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As filed with the Securities and Exchange Commission on January 12, 1999
REGISTRATION NO. 333-66901
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
RITE AID CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
DELAWARE 5912 23-1614034
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION
NUMBER)
</TABLE>
RITE AID CORPORATION
30 HUNTER LANE
CAMP HILL, PENNSYLVANIA 17011
(717) 761-2633
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ELLIOT S. GERSON
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
RITE AID CORPORATION
30 HUNTER LANE
CAMP HILL, PENNSYLVANIA 17011
(717) 761-2633
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
WITH A COPY TO:
MORGAN, LEWIS & BOCKIUS LLP
101 PARK AVENUE
NEW YORK, NEW YORK 10178
(212) 309-6000
ATTN: HOWARD A. KENNY
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If the securities being registered on this form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the
"Securities Act"), check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
Subject to completion, dated January 12, 1999.
PROSPECTUS
RITE AID CORPORATION
RITE AID CORPORATION HEREBY OFFERS TO EXCHANGE UP TO $200,000,000 OF ITS 6%
DEALER REMARKETABLE SECURITIES ("DRS.") DUE OCTOBER 1, 2013 (THE "EXCHANGE
DRS.") FOR AN IDENTICAL PRINCIPAL AMOUNT OF ITS OUTSTANDING 6% DRS. DUE OCTOBER
1, 2013 (THE "RESTRICTED DRS.").
The Exchange Drs. will:
. be identical in all material respects to the Restricted
Drs., except for certain transfer restrictions,
registration rights and liquidated damages provisions
relating to the Restricted Drs.
. bear interest at 6% per annum until October 1, 2003
accruing from September 22, 1998 (the date of issuance of
the Restricted Drs.) and payable semi-annually on April 1
and October 1, commencing April 1, 1999.
. not be listed on any securities exchange or approved for
quotation through any automated quotation system. No
active public market is anticipated.
. be represented by a global security or securities
registered in the name of a nominee of The Depository
Trust Company ("DTC").
The Exchange Offer:
. expires at 5:00 p.m., New York City time, on ___________,
1999, unless extended.
. is not conditioned upon any minimum amount of Restricted
Drs. being tendered.
. is subject to customary terms and conditions, as
specified in this Prospectus and the accompanying Letter
of Transmittal.
The Exchange Drs., will bear interest at a rate of 6% per annum from September
22, 1998 until October 1, 2003 (the "Remarketing Date"). Interest is payable
semi-annually on April 1 and October 1 of each year, commencing April 1, 1999.
The Drs. are subject to mandatory tender, or redemption, on the Remarketing
Date.
We issued the Restricted Drs. in a transaction not requiring registration under
the Securities Act and thus their transfer is restricted. This exchange offer is
being made to satisfy the registration rights of the holders of the Restricted
Drs. requiring us to either provide them with Exchange Drs. registered under the
Securities Act or to register their Restricted Drs. for resale. In the event we
do not fulfill these obligations, the holders of Restricted Drs. will be
entitled to certain additional payments as liquidated damages. See "Exchange
Offer-Purpose of the Exchange Offer."
You should rely only on the information contained in this Prospectus or that we
have referred you to. We have not authorized anyone to provide you with
information that is different. We are not offering to sell or asking you to buy
anything other than the Exchange Drs. We are not offering to sell or asking you
to buy anything in any jurisdiction where doing so would be against the law.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE EXCHANGE DRS. NOR DETERMINED THAT THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.
_________, 1999
"Dealer remarketable securities(SM)" and "Drs.(SM)" are service marks of J.P.
Morgan Securities Inc.
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THE COMPANY
Rite Aid Corporation, incorporated in 1968, is one of the largest retail
drugstore chains in the United States. As of November 28, 1998, we operated
3,827 drugstores, within a range of approximately 7,200 to 20,000 square feet
per store in size, in 30 eastern, southern and western states and the District
of Columbia and employed over 75,000 associates. Pharmacy service forms the core
of our business, with prescriptions accounting for 54.5 percent of drugstore
sales in the thirty-nine week period ended November 28, 1998. Our 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 been added
in select locations. Our Eagle Managed Care Corp. subsidiary markets
prescription plans and sells other managed health care services to employers,
health maintenance organizations and government-sponsored employee benefit
programs.
On December 12, 1996, we acquired Thrifty PayLess Holdings, Inc. ("Thrifty
PayLess"), which was one of the largest drugstore retailers in the western
United States with over 1,000 stores in 10 states. We have renamed the Thrifty
PayLess stores "Rite Aid" and are in the process of remodeling such stores. On
August 27, 1997, we completed the acquisitions of K&B Incorporated ("K&B") and
Harco, Inc. ("Harco"). K&B, based in New Orleans, Louisiana, operated 186 stores
in Louisiana, Alabama, Mississippi, Texas, Tennessee and Florida. It was the
13th largest drugstore chain in the U.S. with sales of $580,000,000 for fiscal
year 1996. Harco, headquartered in Tuscaloosa, Alabama, operated 146 stores in
Alabama, Mississippi and Florida. It was the 17th largest drugstore chain in the
U.S. with sales of $258,000,000 in fiscal year 1996. We have renamed all K&B and
Harco stores "Rite Aid" and have completed the integration of such stores with
our operations.
Our strategy is to operate drugstores in large, fast-growing metropolitan areas.
Of the 60 largest metropolitan statistical areas (commonly referred to as
"MSAs") in the United States, we operate in 33 and are either the largest or
second largest for retail drugstore prescription sales in 23 of those 33
MSAs.
The Company is a Delaware corporation. Our principal executive offices are
located at 30 Hunter Lane, Camp Hill, Pennsylvania 17011 and our telephone
number is (717) 761-2633.
RECENT DEVELOPMENTS
On November 17, 1998, we and Eli Lilly and Company ("Lilly") announced that we
had entered into a Stock Purchase Agreement, pursuant to which we have agreed to
acquire all of the outstanding capital stock of PCS Holding Corporation, a
wholly-owned subsidiary of Lilly, for $1,500,000,000 in cash. PCS, a leading
pharmacy benefits manager for employers, health plans and their members,
currently manages nearly 300,000,000 prescriptions each year, serves more than
1,200 health plan sponsors, assists more than 50,000,000 plan members with their
pharmaceutical needs and accounts for approximately $10,000,000,000 in drug
expenditures. The acquisition of PCS, which we expect will close in the first
quarter of 1999, will be accounted for as a purchase.
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AVAILABLE INFORMATION
We have filed with the SEC a registration statement under the Securities Act,
relating to the Exchange Drs. to be issued in the exchange offer. As permitted
by SEC rules, this prospectus omits certain information included in the
registration statement. For a more complete understanding of the exchange offer,
you should refer to the registration statement, including its exhibits.
We also file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy the registration statement and
any other document we file at the SEC's public reference room at 450 Fifth
Street, N.W., Washington, D.C. 20549. These documents are also available at the
public reference rooms at the SEC's regional offices in New York, New York and
Chicago, Illinois. You may call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available to
the public at the SEC's web site at http://www.sec.gov. Documents filed by us
with the SEC are identifiable by our commission file number, 1-5742.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose information to you by referring you to
those documents. These incorporated documents contain business and financial
information about us that is not included in or delivered with this prospectus.
The information incorporated by reference is considered to be part of this
prospectus, and later information filed with the SEC will update and supersede
this information. We incorporate by reference the documents listed below and any
future filings made with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act prior to the date the exchange offer expires:
(i) Annual Report on Form 10-K for the year ended February 28,
1998;
(ii) Quarterly Reports on Form 10-Q for the quarters ended May 30, 1998,
August 29, 1998 and November 28, 1998 and
(iii) Current Report on Form 8-K dated November 17, 1998.
We will provide without charge to each person to whom a copy of this prospectus
has been delivered, on the written or oral request of any such person, a copy of
any or all of the documents referred to above which have been or may be
incorporated into this prospectus by reference. We will also provide copies of
any exhibits to such documents that are specifically incorporated by reference
in such documents. Requests for such copies should be directed to Investor
Relations, Rite Aid Corporation, 30 Hunter Lane, Camp Hill, Pennsylvania 17011,
telephone number (717) 761-2633, Ext. 5362.
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USE OF PROCEEDS
We will receive no proceeds from the exchange of Drs. pursuant to the exchange
offer.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
THIRTY-NINE
WEEKS
ENDED FISCAL YEAR
---------- -----------------------------
NOVEMBER 28,
1998 1998 1997 1996 1995 1994
---------- ----- ----- ----- ----- -----
Ratio of Earnings to Fixed Charges(1) 1.57 2.91 2.56 3.08 3.78 1.66
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
(1) The ratio of earnings to fixed charges is computed by dividing earnings by
fixed charges. For this purpose, earnings include pre-tax income from
continuing operations plus fixed charges. Fixed charges include interest,
whether expensed or capitalized, amortization of debt expense and that
portion of rental expense which is representative of the interest factor
in these rentals.
4
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EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
We initially sold the Restricted Drs. in a private offering on September 22,
1998 to J.P. Morgan Securities Inc., Goldman, Sachs & Co. and Morgan Stanley &
Co. Incorporated (collectively, the "Initial Purchasers") pursuant to a Purchase
Agreement dated September 17, 1998 between us and the Initial Purchasers. The
Initial Purchasers subsequently resold the Restricted Drs. to qualified
institutional buyers in reliance on, and subject to the restrictions imposed
under, Rule 144A under the Securities Act and outside the United States in
accordance with the provisions of Regulation S under the Securities Act.
In connection with the private offering of the Restricted Drs., we entered into
an Exchange and Registration Rights Agreement dated September 22, 1998, with the
Initial Purchasers, in which we agreed, among other things:
. to file with the SEC on or before December 21, 1998, a registration
statement relating to an exchange offer for the Restricted Drs.
(the "Exchange Offer Registration Statement");
. to use our reasonable best efforts to cause the Exchange Offer
Registration Statement to be declared effective under the
Securities Act on or before March 22, 1999;
. upon the effectiveness of the Exchange Offer Registration
Statement, to offer the holders of the Restricted Drs. the
opportunity to exchange their Restricted Drs. in the exchange offer
for a like principal amount of Exchange Drs.;
. to keep the exchange offer open for not less than 30 days (or
longer, if required by applicable law) after notice of the exchange
offer is mailed to holders of Restricted Drs.; and
. to use our reasonable best efforts to consummate the exchange offer
on or before April 21, 1999.
This exchange offer is intended to satisfy your exchange and registration rights
under the Exchange and Registration Rights Agreement. If we fail to fulfill such
registration and exchange obligations, you, as a holder of outstanding
Restricted Drs., are entitled to receive additional interest, at a rate of 0.25%
per annum, determined daily, as liquidated damages for such default.
For a more complete understanding of your exchange and registration rights, you
should refer to the Exchange and Registration Rights Agreement, which is
included as Exhibit 4.3 to the registration statement that relates to this
prospectus.
EFFECT OF THE EXCHANGE OFFER
Based on certain no-action letters issued by the staff of the SEC to third
parties in unrelated transactions, we believe that you may offer for resale,
resell or otherwise transfer any Exchange Drs. issued to you in the exchange
offer in exchange for Restricted Drs. without compliance with the registration
and prospectus delivery requirements of the Securities Act, if
. you are acquiring the Exchange Drs. issued in the exchange offer in
the ordinary course of your business;
. you are not participating, do not intend to participate and have no
arrangement or understanding with any person to participate, in a
distribution of the Exchange Drs.;
. you are not an "affiliate" of Rite Aid (as defined in Rule 405
under the Securities Act); and
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. you are not a broker-dealer who acquired Restricted Drs. as a
result of market-making activities or other trading activities.
If you are an "affiliate" of Rite Aid or an Initial Purchaser or if you have any
arrangement or understanding with any person to participate in a distribution of
the Exchange Drs.:
. you will not be able to rely on the interpretations of the staff
of the SEC in connection with any offer for resale, resale or
other transfer of Exchange Drs.; and
. you must comply with the registration and prospectus delivery
requirements of the Securities Act, or have an exemption
available to you, in connection with any offer for resale, resale
or other transfer of the Exchange Drs.
Each broker-dealer that receives Exchange Drs. for its own account in exchange
for Restricted Drs., where such Restricted Drs. were acquired by such broker-
dealer as a result of market-making activities or other trading activities, must
deliver a prospectus in connection with any resale of such Exchange Drs. See
"Plan of Distribution."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus and in
the accompanying Letter of Transmittal, we will accept all Restricted Drs.
validly tendered and not withdrawn prior to 5:00 p.m. New York City time, on the
Expiration Date (defined below in "--Expiration Date; Extensions; Amendments").
After authentication of the Exchange Drs. by the Trustee or an authenticating
agent, we will issue and deliver $1,000 principal amount of Exchange Drs. in
exchange for each $1,000 principal amount of outstanding Restricted Drs.
accepted in the exchange offer. Holders may tender some or all of their
Restricted Drs. pursuant to the exchange offer in denominations of $1,000 and
integral multiples thereof.
By tendering Restricted Drs. in exchange for Exchange Drs. and by executing the
Letter of Transmittal, each holder of Restricted Drs. will be deemed to
represent that, among other things:
. any Exchange Drs. to be received by it will be acquired in the
ordinary course of its business;
. it has no arrangement or understanding with any person to
participate in the distribution of the Exchange Drs.; and
. it is not an "affiliate" (as defined in Rule 405 under the
Securities Act) of Rite Aid, or, if it is an affiliate, that it
will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable.
In the case of a broker-dealer that receives Exchange Drs. for its own account
in exchange for Restricted Drs. that were acquired by it as a result of market-
making or other trading activities, the Letter of Transmittal will also include
an acknowledgment that the broker-dealer will deliver a copy of this Prospectus
in connection with the resale by it of Exchange Drs. received pursuant to the
exchange offer. By so acknowledging and by delivering a Prospectus, however,
such broker-dealer will not be deemed to admit that it is an "underwriter"
(within the meaning of the Securities Act). See "Plan of Distribution."
This prospectus, together with the accompanying Letter of Transmittal, is
initially being sent to all registered holders of Restricted Drs. as of the
close of business on _____, 1999. The exchange offer is not conditioned upon any
minimum aggregate principal amount of Restricted Drs. being tendered. The
exchange offer is subject,
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however, to certain customary conditions, which may be waived by Rite Aid, and
to the terms and provisions of the Exchange and Registration Rights Agreement.
See "--Conditions to the Exchange Offer."
