SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D
(Rule 13d-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
ADVANCEPCS
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(Name of Issuer)
Class A Common Stock, par value $0.01 per share
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(Title of Class of Securities)
007491103
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(CUSIP Number)
Elliot S. Gerson
Rite Aid Corporation
30 Hunter Lane
Camp Hill, PA 17011
717-761-2633
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 7, 2000
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1 (b) (3) or (4), check the
following box [ ].
The information required in the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the notes).
1. Names of Reporting Persons.
S.S. or I.R.S. Identification Nos. of Above Persons:
Rite Aid Corporation 23-1614034
2. Check the Appropriate Box if a Member of a Group* (a) [ ]
(b) [X]
3. SEC Use Only
4. Source of Funds OO
5. Check box if disclosure of legal proceedings is required pursuant to
Item 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization:
Delaware
Number of 7. Sole Voting Power 7,030,000
shares
beneficially 8. Shared Voting Power 0
owned by
each 9. Sole Dispositive Power 7,030,000
reporting
person with 10. Shared Dispositive Power 0
11. Aggregate amount beneficially owned by each reporting person:
7,030,000
12. Check box if the aggregate amount in row (11) excludes certain shares*
[ ]
13. Percent of class represented by amount in row (11) 19.3%
14. Type of reporting person: CO
Item 1. Security and Issuer
This statement on Schedule 13D relates to the Class A Common Stock,
par value $.01 per share (the "Class A Common Stock"), of AdvancePCS, a
Delaware corporation (the "Issuer"). The principal executive offices of the
Issuer are located at 5215 North O'Connor Boulevard, Suite 1600, Irving,
Texas 75039.
Item 2. Identity and Background
This statement is being filed by Rite Aid Corporation, a Delaware
corporation (the "Reporting Person"). The principal executive offices of
the Reporting Person are located at 30 Hunter Lane, Camp Hill, Pennsylvania
17011. The principal business of the Reporting Person is the ownership and
operation of retail drugstores, which sell prescription drugs and a wide
variety of general merchandise. The Reporting Person files annual,
quarterly and special reports, proxy statements and other information with
the Securities and Exchange Commission. Reference is made to such filings
for additional information concerning the Reporting Person.
(a)-(c); (f) Schedule I hereto sets forth certain information with
respect to the directors and executive officers of the Reporting Person.
(d)-(e) Neither the Reporting Person nor, to the knowledge of the
Reporting Person, any of its directors or executive officers, has during
the last five years, been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree
or final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any
violations with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
As consideration for the Issuer's acquisition of PCS Holding
Corporation ("PCS") from the Reporting Person, the Issuer has paid or
issued to the Reporting Person (i) $675 million in cash, (ii) 125,000
shares of Series A-2 11% Preferred Stock (the "Series A-2 Preferred
Stock"), (iii) $200 million aggregate principal amount of unsecured 10 year
senior subordinated notes (the "Notes") and (iv) warrants to purchase
780,000 shares of Class A Common Stock (the "Warrants"). The purchase and
sale of PCS was consummated on October 2, 2000, pursuant to a Stock
Purchase Agreement (the "Stock Purchase Agreement") between the Issuer and
the Reporting Person. In connection with such purchase and sale, the
Issuer, the Reporting Person, Joseph Littlejohn & Levy Fund III LP ("JLL")
and certain other investors (collectively the "JLL Investors") entered into
a Stockholders' Agreement (the "Stockholders' Agreement") that contains
certain provisions relating to such parties' ownership of the Issuer's
stock.
Item 4. Purpose of Transaction
As noted in Item 3 above, the Reporting Person acquired the Series
A-2 Preferred Stock, the Notes and the Warrants as part of the
consideration for the Reporting Person's sale of PCS to the Issuer. The
terms of the Series A-2 Preferred Stock are set forth in the Issuer's
Second Amended and Restated Certificate of Incorporation (the "Second
Amended and Restated Certificate"). The shares of Series A-2 Preferred
Stock are convertible into shares of Class B-2 Common Stock (the "Class B-2
Common Stock") of the Issuer. The shares of Class B-2 Common Stock are
convertible into shares of Class A Common Stock. The Series A-2 Preferred
Stock and the Series A-1 Preferred Stock of the Issuer are collectively
referred to herein as the "Series A Preferred Stock." Set forth below is a
summary of certain terms of these securities and the agreements entered
into in connection with their issuance.
