SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by registrant (X)
Filed by a party other than registrant ( )
Check appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of
the Commission Only (as
permitted by Rule
14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
FILING BY:
RITE AID CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Persons Filing Proxy Statement if other than the Registrant)
Payment of filing fee (Check the appropriate box):
(X) No Fee Required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11
(Set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the form or schedule and the date
of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 22, 1999
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[LOGO]
RITE AID CORPORATION
P.O. BOX 3165
HARRISBURG, PENNSYLVANIA 17105
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
A Special Meeting of stockholders ("Special Meeting") of Rite Aid
Corporation ("Rite Aid") will be held on February 22, 1999, at The
Radisson Penn Harris Hotel and Convention Center, 1150 Camp Hill Bypass,
Camp Hill, Pennsylvania 17011, at 9:00 a.m., for the following purposes:
1. To approve an amendment to Rite Aid's Restated Certificate of
Incorporation to increase the number of authorized shares of common
stock, par value $1.00, of Rite Aid (the "Common Stock"), from
300,000,000 shares to 600,000,000 shares.
2. To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on January 21, 1999
as the record date for the Special Meeting. Only stockholders of record as
of that date are entitled to notice of and to vote at the Special Meeting
and any adjournment and postponements thereof. Reference is made to the
attached proxy statement for further information with respect to the
business to be transacted at the Special Meeting.
By Order of the Board of Directors,
Elliot S. Gerson,
Executive Vice President, General Counsel
and Secretary
Camp Hill, Pennsylvania
January 22, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND DATE THE
ENCLOSED PROXY WHICH IS SOLICITED BY THE BOARD OF DIRECTORS OF RITE AID,
AND RETURN IT IN THE ENCLOSED ENVELOPE PROVIDED FOR THAT PURPOSE. ANY
STOCKHOLDER MAY REVOKE HIS PROXY AT ANY TIME BEFORE THE MEETING BY WRITTEN
NOTICE TO SUCH EFFECT TO THE SECRETARY, BY SUBMITTING A SUBSEQUENTLY DATED
PROXY OR BY ATTENDING THE MEETING AND VOTING IN PERSON.
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RITE AID CORPORATION PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
This proxy statement (the "Proxy Statement") is being furnished in
connection with the solicitation of proxies on behalf of the Board of
Directors of Rite Aid Corporation, a Delaware corporation (the "Company"),
for use at a Special Meeting of the stockholders of the Company (the
"Special Meeting") to be held at The Radisson Penn Harris Hotel and
Convention Center, 1150 Camp Hill Bypass, Camp Hill, Pennsylvania 17011, on
February 22, 1999 at 9:00 a.m., or any adjournment or postponement thereof,
for the purposes set forth in the foregoing notice. This Proxy Statement,
the foregoing notice and the enclosed proxy are first being mailed to
stockholders on or about January 22, 1999. Only stockholders of record at
the close of business on January 21, 1999 (the "Record Date") shall be
entitled to notice of and to vote at the Special Meeting.
If the enclosed proxy is properly executed and returned prior to
voting at the Special Meeting, the shares represented thereby will be voted
in accordance with the instructions marked thereon. In the absence of
instructions, the shares will be voted FOR the proposal to amend the
Company's Restated Certificate of Incorporation. Management does not
intend to bring any matter before the Special Meeting other than as
indicated in the notice and does not know of anyone else who intends to do
so. However, if any other matters properly come before the Special
Meeting, the persons named in the enclosed proxy, or their duly constituted
substitutes acting at the meeting, will be deemed authorized to vote or
otherwise act thereon in accordance with their judgment on such matters.
At January 7, 1999, the Company had outstanding and entitled to vote
258,767,046 shares of Common Stock. There must be present at the meeting
in person or by proxy holders of a majority of the issued and outstanding
shares entitled to vote to constitute a quorum for the meeting. Shares
represented by a proxy with instructions to abstain and any shares
represented by broker non-votes will be counted in determining whether a
quorum is present. Broker non-votes are not considered present for
purposes of determining the total number of shares with voting power
present with regard to the proposal to approve the proposed amendment.