We shall be deemed to have accepted validly tendered Restricted Drs. when, as
and if we have given oral or written notice thereof to the Exchange Agent. See
"--Exchange Agent." The Exchange Agent will act as agent for the tendering
holders of Restricted Drs. for the purpose of receiving Exchange Drs. from Rite
Aid and delivering Exchange Drs. to such holders.
Holders who tender Restricted Drs. in the exchange offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Restricted Drs.
pursuant to the exchange offer. Rite Aid will pay all charges and expenses,
other than certain applicable taxes, in connection with the exchange offer. See
"--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on _______,
1999, unless we, in our sole discretion, extend the exchange offer, in which
case the term "Expiration Date" shall mean the latest date to which the exchange
offer is extended. We may extend the exchange offer at any time and from time to
time by giving oral or written notice to the Exchange Agent and by timely public
announcement. We may also accept all properly tendered Restricted Drs. as of the
Expiration Date and extend the Expiration Date in respect of the remaining
outstanding Restricted Drs.
We expressly reserve the right, in our sole discretion, to amend the terms of
the exchange offer in any manner. Without limiting the generality of the
foregoing, if any of the conditions set forth herein under "--Termination" shall
have occurred and shall not have been waived by us (if permitted to be waived),
we expressly reserve the right, in our sole discretion, by giving oral or
written notice to the Exchange Agent, to:
. delay acceptance of, or refuse to accept, any Restricted Drs. not
previously accepted;
. extend the exchange offer; or
. terminate the exchange offer.
Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice thereof by Rite
Aid to the registered holders of the Restricted Drs. If the exchange offer is
amended in a manner determined by us to constitute a material change, we will
promptly disclose such amendment in a manner reasonably calculated to inform the
holders of such amendment and we will extend the exchange offer to the extent
required by law.
Without limiting the manner in which we may choose to make public announcements
of any delay in acceptance, extension, termination or amendment of the exchange
offer, we shall have no obligation to publish, advise, or otherwise communicate
any such public announcement, other than by making a timely press release
thereof.
PROCEDURES FOR TENDERING
Each holder of Restricted Drs. wishing to accept the exchange offer must
complete, sign and date the Letter of Transmittal, or a facsimile thereof, in
accordance with the instructions contained herein and in the Letter of
Transmittal, and mail or otherwise deliver such Letter of Transmittal, and any
other required documentation, to Harris Trust and Savings Bank, as Exchange
Agent, at the address set forth herein and in the Letter of Transmittal. Prior
to the Expiration Date, the Exchange Agent must receive a timely confirmation of
a book-entry transfer of such Restricted Drs. into the Exchange Agent's account
at DTC pursuant to the procedures for book-entry transfer as provided for herein
and in the Letter of Transmittal or the holder must comply with the guaranteed
delivery procedures described below under "-- Guaranteed Delivery
Procedures."
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Any financial institution that is a participant in DTC's system may make book-
entry delivery of the Restricted Drs. by causing DTC to transfer such Restricted
Drs. into the Exchange Agent's account in accordance with DTC's procedure for
such transfer. Although delivery of Restricted Drs. will be effected through
book-entry transfer into the Exchange Agent's account at DTC, the Letter of
Transmittal (or facsimile thereof), with any required signature guarantees and
any other required documents, must be transmitted to and received by the
Exchange Agent at its address set forth herein under "--Exchange Agent" prior to
5:00 p.m., New York City time, on the Expiration Date.
Delivery of documents to DTC in accordance with DTC's procedures does NOT
constitute delivery to the Exchange Agent.
Only a holder of Restricted Drs. may tender its Restricted Drs. in the exchange
offer. To tender in the exchange offer, a holder must complete, sign and date
the Letter of Transmittal or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile and other required
documents to the Exchange Agent, prior to 5:00 p.m., New York City time, on the
Expiration Date.
The tender by a holder of Restricted Drs. will constitute an agreement between
such holder, Rite Aid and the Exchange Agent in accordance with the terms and
subject to the conditions set forth herein and in the Letter of Transmittal. If
less than all the Restricted Drs. held by a holder of Restricted Drs. are
tendered, a tendering holder should fill in the amount of Restricted Drs. being
tendered in the appropriate box on the Letter of Transmittal. The entire amount
of Restricted Drs. delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
The method of delivery of the Letter of Transmittal and all other required
documents to the Exchange Agent is at the election and risk of the holders of
Restricted Drs. Instead of delivery by mail, it is recommended that holders of
Restricted Drs. use an overnight or hand delivery service. In all cases,
sufficient time should be allowed to ensure delivery to the Exchange Agent prior
to the Expiration Date. No Letter of Transmittal or other required documents
should be sent to Rite Aid.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case may
be, must be guaranteed by a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15
under the Exchange Act (each, an "Eligible Institution"), unless the Restricted
Drs. tendered pursuant thereto are tendered for the account of an Eligible
Institution.
If the Letter of Transmittal or powers of attorney are signed or endorsed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting
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in a fiduciary or representative capacity, such persons should so indicate when
signing, and unless waived by us, submit evidence satisfactory to us of their
authority to so act with such Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of receipt),
acceptance and withdrawal of the tendered Restricted Drs. will be determined by
Rite Aid in its sole discretion, which determination will be final and binding.
We reserve the absolute right to reject any and all Restricted Drs. not properly
tendered or any Restricted Drs. our acceptance of which would, in the opinion of
our counsel, be unlawful. We also reserve the absolute right to waive any
irregularities or conditions of tender as to particular Restricted Drs. Our
interpretation of the terms and conditions of the Exchange Offer (including the
instructions in the Letter of Transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of Restricted Drs. must be cured within such time as we shall determine.
Although we intend to notify tendering holders of defects or irregularities with
respect to tenders of Restricted Drs., neither Rite Aid, the Exchange Agent nor
any other person shall be under any duty to give notification of defects or
irregularities with respect to tenders of Restricted Drs., nor shall any of them
incur any liability for failure to give such notification. Tenders of Restricted
Drs. will not be deemed to have been made until such irregularities have been
cured or waived. Any Restricted Drs. received by the Exchange Agent that we
determine are not properly tendered or the tender of which is otherwise rejected
by us and as to which the defects or irregularities have not been cured or
waived by us will be returned by the Exchange Agent to the tendering holder
unless otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
In addition, we reserve the right in our sole discretion:
. to purchase or make offers for any Restricted Drs. that remain
outstanding subsequent to the Expiration Date;
. to terminate the exchange offer, as set forth in "--Conditions to
the Exchange Offer"; and
. to the extent permitted by applicable law, to purchase Restricted
Drs. in the open market, in privately negotiated transactions or
otherwise.
The terms of any such purchases or offers may differ from the terms of the
exchange offer.
BOOK-ENTRY TRANSFER
We understand that the Exchange Agent will make a request promptly after the
date of this prospectus to establish accounts with respect to the Restricted
Drs. at DTC for the purpose of facilitating the exchange offer, and subject to
the establishment of such accounts, any financial institution that is a
participant in DTC's system may make book-entry delivery of Restricted Drs. by
causing DTC to transfer such Restricted Drs. into the Exchange Agent's account
with respect to the Restricted Drs. in accordance with DTC's Automated Tender
Offer Program procedures for such transfer. However, the exchange for the
Restricted Drs. so tendered will only be made after a timely confirmation of a
book-entry transfer of such Restricted Drs. into the Exchange Agent's account,
and timely receipt by the Exchange Agent of an Agent's Message and any other
documents required by the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by DTC and received by
the Exchange Agent and forming part of the confirmation of a book-entry
transfer, which states that DTC has received an express acknowledgment from a
participant tendering Restricted Drs. and that such participant has received the
Letter of Transmittal and agrees to be bound by the terms of the Letter of
Transmittal, and Rite Aid may enforce such agreement against the
participant.
Although delivery of Restricted Drs. may be effected through DTC into the
Exchange Agent's account at DTC, an appropriate Letter of Transmittal properly
completed and duly executed with any required signature guarantee and all other
required documents must in each case be transmitted to and received or confirmed
by the Exchange Agent
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at its address set forth herein or in the Letter of Transmittal on or prior to
the Expiration Date, or, if the guaranteed delivery procedures described below
are complied with, within the time period provided under such procedures.
Delivery of documents to DTC without such confirmation or compliance does
not constitute delivery to the Exchange Agent.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Restricted Drs. and (1) who cannot deliver the
Letter of Transmittal or any other required documents to the Exchange Agent
prior to the Expiration Date or (2) who cannot complete the procedure for book-
entry transfer on a timely basis, may effect a tender if:
. the tender is made through an Eligible Institution;
. prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Letter
of Transmittal (or a facsimile thereof) and Notice of Guaranteed
Delivery (by facsimile transmittal, mail or hand delivery) setting
forth the name and address of the holder and the principal amount
of such Restricted Drs. tendered, stating that the tender is being
made thereby, and guaranteeing that, within three New York Stock
Exchange trading days after the date of execution of the Notice of
Guaranteed Delivery, a confirmation of a book-entry transfer into
the Exchange Agent's account at DTC and any other documents
required by the Letter of Transmittal, will be deposited by the
Eligible Institution with the Exchange Agent; and
. such confirmation of a book-entry transfer into the Exchange
Agent's account at DTC and all other documents required by the
Letter of Transmittal are received by the Exchange Agent within
three New York Stock Exchange trading days after the date of
execution of the Notice of Guaranteed Delivery.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be sent
to holders who wish to tender their Restricted Drs. according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Restricted Drs. may be withdrawn
at any time prior to 5:00 p.m. New York City time, on the Expiration Date.
For a withdrawal to be effective, a written or facsimile transmission notice of
withdrawal must be received by the Exchange Agent at its address set forth
herein prior to 5:00 p.m., New York City time, on the Expiration Date.
Any such notice of withdrawal must
. specify the name of the person having deposited the Restricted Drs.
to be withdrawn (the "Depositor");
. identify the Restricted Drs. to be withdrawn (including the
principal amount of such Restricted Drs. and the name and number of
the account at DTC to be credited);
. be signed by the Depositor in the same manner as the original
signature on the Letter of Transmittal by which such Restricted
Drs. were tendered (including any required signature guarantee) or
be accompanied by documents of transfer sufficient to permit the
registrar to register the transfer of such Restricted Drs. into the
name of the Depositor withdrawing the tender; and
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<PAGE>
. specify the name in which any such Restricted Drs. are to be
registered, if different from that of the Depositor.
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by us, and our
determination shall be final and binding on all parties. Any Restricted Drs. so
withdrawn will be deemed not to have been validly tendered for purposes of the
Exchange Offer, and no Exchange Drs. will be issued with respect thereto unless
the Restricted Drs. so withdrawn are validly retendered. Any Restricted Drs.
that have been tendered but are not accepted for exchange will be returned to
the holder thereof without cost to such holder as soon as practicable after
withdrawal, rejection of tender or termination of the exchange offer. Properly
withdrawn Restricted Drs. may be retendered by following one of the procedures
described above under "--Procedures for Tendering" at any time prior to the
Expiration Date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other term of the exchange offer, we will not be required to
accept for exchange, or to issue Exchange Drs. for, any Restricted Drs., and may
terminate or amend the exchange offer before the acceptance of such Restricted
Drs. if, in our judgment, any of the following conditions has occurred or exists
or has not been satisfied:
. the exchange offer, or the making of any exchange by a holder of
Restricted Drs., violates applicable interpretations of the SEC
staff;
. any action or proceeding shall have been instituted or threatened in
any court or by or before any governmental agency or body with
respect to the exchange offer; or
. there has been adopted or enacted any law, statute, rule or
regulation that can reasonably be expected to impair our ability to
proceed with the exchange offer.
If we determine that we may terminate the exchange offer for any of the reasons
set forth above, we may (1) refuse to accept any Restricted Drs. and return any
Restricted Drs. that have been tendered to the tendering holders, (2) extend the
exchange offer and retain all Restricted Drs. tendered prior to the Expiration
Date of the exchange offer, subject to the rights of the holders of the tendered
Restricted Drs. to withdraw such Restricted Drs., or (3) waive such termination
event with respect to the exchange offer and accept the properly tendered
Restricted Drs. that have not been withdrawn. If we determine that such waiver
constitutes a material change in the exchange offer, we will promptly disclose
such change in a manner reasonably calculated to inform the holders of such
change and we will extend the exchange offer to the extent required by law.
The foregoing conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to any such condition or may be
waived by us in whole or in part at any time and from time to time in our sole
discretion. Our failure at any time to exercise any of the foregoing rights will
not be deemed a waiver of any such right and each such right will be deemed an
ongoing right which may be asserted at any time and from time to time.
EXCHANGE AGENT
Harris Trust and Savings Bank, the Trustee under the Indenture, has been
appointed as Exchange Agent for the exchange offer. In such capacity, the
Exchange Agent has no fiduciary duties and will be acting solely on the basis of
directions of Rite Aid. Requests for assistance and requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed to
the Exchange Agent addressed as follows:
<TABLE>
<CAPTION>
Facsimile Transmission Number: By Hand/Overnight Delivery: By Registered or Certified Mail:
- -------------------------------- ----------------------------- --------------------------------
<S> <C> <C>
(For Eligible Institutions Only) Harris Trust and Savings Bank Harris Trust and Savings Bank
(212) 701-7636 c/o Harris Trust Company c/o Harris Trust Company
of New York of New York
</TABLE>
11
<PAGE>
<TABLE>
<S> <C> <C>
For General Information and to 88 Pine Street P.O. Box 1010
Confirm Receipt of Facsimile by 19th Floor Wall Street Station
Telephone: New York, NY 10005 New York, NY 10268-1010
(212) 701-7624
</TABLE>
Delivery to an address or facsimile number other than those listed above will
not constitute a valid delivery.
FEES AND EXPENSES
We will bear all expenses of the exchange offer. The principal solicitation
pursuant to the exchange offer is being made by mail. Additional solicitations
may be made by our officers and regular employees and our affiliates in person,
by telegraph, telephone or facsimile transmission.
We have not retained any dealer-manager in connection with the exchange offer
and will not make any payments to brokers, dealers or other persons soliciting
acceptances of the exchange offer. We will, however, pay the Exchange Agent
reasonable and customary fees for its services and will reimburse the Exchange
Agent for its reasonable out-of-pocket costs and expenses in connection
therewith and will indemnify the Exchange Agent for all losses and claims
incurred by it as a result of the exchange offer. We may also pay brokerage
houses and other custodians, nominees and fiduciaries the reasonable out-of-
pocket expenses incurred by them in forwarding copies of this Prospectus,
Letters of Transmittal and related documents to the beneficial owners of the
Restricted Drs. and in handling or forwarding tenders for exchange.
