders are urged to consult their own tax advisors regarding the
application of federal income tax withholding, including eligibility for a
withholding tax reduction or exemption and the refund procedure.
14. EXTENSION OF THE OFFER; TERMINATION; AMENDMENTS.
The Company expressly reserves the right, at any time or from time to time,
in its sole discretion, to extend the period of time during which the Offer is
open by giving oral or written notice of such extension to the Depositary and
making a public announcement thereof. The Company also expressly reserves the
right, in its sole discretion, to terminate the Offer and not accept for payment
or pay for any Shares not theretofore accepted for payment or paid for or,
subject to applicable law, to postpone payment for Shares upon the occurrence of
any of the conditions specified in Section 6 by giving oral or written notice of
such termination or postponement to the Depositary and making a public
announcement thereof. The Company's reservation of the right to delay payment
for Shares which it has accepted for payment is limited by Rules 13e-4(f)(2) and
13e-4(f)(5) promulgated under the Exchange Act. Rule 13e-4(f)(2) requires that
the Company permit Shares tendered pursuant to the Offer to be withdrawn: (i) at
any time during the period the Offer remains open; and (ii) if not yet accepted
for payment, after the expiration of forty business days from the commencement
of the Offer. Rule 13e-4(f)(5) requires that the Company must either pay the
consideration offered or return the Shares tendered promptly after the
termination or withdrawal of the Offer. Subject to compliance with applicable
law, the Company further reserves the right, in its sole discretion, at any time
or from time to time to amend the Offer in any respect, including increasing or
decreasing the number of Shares the Company may purchase or the range of prices
it may pay pursuant to the Offer. Amendments to the Offer may be made at any
time or from time to time effected by public announcement thereof, such
announcement, in the case of an extension, to be issued no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date. Any public announcement made pursuant to the Offer will be
disseminated promptly to shareholders in a manner reasonably designed to inform
shareholders of such
23
<PAGE> 26
change. Without limiting the manner in which the Company may choose to make a
public announcement, except as required by applicable law, the Company shall
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by making a release to the Dow Jones News
Service.
If the Company materially changes the terms of the Offer or the information
concerning the Offer, or if it waives a material condition of the Offer, the
Company will extend the Offer to the extent required by Rules 13e-4(d)(2) and
13e-4(e)(2) promulgated under the Exchange Act. These rules require that the
minimum period during which an offer must remain open following material changes
in the terms of the offer or information concerning the offer (other than a
change in price or a change in percentage of securities sought) will depend on
the facts and circumstances, including the relative materiality of such terms or
information. If (i) the Company increases or decreases the price to be paid for
Shares, or the Company increases the number of Shares being sought and any such
increase in the number of Shares being sought exceeds 2% of the outstanding
Shares, or the Company decreases the number of Shares being sought and (ii) the
Offer is scheduled to expire at any time earlier than the expiration of a period
ending on the tenth business day from, and including, the date that notice of
such increase or decrease is first published, sent or given, the Offer will be
extended until the expiration of such period of ten business days.
15. FEES AND EXPENSES.
The Company has retained Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ") as Dealer Manager in connection with the Offer. The Dealer
Manager will receive a fee of $.03 per Share purchased by the Company pursuant
to the Offer. The Company will also reimburse DLJ for its reasonable
out-of-pocket expenses relating to the Offer, including reasonable fees and
expenses of counsel. The Company has agreed to indemnify DLJ against certain
liabilities in connection with the Offer, including certain liabilities under
the federal securities laws. The Dealer Manager has also rendered various
investment banking and other advisory services to the Company in the past, for
which it has received customary compensation. DLJ has been retained to assist
the Company in connection with the sale of its Non-Drugstore Businesses, and the
Company has agreed to pay DLJ fees which range from 1% to 1 1/2% of the purchase
price for such businesses.
The Company has retained Morrow & Co., Inc. as Information Agent and Harris
Trust Company of New York as Depositary in connection with the Offer. The
Information Agent may contact shareholders by mail, telephone, telex, telegraph
and personal interviews, and may request brokers, dealers and other nominee
shareholders to forward materials relating to the Offer to beneficial owners.
The Depositary and the Information Agent will receive reasonable and customary
compensation for their services. The Company will also reimburse the Depositary
and the Information Agent for out-of-pocket expenses, including reasonable
attorneys' fees, and has agreed to indemnify the Depositary and the Information
Agent against certain liabilities in connection with the Offer, including
certain liabilities under the federal securities laws. Neither the Information
Agent nor the Depositary has been retained to make solicitations or
recommendations in connection with the Offer.
The Company will not pay fees or commissions to any broker, dealer,
commercial bank, trust company or other person (other than the Dealer Manager)
for soliciting any Shares pursuant to the Offer. The Company will, however, on
request through the Information Agent, reimburse such persons for customary
handling and mailing expenses incurred in forwarding materials in respect of the
Offer to the beneficial owners for which they act as nominees. No such broker,
dealer, commercial bank or trust company has been authorized to act as the
Company's agent for purposes of this Offer. The Company will pay (or cause to be
paid) any stock transfer taxes on its purchase of Shares, except as otherwise
provided in Instruction 7 of the Letter of Transmittal.
16. MISCELLANEOUS.
The Offer is not being made to, nor will the Company accept tenders from,
holders of Shares in any jurisdiction in which the Offer or its acceptance would
not comply with the securities or Blue Sky laws of such jurisdiction. The
Company is not aware of any jurisdiction in which the making of the Offer or the
tender of Shares would not be in compliance with the laws of such jurisdiction.
However, the Company reserves the right to exclude holders in any jurisdiction
in which it is asserted that the Offer cannot lawfully be made. So long as the
Company makes a good faith effort to comply with any state law deemed applicable
to the
24
<PAGE> 27
Offer, if it cannot do so, the Company believes that the exclusion of holders
residing in such jurisdiction is permitted under Rule 13e-4(f)(9) promulgated
under the Exchange Act. In any jurisdiction the securities or Blue Sky laws of
which require the Offer to be made by a licensed broker or dealer, the Offer
shall be deemed to be made on the Company's behalf by DLJ as Dealer Manager or
one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
RITE AID CORPORATION
January 10, 1994
25
<PAGE> 28
Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal and certificates for the Shares and any other required documents
should be sent or delivered by each shareholder or his broker, dealer,
commercial bank, trust company or other nominee to the Depositary at one of its
addresses set forth below:
THE DEPOSITARY:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
BY MAIL: FACSIMILE TRANSMISSION: BY HAND:
P.O. BOX 1023 (212) 701-7636 RECEIVE WINDOW
WALL STREET STATION (212) 701-7640 77 WATER STREET
NEW YORK, NEW YORK 10268 5TH FLOOR
NEW YORK, NEW YORK 10005
</TABLE>
FOR INFORMATION CALL:
(212) 701-7624
(CALL COLLECT)
Any questions or requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Information Agent at the telephone numbers and
addresses below. You may also contact the Dealer Manager or your broker, dealer,
commercial bank or trust company for assistance concerning the Offer. To confirm
delivery of your Shares, you are directed to contact the Depositary.
THE INFORMATION AGENT:
MORROW & CO., INC.
909 THIRD AVENUE
20TH FLOOR
NEW YORK, NEW YORK 10022
(212) 754-8000
(CALL COLLECT)
OR
CALL TOLL-FREE
1-800-662-5200
THE DEALER MANAGER FOR THE OFFER IS:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
2121 AVENUE OF THE STARS
LOS ANGELES, CA 90067
(310) 282-6100
(CALL COLLECT)
<PAGE> 1
LETTER OF TRANSMITTAL
TO ACCOMPANY SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
RITE AID CORPORATION
TENDERED PURSUANT TO THE OFFER TO PURCHASE
DATED JANUARY 10, 1994
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME,
ON MONDAY, FEBRUARY 7, 1994, UNLESS THE OFFER IS EXTENDED
TO: HARRIS TRUST COMPANY OF NEW YORK. Depositary
<TABLE>
<S> <C> <C>
BY MAIL: FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
(for Eligible Institutions Only) Receive Window
P.O. Box 1023 (212) 701-7636 77 Water Street
Wall Street Station (212) 701-7640 5th Floor
New York, New York 10268 New York, New York 10005
</TABLE>
CONFIRM BY TELEPHONE:
(212) 701-7624 (collect)
FOR INFORMATION TELEPHONE:
(212) 701-7624 (collect)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
(SEE INSTRUCTIONS 3 AND 4)
- ------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S) CERTIFICATE(S) TENDERED
(PLEASE FILL IN EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S) (ATTACH SIGNED LIST IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NUMBER
OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
Total Shares Tendered
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
* Need not be completed if Shares are delivered by book-entry transfer.
** If you desire to tender fewer than all Shares evidenced by any certificates
listed above, please indicate in this column the number of Shares you wish to
tender. Otherwise, all Shares evidenced by such certificates will be deemed
to have been tendered. See Instruction 4.
<PAGE> 2
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN THOSE SHOWN ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE OR TELEX NUMBER OTHER THAN THAT
LISTED ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
THIS LETTER OF TRANSMITTAL IS TO BE USED ONLY (A) IF CERTIFICATES FOR
SHARES (AS DEFINED BELOW) ARE TO BE FORWARDED WITH IT, OR (B) IF A TENDER OF
SHARES IS TO BE MADE BY BOOK-ENTRY TRANSFER TO THE ACCOUNT MAINTAINED BY THE
DEPOSITARY AT THE DEPOSITORY TRUST COMPANY ("DTC"), THE MIDWEST SECURITIES TRUST
COMPANY ("MSTC"), OR THE PHILADELPHIA DEPOSITORY TRUST COMPANY ("PDTC")
(COLLECTIVELY, THE "BOOK-ENTRY TRANSFER FACILITIES") PURSUANT TO SECTION 3 OF
THE OFFER TO PURCHASE.
ABSENT CIRCUMSTANCES CAUSING THE RIGHTS (AS DEFINED BELOW) TO BECOME
EXERCISABLE OR SEPARATELY TRADEABLE PRIOR TO THE EXPIRATION DATE (AS DEFINED IN
THE OFFER TO PURCHASE), A TENDER OF SHARES WILL ALSO CONSTITUTE A TENDER OF THE
ASSOCIATED RIGHTS. UNLESS THE CONTEXT REQUIRES OTHERWISE, ALL REFERENCES HEREIN
TO SHARES INCLUDE THE ASSOCIATED RIGHTS. SHAREHOLDERS WHOSE CERTIFICATES ARE NOT
IMMEDIATELY AVAILABLE OR WHO CANNOT DELIVER THEIR CERTIFICATES FOR SHARES AND
ALL OTHER DOCUMENTS THIS LETTER OF TRANSMITTAL REQUIRES TO THE DEPOSITARY AT OR
BEFORE THE EXPIRATION DATE (OR WHO ARE UNABLE TO COMPLY WITH THE PROCEDURE FOR
BOOK-ENTRY TRANSFER ON A TIMELY BASIS) MUST TENDER THEIR SHARES ACCORDING TO THE
GUARANTEED DELIVERY PROCEDURE SET FORTH IN SECTION 3 OF THE OFFER TO PURCHASE.
SEE INSTRUCTION 2. DELIVERY OF DOCUMENTS TO ONE OF THE BOOK-ENTRY TRANSFER
FACILITIES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH ONE OF THE BOOK-ENTRY
TRANSFER FACILITIES AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:........................................
Check Box of Applicable Book-Entry Transfer Facility:
DTC / / MSTC / / PDTC / /
Account Number:.......................................................
Transaction Code Number:..............................................
/ / CHECK HERE IF CERTIFICATES FOR TENDERED SHARES ARE BEING DELIVERED PURSUANT
TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s):.......................................
Date of Execution of Notice of Guaranteed Delivery:...................
Name of Institution Which Guaranteed Delivery:........................
Check Box of Applicable Book-Entry Transfer Facility and give
Account Number and Transaction Code if Delivered by Book-Entry
Transfer:.............................................................
DTC / / MSTC / / PDTC / /
Account Number:.......................................................
Transaction Code Number:..............................................
To Harris Trust Company of New York:
The undersigned hereby tenders to Rite Aid Corporation, a Delaware
corporation (the "Company"), the above-described shares of the Company's common
stock, par value $1.00 per share, (including the associated Preferred Share
Purchase Rights (the "Rights"), the "Shares"), at the price per Share indicated
in this Letter of Transmittal, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Company's Offer to Purchase dated
January 10, 1994, receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which together constitute the "Offer"). Absent circumstances
causing the Rights to become exercisable or separately tradeable prior to the
Expiration Date, a tender of Shares will also constitute a tender of the
associated Rights. Unless the context requires otherwise, all references herein
to Shares include the associated Rights.
