EXHIBIT 10.4
RITE AID CORPORATION
$200,000,000
4.75% Convertible Notes Due 2006
Purchase Agreement
New York, New York
November 13, 2001
Xxxxxxx Xxxxx Xxxxxx Inc.
X.X. Xxxxxx Securities Inc.
As Representatives of the Initial Purchasers
c/o Xxxxxxx Xxxxx Barney Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Rite Aid Corporation, a corporation organized under the laws
of Delaware (the "Company"), proposes to issue and sell to the several parties
named in Schedule I hereto (the "Initial Purchasers"), for whom you (the
"Representatives") are acting as representatives, $200,000,000 principal amount
of its 4.75% Convertible Notes Due 2006 (the "Firm Securities"), and, at the
election of the Initial Purchasers, up to an aggregate of $50,000,000 additional
principal amount thereof (the "Optional Securities") (the Firm Securities and
any Optional Securities which the Initial Purchasers elect to purchase pursuant
to this Agreement being collectively referred to as the "Securities")
convertible into Common Stock, par value $1.00 ("Stock"), of the Company.
The Securities are to be issued under an indenture (the
"Indenture"), to be dated as of November 19, 2001, between the Company and BNY
Midwest Trust Company, as trustee (the "Trustee"). The Securities have the
benefit of a Registration Rights Agreement (the "Registration Rights
Agreement"), to be dated as of November 19, 2001, among the Company and the
Initial Purchasers, pursuant to which the Company has agreed to file with the
United States Securities and Exchange Commission (the "Commission") under the
circumstances set forth therein a shelf registration statement (the "Shelf
Registration Statement") pursuant to Rule 415 of the Securities Act (as defined)
relating to the resale of (i) such Securities and (ii) the shares of Stock
initially issuable upon conversion of the Securities by holders thereof, and to
use its best efforts to cause such shelf registration statement to be declared
effective.
To the extent there are no additional parties listed on
Schedule I other than you, the term Representatives as used herein shall mean
you as the Initial Purchasers, and the terms Representatives and Initial
Purchasers shall mean either the singular or plural as the context requires. The
use of the neuter in this Agreement shall include the feminine and masculine
wherever appropriate. The use of the neuter in this Agreement shall include the
feminine and masculine wherever appropriate. Certain terms used herein are
defined in Section 16 hereof.
The sale of the Securities to the Initial Purchasers will be
made without registration of the Securities under the Act in reliance upon
exemptions from the registration requirements of the Act.
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In connection with the sale of the Securities, the Company has
prepared a preliminary offering memorandum, dated November 12, 2001 (as amended
or supplemented at the Execution Time, including any and all exhibits thereto
and any information incorporated by reference therein, the "Preliminary
Memorandum"), and a final offering memorandum, dated November 13, 2001 (as
amended or supplemented at the Execution Time, including any and all annexes
forming a part thereof and any information incorporated by reference therein,
the "Final Memorandum"). Each of the Preliminary Memorandum and the Final
Memorandum sets forth certain information concerning the Company and the
Securities. The Company hereby confirms that it has authorized the use of the
Preliminary Memorandum and the Final Memorandum, and any amendment or supplement
thereto, in connection with the offer and sale of the Securities by the Initial
Purchasers.
1. Representations and Warranties. The Company represents and
warrants to each Initial Purchaser as set forth below in this Section 1.
(a) The Preliminary Memorandum, at the date thereof, did not
contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. At the
Execution Time and on the Closing Date (as defined in Section 3
hereof), the Final Memorandum did not, and will not (and any amendment
or supplement thereto, at the date thereof and at the Closing Date,
will not), contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representation or warranty
as to the information contained in or omitted from the Preliminary
Memorandum or the Final Memorandum, or any amendment or supplement
thereto, in reliance upon and in conformity with information furnished
in writing to the Company by or on behalf of the Initial Purchasers
through the Representatives specifically for inclusion therein.
(b) Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf (other than the Initial
Purchasers, as to whom the Company makes no representation) has,
directly or indirectly, made offers or sales of any security, or
solicited offers to buy any security, under circumstances that would
require the registration of the Securities under the Act.
(c) Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf (other than the Initial
Purchasers, as to whom the Company makes no representation) has engaged
in any form of general solicitation or general advertising (within the
meaning of Regulation D) in connection with any offer or sale of the
Securities in the United States.
(d) The Securities satisfy the eligibility requirements of
Rule 144A(d)(3) under the Act.
(e) Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf (other than the Initial
Purchasers, as to whom the Company makes no representation) has engaged
in any directed selling efforts with respect to the Securities being
sold in reliance on Regulation S, and each of them has complied with
the offering restrictions requirements of Regulation S. Terms used in
this paragraph have the meanings given to them by Regulation S.
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(f) The Company is not, and after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Final Memorandum will not be, an
"investment company" within the meaning of the Investment Company Act.
(g) The Company is subject to and in compliance, in all
material respects, with the reporting requirements of Section 13 or
Section 15(d) of the Exchange Act.
(h) The Company has not paid or agreed to pay to any person
any compensation for soliciting another to purchase any Securities
(except as contemplated by this Agreement).
(i) The Company has not taken, directly or indirectly, any
action designed to or that would constitute or that might reasonably be
expected to cause or result in, under the Exchange Act or otherwise,
the stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(j) On the Closing Date, the Indenture will conform in all
material respects to the description thereof contained in the Final
Memorandum.
(k) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or
organized with full corporate power and authority to own or lease, as
the case may be, and to operate its properties and conduct its business
as described in the Final Memorandum, and is duly qualified to do
business as a foreign corporation and is in good standing under the
laws of each jurisdiction which requires such qualification except to
the extent that failure to be so qualified or be in good standing would
not reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business (a "Material Adverse Effect").
(l) All the outstanding shares of capital stock of each
subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable, and, except for Rx USA, Inc., Rite Aid
Lease Management Corporation and Rite Aid Risk Management Corp., all
outstanding shares of capital stock of the subsidiaries of the Company
are owned by the Company either directly or through wholly owned
subsidiaries free and clear of any perfected security interest or any
other security interests, claims, liens or encumbrances.
(m) The Company's authorized equity capitalization is as set
forth in the Final Memorandum and the capital stock conforms in all
material respects to the description thereof contained in the Final
Memorandum; the shares of Stock initially issuable upon conversion of
the Securities have been duly and validly authorized and, when issued
upon conversion in accordance with the terms of the Securities and the
Indenture, will be validly issued, fully paid and nonassessable; the
Board of Directors of the Company or a duly constituted committee
thereof, has duly and validly adopted resolutions reserving such shares
of Stock for issuance upon conversion; and except as set forth in the
Final Memorandum, no options, warrants, or other rights to purchase,
agreements or other obligations to issue, or rights to convert any
obligations into or exchange any securities for shares of capital stock
or ownership interest in the Company are outstanding (other than
warrants held by X.X. Xxxxxx Securities Inc. and its affiliates on the
date hereof).
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(n) There are no persons with registration rights or other
similar rights to have any securities of the Company (other than the
Securities) registered under the Shelf Registration Statement, other
than the persons holding such rights under those agreements listed on
Schedule II hereto.
(o) None of the holders of outstanding shares of capital stock
of the Company and no other person has or will have any preemptive or
other rights to purchase, subscribe for or otherwise acquire (i) the
Securities or the shares of Stock to be issued upon conversion of the
Securities or any rights to such shares or (ii) as a result of or in
connection with the transactions contemplated by the Indenture, this
Agreement or the Registration Rights Agreement, any other capital stock
of the Company or rights thereto.
(p) The statements in the Final Memorandum under the headings
"Certain United States Federal Income Tax Considerations for Non-United
States Holders," "Description of Notes," "Description of Capital
Stock," "Regulation," "Legal Proceedings," "Description of Other
Indebtedness" and "Risk Factors" fairly summarize the matters therein
described.