We will pay any transfer taxes applicable to the exchange of Restricted Drs.
pursuant to the exchange offer. If, however, a transfer tax is imposed for any
reason other than the exchange of Restricted Drs. pursuant to the exchange
offer, then the amount of any such transfer taxes (whether imposed on the
registered holder thereof or any other person) will be payable by the tendering
holder. For example, the tendering holder will pay transfer taxes, if:
. Exchange Drs. for principal amounts not tendered, or accepted for
exchange are to be registered or issued in the name of, any person
other than the registered holder of the Restricted Drs.
tendered; or
. tendered Restricted Drs. are registered in the name of any person
other than the person signing the Letter of Transmittal.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed by Rite Aid directly to such tendering holder.
ACCOUNTING TREATMENT
The Exchange Drs. will be recorded at the same carrying value as the Restricted
Drs., which is the principal amount as reflected in our accounting records on
the date of the exchange. Accordingly, no gain or loss for accounting purposes
will be recognized. The expenses of the exchange offer will be capitalized for
accounting purposes. Such expenses will be classified as prepaid expenses and
included in other assets on the balance sheet. The expenses will be amortized
over the period until the Remarketing Date.
CONSEQUENCES OF A FAILURE TO EXCHANGE RESTRICTED DRS.
As a result of the making of, and upon acceptance for exchange of all validly
tendered Restricted Drs. pursuant to the terms of, this exchange offer, we will
have fulfilled certain covenants contained in the Exchange and Registration
Rights Agreement. Holders of Restricted Drs. who do not tender their Restricted
Drs. in the Exchange Offer will continue to hold such Restricted Drs. and will
be entitled to all the rights, and subject to the limitations applicable
thereto, under the Indenture and the Exchange and Registration Rights Agreement,
except for any such rights under the Exchange and Registration Rights Agreement
that by their terms terminate or cease to have further effect as a result of the
consummation of this exchange offer.
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<PAGE>
All untendered Restricted Drs. will continue to be subject to the restrictions
on transfer set forth in the Indenture. Accordingly, after the completion of the
exchange offer, you will only be able to offer for sale, sell or otherwise
transfer untendered Restricted Drs. as follows:
. to Rite Aid;
. pursuant to a registration statement that has been declared
effective under the Securities Act;
. for so long as the Restricted Drs. are eligible for resale pursuant
to Rule 144A under the Securities Act, to a person you reasonably
believe is a qualified institutional buyer within the meaning of
Rule 144A, that purchases for its own account or for the account of
a qualified institutional buyer to whom notice is given that the
transfer is being made in reliance on the exemption from the
registration requirements of the Securities Act provided by Rule
144A;
. pursuant to offers and sales that occur outside the United States
to foreign persons in transactions complying with the provisions of
Regulation S under the Securities Act; or
. pursuant to any other available exemption from the registration
requirements of the Securities Act.
To the extent that Restricted Drs. are tendered and accepted in the exchange
offer, the liquidity of the trading market for untendered Restricted Drs. could
be adversely affected.
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<PAGE>
DESCRIPTION OF THE DRS.
The form and terms of the Exchange Drs. are the same as the form and terms of
the Restricted Drs. except that the Exchange Drs. will have been registered
under the Securities Act and thus will not bear restrictive legends restricting
their transfer pursuant to the Securities Act. The Restricted Drs. have been,
and the Exchange Drs. are to be, issued under an Indenture, dated as of
September 22, 1998 (the "Indenture"), among the Company and Harris Trust and
Savings Bank, as trustee (the "Trustee").
The following summary of certain provisions of the Indenture is not complete and
is subject to, and is qualified in its entirety by reference to, the Trust
Indenture Act and to all of the provisions of the Indenture, including the
definitions of certain terms therein and those terms made a part of the
Indenture by reference to the Trust Indenture Act. Nevertheless, all material
provisions of the Indenture are summarized in the following discussion. We have
filed a copy of the Indenture as an exhibit to the Registration Statement of
which this Prospectus is a part and additional copies are available upon
request.
GENERAL
The Drs. are limited to $200,000,000 in aggregate principal amount. The
Restricted Drs. are, and the Exchange Drs. will be, unsecured obligations of
Rite Aid and will rank equally with all our other unsecured and unsubordinated
obligations. The Exchange Drs. will be issued only in fully registered form,
without coupons, in denominations of $1,000 or any integral multiple
thereof.
The Restricted Drs. bear, and the Exchange Drs. will bear, interest at an annual
rate of 6% to October 1, 2003 (the "Remarketing Date"). If J.P. Morgan
Securities Inc., as Remarketing Dealer (the "Remarketing Dealer"), elects to
remarket the Drs., then after the Remarketing Date, the interest rate on the
Drs. will be reset at a fixed rate until October 1, 2013 (the "Stated Maturity
Date"), as determined by the Remarketing Dealer based on bids requested from
dealers in the Company's publicly-traded debt. See "--Mandatory Tender of Drs.;
Remarketing." The Exchange Drs. will bear interest from the last payment date on
which interest was paid on the Restricted Drs. surrendered in exchange therefor
or, if no interest has been paid on the Restricted Drs., from September 22,
1998, payable semi-annually on April 1 and October 1 of each year or if any such
date is not a Business Day, on the next succeeding Business Day (each, an
"Interest Payment Date"), commencing April 1, 1999, to the persons in whose name
the Exchange Drs. are registered on the fifteenth calendar day (whether or not a
Business Day) immediately preceding the related Interest Payment Date (each, a
"Record Date"). "Business Day" means any day other than a Saturday, a Sunday or
a day on which banking institutions in The City of New York or in the city in
which the Trustee is located (Chicago, Illinois on the date of the Indenture)
are authorized or obligated by law, executive order or governmental decree to be
closed.
The Drs. will mature on the Stated Maturity Date. However, if the Remarketing
Dealer elects to remarket the Drs., then the Drs. will be subject to mandatory
tender to the Remarketing Dealer, for purchase at 100% of the principal amount
thereof on the Remarketing Date on the terms and subject to the conditions
described herein. See "--Mandatory Tender of Drs.; Remarketing." If the
Remarketing Dealer does not elect to exercise its right to a mandatory tender of
the Drs., or for any reason does not purchase all of the Drs. on the Remarketing
Date, then holders are required to tender, and we are required to repurchase,
any Drs. that have not been purchased by the Remarketing Date from the holders
thereof at 100% of the principal amount thereof plus accrued interest, if any.
See "--Repurchase." We may redeem the Drs. on the Remarketing Date on the terms
described under "--Redemption."
The Exchange Drs. will be issued in the form of one or more registered global
securities and will be deposited with, or on behalf of, DTC and registered in
the name of DTC or its nominee. See "--Book-Entry System."
Although the United States federal income tax treatment of the Drs. is not
certain, the terms of the Drs. provide that Rite Aid and all holders of the Drs.
agree to treat the Drs. as fixed rate debt instruments that mature on the
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<PAGE>
Remarketing Date for United States federal income tax purposes. See "United
States Federal Income Tax Considerations."
MANDATORY TENDER OF DRS.; REMARKETING
The following description sets forth the terms and conditions of the remarketing
of the Drs., if the Remarketing Dealer elects to purchase the Drs. on the
Remarketing Date for remarketing.
Mandatory Tender
If the Remarketing Dealer gives notice to us and the Trustee on a Business Day
not later than five Business Days prior to the Remarketing Date (the
"Notification Date") of its intention to purchase all of the Drs. for
remarketing, all outstanding Drs. will be automatically tendered to the
Remarketing Dealer for purchase on the Remarketing Date, except in the
circumstances described under "--Repurchase" or "--Redemption" below. The
purchase price of the Drs. will be equal to 100% of the principal amount
thereof. When the Drs. are tendered for remarketing, the Remarketing Dealer may
remarket the Drs. for its own account at varying prices to be determined by the
Remarketing Dealer at the time of each sale or may sell such Drs. to the
Reference Corporate Dealer (defined below) submitting the lowest firm, committed
bid on the Determination Date, as described below.
If the Remarketing Dealer elects to remarket the Drs., then from and including
the Remarketing Date to but excluding the Stated Maturity Date, the Drs. will
bear interest at the Interest Rate to Maturity (defined below). The obligation
of the Remarketing Dealer to purchase the Drs. on the Remarketing Date is
subject to several conditions set forth in a Remarketing Agreement between Rite
Aid and the Remarketing Dealer (the "Remarketing Agreement"). In addition, the
Remarketing Dealer may terminate the Remarketing Agreement upon the occurrence
of certain events set forth therein. See "--The Remarketing Dealer." If for any
reason the Remarketing Dealer does not purchase all outstanding Drs. on the
Remarketing Date, then we will be required on the Remarketing Date to repurchase
any Drs. that have not been purchased by the Remarketing Dealer from the holders
thereof at a price equal to the principal amount thereof plus all accrued
interest, if any. See "--Repurchase" below.
The Remarketing Dealer shall determine the interest rate that the Drs. will bear
from the Remarketing Date to the Stated Maturity Date (the "Interest Rate to
Maturity") on the third Business Day immediately preceding the Remarketing Date
(the "Determination Date") by soliciting by 3:30 p.m., New York City time, the
Reference Corporate Dealers (defined below) for firm, committed bids to purchase
all outstanding Drs. at the Dollar Price (defined below), and by selecting the
lowest such firm, committed bid (regardless of whether each of the Reference
Corporate Dealers actually submits a bid). Each bid shall be expressed in terms
of the Interest Rate to Maturity that the Drs. would bear (quoted as a spread
over 4.93% per annum (the "Base Rate")) based on the following assumptions:
(i) the Drs. would be sold to the Reference Corporate Dealer on the
Remarketing Date for settlement on the same day;
(ii) the Drs. would mature on the Stated Maturity Date; and
(iii) the Drs. would bear interest from the Remarketing Date at the
Interest Rate to Maturity bid by such Reference Corporate Dealer,
payable semiannually on the Interest Payment Dates for the Drs.
The Interest Rate to Maturity announced by the Remarketing Dealer as a result of
such process will be quoted to the nearest one hundred-thousandth (0.00001) of
one percent per annum and, absent manifest error, will be binding and conclusive
upon the holders of the Drs., Rite Aid and the Trustee. The Remarketing Dealer
shall have the discretion to select the time at which the Interest Rate to
Maturity is determined on the Determination Date.
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<PAGE>
"Comparable Treasury Issue" means the United States Treasury security selected
by the Remarketing Dealer as having an actual maturity on the Determination Date
(or the United States Treasury securities selected by the Remarketing Dealer to
derive an interpolated maturity on such Determination Date) comparable to the
remaining term of the Drs. The United States Treasury security selected by the
Remarketing Dealer will be based on the standard market convention for the
benchmark used in the swap market to settle an option on the 10-year then
on-the-run Treasury security.
"Comparable Treasury Price" means (a) the offer price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount) on the
Determination Date, as set forth on Telerate Page 500 (defined below), adjusted
to reflect settlement on the Remarketing Date if prices quoted on Telerate Page
500 are for settlement on any date other than the Remarketing Date, or (b) if
such page (or any successor page) is not displayed or does not contain such
offer prices on such Business Day, then (i) the average of such Reference
Treasury Dealer Quotations for such Remarketing Date, after excluding the
highest and lowest of such Reference Treasury Dealer Quotations (unless there is
more than one highest or lowest quotation, in which case only one such highest
and/or lowest quotation shall be excluded), or (ii) if the Remarketing Dealer
obtains fewer than four such Reference Treasury Dealer Quotations, the average
of all such Reference Treasury Dealer Quotations. The Remarketing Dealer shall
have the discretion to select the time at which the Comparable Treasury Price is
determined on the Determination Date and the number of Reference Treasury Dealer
Quotations (which shall be at least three) to be obtained.
"Dollar Price" means the discounted present value to the Remarketing Date of the
cash flows on a bond (x) with a principal amount equal to the aggregate
principal amount of the initially issued Drs., (y) maturing on the Stated
Maturity Date and (z) bearing interest from the Remarketing Date, payable semi-
annually (assuming a 360-day year consisting of twelve 30-day months) on the
Interest Payment Dates of the Drs. at a rate equal to the Base Rate, using a
discount rate equal to the Treasury Rate (defined below).
"Reference Corporate Dealer" means J.P. Morgan Securities Inc. and four other
leading dealers of publicly-traded debt securities of the Company acceptable to
J.P. Morgan Securities Inc. and the Company.
"Reference Treasury Dealer" means a primary U.S. Government securities dealer in
The City of New York (which may include the Remarketing Dealer) selected by the
Remarketing Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer, the offer price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) for settlement on the Remarketing Date,
quoted in writing to the Remarketing Dealer by such Reference Treasury Dealer by
3:30 p.m., New York City time, on the Determination Date.
"Telerate Page 500" means the display designated as "Telerate Page 500" on Dow
Jones Markets Limited (or such other page as may replace Telerate Page 500 on
such service) or such other service displaying the offer price specified in
clause (a) of the definition of Comparable Treasury Price as may replace Dow
Jones Markets Limited.
"Treasury Rate" means the annual rate equal to the semi-annual equivalent yield
to maturity or interpolated (on a 30/360 day count basis) yield to maturity on
the Determination Date of the Comparable Treasury Issue for value on the
Remarketing Date, assuming a price for the Comparable Treasury Issue (expressed
as a percentage of its principal amount) equal to the Comparable Treasury Price.
Notification of Results; Settlement
If the Remarketing Dealer has elected to remarket the Drs. as provided herein,
then the Remarketing Dealer will notify us, the Trustee and DTC by telephone,
confirmed in writing, by 5:00 p.m., New York City time, on the Determination
Date, of the Interest Rate to Maturity.
All of the Drs. will be automatically delivered to the account of the Trustee
by book-entry through DTC, pending payment of the purchase price therefor, on
the Remarketing Date.
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<PAGE>
The Remarketing Dealer will make, or cause the Trustee to make, payment to DTC
by the close of business on the Remarketing Date against delivery through DTC of
the Drs., of the purchase price for all of the Drs. tendered. The purchase price
of the Drs. will be equal to 100% of the principal amount thereof. If the
Remarketing Dealer does not purchase all of the Drs. on the Remarketing Date,
then we are obliged to make or cause to be made such payment for all of the Drs.
not purchased by the Remarketing Dealer, as described below under "--
Repurchase." In any case, we will make, or cause the Trustee to make, payment of
interest due on the Remarketing Date to holders of Drs. by book-entry through
DTC by the close of business on the Remarketing Date.