Subject to and effective on acceptance for payment of the Shares tendered
hereby in accordance with the terms of the Offer (including, if the Offer is
extended or amended, the terms or conditions of any such extension or
amendment), the undersigned hereby sells, assigns, and transfers to or upon the
order of the Company all right, title and interest in and to all Shares tendered
hereby or orders the registration of such Shares tendered by book-entry transfer
that are purchased pursuant to the Offer to or upon the order of the Company and
hereby irrevocably constitutes and appoints the Depositary as attorney-in-fact
of the undersigned with respect to such Shares, with full power of substitution
(such power of attorney being an irrevocable power coupled with interest), to:
(a) deliver certificates for such Shares, or transfer ownership of
such Shares on the account books maintained by a Book-Entry Transfer
Facility, together in either such case with all accompanying evidences of
transfer and authenticity, to or upon the order of the Company, upon
receipt by the Depositary, as the undersigned's agent, of the Purchase
Price (as defined below) with respect to such Shares;
<PAGE> 3
(b) present certificates for such Shares for cancellation and transfer
on the Company's books; and
(c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares, all in accordance with the terms of
the Offer.
The undersigned hereby represents and warrants to the Company that:
(a) the undersigned understands that tenders of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and
in the Instructions hereto will constitute the undersigned's acceptance of
the terms and conditions of the Offer, including the undersigned's
representation and warranty that (i) the undersigned has a net long
position in Shares or equivalent securities at least equal to the Shares
tendered within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended, and (ii) such tender of Shares complies
with Rule 14e-4;
(b) when and to the extent the Company accepts the Shares for
purchase, the Company will acquire good, marketable and unencumbered title
to them, free and clear of all security interests, liens, charges,
encumbrances, conditional sales agreements or other obligations relating to
their sale or transfer, and not subject to any adverse claim;
(c) on request, the undersigned will execute and deliver any
additional documents the Depositary or the Company deems necessary or
desirable to complete the assignment, transfer and purchase of the Shares
tendered hereby; and
(d) the undersigned has read and agrees to all of the terms of the
Offer.
The names and addresses of the registered owners should be printed, if they
are not already printed above, exactly as they appear on the certificates
representing Shares tendered hereby. The certificate numbers, the number of
Shares represented by such certificates, the number of Shares that the
undersigned wishes to tender and the purchase price at which such Shares are
being tendered should be indicated in the appropriate boxes.
The undersigned understands that the Company will determine a single per
Share price (not greater than $18.50 nor less than $16.00 per Share) (the
"Purchase Price") that it will pay for Shares validly tendered pursuant to the
Offer taking into account the number of Shares so tendered and the prices
specified by tendering shareholders. The undersigned understands that the
Company will select the Purchase Price that will allow it to buy 22,000,000
Shares (or such lesser number of Shares as are validly tendered at prices not
greater than $18.50 nor less than $16.00 per Share) pursuant to the Offer. The
undersigned understands that all Shares validly tendered at prices at or below
the Purchase Price will be purchased at the Purchase Price, net to the seller in
cash, upon the terms and subject to the conditions of the Offer, including its
proration provisions, and that the Company will return all other Shares,
including Shares tendered and not withdrawn at prices greater than the Purchase
Price and Shares not purchased because of proration.
The undersigned recognizes that under certain circumstances set forth in
the Offer to Purchase, the Company may terminate or amend the Offer or may not
be required to purchase any of the Shares tendered hereby or may accept for
payment fewer than all of the Shares tendered hereby. The undersigned
understands that certificate(s) for any Shares not tendered or not purchased
will be returned to the undersigned at the address indicated above, unless
otherwise indicated under the "Special Payment Instructions" or "Special
Delivery Instructions" below. The undersigned recognizes that the Company has no
obligation, pursuant to the "Special Payments Instructions," to transfer any
certificate for Shares from the name of their registered owner, or to order the
registration or transfer of such Shares tendered by book-entry transfer, if the
Company purchases none of the Shares represented by such certificate or tendered
by such book-entry transfer.
The undersigned understands that acceptance of Shares by the Company for
payment will constitute a binding agreement between the undersigned and the
Company upon the terms and subject to the conditions of the Offer.
The check for the Purchase Price for such of the tendered Shares as are
purchased will be issued to the order of the undersigned and mailed to the
address indicated above unless otherwise indicated under the "Special Payment
Instructions" or the "Special Delivery Instructions" below.
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned, and any
obligations of the undersigned under this Letter of Transmittal shall be binding
upon the heirs, personal representatives, successors and assigns of the
undersigned. Except as stated in the Offer to Purchase, this tender is
irrevocable.
<PAGE> 4
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE AT
WHICH SHARES ARE BEING TENDERED.
------------------------------------------------------
IF SHARES ARE BEING TENDERED AT
MORE THAN ONE PRICE, USE A
SEPARATE LETTER OF TRANSMITTAL
FOR EACH PRICE SPECIFIED.
(SEE INSTRUCTION 5)
------------------------------------------------------
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED,
OR IF NO BOX IS CHECKED
(EXCEPT AS PROVIDED IN
THE ODD LOTS INSTRUCTIONS
TO THE RIGHT), THERE IS
NO VALID TENDER OF SHARES.
------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
/ / $16 / / $16 5/8 / / $17 1/4 / / $17 7/8
/ / $16 1/8 / / $16 3/4 / / $17 3/8 / / $18
/ / $16 1/4 / / $16 7/8 / / $17 1/2 / / $18 1/8
/ / $16 3/8 / / $17 / / $17 5/8 / / $18 1/4
/ / $16 1/2 / / $17 1/8 / / $17 3/4 / / $18 3/8
/ / $18 1/2
</TABLE>
------------------------------------------------------
------------------------------------------------------
ODD LOTS
(SEE INSTRUCTION 8)
To be completed ONLY if Shares are being tendered by or on behalf of a
person owning beneficially, as of the close of business on January 6, 1994 and
who continue to own beneficially as of the Expiration Date (as defined below),
an aggregate of fewer than 100 Shares.
The undersigned either (check one box):
/ / was the beneficial owner, as of the close of business on January 6, 1994
of an aggregate of fewer than 100 Shares all of which are being
tendered, or
/ / is a broker, dealer, commercial bank, trust company or other nominee
which
(a) is tendering, for the beneficial owners thereof, Shares with respect
to which it is the record owner, and
(b) believes, based upon representations made to it by such beneficial
owners, that each such person was the beneficial owner, as of the
close of business on January 6, 1994 of an aggregate of fewer than
100 Shares and is tendering all of such Shares.
If you do not wish to specify a purchase price check the following box, in
which case you will be deemed to have tendered at the Purchase Price
determined by the Company in accordance with the terms of the Offer (persons
checking this box need not indicate the price per Share in the box entitled
"Price (in Dollars) Per Share at which Shares are Being Tendered" in this
Letter of Transmittal.) / /
------------------------------------------------------
<PAGE> 5
------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 6, 7 AND 9)
To be completed ONLY if certificate(s) for Shares not tendered or not
purchased and/or any check for the Purchase Price of Shares purchased are to
be issued in the name of and sent to someone other than the undersigned.
Issue / / Check / / Certificate(s) to:
Name..........................................................................
(PLEASE PRINT)
Address.......................................................................
.............................................................................
(INCLUDE ZIP CODE)
.............................................................................
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
------------------------------------------------------
------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 6, 7 AND 9)
To be completed ONLY if certificate(s) for Shares not tendered or not
purchased and/or any check for the Purchase Price of Shares purchased, issued
in the name of the undersigned, are to be sent to someone other than the
undersigned, or to the undersigned at an address other than that shown above.
Mail / / Check / / Certificate(s) to:
Name..........................................................................
(PLEASE PRINT)
Address.......................................................................
.............................................................................
(INCLUDE ZIP CODE)
------------------------------------------------------
----------------------------------------------------------------------
SHAREHOLDER(S) SIGN HERE
(SEE INSTRUCTIONS 1 AND 6)
(PLEASE COMPLETE SUBSTITUTE FORM W-9 CONTAINED HEREIN)
Must be signed by registered owner(s) exactly as name(s) appear(s) on
certificate(s) or on a security position listing or by person(s) authorized to
become registered owner(s) by certificate(s) and documents transmitted with
this Letter of Transmittal. If signature is by attorney-in-fact, executor,
administrator, trustee, guardian, officer of a corporation or another acting
in a fiduciary or representative capacity, please set forth the full title.
See Instruction 6.
Please print or type.
..............................................................................
..............................................................................
SIGNATURE(S) OF OWNER(S)
Dated..................................................................., 1994
Name(s).......................................................................
..............................................................................
(PLEASE PRINT)
Capacity (full title).........................................................
Area Code and Telephone Number................................................
..............................................................................
..............................................................................
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER(S))
----------------------------------------------------------------------
<PAGE> 6
- ----------------------------------------------------------------------
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 6)
Authorized Signature..........................................................
Name..........................................................................
(PLEASE PRINT)
Title.........................................................................
Name of Firm..................................................................
Address.......................................................................
(Include Zip Code)
Area Code and Telephone Number................................................
Dated..................................................................., 1994
Tax Identification or
Social Security Number........................................................
- ----------------------------------------------------------------------
INSTRUCTIONS
FORMING PART OF THE TERMS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required if either:
(a) this Letter of Transmittal is signed by the registered owner of
the Shares exactly as the name of the registered holder appears on the
certificate (which term, for purposes of this document, shall include any
participant in a Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of Shares) tendered with this Letter
of Transmittal and payment and delivery are to be made directly to such
owner unless such owner has completed either the box entitled "Special
Payment Instructions" or "Special Delivery Instructions" above; or
(b) such Shares are tendered for the account of a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc. or a commercial bank or trust
company having an office, branch or agency in the United States (each such
entity an "Eligible Institution").
In all other cases, an Eligible Institution must guarantee all signatures
on this Letter of Transmittal. See Instruction 6.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES: GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be used only if certificates are
delivered with it to the Depositary (or such certificates will be delivered
pursuant to a Notice of Guaranteed Delivery previously sent to the Depositary)
or if tenders are to be made pursuant to the procedure for tender by book-entry
transfer set forth in Section 3 of the Offer to Purchase. Certificates for all
physically tendered Shares or confirmation of a book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility of Shares tendered
electronically, together in each case with a properly completed and duly
executed Letter of Transmittal or facsimile of it, and any other documents
required by this Letter of Transmittal, should be mailed or delivered to the
Depositary at the appropriate address set forth herein and must be delivered to
the Depositary on or before the Expiration Date (as defined in the Offer to
Purchase).
Shareholders whose certificates are not immediately available or who cannot
deliver Shares and all other required documents to the Depositary on or before
the Expiration Date, or whose Shares cannot be delivered on a timely basis
pursuant to the procedures for book-entry transfer, may tender their Shares by
or through any Eligible Institution by properly completing (including the price
at which the Shares are being tendered) and duly executing and delivering a
Notice of Guaranteed Delivery (or facsimile of it) and by otherwise complying
with the guaranteed delivery procedure set forth in Section 3 of the Offer to
Purchase. Pursuant to such procedure, the certificates for all physically
tendered Shares, or book-entry confirmation, as the case may be, as well as a
properly completed and duly executed Letter of Transmittal and all other
documents required by this Letter of Transmittal, must be received by the
Depositary within five New York Stock Exchange, Inc. trading days after receipt
by the Depositary of such Notice of Guaranteed Delivery, all as provided in
Section 3 of the Offer to Purchase.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission or mail to the Depositary and must
include a signature guarantee by an Eligible Institution in the form set
<PAGE> 7
forth in such Notice. For Shares to be validly tendered pursuant to the
guaranteed delivery procedure, the Depositary must receive the Notice of
Guaranteed Delivery on or before the Expiration Date.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED.
The Company will not accept any alternative, conditional or contingent
tenders, nor will it purchase any fractional Shares. All tendering shareholders,
by execution of this Letter of Transmittal (or a facsimile of it), waive any
right to receive any notice of the acceptance of their tender.
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Shares Tendered" is inadequate, the certificate numbers and/or
the number of Shares should be listed on a separate signed schedule and attached
to this Letter of Transmittal.
4. PARTIAL TENDERS AND UNPURCHASED SHARES. (Not applicable to shareholders
who tender by book-entry transfer.) If fewer than all of the Shares evidenced by
any certificate are to be tendered, fill in the number of Shares which are to be
tendered in the column entitled "Number of Shares Tendered." In such case, if
any tendered Shares are purchased, a new certificate for the remainder of the
Shares evidenced by the old certificate(s) will be issued and sent to the
registered holders, unless otherwise specified in either the "Special Payment
Instructions" or "Special Delivery Instructions" boxes on this Letter of
Transmittal, as soon as practicable after the Expiration Date. All Shares
represented by the certificate(s) listed and delivered to the Depositary are
deemed to have been tendered unless otherwise indicated.
5. INDICATION OF PRICE AT WHICH SHARES ARE BEING TENDERED. For Shares to
be properly tendered, the shareholder must check the box indicating the price
per Share at which he is tendering Shares under "Price (In Dollars) Per Share at
Which Shares Are Being Tendered" on this Letter of Transmittal, provided,
however, that an Odd Lot Owner (as defined in Instruction 8) may check the box
above in the section entitled "Odd Lots" indicating that he is tendering all
Shares at the Purchase Price. ONLY ONE BOX MAY BE CHECKED. IF MORE THAN ONE BOX
IS CHECKED OR IF NO BOX IS CHECKED, THERE IS NO VALID TENDER OF SHARES (other
than pursuant to tenders by Odd Lot holders as provided herein). A shareholder
wishing to tender portions of his Share holdings at different prices must
complete a separate Letter of Transmittal for each price at which he wishes to
tender each such portion of his Shares. The same Shares cannot be tendered
(unless previously properly withdrawn as provided in Section 4 of the Offer to
Purchase) at more than one price.
6. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS.
(a) If this Letter of Transmittal is signed by the registered owner(s) of
the Shares tendered hereby, the signature(s) must correspond exactly with
the name(s) as written on the face of the certificates without any change
whatsoever.
(b) If the Shares are registered in the names of two or more joint
owners, each such owner must sign this Letter of Transmittal.
(c) If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal (or facsimiles of it) as there are
different registrations of certificates.
(d) When this Letter of Transmittal is signed by the registered owner(s)
of the Shares listed and transmitted hereby, no endorsements of
certificate(s) representing such Shares or separate stock powers are
required unless payment is to be made, or the certificates for Shares not
tendered or not purchased are to be issued, to a person other than the
registered owner(s). Signatures on such certificates or stock powers must
be guaranteed by an Eligible Institution. If this Letter of Transmittal is
signed by a person other than the registered owner of the certificates
listed, however, the certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of
the registered owner(s) appear(s) on the certificate, and the signatures on
such certificate or stock powers must be guaranteed by an Eligible
Institution. See Instruction 1.
(e) If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary
or representative capacity, such persons should so indicate when signing
and must submit proper evidence satisfactory to the Company of their
authority so to act.
7. STOCK TRANSFER TAXES. Except as provided in this Instruction 7, no
stock transfer tax stamps or funds to cover such stamps need accompany this
Letter of Transmittal. The Company will pay or cause to be paid any stock
transfer taxes payable on the transfer to it of Shares purchased pursuant to the
Offer. If, however:
(a) payment of the Purchase Price is to be made to any person(s) other
than the registered owner(s);
(b) Shares not tendered or not accepted for purchase are to be registered
in the name of any person(s) other than the registered owner(s); or
(c) tendered certificates are registered in the name(s) of any person(s)
other than the person(s) signing this Letter of Transmittal,
then the Depositary will deduct from the Purchase Price the amount of any stock
transfer taxes (whether imposed on the registered owner, such other person or
otherwise) payable on account of the transfer to such person unless satisfactory
evidence of the payment of such taxes or an exemption from them is submitted.
<PAGE> 8
8. ODD LOTS. As described in Section 1 of the Offer to Purchase, if the
Company is to purchase less than all Shares tendered before the Expiration Date,
the Shares purchased first will consist of all Shares tendered by any
shareholder who owned beneficially, as of the close of business on January 6,
1994 and continues to own beneficially as of the Expiration Date, an aggregate
of fewer than 100 Shares and who tenders all of his Shares at or below the
Purchase Price (including by not designating a purchase price). This preference
will not be available unless the box captioned "Odd Lots" is completed.
9. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If certificates for Shares
not tendered or not purchased and/or checks are to be issued in the name of a
person other than the person signing the Letter of Transmittal or if such
certificates and/or checks are to be sent to someone other than the person
signing the Letter of Transmittal or to the signer at a different address, the
boxes captioned "Special Payment Instructions" and/or "Special Delivery
Instructions" on this Letter of Transmittal should be completed as applicable
and signatures must be guaranteed as described in Instruction 1.
10. IRREGULARITIES. The Company will determine, in its sole discretion,
all questions as to the number of Shares to be accepted, the price to be paid
therefor and the validity, form, eligibility (including time of receipt) and
acceptance for payment of any tender of Shares and its determination shall be
final and binding on all parties. The Company reserves the absolute right to
reject any or all tenders of Shares determined by it not to be in proper form or
the acceptance of or payment for which may be unlawful. The Company also
reserves the absolute right to waive any of the conditions of the Offer or any
defect or irregularity in the tender of any particular Shares and the Company's
interpretation of the terms of the Offer (including these instructions) will be
final and binding on all parties. No tender of Shares will be deemed to be
validly made until all defects and irregularities have been cured or waived.
Unless waived, any defects or irregularities in connection with tenders must be
cured within such time as the Company shall determine. None of the Company, the
Dealer Manager, the Depositary, the Information Agent nor any other person is or
will be obligated to give notice of defects or irregularities in tenders, nor
shall any of them incur any liability for failure to give any such notice.
11. QUESTIONS AND REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions
and request for assistance may be directed to, or additional copies of the Offer
to Purchase, the Notice of Guaranteed Delivery and this Letter of Transmittal
may be obtained from, the Information Agent at the address and telephone number
set forth at the end of this Letter of Transmittal or from your broker, dealer,
commercial bank or trust company.
12. SUBSTITUTE FORM W-9. Each tendering shareholder that is not an exempt
recipient (see "Important Tax Information" below) is required to provide the
Depositary with a correct taxpayer identification number ("TIN") on Substitute
Form W-9 (the "Form W-9") which is provided under "Important Tax Information"
below, and, if applicable, to indicate that the shareholder is not subject to
backup withholding by checking the box in Part 2 of the form. Failure to provide
the information on the form or to check the box in Part 2 of the form may
subject the tendering shareholder to 31% Federal income tax withholding on the
payments made to the shareholder or other payee with respect to Shares purchased
pursuant to the Offer. The box in Part 3 of the form may be checked if the
tendering shareholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked
and the Depositary is not provided with a TIN within sixty (60) days, the
Depositary will withhold 31% on all such payments thereafter until a TIN is
provided to the Depositary.
13. WITHHOLDING ON FOREIGN SHAREHOLDERS. The Depositary will withhold
federal income taxes equal to 30% of the gross payments payable to a foreign
shareholder unless the Depositary determines that a reduced rate of withholding
or an exemption from withholding is applicable. For this purpose, a foreign
shareholder is any shareholder that is not (i) a citizen or resident of the
United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or any political subdivision
thereof, or (iii) any estate or trust the income of which is subject to United
States federal income taxation regardless of the source of such income. The
Depositary will determine a shareholder's status as a foreign shareholder and
eligibility for a reduced rate of, or an exemption from, withholding by
reference to the shareholder's address and to any outstanding certificates or
statements concerning eligibility for a reduced rate of, or exemption from,
withholding unless facts and circumstances indicate that reliance is not
warranted. A foreign shareholder who has not previously submitted the
appropriate certificates or statements with respect to a reduced rate of, or
exemption from, withholding for which such shareholder may be eligible should
consider doing so in order to avoid overwithholding. A foreign shareholder may
be eligible to obtain a refund of tax withheld if such shareholder meets one of
the three tests for capital gain or loss treatment described in Section 13 of
the Offer to Purchase or is otherwise able to establish that no tax or a reduced
amount of tax was due.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE OF IT
(TOGETHER WITH CERTIFICATES FOR SHARES OR CONFIRMATION OF BOOK-ENTRY TRANSFER
AND ALL OTHER REQUIRED DOCUMENTS) OR THE NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY ON OR BEFORE THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under federal income tax law, a shareholder whose tendered Shares are
accepted for payment is required to provide the Depositary with such
shareholder's correct TIN on Form W-9 below. If the Depositary is not provided
with the correct TIN, the Internal Revenue Service may subject the shareholder
or other payee to a $50 penalty. In addition, payments that are made to such
shareholder or other payee with respect to Shares purchased pursuant to the
Offer may be subject to backup withholding.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are considered "exempt recipients" and are not subject to
these backup withholding and reporting requirements. In order for a foreign
individual to qualify as an exempt recipient, the shareholder must submit a Form
W-8, signed under penalties of perjury,
<PAGE> 9
attesting to that individual's exempt status. A Form W-8 can be obtained from
the Depositary. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for more instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any such payments made to the shareholder or other payee. Backup withholding
is not an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained.
PURPOSE OF FORM W-9
To prevent backup withholding on payment made to a shareholder or other
payee with respect to Shares purchased pursuant to the Offer, the shareholder is
required to notify the Depositary of the shareholder's correct TIN by completing
the form below, certifying that the TIN provided on Form W-9 is correct (or that
such shareholder is awaiting a TIN) and that:
(a) the shareholder has not been notified by the Internal Revenue Service
that the shareholder is subject to backup withholding as a result of
failure to report all interest or dividends; or
(b) the Internal Revenue Service has notified the shareholder that the
shareholder is no longer subject to backup withholding.
The Shareholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are in more than one name or are not in the name of the
actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Form W-9" for additional guidance on which number to
report.
PAYER'S NAME: HARRIS TRUST COMPANY OF NEW YORK
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE Social Security number
FORM W-9 BOX AT RIGHT AND CERTIFY BY SIGNING AND OR ---------------------------
DATING BELOW Employer identification number
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Department of the Treasury PART 2 -- Check the box if you are NOT subject to backup withholding under the
Internal Revenue Service provisions of section 3406(a)(1)(C) of the Internal Revenue Code because (1) you have
not been notified that you are subject to backup withholding as a result of failure to
report all interest or dividends or (2) the Internal Revenue Service has notified you
that you are no longer subject to backup withholding. / /
- --------------------------------------------------------------------------------
CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I
Payer's Request for Taxpayer CERTIFY THAT THE INFORMATION PROVIDED ON THIS FORM IS PART 3 --
Identification Number ("TIN") TRUE, CORRECT, AND COMPLETE.
Awaiting TIN / /
SIGNATURE DATE
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECK THE BOX
IN PART 3 OF FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number within sixty (60) days, 31% of all
reportable payments made to me thereafter will be withheld until I provide a
number.
<TABLE>
<S> <C>
- --------------------------------------------------------------------- ------------------------------------
Signature Date
</TABLE>
<PAGE> 10
The Information Agent:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, NY 10022
(212) 754-8000
(call collect)
or
call Toll-Free 1-800-662-5200
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
2121 AVENUE OF THE STARS
LOS ANGELES, CA 90067
(310) 282-6161
(CALL COLLECT)
<PAGE> 1
RITE AID CORPORATION
NOTICE OF GUARANTEED DELIVERY
OF SHARES OF COMMON STOCK
OFFER TO PURCHASE FOR CASH UP TO 22,000,000 SHARES OF ITS COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS) AT A PURCHASE PRICE
NOT GREATER THAN $18.50 NOR LESS THAN $16.00 PER SHARE
This form or a facsimile copy of it must be used to accept the Offer (as
defined below) if:
(a) certificates for common stock, par value $1.00 per share (the
"Shares"), including the associated Rights (as defined herein), of Rite
Aid Corporation, a Delaware corporation, are not immediately available;
or
(b) the procedure for book-entry transfer cannot be completed on a timely
basis; or
(c) time will not permit the Letter of Transmittal or other required
documents to reach the Depositary before the Expiration Date (as defined
in Section 1 of the Offer to Purchase, as defined below).
This form or a facsimile of it, signed and properly completed, may be
delivered by hand, mail, telegram, telex or facsimile transmission to the
Depositary by the Expiration Date. See Section 3 of the Offer to Purchase.
HARRIS TRUST COMPANY OF NEW YORK, DEPOSITARY
<TABLE>
<CAPTION>
BY MAIL: FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
<S> <C> <C>
P.O. Box 1023 (212) 701-7636 Receive Window
Wall Street Station (212) 701-7640 77 Water Street
(for Eligible Institutions
New York, New York 10268 only) 5th Floor
New York, New York 10005
FOR INFORMATION TELEPHONE:
(212) 701-7624 (collect)
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN THOSE SHOWN ABOVE OR
TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN THOSE LISTED ABOVE
DOES NOT CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
The undersigned hereby tenders to Rite Aid Corporation, at the price per
Share indicated below, net to the seller in cash, upon the terms and subject to
the conditions set forth in the Offer to Purchase, dated January 10, 1994 (the
"Offer to Purchase"), and the related Letter of Transmittal (which together with
the Offer to Purchase constitute the "Offer"), receipt of which is hereby
acknowledged, Shares of common stock, par value $1.00 per Share
(including the associated preferred share purchase rights (the "Rights"), the
"Shares"), pursuant to the guaranteed delivery procedure set forth in Section 3
of the Offer to Purchase. Unless the Rights become exercisable or separately
tradeable prior to the Expiration Date, a tender of Shares will also constitute
a tender of the associated Rights. Unless the context requires otherwise, all
references herein to Shares include the associated Rights.
1
<PAGE> 2
------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE AT
WHICH SHARES ARE BEING TENDERED.
------------------------------------------------------
IF SHARES ARE BEING TENDERED AT MORE THAN ONE PRICE, USE A SEPARATE NOTICE OF
GUARANTEED DELIVERY FOR EACH PRICE SPECIFIED.
------------------------------------------------------
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED,
OR IF NO BOX IS CHECKED (EXCEPT AS PROVIDED IN THE ODD LOT INSTRUCTIONS TO THE
RIGHT), THERE IS
NO VALID TENDER OF SHARES.