(q) This Agreement has been duly authorized, executed and
delivered by the Company; the Indenture has been duly authorized and,
assuming due authorization, execution and delivery thereof by the
Trustee, when executed and delivered by the Company, will constitute a
legal, valid and binding instrument enforceable against the Company in
accordance with its terms (subject, as to the enforcement of remedies,
to applicable bankruptcy, fraudulent conveyance, reorganization,
insolvency, moratorium or other laws affecting creditors' rights
generally from time to time in effect and to general principles of
equity); the Securities have been duly authorized, and, when executed
and authenticated in accordance with the provisions of the Indenture
and delivered to and paid for by the Initial Purchasers, will have been
duly executed and delivered by the Company and (assuming the due
authorization, execution and delivery of the Indenture by the Trustee)
will constitute the legal, valid and binding obligations of the Company
entitled to the benefits of the Indenture (subject, as to the
enforcement of remedies, to applicable bankruptcy, fraudulent
conveyance, reorganization, insolvency, moratorium or other laws
affecting creditors' rights generally from time to time in effect and
to general principles of equity) and will be convertible into Stock in
accordance with their terms; and the Registration Rights Agreement has
been duly authorized and, when executed and delivered by the Company,
will constitute a legal, valid and binding instrument enforceable
against the Company in accordance with its terms (subject, as to the
enforcement of remedies, to applicable bankruptcy, fraudulent
conveyance, reorganization, insolvency, moratorium or other laws
affecting creditors' rights generally from time to time in effect and
to general principles of equity and except that the enforceability of
any rights to contribution or indemnification may be violative of
public policy under any law, rule or regulation).
(r) Subject to compliance by the Initial Purchasers with the
representations, warranties and agreements set forth in Section 4 of
this Agreement, no consent, approval, authorization, filing with or
order of any court or governmental agency or body is required in
connection with the transactions contemplated herein, in the Indenture
or the Registration Rights Agreement, except such as will be obtained
under the Act and the Trust Indenture Act, the securities laws of any
jurisdiction outside the U.S. in which the Securities are offered and
such as may be required under the blue sky laws of any jurisdiction and
the National Association of Securities Dealers Inc. in connection with
the purchase and distribution of the Securities by the Initial
Purchasers in the manner contemplated herein and in the Final
Memorandum and the Registration Rights Agreement.
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(s) On the Closing Date, neither the execution and delivery of
the Indenture, this Agreement or the Registration Rights Agreement, the
issue and sale of the Securities, nor the fulfillment of the terms
hereof or thereof will conflict with, result in a breach or violation
of, or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any of its subsidiaries pursuant to, (i)
the charter or by-laws of either of the Company or any subsidiary, (ii)
any statute, rule, regulation or order of any governmental agency or
body or any court, domestic or foreign, having jurisdiction over the
Company or any subsidiary of the Company or any of their properties, as
applicable or (iii) any agreement or instrument to which the Company or
any such subsidiary is a party or by which the Company or any such
subsidiary is bound or to which any of the properties of the Company or
any of its subsidiaries is subject.
(t) The consolidated historical financial statements and
schedules of the Company and its consolidated subsidiaries included in
or incorporated by reference in the Final Memorandum present fairly in
all material respects the financial condition, results of operations
and cash flows of the Company as of the dates and for the periods
indicated, comply as to form with the applicable accounting
requirements of the Act and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as otherwise noted therein);
the selected financial data set forth under the caption "Selected
Consolidated Financial Information" in the Final Memorandum fairly
present, on the basis stated in the Final Memorandum, the information
included therein.
(u) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries or its or their property is pending
or, to the best knowledge of the Company, threatened that (i) could
reasonably be expected to have a material adverse effect on the
performance of this Agreement, the Indenture or the Registration Rights
Agreement, or the consummation of any of the transactions contemplated
hereby or thereby; or (ii) could reasonably be expected to have a
Material Adverse Effect, except as set forth in or contemplated in the
Final Memorandum (exclusive of any amendment or supplement thereto).
(v) The Company and each of its subsidiaries own or lease all
such properties as are necessary to the conduct of their respective
operations as presently conducted, except where the failure to own or
lease such property could not reasonably be expected to have a Material
Adverse Effect.
(w) Neither the Company nor any subsidiary is in violation or
default of (i) any provision of its charter or bylaws; (ii) the terms
of any agreement or instrument to which it is a party or bound or to
which its property is subject; or (iii) any statute, rule, regulation
or order of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Company or any subsidiary of the
Company or any of their properties, as applicable, except in the case
of (ii) and (iii), such violation or default that could not reasonably
by expected to have a Material Adverse Effect.
6
(x) Deloitte & Touche LLP, who have certified certain
financial statements of the Company and its consolidated subsidiaries
and delivered their report with respect to the audited consolidated
financial statements included or incorporated by reference in the Final
Memorandum, are, to the knowledge of the Company, independent public
accountants with respect to the Company within the meaning of the Act
and the applicable published rules and regulations thereunder.
(y) There are no stamp or other issuance or transfer taxes or
duties or other similar fees or charges required to be paid in
connection with the execution and delivery of this Agreement, the
issuance or sale by the Company of the Securities or, if issued on the
date hereof, the issuance of shares of Stock upon conversion of the
Securities.
(z) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed or has requested
extensions thereof (except in any case in which the failure so to file
would not have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
and its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Final Memorandum (exclusive of any amendment or
supplement thereto)) and has paid all taxes required to be paid by it
and any other assessment, fine or penalty levied against it, to the
extent that any of the foregoing is due and payable, except for any
such assessment, fine or penalty that is currently being contested in
good faith or as would not have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Final
Memorandum (exclusive of any amendment or supplement thereto).
(aa) No labor problem or dispute with the employees of the
Company or any of its subsidiaries exists or is threatened or imminent,
and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or its subsidiaries'
principal suppliers, contractors or customers that could reasonably be
expected to have a material adverse effect on the condition (financial
or otherwise), prospects, earnings, business or properties of the
Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, except as set
forth in or contemplated in the Final Memorandum (exclusive of any
amendment or supplement thereto).
(bb) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the
businesses in which they are engaged; the Company and its subsidiaries
are in compliance with the terms of such policies and instruments in
all material respects, except where noncompliance could not reasonably
be expected to have a Material Adverse Effect; and neither the Company
nor any such subsidiary has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Final Memorandum (exclusive of any amendment or
supplement thereto).
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(cc) No subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from
making any other distribution on such subsidiary's capital stock, from
repaying to the Company any loans or advances to such subsidiary from
the Company or from transferring any of such subsidiary's property or
assets to the Company or any other subsidiary of the Company, except as
described in or contemplated by the Final Memorandum.
(dd) The Company and its subsidiaries possess all licenses,
certificates, permits and other authorizations issued by the
appropriate federal, state or foreign regulatory authorities necessary
to conduct their respective businesses, except where the failure to
possess such licenses, certificates, permits and other authorizations
could not reasonably be expected to have a Material Adverse Effect, and
neither the Company nor any such subsidiary has received any notice of
proceedings relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, could
reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Final
Memorandum (exclusive of any amendment or supplement thereto).
(ee) The Company and its subsidiaries (i) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"); (ii) have received and are in
compliance with all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their respective
businesses; and (iii) have not received notice of any actual or
potential liability for the investigation or remediation of any
disposal or release of hazardous or toxic substances or wastes,
pollutants or contaminants, except where such non- compliance with
Environmental Laws, failure to receive required permits, licenses or
other approvals, or liability would not, individually or in the
aggregate, have a material adverse change in the condition (financial
or otherwise), prospects, earnings, business or properties of the
Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, except as set
forth in or contemplated in the Final Memorandum (exclusive of any
amendment or supplement thereto); except as set forth in the Final
Memorandum, neither the Company nor any of the subsidiaries has been
named as a "potentially responsible party" under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended.