The tender and settlement procedures described above may be modified without the
consent of the holders of the Drs. to the extent required by DTC or, if the
book-entry system is no longer available for the Drs. at the time of the
remarketing,to the extent required to facilitate the tendering and remarketing
of Drs. in certificated form. In addition, the Remarketing Dealer may modify
without the consent of the holders of the Drs. the settlement procedures set
forth above in order to facilitate the settlement process.
As long as DTC's nominee holds the certificates representing any Drs. in the
book-entry system of DTC, no certificates for such Drs. will be delivered by any
selling beneficial owner to reflect any transfer of such Drs. effected in the
remarketing. In addition, under the terms of the Drs. and the Remarketing
Agreement, we have agreed that (i) we will use our best efforts to maintain the
Drs. in book-entry form with DTC or any successor thereto and to appoint a
successor depository to the extent necessary to maintain the Drs. in book-entry
form and (ii) we will waive any discretionary right that it otherwise has under
the Indenture to cause the Drs. to be issued in certificated form.
For further information with respect to transfers and settlement through DTC,
see "--Book-Entry System" below.
The Remarketing Dealer
Rite Aid and the Remarketing Dealer have entered into a Remarketing Agreement
which provides for the Drs. to be remarketed substantially on the terms
described below and in "--Mandatory Tender of Drs.; Remarketing." The
Remarketing Dealer will not receive any fees or reimbursement of expenses from
us in connection with the remarketing but will be entitled to reimbursement of
out-of-pocket expenses under certain circumstances.
We have agreed to indemnify the Remarketing Dealer against certain liabilities,
including liabilities under the Securities Act, arising out of or in connection
with its duties under the Remarketing Agreement.
If the Remarketing Dealer elects to remarket the Drs. as described herein, the
obligation of the Remarketing Dealer to purchase Drs. from holders thereof will
be subject to several conditions set forth in the Remarketing Agreement. In
addition, the Remarketing Agreement provides for its termination by the
Remarketing Dealer on or before the Remarketing Date, upon the occurrence of
certain events that would customarily give underwriters the right to terminate
an underwriting agreement or would give rise to a failure to satisfy a closing
condition to an underwriting agreement in Rite Aid's public debt offerings. The
Remarketing Agreement also provides that the Remarketing Dealer may resign at
any time as Remarketing Dealer, such resignation to be effective ten Business
Days after the delivery to Rite Aid and the Trustee of notice of such
resignation. In such case, we shall have the right, but not the obligation, to
appoint a successor Remarketing Dealer.
As a result of these conditions and termination rights and the Remarketing
Dealer's right to resign, holders of Drs. cannot be assured that their Drs. will
be purchased by the Remarketing Dealer in connection with a mandatory tender. No
holder of any Drs. shall have any rights or claims under the Remarketing
Agreement or against the Company or the Remarketing Dealer as a result of the
Remarketing Dealer not purchasing such Drs. If the Remarketing Dealer does not
purchase all of the Drs. on the Remarketing Date, we will be required to
purchase on the Remarketing Date any Drs. that have not been purchased by the
Remarketing Dealer at a price equal to 100% of the principal amount thereof plus
accrued interest, if any. See "--Repurchase."
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<PAGE>
The Remarketing Dealer, in its individual or any other capacity, may buy, sell,
hold and deal in any of the Drs. The Remarketing Dealer may exercise any vote or
join in any action which any holder of Drs. may be entitled to exercise or take
with like effect as if it did not act in any capacity under the Remarketing
Agreement.
The Remarketing Dealer, in its individual capacity, either as principal or
agent, may also engage in or have an interest in any financial or other
transaction with Rite Aid as freely as if it did not act in any capacity under
the Remarketing Agreement.
REPURCHASE
If the Remarketing Dealer for any reason does not purchase all of the Drs. on
the Remarketing Date, all holders are required to tender, and we shall
repurchase on the Remarketing Date, any Drs. that have not been purchased by the
Remarketing Dealer, at a price equal to 100% of the principal amount of the Drs.
plus all accrued and unpaid interest, if any, on such Drs. to (but excluding)
the Remarketing Date.
REDEMPTION
If the Remarketing Dealer has elected to remarket the Drs. on the Remarketing
Date, we shall have the right to redeem the Drs., in whole but not in part, from
the Remarketing Dealer on the Remarketing Date at a redemption price equal to
the greater of (i) 100% of the aggregate principal amount of the Drs. and (ii)
the Dollar Price, by giving notice of such redemption to the Remarketing
Dealer:
(x) no later than the Business Day immediately prior to the
Determination Date, or
(y) if fewer than three Reference Corporate Dealers timely submit
firm, committed bids for all outstanding Drs. to the Remarketing
Dealer on the Determination Date, immediately after the deadline
set by the Remarketing Dealer for receiving such bids has
passed.
In either such case, we shall pay such redemption price for the Drs. in same-day
funds by wire transfer on the Remarketing Date to an account designated by the
Remarketing Dealer.
OPTIONAL REDEMPTION AFTER THE REMARKETING DATE
After the Remarketing Date, if the Remarketing Dealer has elected to remarket
the Drs. on the Remarketing Date, the Drs. will be redeemable (a "Post-
Remarketing Redemption"), in whole or in part, at our option at any time at a
redemption price equal to the greater of (i) 100% of the principal amount of
such Drs. or (ii) the sum of the present values of the remaining scheduled
payments of principal and interest thereon (not including the portion of any
such payments of interest accrued as of the redemption date) discounted to the
redemption date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate (as defined below)
(determined on the third Business Day preceding such redemption date), plus, in
each case, accrued and unpaid interest thereon to (but excluding) the redemption
date.
Notice of any Post-Remarketing Redemption will be mailed at least 30 days but
not more than 60 days before the redemption date to each holder of the Drs. to
be redeemed. Unless we default in payment of the redemption price, on and after
the redemption date, interest will cease to accrue on the Drs. or portions
thereof called in connection with a Post-Remarketing Redemption.
"Adjusted Treasury Rate" means (i) the arithmetic mean of the yields under the
heading "Week Ending" published in the Statistical Release most recently
published prior to the date of determination under the caption "Treasury
Constant Maturities" for the maturity (rounded to the nearest month)
corresponding to the remaining life to the maturity, as of the redemption date,
of the principal being redeemed, plus (ii) 0.20%. If no maturity set forth under
such heading exactly corresponds to the maturity of such principal, yields for
the two published maturities most closely corresponding to the maturity of such
principal shall be calculated pursuant to the immediately preceding
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<PAGE>
sentence, and the Adjusted Treasury Rate shall be interpolated or extrapolated
from such yields on a straight-line basis, rounding in each of the relevant
periods to the nearest month.
"Statistical Release" means the statistical release designated "H.15(519)" or
any successor publication which is published weekly by the Federal Reserve
System and which establishes yields on actively-traded United States government
securities adjusted to constant maturities, or, if such statistical release is
not published at the time of any determination under the terms of the Drs., then
such other reasonably comparable index which shall be designated by Rite
Aid.
COVENANTS APPLICABLE TO DRS.
Absence of Certain Protections in the Indenture
The Indenture does not contain any provisions that permit the holders of the
Drs. to require prepayment in the event of a change in the management or control
of Rite Aid, or that afford holders of the Drs. protection in the event of a
highly leveraged transaction, reorganization, restructuring, merger or similar
transaction involving Rite Aid that may adversely affect holders of the Drs.
(except to the limited extent that the covenants described below might affect
our ability to consummate such transactions).
General
The various restrictive provisions of the Indenture applicable to Rite Aid and
its Restricted Subsidiaries do not apply to Unrestricted Subsidiaries. The
assets and indebtedness of Unrestricted Subsidiaries are not consolidated with
those of Rite Aid and its Restricted Subsidiaries in calculating Consolidated
Net Tangible Assets under the Indenture, and investments by Rite Aid 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 at least 99% of the outstanding voting stock of which
(except directors' qualifying shares) is owned by Rite Aid and its other Wholly-
owned Restricted Subsidiaries. A "Subsidiary" is a corporation more than 50% of
the outstanding voting stock is owned, directly or indirectly, by Rite Aid or an
entity other than a corporation of which Rite Aid has, directly or indirectly,
the majority ownership and the power to direct the management. (Section
1.01)
An Unrestricted Subsidiary may not be designated a Restricted Subsidiary if it
has any Secured Debt, Funded Debt or Attributable Debt in respect of Sale and
Leaseback Transactions, except such debt as the Company would be permitted to
incur under the terms of the Indenture, immediately after such Unrestricted
Subsidiary becomes a Restricted Subsidiary. (Section 10.11(a))
Restrictions Upon Secured Debt
Neither Rite Aid 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 Drs. This restriction
does not apply to certain permitted encumbrances described in the Indenture,
including purchase money mortgage encumbrances existing on property at the time
it is acquired by Rite Aid or a Restricted Subsidiary, conditional sales and
similar agreements, and the extension, renewal or refunding of any of the
foregoing and any Secured Debt of a Restricted Subsidiary owing to Rite Aid or a
Wholly-owned Restricted Subsidiary. Section 10.10(d) of the 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 Rite Aid or a Restricted Subsidiary not more
than 24 months prior to the date such transaction is entered into), and
unsecured Funded Debt of Restricted Subsidiaries (excluding unsecured Funded
Debt incurred through extension, refund or renewal where Consolidated
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Funded Debt was not thereby increased and excluding any Funded Debt owed to Rite
Aid or a Wholly-owned Restricted Subsidiary), incurred or entered into, as the
case may be, after the date of the Indenture, would not at the time exceed 20%
of the Consolidated Net Tangible Assets of Rite Aid and its Restricted
Subsidiaries. (Section 10.10)
Under the Indenture (Section 1.01):
(1) "Consolidated Net Tangible Assets" means the total amount of
assets on a consolidated balance sheet of Rite Aid 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 (a) 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 (b)
goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangibles;
(2) "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 (a) indebtedness for which
money in satisfaction thereof has been deposited in trust, (b)
certain guarantees arising in the ordinary course of business
and (c) liabilities resulting from capitalization of lease
rentals;
(3) "Secured Debt" means indebtedness for money borrowed which is
secured by a lien or other encumbrance on property of Rite Aid
or any Restricted Subsidiary, excluding certain guarantees
arising in the ordinary course of business; and
(4) "Attributable Debt" means as to any Sale and Leaseback
Transaction (as defined below), in the case of a capital lease,
the amount of the capital lease obligation thereunder and in all
other cases, the present value of the minimum remaining rental
obligation discounted at the interest factor included in the
rental payment.
Restrictions Upon Sales with Leases Back
We are not permitted, and may not permit a Restricted Subsidiary, to sell or
transfer (except to Rite Aid or one or more Wholly-owned Restricted
Subsidiaries) any manufacturing plant, warehouse, retail store or equipment
owned and operated by Rite Aid or a Restricted Subsidiary on or after the date
of the Indenture with the intention that Rite Aid 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 (any such transaction, a
"Sale and Leaseback Transaction"), except (i) where Rite Aid would be entitled
under Section 10.10(d) of the Indenture to incur additional secured indebtedness
not otherwise specifically permitted by the 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 Rite Aid or a Restricted Subsidiary within 24 months of such acquisitions or
(iii) where Rite Aid 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 10.09)
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Restrictions Upon Funded Debt of Restricted Subsidiaries
Restricted Subsidiaries are prohibited from becoming liable for any unsecured
Funded Debt except where we would be entitled under Section 10.10(d) of the
Indenture to incur additional secured indebtedness not otherwise specifically
permitted by the Indenture in an amount equal to such Funded Debt and except for
certain extensions, refundings and renewals of Funded Debt and Funded Debt owing
to Rite Aid or a Wholly-owned Restricted Subsidiary. (Section 10.08)
Restrictions Upon Merger and Sale of Assets
The Indenture provides that no merger of Rite Aid with or sale of Rite Aid's
property substantially as an entirety to any other corporation shall be made if,
as a result, our properties or assets would become subject to a mortgage, lien
or other encumbrance which would not be permitted by the Indenture, unless the
Drs. shall be equally and ratably secured with such obligations. Any successor
entity must be a corporation organized in the United States, assume the payment
of the principal and interest on the Drs. and the performance of every covenant
under the Indenture and, immediately after giving effect to a merger or a
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 8.01)
Although the amount of our 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 us, and we
will give notice of such occurrence to the holders of the Drs. 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
our determination. If such a transaction occurs, the person to which such amount
of our 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 Rite Aid only
with the consent of the holders of not less than a majority in aggregate
principal amount of the outstanding Drs.; 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 or reducing the percentage required for modification will be effective
against any holder without his, her or its consent. (Section 9.02)
EVENTS OF DEFAULT
The Indenture defines an Event of Default with respect to the Drs. as being any
one of the following events:
(i) default in any payment of principal of (or premium, if any)
upon any Drs. when due;
(ii) default for 30 days in any payment of interest upon any Drs.
when due;
(iii) default in the performance of the covenant restricting merger
and sale of assets;
(iv) default for 60 days after appropriate notice in the
performance of any other covenant in the Indenture;
(v) certain events of default resulting in the acceleration of the
maturity of indebtedness aggregating in excess of $10,000,000
under any mortgages, indentures or instruments under which
Rite Aid
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may have issued, or by which there may have been secured or evidenced,
any other indebtedness of Rite Aid; or
(vi) certain events in bankruptcy, insolvency or reorganization.