------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
/ / $16 / / $16 5/8 / / $17 1/4 / / $17 7/8
/ / $16 1/8 / / $16 3/4 / / $17 3/8 / / $18
/ / $16 1/4 / / $16 7/8 / / $17 1/2 / / $18 1/8
/ / $16 3/8 / / $17 / / $17 5/8 / / $18 1/4
/ / $16 1/2 / / $17 1/8 / / $17 3/4 / / $18 3/8
/ / $18 1/2
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
ODD LOTS
To be completed ONLY if Shares are being tendered by or on behalf of a
person owning beneficially, as of the close of business on January 6, 1994 and
who continue to own beneficially as of the Expiration Date, an aggregate of
fewer than 100 Shares.
The undersigned either (check one):
/ / was the beneficial owner, as of the close of business on January 6, 1994
of an aggregate of fewer than 100 Shares all of which are being
tendered, or
/ / is a broker, dealer, commercial bank, trust company or other nomimee
which
(a) is tendering, for the beneficial owners thereof, Shares with respect
to which it is the record owner, and
(b) believes, based upon representations made to it by such beneficial
owners, that each such person was the beneficial owner, as of the
close of business on January 6, 1994 of an aggregate of fewer than
100 Shares and is tendering all of such Shares.
If you do not wish to specify a purchase price, check the following box, in
which case you will be deemed to have tendered at the Purchase Price
determined by the Company in accordance with the terms of the Offer (persons
checking this box need not indicate the price per Share in the box entitled
"Price (in Dollars) Per Share are Being Tendered"). / /
------------------------------------------------------
PLEASE TYPE OR PRINT
................................................................................
CERTIFICATE NOS. (IF AVAILABLE)
................................................................................
NAME(S)
...............................................................................
ADDRESS(ES)
...............................................................................
...............................................................................
AREA CODE AND TELEPHONE NUMBER
...............................................................................
SIGN HERE:
...............................................................................
...............................................................................
Dated: .................................................................... 1994
If Shares will be tendered by book-entry transfer, check one box:
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number: ................................................................
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities
exchange, a member of the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office or correspondent in the United
States (each, an "Eligible Institution"), hereby (i) represents that the
undersigned has a net long position in Shares or equivalent securities within
the meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934,
as amended, at least equal to the Shares tendered, (ii) represents that such
tender of Shares complies with Rule 14e-4, and (iii) guarantees that either the
certificates representing the Shares tendered hereby in proper form for
transfer, or timely confirmation of the book-entry transfer of such Shares into
the Depositary's account at The Depository Trust Company, the Midwest Securities
Trust Company or the Philadelphia Depository Trust Company (pursuant to the
procedures set forth in Section 3 of the Offer to Purchase), together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantee and any other documents required
by the Letter of Transmittal, will be received by the Depositary at one of its
addresses set forth above within five New York Stock Exchange, Inc. trading days
after the date of execution hereof.
Name of Firm:.......................
Authorized
Signature:..........................
Name:...............................
Title:..............................
Address:............................
Zip Code:...........................
Area Code and
Telephone Number:...................
Dated:..........................1994
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE> 1
Donaldson, Lufkin & Jenrette
Securities Corporation
2121 Avenue of the Stars
Los Angeles, CA 90067
(310) 282-6161
RITE AID CORPORATION
OFFER TO PURCHASE FOR CASH
UP TO 22,000,000 SHARES OF ITS COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
AT A PURCHASE PRICE NOT GREATER THAN
$18.50 NOR LESS THAN $16.00 PER SHARE
January 10, 1994
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Rite Aid Corporation, a Delaware corporation (the "Company"), has appointed
us to act as Dealer Manager in connection with its offer to purchase for cash up
to 22,000,000 shares of its common stock, par value $1.00 per share (including
the associated Preferred Share Purchase Rights (the "Rights"), the "Shares"), at
prices, not greater than $18.50 nor less than $16.00 per Share, upon the terms
and subject to the conditions set forth in its Offer to Purchase dated January
10, 1994 and in the related Letter of Transmittal (which together constitute the
"Offer"). We enclose the materials listed below relating to the Offer. Unless
the Rights become exercisable or separately tradeable prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase), a tender of Shares will
also constitute a tender of the associated Rights. Unless the context requires
otherwise, all references herein to Shares include the associated Rights.
The Company will determine a single per Share price (not greater than
$18.50 nor less than $16.00 per Share) (the "Purchase Price"), that it will pay
for Shares validly tendered pursuant to the Offer taking into account the number
of Shares so tendered and the prices specified by tendering shareholders. The
Company will select the Purchase Price which will allow it to buy 22,000,000
Shares (or such lesser number of Shares as are validly tendered at prices not
greater than $18.50 nor less than $16.00 per Share) pursuant to the Offer. All
Shares validly tendered at prices at or below the Purchase Price will be
purchased at the Purchase Price, net to the seller in cash, upon the terms and
subject to the conditions of the Offer, including the proration terms thereof.
See Section 1 of the Offer to Purchase.
If, prior to the Expiration Date, more than 22,000,000 Shares (or such
greater number of Shares as the Company may elect to purchase) are validly
tendered, the Company will, upon the terms and subject to the conditions of the
Offer, accept Shares for purchase first from Odd Lot Owners (as defined in
Section 2 of the Offer to Purchase) who validly tender their Shares at or below
the Purchase Price and then on a pro rata basis from all other shareholders
whose Shares are validly tendered at or below the Purchase Price.
The Offer is not conditioned on any minimum number of Shares being
tendered. The Offer is, however, subject to certain other conditions set forth
in the Offer. See Section 6 of the Offer to Purchase.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase dated January 10, 1994;
2. Letter to Clients which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer;
3. Letter, dated January 10, 1994, from Alex Grass, Chairman of the
Board and Chief Executive Officer, and Martin L. Grass, President and Chief
Operating Officer of the Company, to shareholders of the Company;
<PAGE> 2
4. Letter of Transmittal for your use and for the information of
your clients (together with Substitute Form W-9 and guidelines);
5. Notice of Guaranteed Delivery to be used to accept the Offer if
Share certificates and all other required documents cannot be delivered to
the Depositary by the Expiration Date or if the procedure for book-entry
transfer cannot be completed on a timely basis; and
6. Return envelope addressed to Harris Trust Company of New York,
the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER,
PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, FEBRUARY 7, 1994, UNLESS THE OFFER IS EXTENDED.
No fees or commissions will be payable to brokers, dealers or any other
persons for soliciting tenders of Shares pursuant to the Offer. The Company
will, however, upon request, reimburse you for customary mailing and handling
expenses incurred by you in forwarding any of the enclosed materials to the
beneficial owners of Shares held by you as a nominee or in a fiduciary capacity.
The Company will pay or cause to be paid any stock transfer taxes applicable to
its purchase of Shares, except as otherwise provided in Instruction 7 of the
Letter of Transmittal.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal and any other required documents should be sent
to the Depositary with either certificate(s) representing the tendered Shares or
confirmation of their book-entry transfer all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
As described in Section 3 of the Offer to Purchase, tenders may be made
without the concurrent deposit of stock certificates or concurrent compliance
with the procedure for book-entry transfer, if such tenders are made by or
through a broker or dealer which is a member firm of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office, branch or
agency in the United States. Certificates for Shares so tendered (or a
confirmation of a book-entry transfer of such Shares into the Depositary's
account at one of the "Book-Entry Transfer Facilities" described in Section 3 of
the Offer to Purchase), together with a properly completed and duly executed
Letter of Transmittal and any other documents required by the Letter of
Transmittal, must be received by the Depositary within five New York Stock
Exchange, Inc. trading days after timely receipt by the Depositary of a properly
completed and duly executed Notice of Guaranteed Delivery.
Any inquiries you may have with respect to the Offer should be addressed to
the Dealer Manager or to the Information Agent at their respective addresses and
telephone numbers set forth on the back cover page of the Offer to Purchase.
Additional copies of the enclosed material may be obtained from the
Information Agent, Morrow & Co., Inc., telephone: (800) 662-5200.
Very truly yours,
Donaldson, Lufkin & Jenrette Securities
Corporation
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS THE AGENT OF THE COMPANY, THE DEALER MANAGER, THE
INFORMATION AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE
ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH
THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED
THEREIN.
<PAGE> 1
RITE AID CORPORATION
OFFER TO PURCHASE FOR CASH
UP TO 22,000,000 SHARES OF ITS COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARED PURCHASE RIGHTS)
AT A PURCHASE PRICE NOT GREATER THAN
$18.50 NOR LESS THAN $16.00 PER SHARE
January 10, 1994
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated January
10, 1994, and the related Letter of Transmittal (which together constitute the
"Offer"), in connection with the offer by Rite Aid Corporation, a Delaware
corporation (the "Company"), to purchase for cash up to 22,000,000 shares of its
common stock, par value $1.00 per share (including the associated Preferred
Shared Purchase Rights (the "Rights"), the "Shares"), at prices not greater than
$18.50 nor less than $16.00 per Share, upon the terms and subject to the
conditions of the Offer. Unless the Rights become exercisable or separately
tradeable prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase), a tender of Shares will also constitute a tender of the associated
Rights. Unless the context requires otherwise, all references herein to Shares
include the associated Rights.
The Company will determine a single per Share price (not greater than
$18.50 nor less than $16.00 per Share) (the "Purchase Price") that it will pay
for Shares validly tendered pursuant to the Offer taking into account the number
of Shares so tendered and the prices specified by tendering shareholders. The
Company will select the Purchase Price which will allow it to buy 22,000,000
Shares (or such lesser number of Shares as are validly tendered at prices not
greater than $18.50 nor less than $16.00 per Share) pursuant to the Offer. All
Shares validly tendered prior to the Expiration Date at prices at or below the
Purchase Price will be purchased at the Purchase Price, net to the seller in
cash, upon the terms and subject to the conditions of the Offer, including the
proration terms thereof. The Company will return all other Shares, including
Shares tendered at prices greater than the Purchase Price and Shares not
purchased because of proration. See Section 1 of the Offer to Purchase.
If, prior to the Expiration Date, more than 22,000,000 Shares (or such
greater number of Shares as the Company may elect to purchase) are validly
tendered, the Company will, upon the terms and subject to the conditions of the
Offer, accept Shares for purchase first from Odd Lot Owners (as defined in
Section 2 of the Offer to Purchase) who validly tender their Shares at or below
the Purchase Price and then on a pro rata basis from all other shareholders
whose Shares are validly tendered at or below the Purchase Price.
WE ARE THE HOLDER OF RECORD OF SHARES HELD FOR YOUR ACCOUNT. AS SUCH, WE
ARE THE ONLY ONES WHO CAN TENDER YOUR SHARES, AND THEN ONLY PURSUANT TO YOUR
INSTRUCTIONS. WE ARE SENDING YOU THE LETTER OF TRANSMITTAL FOR YOUR INFORMATION
ONLY; YOU CANNOT USE IT TO TENDER SHARES WE HOLD FOR YOUR ACCOUNT.
Please instruct us as to whether you wish us to tender any or all of the
Shares we hold for your account on the terms and subject to the conditions of
the Offer.
We call your attention to the following:
1. You may tender Shares at prices (in multiples of $.125), not greater
than $18.50 nor less than $16.00 per Share, as indicated in the attached
Instruction Form, net to you in cash.
2. The Offer is not conditioned on any minimum number of Shares being
tendered. The Offer is, however, subject to certain other conditions set forth
in the Offer.
3. The Offer, proration period and withdrawal rights will expire at 12:00
midnight, New York City time, on Monday, February 7, 1994, unless the Company
extends the Offer.
<PAGE> 2
4. The Offer is for up to 22,000,000 Shares, constituting approximately 25%
of the Shares outstanding as of January 10, 1994.
5. Tendering shareholders will not be obligated to pay any brokerage
commissions, solicitation fees or, subject to Instruction 7 of the Letter of
Transmittal, stock transfer taxes on the Company's purchase of Shares pursuant
to the Offer.
6. If you owned beneficially as of the close of business on January 6, 1994
and continued to own beneficially as of the Expiration Date, an aggregate of
fewer than 100 Shares and you instruct us to tender on your behalf all such
Shares at or below the Purchase Price before the expiration of the Offer and
check the box captioned "Odd Lots" in the attached Instruction Form, the
Company, upon the terms and subject to the conditions of the Offer, will accept
all such Shares for purchase before proration, if any, of the purchase of other
Shares tendered at or below the Purchase Price.
7. If you wish to tender portions of your Shares at different prices you
must complete a separate Instruction Form for each price at which you wish to
tender each such portion of your Shares. We must submit separate Letters of
Transmittal on your behalf for each price you will accept.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, detaching and returning to us the attached
Instruction Form. An envelope to return your Instruction Form to us is enclosed.
If you authorize us to tender your Shares, we will tender all such Shares unless
you specify otherwise on the attached Instruction Form.
YOUR INSTRUCTION FORM SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US
TO SUBMIT A TENDER ON YOUR BEHALF ON OR BEFORE THE EXPIRATION DATE OF THE OFFER.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON MONDAY, FEBRUARY 7, 1994, UNLESS THE COMPANY EXTENDS THE
OFFER.