Each holder of Common Stock is entitled to one vote per share of Common
Stock held of record by him or her on the Record Date.
Approval of the proposed amendment will require the affirmative vote
of a majority of the outstanding shares of Common Stock entitled to vote
thereon at the Special Meeting. Broker non-votes will be treated as
abstentions on the proposal to approve the proposed amendment. Neither an
abstention nor a broker non-vote is an affirmative vote and, therefore,
both will have the same legal effect as a vote against the approval of the
proposed amendment.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of January 7, 1999, certain
information concerning the beneficial shareholdings of each director and
executive officer of the Company and of all directors and executive
officers as a group. Each of the persons named below has sole voting power
and sole investment power with respect to the shares set forth opposite his
or her name, except as otherwise noted. Except as set forth below, no
person was known by the Company to own beneficially more than five percent
(5%) of the Company's outstanding Common Stock.
Number of
Common Shares
Beneficial Owners Beneficially Owned(1) Percent of
Cla
----------------- --------------------- ----------------
Alex Grass . . . . . . . . . . 2,696,923 (2) 1.0%
William J. Bratton . . . . . . 3,500 *
Franklin C. Brown . . . . . . . 383,460 (3) *
Leonard I. Green. . . . . . . . 1,004,000 *
Martin L. Grass . . . . . . . . 3,897,795 (4) 1.5%
Nancy A. Lieberman . . . . . . 7,000 *
Phillip Nievert . . . . . . . . 2,869,506 (5) 1.1%
Leonard Stern . . . . . . . . . 10,000 *
Preston Robert Tisch . . . . . 10,000 *
Gerald Tsai, Jr. . . . . . . . 4,000 *
Timothy J. Noonan . . . . . . . 1,238,468 *
Frank M. Bergonzi . . . . . . . 599,281 *
Beth J. Kaplan . . . . . . . . 307,155 *
Massachusetts Financial
Services Company . . . . . .
26,228,342
(6)
American Express Company . . . 18,181,342 (7) 7.0%
Putnam Investments, Inc. . . . 18,017,600 (8) 7.0%
All executive officers
and directors (25 persons) . .
13,917,230 (2)(3)(4)(5)
5.2
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* Percentage less than 1% of class.
(1) Beneficial ownership has been determined in accordance with Rule
13d-3 of the Securities Exchange Act of 1934, as amended. Unless
otherwise indicated, the address of each beneficial owner shall be
the address of the Company. Except as otherwise specified herein,
all information has been provided to the Company as of January 7,
1999.
(2) Includes 137,904 shares of Common Stock owned by the Grass Family
Foundation of which Mr. Alex Grass is a director. Also includes
90,982 shares of Common Stock held in trust for the benefit of Martin
L. Grass and of which Mr. Alex Grass is a trustee and 370,568 shares
of Common Stock held in trust for the benefit of Lois Grass and of
which Mr. Alex Grass is an alternate trustee.
(3) Includes 383,360 shares owned by Mr. Brown's wife as to which Mr.
Brown disclaims any beneficial interest. All options and stock-based
awards held by Mr. Brown have been assigned to his children and he
disclaims any beneficial interest in those shares.
(4) Includes 370,568 shares held in trust for the benefit of Lois Grass of
which trust Mr. Martin Grass is a co-trustee.
(5) Includes 1,440,000 shares held in trust as to which Mr. Nievert is
both a co-trustee and a co-beneficiary and 712,778 shares owned by Mr.
Nievert's wife. Mr. Nievert disclaims any beneficial interest in
those shares owned by his wife.
(6) Massachusetts Financial Services Company beneficially owns 26,228,342
shares, of which it has sole dispositive power over all of the shares
and sole voting power as to 25,845,562 of the shares. This
information is derived from a Schedule 13G filed with the Securities
and Exchange Commission on August 17, 1998. Massachusetts Financial
Services Company is located at 500 Boylston Street, Boston, MA 02116.