In case an Event of Default shall occur and be continuing, the Trustee or the
holders of not less than 25% in aggregate principal amount of the Drs. then
outstanding may declare the principal of the Drs. and the accrued interest
thereon, if any, to be due and payable. Any Event of Default with respect to
the Drs. which has been cured may be waived by the holders of a majority in
aggregate principal amount of the Drs. then outstanding. (Sections 5.01, 5.02
and 5.13)
The Indenture requires us to file annually with the Trustee a written statement
signed by an officer 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 6.02 and 10.13)
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 Drs. 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 and 6.03)
DISCHARGE OF CERTAIN OBLIGATIONS AT OUR OPTION
The Indenture provides us with the option to be discharged from any and all
obligations (except for certain obligations to register the transfer or exchange
of Drs., to replace stolen, lost or mutilated Drs., 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 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 such Drs. in accordance with the
terms of the Indenture and such Drs. Such option may only be exercised (i) if
we have received from, or there has been published by, the United States IRS a
ruling to the effect that such a discharge will not be deemed, or result in, a
taxable event with respect to holders of Drs., (ii) there is no Event of Default
or event which may become an Event of Default then occurring and (iii) such
action would not cause any outstanding Drs. to become delisted as a result
thereof. (Article 12)
The Indenture also provides us with the option to have the occurrence of events
described in (v) under the heading "--Events of Default" above no longer be
Events of Default and to omit to comply with certain of the covenants described
under the heading "--Certain Restrictions" above. In order to exercise such
option, we will be required to deposit with the Trustee money or U.S. Government
Obligations, 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 such Drs. in
accordance with the terms of the Indenture and such Drs. Additionally, no Event
of Default or event which may become an Event of Default may have occurred and
be continuing on the date of deposit with the Trustee. We will also be required
to deliver to the Trustee an opinion of counsel to the effect that the deposit
and related option not to comply with certain covenants will not cause the
holders of such Drs. to recognize income, gain or loss for federal income tax
purposes. (Article 12)
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EFFECT OF EXERCISE OF DEFEASANCE OPTION
We may exercise the defeasance option with respect to such Drs. notwithstanding
its prior exercise of its covenant defeasance option. If we exercise the
defeasance option, payment of such Drs. may not be accelerated because of an
Event of Default. If we exercise the covenant defeasance option, payment of
such Drs. may not be accelerated by reference to the provisions described in the
preceding paragraph. In the event we omit to comply with our remaining
obligations with respect to such Drs. under the Indenture after exercising the
covenant defeasance option and such Drs. are declared due and payable because of
the occurrence of any Event of Default, the amount of money and U.S. Government
Obligations on deposit with the Trustee may be insufficient to pay amounts due
on the Drs. at the time of the acceleration resulting from such Event of
Default. However, we will remain liable in respect of such payments. (Article
12)
BOOK-ENTRY SYSTEM
The Exchange Drs. will be issued in the form of one or more fully registered
global securities that will be deposited with, or on behalf of, DTC and
registered in the name of DTC's nominee. See "--General."
DTC is a limited-purpose trust company organized under the New York Banking Law,
a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes to Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. DTC Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock Exchange,
Inc., the American Stock Exchange, Inc. and the National Association of
Securities Dealers, Inc. Access to the DTC System is also available to others
such as securities brokers and dealers, banks and trust companies that clear
through or maintain a custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participants"), including Euroclear and Cedel
Bank. The rules applicable to DTC and its Participants are on file with the
Commission.
Payments of principal of, premium, if any, and interest on the Drs. will be made
to Cede & Co., as nominee of DTC. DTC's practice is to credit Direct
Participants' accounts on the related payment date in accordance with their
respective holdings shown on DTC's records. Payments of interest on and
principal of the Drs. held through Euroclear or Cedel Bank will be credited to
the cash accounts of their respective participants in accordance with the
relevant system's rules and procedures. Payments by Participants to beneficial
owners of the Drs. will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers in
bearer form or registered in "street name," and will be the responsibility of
such Participant and not of DTC, the Trustee or any Paying Agent under the
Indenture, or Rite Aid, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of principal and interest to Cede &
Co. is the responsibility of Rite Aid or the Trustee or any Paying Agent,
disbursement of such payments to Direct Participants is the responsibility of
DTC, and disbursement of such payments to the beneficial owners of the Drs. is
the responsibility of Direct and Indirect Participants.
DTC may decide to discontinue providing its services as securities depository
with respect to the Drs. at any time by giving notice to Rite Aid or the
Trustee. Under such circumstances, in the event that a successor securities
depository is not obtained, Drs. certificates are required to be printed and
delivered.
None of Rite Aid, the Trustee, any Paying Agent or any Registrar for the Drs.
will have any responsibility or liability for any aspect of the records
maintained by DTC relating to, or payments made on account of beneficial
ownership interests in, Drs. represented in global form, or for maintaining,
supervising or receiving any records relating to such beneficial ownership
interests maintained by DTC.
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CONCERNING THE TRUSTEE
Harris Trust and Savings Bank is the Trustee under the Indenture and has been
appointed by Rite Aid as the initial registrar and paying agent with respect to
the Drs.
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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
INTRODUCTION
The following discussion describes the material U.S. federal income tax
consequences of the purchase, ownership and disposition of the Drs. to initial
holders purchasing Drs. at their "issue price." The "issue price" of the Drs.
is the first price to the public (not including bond houses, brokers or similar
persons or organizations acting in the capacity of underwriters, placement
agents or wholesalers) at which a substantial amount of the Drs. is sold for
money. This summary is based upon laws, regulations, rulings and decisions
currently in effect, all of which are subject to change, which change may be
retroactive. Moreover, it deals only with purchasers who hold Drs. as "capital
assets" within the meaning of Section 1221 of the Internal Revenue Code of 1986,
as amended (the "Code"), and does not purport to deal with persons in special
tax situations, such as financial institutions, insurance companies, regulated
investment companies, dealers in securities or currencies, persons holding Drs.
as a hedge against currency risk or as a position in a "straddle," "conversion
transaction" or another integrated transaction for tax purposes, or U.S. Holders
(as defined below) whose functional currency is not the U.S. dollar. In
addition, this discussion only addresses the U.S. federal income tax
consequences of the Drs. for the period ending on the Remarketing Date.
Although the following discussion does not purport to describe all of the tax
considerations that may be relevant to a prospective purchaser of Drs., in the
opinion of Morgan, Lewis & Bockius LLP, tax counsel to Rite Aid, subject to
the qualifications and limitations set out herein, the discussion below
describes the material U.S. federal income tax considerations of an investment
in the Drs. to a U.S. Holder (as defined below) or, as the case may be, to a
non-U.S. Holder (as defined below). Opinions of tax counsel have no binding
effect or official status of any kind; no assurance can be given that the
conclusions set out below would be sustained by a court if challenged by the
IRS.
As used herein, the term "U.S. Holder" means a beneficial owner of Drs. that is,
for U.S. federal income tax purposes, (i) an individual citizen or resident of
the United States, (ii) a corporation created or organized in or under the laws
of the United States or of any political subdivision thereof or (iii) an estate
or trust the income of which is subject to U.S. federal income tax regardless of
its source. As used herein, the term "non-U.S. Holder" means a beneficial owner
of Drs. that is, for U.S. federal income tax purposes, (i) a nonresident alien
individual, (ii) a foreign corporation or (iii) a nonresident alien fiduciary of
a foreign estate or trust.
Because the Drs. are subject to mandatory tender to the Remarketing Dealer or
repurchase by Rite Aid on the Remarketing Date, the Company intends to treat
the Drs. as maturing on the Remarketing Date for U.S. federal income tax
purposes and as being reissued on the Remarketing Date should the Remarketing
Dealer remarket the Drs. By purchasing the Drs., a holder agrees to follow such
treatment for U.S. federal income tax purposes. However, because no debt
instrument closely comparable to the Drs. has been the subject of any Treasury
regulation, revenue ruling or judicial decision, the U.S. federal income tax
treatment of the Drs. is not certain, and tax counsel is unable to opine that
the Drs. should be treated as maturing on the Remarketing Date. In addition, no
ruling on any of the issues discussed below will be sought from the IRS.
Accordingly, significant aspects of the U.S. federal income tax consequences of
an investment in the Drs. are uncertain, and no assurance can be given that the
IRS or the courts will agree that the Drs. should be treated as maturing on the
Remarketing Date. Prospective purchasers are strongly urged to consult their
own tax advisors regarding the U.S. federal income tax consequences of an
investment in the Drs. (including alternative characterizations of the Drs.).
Except where indicated to the contrary, the following discussion assumes that
Rite Aid's treatment of the Drs. will be respected for U.S. federal income tax
purposes. Prospective purchasers should also consult their own tax advisors
with respect to any tax consequences arising under the laws of any state, local
or foreign taxing jurisdiction.
TAX TREATMENT OF THE DRS.
Assuming the characterization of the Drs. set forth above, it is the opinion of
tax counsel that the following tax consequences will result to U.S.
Holders.
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Exchange Offer
The exchange of Restricted Drs. for Exchange Drs. in the Exchange Offer will not
constitute a taxable event to U.S. Holders. Consequently, (i) no gain or loss
will be realized by a U.S. Holder upon receipt of an Exchange Drs.; (ii) the
holding period of the Exchange Drs. will include the holding period of the
Restricted Drs. exchanged therefor; and (iii) the adjusted tax basis of the
Exchange Drs. will be the same as the adjusted tax basis of the Restricted Drs.
exchanged therefor immediately before the exchange.
Interest Income
Interest on the Drs. will be taxable as ordinary income for U.S. federal income
tax purposes when received or accrued by a U.S. Holder in accordance with its
method of accounting for tax purposes.
Gain or Loss on Sale or Retirement
When a Drs. is sold or retired, the U.S. Holder will recognize gain or loss
equal to the difference between the amount realized on the sale or retirement
(excluding any amount attributable to accrued interest, which will be taxable as
such) and the adjusted tax basis of the Drs. in the hands of the U.S. Holder.
The adjusted tax basis of the Drs. generally will equal the U.S. Holder's cost,
reduced by the principal payments previously received with respect to the Drs.
Gain or loss on sale or retirement of a Drs. will be capital gain or loss.
ALTERNATIVE U.S. FEDERAL INCOME TAX TREATMENT
As discussed above, there can be no assurance that the IRS will agree with, or
that a court will uphold, Rite Aid's treatment of the Drs. as maturing on the
Remarketing Date and as thereafter being reissued should the Drs. be remarketed,
and it is possible that the IRS could assert another characterization. In
particular, the IRS could seek to treat the Drs. as maturing on the Stated
Maturity Date. Because of the possible remarketing and reset, if the Drs. were
treated as maturing on the Stated Maturity Date, then Treasury regulations
relating to contingent payment debt obligations (the "Contingent Payment Debt
Regulations") would apply. In such case, the timing and character of income on
the Drs. would be significantly affected. Among other things, U.S. Holders,
regardless of their usual method of tax accounting, would be required to accrue
income annually as original issue discount, subject to the adjustments described
below, at a "comparable yield" on the adjusted issue price, which could be
higher than the actual cash payments received on the Drs. in a taxable year. In
addition, the Contingent Payment Debt Regulations require that a projected
payment schedule be determined, and that adjustments to income accruals be made
to account for differences between actual payments and projected payments.
Furthermore, any gain realized with respect to the Drs. generally would be
treated as ordinary interest income, and any loss realized generally would be
treated as ordinary loss to the extent of the U.S. Holder's ordinary income
inclusions with respect to the Drs. Any remaining loss generally would be
treated as capital loss.
In addition, the IRS could, in connection with the treatment of the Drs. as a
contingent payment debt instrument maturing on the Stated Maturity Date, treat
the holder of the Drs. as receiving consideration from the Remarketing Dealer
(in effect, an option premium) in exchange for the Remarketing Dealer's right to
require mandatory tender of the Drs., in which case the issue price of the Drs.
would be increased by an equal amount. Under that characterization, upon the
sale of a Drs. (other than through the mandatory tender), the IRS could take the
position that the gain or loss with respect to the mandatory tender right and
the gain or loss with respect to the debt instrument must be separately
determined, in which case any deemed loss with respect to the mandatory tender
right would be treated as capital loss, and a corresponding amount of additional
ordinary income would be recognized by the U.S. Holder on the sale of the debt
instrument. The ability to use capital losses to offset ordinary income in
determining taxable income is generally limited.
Prospective purchasers are strongly urged to consult their tax advisors
regarding the U.S. federal income tax consequences of an investment in the Drs.
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TREATMENT OF NON-U.S. HOLDERS
It is the opinion of tax counsel that, subject to the discussion of backup
withholding tax below, a non-U.S. Holder will not be subject to withholding of
U.S. federal income tax on payments of principal of, premium (if any) or
interest (including (i) original issue discount and (ii) accruals, and gain
treated as interest income, under the Contingent Payment Debt Regulations, if
any) on a Drs., unless such non-U.S. Holder owns actually or constructively 10%
or more of the total combined voting power of the stock of Rite Aid, is a
controlled foreign corporation related to Rite Aid through stock ownership or is
a bank receiving interest described in Section 881(c)(3)(A) of the Code.
Sections 871(h) and 881(c) of the Code require that, in order to obtain the
exemption from withholding tax described above, either the beneficial owner of
the Drs., or a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business (a "Financial Institution") and that is holding the Drs. on behalf
of such beneficial owner, file a statement with the withholding agent to the
effect that the beneficial owner of the Drs. is not a U.S. person. In general,
for payments made on or prior to December 31, 1999, such requirement will be
fulfilled if the beneficial owner of a Drs. certifies on IRS Form W-8, under
penalties of perjury, that it is not a U.S. person and provides its name and
address, and any Financial Institution holding the Drs. on behalf of the
beneficial owner files a statement with the withholding agent to the effect
that it has received such statement from the beneficial owner (and furnishes the
withholding agent with a copy thereof).
Generally, a non-U.S. Holder will not be subject to U.S. federal income tax on
any amount which constitutes gain upon retirement or disposition of a Drs.,
provided the gain is not effectively connected with the conduct of a trade or
business in the United States by the non-U.S. Holder. Certain other exceptions
may be applicable, and a non-U.S. Holder should consult its tax advisor in this
regard.
The Drs. will not be includable in the estate of a non-U.S. Holder unless the
individual is a direct or indirect 10% or greater shareholder of Rite Aid or, at
the time of such individual's death, payments in respect of the Drs. would have
been effectively connected with the conduct by such individual of a trade or
business in the United States.
INFORMATION REPORTING AND BACKUP WITHHOLDING
A holder may be subject to backup withholding tax at the rate of 31% of the
interest and other "reportable payments" (including, under certain
circumstances, principal payments and sales proceeds) paid with respect to the
Drs. if, in general, the holder fails to comply with certain certification
procedures and is not an exempt recipient under applicable provisions of the
Code.
On October 6, 1997, the Treasury Department issued new regulations (the "New
Regulations") which make modifications to the withholding tax, backup
withholding tax and information reporting rules described above. The New
Regulations generally will be effective for payments made after December 31,
1999, subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Drs. for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Drs. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of Exchange Drs. received in exchange for Restricted
Drs. where such Restricted Drs. were acquired as a result of market-making
activities or other trading activities. We have agreed that, for a period of
180 days after the Expiration Date, we will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale.