As described in Section 1 of the Offer to Purchase, if before the
Expiration Date more than 22,000,000 Shares (or such greater number of Shares as
the Company elects to purchase) are validly tendered at or below the Purchase
Price, the Company will accept Shares for purchase at the Purchase Price in the
following order of priority:
(a) first, all Shares validly tendered at or below the Purchase Price
prior to the Expiration Date by any Odd Lot Owner who:
(1) tenders all Shares beneficially owned by such Odd Lot Owners at
or below the Purchase Price (partial tenders will not qualify for this
preference); and
(2) completes the section captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery;
and
(b) then, after purchase of all of the foregoing Shares, all other
Shares validly tendered at or below the Purchase Price before the
Expiration Date on a pro rata basis, if necessary (with adjustments to
avoid purchases of fractional Shares).
The Offer is not being made to, nor will the Company accept tenders from,
holders of Shares in any jurisdiction in which the Offer or its acceptance would
not comply with the securities or Blue Sky laws of such jurisdiction. The
Company is not aware of any jurisdiction in which the making of the Offer or the
tender of Shares would not be in compliance with the laws of such jurisdictions.
However, the Company reserves the right to exclude holders in any jurisdiction
in which it is asserted that the Offer cannot lawfully be made. So long as the
Company makes a good faith effort to comply with any state law deemed applicable
to the Offer, if it cannot do so, the Company believes that the exclusion of
holders residing in such jurisdiction is permitted under Rule 13e-4(f)(9)
promulgated under the Exchange Act. In any jurisdiction the securities or Blue
Sky laws of which require the Offer to be made by a licensed broker or dealer,
the Offer shall be deemed to be made on the Company's behalf by Donaldson,
Lufkin & Jenrette Securities Corporation as Dealer Manager or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
2
<PAGE> 3
INSTRUCTION FORM
WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
UP TO 22,000,000 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF RITE AID CORPORATION
AT A PURCHASE PRICE NOT GREATER THAN
$18.50 NOR LESS THAN $16.00 PER SHARE
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated January 10, 1994 and the related Letter of Transmittal
(which together constitute the "Offer"), in connection with the offer by Rite
Aid Corporation, a Delaware corporation (the "Company"), to purchase for cash up
to 22,000,000 shares of its common stock, par value $1.00 per share (including
the associated Preferred Share Purchase Rights (the "Rights"), the "Shares"), at
prices not greater than $18.50 nor less than $16.00 per Share, upon the terms
and subject to the conditions of the Offer. Unless the Rights become exercisable
or separately tradeable prior to the Expiration Date (as defined in Section 1 of
the Offer to Purchase), a tender of Shares will also constitute a tender of the
associated Rights. Unless the context requires otherwise, all references herein
to Shares include the associated Rights.
The Company will determine a single per Share price (not greater than
$18.50 nor less than $16.00 per Share) (the "Purchase Price") that it will pay
for Shares validly tendered pursuant to the Offer taking into account the number
of Shares so tendered and the prices specified by tendering shareholders. The
Company will select the Purchase Price which will allow it to buy 22,000,000
Shares (or such lesser number of Shares as are validly tendered at prices not
greater than $18.50 nor less than $16.00 per Share) pursuant to the Offer. All
Shares validly tendered at prices at or below the Purchase Price will be
purchased at the Purchase Price, net to the seller in cash, upon the terms and
subject to the conditions of the Offer, including the proration terms thereof.
The Company will return all other Shares, including Shares tendered at prices
greater than the Purchase Price and Shares not purchased because of proration.
See Section 1 of the Offer to Purchase.
The undersigned hereby instruct(s) you to tender to the Company the number
of Shares indicated below or, if no number is indicated, all Shares you hold for
the account of the undersigned, at the price per Share indicated below, pursuant
to the terms and subject to the conditions of the Offer.
Aggregate number of Shares to be tendered by you for us: Shares*
------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE AT
WHICH SHARES ARE BEING TENDERED.
------------------------------------------------------
IF SHARES ARE BEING TENDERED AT MORE THAN ONE PRICE, USE A SEPARATE INSTRUCTION
FORM FOR EACH PRICE SPECIFIED.
------------------------------------------------------
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED, OR IF NO BOX IS CHECKED (EXCEPT AS PROVIDED IN
THE ODD LOTS INSTRUCTIONS TO THE RIGHT), THERE IS NO VALID TENDER OF SHARES.
------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
/ / $16 / / $16 5/8 / / $17 1/4 / / $17 7/8
/ / $16 1/8 / / $16 3/4 / / $17 3/8 / / $18
/ / $16 1/4 / / $16 7/8 / / $17 1/2 / / $18 1/8
/ / $16 3/8 / / $17 / / $17 5/8 / / $18 1/4
/ / $16 1/2 / / $17 1/8 / / $17 3/4 / / $18 3/8
/ / $18 1/2
</TABLE>
------------------------------------------------------
------------------------------------------------------
ODD LOTS
/ / By checking this box, the undersigned represents that the undersigned
owned beneficially, as of the close of business on January 6, 1994, and will
continue to own beneficially as of the Expiration Date, an aggregate of fewer
than 100 Shares and is instructing the holder to tender all such Shares.
If you do not wish to specify a purchase price, check the following box, in
which case you will be deemed to have tendered at the Purchase Price
determined by the Company in accordance with the terms of the Offer (persons
checking this box need not indicate the price per Share in the box entitled
"Price (in Dollars) Per Share at which Shares are Being Tendered"). / /
------------------------------------------------------
------------------------------------------------------
SIGNATURE BOX
Signature(s)..................................................................
Dated.........................................................................
Name(s) and Address(es) (Please Print)........................................
.............................................................................
Area Code and
Telephone Number..............................................................
Taxpayer Identification or
Social Security Number........................................................
------------------------------------------------------
- ---------------
* Unless otherwise indicated, all of the Shares, including the associated
Rights, held for the account of the undersigned will be tendered.
3
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
IRS INSTRUCTIONS
(SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE.)
PURPOSE OF FORM. -- A person who is required to file an information return with
the Internal Revenue Service (the IRS) must obtain your correct taxpayer
identification number (TIN) to report income paid to you, real estate
transactions, mortgage interest you paid, the acquisition or abandonment of
secured property, or contributions you made to an individual retirement account
(IRA). Use Form W-9 to furnish your correct TIN to the requester (the person
asking you to furnish your TIN), and, when applicable, (1) to certify that the
TIN you are furnishing is correct (or that you are waiting for a number to be
issued), (2) to certify that you are not subject to backup withholding, and (3)
to claim exemption from backup withholding if you are an exempt payee.
Furnishing your correct TIN and making the appropriate certifications will
prevent certain payments from being subject to backup withholding.
NOTE: IF A REQUESTER GIVES YOU A FORM OTHER THAN A W-9 TO REQUEST YOUR TIN, YOU
MUST USE THE REQUESTER'S FORM.
HOW TO OBTAIN A TIN. -- If you do not have a TIN, apply for one immediately. To
apply, get FORM SS-5, Application for a Social Security Card (SSN) (for
individuals), from your local office of the Social Security Administration, or
FORM SS-4, Application for Employer Identification Number (EIN) (for businesses
and all other entities), from your local IRS office.
To complete Form W-9, if you do not have a TIN, check the box in Part 3 of the
substitute Form W-9, sign and date the form, and give it to the requester.
Generally, you will then have 60 days to obtain a TIN and furnish it to the
requester. If the requester does not receive your TIN within 60 days, backup
withholding, if applicable, will begin and continue until you furnish your TIN
to the requester. For reportable interest or dividend payments, the payer must
exercise one of the following options concerning backup withholding during this
60-day period. Under option (1), a payer must backup withhold on any withdrawals
you make from your account after 7 business days after the requester receives
this form back from you. Under option (2), the payer must backup withhold on any
reportable interest or dividend payments made to your account, regardless of
whether you make any withdrawals. The backup withholding under option (2) must
begin no later than 7 business days after the requester receives this form back.
Under option (2), the payer is required to refund the amounts withheld if your
certified TIN is received within the 60-day period and you were not subject to
backup withholding during the period.
NOTE: CHECKING THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9 MEANS THAT YOU HAVE
ALREADY APPLIED FOR A TIN OR THAT YOU INTEND TO APPLY FOR ONE IN THE NEAR
FUTURE.
As soon as you receive your TIN, complete another Form W-9, include your TIN,
sign and date this form, and give it to the requester.
WHAT IS BACKUP WITHHOLDING? -- Persons making certain payments to you after 1992
are required to withhold and pay to the IRS 31% of such payments under certain
conditions. This is called "backup withholding." Payments that could be subject
to backup withholding include interest, dividends, broker and barter exchange
transactions, rents, royalties, nonemployee compensation, and certain payments
from fishing boat operators, but do not include real estate transactions.
If you give the requester your correct TIN, make the appropriate certifications,
and report all your taxable interest and dividends on your tax return, your
payments will not be subject to backup withholding. Payments you receive will be
subject to backup withholding if:
(1) You do not furnish your TIN to the requester, or
(2) The IRS notifies the requester that you furnished an incorrect TIN, or
(3) You are notified by the IRS that you are subject to backup withholding
because you failed to report all your interest and dividends on your tax return
(for reportable interest and dividends only), or
(4) You fail to certify to the requester that you are not subject to backup
withholding under (3) above (for reportable interest and dividend accounts
opened after 1983 only), or
(5) You fail to certify your TIN. This applies only to reportable interest,
dividend, broker or barter exchange accounts opened after 1983, or broker
accounts considered inactive in 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies. Certain payees and payments
are exempt from backup withholding and information reporting. See PAYEES AND
PAYMENTS EXEMPT FROM BACKUP WITHHOLDING, below, and EXEMPT PAYEES AND PAYMENTS
under SPECIFIC INSTRUCTIONS, on page 2, if you are an exempt payee.
PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING. -- The following is a list
of payees exempt from backup withholding and for which no information reporting
is required. For interest and dividends, all listed payees are exempt except
item (9). For broker transactions, payees listed in (1) through (13) and a
person registered under the Investment Advisers Act of 1940 who regularly acts
as a broker are exempt. Payments subject to reporting under sections 6041 and
6041A are generally exempt from backup withholding only if made to payees
described in Items (1) through (7), except that a corporation that provides
medical and health care services or bills and collects payments for such
services is not exempt from backup withholding or information reporting. Only
payees described in items (2) through (6) are exempt from backup withholding for
barter exchange transactions, patronage dividends, and payments by certain
fishing boat operators.
(1) A corporation.
(2) An organization exempt from tax under Section 501(a), or an IRA, or a
custodial account under section 403(b)(7).
(3) The United States or any of its agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies or
instrumentalities.
(6) An international organization or any of its agencies or instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
(9) A futures commission merchant registered with the Commodity Futures Trading
Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the Investment
Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporation Secretaries,
Inc., Nominee List.
(15) A trust exempt from tax under section 664 or described in section 4947.
Payments of dividends and patronage dividends generally not subject to backup
withholding also include the following:
- - Payments to nonresident aliens subject to withholding under section 1441.
- - Payments to partnerships not engaged in trade or business in the U.S. and that
have at least one nonresident partner.
- - Payments of patronage dividends not paid in money.
- - Payments made by certain foreign organizations.
Payments of interest generally not subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals.
NOTE: YOU MAY BE SUBJECT TO BACKUP WITHHOLDING IF THIS INTEREST IS $600 OR MORE
AND IS PAID IN THE COURSE OF THE PAYER'S TRADE OR BUSINESS AND YOU HAVE NOT
PROVIDED YOUR CORRECT TIN TO THE PAYER.
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- - Payments described in section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Mortgage interest paid by you.
Payments that are not subject to information reporting are also not subject to
backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044, 6045,
6049, 6050A, and 6050N, and their regulations.
PENALTIES
FAILURE TO FURNISH TIN. -- If you fail to furnish your correct TIN to a
requester, you are subject to a penalty of $50 for each such failure unless your
failure is due to reasonable cause and not to willful neglect.
CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you make
a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
MISUSE OF TINS. -- If the requester discloses or uses TINs in violation of
Federal law, the requester may be subject to civil and criminal penalties.
<PAGE> 2
SPECIFIC INSTRUCTIONS
NAME. -- If you are an individual, you must generally provide the name shown on
your social security card. However, if you have changed your last name, for
instance, due to marriage, without informing the Social Security Administration
of the name change, please enter your first name, the last name shown on your
social security card and your new last name.
If you are a sole proprietor, you must furnish your individual name and either
your SSN or EIN. You may also enter your business name. Enter your name(s) as
shown on your social security card and/or as it was used to apply for your EIN
on Form SS-4.
SIGNING THE CERTIFICATION. --
(1) INTEREST, DIVIDEND, AND BARTER EXCHANGE ACCOUNTS OPENED BEFORE 1984 AND
BROKER ACCOUNTS CONSIDERED ACTIVE DURING 1983. -- You are required to furnish
your correct TIN, but you are not required to sign the certification.
(2) INTEREST, DIVIDEND, BROKER AND BARTER EXCHANGE ACCOUNTS OPENED AFTER 1983
AND BROKER ACCOUNTS CONSIDERED INACTIVE DURING 1983. -- You must sign the
certification or backup withholding will apply. If you are subject to backup
withholding and you are merely providing your correct TIN to the requester, you
must cross out item (2) in the certification before signing the form.