8
(ff) Each of the Company and its subsidiaries has fulfilled
its obligations, if any, under the minimum funding standards of Xxxxxxx
000 xx xxx Xxxxxx Xxxxxx Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and the regulations and published
interpretations thereunder with respect to each "plan" (as defined in
Section 3(3) of ERISA and such regulations and published
interpretations) in which employees of the Company and its subsidiaries
are eligible to participate; the Company and its subsidiaries have not
incurred any unpaid liability to the Pension Benefit Guaranty
Corporation (other than for the payment of premiums in the ordinary
course) or to any such plan under Title IV of ERISA.
(gg) The Company and its subsidiaries own, possess, license or
have other rights to use, on reasonable terms, all patents, patent
applications, trade and service marks, trade and service xxxx
registrations, trade names, copyrights, licenses, inventions, trade
secrets, technology, know-how and other intellectual property
(collectively, the "Intellectual Property") necessary for the conduct
of the Company's business as now conducted or as proposed in the Final
Memorandum to be conducted, except where the failure to own such
Intellectual Property could not reasonably be expected to have a
Material Adverse Effect. Neither the Company nor any of its
subsidiaries has received any charge, complaint, claim, demand or
notice alleging any interference, infringement, misappropriation or
violation of a third party's right in Intellectual Property (including
any claim that the Company or any of its subsidiaries must license or
refrain from using such Intellectual Property), which, if the subject
of any unfavorable ruling, decision or finding could, individually or
in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(hh) Each executive officer and director of the Company has
entered into a written agreement with the Company in the form of
Exhibit B hereto (each such agreement, a "Lock-up Agreement"), and
executed originals of each Lock-up Agreement have been delivered to
you.
Any certificate signed by any officer of the Company and
delivered to the Initial Representatives or counsel for the Initial Purchasers
in connection with the offering of the Securities shall be deemed a
representation and warranty by the Company, as to matters covered thereby, to
each Initial Purchaser.
2. Purchase and Sale. Subject to the terms and conditions and
in reliance upon the representations and warranties herein set forth, (a) the
Company agrees to sell to each Initial Purchaser, and each Initial Purchaser
agrees, severally and not jointly, to purchase from the Company, at a purchase
price of 100% of the principal amount thereof, plus accrued interest, if any,
from November 19, 2001 to the Closing Date, the principal amount of Firm
Securities set forth opposite such Initial Purchaser's name on Schedule I hereto
and (b) in the event and to the extent that the Initial Purchasers shall
exercise the election to purchase Optional Securities as provided below, the
Company agrees to issue and sell to each Initial Purchaser, and each Initial
Purchaser agrees, severally and not jointly, to purchase from the Company, at
the purchase price set forth in clause (a) of this Section 2, the aggregate
principal amount of Optional Securities as to which such election shall have
been exercised (to be adjusted by you so as to eliminate fractions of $1,000).
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The Company hereby grants to Xxxxxxx Xxxxx Xxxxxx Inc. the
right to purchase at their election up to $50,000,000 aggregate principal amount
of Optional Securities, at the purchase price set forth in clause (a) of this
Section 2, for the sole purpose of covering over-allotments in the sale of the
Firm Securities. Any such election to purchase Optional Securities may be
exercised only by written notice from Xxxxxxx Xxxxx Barney Inc. to the Company,
given within a period of 30 calendar days after the date of this Agreement,
setting forth the aggregate principal amount of Optional Securities to be
purchased and the date on which such Optional Securities are to be delivered, as
determined by Xxxxxxx Xxxxx Barney Inc. but in no event earlier than the Closing
Date (as defined in Section 3 hereof) or, unless Xxxxxxx Xxxxx Xxxxxx Inc. and
the Company otherwise agree in writing, earlier than three or later than ten
business days after the date of such notice; provided that this paragraph is
subject to the condition that either (1) the resale of Optional Securities to
investors settles within 12 days after the first date of settlement of the
initial resale of any Firm Securities to one or more investors (the "Initial
Settlement Date"), (2) the resale of Optional Securities to investors settles
within 30 days of the Initial Settlement Date and is at a price that would not
cause the Optional Securities to have original issue discount in more than a "de
minimis" amount for Federal income tax purposes if the Optional Securities were
a separate "issue" for such purposes, or (3) the Representatives have consulted
with their counsel, Cravath, Swaine & Xxxxx, and with counsel to the Company,
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, to confirm that the Firm Securities
and the Optional Securities will be treated as part of the same "issue" for
Federal income tax purposes.
3. Delivery and Payment. Delivery of and payment for the Firm
Securities and the Optional Securities (if the option provided for in Section
2(b) hereof shall have been exercised on or before the third Business Day prior
to the Closing Date) shall be made at 10:00 A.M., New York City time, on
November 19, 2001, which date and time may be postponed by agreement between
Xxxxxxx Xxxxx Barney Inc. and the Company or as provided in Section 9 hereof
(such date and time of delivery and payment for the Securities being herein
called the "Closing Date"). If the option provided for in Section 2(b) hereof is
exercised after the third Business Day prior to the Closing Date, the Company
will deliver the Optional Securities (at the expense of the Company) to Xxxxxxx
Xxxxx Xxxxxx Inc. for its account on the date specified by Xxxxxxx Xxxxx Barney
Inc. (which shall be no fewer than three Business Days and no more than ten
Business Days after exercise of said option).
Delivery of the Securities shall be made to the Representatives against payment
by the several Initial Purchasers through the Representatives of the purchase
price thereof to or upon the order of the Company by wire transfer payable in
same-day funds to the account specified by the Company. Delivery of the
Securities shall be made through the facilities of The Depository Trust Company
unless Xxxxxxx Xxxxx Xxxxxx Inc. shall otherwise instruct.
If settlement of the Optional Securities occurs after the
Closing Date, the Company will deliver to Xxxxxxx Xxxxx Barney Inc. for its
account on the settlement date for the Optional Securities, and the obligation
of Xxxxxxx Xxxxx Xxxxxx Inc. to purchase the Optional Securities shall be
conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Closing Date pursuant to Section 6 hereof.
4. Offering by Initial Purchasers. Each Initial Purchaser,
severally and not jointly, represents and warrants to and agrees with the
Company that:
(a) It is a qualified institutional buyer (as defined in Rule
144A under the Act) or an institutional accredited investor (as defined
in Rule 501(a) under the Act).
(b) It has not offered or sold, and will not offer or sell,
any Securities except (i) to those persons it reasonably believes to be
qualified institutional buyers (as defined in Rule 144A under the Act)
and that, in connection with each such sale, it has taken or will take
reasonable steps to ensure that the purchaser of such Securities is
aware that such sale is being made in reliance on Rule 144A; or (ii) in
accordance with the restrictions set forth in Exhibit A hereto.
10
(c) Neither it nor any person acting on its behalf has made or
will make offers or sales of the Securities in the United States by
means of any form of general solicitation or general advertising
(within the meaning of Regulation D) in the United States.
5. Agreements. The Company agrees with each Initial
Purchaser that:
(a) The Company will furnish to each Initial Purchaser and to
counsel for the Initial Purchasers, without charge, during the period
referred to in paragraph (c) below, as many copies of the Final
Memorandum and any amendments and supplements thereto as you may
reasonably request.
(b) The Company will not amend or supplement the Final
Memorandum without the prior written consent of the Representatives,
which consent will not be unreasonably withheld or delayed.
(c) If at any time prior to the completion of the sale of the
Securities by the Initial Purchasers (as determined by the
Representatives), any event occurs as a result of which the Final
Memorandum, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it
shall be necessary to amend or supplement the Final Memorandum to
comply with applicable law, the Company promptly (i) will notify the
Representatives of any such event; (ii) subject to the requirements of
paragraph (b) of this Section 5, will prepare an amendment or
supplement that will correct such statement or omission or effect such
compliance; and (iii) will supply any supplemented or amended Final
Memorandum to the several Initial Purchasers and counsel for the
Initial Purchasers without charge in such quantities as you may
reasonably request.