Series A-2 Preferred Stock
Conversion. The holders of Series A-2 Preferred Stock (the "Series
A-2 Holders") may at any time convert the Series A-2 Preferred Stock into
Class B-2 Common Stock. If any shares of Series A-2 Preferred Stock are
converted, all shares of that series will be automatically converted. Each
share of Series A-2 Preferred Stock may be converted into that number of
shares of Class B-2 Common Stock determined by dividing $1,000 by the
conversion price then in effect (which is initially $20.00 and is subject
to certain adjustments).
Voting Rights. The Series A-2 Preferred Stock does not have any
voting rights except as provided by law and except that the Series A-2
Holders may initially elect two directors to the Issuer's board of
directors and shall be so entitled until October 2, 2002, and thereafter as
long as the number of outstanding shares of Series A-2 Preferred Stock is
equal to or greater than 50% of the number of shares of Series A-2
Preferred Stock issued on October 2, 2000 (the "Initial Series A-2
Amount"). If after October 2, 2002 the number of outstanding shares is less
than 50% but equal to or greater than 10% of the Initial Series A-2 Amount,
the Series A-2 Holders will be entitled to elect only one director. The
Series A-2 Holders will not be entitled to elect any directors after
October 2, 2002 if the number of outstanding shares of Series A-2 Preferred
Stock is less than 10% of the Initial Series A-2 Amount. The directors
designated by the Series A-2 Holders are Robert G. Miller and David R.
Jessick, each of whom is an executive officer of the Reporting Person.
Dividends. Any dividend or distribution on shares of the Issuer's
common stock will be payable on the Series A-2 Preferred Stock on an
"as-if-converted" basis at the time of such dividend or distribution.
Rank. The Series A-2 Preferred Stock ranks senior in right of
payment to all classes of common stock and junior in right of payment to
all of the Issuer's other equity securities for purposes of dividends and
distributions and upon the Issuer's liquidation, dissolution or winding up.
Liquidation Rights. In the event of the Issuer's liquidation,
dissolution or winding up, the Series A-2 Holders will be entitled to
receive the greater of (i) $1,000 per share of Series A-2 Preferred Stock,
plus all accrued, unpaid dividends and (ii) the securities and property
that would be received upon such liquidation, dissolution or winding up by
the holders of the number of shares of common stock issuable upon the
conversion of all of the Series A-2 Preferred Stock. A consolidation,
merger, recapitalization or sale of all or substantially all of the
Issuer's assets will be deemed a liquidation, dissolution or winding up at
the election of the holders of a majority of the shares of Series A-2
Preferred Stock.
Preemptive Rights. The Series A-2 Holders will be offered the right
to participate in future issuances of equity securities for cash to enable
them to maintain their then current fully diluted percentage ownership of
the Issuer.
Transfers. Shares of Series A-2 Preferred Stock may be transferred
only to certain permitted transferees. Permitted transferees of Series A-2
Preferred Stock (the "Permitted Transferees") include the Reporting Person,
subsidiaries of the Reporting Person and institutional lenders of the
Reporting Person or its subsidiaries acquiring such shares as security for
indebtedness.
Stockholders' Agreement
Standstill. Until October 2, 2004, the Reporting Person and the
Permitted Transferees are subject to standstill provisions, prohibiting
them from, among other things, purchasing additional shares of common stock
resulting in an increase in such holders' ownership percentage of the
Issuer, participating in proxy contests and making any public announcement
or proposal, or soliciting a third party to do the same, with respect to a
merger, sale or other corporate transaction that would result in a change
of control of the Issuer. This standstill covenant terminates:
o if the Issuer's board of directors approves a transaction resulting
in the acquisition by any person or group (other than the persons
and entities subject to the standstill) of beneficial ownership of
35% of the Issuer's common stock, determined on a fully diluted
basis;
o upon a merger of the Issuer;
o upon a transfer of all or substantially all of the Issuer's
properties or assets;
o upon any person or group becoming the beneficial owner of more than
35% of the Issuer's common stock, determined on a fully diluted
basis (provided that such 35% shall be increased by any shares
transferred by the persons and entities subject to the standstill
to an acquiror after it has announced an intention to engage in any
of the transactions reportable under Item 4 of Schedule 13D); and
o if the amount of shares held by the Reporting Person and certain
other investors represents less than 10% of all shares initially
issued to these parties pursuant to the PCS transaction.
