<PAGE> 1
Filed Pursuant to Rule 424(b)(5)
File No. 33-63794
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED APRIL 12, 1995)
$200,000,000
RITE AID CORPORATION
[LOGO] 7 5/8% SENIOR NOTES DUE APRIL 15, 2005
------------------
Interest on the notes offered hereby (the "Notes") will be payable on April
15 and October 15 of each year, commencing October 15, 1995. The Notes will
mature on April 15, 2005. The Notes may not be redeemed prior to maturity and
will not be entitled to any sinking fund.
The Notes will be represented by one or more Global Securities registered
in the name of the nominee of The Depository Trust Company (the "Depository").
Interests in the Global Securities will be shown on, and transfers thereof will
be effected only through, records maintained by the Depository and its
participants. Except as provided herein, Notes in definitive form will not be
issued. Settlement for the Notes will be made in immediately available funds.
The Notes will trade in the Depository's Same-Day Funds Settlement System until
maturity, and secondary market trading activity for the Notes will therefore
settle in immediately available funds. All payments of principal and interest
will be made in immediately available funds. See "Description of
Notes -- Same-Day Settlement and Payment."
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note....................................... 99.757% 0.650% 99.107%
- --------------------------------------------------------------------------------------------------------
Total.......................................... $199,514,000 $1,300,000 $198,214,000
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from April 20, 1995 to date of delivery.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deduction of estimated expenses of $150,000 to be paid by the
Company.
------------------
The Notes are offered, subject to prior sale, when, as and if delivered to
and accepted by the Underwriters, and subject to certain other conditions. The
Underwriters reserve the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that the Notes will be
delivered in book-entry form only, on or about April 20, 1995, through the
facilities of the Depository.
------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BEAR, STEARNS & CO. INC.
J.P. MORGAN SECURITIES INC.
NATIONSBANC CAPITAL MARKETS, INC.
------------------
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS APRIL 12, 1995.
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
RECENT OPERATING RESULTS
On April 3, 1995, the Company announced certain preliminary operating
results for the year ended March 4, 1995. Net sales for the year ended March 4,
1995 were $4,533,851,000 compared to $4,058,711,000 for the year ended February
26, 1994, an increase of $475,140,000 or 11.7%. Income from continuing
operations for the year ended March 4, 1995 was $141,286,000 compared to
$26,208,000 for the year ended February 26, 1994. Income from continuing
operations for the year ended February 26, 1994 includes a one-time pre-tax
provision of $149,196,000 for a corporate restructuring, including the closing
of 200 underperforming drugstores, and the disposition of other assets.
Excluding these charges, income from continuing operations for the year ended
February 26, 1994 would have been $116,845,000. Same-store sales for the year
ended March 4, 1995 increased 7.2% compared to 2.8% for the year ended February
26, 1994.
USE OF PROCEEDS
The net proceeds from the sale of the Notes offered hereby will be used for
working capital and general corporate purposes, including the repayment of
outstanding commercial paper of the Company, which at March 31, 1995 bore
interest at the rate of 6.17%.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the Company for the five years ended February 26, 1994 and for the 39 weeks
ended November 26, 1994. For the purpose of computing the ratio of earnings to
fixed charges, (1) "earnings" consist of earnings before taxes and fixed charges
and (2) "fixed charges" consist of total interest on debt (including interest
capitalized during the period and the portion of rental expense deemed
representative of the interest factor). The ratios set forth below are not
indicative of expected future ratios because, among other reasons, the issuance
of the Notes will result in increased fixed charges.
<TABLE>
<CAPTION>
YEAR ENDED
---------------------------------------------------------------------
39 WEEKS FEBRUARY 26, FEBRUARY 27, FEBRUARY 29, MARCH 2, MARCH 3,
ENDED 1994 1993 1992 1991 1990
NOVEMBER 26, 1994 (52 WEEKS) (52 WEEKS) (52 WEEKS) (52 WEEKS) (52 WEEKS)
------------------ ------------- ------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to
Fixed Charges......... 3.44 1.65(1) 3.95 3.54 2.94 2.48
</TABLE>
- ---------------
(1) Includes the impact of a $149,196,000 one-time, pre-tax provision for
corporate restructuring. Excluding the $149,196,000 charge, the ratio of
earnings to fixed charges would have been 3.79.
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes (referred to
in the accompanying Prospectus as the "Debt Securities") supplements, and to the
extent inconsistent therewith replaces, insofar as such description relates to
the Notes, the description of the general terms and provisions of Debt
Securities set forth in the Prospectus.
GENERAL
The Notes will be limited to $200,000,000 aggregate principal amount and
will mature on April 15, 2005. The Notes will be unsecured obligations of the
Company and will rank senior to all subordinated indebtedness, if any, of the
Company and pari passu with all other senior unsecured indebtedness of the
Company. The Notes will constitute a series of Senior Debt Securities (as
defined in the Prospectus) and will be issued under an Indenture, dated as of
August 1, 1993, between the Company and First Trust of New York, National
Association, as trustee (the "Trustee"), the terms of which are more fully
described in the Prospectus (such Indenture being referred to as the "Senior
Indenture" in the Prospectus).
The Notes will bear interest from April 20, 1995 at the rate per annum set
forth on the cover page of this Prospectus Supplement, payable on April 15 and
October 15 of each year, commencing October 15, 1995, to the person in whose
name the Note was registered at the close of business on the preceding April 1
and October 1, respectively, subject to certain exceptions.
The Notes may not be redeemed prior to maturity and will not be entitled to
any sinking fund.
S-2
<PAGE> 3
BOOK-ENTRY, DELIVERY AND FORM
The Notes will be issued in the form of one or more fully registered Global
Securities. The Global Securities will be deposited with, or on behalf of, the
Depository and registered in the name of the Depository's nominee. The
Depository currently limits the maximum denomination of any global security to
$200,000,000. Therefore, for purposes of this Prospectus Supplement, "Global
Security" refers to the Global Security or Global Securities representing the
entire issue of Notes offered hereby.
Except as set forth below, the Global Security may be transferred, in whole
and not in part, only to another nominee of the Depository or to a successor of
the Depository or its nominee.
The Depository has advised as follows: It is a limited-purpose trust
company which was created to hold securities for its participating organizations
(the "Participants") and to facilitate the clearance and settlement of
securities transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. Participants
include securities brokers and dealers (including the Underwriters hereinafter
named), banks and trust companies, clearing corporations and certain other
organizations. Access to the Depository's system is also available to others
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ("indirect participants"). Persons who are not Participants may
beneficially own securities held by the Depository only through Participants or
indirect participants.
The Depository advises that its established procedures provide that (i)
upon issuance of the Notes by the Company, the Depository will credit the
accounts of Participants designated by the Underwriters with the principal
amounts of the Notes purchased by the Underwriters, and (ii) ownership of
interests in the Global Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the Depository,
the Participants and the indirect participants. The laws of some states require
that certain persons take physical delivery in definitive form of securities
which they own. Consequently, the ability to transfer beneficial interests in
the Global Security is limited to such extent.
So long as a nominee of the Depository is the registered owner of the
Global Security, such nominee for all purposes will be considered the sole owner
or holder of the Notes under the Indenture. Except as provided below, owners of
beneficial interests in the Global Security will not be entitled to have Notes
registered in their names, will not receive or be entitled to receive physical
delivery of Notes in definitive form, and will not be considered the owners or
holders thereof under the Indenture.
Neither the Company, the Trustee, any paying agent nor the Security
Registrar (as defined in the Indenture) will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the Global Security, or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
Principal and interest payments on the Notes registered in the name of the
Depository's nominee will be made by the Trustee to the Depository's nominee as
the registered owner of the Global Security. Under the terms of the Indenture,
the Company and the Trustee will treat the persons in whose names the Notes are
registered as the owners of such Notes for the purpose of receiving payment of
principal and interest on such Notes and for all other purposes whatsoever.
Therefore, neither the Company, the Trustee nor any paying agent has any direct
responsibility or liability for the payment of principal or interest on the
Notes to owners of beneficial interests in the Global Security. The Depository
has advised the Company and the Trustee that its present practice is, upon
receipt of any payment of principal or interest, to immediately credit the
accounts of the Participants with such payment in amounts proportionate to their
respective holdings in principal amount of beneficial interests in the Global
Security as shown on the records of the Depository. Payments by Participants and
indirect participants to owners of beneficial interests in the Global Security
will be governed by standing instructions and customary practices, as is now the
case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of the Participants
or indirect participants.