(d) The Company will arrange, if necessary, for the
qualification of the Securities for sale by the Initial Purchasers
under the laws of such jurisdictions as the Representatives may
designate and will maintain such qualifications in effect so long as
required for the sale of the Securities; provided that in no event
shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action
that would subject it to service of process in suits, other than those
arising out of the offering or sale of the Securities, in any
jurisdiction where it is not now so subject. The Company will promptly
advise the Representatives of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose.
(e) The Company will not, and will not permit any of its
controlled Affiliates to, and will use its reasonable best efforts not
to permit any of its other Affiliates to, resell any Securities or
Stock issuable on conversion thereof that have been acquired by any of
them.
(f) Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf (other than the Initial
Purchasers) will, directly or indirectly, make offers or sales of any
security, or solicit offers to buy any security, under circumstances
that would require the registration of the Securities or the Stock
issuable on conversion thereof under the Act.
11
(g) Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf (other than the Initial
Purchasers) will engage in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with any
offer or sale of the Securities in the United States.
(h) So long as any of the Securities or shares of Stock issued
or issuable upon conversion of the Securities are "restricted
securities" within the meaning of Rule 144(a)(3) under the Act, the
Company will, during any period in which it is not subject to and in
compliance with Section 13 or 15(d) of the Exchange Act or it is not
exempt from such reporting requirements pursuant to and in compliance
with Rule 12g3-2(b) under the Exchange Act, provide to each holder of
such restricted securities and to each prospective purchaser (as
designated by such holder) of such restricted securities, upon the
request of such holder or prospective purchaser, any information
required to be provided by Rule 144A(d)(4) under the Act. This covenant
is intended to be for the benefit of the holders, and the prospective
purchasers designated by such holders, from time to time of such
restricted securities.
(i) Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf (other than the Initial
Purchasers) will engage in any directed selling efforts with respect to
the Securities, and each of them will comply with the offering
restrictions requirements of Regulation S. Terms used in this paragraph
have the meanings given to them by Regulation S.
(j) The Company will cooperate with the Representatives and
use its best efforts to permit the Securities to be eligible for
clearance and settlement through The Depository Trust Company.
(k) The Company will not for a period of 90 days following the
Execution Time, without the prior written consent of Xxxxxxx Xxxxx
Barney Inc. (which consent shall not be unreasonably withheld, delayed
or conditioned), offer, sell, contract to sell, pledge or otherwise
dispose of, or file (or participate in the filing of) a registration
statement with the Commission in respect of, or establish or increase a
put equivalent position or liquidate or decrease a call equivalent
position within the meaning of Section 16 of the Exchange Act and the
rules and regulations of the Commission promulgated thereunder with
respect to, any shares of capital stock of the Company or any
securities convertible or exercisable or exchangeable for such capital
stock, or publicly announce an intention to effect any such
transaction; provided, however, that (i) the Company may issue common
stock, or grant options to purchase common stock or other awards, in
each case under its existing stock or bonus plans, to employees,
directors and consultants of the Company or pursuant to commercial
arrangements with partners of the Company, (ii) the Company may file
registration statements in respect of the Securities and shares of
common stock issuable upon conversion of the Securities and may issue
common stock upon conversion of the Securities, (iii) the Company may
issue common stock or securities convertible into common stock and file
registration statements, in each case in connection with acquisitions,
the consideration for which includes the issuance of common stock or
securities convertible into common stock; provided that the parties
receiving the Class A common stock in any acquisition agree to be bound
by the foregoing restrictions, (iv) the Company may file a registration
statement in any instance in which the Company is required to register
shares of common stock pursuant to registration rights agreements in
which the Company is a party thereto and (v) the Company may issue
common stock in exchange for the preferred stock of Rite Aid Lease
Management Corporation and the Company may file a registration
statement with respect thereto.
12
(l) The Company will not take, directly or indirectly, any
action designed to or that would constitute or that might reasonably be
expected to cause or result in, under the Exchange Act or otherwise,
the stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(m) The Company currently has no plan or intent to be or
become, or be or become owned by, an open-end investment company, unit
investment trust or face-amount certificate company that is or is
required to be registered under Section 8 of the Investment Company
Act.
(n) The Company agrees to pay the costs and expenses relating
to the following matters: (i) the preparation of the Indenture and the
Registration Rights Agreement and the issuance of the Securities; (ii)
the preparation, printing or reproduction of the Preliminary Memorandum
and Final Memorandum and each amendment or supplement to either of
them; (iii) the printing (or reproduction) and delivery (including
postage, air freight charges and charges for counting and packaging) of
such copies of the Preliminary Memorandum and Final Memorandum, and all
amendments or supplements to either of them, as may, in each case, be
reasonably requested for use in connection with the offering and sale
of the Securities; (iv) the preparation, printing, authentication,
issuance and delivery of certificates for the Securities, including any
stamp or transfer taxes in connection with the original issuance and
sale of the Securities and the shares of Stock issuable upon conversion
thereof; (v) the printing (or reproduction) and delivery of this
Agreement, any blue sky memorandum and all other agreements or
documents printed (or reproduced) and delivered in connection with the
offering of the Securities; (vi) any registration or qualification of
the Securities for offer and sale under the securities or blue sky laws
of the several states (including filing fees and the reasonable fees
and expenses of counsel for the Initial Purchasers relating to such
registration and qualification); (vii) admitting the Securities for
trading in The Portal Market of the NASD and the listing of the shares
of Stock issuable upon conversion of the Securities; (viii) the
transportation and other expenses incurred by or on behalf of Company
representatives in connection with presentations to prospective
purchasers of the Securities; (ix) the fees and expenses of the
Company's accountants and the fees and expenses of counsel (including
local and special counsel) for the Company; and (x) all other costs and
expenses incident to the performance by the Company of its and their
obligations hereunder and under the Indenture and the Registration
Rights Agreement. It is understood, however, that, except as provided
in Section 5 and Sections 7 and 8 of this Agreement, the Initial
Purchasers will pay all of their own costs and expenses, including the
fees of their counsel.
(o) The Company will reserve and keep available at all times,
free of preemptive rights, shares of Stock for the purpose of enabling
the Company to satisfy its obligations to issue shares of Stock upon
conversion of the Securities.
13
(p) The Company will refuse, and will cause all applicable
trustees and transfer agents to refuse, to register any transfer of
Securities or shares of Stock issued upon conversion of Securities if
such transfer is not made in accordance with the provisions of
Regulation S under the Securities Act, pursuant to an effective
registration statement under the Securities Act or pursuant to an
available exemption from the registration requirements of the
Securities Act; provided that the provisions of this paragraph shall
not be applicable to any Security or share of Stock which has been
transferred pursuant to an effective registration statement Rule 144
under the Securities Act, and, as a result of which, or otherwise, are
no longer subject to restrictions on transfer under the Securities Act.
(q) All of the Securities and shares of Stock issuable upon
conversion thereof will contain a legend to the effect that the
transfer thereof is prohibited except in accordance with the provisions
of Regulation S, pursuant to an effective registration statement under
the Securities Act or pursuant to an available exemption from
registration under the Securities Act and that hedging transactions
involving those Securities or shares may not be conducted unless in
compliance with the Securities Act; provided that such legend may be
removed if such Securities or shares have been transferred pursuant to
an effective registration statement or or when eligible for resale
under Rule 144 under the Securities Act, and, as a result of which, or
otherwise, is no longer subject to restrictions on transfer under the
Securities Act.
(r) Between the date hereof and the Closing Date, the Company
will not do or authorize any act or thing that would result in an
adjustment of the conversion price.
(s) The Company shall duly list the shares of Stock issuable
upon conversion of the Securities on the New York Stock Exchange,
subject to official notice of issuance.