(7) American Express Company, through its wholly owned subsidiary American
Express Financial Corporation, a registered investment advisor, is
deemed to beneficially own 18,181,342 shares, as to which it has
shared dispositive power over all of the shares and shared voting
power as to 8,588,122 of the shares. American Express Company is
located at American Express Tower, 200 Vesey Street, New York, NY
10285.
(8) Putnam Investment Management, Inc. and the Putnam Advisory Company,
Inc., both wholly owned registered investment advisors of Putnam
Investments, Inc., together beneficially own 18,017,600 shares, as to
which Putnam Investment Management, Inc. beneficially owns 15,480,400
shares and The Putnam Advisory Company beneficially owns 2,537,200
shares. Both subsidiaries have shared dispositive power over the
shares each beneficially owns as investment managers, but each of the
mutual fund's trustees have voting power over the shares held by each
fund, and the Putnam Advisory, Inc. has shared voting power over the
shares held by the institution clients (740,200 shares). Putnam
Investments, Inc. is located at One Post Office Square, Boston, MA
02109.
PROPOSAL TO INCREASE THE AUTHORIZED COMMON STOCK
The Board of Directors of the Company has approved and recommends to
the stockholders a proposal to amend the first paragraph of Article Fourth
of the Company's Restated Certificate of Incorporation (the "Restated
Certificate") to increase the total number of shares of all classes of
capital stock which the Company shall have authority to issue from
320,000,000 to 620,000,000 shares by increasing the number of authorized
shares of Common Stock from 300,000,000 shares to 600,000,000 shares (the
"Amendment"). The number of shares of Preferred Stock, par value $1.00, of
the Company will remain at 20,000,000 shares. The Amendment to the
Restated Certificate is attached as Annex A to this Proxy Statement. As of
January 7, 1999, 258,767,046 shares of Common Stock were issued and
outstanding and 37,477,244 were reserved for issuance under the Company's
stock option plans and under outstanding convertible subordinated notes.
As a result, only 3,755,710 shares of Common Stock remain available for
future financing and other corporate purposes.
The Board of Directors believes that the proposed increase in the
authorized Common Stock is in the best interests of the Company and its
stockholders.
REASONS FOR THE PROPOSAL
The Board of Directors believes that the availability of additional
shares resulting from approval of the proposed Amendment will benefit the
Company by providing the flexibility to issue Common Stock for a variety of
proper corporate purposes without further action by the Company's
stockholders, except as may be required by law, regulation or stock
exchange rules. As a result, the Company would be in a better position to
take prompt advantage of opportunities for which the issuance of Common
Stock might be appropriate including, without limitation, the sale of
stock to obtain additional capital funds, the purchase of property, the
acquisition or merger into the Company of other companies, the use of
additional shares for various equity compensation and other employee
benefit plans, the declaration of stock dividends or other corporate
distributions, or other bona fide corporate purposes. As indicated above,
as of January 7, 1999, the Company had only 3,755,710 authorized but
unreserved and unissued shares of Common Stock available for future
issuances. This severely limits the ability of the Board of Directors to
issue shares of Common Stock without seeking stockholder approval. If the
Amendment were postponed until specific needs arose for an amount of shares
in excess of the amount of Common Stock authorized for issuance, the
Company's ability to respond promptly and effectively might be adversely
impacted by the additional expense and delay resulting from the stockholder
approval process.
Pursuant to a Stock Purchase Agreement between the Company and Eli
Lilly and Company ("Lilly"), dated November 17, 1998, on January 22, 1999,
the Company acquired (the "PCS Acquisition") all of the outstanding capital
stock of PCS Holding Corporation ("PCS"), a wholly owned subsidiary of
Lilly, for a purchase price of $1.5 billion in cash. In addition, Lilly
has retained $100 million of cash from PCS.