If the Depository is at any time unwilling or unable to continue as
depository and a successor depository is not appointed by the Company within 90
days, the Company will issue Notes in definitive form in exchange for the Global
Security. In addition, the Company may at any time determine not to have the
Notes represented by a Global Security and, in such event, will issue Notes in
definitive form in exchange for the Global Security. In addition, if any event
shall have happened and be continuing that constitutes or, after notice or the
lapse of time or both, would constitute an Event of
S-3
<PAGE> 4
Default (as defined in the Prospectus), the Notes represented by the Global
Security may be exchanged for Notes in definitive form. In any of the foregoing
instances, an owner of a beneficial interest in the Global Security will be
entitled to have Notes equal in principal amount to such beneficial interest
registered in its name and will be entitled to physical delivery of such Notes
in definitive form. Notes so issued in definitive form will be issued in
denominations of $1,000 and integral multiples thereof and will be issued in
registered form only, without coupons.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters in immediately
available funds. All payments of principal and interest will be made by the
Company in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, the Notes
will trade in the Depository's Same-Day Funds Settlement System until maturity,
and secondary market trading activity in the Notes will therefore be required by
the Depository to settle in immediately available funds. No assurance can be
given as to the effect, if any, of settlement in immediately available funds on
trading activity in the Notes.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
and the Pricing Agreement relating to the Notes, the Company has agreed to sell
to each of the underwriters named below (the "Underwriters"), and each of them
has severally agreed to purchase, the principal amount of Notes set forth
opposite its name below.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
UNDERWRITER OF NOTES
- ---------------------------------------------------------------------------------------- ------------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation..................................... $ 75,000,000
Bear, Stearns & Co. Inc. ............................................................... 50,000,000
J.P. Morgan Securities Inc. ............................................................ 50,000,000
NationsBanc Capital Markets, Inc. ...................................................... 25,000,000
------------
Total......................................................................... $200,000,000
===========
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the Notes are subject to the
approval of certain legal matters by counsel and to certain other conditions.
The Underwriters are committed to take and pay for all of the Notes if any are
taken.
The Underwriters have advised the Company that they propose to offer all or
part of the Notes directly to purchasers at the initial public offering price
set forth on the cover page of this Prospectus Supplement, and to certain
securities dealers at such price less a concession not in excess of 0.40% of the
principal amount of the Notes. The Underwriters may allow and such dealers may
reallow to certain brokers and dealers a concession not in excess of 0.25% of
the principal amount of the Notes. After the Notes are released for sale to the
public, the offering price and other selling terms may from time to time be
varied.
The Company has been advised by the Underwriters that they intend to make a
market in the Notes, but they are not obligated to do so and may discontinue
such market-making at any time without notice. No assurance can be given as to
the liquidity of the trading market for the Notes.
All secondary trading in the Notes will settle in immediately available
funds. See "Description of Notes -- Same-Day Settlement and Payment."
The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended.
In the ordinary course of their respective businesses, certain of the
Underwriters and their affiliates have engaged, and may in the future engage, in
investment banking or commercial banking transactions with the Company.
S-4
<PAGE> 5
LEGAL OPINIONS
The validity of the Notes offered hereby is being passed upon for the
Company by Franklin C. Brown, Esq., General Counsel for the Company. Certain
legal matters in connection with the offering to which this Prospectus
Supplement and the Prospectus relates will be passed upon for the Underwriters
by Skadden, Arps, Slate, Meagher & Flom, New York, New York. Skadden, Arps,
Slate, Meagher & Flom has represented and continues to represent the Company in
connection with certain legal matters and passed upon the validity of the
Securities (as defined in the Prospectus) in connection with the filing of the
Registration Statement of which this Prospectus Supplement and the Prospectus
are a part.
S-5
<PAGE> 6
PROSPECTUS
- ----------
[LOGO]
RITE AID CORPORATION
DEBT SECURITIES
AND
WARRANTS TO PURCHASE DEBT SECURITIES
----------------------------
Rite Aid Corporation may offer from time to time, together or separately,
up to $425,000,000 aggregate principal amount, or its equivalent based on the
applicable exchange rate at the time of the offering, of its (i) debt securities
consisting of debentures, notes or other unsecured evidences of indebtedness
(the "Debt Securities"), which may be either senior debt securities (the "Senior
Debt Securities") or subordinated debt securities (the "Subordinated Debt
Securities"), and (ii) warrants to purchase Debt Securities (the "Warrants")
(such Debt Securities and Warrants are collectively called the "Securities")
which will be offered on terms determined by market conditions at the time of
sale. As used herein, Securities shall include Securities denominated in U.S.
dollars, or, if so specified in the accompanying Prospectus Supplement
("Prospectus Supplement"), in any other currency, including composite currencies
such as the European Currency Unit. The Securities may be offered as separate
series in amounts, at prices and on terms to be set forth in the accompanying
Prospectus Supplement. The terms of the Securities, including, where applicable,
the specific designation, aggregate principal amount, denomination, currency,
maturity, premium, if any, interest rate (which may be fixed, floating or
adjustable), if any, and method of calculating payment of any interest, any
redemption terms, any conversion terms, any terms for sinking fund payments, the
initial public offering price, the names of, and the principal amounts to be
purchased by or through, underwriters, dealers or agents, if any, the
compensation of such persons and any other specific terms in connection with the
offering and sale of the Securities will be set forth in an accompanying
Prospectus Supplement. Securities of a series may be issuable in registered form
without coupons, including in the form of one or more global securities. The net
proceeds to the Company from the sale of Securities also will be set forth in a
Prospectus Supplement, as well as information concerning certain U.S. federal
income tax considerations, if applicable to the Securities offered.
Unless otherwise specified in a Prospectus Supplement, the Senior Debt
Securities, when issued, will be unsecured and will rank equally with all other
unsecured and unsubordinated indebtedness of the Company. The Subordinated Debt
Securities, when issued, will be subordinated in right of payment to all Senior
Debt of the Company.
----------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
----------------------------
The Securities will be sold directly, through agents, underwriters or
dealers as designated from time to time or through a combination of such
methods. If agents of the Company or any dealers or underwriters are involved in
the sale of the Securities in respect of which this Prospectus is being
delivered, the names of such underwriters, dealers or agents and any applicable
commissions or discounts are set forth in or may be calculated from the
Prospectus Supplement with respect to such Securities.
----------------------------
----------------------------
The date of this Prospectus is April 12, 1995.
<PAGE> 7
No person has been authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
Prospectus in connection with the offer contained in this Prospectus and, if
given or made, such information or representations must not be relied upon as
having been authorized by the Company or any underwriters, dealers or agents.
This Prospectus does not constitute an offer to sell or solicitation of an offer
to buy securities in any jurisdiction to any person to whom it is unlawful to
make such offer or solicitation. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create an implication that
there has been no change in the affairs of the Company since the date hereof or
that the information contained herein is correct at any time subsequent to the
date hereof.
AVAILABLE INFORMATION
Rite Aid Corporation (together with its subsidiaries, when appropriate, the
"Company" or "Rite Aid") is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549; 7 World Trade Center, New York, New York
10048; and 500 West Madison Street, Suite 1400, Chicago, Illinois 60606. Copies
of such materials can be obtained from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. Such material can also be inspected at the offices of the New
York Stock Exchange, 20 Broad Street, New York, New York 10005 and at the
offices of the Pacific Stock Exchange, 301 Pine Street, San Francisco,
California 94109, on which the Company's Common Stock is listed.
This Prospectus constitutes a part of a Registration Statement filed by the
Company with the Commission under the Securities Act of 1933, as amended (the
"Act"). This Prospectus omits certain of the information contained in the
Registration Statement, and reference is hereby made to the Registration
Statement and to the exhibits relating thereto for further information with
respect to the Company and the Securities offered hereby. Any statements
contained herein concerning the provisions of any document are not necessarily
complete, and, in each instance, reference is made to such copy filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference. The
Registration Statement and the exhibits thereto may be inspected without charge
at the office of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and copies thereof may be obtained from the Commission
at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated in and made a part of this Prospectus by reference:
1. The Company's Annual Report on Form 10-K for the year ended
February 26, 1994, which incorporates by reference certain portions of the
Company's 1994 Annual Report to Stockholders;
2. The Company's Current Report on Form 8-K dated August 3, 1994 and
the Company's Current Report on Form 8-K dated January 27, 1995, as amended
by Form 8-K/A; and
3. The Company's Quarterly Reports on Form 10-Q for the quarterly
periods ended May 28, 1994, August 27, 1994 and November 26, 1994.
All reports and any definitive proxy or information statements filed by the
Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the Securities shall be deemed to be incorporated
by reference in this Prospectus and to be a part hereof from the date of filing
of such documents.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of any such person,
a copy of any or all of the documents incorporated herein by reference (other
than exhibits). Requests for such copies should be directed to the Secretary,
Rite Aid Corporation, 30 Hunter Lane, Camp Hill, Pennsylvania 17011 (telephone:
(717) 761-2633).