(3) REAL ESTATE TRANSACTIONS. -- You must sign the certification. You may cross
out item (2) of the certification.
(4) OTHER PAYMENTS. -- You are required to furnish your correct TIN, but you are
not required to sign the certification unless you have been notified of an
incorrect TIN. Other payments include payments made in the course of the
requester's trade or business for rents, royalties, goods (other than bills for
merchandise), medical and health care services, payments to a nonemployee for
services (including attorney and accounting fees), and payments to certain
fishing boat crew members.
(5) MORTGAGE INTEREST PAID BY YOU, ACQUISITION OR ABANDONMENT OF SECURED
PROPERTY, OR IRA CONTRIBUTIONS. -- You are requested to furnish your correct
TIN, but you are not required to sign the certification.
(6) EXEMPT PAYEES AND PAYMENTS. -- If you are exempt from backup withholding,
you should complete this form to avoid possible erroneous backup withholding.
Enter your correct TIN in Part 1, write "EXEMPT" in the block in Part 2, and
sign and date the form. If you are a nonresident alien or foreign entity not
subject to backup withholding, give the requester a completed Form W-8,
Certificate of Foreign Status.
(7) "AWAITING TIN". -- Follow the instructions under HOW TO OBTAIN A TIN, on
page 1, check the box in Part 3 of the Substitute Form W-9 and sign and date the
form.
SIGNATURE. -- For a joint account, only the person whose TIN is shown in Part 1
should sign the form.
PRIVACY ACT NOTICE. -- Section 6109 requires you to furnish your correct TIN to
persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, or contributions you made to an
IRA. The IRS uses the numbers for identification purposes and to help verify the
accuracy of your tax return. You must provide your TIN whether or not you are
required to file a tax return. Payers must generally withhold 31% of taxable
interest, dividends, and certain other payments to a payee who does not furnish
a TIN to a payer. Certain penalties may also apply.
WHAT NAME AND NUMBER TO GIVE THE REQUESTER
<TABLE>
<C> <S> <C>
- ---------------------------------------------------------------
GIVE THE NAME AND
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF:
- ---------------------------------------------------------------
1. Individual The individual
2. Two or more individuals (joint account) The actual owner of
the account or, if
combined funds, the
first individual on
the account(1)
3. Custodian account of a minor (Uniform The minor(2)
Gift to Minors Act)
4. a. The usual revocable savings trust The grantor-trustee(1)
(grantor is also trustee)
b. So-called trust account that is not The actual owner(1)
a legal or valid trust under state law
5. Sole proprietorship The owner(3)
---------------------------------------------------------------
GIVE THE NAME AND
EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION NUMBER
OF:
- ---------------------------------------------------------------
6. Sole proprietorship The owner(3)
7. A valid trust, estate or pension trust Legal entity(4)
8. Corporate The corporation
9. Association, club, religious, The organization
charitable, educational, or other
tax-exempt organization
10. Partnership The partnership
11. A broker or registered nominee The broker or nominee
12. Account with the Department of The public entity
Agriculture in the name of a public
entity (such as a state or local
government, school district, or prison)
that receives agricultural program
payments
</TABLE>
- ------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show the individual's name. You may also enter your business name. You may
use your SSN or EIN.
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the TIN of the personal representative or trustee unless the
legal entity itself is not designated in the account title.)
NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME, THE NUMBER WILL BE
CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.
<PAGE> 1
[RITE AID LETTERHEAD]
Frank Bergonzi
Senior Vice President, Finance
(717) 975-5750
Suzanne Mead
Vice President, Advertising and
Corporate Communications
(717) 975-5887
FOR IMMEDIATE RELEASE
RITE AID ANNOUNCES MAJOR RESTRUCTURING
INCLUDING STOCK BUYBACK, ASSET SALES, STORE CLOSINGS
CAMP HILL, PA. (January 7, 1994)--Rite Aid Coporation (RAD-NYSE, PSE) today
announced a major restructuring. Its board of directors authorized the
commencement of a "Dutch Auction" cash self tender offer for up to 22,000,000
of its common shares; the planned sale of its four non-drugstore businesses
resulting in an after-tax reserve of $25.6 million for the loss on the disposal
of these discontinued operations; and the closing of 200 underperforming
drugstores and elimination of other assets causing a pre-tax write off of $149.2
million.
The "Dutch Auction" cash self-tender offer for up to 22,000,000 shares will
commence on January 10, 1994. The tender price range will be from $16.00 per
share to $18.50 per share.
ADAP, an auto parts retailer with 95 stores, Encore Books operating 103 units,
and Concord Custom Cleaners with 170 outlets will all be sold. In addition,
Sera Tec Biologicals, which consists of 33 plasma collection centers providing
plasma for use in therapeutic and diagnostic products, will also be disposed.
The 200 drugstores will be closed within the next six months. At this time,
the company is not making public the specific store locations.
Donaldson, Lufkin & Jenrette Securities Corporation has been retained to sell
the four businesses and also to act as the dealer manager for the tender offer.
The board does not make any recommendation to shareholders with regard to the
tendering of shares. Details of the offer will be mailed to shareholders next
week.
####
<PAGE> 1
JANUARY 10, 1994
To Our Shareholders:
We are pleased to inform you that Rite Aid Corporation is offering to
purchase 22,000,000 shares (representing approximately 25% of the currently
outstanding shares) of its common stock (including the associated Preferred
Share Purchase Rights) from its shareholders through a tender offer at prices
not greater than $18.50 nor less than $16.00 per share. The Company is
conducting the tender offer through a procedure commonly referred to as a "Dutch
Auction." This procedure allows you to select the price within that price range
at which you are willing to sell your shares to the Company. Based upon the
number of shares tendered and the prices specified by the tendering
shareholders, Rite Aid will determine the single per share price within that
price range that will allow it to buy 22,000,000 shares (or such lesser number
of shares as are validly tendered). All of the shares that are validly tendered
at prices at or below that purchase price will, subject to possible proration,
be purchased at that purchase price, net in cash to the selling shareholder. All
other shares which have been tendered and not purchased will be returned to the
shareholder. The tender offer is not conditioned on any minimum number of shares
being tendered.
The Offer is a part of a major restructuring by the Company. The Company
has authorized the sale of its four non-drugstore businesses (the "Non-Drugstore
Businesses") resulting in an after-tax reserve of $25.6 million for the loss on
the disposal of these discontinued operations and the closing of 200
underperforming drugstores and the disposition of other assets causing a pre-tax
charge of $149.2 million. The Company is making the Offer because the Board of
Directors believes that, given the Company's businesses, assets and prospects
and the current market price of the Shares, the purchase of the Shares pursuant
to the Offer is an attractive investment for the Company. The Non-Drugstore
Businesses are ADAP, an auto parts retailer with 95 stores, Encore Books, which
operates 103 stores, Concord Custom Cleaners with 170 outlets and Sera-Tec
Biologicals, which consists of 33 plasma collection centers providing plasma for
use in therapeutic and diagnostic products. No agreement exists between the
Company and any prospective purchaser concerning such planned dispositions. Any
such sales would also be subject to the identification of persons willing to
purchase one or more of the Non-Drugstore Businesses at prices and upon other
terms deemed acceptable by the Company, as well as the negotiations of
definitive agreements.
The Offer, the sale of the Non-Drugstore Businesses and the closing of 200
underperforming drugstores are intended to enhance shareholder value. Moreover,
the disposition of the Non-Drugstore Businesses will allow the Company better to
focus its resources on the Company's drugstore business.
The tender offer is explained in detail in the enclosed Offer to Purchase
and Letter of Transmittal. If you wish to tender your shares, detailed
instructions on how to tender shares are also in the enclosed materials. We
encourage you to read these materials carefully before making any decision with
respect to the tender offer. Please note that the tender offer is scheduled to
expire at midnight on February 7, 1994, unless extended by the Company. Neither
the Company nor its Board of Directors makes any recommendation to any
shareholder as to whether to tender or refrain from tendering shares.
SINCERELY,
MARTIN L. GRASS
PRESIDENT AND CHIEF OPERATING OFFICER
ALEX GRASS
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made solely by the Offer to Purchase, dated
January 10, 1994, and the related Letter of Transmittal. Capitalized terms not
defined in this notice are defined in the Offer to Purchase. The Offer is not
being made to, nor will the Company accept tenders from, holders of Shares
in any jurisdictions in which the Offer or its acceptance would violate
that jurisdiction's laws. The Company is not aware of any jurisdiction
in which the making of the Offer or the tender of Shares would not be
in compliance with the laws of such jurisdiction. In those
jurisdictions whose laws require that the Offer be made by a licensed
broker or dealer, the Offer shall be deemed to be made on the
Company's behalf by Donaldson, Lufkin & Jenrette Securities
Corporation or one or more registered brokers or dealers licensed
under the laws of such jurisdictions.
NOTICE OF OFFER BY
RITE AID CORPORATION
TO PURCHASE FOR CASH UP TO
22,000,000 SHARES OF ITS COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
AT A PURCHASE PRICE NOT GREATER THAN $18.50
NOR LESS THAN $16.00 PER SHARE
Rite Aid Corporation, a Delaware corporation (the "Company"), invites
shareholders to tender shares of its common stock, par value $1.00 per share
(including the associated Preferred Share Purchase Rights (the "Rights"), the
"Shares"), to the Company at prices, net to the seller in cash, not greater
than $18.50 nor less than $16.00 per Share, specified by such shareholders,
upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated January 10, 1994 (the "Offer to Purchase"), and in the related
Letter of Transmittal (which together constitute the "Offer"). Absent
circumstances causing the Rights to become exercisable or separately tradeable
prior to the Expiration Date, the tender of Shares will also constitute a
tender of the associated Rights. Unless the context requires otherwise, all
references herein to Shares include the associated Rights. The information
contained in the Offer to Purchase and the Letter of Transmittal is
incorporated by reference herein in its entirety.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS SET FORTH
IN THE OFFER.
- ------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, FEBRUARY 7, 1994, UNLESS THE OFFER IS
EXTENDED.
- ------------------------------------------------------------------------------
The Company will, upon the terms and subject to the conditions of the
Offer, determine a single per Share price (not greater than $18.50 nor less
than $16.00 per Share) (the "Purchase Price") that it will pay for Shares
validly tendered pursuant to the Offer taking into account the number of Shares
so tendered and the prices specified by tendering shareholders. The Company
will select the Purchase Price which will allow it to buy 22,000,000 Shares (or
such lesser number as are validly tendered at prices not greater than $18.50
nor less than $16.00 per Share) pursuant to the Offer. All Shares validly
tendered at prices at or below the Purchase Price will be purchased at the
Purchase Price, net to the seller in cash, upon the terms and subject to the
conditions of the Offer, including the proration terms described below. For
purposes of the Offer, the Company will be deemed to have accepted for payment
(and thereby purchased), subject to proration, Shares which are validly
tendered at or below the Purchase Price when, as and if it gives oral or
written notice to the Depositary of its acceptance of such Shares for payment
pursuant to the Offer. In all cases, payment for Shares tendered and accepted
for payment pursuant to the Offer will be made only after timely receipt by the
Depositary of certificates for such Shares (or a timely confirmation of a
book-entry transfer of such Shares into the Depositary's account at one of the
Book-Entry Transfer Facilities (as defined in the Offer to Purchase)), a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) and any other documents required by the Letter of Transmittal.
Upon the terms and subject to the conditions of the Offer, in the
event that prior to the Expiration Date more than 22,000,000 Shares (or such
greater number of Shares as the Company may elect to purchase pursuant to the
Offer) are validly tendered at or below the Purchase Price, the Company will
accept Shares for purchase, in the following order of priority: (a) first, all
Shares validly tendered by any Odd Lot Owner (as defined in the Offer) who
tenders all such Shares beneficially owned by such Odd Lot Owner at or below
the Purchase Price (partial tenders will not qualify for this preference) and
who completes the box captioned "Odd Lots" on the Letter of Transmittal and, if
applicable, on the Notice of Guaranteed Delivery, and (b) then, after purchase
of all of the foregoing Shares, all other Shares validly tendered at or below
the Purchase Price before the Expiration Date on a pro rata basis, if necessary
(with adjustments to avoid purchases of fractional Shares).
The Offer provides shareholders who are considering a sale of all or a
portion of their Shares the opportunity to determine the price or prices (not
greater than $18.50 nor less than $16.00 per Share) at which they are willing
to sell their Shares and, if any such Shares are purchased pursuant to the
Offer, to sell those Shares for cash without the usual transaction costs
associated with open-market sales. The Company is making the Offer because the
Board of Directors believes that, given the Company's business, assets and
prospects and the current market price of the Shares, the purchase of the
Shares pursuant to the Offer is an attractive investment for the Company.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING SHARES. SHAREHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER
SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH
SHARES SHOULD BE TENDERED. THE COMPANY HAS BEEN ADVISED THAT NO DIRECTOR OR
EXECUTIVE OFFICER OF THE COMPANY INTENDS TO TENDER ANY SHARES PURSUANT TO THE
OFFER.