We will not receive any proceeds from any sale of Exchange Drs. by broker-
dealers. Exchange Drs. received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the
27
<PAGE>
Exchange Drs. or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer or the
purchasers of any such Exchange Drs. Any broker-dealer that resells Exchange
Drs. that were received by it for its own account pursuant to the Exchange Offer
and any broker or dealer that participates in a distribution of such Exchange
Drs. may be deemed to be an "underwriter" within the meaning of the Securities
Act and any profit on any such resale of Exchange Drs. and any commission or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a broker-
dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
For a period of 180 days after the Expiration Date we will promptly send
additional copies of this Prospectus and any amendment or supplement to this
Prospectus to any broker-dealer that requests such documents in the Letter of
Transmittal. Rite Aid has agreed to pay all expenses incident to the Exchange
Offer (including the expenses of one counsel for the holders of the Drs.) other
than commissions or concessions of any broker-dealers and will indemnify the
holders of the Drs. (including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the Exchange Drs. will be passed upon for Rite Aid by Morgan,
Lewis & Bockius LLP.
EXPERTS
The consolidated financial statements and schedule of Rite Aid and its
subsidiaries as of February 28, 1998 and March 1, 1997 and for each of the years
in the three-year period ended February 28, 1998, have been incorporated by
reference herein and in the Registration Statement in reliance upon the reports
of KPMG LLP, independent certified public accountants, incorporated
by reference herein, and upon authority of said firm as experts in accounting
and auditing.
With respect to the unaudited interim financial information of Rite Aid and
subsidiaries for the periods ended May 30, 1998, August 29, 1998 and November
28, 1998, incorporated by reference herein, the independent certified public
accountants have reported that they applied limited procedures in accordance
with professional standards for a review of such information. However, their
separate reports included in Rite Aid's quarterly reports on Form 10-Q for the
quarters ended May 30, 1998, August 29, 1998 and November 28, 1998, and
incorporated by reference herein, state that they did not audit and they do not
express an opinion on the interim financial information. Accordingly, the degree
of reliance on their reports on such information should be restricted in light
of the limited nature of the review procedures applied. The accountants are not
subject to the liability provisions of Section 11 of the Securities Act for
their report on the unaudited interim financial information because that report
is not a "report" or a "part" of the registration statement prepared or
certified by the accountants within the meaning of Sections 7 and 11 of the
Securities Act.
28
<PAGE>
RITE AID HAS NOT AUTHORIZED ANY PERSON TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, YOU MUST NOT RELY ON ANY SUCH INFORMATION OR REPRESENTATIONS AS HAVING
BEEN AUTHORIZED BY RITE AID. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS 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 SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
--------------------------------
TABLE OF CONTENTS
PAGE
----
The Company...................................................... 2
Recent Developments.............................................. 2
Available Information............................................ 3
Use of Proceeds.................................................. 4
Ratio of Earnings to Fixed Charges............................... 4
Exchange Offer................................................... 5
Description of the Drs........................................... 14
United States Federal Income Tax Considerations.................. 25
Plan of Distribution............................................. 27
Legal Matters.................................................... 28
Experts.......................................................... 28
RITE AID CORPORATION
_____________________
PROSPECTUS
_____________________
OFFER TO EXCHANGE 6% DEALER
REMARKETABLE SECURITIES/SM/
("DRS./SM/") DUE 2013 FOR
6% DRS. DUE 2013
___________, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides that a
Delaware corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative (a
"proceeding") (other than an action by or in the right of the corporation) by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his or her conduct was unlawful. A Delaware corporation may indemnify any
person under such section in connection with a proceeding by or in the right of
the corporation to procure judgment in its favor, as provided in the preceding
sentence, against expenses (including attorneys' fees) actually and reasonably
incurred by him or her in connection with the defense or settlement of such
action, except that no indemnification shall be made in respect thereof unless,
and then only to the extent that, a court of competent jurisdiction shall
determine upon application that such person is fairly and reasonably entitled to
indemnity for such expenses as the court shall deem proper. A Delaware
corporation must indemnify any person who was successful on the merits or
otherwise in defense of any action, suit or proceeding or in defense of any
claim, issue or matter in any proceeding, by reason of the fact that such person
is or was a director, officer, employee or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees) actually and reasonably
incurred by such person in connection therewith. A Delaware corporation may pay
for the expenses (including attorneys' fees) incurred by an officer or director
in defending a proceeding in advance of the final disposition upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the corporation.
Registrant's Restated Certificate of Incorporation and By-Laws provide
Registrant will indemnify and hold harmless each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such person or a person of whom such person is the legal
representative is or was a director or officer of Registrant or is or was
serving at the request of Registrant as a director or officer of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a director or
officer or in any other capacity while serving as a director or officer shall be
indemnified and held harmless by Registrant to the fullest extent authorized by
the Delaware General Corporation Law as the same exists or may be amended (but,
in the case of any such amendment, only to the extent that such amendment
permits Registrant to provide broader indemnification rights than said law
permitted Registrant to provide prior to such amendment). The indemnity may
include all expense, liability and loss (including attorneys' fees, judgments,
fines, ERISA excise taxes or penalties and amounts paid to be paid in
settlement) reasonably incurred or suffered by
II-1
<PAGE>
such person in connection with such proceeding and such indemnification shall
continue as to a person who has ceased to be a director, officer, employee or
agent of Registrant and shall inure to the benefit of such person's heirs,
executors and administrators.
Section 102(b)(7) of the Delaware General Corporation Law provides that a
Delaware corporation may in its articles of incorporation eliminate or limit the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director except for
liability: for any breach of the director's duty of loyalty to the corporation
or its stockholders; for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; under Section 174
(pertaining to certain prohibited acts including unlawful payment of dividends
or unlawful purchase or redemption of the corporation's capital stock); or for
any transaction from which the director derived an improper personal benefit.
Registrant's Restated Certificate of Incorporation eliminates the liability of
directors for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to
Registrant or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit, and provide that
if the Delaware General Corporation Law is amended to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director of Registrant shall be eliminated or limited to the
fullest extent permitted by the Delaware General Corporation Law, as so amended.
The Delaware General Corporation Law permits the purchase of insurance on
behalf of directors and officers against any liability asserted against
directors and officers and incurred by such persons in such capacity, or arising
out of their status as such, whether or not the corporation would have the power
to indemnify offices and directors against such liability. Registrant's
Restated Certificate of Incorporation allows Registrant to maintain insurance,
at its expense, to protect itself and any director, officer, employee or agent
of Registrant or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not Registrant
would have the power to indemnify such person against such expense, liability or
loss under the Delaware General Corporation Law. Registrant has obtained
liability coverage, which includes coverage to reimburse Registrant for amounts
required or permitted by law to be paid to indemnify directors and officers.
The foregoing summary of the Delaware General Corporation Law, Registrant's
Restated Certificate of Incorporation and Registrant's By-Laws is qualified in
its entirety by reference to the relevant provisions of the Delaware General
Corporation Law and by reference to the relevant provisions of Registrant's
Restated Certificate of Incorporation and the relevant provisions of
Registrant's By-Laws.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following exhibits, as required by Item 601 of Regulation S-K, are
filed as part of this Registration Statement (previously filed except where
otherwise indicated):
4.1 Indenture, dated as of September 22, 1998, by and among Rite Aid
Corporation and Harris Trust and Savings Bank, as Trustee.
4.2 Remarketing Agreement, dated as of September 22, 1998, between Rite
Aid Corporation and J.P. Morgan Securities Inc., as Remarketing
Dealer.
II-2
<PAGE>
<TABLE>
<S> <C>
4.3 Exchange and Registration Rights Agreement, dated as of September
22, 1998, by and among Rite Aid Corporation, J.P. Morgan Securities
Inc., Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated.
5 Opinion of Morgan, Lewis & Bockius LLP as to the legality of the
securities being registered.
8* Opinion of Morgan, Lewis & Bockius LLP with respect to tax
matters.
12* Statement re Computation of Ratio of Earnings to Fixed Charges.
15 Letter re Unaudited Interim Financial Information.
23.1 Consent of Morgan, Lewis & Bockius LLP.
23.2* Consent of Morgan, Lewis & Bockius LLP (contained in Exhibit 8).
23.3* Consent of KPMG LLP.
24 Powers of Attorney.
25 Statement of Eligibility of Harris Trust and Savings Bank, as
Trustee, on Form T-1.
99.1* Form of Letter of Transmittal respecting the offer to exchange 6%
Dealer remarketable securities due 2013 which have been
registered under the Securities Act for 6% Dealer remarketable
securities due 2013.
99.2* Form of Notice of Guaranteed Delivery.
</TABLE>
_____________________
* Filed herewith
(b) Financial Statement Schedules:
Financial Statement Schedules filed herewith:
None applicable.
ITEM 22. UNDERTAKINGS.
(a) (1) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the
II-3
<PAGE>
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(2) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the co-registrants pursuant to the provisions
described under Item 20 or otherwise, the co-registrants have been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities
(other than the payment by a co-registrant of expenses incurred or
paid by a director, officer or controlling person of such co-
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, such co-
registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act
and will be governed by the final adjudication of such issue.
(b) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(c) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Camp
Hill, Commonwealth of Pennsylvania on January 12, 1999.
RITE AID CORPORATION
By:/s/ Martin L. Grass
____________________
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Martin L. Grass Chairman of the Board and January 12, 1999
_____________________________ Chief Executive Officer
Martin L. Grass (Principal Executive Officer)
/s/ Timothy J. Noonan President, Chief Operating January 12, 1999
_____________________________ Officer and Director
Timothy J. Noonan
Executive Vice President and January 12, 1999
/s/ Frank M. Bergonzi Chief Financial and
_____________________________ Accounting Officer
Frank M. Bergonzi (Principal Financial and
Accounting Officer)
/s/ Franklin C. Brown Vice Chairman of the Board January 12, 1999
_____________________________ and Director
Franklin C. Brown
_____________________________ Director
William J. Bratton
* Director January 12, 1999
____________________________
Alex Grass
* Director January 12, 1999
____________________________
Leonard I. Green
* Director January 12, 1999
____________________________
Nancy A. Lieberman
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Director January 12, 1999
___________________________
Philip Neivert
* Director January 12, 1999
___________________________
Leonard N. Stern
Director January 12, 1999
*
___________________________
Preston Robert Tisch
* Director January 12, 1999
___________________________
Gerald Tsai, Jr.
*By /s/ Frank M. Bergonzi
_______________________
Attorney in Fact
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
4.1 Indenture, dated as of September 22, 1998, by and among Rite Aid
Corporation and Harris Trust and Savings Bank, as Trustee.
4.2 Remarketing Agreement, dated as of September 22, 1998, between Rite
Aid Corporation and J.P. Morgan Securities Inc., as Remarketing
Dealer.
4.3 Exchange and Registration Rights Agreement, dated as of September 22,
1998, by and among Rite Aid Corporation, J.P. Morgan Securities Inc.,
Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated.
5 Opinion of Morgan, Lewis & Bockius LLP as to the legality of the
securities being registered.
8* Opinion of Morgan, Lewis & Bockius LLP with respect to tax matters.
12* Statement re Computation of Ratio of Earnings to Fixed Charges.
15 Letter re Unaudited Interim Financial Information.
23.1 Consent of Morgan, Lewis & Bockius LLP.
23.2* Consent of Morgan, Lewis & Bockius LLP (contained in Exhibit 8).
23.3* Consent of KPMG LLP.
24 Powers of Attorney.
25 Statement of Eligibility of Harris Trust and Savings Bank, as Trustee,
on Form T-1.
99.1* Form of Letter of Transmittal respecting the offer to exchange 6%
Dealer remarketable securities due 2013 which have been registered
under the Securities Act for 6% Dealer remarketable securities due
2013.
99.2* Form of Notice of Guaranteed Delivery.
____________________
* Filed herewith
</TABLE>
<PAGE>
EXHIBIT 8
January 12, 1999
Rite Aid Corporation
30 Hunter Lane
Camp Hill, Pennsylvania 17011
Re: Rite Aid Corporation
Registration Statement on Form S-4
----------------------------------
Dear Sirs:
We have acted as United States tax counsel to Rite Aid Corporation
(the "Company") in connection with the preparation of the above-referenced
Registration Statement, and the prospectus forming a part thereof (the
"Prospectus"), relating to the issuance and sale by the Company of its 6% Dealer
remarketable securities/SM/ due October 1, 2013 ("Drs./SM/"). Unless otherwise
defined herein, capitalized terms used herein have the respective meanings
ascribed to those terms in the Prospectus.
In arriving at the opinion expressed below, we have examined and
relied upon the following documents:
(a) the Prospectus;
(b) the Purchase Agreement, dated September 17, 1998, by and among the
Company, and J.P. Morgan Securities Inc. ("JPMSI"), Goldman Sachs
& Co. and Morgan Stanley & Co. Incorporated (the "Initial
Purchasers");
<PAGE>
Rite Aid Corporation
January 12, 1999
Page -2-
(c) the Indenture, dated as of September 22, 1998, between the Company
and Harris Trust and Savings Bank, as Trustee;
(d) the Remarketing Agreement, dated as of September 22, 1998, between
the Company and JPMSI; and
(e) the Exchange and Registration Rights Agreement, dated as of
September 22, 1998, by and among the Company and the Initial
Purchasers.
We have also read and relied upon originals or copies, certified or
otherwise identified to our satisfaction, of such corporate records of the
Company and such certificates and representations of officers and
representatives of the Company, and we have made such investigations of law, as
we have deemed appropriate as a basis for the opinion expressed below. In our
examination, we have assumed the authenticity of original documents, the
accuracy of copies and the genuineness of signatures. We understand and assume
that (i) each agreement represents the valid and binding obligation of the
respective parties thereto, enforceable in accordance with its respective terms,
and the entire agreement between the parties with respect to the subject matter
thereof, (ii) the parties to each agreement have complied, and will comply, with
all of their respective covenants, agreements and undertakings contained therein
and (iii) the transactions provided for by each agreement were and will be
carried out in accordance with their terms.
Our opinion is based upon existing federal income tax laws,
regulations, administrative pronouncements and judicial decisions. All such
authorities are subject to change, either prospectively or retroactively. No
assurance can be provided as to the effect of any such change upon our opinion.
The opinion set forth herein has no binding effect on the Internal
Revenue Service or the courts. No assurance can be given that, if the matter
were contested, a court would agree with the opinion set forth herein.