2
<PAGE> 8
THE COMPANY
The Company is one of the largest drugstore chains in the United States. On
March 4, 1995, the Company operated 2,829 drugstores in 23 eastern states and
the District of Columbia. Pharmacy service forms the core of the Company's
business, with prescriptions accounting for 53.1% of drugstore sales in the year
ended March 4, 1995.
The Company's drugstores cater to convenience, offering a full selection of
health and personal care products, seasonal merchandise and a large private
label product line. Express mail with complementary services and one-hour photo
departments have recently been added in select locations.
The Company also operates Eagle Managed Care Corporation, a wholly owned
subsidiary, which markets prescription plans and sells other managed health care
services to large employers and government-sponsored employee benefit programs.
Rite Aid was incorporated in Delaware in 1968. The Company's principal
executive offices are located at 30 Hunter Lane, Camp Hill, Pennsylvania 17011
and its telephone number is (717) 761-2633.
ACQUISITION OF PERRY DRUG STORES, INC.
The Company acquired Perry Drug Stores, Inc. ("Perry") pursuant to a cash
tender offer, which expired on January 27, 1995, and a subsequent merger with a
wholly owned subsidiary of the Company on March 24, 1995. The aggregate
consideration paid in the acquisition was approximately $238,000,000, which
includes the repayment of outstanding Perry debt acquired in connection with the
merger. Perry operates 224 drugstores throughout Michigan. The Company intends
to continue to utilize Perry's distribution center located near Pontiac,
Michigan and to integrate Perry's administrative offices with those of the
Company.
DISPOSITIONS OF OTHER BUSINESSES
In January 1994, the Company announced plans to concentrate corporate
resources entirely on its drugstore segment and sell its non-drugstore related
businesses. Consistent with this plan, the Company sold Sera-Tec Biologicals in
October 1994 in a cash transaction to a group of investors including Alex Grass,
formerly Chairman and Chief Executive Officer of the Company. In addition, the
Company completed the sale of Encore Books in November 1994 and the sale of
Concord Custom Cleaners in December 1994. The Company is currently negotiating
with a prospective purchaser for the sale of ADAP, Inc., which operates a chain
of discount automotive parts stores. The operating results and net assets of
these non-drugstore related businesses have been segregated in the Company's
financial statements as discontinued operations.
USE OF PROCEEDS
Except as may otherwise be set forth in the applicable Prospectus
Supplement, the net proceeds from the sale of the Securities offered hereby will
be used for general corporate purposes.
DESCRIPTION OF SECURITIES
DESCRIPTION OF DEBT SECURITIES
The Senior Debt Securities are to be issued under an Indenture (the "Senior
Indenture"), between the Company and First Trust of New York, National
Association, as Trustee (the "Trustee"). The Subordinated Debt Securities are to
be issued under an Indenture (the "Subordinated Indenture"), between the Company
and the Trustee. The Senior Indenture and the Subordinated Indenture are
sometimes referred to together as the "Indenture." Copies of the Senior
Indenture and the Subordinated Indenture have been filed as exhibits to the
Registration Statement. The following summary of certain general provisions of
the Senior Indenture and the Subordinated Indenture and the Debt Securities does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, the provisions of the Senior Indenture or the Subordinated
Indenture, as the case may be, including the definitions therein of certain
terms. The Senior Indenture and the Subordinated Indenture are identical in all
respects except as otherwise indicated below.
The particular terms of the Debt Securities offered by any Prospectus
Supplement (the "Offered Debt Securities") and the extent, if any, to which such
general provisions may apply to the Offered Debt Securities will be described in
the Prospectus Supplement relating to such Offered Debt Securities. The
Prospectus Supplement relating to the Offered Debt Securities will also set
forth whether the Offered Debt Securities are Senior Debt Securities or
Subordinated Debt Securities.
3
<PAGE> 9
General
The Indenture does not limit the amount of Debt Securities which may be
issued thereunder and provides that Debt Securities may be issued thereunder up
to the aggregate principal amount which may be authorized from time to time. The
Debt Securities may be issued from time to time in one or more series. Unless
otherwise specified in the Prospectus Supplement, the Senior Debt Securities
will be unsecured and will rank equally with all other unsecured and
unsubordinated indebtedness of the Company. The Subordinated Debt Securities
will be subordinated in right of payment to the prior payment in full of the
Senior Indebtedness (as defined) of the Company, as described below under
"Subordination of Subordinated Debt Securities" and in a Prospectus Supplement
applicable to an offering of Subordinated Debt Securities.
Reference is made to the Prospectus Supplement relating to the particular
series of Offered Debt Securities offered thereby for the following terms of the
Offered Debt Securities: (i) the designation, aggregate principal amount (and
any limit on the aggregate principal amount of the Offered Debt Securities) and
authorized denominations of the Offered Debt Securities; (ii) the price
(expressed as a percentage of the aggregate principal amount thereof) at which
the Offered Debt Securities will be issued; (iii) the date or dates on which the
principal of the Offered Debt Securities will be payable; (iv) the rate or rates
per annum (which may be fixed, floating or adjustable) at which the Offered Debt
Securities will bear interest, if any, or the formula pursuant to which such
rate or rates shall be determined; (v) the date from which such interest, if
any, on the Offered Debt Securities will accrue, the dates on which such
interest, if any, will be payable, the date on which payment of such interest,
if any, will commence and the Regular Record Dates for such Interest Payment
Dates, if any, and the Person to whom any interest on the Offered Debt
Securities will be payable, if other than the Person in whose name such Offered
Debt Securities are registered on any Regular Record Date; (vi) any optional or
mandatory sinking fund provisions; (vii) the date, if any, after which and the
price or prices at which the Offered Debt Securities may, pursuant to any
optional or mandatory redemption provisions, be redeemed at the option of the
Company or the Holder and any other terms and provisions of such optional or
mandatory redemptions; (viii) if applicable, the terms of any right to convert
or exchange the Offered Debt Securities into Common Stock of the Company; (ix)
if other than denominations of $1,000 and any integral multiple thereof, the
denominations in which Offered Debt Securities of the series will be issuable;
(x) if other than the principal amount thereof, the portion of the principal
amount of Offered Debt Securities which will be payable upon declaration of
acceleration of maturity thereof or provable in bankruptcy; (xi) the currency or
currencies, including composite currencies and currency units, in which payment
of the principal of (and premium, if any) and interest, if any, on the Offered
Debt Securities will be payable (if other than the currency of the United States
of America), which unless otherwise specified will be the currency of the United
States of America as at the time of payment is legal tender for payment of
public or private debts; (xii) if the principal of (and premium, if any), or
interest, if any, on the Offered Debt Securities are to be payable, at the
election of the Company or any Holder thereof, in a coin, currency or currency
unit other than that in which the Offered Debt Securities of the series are
stated to be payable, the period or periods within which, and the terms and
conditions upon which, such election may be made; (xiii) if such securities are
to be denominated in a currency or currencies, including composite currencies
and currency units, other than the currency of the United States of America, the
equivalent price in the currency of the United States of America for purposes of
determining the voting rights of Holders of such Debt Securities as Outstanding
Securities under the Indenture; (xiv) if the amount of payments of principal of
(and premium, if any), or portions thereof, or interest, if any, on the Offered
Debt Securities may be determined with reference to an index, formula or other
method, the manner in which such amounts will be determined; (xv) whether the
Offered Debt Securities shall be issued in whole or in part in the form of a
Global Security or Securities; the terms and conditions, if any, upon which such
Global Security or Securities may be exchanged in whole or in part for other
definitive Debt Securities; and the depositary for such Global Security or
Securities, which depositary must be a clearing agency registered under the
Exchange Act; (xvi) any authenticating or paying agents, registrars, conversion
agents or any other agents with respect to the Offered Debt Securities; or
(xvii) any additional terms relating to the Offered Debt Securities (which may
not be inconsistent with the Indenture).
In addition to the ability to issue Debt Securities with terms different
from those of Debt Securities previously issued, the Indenture provides the
Company with the ability to "reopen" a previous issue of a series of Debt
Securities and issue additional Debt Securities of such series.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
principal, premium, if any, and interest, if any, will be payable and the Debt
Securities will be transferable and convertible, if applicable, at the
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corporate trust office of the Trustee. Unless other arrangements are made,
interest will be paid by checks mailed to the Holders at their registered
addresses. (Sections 3.5, 10.2.)
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Debt Securities will be issued only in fully registered form, without
coupons, in denominations of $1,000 or any integral multiple thereof. No service
charge will be made for any transfer or exchange of the Debt Securities, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. (Sections 3.2, 3.5.)
Some or all of the Debt Securities may be issued as discounted Debt
Securities (bearing no interest or interest at a rate which at the time of
issuance is below market rates) to be sold at a substantial discount below their
stated principal amount. Federal income tax consequences and other special
considerations applicable to any such discounted Debt Securities will be
described in the Prospectus Supplement relating thereto.