6. Conditions to the Obligations of the Initial Purchasers.
The obligations of each Initial Purchaser to purchase the Firm Securities and
the obligation of Xxxxxxx Xxxxx Xxxxxx Inc. to purchase the Optional Securities,
as the case may be, shall be subject to the accuracy of the representations and
warranties on the part of the Company contained herein at the Execution Time and
the Closing Date (and any settlement date with respect to the Optional
Securities), to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions:
(a) The Initial Purchasers shall have received an opinion,
dated the Closing Date, of Xxxxxx X. Xxxxxx, Esq., general counsel for
the Company, substantially to the effect set forth below:
(i) each of the Company and its subsidiaries has been
duly incorporated and is validly existing as a corporation in
good standing under the laws of the jurisdiction in which it
is chartered or organized, with full corporate power and
authority to own or lease, as the case may be, and to operate
its properties and conduct its business as described in the
Final Memorandum, and is duly qualified to do business as a
foreign corporation and is in good standing under the laws of
each jurisdiction which requires such qualification, except to
the extent that the failure to be so qualified or in good
standing could not reasonably be expected to have a Material
Adverse Effect;
14
(ii) all the outstanding shares of capital stock of
the Company and each subsidiary have been duly and validly
authorized and issued and are fully paid and nonassessable,
and, except for Rx USA, Inc., Rite Aid Lease Management
Corporation and Rite Aid Risk Management Corp., all
outstanding shares of capital stock of the Subsidiaries are
owned by the Company either directly or through wholly owned
subsidiaries free and clear of any perfected security interest
and, to the knowledge of such counsel, after due inquiry, any
other security interests, claims, liens or encumbrances;
(iii) the Company's authorized capital stock is as
set forth in the Final Memorandum; the shares conform, as to
legal matters, in all material respects to the description
thereof contained in the Final Memorandum under the caption
"Description of Capital Stock"; the shares of Stock initially
issuable upon conversion of the Securities have been duly
authorized and, when issued upon conversion in accordance with
the Securities and the Indenture, will be validly issued,
fully paid and nonassessable; no holder of outstanding shares
of capital stock of the Company has any statutory or, to such
Counsel's knowledge after due inquiry, contractual preemptive
rights to subscribe for the Securities or the shares of Stock
issuable upon conversion thereof; and to such counsel's
knowledge after due inquiry, except as set forth in the Final
Memorandum, no options, warrants or other rights to purchase,
agreements or other obligations to issue, or rights to convert
any obligations into or exchange any securities for, shares of
capital stock or ownership interests in the Company are
outstanding;
(iv) to the knowledge of such counsel, there is no
pending or threatened action, suit or proceeding by or before
any court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries or
its or their property that would be required to be disclosed
in a registration statement on Form S-1 under the Act and that
is not adequately disclosed in the Final Memorandum, except in
each case for such proceedings that, if the subject of an
unfavorable decision, ruling or finding would not singly or in
the aggregate, result in a material adverse change in the
condition (financial or otherwise), prospects, earnings,
business or properties or results of operations of the Company
and its subsidiaries, taken as a whole;
(v) each of this Agreement and the Registration
Rights Agreement has been duly authorized, executed and
delivered by the Company;
(vi) neither the execution and delivery of the
Indenture, this Agreement or the Registration Rights
Agreement, the issue and sale of the Securities, nor the
fulfillment of the terms hereof or thereof will conflict with,
result in a breach or violation of, or imposition of any lien,
charge or encumbrance upon any property or asset of the
Company or any of its subsidiaries pursuant to, (i) the
charter or by-laws of the Company or any of its subsidiaries;
(ii) the terms of any indenture, contract, lease, mortgage,
deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to
which the Company or any of its subsidiaries is a party or
bound or to which any of their respective properties is
subject; or (iii) any statute, law, rule, regulation,
judgment, order or decree applicable to the Company or any of
its subsidiaries of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority
having jurisdiction over the Company, any of its subsidiaries
or any of their respective properties, except such conflicts,
breaches or violations as could not reasonably be expected to
have a Material Adverse Effect; or could not reasonably be
expected to have a material adverse effect on the Company's
performance of this Agreement, the Indenture or the
Registration Rights Agreement, or the consummation of any of
the transactions contemplated by the Purchase Agreement or
such other agreements;
15
(vii) no consent, approval, authorization, filing
with or order of any court or governmental agency or body is
required in connection with the transactions contemplated
herein or in the Indenture or the Registration Rights
Agreement, except such as will be obtained under the Act and
the Trust Indenture Act in connection with the transactions
contemplated by the Registration Rights Agreement and such as
may be required under the blue sky or securities laws of any
jurisdiction in connection with the transactions contemplated
by this Agreement and the Registration Rights Agreement and
such other approvals (specified in such opinion) as have been
obtained;
(viii) the statements in the Final Memorandum under
the headings "Regulation" and "Legal Proceedings"; insofar as
such statements summarize legal matters, agreements, documents
or proceedings discussed therein, are accurate and fair
summaries of such legal matters, agreements, documents or
proceedings; and
(ix) other than the persons holding such rights under
those agreements listed on Schedule II to the Purchase
Agreement, no holder of any security of the Company has any
right (except as has been satisfied or waived) to require
registration of shares of Stock or any other security of the
Company under the Shelf Registration Statement.
(x) all documents filed under the Exchange Act and
deemed to be included in the Preliminary Memorandum, or any
amendment or supplement thereto and any other documents
incorporated by reference in the Preliminary Memorandum as
amended or supplemented (other than the financial statements
and related schedules therein, as to which such counsel need
express no opinion), when they were filed with the Commission,
complied as to form in all material respects with the
requirements of the Exchange Act, and the rules and
regulations of the Commission thereunder; and such counsel has
no reason to believe that any of such documents, when they
were so filed, contained an untrue statement of a material
fact or omitted to state a material fact necessary in order to
make the statements therein, in the light of the circumstances
under which they were made when such documents were so filed,
not misleading.
In addition, such counsel will state that he has
participated in conferences with officers and other
representatives of the Company, counsel for the Company,
representatives of the independent accountants of the Company
and the Initial Purchasers and its counsel at which the
contents of the Final Memorandum and related matters were
discussed; although he is not passing upon, and does not
assume any responsibility for, the accuracy, completeness or
fairness of the statements contained in the Final Memorandum
and has made no independent check or verification thereof, on
the basis of the foregoing such counsel has no reason to
believe that at the Execution Time and on the Closing Date the
Final Memorandum contained or contains any untrue statement of
a material fact or omitted or omits to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (in
each case, other than the financial statements and other
financial information contained therein, as to which such
counsel need express no opinion).