Based upon the foregoing, we advise you that in our opinion, except as
to factual matters and subject to the qualifications and limitations set out in
the Prospectus, the material United States federal income tax considerations of
an investment in the Drs. are as set out in the Prospectus under the caption
"United States Federal Income Tax Considerations."
<PAGE>
Rite Aid Corporation
January 12, 1999
Page -3-
In giving the foregoing opinion, we express no opinion other than as
to the federal income tax law of the United States of America.
We are furnishing this letter in our capacity as United States tax
counsel to the Company, and this letter is solely for the benefit of the
Company. This letter is not to be used, circulated, quoted or otherwise
referred to for any other purpose, except as set forth below.
We hereby consent to the reference to our firm under the caption
"United States Federal Income Tax Considerations" in the Prospectus.
Very truly yours,
Morgan, Lewis & Bockius LLP
<PAGE>
EXHIBIT 12
RITE AID CORPORATION AND SUBSIDIARIES
STATEMENTS RE COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
THIRTY-NINE WEEKS ENDED NOVEMBER 28, 1998 AND
YEARS ENDED FEBRUARY 28, 1998, MARCH 1, 1997, MARCH 2, 1996, MARCH 4, 1995, AND
FEBRUARY 26, 1994
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
Thirty-nine
Weeks Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
November 28, Feb. 28, March 1, March 2, March 4, Feb. 26,
1998 1998 1997 1996 1995 1994
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Fixed Charges
Interest Expense $ 128,155 $ 159,752 $ 96,473 $ 68,341 $ 42,300 $ 28,683
Interest Portion(1)
of Net Rental
Expense 102,300 111,943 66,067 52,080 40,424 40,427
--------- --------- --------- --------- --------- ---------
Fixed Charges Before
Capitalized Interest 230,455 271,695 162,540 120,421 82,724 69,110
Capitalized Interest 6,020 3,834 1,897 1,948 373 217
--------- --------- --------- --------- --------- ---------
Total Fixed Charges $ 236,475 $ 275,529 $ 164,437 $ 122,369 $ 83,097 $ 69,327
========= ========= ========= ========= ========= =========
Earnings
Income Before
Extraordinary Loss
and Income Taxes $ 141,735 $ 530,041 $ 258,927 $ 256,202 $ 231,464 $ 45,670
Fixed Charges Before
Capitalized Interest 230,455 271,695 162,540 120,421 82,724 69,110
--------- --------- --------- --------- --------- ---------
Total Adjusted
Earnings $ 372,190 $ 801,736 $ 421,467 $ 376,623 $ 314,188 $ 114,780
========= ========= ========= ========= ========= =========
Ratio of Earnings to
Fixed Charges 1.57 2.91 2.56 3.08 3.78 1.66
========= ========= ========= ========= ========= =========
</TABLE>
(1) The interest portion of the net rental expense is estimated to be equal to
one-third of the minimum rental expense for the period.
<PAGE>
EXHIBIT 23.3
------------
Consent of Independent Certified Public Accountants
The Board of Directors
Rite Aid Corporation
We consent to the use of our audit reports dated April 14, 1998 on the
consolidated financial statements and schedule of Rite Aid Corporation and
subsidiaries as of February 28, 1998 and March 1, 1997, and for each of the
years in the three-year period then ended incorporated herein by reference and
to the reference to our firm under the heading "Experts" in the prospectus.
KPMG LLP
Harrisburg, Pennsylvania
January 12, 1999
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
Offer to exchange all outstanding 6% Dealer remarketable securities /SM/
("Drs./SM/") due 2013 for 6% Dealer remarketable securities/SM/ ("Drs./SM/") due
2013 of
RITE AID CORPORATION
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1999, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR
TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
The Exchange Agent for the Exchange Offer is:
Harris Trust and Savings Bank
<TABLE>
<C> <S> <C>
Facsimile Transmission Number: By Hand/Overnight Delivery: By Registered or Certified Mail:
- -------------------------------- ------------------------------- --------------------------------
(For Eligible Institutions Only) Harris Trust and Savings Bank Harris Trust and Savings Bank
(212) 701-7636 c/o Harris Trust Company c/o Harris Trust Company
of New York of New York
For General Information and to 88 Pine Street P.O. Box 1010
Confirm Receipt of Facsimile by 19th Floor Wall Street Station
Telephone: New York, NY 10005 New York, NY 10268-1010
- --------------------------------
(212) 701-7624
</TABLE>
(Originals of all documents sent by facsimile should be sent
promptly by registered or certified mail, by hand or by overnight courier)
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY OF THIS LETTER OF TRANSMITTAL. THE INSTRUCTIONS
ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE EXCHANGE Drs. FOR THEIR
RESTRICTED Drs. PURSUANT TO THE EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT
WITHDRAW) THEIR RESTRICTED Drs. TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION
DATE.
The undersigned acknowledges receipt of the prospectus dated _______, 1999
(the "Prospectus") of Rite Aid Corporation, a Delaware corporation (the
"Company"), and this Letter of Transmittal (this "Letter"), which together
constitute the Company's offer (the "Exchange Offer") to exchange an aggregate
principal amount of up to $200,000,000 of its 6% Dealer remarketable
securities/SM/ ("Drs./SM/") due October 1, 2013 (the "Exchange Drs."), which
have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), for an identical principal amount of its 6% Drs. due October
1, 2013 (the "Restricted Drs.," and together with the Exchange Drs., the "Drs.")
outstanding on the date hereof. Capitalized terms used but not defined herein
have the meanings given to them in the Prospectus.
For each Restricted Drs. accepted for exchange and not validly withdrawn,
the holder of such Restricted Drs. will receive an Exchange Drs. having a
principal amount equal to that of the surrendered Restricted Drs. Restricted
Drs. accepted for exchange will cease to accrue interest from and after the date
of consummation of the Exchange Offer.
<PAGE>
Holders of Restricted Drs. whose Restricted Drs. are accepted for exchange will
not receive any payment in respect of interest on such Restricted Drs. otherwise
payable on any interest payment date the record date for which occurs on or
after consummation of the Exchange Offer. Interest on the Exchange Drs. will
accrue from the last interest payment date on which interest was paid on the
Restricted Drs. surrendered in exchange therefor or, if no interest has been
paid on the Restricted Drs., from the date of original issue of the Restricted
Drs. The Company expressly reserves the right, at any time or from time to time,
to extend the Exchange Offer at its discretion, in which event the term
"Expiration Date" shall mean the latest time and date to which the Exchange
Offer is extended. The Company shall notify the holders of the Restricted Drs.
of any extension by means of a press release or other public announcement prior
to 9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date.
This Letter is to be used by a holder of Restricted Drs. if: (i) tender
of Restricted Drs. is to be made by book-entry transfer to the account
maintained by the Exchange Agent at The Depository Trust Company (the "Book-
Entry Transfer Facility") pursuant to the procedures set forth in the Prospectus
under "Exchange Offer -- Book-Entry Transfer" by any financial institution that
is a participant in the Book-Entry Transfer Facility and whose name appears on a
security position listing as the owner of Restricted Drs. or (ii) tender of
Restricted Drs. is to be made according to the guaranteed delivery procedures
set forth in the Prospectus under "Exchange Offer--Guaranteed Delivery
Procedures." Delivery of documents to the Book-Entry Transfer Facility does not
constitute delivery to the Exchange Agent.
The term "holder" for purposes of the Exchange Offer means any participant
in the Book-Entry Transfer Facility system whose name appears on a security
position listing as the holder of Restricted Drs. The undersigned has
completed, executed and delivered this Letter of Transmittal to indicate the
action the undersigned desires to take with respect to the Exchange Offer.
Questions and requests for assistance or for additional copies of the
Prospectus, this Letter and the Notice of Guaranteed Delivery may be directed to
the Exchange Agent. See Instruction 8 herein.
Listed below are the Restricted Drs. to which this Letter relates.
<PAGE>
HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER AND TENDER THEIR RESTRICTED
Drs. MUST COMPLETE THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX BELOW
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
DESCRIPTION OF RESTRICTED Drs.
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 2 3
- -----------------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Aggregate Principal Principal Amount
Registered Holder(s) Amount of Restricted Drs. Tendered*
(Please fill in, if blank)
- -----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
Total Total
- -----------------------------------------------------------------------------------------------------------------
* Unless otherwise indicated in this column, any tendering holder of Restricted Drs. will be deemed to have
tendered ALL of the Restricted Drs. indicated in column 2. If the space provided above is inadequate, the
principal amount of Restricted Drs. should be listed on a separate signed schedule affixed hereto. Restricted
Drs. tendered hereby must be in denominations of principal amount of $1,000 and any integral multiple
thereof. See Instruction 1.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- -----------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
To be completed ONLY if Exchange Drs. are to be
registered in the name of someone other than the
undersigned or if Restricted Drs. which are not tendered
or not accepted for exchange are to be credited to an
account maintained by the Book-Entry Transfer Facility
other than the account indicated above.
Register Exchange Drs. and/or Restricted Drs. in the
name of:
Name______________________________________
(Please Print)
Address____________________________________
___________________________________________
(Include Zip Code)
___________________________________________
(Tax Identification or Social Security No.)
- -----------------------------------------------------------
<PAGE>
[ ] CHECK HERE IF TENDERED RESTRICTED Drs. ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER TO THE EXCHANGE AGENT'S ACCOUNT AT THE BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
---------------------------------------------
Transfer Facility Book-Entry Account No.:
----------------------------------
Transaction Code No.:
------------------------------------------------------
[ ] CHECK HERE IF TENDERED RESTRICTED Drs. ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
-------------------------------------------
Window Ticket Number (if any):
---------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
------------------------
Account Number: Transaction Code Number:
-------------------- ----------
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:
----------------------------------------------------------------------
Address:
-------------------------------------------------------------------
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Drs. If the undersigned is a broker-dealer that will receive Exchange Drs. for
its own account in exchange for Restricted Drs. that were acquired as a result
of market-making activities or other trading activities, it acknowledges that it
will deliver a Prospectus in connection with any resale of such Exchange Drs.;
however, by so acknowledging and by delivering a Prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
<PAGE>
Ladies and Gentlemen:
Subject to the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of
Restricted Drs. indicated above. Subject to, and effective upon, the acceptance
for exchange of the Restricted Drs. tendered in accordance with this Letter, the
undersigned hereby sells, assigns and transfers to, or upon the order of, the
Company, all right, title and interest in and to such Restricted Drs. tendered
hereby. The undersigned hereby irrevocably constitutes and appoints the
Exchange Agent its agent and attorney-in-fact (with full knowledge that the
Exchange Agent also acts as the agent of the Company and as Trustee under the
Indenture for the Restricted Drs. and Exchange Drs.) with respect to the
tendered Restricted Drs. with full power of substitution to (i) transfer
ownership of such Restricted Drs. on the account books maintained by the Book-
Entry Transfer Facility and deliver all accompanying evidence of transfer and
authenticity to, or upon the order of, the Company and (ii) receive all benefits
and otherwise exercise all rights of beneficial ownership of such Restricted
Drs., all in accordance with the terms and subject to the conditions of the
Exchange Offer. The power of attorney granted in this paragraph shall be deemed
irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Restricted Drs.
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim when the same are accepted by the Company. The
undersigned hereby further represents that (i) any Exchange Drs. acquired in
exchange for Restricted Drs. tendered hereby will have been acquired in the
ordinary course of business of the person receiving such Exchange Drs., whether
or not such person is the holder, (ii) neither the holder of such Restricted
Drs. nor any such other person has an arrangement or understanding with any
person to participate in the distribution of such Exchange Drs., (iii) if the
holder of Restricted Drs. is not a broker-dealer, or is a broker-dealer but will
not receive Exchange Drs. for its own account in exchange for Restricted Drs.,
neither the holder nor any such other person is engaged in or intends to engage
in the distribution of such Exchange Drs. and (iv) neither the holder of such
Restricted Drs. nor any such other person is an "affiliate," as defined in Rule
405 under the Securities Act, of the Company.
The undersigned also acknowledges that this Exchange Offer is being made in
reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, that the Exchange Drs. issued in exchange for the Restricted Drs.
pursuant to the Exchange Offer may be offered for resale, resold and otherwise
transferred by holders thereof (other than any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such Exchange Drs. are acquired
in the ordinary course of such holders' business and such holders have no
arrangement with any person to participate in the distribution of such Exchange
Drs. However, the Company does not intend to request the SEC to consider, and
the SEC has not considered the Exchange Offer in the context of a no-action
letter and there can be no assurance that the staff of the SEC would make a
similar determination with respect to the Exchange Offer as in other
circumstances. If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a
distribution of Exchange Drs. If any holder is an affiliate of the Company, is
engaged in or intends to engage in or has any arrangement or understanding with
respect to the distribution of the Exchange Drs. to be acquired pursuant to the
Exchange Offer, such holder (i) could not rely on the applicable interpretations
of the staff of the SEC and (ii) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction and that such a resale transaction must be covered by an
effective registration statement containing the selling security holder
information required by the applicable regulation. If the undersigned is a
broker-dealer that will receive Exchange Drs. for its own account in exchange
for Restricted Drs. that were acquired by it as a result of market-making
activities or other trading activities it acknowledges that it will deliver a
prospectus in connection with any resale of such Exchange Drs.; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be deemed
to admit that its is an "underwriter" within the meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents reasonably deemed by the Exchange Agent or the Company to be necessary
or desirable to complete the assignment, transfer and purchase of the Restricted
Drs. tendered hereby. All authority conferred or agreed to be conferred in this
Letter shall survive the death, incapacity or dissolution of the undersigned and
every obligation of the undersigned hereunder shall be
<PAGE>
binding upon the undersigned's heirs, personal representatives, successors and
assigns, trustees in bankruptcy or other legal representatives of the
undersigned. This tender may be withdrawn only in accordance with the procedures
set forth under the caption "Exchange Offer -- Withdrawal of Tenders" in the
Prospectus.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted properly tendered Restricted Drs. for exchange when, as and if the
Company has given oral or written notice thereof to the Exchange Agent with
written confirmation of any oral notice to be given promptly thereafter.
The undersigned understands that tenders of Restricted Drs. pursuant to the
procedures described under the caption "Exchange Offer--Procedures for
Tendering" in the Prospectus and in the instructions hereto will constitute a
binding agreement between the undersigned and the Company upon the terms and
subject to the conditions of the Exchange Offer.