The rights of the Company, and hence the right of creditors of the Company
(including the Holders of Debt Securities), to participate in any distribution
of the assets of any subsidiary upon its liquidation or reorganization or
otherwise is necessarily subject to the prior claims of creditors of the
subsidiary, except to the extent that claims of the Company itself as a creditor
of the subsidiary may be recognized.
The Indenture does not contain any provisions that afford Holders of the
Debt Securities protection in the event of a highly leveraged transaction,
reorganization, restructuring, merger or similar transaction involving the
Company that may adversely affect Holders of the Debt Securities (except to the
limited extent that the covenants described below under "Certain Restrictions"
might affect the Company's ability to consummate such transactions).
Debt Securities denominated or payable in foreign currencies may entail
significant risks. These risks include, without limitation, the possibility of
significant fluctuations in the foreign currency markets. These risks will vary
depending upon the currency or currencies involved. These risks will be more
fully described in the Prospectus Supplement relating thereto.
Certain Restrictions
General. The various restrictive provisions of the Indenture applicable to
the Company and its Restricted Subsidiaries do not apply to Unrestricted
Subsidiaries. The assets and indebtedness of Unrestricted Subsidiaries are not
consolidated with those of the Company and its Restricted Subsidiaries in
calculating Consolidated Net Tangible Assets under the Senior Indenture and
Investments by the Company or by its Restricted Subsidiaries in Unrestricted
Subsidiaries are excluded in computing Consolidated Net Tangible Assets.
"Unrestricted Subsidiaries" are those Subsidiaries which are designated as
Unrestricted Subsidiaries by the Board of Directors from time to time pursuant
to the Indenture (in each case, unless and until designated as Restricted
Subsidiaries by the Board of Directors pursuant to the Indenture). "Restricted
Subsidiaries" are all Subsidiaries other than Unrestricted Subsidiaries. A
"Wholly-owned Restricted Subsidiary" is a Restricted Subsidiary all of the
outstanding Funded Debt and capital stock of which (except directors' qualifying
shares) is owned by the Company and its other Wholly-owned Restricted
Subsidiaries. (Section 1.1 of the Senior Indenture and, in relation to the
designation of Restricted Subsidiaries and Unrestricted Subsidiaries, Section
1.1 of the Subordinated Indenture.)
An Unrestricted Subsidiary may not be designated a Restricted Subsidiary if
it has any Secured Debt, Funded Debt or Attributable Debt unless immediately
thereafter the Company and its Restricted Subsidiaries would be permitted to
incur such debt under the terms of the Senior Indenture. (Section 10.11(a) of
the Senior Indenture.)
Restrictions Upon Secured Debt. Neither the Company nor a Restricted
Subsidiary is permitted to incur or guarantee certain indebtedness secured by
any lien, mortgage, pledge or other encumbrance on its property without equally
and ratably securing the Senior Debt Securities. This restriction does not apply
to certain permitted encumbrances described in the Senior Indenture, including
purchase money mortgages, encumbrances existing on property at the time it is
acquired by the Company or a Restricted Subsidiary or created within 24 months
of the date of such acquisition, conditional sales and similar agreements and
the extension, renewal or refunding of any of the foregoing. Subsection (d) of
Section 10.10 of the Senior Indenture also permits other indebtedness secured by
encumbrances not otherwise specifically permitted which, together with
Attributable Debt respecting existing Sale and Leaseback Transactions (excluding
Sale and Leaseback Transactions entered into in respect of property acquired by
the Company or a Restricted Subsidiary not more than 24 months prior to the date
such Transaction is entered into), and unsecured Funded Debt of Subsidiaries,
incurred or entered into, as the case may be, after the
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<PAGE> 11
date of the Senior Indenture, would not at the time exceed 20% of the
Consolidated Net Tangible Assets of the Company and its Restricted Subsidiaries.
(Section 10.10 of the Senior Indenture.)
"Consolidated Net Tangible Assets" means the total amount of assets on a
consolidated balance sheet of the Company and its Restricted Subsidiaries (less
applicable reserves and other properly deductible items and after excluding any
investments made in Unrestricted Subsidiaries or in corporations while they were
Unrestricted Subsidiaries but which are not Subsidiaries at the time of
computation) after deducting (i) all liabilities and liability items, including
amounts in respect of obligations under leases (or guarantees thereof) which
under generally accepted accounting principles would be included on such balance
sheet, except Funded Debt, capital stock and surplus, surplus reserves and
provisions for deferred income taxes and (ii) goodwill, trade names, trademarks,
patents, unamortized debt discount and expense and other like intangibles.
(Section 1.1 of the Senior Indenture.)
"Funded Debt" means any indebtedness for money borrowed, created, issued,
incurred, assumed or guaranteed, whether secured or unsecured, maturing more
than one year after the date of determination thereof and any indebtedness,
regardless of its term, renewable pursuant to the terms thereof or of a
revolving credit or similar agreement effective for more than one year after the
date of the creation of the indebtedness, which would, in accordance with
generally accepted accounting practice, be classified as funded debt, excluding
(i) indebtedness for which money in satisfaction thereof has been deposited in
trust, (ii) certain guarantees arising in the ordinary course of business and
(iii) liabilities resulting from capitalization of lease rentals. (Section 1.1
of the Senior Indenture.)
"Secured Debt" means indebtedness for money borrowed which is secured by a
lien on property of the Company or any Restricted Subsidiary, excluding certain
guarantees arising in the ordinary course of business. (Section 1.1 of the
Senior Indenture.)
Restrictions Upon Sales with Leases Back. The Company is not permitted,
and may not permit a Restricted Subsidiary, to sell (except to the Company or
one or more Wholly-owned Restricted Subsidiaries) any manufacturing plant,
warehouse, retail store or equipment owned and operated by the Company or a
Restricted Subsidiary on or after the date of the Senior Indenture with the
intention that the Company or any Restricted Subsidiaries take back a lease
thereof, except a lease for a period, including renewals, of not more than 24
months by the end of which period it is intended that the use of such property
by the lessee will be discontinued, except (i) where the Company would be
entitled under subsection (d) of Section 10.10 of the Senior Indenture to incur
additional secured indebtedness not otherwise specifically permitted by the
Senior Indenture in an amount equal to the Attributable Debt respecting such
Sale and Leaseback Transaction, (ii) where the Sale and Leaseback Transaction is
entered into in respect of property acquired by the Company or a Restricted
Subsidiary within 24 months of such acquisition, or (iii) where the Company
within 120 days of entering into the Sale and Leaseback Transaction applies to
the retirement of its Secured Debt an amount equal to the greater of (a) the net
proceeds of the sale of the property leased pursuant to such Transaction or (b)
the fair market value of the property so leased. (Section 10.9 of the Senior
Indenture.)
Restrictions Upon Funded Debt of Restricted Subsidiaries. Restricted
Subsidiaries are prohibited from becoming liable for any unsecured Funded Debt
except where the Company would be entitled under subsection (d) of Section 10.10
of the Senior Indenture to incur additional secured indebtedness not otherwise
specifically permitted by the Senior Indenture in an amount equal to such Funded
Debt and except for certain extensions, refunding and renewals of Funded Debt.
(Section 10.8 of the Senior Indenture.)
Restrictions Upon Merger and Sale of Assets. The Senior Indenture provides
that no merger of the Company with or sale of the Company's property
substantially as an entirety to any other corporation shall be made if, as a
result, properties or assets of the Company would become subject to a mortgage
or lien which would not be permitted by the Senior Indenture, unless the Senior
Debt Securities shall be equally and ratably secured with such obligations.
(Section 8.1 of the Senior Indenture.) Any successor entity must be a
corporation organized in the United States and, immediately after giving effect
to a merger or consolidation, no Event of Default, and no event which, after
notice or lapse of time or both, would become an Event of Default, shall have
happened and be continuing. (Section 8.1.)
Although the amount of the Company's property that will constitute a sale
of such property "substantially as an entirety" is not readily quantifiable, a
determination as to whether such a sale has occurred will depend on the
percentage of operating and total assets transferred, among other measurements,
and other facts and circumstances of the transaction. In any particular
transaction, the determination of whether such a sale has occurred will be made
by the Company, and the Company will give notice of such occurrence to the
Holders of the Debt Securities.
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Because of the uncertainty regarding whether a particular sale will constitute a
sale of property "substantially as an entirety," Holders will not be able to
determine for themselves whether such a transaction has occurred and will have
to rely on the Company's determination. If such a transaction occurs, the person
to which such amount of the Company's property is transferred shall enter into a
supplemental Indenture satisfactory in form to the Trustee.