Registration Rights. The Series A-2 Holders and the holders of any
Class A Common Stock issued upon conversion of the Class B-2 Common Stock
have registration rights as set forth below.
o The Series A-2 Holders will have unlimited piggyback registration
rights.
o The holders of the Class A Common Stock issuable upon conversion of
the Class B-2 Common Stock have two demand registration rights and
unlimited piggyback registration rights. The request for
registration may be submitted on or after April 2, 2001.
Class B-2 Common Stock
Voting Rights. The Class B-2 Common Stock will vote as a single
class with the Class B-1 Common Stock of the Issuer (the "Class B-1 Common
Stock") and the Class A Common Stock on an "as-if-converted" basis, except
for the election of directors. Further, the approval of the holders of at
least two-thirds of the then outstanding shares of the Class B-1 Common
Stock and the Class B-2 Common Stock (collectively, the "Class B Common
Stock"), voting or consenting separately as a single class, is required
before the Issuer can take certain actions, including:
o amending or repealing the Issuer's certificate of incorporation or
bylaws to adversely affect the rights of the Class B Common Stock;
o incurring certain indebtedness;
o voluntarily filing for bankruptcy, liquidation, dissolution or
winding up of the Issuer;
o increasing the number of directors on the board of directors to
more than 11, unless such increase is allowed pursuant to the
Second Amended and Restated Certificate or the certificate of
designation of the Series A Preferred Stock;
o having fewer than three of the Issuer's employees or officers serve
as directors on the board of directors; and
o entering into any agreement with an affiliate involving amounts in
excess of $5 million.
In addition, provided the number of outstanding shares of Class B Common
Stock plus the number of shares of Class B Common Stock issuable upon
conversion of the Series A Preferred Stock (the "Current Class B Amount")
is equal to or greater than 25% of the total number of shares of Class B
Common Stock that would have been issuable to the Reporting Person and the
JLL Investors on October 2, 2000 had the Series A and Series B Preferred
Stock of the Issuer been convertible into Class B Common Stock on such date
(the "Initial Class B Amount") and greater than 5% of the total issued and
outstanding shares of common stock, the Issuer may not, without the
approval of at least two-thirds of the then outstanding shares of Class B
Common Stock voting or consenting separately as a single class, undertake,
effect or consummate any merger, consolidation, other business combination
or any sale of all or substantially all of the Issuer's assets or other
transaction through which the Issuer causes a change in control of the
Issuer to be effected.
Voluntary Conversion of Class B-2 Common Stock into Class A Common
Stock. The holders of Class B-2 Common Stock may, at any time and from time
to time, convert any or all outstanding shares of Class B-2 Common Stock
into shares of Class A Common Stock on a one-for-one basis, subject to
certain adjustments.
Automatic Conversion of Class B-2 Common Stock into Class A Common
Stock. Upon the occurrence of any transfer not permitted under the Second
Amended and Restated Certificate, the shares of Class B-2 Common Stock
being transferred will automatically convert into shares of Class A Common
Stock. In addition, all outstanding shares of Class B Common Stock will
automatically convert into shares of Class A Common Stock if the Current
Class B Amount is less than certain specified amounts.
Preemptive Rights. The holders of Class B-2 Common Stock will be
offered the right to participate in future issuances of equity securities
for cash, subject to certain exceptions, to enable them to maintain their
then current fully diluted percentage ownership of the Company.
Board of Directors. The holders of Class B-2 Common Stock may initially
designate two Class B-2 Directors to the Issuer's board of directors. If at
any time after October 2, 2002, the number of shares of Class B-2 Common
Stock outstanding or, if Series A-2 Preferred Stock is outstanding, the
number of shares of Class B-2 Common Stock issuable upon conversion of the
Series A-2 Preferred Stock (the "Current Class B-2 Amount") represents less
than 50% of the number of shares issuable upon the conversion of the
125,000 shares of Series A-2 Preferred Stock (the "Initial Class B-2
Amount"), then the holders of Class B-2 Common Stock will be entitled to
elect only one director. The holders of Class B-2 Common Stock will not be
entitled to elect any directors if the Current Class B-2 Amount is less
than 10% of the Initial Class B-2 Amount.