The Company financed the PCS Acquisition with commercial paper
issuances that were supported by approximately $200 million in available
borrowings under the Company's existing credit facility, pursuant to a
credit agreement, dated as of July 19, 1996, among the Company, the banks
from time to time party thereto, and Morgan Guaranty Trust Company of New
York ("Morgan Guaranty"), as agent, and a $1.3 billion commitment under a
new credit facility, pursuant to a credit agreement, dated as of January
21, 1999, among the Company, the banks from time to time party thereto,
J.P. Morgan Securities Inc., as lead arranger and Morgan Guaranty, as
administrative agent.
If market conditions are favorable, the Company intends to refinance
the commercial paper issuances used to fund the PCS Acquisition with the
net proceeds it anticipates realizing from a public offering of securities
(the "Offering"), consisting of shares of Common Stock and equity-linked
securities. Based on the last reported sale price of the Common Stock on
the New York Stock Exchange on January 19, 1999 of $47.25 per share, the
Offering to refinance the commercial paper issuances used to fund the PCS
Acquisition (excluding fees and expenses related to the Offering and the
PCS Acquisition) would consist of approximately 31,800,000 shares of Common
Stock (assuming that the Offering consisted solely of shares of Common
Stock).
The increase in the authorized capital of the Company is not for the
purpose of approving the authorization of additional shares of Common Stock
to be used in any specific acquisition. The vote of the stockholders of
the Company on the proposed Amendment will not in any way affect the PCS
Acquisition, which has already been consummated. If the proposed Amendment
is delayed or not adopted, or if market conditions are not favorable, the
Company intends to postpone the Offering until such time as the
stockholders of the Company shall vote to approve the Amendment and such
time as the Company believes that market conditions are favorable. In
addition, in the event that the proposed Amendment is not approved, the
Company may find it necessary to convene a special meeting of stockholders
before the Company could consummate any other transaction in which the
number of shares of Common Stock that would be issued, together with all
other new issuances of Common Stock after January 7, 1999, would exceed
3,755,710. This could potentially add to the costs of a future transaction
and the added time necessary to prepare for and hold a stockholders'
meeting could serve as a disincentive for third parties otherwise
interested in making an investment in, or entering into such transaction
with the Company.
EFFECTS OF THE PROPOSAL
The Board of Directors is authorized to issue the Common Stock for
such consideration as the Board may fix and for any corporate purposes.
Such issuance can be undertaken without the further action of stockholders,
except as maybe required by law, regulation or stock exchange rule. The
Board of Directors will determine whether, when, and on what terms the
issuance of shares of Common Stock may be warranted in connection with any
of the foregoing purposes.
The additional shares of Common Stock to be authorized by the adoption
of the Amendment would have rights and privileges identical to the
currently outstanding shares of Common Stock of the Company. Adoption of
the proposed Amendment and issuance of the Common Stock authorized thereby
would not affect the rights of the holders of currently outstanding shares
of Common Stock, except for effects incidental to increasing outstanding
shares of Common Stock such as dilution to the earnings per share and
voting rights of current holders of Common Stock. The Company's
stockholders do not have preemptive rights with respect to future issuances
of additional shares of Common Stock, which means that current stockholders
do not have a prior right to purchase any new issue of Common Stock of the
Company in order to maintain their proportionate ownership interest. As a
result, the issuance of additional authorized Common Stock (other than a
stock split or other pro rata distribution to stockholders) would result in
dilution of the beneficial ownership interests and/or voting power of each
Company stockholder who does not purchase additional shares to maintain his
or her pro rata interest.
Because the authorized but unissued stock could be issued by the Board
of Directors for the purpose of countering an unsolicited takeover or other
proposal that is opposed by the Board, an increase in the number of
authorized shares may be viewed as having the effect of discouraging an
unsolicited attempt by another person or entity to acquire control of the
Company that holders of Common Stock may deem to be in their best interest
or in which holders of Common Stock are offered a premium for their shares
over market price. The Board is not currently aware of any person or
entity who is seeking to acquire control of the Company and has no plans to
issue additional shares of Common Stock other than pursuant to the
Offering. The Company has no current plan to issue any Common Stock in any
transaction that would result in a change of control of the Company. If the
Amendment is approved, all or any of the authorized shares of Common Stock
may be issued without further action by the stockholders and without first
offering such shares to the stockholders for subscription.