Modification of the Indenture
The Indenture and the rights of the Holders may be modified by the Company
only with the consent of the Holders of not less than a majority in aggregate
principal amount of the outstanding Debt Securities of each series affected by
the modification; but no modification altering the terms of payment of principal
or interest, changing the place or medium of payment of principal or interest,
impairing the rights of Holders to institute suit for payment, adversely
changing the right to convert or exchange any Debt Security, including
decreasing the conversion rate or increasing the conversion price of such Debt
Security (if applicable), reducing the percentage required for modification or,
in the case of the Subordinated Indenture, modifying the subordination
provisions in a manner adverse to the Holders of the Subordinated Debt
Securities will be effective against any Holder without his consent. (Section
9.2.)
Events of Default
The Indenture defines an Event of Default with respect to the Debt
Securities of any series as being any one of the following events: (a) default
for 30 days in any payment of interest upon any Security of that series when due
(in the case of the Subordinated Indenture, whether or not payment is prohibited
by the provisions described under the heading "Subordination of Subordinated
Debt Securities" below), (b) default in any payment of principal of (or premium,
if any) upon any Security of that series when due (in the case of the
Subordinated Indenture, whether or not payment is prohibited by the provisions
described under the heading "Subordination of Subordinated Debt Securities"
below), (c) default for 60 days after appropriate notice in the performance of
any other covenant in the Debt Securities of that series or the Indenture (other
than a covenant included in the Indenture solely for the benefit of any series
of Debt Securities other than that series), (d) certain events in bankruptcy,
insolvency or reorganization, or (e) certain events of default resulting in the
acceleration of the maturity of the related indebtedness aggregating in excess
of $10,000,000 under any mortgages, indentures (including the Indenture) or
instruments under which the Company may have issued, or by which there may have
been secured or evidenced, any other indebtedness (including Debt Securities of
any series) of the Company. In case an Event of Default shall occur and be
continuing with respect to the Debt Securities of any series, the Trustee or the
Holders of not less than 25% in aggregate principal amount of the Debt
Securities then outstanding of that series may declare the principal of the Debt
Securities of such series (or, if the Debt Securities of that series were issued
as discounted Debt Securities, such portion of the principal as may be specified
in the terms of that series) and the accrued interest thereon, if any, to be due
and payable. Any Event of Default with respect to the Debt Securities of any
series which has been cured may be waived by the Holders of a majority in
aggregate principal amount of the Debt Securities of that series then
outstanding. (Sections 5.1, 5.2, 5.13.)
The Indenture requires the Company to file annually with the Trustee a
written statement signed by an officer of the Company as to the absence of
certain defaults under the terms of the Indenture. The Indenture provides that
the Trustee may withhold notice to the Holders of any default (except in payment
of principal or premium, if any, or interest) if it considers it in the interest
of the Holders to do so. (Sections 6.2 and 10.13 of the Senior Indenture and
Sections 6.2 and 10.10 of the Subordinated Indenture.)
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Indenture
provides that the Trustee shall be under no obligation to exercise any of its
rights or powers under the Indenture at the request, order or direction of
Holders unless such Holders shall have offered to the Trustee reasonable
indemnity. Subject to such provisions for indemnification and certain other
rights of the Trustee, the Indenture provides that the Holders of a majority in
principal amount of the Debt Securities of any series then outstanding shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee. (Sections 5.12, 6.3.)
Conversion Rights
The terms on which Debt Securities of any series are convertible into or
exchangeable for Common Stock of the Company will be set forth in the Prospectus
Supplement relating thereto. Such terms shall include provisions as
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<PAGE> 13
to whether conversion or exchange is mandatory, at the option of the holder or
at the option of the Company, and may include provisions pursuant to which the
number of shares of Common Stock of the Company to be received by the holders of
Debt Securities would be calculated according to the market price of Common
Stock of the Company as of a time stated in the Prospectus Supplement. (Article
Thirteen.)
Defeasance and Discharge
The terms of the Indenture provide the Company with the option to be
discharged from any and all obligations with respect to a particular series of
Debt Securities, including, in the case of Subordinated Debt Securities, the
provisions described under the heading "Subordination of Subordinated Debt
Securities" herein (except for certain obligations to register the transfer or
exchange of Debt Securities, to replace stolen, lost or mutilated Debt
Securities, to maintain paying agencies and hold moneys for payment in trust)
upon the deposit with the Trustee, in trust, of money or U.S. Government
Obligations (as defined) (or Foreign Government Obligations (as defined) in case
of Debt Securities denominated in foreign currencies), or both, which through
the payment of interest and principal thereof in accordance with their terms
will provide money in an amount sufficient to pay any installment of principal
(and premium, if any) and interest on and any mandatory sinking fund payments in
respect of such Debt Securities on the Stated Maturity of such payments or on
the applicable Redemption Date in accordance with the terms of the Indenture and
such Debt Securities. Such option may only be exercised if the Company has
received from, or there has been published by, the United States Internal
Revenue Service a ruling to the effect that such a discharge will not be deemed,
or result in, a taxable event with respect to Holders of such series of Debt
Securities. (Section 4.3.)
Defeasance of Certain Covenants
The terms of the Indenture provide the Company with the option to have the
occurrence of events described in (c) or (e) under the heading "Events of
Default" above no longer be Events of Default and, in the case of Senior Debt
Securities, to omit to comply with certain of the covenants described under the
heading "Certain Restrictions" above, and, in the case of Subordinated Debt
Securities, the provisions described under the heading "Subordination of
Subordinated Debt Securities" below will no longer be applicable, in each case,
with respect to a particular series of Debt Securities. The Company, in order to
exercise such option, will be required to deposit with the Trustee money or U.S.
Government Obligations (or Foreign Government Obligations (as defined) in case
of Debt Securities denominated in foreign currencies), or both, which through
the payment of interest and principal thereof in accordance with their terms
will provide money in an amount sufficient to pay principal (and premium, if
any) and interest on and any mandatory sinking fund payments in respect of such
Debt Securities on the Stated Maturity of such payments or on the applicable
Redemption Date in accordance with the terms of the Indenture and such Debt
Securities. The Company will also be required to deliver to the Trustee an
opinion of counsel to the effect that the deposit and related covenant
defeasance will not cause the Holders of such series of Debt Securities to
recognize income, gain or loss for federal income tax purposes. (Section 10.12
of the Senior Indenture and Section 10.9 of the Subordinated Indenture.)
The Company may exercise its defeasance option with respect to such Debt
Securities notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its defeasance option, payment of such Debt Securities
may not be accelerated because of an Event of Default. If the Company exercises
its covenant defeasance option, payment of such Debt Securities may not be
accelerated by reference to the provisions described in the preceding paragraph.
In the event the Company omits to comply with its remaining obligations with
respect to such Debt Securities under the Indenture after exercising its
covenant defeasance option and such Debt Securities are declared due and payable
because of the occurrence of any Event of Default, the amount of money and U.S.
Government Obligations (or Foreign Government Obligations in case of Debt
Securities denominated in foreign currencies) on deposit with the Trustee may be
insufficient to pay amounts due on the Debt Securities of such series at the
time of the acceleration resulting from such Event of Default. However, the
Company will remain liable in respect of such payments. (Sections 4.3 and 10.12
of the Senior Indenture and Sections 4.3 and 10.9 of the Subordinated
Indenture.)
Subordination of Subordinated Debt Securities
The Subordinated Debt Securities will be subordinated in right of payment,
as set forth in the Subordinated Indenture, to the prior payment in full of all
existing and future Senior Indebtedness of the Company. (Section 14.1 of the
Subordinated Indenture.) "Senior Indebtedness" means the principal of (and
premium, if any) and interest on (including interest accruing after the filing
of a petition initiating any proceeding pursuant to any bankruptcy law, but only
to the extent allowed or permitted to the holder of such Debt against the
bankruptcy or any other
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insolvency estate of the Company in such proceeding) or accrued original issue
discount on and other amounts due on or in connection with any Debt incurred,
assumed or guaranteed by the Company, whether presently outstanding or hereafter
incurred, assumed or guaranteed, and all renewals, extensions and refundings of
any such Debt; provided however, that the following will not constitute Senior
Indebtedness: (a) any Debt which expressly provides (i) that such Debt shall not
be senior in right of payment to the Subordinated Debt Securities, or (ii) that
such Debt shall be subordinated to any other Debt of the Company, unless such
Debt expressly provides that such Debt shall be senior in right of payment to
the Subordinated Debt Securities; (b) any Debt of the Company in respect of the
Subordinated Debt Securities; (c) any Debt or liability for compensation to
employees, for goods or materials purchased in the ordinary course of business
or for services; (d) any Debt of the Company to any subsidiary for money
borrowed or advanced from such subsidiary; and (e) any liability for federal,
state, local or other taxes owed or owing by the Company. "Debt" means (i) all
indebtedness for borrowed money (whether or not the recourse of the lender is to
the whole of the assets of the borrower or only to a portion thereof and
including all indebtedness evidenced by notes, bonds, debentures or other
securities sold for money), (ii) all indebtedness incurred or assumed in the
acquisition (whether by way of purchase, merger, consolidation or otherwise) of
any business, real property or other assets (except assets other than real
property acquired in the ordinary course of the conduct of the acquirer's usual
business), (iii) all Capital Lease Obligations, (iv) Hedging Obligations, (v)
guarantees of indebtedness described in clauses (i), (ii), (iii) or (iv) of any
other person and (vi) renewals, extensions, refundings, deferrals,
restructurings, amendments and modifications of any such indebtedness
(including, without limitation, exchange offers), obligation or guarantee.