16
(b) The Initial Purchasers shall have received an opinion,
dated the Closing Date, of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP,
counsel for the Company, substantially to the effect set forth below:
(i) Based solely on such counsel's review of
good-standing certificates, the Company is validly existing as
a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized, with full
corporate power and authority to own or lease, as the case may
be, and to operate its properties and conduct its business as
described in the Final Memorandum;
(ii) The shares of Stock initially issuable upon
conversion of the Securities have been duly authorized and the
resolutions of the Executive Committee of the Board of
Directors of the Company approving the issuance of the
Securities have reserved for issuance the Stock and, if and
when issued and delivered upon conversion of the Securities in
accordance with the provisions of the Securities and the
Indenture at conversion prices at or in excess of the par
value of such Stock, will be duly and validly issued and fully
paid and nonassessable, and the shares of common stock into
which the Securities are initially convertible conform to the
description of the common stock contained in the Final
Memorandum;
(iii) the Indenture has been duly authorized,
executed and delivered, and is a valid and binding agreement
of the Company enforceable against the Company in accordance
with its terms (subject, as to the enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium
or other laws affecting creditors' rights generally from time
to time in effect and to general principles of equity,
including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, regardless of
whether considered in a proceeding in equity or at law and
such counsel need not express any opinion as to the
applicability or effect of any fraudulent transfer, preference
or similar law); the Securities have been duly authorized and
when executed by the Company and delivered to and paid for by
the Initial Purchasers under this Agreement (assuming due
execution and authentication of the Securities by the Trustee
under the Indenture), will constitute legal, valid and binding
obligations of the Company entitled to the benefits of the
Indenture (subject, as to the enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium
or other laws affecting creditors' rights generally from time
to time in effect and to general principles of equity,
including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, regardless of
whether considered in a proceeding in equity or at law and
such counsel need not express any opinion as to the
applicability or effect of any fraudulent transfer, preference
or similar law); the Registration Rights Agreement has been
duly authorized, executed and delivered and is a valid and
binding agreement by the Company enforceable against the
Company in accordance with its terms (subject, as to the
enforcement of remedies, to applicable bankruptcy, fraudulent
conveyance, reorganization, insolvency, moratorium or other
laws affecting creditors' rights generally from time to time
in effect and to general principles of equity, including,
without limitation, concepts of materiality, reasonableness,
good faith and fair dealing, regardless of whether considered
in a proceeding in equity or at law and such counsel need not
express any opinion as to the applicability or effect of any
fraudulent transfer, preference or similar law); and the
statements set forth under the heading "Description of Notes"
and "Description of Capital Stock" in the Final Memorandum,
insofar as such statements purport to summarize certain terms
of the Securities, the common stock, the Indenture and the
Registration Rights Agreement, fairly summarize such
provisions in all material respects;
17
(iv) to the knowledge of such counsel, there is no
pending or threatened action, suit or proceeding by or before
any court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries or
its or their property that is not adequately disclosed in the
Final Memorandum, except in each case for such proceedings
that, if the subject of an unfavorable decision, ruling or
finding would not singly or in the aggregate, result in a
material adverse change in the condition (financial or
otherwise), prospects, earnings, business or properties or
results of operations of the Company and its subsidiaries,
taken as a whole; and the statements in the Final Memorandum
under the headings "Certain United States Federal Income Tax
Considerations for Non-United States Holders" and "Description
of Other Indebtedness"; insofar as such statements summarized
legal matters, agreements, documents or proceedings discussed
therein, are accurate and fair summaries of such legal
matters, agreements, documents or proceedings;
(v) this Agreement has been duly authorized, executed
and delivered by the Company;
(vi) the execution and delivery of the Indenture,
this Agreement, the Registration Rights Agreement, the issue
and sale of the Securities, nor the fulfillment of the terms
hereof or thereof will not (i) conflict with the charter or
by-laws of the Company; (ii) constitute a violation of, or a
breach or default under the terms of any Applicable Contract
or (iii) violate or conflict with, or result in any
contravention of, any Applicable Law or Applicable Order. Such
counsel need not express any opinion, however, as to whether
such execution, delivery or performance will constitute a
violation of, or default under, any covenant, restriction or
provision with respect to financial ratios or tests or any
aspect of the financial condition or results of operation of
the Company or any of its subsidiaries;
(vii) assuming (i) the accuracy of the
representations and warranties of the Company set forth in
Section 1 of the Purchase Agreement and of you in Section 4 of
the Purchase Agreement, (ii) the due performance by the
Company of the covenants and agreements set forth in Section 5
of the Purchase Agreement and the due performance by you of
the covenants and agreements set forth in Section 4 of the
Purchase Agreement, (iii) your compliance with the offering
and transfer procedures and restrictions described in the
Offering Memorandum, and (iv) the accuracy of the
representations and warranties made in accordance with the
Offering Memorandum by purchasers to whom you initially resell
the Securities, the offer, sale and delivery of the Securities
to you in the manner contemplated by the Purchase Agreement
and the Offering Memorandum and the initial resale of the
Securities by you in the manner contemplated in the Offering
Memorandum and the Purchase Agreement, do not require
registration under the Securities Act of 1933, as amended, and
the Indenture does not require qualification under the Trust
Indenture Act of 1939, as amended, it being understood that
such counsel does not express any opinion as to any subsequent
resale of any Security;
18
(viii) the Company is not and, after giving effect to
the offering and sale of the Securities and the application of
the proceeds thereof as described in the Final Memorandum,
will not be an "investment company" as defined in the
Investment Company Act;
(ix) no Governmental Approval is required in
connection with the transactions contemplated herein or in the
Indenture or the Registration Rights Agreement, except such as
will be obtained under the Act and the Trust Indenture Act in
connection with the transactions contemplated by the
Registration Rights Agreement;
(x) The specimen stock certificate evidencing the
common stock of the Company complies in all material respects
with the applicable requirements of Delaware law; and
(xi) such counsel will state that it has participated
in conferences with officers and other representatives of the
Company, counsel for the Company, representatives of the
independent accountants of the Company and you and your
counsel at which the contents of the Final Memorandum and
related matters were discussed. Although it is not passing
upon, and does not assume any responsibility for, the
accuracy, completeness or fairness of the statements contained
in the Final Memorandum and has made no independent check or
verification thereof (except to the limited extent referred to
above), on the basis of the foregoing, no facts have come to
its attention that have led it to believe that the Final
Memorandum, as of its date or as of Closing Date, contained or
contains an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading, except that such counsel need
not express any opinion or belief with respect to the
financial statements, schedules and other financial data
included or excluded therefrom.
The following definitions apply to this paragraph (b):
"Applicable Contracts" means those agreements or
instruments identified in a schedule to the opinion reasonably
satisfactory to the Initial Purchasers.
19
"Applicable Laws" means Delaware General Corporation
Law (the "DGCL") and those laws, rules and regulations of the
State of New York and the federal laws of the United States of
America, in each case, which, in our experience, are normally
applicable to transactions of the type contemplated by the
Agreement, the Indenture and the Registration Rights Agreement
(other than the United States Federal securities laws, state
and foreign securities or blue sky laws, antifraud laws and
the rules and regulations of the National Association of
Securities Dealers Inc.), but without such counsel having made
any investigation as to any other laws, rules or regulations,
and which are not the subject of a specific opinion therein
referring expressly to a particular law or laws.
"Governmental Authorities" means any court,
regulatory body, administrative agency or governmental body of
the State of New York or the United States of America having
jurisdiction over the Company under Applicable Laws.
"Governmental Approval" means any consent, approval,
license, authorization or validation of, or filing,
qualification or registration with, any Governmental Authority
required to be made or obtained by the Company pursuant to
Applicable Laws.
"Applicable Orders" means those judgments, orders or
decrees, if any, of any Governmental Authority.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than the
jurisdiction of incorporation of the Company, the State of New York or the
Federal laws of the United States, to the extent they deem proper and specified
in such opinion, upon the opinion of other counsel of good standing whom they
believe to be reliable and who are satisfactory to counsel for the Initial
Purchasers; and (B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and public officials.
References to the Final Memorandum in this Section 6(a) include any amendment or
supplement thereto at the Closing Date.
(c) The Representatives shall have received from Cravath,
Swaine & Xxxxx, counsel for the Initial Purchasers, such opinion or
opinions, dated the Closing Date and addressed to the Representatives,
with respect to the issuance and sale of the Securities, the Indenture,
the Registration Rights Agreement, the Final Memorandum (as amended or
supplemented at the Closing Date) and other related matters as the
Representatives may reasonably require, and the Company shall have
furnished to such counsel such documents as they reasonably request for
the purpose of enabling them to pass upon such matters.
(d) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Final Memorandum, any amendment
or supplement to the Final Memorandum and this Agreement and that:
(i) the representations and warranties of the Company
in this Agreement are true and correct on and as of the
Closing Date with the same effect as if made on the Closing
Date, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date; and
20
(ii) since the date of the most recent financial
statements included in the Final Memorandum (exclusive of any
amendment or supplement thereto), there has been no material
adverse change in the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and
its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, except
as set forth in or contemplated by the Final Memorandum
(exclusive of any amendment or supplement thereto).