The Board of Directors believes that the benefits of providing the
Company with the flexibility to issue shares without delay for any purpose
outweighs the possible disadvantages discussed above, and that it is
prudent, advisable and in the best interests of the stockholders to provide
the greater flexibility that will result from the approval of the proposed
increase in authorized shares.
EFFECTIVE DATE
If the Amendment is approved by the stockholders, it will become
effective upon the filing of a Certificate of Amendment to the Restated
Certificate with the Delaware Secretary of State, which filing is expected
to take place promptly after the stockholders approve the Amendment. The
only changes to the current Restated Certificate are those made by the
proposed Amendment. Stockholder approval of the Amendment will also
constitute approval of the filing of a Certificate of Amendment to the
Certificate incorporating the Amendment as set forth on Annex A attached
hereto.
RECOMMENDATION OF THE BOARD OF DIRECTORS
FOR ALL THE FOREGOING REASONS, THE BOARD OF DIRECTORS BELIEVES THAT
THE AMENDMENT IS IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS
AND UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
PROPOSALS OF SECURITY HOLDERS
All proposals of any stockholder of the Company which the stockholder
desires be presented at the next Annual Meeting of stockholders and be
included in the Proxy Statement and form of proxy prepared for that meeting
must have been received by the Company at its principal executive offices
no later than January 18, 1999. All such proposals must have been
submitted in writing to the Secretary of the Company at the address
appearing on the notice accompanying this Proxy Statement.
SOLICITATION OF PROXIES
The cost of the solicitation of proxies will be borne by the Company.
In addition to the use of the mails, solicitations may be made by telephone
and personal interviews by officers, directors and regularly engaged
employees of the Company. It is not anticipated that anyone will be
specifically engaged by the Company or by any other person to solicit
proxies. Brokerage houses, custodians, nominees and fiduciaries will be
requested to forward this Proxy Statement to the beneficial owners of the
stock held of record by such persons, and the Company will reimburse them
for their charges and expenses in this connection.
ANNEX A
Set forth below is the first paragraph of Article Fourth of the Company's
Restated Certificate of Incorporation as proposed to be amended; the
remainder of Article Fourth is unchanged:
"The total number of shares or stock which the Corporation shall have the
authority to issue shall be 620,000,000 shares of which six hundred million
(600,000,000) shares shall be Common Stock of the par value of $1.00 per
share, and twenty million (20,000,000) shares shall be Preferred Stock of
the par value of $1.00 per share."
P R O X Y
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
RITE AID CORPORATION
SPECIAL MEETING OF STOCKHOLDERS
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The undersigned hereby appoints Martin L. Grass and Franklin C. Brown,
or either of them, with full power of substitution to each as proxies to
represent the undersigned at a Special Meeting of Stockholders of Rite Aid
Corporation, to be held at The Radisson Penn Harris Hotel and Convention
Center, 1150 Camp Hill Bypass, Camp Hill, Pennsylvania 17011, on February
22, 1999 at 9:00 a.m. and at any adjournment(s) thereof, and to vote all
shares of stock which the undersigned may be entitled to vote at said
meeting as directed below with respect to the proposal as set forth in the
proxy statement, and in their discretion, upon any other matters that may
properly come before the meeting.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE BOX,
SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOX IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATION. THE TABULATOR
CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
[X] PLEASE MARK YOUR VOTES AS IN
THIS EXAMPLE.
UNLESS YOU INDICATE OTHERWISE, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH
THE BOARD OF DIRECTORS' RECOMMENDATION.
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DIRECTORS RECOMMEND A VOTE FOR PROPOSAL 1.
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FOR AGAINST ABSTAIN
1. Approval of Amendment [ ] [ ] [ ]
to the Restated Certificate
of Incorporation to Increase
the Authorized Common Stock.
SIGNATURE________________________ DATE________________
Please sign name(s) exactly as printed hereon. Joint owners should each
sign. In signing as attorney, administrator, executor, guardian or
trustee, please give full title as such.