By reason of the subordination described herein, in the event of
insolvency, upon any distribution of the assets of the Company, (i) the Holders
of Subordinated Debt Securities are required to pay over their share of such
distribution to the trustee in bankruptcy, receiver or other person distributing
the assets of the Company for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all holders of
Senior Indebtedness in full and (ii) unsecured creditors of the Company who are
not Holders of Subordinated Debt Securities or holders of Senior Indebtedness of
the Company may recover less, ratably, than holders of Senior Indebtedness of
the Company and may recover more, ratably, than the Holders of Subordinated Debt
Securities. (Section 14.2 of the Subordinated Indenture.)
In the event that any Subordinated Debt Securities are declared due and
payable prior to their Stated Maturity by reason of the occurrence of an Event
of Default, then the Company is obligated to notify promptly holders of Senior
Indebtedness of such acceleration. The Company may not pay the Subordinated Debt
Securities until 120 days have passed after such acceleration occurs and may
thereafter pay the Subordinated Debt Securities if the terms of the Indenture
otherwise permit payment at that time. (Section 14.3 of the Subordinated
Indenture.)
No payment of the principal, premium, if any, or interest with respect to
any Subordinated Debt Securities may be made, nor may the Company acquire any
Subordinated Debt Securities except as set forth in the Indenture, if any
default with respect to Senior Indebtedness occurs and is continuing that
permits the acceleration of the maturity thereof and the Company has actual
knowledge of the default, unless (a) 120 days pass after notice of the default
is given to the Trustee and such default is not then the subject of judicial
proceedings or the default with respect to the Senior Indebtedness is cured
(including, without limitation, by the payment of such Senior Indebtedness in
full) or waived and (b) the terms of the Indenture otherwise permit the payment
or acquisition of Subordinated Debt Securities at that time. The Company is
required to give the Trustee notice of a default with respect to Senior
Indebtedness within five Business Days after the Company has actual knowledge of
the default or potential default. (Section 14.4 of the Subordinated Indenture.)
The Subordinated Indenture does not limit or prohibit the incurrence of
additional Senior Indebtedness, which may include indebtedness that is senior to
the Subordinated Debt Securities, but subordinate to other obligations of the
Company. The Senior Debt Securities, when issued, will constitute Senior
Indebtedness.
The Prospectus Supplement may further describe the provisions, if any,
applicable to the subordination of the Subordinated Debt Securities of a
particular series.
Global Securities
Securities of a series may be issued in whole or in part in the form of one
or more Global Securities that will be deposited with, or on behalf of, a
depositary identified in the Prospectus Supplement relating to such series.
Global Securities will be issued in registered form and in either temporary or
permanent form. Unless and until it is exchanged for Debt Securities in
definitive form, a temporary Global Security may not be transferred except as a
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whole by the depositary for such Global Security to a nominee of such depositary
or any such nominee to a successor of such depositary or a nominee of such
successor.
The specific terms of the depositary arrangement with respect to a series
of Securities will be described in the Prospectus Supplement relating to such
series. The Company anticipates that the following provisions will apply to any
depositary arrangements.
Upon the issuance of a Global Security, the depositary for such Global
Security or its nominee will credit the accounts of persons held with it with
the respective principal amounts of the Securities represented by such Global
Security. Such accounts shall be designated by the underwriters or agents with
respect to such Securities or by the Company if such Securities are offered and
sold directly by the Company. Ownership of beneficial interests in a Global
Security will be limited to persons that have accounts with the depositary for
such Global Security or its nominee ("participants") or persons that may hold
interests through participants. Ownership of beneficial interests in such Global
Security will be shown on, and the transfer of that ownership will be effected
only through, records maintained by the depositary (with respect to
participants' interests) for such Global Security or by participants or persons
that hold through participants (with respect to beneficial owners' interests).
Concerning the Trustee
First Trust of New York, National Association is the Trustee under the
Senior Indenture, the Subordinated Indenture and the Company's Indenture dated
as of July 2, 1984 and has been appointed by the Company as initial Security
Registrar and Paying Agent with regard to the Debt Securities.
DESCRIPTION OF CAPITAL STOCK
The following statements with respect to the capital stock of the Company
are subject to the detailed provisions of the Company's certificate of
incorporation, as amended (the "Certificate of Incorporation"), and by-laws, as
amended (the "By-Laws"). These statements do not purport to be complete, or to
give full effect to the provisions of statutory or common law, and are subject
to, and are qualified in their entirety by reference to, the terms of the
Certificate of Incorporation and the By-Laws. The Certificate of Incorporation
and the By-Laws are filed as exhibits to the Registration Statement of which
this Prospectus is a part.
General
The authorized capital stock of the Company consists of 240,000,000 shares
of Common Stock, par value $1.00 per share, and 20,000,000 shares of preferred
stock, par value $1.00 per share. The Company's Certificate of Incorporation
authorizes the Company's Board of Directors to provide for the issuance, from
time to time, of series of preferred stock, to establish the number of shares to
be included in any such series and to fix the designations, powers, preferences
and rights of the shares of each such series and any qualifications, limitations
or restrictions thereof. No shares of preferred stock of the Company are
outstanding as of the date hereof. However 45,000 shares of Series A Junior
Participating Preferred Stock, par value $1.00 per share, of the Company (the
"Junior Preferred Stock") have been authorized and reserved for issuance in
connection with the preferred stock purchase rights (the "Rights") described in
"Description of Rights and Junior Preferred Stock."
Voting Rights
Each holder of Common Stock is entitled to one vote for each share
registered in his name on the books of the Company on all matters submitted to a
vote of stockholders. Except as otherwise provided by law, the holders of Common
Stock vote as one class. The shares of Common Stock do not have cumulative
voting rights. As a result, subject to the voting rights, if any, of the holders
of any shares of the Company's preferred stock which may at the time be
outstanding, the holders of Common Stock entitled to exercise more than 50% of
the voting rights in an election of directors can elect 100% of the directors to
be elected in a particular year if they choose to do so. In such event, the
holders of the remaining Common Stock voting for the election of directors will
not be able to elect any persons to the Board of Directors.
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Dividend Rights
Subject to the rights of the holders of any shares of the Company's
preferred stock which may at the time be outstanding, holders of Common Stock
are entitled to such dividends as the Board of Directors may declare out of
funds legally available therefor.
Liquidation Rights and Other Provisions
Subject to the prior rights of creditors and the holders of outstanding
preferred stock, if any, the holders of the Common Stock are entitled in the
event of liquidation, dissolution or winding up to share pro rata in the
distributions of all remaining assets.
The Common Stock is fully paid and is not liable to any calls or
assessments and is not convertible into any other securities. There are no
redemption or sinking fund provisions applicable to the Common Stock, and the
Certificate of Incorporation provides that there shall be no preemptive rights.
Harris Trust Company of New York acts as transfer agent and registrar for
Common Stock.
CERTAIN ANTI-TAKEOVER PROVISIONS
The provisions of the Certificate of Incorporation summarized in the
succeeding paragraphs may be deemed to have an anti-takeover effect and may
delay, defer or prevent a tender offer or takeover attempt that a stockholder
might consider in such stockholder's best interest, including those attempts
that might result in a premium over the market price for the shares held by
stockholders.
The Board of Directors of the Company is divided into three classes that
are elected for staggered three-year terms.
Pursuant to the Certificate of Incorporation, the Board of Directors by
resolution may establish one or more series of Company preferred stock having
such number of shares, designation, relative voting rights, dividend rates,
liquidation and other rights, preferences and limitations as may be fixed by the
Board of Directors without any further stockholder approval. Such rights,
preferences, privileges and limitations as may be established could have the
effect of impeding or discouraging the acquisition of control of the Company.