Unless otherwise indicated under "Special Issuance Instructions," please
issue and register the Exchange Drs. issued in exchange for the Restricted Drs.
accepted for exchange and register any Restricted Drs. not tendered or not
exchanged in the name(s) of the undersigned by credit to the undersigned's
account at the Book-Entry Transfer Facility. In the event that the "Special
Issuance Instructions" are completed, please issue and register the Exchange
Drs. issued in exchange for the Restricted Drs. accepted for exchange, and
register any Restricted Drs. not tendered or not exchanged, in the name(s) of
the person(s) so indicated by credit to such person's account at the Book-Entry
Transfer Facility. The undersigned recognizes that the Company has no
obligation pursuant to the "Special Issuance Instructions" to transfer any
Restricted Drs. from the name of the registered holder(s) thereof if the Company
does not accept for exchange any of the Restricted Drs. so tendered.
Holders of Restricted Drs. who are unable to deliver their confirmation of
the book-entry tender of their Restricted Drs. into the Exchange Agent's account
at the Book-Entry Transfer Facility (a "Book-Entry Confirmation") and all other
documents required by this Letter to the Exchange Agent on or prior to the
Expiration Date, must tender their Restricted Drs. according to the guaranteed
delivery procedures set forth in the Prospectus under "Exchange Offer --
Guaranteed Delivery Procedures." See Instruction 1.
<PAGE>
PLEASE SIGN HERE WHETHER OR NOT
RESTRICTED Drs. ARE BEING TENDERED HEREBY
X
----------------------------------- -----------------------------------
Date
X
----------------------------------- -----------------------------------
Signature(s) of Registered Holder(s) Date
Or Authorized Signatory
Area Code and Telephone Number:
---------------------
The above lines must be signed by the registered holder(s) of Restricted
Drs. as their name(s) appear(s) as such on a security position listing as the
owner of Restricted Drs., or by person(s) authorized to become registered
holder(s). If Restricted Drs. to which this Letter of Transmittal relates are
held of record by two or more joint holders, then all such holders must sign
this Letter of Transmittal. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, such person must (i)
set forth his or her full title below and (ii) unless waived by the Company,
submit evidence satisfactory to the Company of such person's authority as to
act. See Instruction 3 regarding the completion of this Letter of Transmittal.
Name(s):
-----------------------------------------------------------------------
(Please Print)
Capacity:
----------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
(Include Zip Code)
Signature(s) Guaranteed by an Eligible Institution (as
defined): (If required by Instruction 3)
-----------------------------------------------------------------------
(Authorized Signature)
-----------------------------------------------------------------------
(Title)
-----------------------------------------------------------------------
(Name of Firm)
-----------------------------------------------------------------------
(Address (including zip code) and Telephone Number
(including area code) of Firm)
Date: , 1998
--------------------------
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the
Exchange Offer
1. DELIVERY OF THIS LETTER AND Drs.; GUARANTEED DELIVERY PROCEDURES.
This Letter is to be completed by holders (which term, for purposes of the
Exchange Offer means any participant in the Book-Entry Transfer Facility system
whose name appears on a security position listing as the holder of such
Restricted Drs.) if tenders are to be made pursuant to the procedures for
delivery by book-entry transfer set forth in the Prospectus under the caption
"Exchange Offer -- Book-Entry Transfer." A Book-Entry Confirmation, as well as
this properly completed and duly executed Letter (or manually signed facsimile
hereof) and any other documents required by this Letter, must be received by the
Exchange Agent at the address set forth herein on or prior to 5:00 p.m., New
York City time, on the Expiration Date, or the tendering holder must comply with
the guaranteed delivery procedures set forth below. Restricted Drs. tendered
hereby must be in denominations of principal amount of $1,000 and any integral
multiple thereof.
If a registered holder of the Restricted Drs. desires to tender such
Restricted Drs. and time will not permit such holder's Letter of Transmittal or
other required documents to reach the Exchange Agent before the Expiration Date
or the procedure for book-entry transfer cannot be completed on a timely basis,
a tender may be effected if (i) the tender is made through an Eligible
Institution, (ii) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly competed and duly executed Letter of
Transmittal (or a facsimile thereof) and Notice of Guaranteed Delivery,
substantially in the form provided by the Company (by facsimile transmittal,
mail or hand delivery), setting forth the name and address of the holder of
Restricted Drs. and the amount of Restricted Drs. tendered, stating that the
tender is being made thereby and guaranteeing that within three New York Stock
Exchange ("NYSE") trading days after the date of execution of the Notice of
Guaranteed Delivery, a Book-Entry Confirmation and all other documents required
by the Letter of Transmittal will be deposited by the Eligible Institution with
the Exchange Agent and (iii) a Book-Entry Confirmation and all other documents
required by the Letter of Transmittal are received by the Exchange Agent within
three NYSE trading days after the date of execution of the Notice of Guaranteed
Delivery.
The method of delivery of this Letter and all other required documents to
the Exchange Agent is at the election and risk of the tendering holders, and the
delivery will be deemed made only when actually received or confirmed by the
Exchange Agent. If Restricted Drs. are sent by mail, it is suggested that the
mailing be made sufficiently in advance of the Expiration Date to permit
delivery to the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date.
2. SIGNATURES ON THIS LETTER; GUARANTEE OF SIGNATURES.
If any tendered Restricted Drs. are owned of record by two or more joint
owners, all such owners must sign this Letter.
If this Letter or powers of attorney are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority to so act must be submitted.
In the event that signatures on this Letter are required to be guaranteed,
such guarantees must be by a firm that is a member or participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program, or by an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Exchange Act (collectively, "Eligible Institutions").
<PAGE>
Signatures on this Letter need not be guaranteed by an Eligible
Institution, provided the Restricted Drs. are tendered: (i) by a registered
holder of Restricted Drs. who has not completed the box entitled "Special
Issuance Instructions" on this Letter; or (ii) for the account of an Eligible
Institution.
3. SPECIAL ISSUANCE AND REGISTRATION INSTRUCTIONS.
Tendering holders of Restricted Drs. may request that Restricted Drs. not
exchanged be credited to an account maintained at the Book-Entry Transfer
Facility designated by such holder hereon. If no such instructions are given,
such Restricted Drs. not exchanged will be returned to the name of the person
signing this Letter.
4. TAX IDENTIFICATION NUMBER.
United States federal income tax law may require that a tendering holder
whose Restricted Drs. are accepted for exchange provide the Company (as payor)
with such holder's correct Taxpayer Identification Number ("TIN") on Substitute
Form W-9 below, which in the case of a tendering holder who is an individual, is
his or her social security number. If the Company is not provided with the
current TIN or an adequate basis for an exemption, such tendering holder may be
subject to a $50 penalty imposed by the United States Internal Revenue Service
(the "IRS"). In addition, such tendering holder may be subject to backup
withholding tax in an amount equal to 31% of all reportable payments made after
the exchange. If such withholding results in an overpayment of taxes, a refund
may be obtained.
Exempt holders of Restricted Drs. (including, among others, all
corporations) are not subject to these backup withholding requirements. See the
enclosed Guidelines For Certification of Taxpayer Identification Number on
Substitute Form W-9 (the "Guidelines") for additional instructions.
To prevent backup withholding tax, each tendering holder of Restricted Drs.
should provide its correct TIN by completing the Substitute Form W-9 set forth
below, certifying that the TIN provided is correct. If the tendering holder of
Restricted Drs. is a nonresident alien or foreign entity not subject to backup
withholding tax, such holder should provide a completed Form W-8, Certificate of
Foreign Status. These forms may be obtained from the Exchange Agent. If the
Restricted Drs. are held in more than one name or are not held in the name of
the actual owner, such holder should consult the Guidelines for information on
which TIN to report.
5. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the transfer
of Exchange Drs. in exchange for Restricted Drs. pursuant to the Exchange Offer.
If, however, Exchange Drs. or Restricted Drs. not tendered or not accepted are
to be registered in the name of any person other than the registered holder of
the Restricted Drs. tendered hereby, or if tendered Restricted Drs. are
registered in the name of any person other than the person signing this Letter,
or if a transfer tax is imposed for any reason other than the transfer of
Restricted Drs. to the Company or its order pursuant to the Exchange Offer, the
amount of any such transfer taxes (whether imposed on the registered holder or
any other person) will be payable by the tendering holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted
herewith, the amount of such transfer taxes will be billed directly to such
tendering holder.
Except as provided in this Instruction 5, it will not be necessary for
transfer tax stamps to be affixed to the Restricted Drs. specified in this
letter.
<PAGE>
6. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive satisfaction of any or all
conditions enumerated in the Prospectus.
7. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Restricted Drs., by execution of this
Letter, shall waive any right to receive notice of the acceptance of their
Restricted Drs. for exchange.
Neither the Company, the Exchange Agent nor any other person is obligated
to give notice of any defect or irregularity with respect to any tender of
Restricted Drs., nor shall any of them incur any liability for failure to give
any such notice.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter, may be directed to the
Exchange Agent, at the address and telephone number indicated above.
<PAGE>
- --------------------------------------------------------------------------------
Name (if joint names, list first and circle the name of the person or entity
whose number you enter below)
- --------------------------------------------------------------------------------
Business Name (Sole proprietors see the instructions in the enclosed Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 (the
"Guidelines"))
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City, State and Zip Code
- --------------------------------------------------------------------------------
Part I - Taxpayer Identification Number
Enter your taxpayer identification number
in the appropriate box. For individuals,
SUBSTITUTE FORM W-9 this is your social security number. For
Department of the Treasury sole proprietors, see the instructions in
Internal Revenue Service the Guidelines. For other entities, it is
your employer identification number. If
Request for Taxpayer you do not have a number, see
Identification Number and "Obtaining a Number" in the Guidelines.
Certification
Note: If the account is in more than one
name, see the chart on page 1
of the Guidelines on whose number to enter.
------------------------------------------
Social Security Number
------------------------------------------
OR
------------------------------------------
Employer Identification Number
------------------------------------------
-------------------------------------------------
Part II - For Payees Exempt from Backup
Withholding (see instructions in the
Guidelines)
- --------------------------------------------------------------------------------
Certification--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct taxpayer identification number
(or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding because (a) I am exempt from backup
withholding or (b) I have not been notified by the Internal Revenue Service
("IRS") that I am subject to backup withholding as a result of a failure to
report all interest or dividends, or (c) the IRS has notified me that I am
no longer subject to backup withholding.
Certification Instructions--You must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding because
of underreporting interest or dividends on your tax return.
SIGNATURE: DATE: , 1998
-------------------- ---------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF CERTAIN PAYMENTS MADE TO YOU. PLEASE REVIEW THE GUIDELINES FOR
ADDITIONAL DETAILS.
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of Rite Aid Corporation (the "Company") made pursuant to the
Prospectus, dated _____, 1999 (the "Prospectus"), if the procedure for book-
entry transfer cannot be completed on a timely basis or time will not permit all
required documents to reach the Exchange Agent prior to 5:00 p.m., New York City
time, on the Expiration Date of the Exchange Offer. This form may be delivered
or transmitted by facsimile transmission, mail or hand delivery to Harris Trust
and Savings Bank (the "Exchange Agent") as set forth below. In addition, in
order to utilize the guaranteed delivery procedure to tender Restricted Drs.
pursuant to the Exchange Offer, a completed, signed and dated Letter of
Transmittal (or facsimile thereof) must also be received by the Exchange Agent
prior to 5:00 p.m., New York City time, on the Expiration Date. Capitalized
terms used but not defined herein have the meanings given to them in the
Prospectus.
Delivery To: Harris Trust and Savings Bank, Exchange Agent
<TABLE>
<S> <C> <C>
Facsimile Transmission Number: By Hand/Overnight Delivery By Registered or Certified Mail:
- -------------------------------- ----------------------------- --------------------------------
(For Eligible Institutions Only) Harris Trust and Savings Bank Harris Trust and Savings Bank
(212) 701-7636 c/o Harris Trust Company c/o Harris Trust Company
For General Information and to of New York of New York
Confirm Receipt of Facsimile by 88 Pine Street P.O. Box 1010
Telephone: 19th Floor Wall Street Station
- -------------------------------- New York, NY 10005 New York, NY 10268-1010
(212) 701-7624
</TABLE>
(Originals of all documents sent by facsimile should be sent
promptly by registered or certified mail, by hand or by overnight courier)
Delivery of this instrument to an address other than as set forth above, or
transmission of instructions via facsimile other than as set forth above, will
not constitute a valid delivery.
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount of Restricted Drs. set forth below, pursuant to the
guaranteed delivery procedure described in "Exchange Offer--Guaranteed Delivery
Procedures" section of the Prospectus.
<PAGE>
Principal Amount of Outstanding Drs. Tendered:/*/
$__________________________________________
Provide account number for Restricted Drs.
to be delivered by book-entry transfer to
the Depository Trust Company.
Account Number _____________________________
- ----------------------
/*/Must be in denominations of principal amount of $1,000 and any integral
multiple thereof.
<PAGE>
All authority herein conferred or agreed to be conferred shall survive the death
or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
PLEASE SIGN HERE
X_______________________________________________________________________________
X_______________________________________________________________________________
Signature(s) of Owner(s) Date
or Authorized Signatory
Area Code and Telephone Number:
Must be signed by the holder(s) of Restricted Drs. as their name(s)
appear(s) on a security position listing or by person(s) authorized to become
registered holder(s) by documents transmitted with this Notice of Guaranteed
Delivery. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or the person acting in a fiduciary or representative
capacity, such person must set forth his or her full title below.
Please print name(s) and address(es)
Name(s):________________________________________________________________________
Capacity:_______________________________________________________________________
Address(es):____________________________________________________________________
____________________________________________________________________
<PAGE>
GUARANTEE
The undersigned, a member or participant in the Securities Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Program or
the Stock Exchange Medallion Program, on an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, hereby guarantees that timely confirmation of the book-entry transfer
of such Restricted Drs. into the Exchange Agent's account at the Depository
Trust Company pursuant to the procedures set forth in "Exchange Offer--
Guaranteed Delivery Procedures" section of the Prospectus, together with a
properly completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof) with any required signature guarantee and any other documents
required by the Letter of Transmittal, will be received by the Exchange Agent at
the address set forth above, no later than three business days after the date of
the delivery hereof.
Name of Firm:__________________________________________________________________
Authorized Signature:__________________________________________________________
Title:_________________________________________________________________________
Name:__________________________________________________________________________
Address:_______________________________________________________________________
(Please Type or Print)
Area Code and Tel. No._________________________________________________________
Dated:_________________________________________________________________________