The Notes
The Notes, which were issued pursuant to an Indenture dated as of
October 2, 2000 among the Issuer, various guarantors and U.S. Trust Company
of Texas, N.A. (the "Indenture"), bear interest at the rate of 11% per
annum for the first 18 months after their date of issuance, 12% for the
next six months and 13% thereafter until maturity. The Warrants are
attached to the Notes and are not exercisable prior to October 2, 2002.
Once exercisable, they will be transferable separately from the Notes and
entitle the holders collectively to purchase, for $20 per share, 780,000
shares of Class A Common Stock (subject to adjustment for certain dilutive
events). The Notes may be prepaid by the Issuer at any time; however, if
less than the entire outstanding principal amount is prepaid not more than
an aggregate of $75 million principal amount may be prepaid from the date
of issuance. Upon any prepayment prior to October 2, 2002, a ratable
portion of the Warrants attached to the Notes will expire. The Reporting
Person has certain registration rights with respect to the Notes, the
Warrants and the Class A Common Stock issuable upon exercise of the
Warrants pursuant to a Registration Rights Agreement (the "Registration
Rights Agreement") with the Issuer.
The foregoing summary is qualified in its entirety by the text of the
Stock Purchase Agreement, the Second Amended and Restated Certificate, the
Stockholders' Agreement, the Indenture, the Warrants and the Registration
Rights Agreement filed as exhibits to this statement.
Subject to the limitations set forth in the Stockholders' Agreement and
the Second Amended and Restated Certificate, the Reporting Person may sell
some or all of its securities of the Issuer in the open market or in
privately-negotiated transactions, depending on the Reporting Person's
evaluation of its and the Issuer's business, prospects and financial
condition, general economic and market conditions, and future developments.
In this regard, pursuant to the terms of the Registration Rights Agreement,
the Issuer has filed a shelf registration statement relating to the Notes
and the Warrants, and the Reporting Person is evaluating its alternatives
with respect to the possible disposition of such securities.
Except as set forth in this statement, neither the Reporting Person
nor, to the Reporting Person's knowledge, any of its directors or executive
officers, has any plans or proposals that relate to or would result in any
of the actions described in subparagraphs (a) through (j) of Item 4 of
Schedule 13D.
Item 5. Interest in Securities of the Issuer
(a) By virtue of its ownership of 125,000 shares of Series A-2
Preferred Stock and Warrants to purchase 780,000 shares of Class A Common
Stock, the Reporting Person may be deemed to beneficially own a total of
7,030,000 shares of Class A Common Stock, representing approximately 19.3%
of the shares of Class A Common Stock that would be outstanding assuming
the conversion of all of the Series A-2 Preferred Stock and the exercise of
all of the Warrants. Robert G. Miller and David R. Jessick, each of whom is
an executive officer of the Reporting Person, were among the JLL Investors
who purchased securities of the Issuer at the time of the sale of PCS to
the Issuer. As a result, each of Messrs. Miller and Jessick owns 44 shares
of Series A-1 Preferred Stock and 2800 shares of Class B-1 Common Stock.
The total purchase price paid by each individual was $100,000.
(b) The Reporting Person and Messrs. Miller and Jessick have sole
voting and dispositive power with respect to the respective securities of
the Issuer held by them.
(c) Other than the transactions described in Item 4, no other
transactions in shares of Class A Common Stock by the Reporting Person or,
to the Reporting Person's knowledge, any of its directors or executive
officers, were effected during the sixty days prior to the date of this
statement.
(d)-(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
respect to Securities of the Issuer
The responses to Items 3 and 4 are incorporated herein by reference.
All of the securities of the Issuer held by the Reporting Person have been
pledged to secure the Reporting Person's obligations under certain of its
credit facilities. The Reporting Person is required to use any net proceeds
from any sale of such securities to repay the then outstanding balance of
such credit facilities. Additional information concerning the Reporting
Person's credit facilities is contained in the Reporting Person's filings
with the Securities and Exchange Commission.
Except as set forth in this statement, neither the Reporting Person
nor, to its knowledge, any of its directors or executive officers, has any
contract, arrangement, understanding or relationship with any person with
respect to any securities of the Issuer.