(e) At the Execution Time and at the Closing Date, the Company
shall have requested and caused Deloitte & Touche LLP to furnish to the
Representatives letters, dated respectively as of the Execution Time
and as of the Closing Date, in form and substance satisfactory to the
Representatives, confirming that they are independent accountants
within the meaning of the Act and the Exchange Act and the respective
applicable rules and regulations adopted by the Commission thereunder,
that they have performed a review of the unaudited interim financial
information of the Company for the six-month period ended September 1,
2001 and as at September 1, 2001, and stating in effect that:
(i) in their opinion the audited financial statements
and financial statement schedules included or incorporated by
reference in the Final Memorandum and reported on by them
comply as to form in all material respects with the applicable
accounting requirements of the Exchange Act and the related
rules and regulations adopted by the Commission thereunder
that would apply to the Final Memorandum if the Final
Memorandum were a prospectus included in a registration
statement on Form S-1 under the Act;
(ii) on the basis of a reading of the latest
unaudited financial statements made available by the Company
and its subsidiaries; their limited review, in accordance with
the standards established under Statement on Auditing
Standards No. 71, of the unaudited interim financial
information for the six-month period ended September 1, 2001,
and as at September 1, 2001; carrying out certain specified
procedures (but not an examination in accordance with
generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of
the meetings of the stockholders, directors and audit,
executive and compensation committees of the Company and the
Subsidiaries; and inquiries of certain officials of the
Company who have responsibility for financial and accounting
matters of the Company and its subsidiaries as to transactions
and events subsequent to September 1, 2001, nothing came to
their attention which caused them to believe that:
(1) any unaudited financial statements
included or incorporated in the Final Memorandum do
not comply in form in all material respects with
applicable accounting requirements and with the
related rules and regulations adopted by the
Commission with respect to financial statements
included or incorporated in quarterly reports on Form
10-Q under the Exchange Act; and said unaudited
financial statements are not in conformity with
generally accepted accounting principles applied on a
basis substantially consistent with that of the
audited financial statements included or incorporated
in the Final Memorandum;
21
(2) with respect to the period subsequent to
September 1, 2001, there were any changes, at a
specified date not more than five days prior to the
date of the letter, in the long-term debt less
current maturities of the Company and its
subsidiaries or common stock of the Company or
decreases in the stockholders' equity (deficit) of
the Company as compared with the amounts shown on the
September 1, 2001 consolidated balance sheet included
or incorporated in the Final Memorandum, or for the
period from September 2, 2001 to such specified date
there were any decreases, as compared with the
corresponding period in the preceding year in
revenues, net loss or loss from continuing operations
before income taxes and cumulative effect of
accounting change or in net loss per share of the
Company and its subsidiaries, except in all instances
for changes or decreases set forth in such letter, in
which case the letter shall be accompanied by an
explanation by the Company as to the significance
thereof unless said explanation is not deemed
necessary by the Representatives; or
(3) the information included in response to
Regulation S-K, Item 301 (Selected Financial Data),
Item 302 (Supplementary Financial Information), Item
402 (Executive Compensation) and Item 503(d) (Ratio
of Earnings to Fixed Charges) is not in conformity
with the disclosure requirements of Regulation S-K.
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of the
Company and its subsidiaries) set forth in the Final
Memorandum, including the information set forth under the
captions "Offering Memorandum Summary", "Risk Factors", "Use
of Proceeds", "Capitalization", "Selected Consolidated
Financial Data", "Management's Discussion and Analysis of
Financial Condition and Results of Operations", "Business",
"Management", "Executive Officer Compensation", "Security
Ownership of Certain Beneficial Owners and Management",
"Certain Relationships and Related Transactions," "Description
of Capital Stock" and "Description of Other Indebtedness" in
the Final Memorandum, agrees with the accounting records of
the Company and its subsidiaries, excluding any questions of
legal interpretation;
References to the Final Memorandum in this Section 6(e)
include any amendment or supplement thereto at the date of the
applicable letter.
(f) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Final Memorandum (exclusive of
any amendment or supplement thereto), there shall not have been (i) any
change or decrease specified in the letter or letters referred to in
paragraph (e) of this Section 6; or (ii) any change, or any development
involving a prospective change, in or affecting the condition
(financial or otherwise), prospects, earnings, business or properties
of the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, except as
set forth in or contemplated in the Final Memorandum (exclusive of any
amendment or supplement thereto) the effect of which, in any case
referred to in clause (i) or (ii) above, is, in the sole judgment of
the Representatives, so material and adverse as to make it impractical
or inadvisable to market the Securities as contemplated by the Final
Memorandum (exclusive of any amendment or supplement thereto).
22
(g) The Securities shall have been designated as
Portal-eligible securities in accordance with the rules and regulations
of the NASD, and the Securities shall be eligible for clearance and
settlement through The Depository Trust Company.
(h) Subsequent to the Execution Time, there shall not have
been any decrease in the rating of any of the Company's debt securities
by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Act), any notice given of
any intended or potential decrease in any such rating (including notice
of an adverse change in the outlook for such rating) or of a possible
change in any such rating that does not indicate the direction of the
possible change.
(i) Each Lock-up Agreement shall have been duly executed and
delivered to the Company and you and there shall have occurred no
breach of any Lock-up Agreement.
(j) The shares of Stock issuable upon conversion of the
Securities shall have been duly listed, subject to notice of issuance,
on the New York Stock Exchange.
(k) Prior to the Closing Date, the Company shall have
furnished to the Representatives such further information, certificates
and documents as the Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and counsel for the
Initial Purchasers, this Agreement and all obligations of the Initial Purchasers
hereunder may be canceled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancellation shall be given to the Company in
writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 will
be delivered at the office of counsel for the Initial Purchasers, at Cravath,
Swaine & Xxxxx, 000 Xxxxxx Xxxxxx, Xxx Xxxx, XX 00000, on the Closing Date.
7. Reimbursement of Expenses. If the sale of the Securities
provided for herein is not consummated because any condition to the obligations
of the Initial Purchasers set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Initial Purchasers, the Company will reimburse the Initial
Purchasers severally through Xxxxxxx Xxxxx Barney Inc. on demand for all
reasonable out-of-pocket expenses (including reasonable fees and disbursements
of counsel) that shall have been incurred by them in connection with the
proposed purchase and sale of the Securities.
23
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Initial Purchaser, the directors, officers,
employees and agents of each Initial Purchaser and each person who controls any
Initial Purchaser within the meaning of either the Act or the Exchange Act
against any and all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the Act, the Exchange Act or
other Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Memorandum, the Final
Memorandum (or in any supplement or amendment thereto), or arise out of or are
based upon the omission or alleged omission to state therein a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made in the Preliminary
Memorandum or the Final Memorandum, or in any amendment thereof or supplement
thereto, in reliance upon and in conformity with written information furnished
to the Company by or on behalf of any Initial Purchaser through the
Representatives specifically for inclusion therein; provided further, that with
respect to any untrue statement or omission of material fact made in any
Preliminary Memorandum, the indemnity agreement contained in this Section 8(a)
shall not inure to the benefit of any Initial Purchaser from whom the person
asserting any such loss, claim, damage or liability purchased the securities
concerned, to the extent that any such loss, claim, damage or liability of such
Initial Purchaser occurs under the circumstance where it shall have been
determined by a court of competent jurisdiction by final and nonappealable
judgment that (x) the Company had previously furnished copies of the Final
Memorandum to the Representatives, (y) the untrue statement or omission of a
material fact contained in the Preliminary Memorandum was corrected in the Final
Memorandum and (z) there was not sent or given to such person, at or prior to
the written confirmation of the sale of such securities to such person, a copy
of the Final Memorandum. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) Each Initial Purchaser severally and not jointly agrees to
indemnify and hold harmless the Company, each of its directors, each of its
officers, and each person who controls the Company within the meaning of either
the Act or the Exchange Act, to the same extent as the foregoing indemnity from
the Company to each Initial Purchaser, but only with reference to written
information relating to such Initial Purchaser furnished to the Company by or on
behalf of the Initial Purchaser through the Representatives specifically for
inclusion in the Preliminary Memorandum or the Final Memorandum (or in any
amendment or supplement thereto). This indemnity agreement will be in addition
to any liability which any Initial Purchaser may otherwise have. The Company
acknowledges that the statements set forth in the last paragraph of the cover
page regarding the delivery of the Securities and, under the heading "Plan of
Distribution," (i) the list of Initial Purchasers and their respective
participation in the sale of the Securities and (ii) the paragraph related to
stabilization and syndicate covering transactions in the Preliminary Memorandum
and the Final Memorandum, constitute the only information furnished in writing
by or on behalf of the Initial Purchasers for inclusion in the Preliminary
Memorandum or the Final Memorandum (or in any amendment or supplement thereto).