The Company reserves the right, at any time or from time to time, in
its sole discretion, to extend the period of time during which the Offer is
open by giving oral or written notice of such extension to the Depositary and
making a public announcement thereof. Subject to certain conditions, the
Company also expressly reserves the right to terminate the Offer and not accept
for payment any Shares not theretofore accepted for payment.
Shares tendered pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date and, unless theretofore accepted for payment by
the Company, may also be withdrawn after 12:00 midnight, New York City time, on
March 8, 1994. For a withdrawal to be effective, the Depositary must timely
receive a written, telegraphic, telex or facsimile transmission notice of
withdrawal. Such notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder (if different from that of the person who
tendered such Shares). If the certificates have been delivered or otherwise
identified to the Depositary, then, prior to the release of such certificates,
the tendering shareholder must also submit the serial numbers of the particular
certificates evidencing the Shares to be withdrawn and the signature on the
notice of withdrawal must be guaranteed by an Eligible Institution (except in
the case of Shares tendered by an Eligible Institution). If Shares have been
tendered pursuant to the procedure for book-entry transfer set forth in the
Offer to Purchase, the notice of withdrawal must specify the name and number of
the account at the applicable Book-Entry Transfer Facility to be credited with
the withdrawn Shares and otherwise comply with the procedures of such facility.
The Offer to Purchase and the Letter of Transmittal contain important
information, which should be read before shareholders decide whether to accept
or reject the Offer and if accepted, at what price or prices to tender their
Shares. These materials are being mailed to record holders of Shares and are
being furnished to brokers, banks and similar persons whose names, or the names
of whose nominees, appear on the Company's shareholder list (or, if applicable,
who are listed as participants in a clearing agency's security position
listing) for transmittal to beneficial holders of Shares.
THE INFORMATION REQUIRED TO BE DISCLOSED BY RULE 13E-4(D)(1) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, IS CONTAINED IN THE OFFER TO
PURCHASE AND IS INCORPORATED IN THIS NOTICE BY REFERENCE.
Please contact the Information Agent for copies of the Offer to
Purchase, the related Letter of Transmittal and other tender offer materials.
It will furnish copies promptly at the Company's expense.
THE INFORMATION AGENT FOR THE OFFER IS:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, New York 10022
(212) 754-8000
or
CALL TOLL-FREE 1-800-662-5200
The Dealer Manager for the Offer is:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
2121 Avenue of the Stars
Los Angeles, CA 90067
(310) 282-6161 (call collect)
January 10, 1994
<PAGE> 1
January 7, 1994
Mr. Frank Bergonzi
Senior Vice President-Finance
Rite Aid Corporation
P.O. Box 3165
Harrisburg, PA 17105
Dear Frank:
You have advised us that Rite Aid Corporation ("Rite Aid") proposes to
raise $600 million in revolving commitments for the repurchase of up to 22
million shares of Rite Aid common stock and for general corporate purposes. In
connection with this transaction, Morgan Guaranty Trust Company of New York
("Morgan") would be pleased to underwrite a $250 million 364-day facility and a
$350 million five-year facility (together the "Credit Facilities") under the
terms and conditions described in the attached Summaries of Terms and Conditions
(the "Term Sheets") for the Credit Facilities.
Morgan's commitment is subject to (i) acceptance by you as set forth in the
last paragraph of this letter by 5:00 p.m. January 11, 1994, and (ii) the
negotiation, execution and delivery of mutually acceptable definitive loan
documentation (to be prepared by Morgan's counsel, Davis Polk & Wardwell) within
90 days of the launch of the syndication.
It is J.P. Morgan Securities, Inc.'s ("JPMSI") intention to syndicate this
facility to a group of lenders acceptable to Morgan and Rite Aid (Morgan and
such other lenders herein being called the "Banks"). Rite Aid agrees to provide
such assistance in the syndication effort as may be reasonably requested,
including making members of management of Rite Aid and its subsidiaries
available to meet with prospective syndicate members, and assisting JPMSI in the
preparation of a financing memorandum.
By signing below, Rite Aid acknowledges its obligation to pay Morgan and
JPMSI the fees as set forth in the Fee Letter dated January 7, 1994 among Rite
Aid, Morgan, and JPMSI.
In addition, by signing below, Rite Aid agrees to indemnify and defend
Morgan and JPMSI and each other Bank and their respective directors, officers,
agents, employees and affiliates from, and hold each of them harmless against,
any and all losses, liabilities, claims, damages or expenses incurred by any of
them arising out of or by reason of any investigation, litigation or other
proceeding brought or threatened relating to any loan made or proposed to be
made to Rite Aid or any of its affiliates in connection with the matters herein
referred to (including, but without limitation, any use made or proposed to be
made by Rite Aid or any of its affiliates of the proceeds of such loans, but
excluding any such losses, liabilities, claims, damages or expenses incurred by
reason of the gross negligence or willful misconduct of the indemnitee),
including, without limitation, amounts paid in settlement, court costs, and fees
and disbursements of counsel incurred in connection with any such pending or
threatened investigation, litigation or other proceeding.
Finally, by signing below, Rite Aid acknowledges its obligation to pay
Morgan's and JPMSI's reasonable out-of-pocket costs and expenses in connection
herewith, including fees and disbursements of Morgan's counsel, Davis Polk &
Wardwell, regardless of whether any loan documents are agreed to and signed by
the Banks and Rite Aid, and regardless of whether any loans are actually made.
<PAGE> 2
If you accept and agree to this proposal, please so indicate by signing in
the space provided below and returning a copy of this letter to us. This offer
will expire at 5:00 p.m. on January 11, 1994, if this letter and the Fee Letter
have not been accepted by you by that time.
Very truly yours,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By: /s/ STEPHEN J. KENNEALLY
Name: Stephen J. Kenneally
Title: Vice President
J.P. MORGAN SECURITIES, INC.
By: /s/ BARBARA J. ASCH
Name: Barbara J. Asch
Title: Vice President
ACCEPTED AND AGREED TO
this 7th day of January, 1994:
RITE AID CORPORATION
By: /s/ FRANK BERGONZI
Name: Frank Bergonzi
Title: Senior Vice President -- Finance
<PAGE> 3
SUMMARY OF TERMS AND CONDITIONS
FOR RITE AID CORPORATION
5 YEAR CREDIT FACILITY
BORROWER: Rite Aid Corporation ("Rite Aid").
AMOUNT: $350 million.
PURPOSE: General Corporate Purposes and to finance the
proposed repurchase of up to 22 million shares of
Rite Aid common stock.
AGENT: Morgan Guaranty Trust Company of New York
("Morgan").
ARRANGER: J.P. Morgan Securities, Inc.
LENDERS: Syndicate of lenders acceptable to Rite Aid and
Morgan ("the Banks").
FACILITY DESCRIPTION: 5 years on a fully revolving basis.
BORROWING OPTIONS: Adjusted LIBOR, Adjusted CD, Base Rate, and
Competitive Bid.
LIBOR and CD will be adjusted for reserves and
other regulatory requirements, if any.
Base Rate means the higher of Morgan's prime rate
or the federal funds rate + 0.50%.
MONEY MARKET OPTION
DESCRIPTION: The Borrower may request the Agent to solicit
competitive bids from the Banks at a margin over
LIBOR or at an absolute rate. Each Bank will bid
at its own discretion for amounts up to the total
amount of commitments and the Borrower will be
under no obligation to accept any of the bids.
Any Money Market advances made by a Bank shall be
deemed usage of the facility for the purpose of
fees and availability. However, each Bank's
advance shall not reduce such Bank's obligation
to lend its pro rata share of the remaining
undrawn commitment.
Bid Selection Mechanism: The Borrower will
determine the aggregate amount of bids, if any,
it will accept. Bids will be accepted in order of
the lowest to the highest rates ("Bid Rates"). If
two or more Banks bid at the same Bid Rate and
the amount of such bids accepted is less than the
aggregate amount of such bids, then the amount to
be borrowed at such Bid Rate will be allocated
among such Banks in proportion to the amount for
which each Bank bid at such Bid Rate. If the bids
are either unacceptably high to the Borrower or
are insufficient in amount, the Borrower may
cancel the auction.
PRICING: Pricing on the commitments and loans will be at the
rates per annum, varying commensurate with credit
quality, set forth in the attached Pricing Grid.
Margins: See attached Pricing Grid.
Facility Fee: A per annum fee calculated on a 360 day basis
payable on each Bank's commitment irrespective of
usage, quarterly in arrears and on termination of
a Bank's Commitment. See attached Pricing Grid.
<PAGE> 4
Commitment Fee: A per annum fee calculated on a 360 day basis
payable on the unused portion of the facility
quarterly in arrears and on termination of the
facility. See attached Pricing Grid.
REFERENCE LENDERS: Morgan and two other banks representative of the
syndicate.
INTEREST PAYMENTS: At the end of each applicable Interest Period or
quarterly, if earlier.
INTEREST PERIODS: Syndicated Borrowings:
Base Rate -- 30 days.
Adjusted LIBOR Loans -- 1, 2, 3, or 6 months.
Adjusted CD Loans -- 30, 60, 90, or 180 days.
Non-Syndicated Borrowings:
Money Market LIBOR Loans -- minimum 1 month.
Money Market Absolute Rate Loan -- minimum 14
days.
DRAWDOWNS: Minimum amounts of $10 million with additional
increments of $1 million. Drawdowns are at the
Borrower's option with same day notice for Base
Rate Loans, one business day's notice for Money
Market Absolute Rate Loans, one business day's
notice for Adjusted CD Loans, three business
days' notice for Adjusted LIBOR Loans, and five
business days' notice for Money Market LIBOR
Loans.
PREPAYMENTS: Base Rate Loans, Adjusted LIBOR, and Adjusted CD
may be prepaid at any time on three business
days' notice. Money Market Loans may not be
prepaid before the end of an Interest Period.
TERMINATION OR REDUCTION OF
COMMITMENTS: The Borrower may terminate unused commitments in
amounts of at least $10 million at any time on
three business days' notice.
REPRESENTATIONS AND
WARRANTIES: With respect to the Borrower and its Consolidated
or Significant Subsidiaries, as appropriate,
including but not limited to:
1. Corporate existence.
2. Corporate and governmental authorization; no
contravention; binding effect.
3. Financial information.
4. No material adverse change.
5. Full disclosure.
6. No material litigation.
7. Compliance with laws, including ERISA.
8. Payment of taxes.
9. Existence, incorporation, etc. of
subsidiaries.
10. Environmental matters.
CONDITIONS TO CLOSING AND
EACH BORROWING: Customary in Credit Agreements of this nature,
including but not limited to:
1. Absence of Default.
2. Accuracy of representations and warranties.
3. Negotiation and execution of satisfactory
closing documentation, including the
cancellation of the $100 and $300 million
Credit Agreements dated as of November 19,
1993.
<PAGE> 5
COVENANTS: Customary in Credit Agreements of this nature,
including but not limited to:
1. Information.
2. Payment of obligations.
3. Maintenance of property; insurance coverage.
4. Conduct of business; maintenance of
existence.
5. Compliance with laws.
6. Inspection of property, books, and records.
7. Restriction on debt of subsidiaries.
8. Restriction on sales with leases back.
9. Negative pledge (including subsidiary stock
and assets) with customary exceptions and a
basket of 5% of consolidated net tangible
assets.
10. Operating Cash Flow to Total Borrowed Funds
not to be less than 30%.
11. Debt to Total Capital not to exceed 66% at
fiscal year end 1995, 56% at fiscal year end
1996, 50% at fiscal year end 1997, and 40% at
fiscal year end 1998.
12. Limitation on minority investments.
13. Limitations on consolidations, mergers and
sale of assets.
14. Use of proceeds.
EVENTS OF DEFAULT: Customary in Credit Agreements of this nature,
including but not limited to:
1. Failure to pay principal under the Credit
Agreement when due. Failure to pay interest,
fees or other amounts within 5 days of when
due.
2. Failure to meet covenants (with grace
periods, where appropriate).
3. Representations or warranties false in any
material respect when made.
4. Cross default to other debt of the Borrower
and its Subsidiaries in excess of $25 million
(in aggregate) which is triggered by (i)
failure to pay when due (including any
applicable grace period) or (ii) an event
which results in acceleration of, or with the
giving of notice or lapse of time or both
would enable the holder to accelerate, the
maturity of its debt.
5. Change of ownership or control.
6. Other usual defaults with respect to the
Borrower and Subsidiaries, including but not
limited to insolvency, bankruptcy, ERISA, and
judgment defaults.
INCREASED COSTS/CHANGE OF
CIRCUMSTANCES: The credit agreement will contain customary
provisions protecting the Banks in the event of
unavailability of funding, illegality, increased
costs and funding losses (including funding
losses incurred as a result of prepayment of
Adjusted CD and Adjusted LIBOR loans).
Capital adequacy compensation will be required only
with respect to capital requirements adopted
after the date hereof. Banks will represent that
capital adequacy compensation is not required at
time of closing.