Item 7. Material to be filed as Exhibits
Exhibit 1 Stock Purchase Agreement dated as of July 11, 2000 between the
Issuer and the Reporting Person (filed as Exhibit 2.1 to the
Issuer's Form 8-K filed with the Securities and Exchange
Commission on July 31, 2000 and incorporated herein by
reference)
Exhibit 2 Second Amended and Restated Certificate of Incorporation of
the Issuer (filed as Exhibit 99.1 to the Issuer's Form 8-K filed
with the Securities and Exchange Commission on December 11, 2000
and incorporated herein by reference)
Exhibit 3 Stockholders' Agreement dated as of October 2, 2000 among the
Issuer, the Reporting Person and the JLL Investors (filed as
Exhibit 10.1 to the Issuer's Form 8-K filed with the Securities
and Exchange Commission on October 16, 2000 and incorporated
herein by reference)
Exhibit 4 Registration Rights Agreement dated as of October 2, 2000
among the Issuer, the Reporting Person and the other parties
named therein (filed as Exhibit 10.2 to the Issuer's Form 8-K
filed with the Securities and Exchange Commission on October 16,
2000 and incorporated herein by reference)
Exhibit 5 Warrant dated as of October 2, 2000 issued to the Reporting
Person (filed as Exhibit 10.3 to the Issuer's Form 8-K filed
with the Securities and Exchange Commission on October 16, 2000
and incorporated herein by reference)
Exhibit 6 Indenture dated as of October 2, 2000 among the Issuer and the
other parties named therein (filed as Exhibit 10.5 to the
Issuer's Form 8-K filed with the Securities and Exchange
Commission on October 16, 2000 and incorporated herein by
reference)
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement with respect to
Rite Aid Corporation is true, complete and correct.
January 4, 2001
Rite Aid Corporation
By /s/ Elliot S. Gerson
_________________________________
Name: Elliot S. Gerson
Title: Senior Executive Vice President
and General Counsel
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF RITE AID CORPORATION
The name, business address, present principal occupation or
employment, and the name, principal business and address of any corporation
or other organization in which such employment is conducted, of each of the
directors and executive officers of Rite Aid Corporation is set forth
below. If no business address is given, the director's or officer's address
is Rite Aid Corporation, 30 Hunter Lane, Camp Hill, Pennsylvania 17011.
RITE AID CORPORATION
Name and Position
(if different from
Principal Occupation Present Principal Occupation or
or Employment) Employment and Address
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Robert G. Miller Director, Chairman of the Board and Chief
Executive Officer of Rite Aid Corporation
Mary F. Sammons Director, President and Chief Operating Officer
of Rite Aid Corporation
David R. Jessick Senior Executive Vice President and Chief
Administrative Officer of Rite Aid Corporation
Elliot S. Gerson Senior Executive Vice President and General
Counsel of Rite Aid Corporation
John T. Standley Senior Executive Vice President and Chief
Financial Officer of Rite Aid Corporation
James P. Mastrian Senior Executive Vice President - Marketing
and Logistics of Rite Aid Corporation
Christopher Hall Senior Vice President and Chief Accounting
Officer of Rite Aid Corporation
William J. Bratton President, The Bratton Group, LLC, which
Director provides criminal justice consulting services
900 Third Avenue
New York, NY 10022
Alfred M. Gleason Self-Employed Consultant
Director P.O. Box 446
Depoe Bay, OR 97341
Alex Grass Chief Executive Officer of Fleer/Skybox
Director International, L.P., which manufactures and
sells trading cards
1120 Route 73 South, Suite 300
Mount Laurel, NJ 08054
Leonard I. Green Executive Officer of Leonard Green &
Director Partners, L.P., a merchant banking firm
11111 Santa Monica Boulevard, Suite 2000
Los Angeles, CA 90025
Nancy A. Lieberman Partner at Skadden, Arps, Slate, Meagher &
Director Flom LLP, a law firm
4 Times Square, New York, NY 10036-6522
Stuart M. Sloan Principal of Sloan Capital Companies, a
Director private investment company
1301 Fifth Avenue, Suite 3000
Seattle, WA 98101
Jonathan D. Sokoloff Executive Officer of Leonard Green &
Director Partners, L.P., a merchant banking firm
11111 Santa Monica Boulevard, Suite 2000
Los Angeles, CA 90025
Leonard N. Stern Chairman of the Board and Chief Executive
Director Officer of the Hartz Group, Inc., which is
engaged in various businesses including pet
supplies, hotels, real estate development and
investing
667 Madison Ave, 24th Floor
New York, NY 10021
Gerald Tsai, Jr. Chairman of Satmark Media Group, an ATM
Director advertising company
200 Park Avenue
Suite 4522
New York, NY 10166