In addition, the Certificate of Incorporation provides that the affirmative
vote of no less than 75% of the outstanding voting stock of the Company, voting
as one class, shall be required for the adoption or authorization of certain
Business Combinations (as defined below) with a Related Person (as defined
below). Such vote will not be required if (i) the agreement to effectuate the
Business Combination with a Related Person is approved by a majority of the
Continuing Directors (as defined below), even if such majority does not
constitute a quorum of the Board of Directors then in office, or (ii) the
Business Combination satisfies certain minimum price criteria and procedural
requirements which are intended to assure an adequate and fair price under the
circumstances.
A "Business Combination" includes; (i) any merger or consolidation of the
Company with or into any Related Person; (ii) the sale, lease, exchange,
mortgage, pledge, transfer or other disposition (in one transaction or a series
of transactions) to or with any Related Person of any assets of the Company or
any subsidiary thereof having an aggregate fair market value of $15,000,000 or
more; (iii) the issuance or transfer by the Company or any subsidiary thereof
(in one transaction or a series of transactions) of any securities of the
Company or any subsidiary thereof to any Related Person in exchange for cash,
securities or other property (or a combination thereof) having an aggregate fair
market value of $15,000,000 or more; (iv) the adoption of any plan or proposal
for the liquidation or dissolution of the Company proposed by or on behalf of
any Related Person; or (v) any reclassification or recapitalization of
securities of the Company if the effect, directly or indirectly, of such
transaction is to increase the relative voting power of any Related Person. A
"Related Person" includes any person, together with any affiliate or associate
of such person, which has beneficial ownership, directly or indirectly, of
shares of stock of the Company entitling such person to exercise more than ten
percent (10%) of the total voting power of all classes of stock of the Company
entitled to vote in elections of directors, considered as one class, together
with the successors and assigns of any such person in any transaction or series
of transactions not involving a public offering of the Company stock within the
meaning of the Securities Act. A "Continuing Director" is a member of the Board
of Directors who was not affiliated with the Related Person and was a member of
the Board of Directors prior to the time that the Related
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<PAGE> 17
Person acquired the last shares of stock of the Company entitling such Related
Person to exercise, in the aggregate, in excess of ten percent (10%) of the
total voting power of all classes of stock of the Company entitled to vote in
elections of directors, or a person recommended to succeed a Continuing Director
by a majority of Continuing Directors.
DESCRIPTION OF RIGHTS AND JUNIOR PREFERRED STOCK
Rights
On April 5, 1989, the Board of Directors of the Company declared a
distribution of one Right for each outstanding share of Common Stock to
stockholders of record on April 19, 1989. Following the Distribution Date (as
defined below), each Right entitles the recordholder to purchase from the
Company a unit consisting of one one-thousandth of a share of Junior Preferred
Stock, at a price of $120 per unit, subject to adjustment (the "Purchase
Price"). The following summary of the Rights does not purport to be complete and
is qualified in its entirety by reference to the Rights Agreement between the
Company and Harris Trust Company of New York (the "Rights Agreement"), which is
filed as an exhibit to the Registration Statement of which this Prospectus is a
part. Capitalized terms used herein and not otherwise defined shall have the
meanings given to them in the Rights Agreement.
The Rights attach to all certificates representing outstanding shares of
Common Stock and will attach to the shares of Common Stock issued prior to the
Distribution Date and the redemption or expiration of the Rights upon conversion
of the Debt Securities. The Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of (i) 10 business days following
a public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") acquired beneficial ownership of 20% or more of the
outstanding shares of Common Stock (the "Stock Acquisition Date"), (ii) 10
business days (or such later date as may be determined by the Board of
Directors) following the commencement of a tender or exchange offer that, upon
its consummation, would result in a person or group beneficially owning 20% or
more of the outstanding shares of Common Stock or (iii) 10 business days after
the Board of Directors determines that any person, alone or together with its
affiliates and associates, has become the beneficial owner of an amount of
Common Stock that the Board of Directors determines to be substantial (which
amount shall in no event be less than 15% of the shares of Common Stock
outstanding) and the independent directors shall, after reasonable inquiry and
investigation, including consultation with such persons as the directors deem
appropriate, determine that (a) such beneficial ownership by such person is
intended to cause the Company to repurchase the Common Stock beneficially owned
by such person or to cause pressure on the Company to take action or enter into
a transaction or series of transactions intended to provide such persons with
short-term financial gain under circumstances where the Board of Directors
determines that the best long-term interest of the Company and its stockholders
would not be served by taking such action or entering into such transactions or
series of transactions at that time or (b) such beneficial ownership is causing
or reasonably likely to cause a material adverse impact (including, but not
limited to, impairment of relationships with customers, impairment of the
Company's ability to deal with governmental agencies) on the business or
prospects of the Company (any such person being referred to herein as an
"Adverse Person"). The Rights are not exercisable until the Distribution Date,
if any, and will expire on April 5, 1999.
In the event (i) a person becomes the beneficial owner of 20% or more of
the outstanding shares of Common Stock, except pursuant to an offer of all
outstanding shares of Common Stock that at least a majority of the members of
the Board of Directors who are not officers of the Company and who are not
representatives, nominees, Affiliates or Associates of an Acquiring Person
determines to be fair and otherwise in the best interests of the Company and its
stockholders, or (ii) the Board of Directors determines that a person is an
Adverse Person, then each Right not owned by any Acquiring Person or Adverse
Person (or certain transferees of such persons) will enable the holder to
purchase at the Right's then current Purchase Price, Common Stock (or, in
certain circumstances, a combination of Common Stock, other securities, cash or
other property) having a calculated value of twice the Right's Purchase Price.
Rights, however, are not exercisable following the occurrence of either of the
events set forth in this paragraph until such time as the Rights are no longer
redeemable by the Company as set forth below.
In the event that at any time following the Stock Acquisition Date (i) the
Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation (other than a merger
12
<PAGE> 18
which follows an offer described in the second preceding paragraph), or (ii)
more than 50% of the Company's assets, cash flow or earning power is sold, each
outstanding Right will entitle its holder to receive, upon exercise, common
stock of the acquiring company having a calculated value of two times the
exercise price of the Right.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote and to receive dividends.
The Board of Directors may redeem the Rights at $.01 per Right at any time
prior to the tenth business day following the Stock Acquisition Date. The Board
of Directors may not redeem the Rights if it has previously declared any person
to be an Adverse Person.
The terms of the Rights, other than the principal economic terms, may be
amended by the Board of Directors in any manner prior to the time Rights are
distributed. Thereafter, the Rights Agreement may be amended by the Board in
order to cure any ambiguity, to make changes that do not adversely affect the
interests of holders of Rights, or to shorten or lengthen any time period under
the Rights Agreement; provided, however, that no amendment to adjust the time
period governing redemption shall be made at such time as the Rights are not
redeemable.
Junior Preferred Stock
In connection with the Rights Agreement, 45,000 shares of Junior Preferred
Stock have been reserved and authorized for issuance by the Board of Directors.
No shares of Junior Preferred Stock are outstanding as of the date of this
Prospectus. The following statements with respect to the Junior Preferred Stock
do not purport to be complete and are subject to the detailed provisions of the
Certificate of Incorporation and the certificate of designation relating to the
Junior Preferred Stock (the "Certificate of Designation"), which are filed as
exhibits to the Registration Statement of which this Prospectus is a part.
Capitalized terms used herein and not otherwise defined shall have the meanings
given to them in the Certificate of Designation.
Subject to the prior payment of dividends on any series of preferred stock
ranking prior and superior to the Junior Preferred Stock, the holders of shares
of the Junior Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends per share equal to the greater of (a) $.05 or (b)
(subject to adjustment upon certain dilutive events) 1,000 times the aggregate
per share amount of all cash dividends, and 1,000 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock since the last quarterly dividend payment date for the
Junior Preferred Stock (or since the date of issuance of the Junior Preferred
Stock if no such dividend date has occurred).
A holder of Junior Preferred Stock will be entitled to one vote (subject to
adjustment upon certain dilutive events) per share of Junior Preferred Stock on
all mergers submitted to a vote of the stockholders of the Company. Except as
otherwise provided in the Certificate of Designation or By-laws, such holders
will vote together with the holders of shares of Common Stock as a single class.
If dividends on any Junior Preferred Stock are in arrears in an amount
equal to six quarterly dividends thereon, all holders of preferred stock
(including holders of the Junior Preferred Stock with dividends in arrears equal
to six quarterly dividends thereon), voting as a class, shall have the right to
elect two Directors.
Upon any liquidation (voluntary or otherwise), dissolution or winding up of
the Company, no distribution will be made to holders of shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Junior Preferred Stock, unless, prior thereto, the holders of shares of
Junior Preferred Stock shall have received $.10 per share, plus all accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment.
In the event the Company shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, the shares of Junior Preferred Stock shall similarly be exchanged or
changed in an amount per share equal to 1,000 times (subject to adjustment upon
certain dilutive events) the aggregate amount of stock, securities, cash and/or
any other property, as the case may be, into which or for which each share of
Common Stock is changed or exchanged.