<PAGE> 6
INDEMNIFICATION: The Borrower will indemnify the Banks against all
losses, liabilities, claims, damages, or expenses
relating to their loans, the Borrower's use of
loan proceeds or the commitments, including but
not limited to reasonable attorneys' fees and
settlement costs (except such as result from the
indemnitee's gross negligence or willful
misconduct).
TRANSFERS AND
PARTICIPATIONS: Banks will have the right to transfer or sell
participations in their loans or commitments with
the transferability of voting rights limited to
changes in principal, rate, fees and term.
Assignments will be allowed with the consent of
the Borrower, such consent not to be unreasonably
withheld. Assignment to a Bank's affiliate or a
Federal Reserve Bank is allowed without the
consent of the Borrower.
EXPENSES: Borrower will pay all legal and other reasonable
out-of-pocket expenses of the Agent related to
this transaction and any subsequent amendments or
waivers, including the reasonable fees and
expenses of Davis Polk & Wardwell, special
counsel to the Agent.
GOVERNING LAW: State of New York.
<PAGE> 7
PRICING GRID FOR RITE AID CORPORATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$350 MILLION 5-YEAR FACILITY
(BASIS POINTS PER ANNUM)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
IF THE BORROWER
IS
IF THE BORROWER IF THE BORROWER RATED BBB- OR
IF THE BORROWER IF THE BORROWER IS RATED BBB+ IS BELOW
IF THE BORROWER IS RATED A BY IS RATED A- BY BY S&P AND RATED BBB BY BY S&P OR BAA3 OR
IS S&P AND A2 BY S&P AND A3 BY BAA1 BY S&P, AND BAA2 BELOW BY MOODY'S
RATED A+ BY S&P MOODY'S OR MOODY'S OR MOODY'S OR BY MOODY'S OR OR
AND A1 BY BETTER AND NO BETTER AND NO BETTER AND NO BETTER AND NO IS UNRATED BY
MOODY'S OR OTHER LEVEL OTHER LEVEL OTHER LEVEL OTHER LEVEL EITHER
BETTER APPLIES APPLIES APPLIES APPLIES S&P OR MOODY'S
- -
Facility Fee 10.00 12.50 12.50 15.00 17.50 20.00
- ----------------------------------------------------------------------------------------------------------------------------------
Commitment Fee 2.50 2.50 2.50 5.00 5.00 5.00
- ----------------------------------------------------------------------------------------------------------------------------------
"Unused" 12.50 15.00 15.00 20.0 22.50 25.00
- ----------------------------------------------------------------------------------------------------------------------------------
LIBOR+ 25.00 25.00 30.00 37.50 42.50 55.00
- ----------------------------------------------------------------------------------------------------------------------------------
CD+ 37.50 37.50 42.50 50.00 55.00 67.50
- ----------------------------------------------------------------------------------------------------------------------------------
Based Rate+ 0 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
"Used"
(LIBOR+) L+35.00 L+37.50 L+42.50 L+52.50 L+60.0 L+75.00
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: A 6.25 BASIS POINT PER ANNUM UTILIZATION FEE SHALL ACCRUE ON BORROWINGS
IN EXCESS OF 60% OF THE FACILITY.
<PAGE> 8
SUMMARY OF TERMS AND CONDITIONS
FOR RITE AID CORPORATION
364-DAY CREDIT FACILITY
BORROWER: Rite Aid Corporation ("Rite Aid").
AMOUNT: $250 million.
PURPOSE: To bridge long-term debt issues and asset sales
related to the repurchase of up to 22 million
shares of Rite Aid common stock.
AGENT: Morgan Guaranty Trust Company of New York
("Morgan").
ARRANGER: J.P. Morgan Securities, Inc.
LENDERS: Syndicate of lenders acceptable to Rite Aid and
Morgan ("the Banks").
FACILITY DESCRIPTION: 364 days on a fully revolving basis.
BORROWING OPTIONS: Adjusted LIBOR, Adjusted CD, Base Rate, and
Competitive Bid.
LIBOR and CD will be adjusted for reserves and
other regulatory requirements, if any.
Base Rate means the higher of Morgan's prime rate
or the federal funds rate + 0.50%.
[MONEY MARKET OPTION
DESCRIPTION: The Borrower may request the Agent to solicit
competitive bids from the Banks at a margin over
LIBOR or at an absolute rate. Each Bank will bid
at its own discretion for amounts up to the total
amount of commitments and the Borrower will be
under no obligation to accept any of the bids.
Any Money Market advances made by a Bank shall be
deemed usage of the facility for the purpose of
fees and availability. However, each Bank's
advance shall not reduce such Bank's obligation
to lend its pro rata share of the remaining
undrawn commitment.
Bid Selection Mechanism: The Borrower will
determine the aggregate amount of bids, if any,
it will accept. Bids will be accepted in order of
the lowest to the highest rates ("Bid Rates"). If
two or more Banks bid at the same Bid Rate and
the amount of such bids accepted is less than the
aggregate amount of such bids, then the amount to
be borrowed at such Bid Rate will be allocated
among such Banks in proportion to the amount for
which each Bank bid at such Bid Rate. If the bids
are either unacceptably high to the Borrower or
are insufficient in amount, the Borrower may
cancel the auction.]
PRICING: Pricing on the commitments and loans will be at the
rates per annum, varying commensurate with credit
quality, set forth in the attached Pricing Grid.
Margins: See attached Pricing Grid.
Facility Fee: A per annum fee calculated on a 360 day basis
payable on each Bank's commitment irrespective of
usage, quarterly in arrears and on termination of
a Bank's Commitment. See attached Pricing Grid.
<PAGE> 9
Commitment Fee: A per annum fee calculated on a 360 day basis
payable on the unused portion of the facility
quarterly in arrears and on termination of the
facility. See attached Pricing Grid.
REFERENCE LENDERS: Morgan and two other banks representative of the
syndicate.
INTEREST PAYMENTS: At the end of each applicable Interest Period or
quarterly, if earlier.
INTEREST PERIODS: Syndicated Borrowings:
Base Rate -- 30 days.
Adjusted LIBOR Loans -- 1, 2, 3, or 6 months.
Adjusted CD Loans -- 30, 60, 90, or 180 days.
[Non-Syndicated Borrowings:
Money Market LIBOR Loans -- minimum 1 month.
Money Market Absolute Rate Loan -- minimum 14
days.]
DRAWDOWNS: Minimum amounts of $10 million with additional
increments of $1 million. Drawdowns are at the
Borrower's option with same day notice for Base
Rate Loans, [one business day's notice for Money
Market Absolute Rate Loans], one business day's
notice for Adjusted CD Loans, three business
days' notice for Adjusted LIBOR Loans, [and five
business days' notice for Money Market LIBOR
Loans].
PREPAYMENTS: Base Rate Loans, Adjusted LIBOR, and Adjusted CD
may be prepaid at any time on three business
days' notice. [Money Market Loans may not be
prepaid before the end of an Interest Period].
TERMINATION OR REDUCTION OF
COMMITMENTS: OPTIONAL: The Borrower may terminate unused
commitments in amounts of at least $10 million at
any time on three business days' notice.
MANDATORY: Commitments will be reduced by the net
proceeds from any capital markets issues (with a
maturity in excess of one year) and from the net
proceeds from the sale of the Specialty Retailing
assets.
REPRESENTATIONS AND
WARRANTIES: With respect to the Borrower and its Consolidated
or Significant Subsidiaries, as appropriate,
including but not limited to:
1. Corporate existence.
2. Corporate and governmental authorization; no
contravention; binding effect.
3. Financial information.
4. No material adverse change.
5. Full disclosure.
6. No material litigation.
7. Compliance with laws, including ERISA.
8. Payment of taxes.
9. Existence, incorporation, etc. of
subsidiaries.
10. Environmental matters.
CONDITIONS TO CLOSING AND
EACH BORROWING: Customary in Credit Agreements of this nature,
including but not limited to:
1. Absence of Default
2. Accuracy of representations and warranties.
3. Negotiation and execution of satisfactory
closing documentation,
<PAGE> 10
including the cancellation of the $100 and
$300 million Credit Agreements dated as of
November 19, 1993.
COVENANTS: Customary in Credit Agreements of this nature,
including but not limited to:
1. Information.
2. Payment of obligations.
3. Maintenance of property; insurance coverage.
4. Conduct of business; maintenance of
existence.
5. Compliance with laws.
6. Inspection of property, books, and records.
7. Restriction on debt of subsidiaries.
8. Restriction on sales with leases back.
9. Negative pledge (including a subsidiary stock
and assets) with customary exceptions and a
basket of 5% of consolidated net tangible
assets.
10. Operating Cash Flow to Total Borrowed Funds
not to be less than 30%.
11. Debt to total Capital not to exceed 66%.
12. Limitation on minority investments.
13. Limitations on consolidations, mergers and
sale of assets.
14. Use of proceeds.
EVENTS OF DEFAULT: Customary in Credit Agreements of this nature,
including but not limited to:
1. Failure to pay principal under the Credit
Agreement when due. Failure to pay interest,
fees or other amounts within 5 days of when
due.
2. Failure to meet covenants (with grace periods,
where appropriate).
3. Representations or warranties false in any
material respect when made.
4. Cross default to other debt of the Borrower
and its subsidiaries in excess of $25 million
(in aggregate) which is triggered by (i)
failure to pay when due (including any
applicable grace period) or (ii) an event
which results in acceleration of, or with the
giving of notice or lapse of time or both
would enable the holder to accelerate, the
maturity of its debt.
5. Change of ownership or control.
6. Other usual defaults with respect to the
Borrower and Subsidiaries, including but not
limited to insolvency, bankruptcy, ERISA, and
judgment defaults.
INCREASED COSTS/CHANGE OF
CIRCUMSTANCES: The credit agreement will contain customary
provisions protecting the Banks in the event of
unavailability of funding, illegality, increased
costs and funding losses (including funding
losses incurred as a result of prepayment of
Adjusted CD and Adjusted LIBOR loans).
Capital adequacy compensation will be required only
with respect to capital requirements adopted
after the date hereof. Banks will repre-
sent that capital adequacy compensation is not
required at time of closing.
INDEMNIFICATION: The Borrower will indemnify the Banks against all
losses, liabilities, claims, damages, or expenses
relating to their loans, the Borrower's use
<PAGE> 11
of loan proceeds or the commitments, including
but not limited to reasonable attorneys' fees and
settlement costs (except such as result from the
indemnitee's gross negligence or willful
misconduct).
TRANSFERS AND
PARTICIPATIONS: Banks will have the right to transfer or sell
participations in their loans or commitments with
the transferability of voting rights limited to
changes in principal, rate, fees and term.
Assignments will be allowed with the consent of
the Borrower, such consent not to be unreasonably
withheld. Assignment to a Bank's affiliate or a
Federal Reserve Bank is allowed without the
consent of the Borrower.
EXPENSES: Borrower will pay all legal and other reasonable
out-of-pocket expenses of the Agent related to
this transaction and any subsequent amendments or
waivers, including the reasonable fees and
expenses of Davis Polk & Wardwell, special
counsel to the Agent.
GOVERNING LAW: State of New York.
<PAGE> 12
PRICING GRID FOR RITE AID CORPORATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$250 MILLION 364-DAY FACILITY
(BASIS POINTS PER ANNUM)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
IF THE BORROWER
IS
IF THE BORROWER IF THE BORROWER RATED BBB- OR
IF THE BORROWER IF THE BORROWER IS RATED BBB+ IS BELOW
IF THE BORROWER IS RATED A BY IS RATED A- BY BY S&P AND RATED BBB BY BY S&P OR BAA3 OR
IS S&P AND A2 BY S&P AND A3 BY BAA1 BY S&P, AND BAA2 BELOW BY MOODY'S
RATED A+ BY S&P MOODY'S OR MOODY'S OR MOODY'S OR BY MOODY'S OR OR
AND A1 BY BETTER AND NO BETTER AND NO BETTER AND NO BETTER AND NO IS UNRATED BY
MOODY'S OR OTHER LEVEL OTHER LEVEL OTHER LEVEL OTHER LEVEL EITHER
BETTER APPLIES APPLIES APPLIES APPLIES S&P OR MOODY'S
- ----------------------------------------------------------------------------------------------------------------------------------
Facility Fee 8.00 9.00 10.0 12.50 15.00 20.00
- ----------------------------------------------------------------------------------------------------------------------------------
Commitment Fee 0 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
"Unused" 8.00 9.00 10.0 12.50 15.00 20.00
- ----------------------------------------------------------------------------------------------------------------------------------
LIBOR+ 27.00 28.50 32.50 40.00 45.00 55.00
- ----------------------------------------------------------------------------------------------------------------------------------
CD+ 39.50 41.00 45.00 52.50 57.50 67.50
- ----------------------------------------------------------------------------------------------------------------------------------
Based Rate+ 0 0 0 0 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
"Used"
(LIBOR+) L+35.00 L+37.50 L+42.50 L+52.50 L+50.00 L+75.00
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: A 6.25 BASIS POINT PER ANNUM UTILIZATION FEE SHALL ACCRUE ON BORROWINGS
IN EXCESS OF 50% OF THE FACILITY.