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<PAGE> 19
The Company has the option to redeem, in whole or in part, the Junior
Preferred Stock at any time at a price of 1,000 times (subject to adjustment
upon certain dilutive events) the "current per share market price" of the Common
Stock on the date of the mailing of the notice of redemption, together with
unpaid accumulated dividends to the date of such redemption. The "current per
share market price" on any date shall be deemed to be the average of the closing
price per share of such Common Stock for the 10 consecutive trading days
immediately prior to such date.
DESCRIPTION OF WARRANTS
The Company may issue, together with Debt Securities or separately,
Warrants for the purchase of Debt Securities. The Warrants are to be issued
under warrant agreements (each a "Warrant Agreement") to be entered into between
the Company and a bank or trust company, as warrant agent ("Warrant Agent"), all
as shall be set forth in the Prospectus Supplement relating to Warrants being
offered thereby. The following summaries of certain provisions of the Warrant
Agreement and the certificates representing the Warrants ("Warrant
Certificates") do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the Warrant
Agreement and the Warrant Certificates, respectively, including the definitions
therein of certain terms.
General
The Prospectus Supplement will describe the terms of Warrants offered
thereby, the Warrant Agreement relating to such Warrants and the Warrant
Certificates representing such Warrants, including the following: (i) the title
of such Warrants; (ii) the aggregate number of such Warrants; (iii) the price or
prices at which such Warrants will be issued; (iv) the currency or currencies,
including foreign or composite currencies, in which the price of such Warrants
may be payable; (v) the designation, aggregate principal amount and terms of the
Debt Securities purchasable upon exercise of such Warrants and the procedures
and conditions relating to the exercise of such Debt Warrants; (vi) the
designation and terms of any related Debt Securities with which such Warrants
are issued and the number of such Warrants issued with each such Debt Security;
(vii) the currency or currencies, including foreign or composite currencies, in
which the principal of or premium, if any, or interest on the Debt Securities
purchasable upon exercise of such Warrants is payable; (viii) the date, if any,
on and after which such Warrants and the related Debt Securities will be
separately transferable; (ix) the principal amount of Debt Securities
purchasable upon exercise of each Warrant and the price at which and the
Currency, including foreign or composite currencies, in which such principal
amount of Debt Securities may be purchased upon such exercise; (x) the date on
which the right to exercise such Warrants shall commence and the date on which
such right shall expire (the "Expiration Date"); (xi) if the Debt Securities
purchasable upon exercise of such Warrants are original issue discount Debt
Securities, a discussion of federal income tax considerations applicable
thereto; (xii) whether the Warrants represented by the Warrant Certificates will
be issued in registered or bearer form, and, if registered, where they may be
transferred and registered; (xiv) the maximum or minimum number of such Debt
Warrants which may be issued at any one time; and (xv) any other terms of the
Warrants.
Warrant Certificates will be exchangeable for new Warrant Certificates of
different denominations and Warrants may be exercised at the corporate trust
office of the Warrant Agent or any other office indicated in the Prospectus
Supplement. Prior to the exercise of their Warrants, Holders of Warrants will
not be entitled to payments of principal of (premium, if any), or interest, if
any, on, the Debt Securities purchasable upon such exercise.
Exercise of Warrants
Each Warrant will entitle the Holder of Warrants to purchase for cash such
principal amount of Debt Securities at such exercise price as shall in each case
be set forth in, or be determinable as set forth in, the Prospectus Supplement
relating to the Warrants offered thereby. Warrants may be exercised at any time
up to the close of business on the Expiration Date set forth in the Prospectus
Supplement relating to the Warrants offered thereby. After the close of business
on the Expiration Date, unexercised Warrants will become void.
Warrants may be exercised as set forth in the Prospectus Supplement
relating to the Warrants offered thereby. Upon receipt of payment and the
Warrant Certificate properly completed and duly executed at the corporate trust
office of the Warrant Agent or any other office indicated in the Prospectus
Supplement, the Company will, as soon as practicable, forward the Debt
Securities purchasable upon such exercise. If less than all of the Warrants
represented by such Warrant Certificate are exercised, a new Warrant Certificate
will be issued for the remaining Warrants.
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<PAGE> 20
PLAN OF DISTRIBUTION
The Company may sell Securities to or through underwriters, and also may
sell Securities directly to other purchasers or through agents, including on a
continuing basis. The Prospectus Supplement with respect to the Securities being
offered thereby sets forth the terms of the offering of such Securities,
including the name or names of any underwriters, the purchase price of such
Securities and the proceeds to the Company from such sale, any underwriting
discounts and other items constituting underwriters' compensation, any initial
public offering price, any discounts or concessions allowed or reallowed or paid
to dealers and any securities exchanges on which such Securities may be listed.
Only underwriters so named in the Prospectus Supplement are deemed to be
underwriters in connection with the Securities offered thereby.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices relating to such
prevailing market prices or at negotiated prices.
In connection with the sale of Securities, underwriters may receive
compensation from the Company or from purchasers of Securities for whom they may
act as agents in the form of discounts, concessions or commissions.
Underwriters, dealers and agents that participate in the distribution of
Securities may be deemed to be underwriters and any discounts or commissions
received by them and any profit on the resale of Securities by them may be
deemed to be underwriting discounts and commissions under the Act. Any such
underwriter or agent will be identified, and any such compensation will be
described, in a Prospectus Supplement.
Under agreements which may be entered into by the Company, underwriters,
dealers and agents who participate in the distribution of Securities may be
entitled to indemnification by the Company against certain civil liabilities,
including liabilities under the Act.
If so indicated in the Prospectus Supplement, the Company will authorize
the underwriters to solicit offers by certain institutions to purchase
Securities from the Company at the public offering price set forth in the
Prospectus Supplement pursuant to Delayed Delivery Contracts providing for
payment and delivery on the date stated in the Prospectus Supplement. Each such
contract will be for an amount not less than, and unless the Company otherwise
agrees, the aggregate principal amount of Securities sold pursuant to such
contracts shall not be more than, the respective amounts stated in the
Prospectus Supplement. Institutions with whom such contracts, when authorized,
may be made include commercial and savings banks, insurance companies, pension
funds, investment companies, educational and charitable institutions, and other
institutions, but shall in all cases be subject to the approval of the Company.
Delayed Delivery Contracts will not be subject to any conditions except that the
purchase by an institution of the Securities covered thereby shall not at the
time of delivery be prohibited under the laws of any jurisdiction in the United
States to which such institution is subject.
The Underwriting Agreement entered into with respect to any Securities sold
through underwriters provides that the obligations of the underwriter or
underwriters will be subject to certain conditions precedent and that the
underwriters will be obligated to purchase all of the Securities covered by the
applicable Prospectus Supplement if any are purchased.
LEGAL OPINIONS
The validity of the Securities offered hereby has been passed upon for the
Company by Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue, New York, New
York 10022. Certain legal matters in connection with the offering to which this
Prospectus relates will be passed upon for the Company by Franklin C. Brown,
Esq., General Counsel for the Company.
EXPERTS
The financial statements and schedules of Rite Aid Corporation as of
February 26, 1994 and February 27, 1993, and for each of the years in the
three-year period ended February 26, 1994, incorporated by reference herein have
been incorporated by reference herein and in the registration statement in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon authority of said firm
as experts in accounting and auditing. The report of KPMG Peat Marwick LLP
covering the February 26, 1994 financial statements and schedules refer to a
change in the Company's method of accounting for income taxes to conform with
Statement of Financial Accounting Standards No. 109 in the fiscal year ended
February 27, 1993.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS OR AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY JURISDICTION WHERE SUCH
AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF RITE AID CORPORATION SINCE THE DATE HEREOF, OR
THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF
SUCH INFORMATION.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Recent Operating Results................. S-2
Use of Proceeds.......................... S-2
Ratio of Earnings to Fixed Charges....... S-2
Description of Notes..................... S-2
Underwriting............................. S-4
Legal Opinions........................... S-5
PROSPECTUS
Available Information.................... 2
Incorporation of Certain Documents by
Reference.............................. 2
The Company.............................. 3
Use of Proceeds.......................... 3
Description of Securities................ 3
Plan of Distribution..................... 15
Legal Opinions........................... 15
Experts.................................. 15
</TABLE>
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RITE AID CORPORATION
$200,000,000
7 5/8% SENIOR NOTES
DUE APRIL 15, 2005
[LOGO]
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PROSPECTUS SUPPLEMENT
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DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BEAR, STEARNS & CO. INC.
J.P. MORGAN SECURITIES INC.
NATIONSBANC CAPITAL MARKETS, INC.
APRIL 12, 1995
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