24
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses;
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the indemnified party
shall have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest; (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party; (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action; or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Initial Purchasers
severally agree to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively "Losses") to which the
Company and one or more of the Initial Purchasers may be subject in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and by the Initial Purchasers on the other from the
offering of the Securities; provided, however, that in no case shall any Initial
Purchaser (except as may be provided in any agreeement among the Initial
Purchasers relating to the offering of the Securities) be responsible for any
amount in excess of the purchase discount or commission applicable to the
Securities purchased by such Initial Purchaser hereunder. If the allocation
provided by the immediately preceding sentence is unavailable for any reason,
the Company and the Initial Purchasers severally shall contribute in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company on the one hand and of the Initial Purchasers
on the other in connection with the statements or omissions which resulted in
such Losses, as well as any other relevant equitable considerations. Benefits
25
received by the Company shall be deemed to be equal to the total net proceeds
from the offering (before deducting expenses) received by the Company, and
benefits received by the Initial Purchasers shall be deemed to be equal to the
total purchase discounts and commissions in each case set forth on the cover of
the Final Memorandum. Relative fault shall be determined by reference to, among
other things, whether any untrue or any alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information provided by the Company on the one hand or the Initial Purchasers on
the other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Company and the Initial Purchasers agree that it would not be just
and equitable if contribution were determined by pro rata allocation or any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person who controls an Initial Purchaser within the meaning
of either the Act or the Exchange Act and each director, officer, employee and
agent of an Initial Purchaser shall have the same rights to contribution as such
Initial Purchaser, and each person who controls the Company within the meaning
of either the Act or the Exchange Act and each officer and director of the
Company shall have the same rights to contribution as the Company, subject in
each case to the applicable terms and conditions of this paragraph (d).
9. Default by an Initial Purchaser. If any one or more Initial
Purchasers shall fail to purchase and pay for any of the Securities agreed to be
purchased by such Initial Purchaser hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Initial Purchasers shall be obligated severally to take
up and pay for (in the respective proportions which the principal amount of
Securities set forth opposite their names on Schedule I hereto bears to the
aggregate principal amount of Securities set forth opposite the names of all the
remaining Initial Purchasers) the Securities which the defaulting Initial
Purchaser or Initial Purchasers agreed but failed to purchase; provided,
however, that in the event that the aggregate principal amount of Securities
which the defaulting Initial Purchaser or Initial Purchasers agreed but failed
to purchase shall exceed 10% of the aggregate principal amount of Securities set
forth on Schedule I hereto, the remaining Initial Purchasers shall have the
right to purchase all, but shall not be under any obligation to purchase any, of
the Securities, and if such nondefaulting Initial Purchasers do not purchase all
the Securities, this Agreement will terminate without liability to any
nondefaulting Initial Purchaser or the Company. In the event of a default by any
Initial Purchaser as set forth in this Section 9, the Closing Date shall be
postponed for such period, not exceeding two Business Days, as the
Representatives and the Company shall determine in order that the required
changes in the Final Memorandum or in any other documents or arrangements may be
effected. Nothing contained in this Agreement shall relieve any defaulting
Initial Purchaser of its liability, if any, to the Company or any nondefaulting
Initial Purchaser for damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Representatives, by notice given
to the Company prior to delivery of and payment for the Securities, if at any
time prior to such time (i) trading in the Company's Common Stock shall have
been suspended by the Commission, the New York Stock Exchange or the Pacific
Stock Exchange or trading in securities generally on the New York Stock Exchange
or the Pacific Stock Exchange shall have been suspended or limited or minimum
prices shall have been established on either such Exchange; (ii) a banking
moratorium shall have been declared either by Federal or New York State
authorities; or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war or
other calamity or crisis the effect of which on financial markets is such as to
make it, in the sole judgment of the Representatives, impracticable or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Final Memorandum (exclusive of any amendment or supplement
thereto).
26
10. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Initial Purchasers set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of the Initial Purchasers or the Company
or any of the officers, directors, employees, agents or controlling persons
referred to in Section 8 hereof, and will survive delivery of and payment for
the Securities. The provisions of Sections 7 and 8 hereof shall survive the
termination or cancellation of this Agreement.
11. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Representatives, will be
mailed, delivered or telefaxed to Xxxxxxx Xxxxx Xxxxxx Inc. General Counsel (fax
no.: (000) 000-0000) and confirmed to the General Counsel, Xxxxxxx Xxxxx Barney
Inc. at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: General
Counsel; or, if sent to the Company, will be mailed, delivered or telefaxed to
Xxxxxx X. Xxxxxx, Esq. (fax no.: (000) 000-0000) and confirmed to Xxxxxx X.
Xxxxxx, Esq., Rite Aid Corporation, 00 Xxxxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxxxx
00000.
12. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents and controlling persons referred to in
Section 8 hereof, and, except as expressly set forth in Section 5(h) hereof, no
other person will have any right or obligation hereunder.
13. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
14. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument.
15. Headings. The section headings used herein are for
convenience only and shall not affect the construction hereof.
16. Definitions. The terms which follow, when used in this
Agreement, shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
27
"Affiliate" shall have the meaning specified in Rule 501(b) of
Regulation D.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a legal holiday or a day on which banking institutions or trust
companies are authorized or obligated by law to close in The City of New York.
"Commission" shall mean the Securities and Exchange
Commission.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto.
"Investment Company Act" shall mean the Investment Company Act
of 1940, as amended, and the rules and regulations of the Commission promulgated
thereunder.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"Regulation D" shall mean Regulation D under the Act.
"Regulation S" shall mean Regulation S under the Act.
"Trust Indenture Act" shall mean the Trust Indenture Act of
1939, as amended, and the rules and regulations of the Commission promulgated
thereunder.
28
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this Agreement and your acceptance shall represent a binding agreement
between the Company and the several Initial Purchasers.
Very truly yours,
Rite Aid Corporation,
by
-----------------------------------
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Xxxxxxx Xxxxx Barney Inc.
X.X. Xxxxxx Securities Inc.
By: Xxxxxxx Xxxxx Barney Inc.
by
----------------------
Name:
Title:
For themselves and the other several Initial
Purchasers named in Schedule I to the
foregoing Agreement
SCHEDULE I
Principal Amount of
Optional Securities to be
Purchased if Over-
Principal Amount of Firm Allotment Option is
Initial Purchasers Securities to be Purchased Exercised
------------------ -------------------------- ---------
Xxxxxxx Xxxxx Xxxxxx Inc............ $168,750,000 $50,000,000
X.X. Xxxxxx Securities Inc............. $31,250,000 $0
Total $200,000,000 $50,000,000
============ ===========
SCHEDULE II
1. Registration Rights Agreement dated as of October 27, 1999
by and between Rite Aid Corporation and Green Equity Investors III, L.P.
2. Registration Rights Agreement dated as of October 27, 1999
by and between Rite Aid Corporation and X.X. Xxxxxx Ventures Corporation.
3. Registration Rights Agreement dated as of June 14, 2001, by
and among Rite Aid Corporation and the Lenders listed therein.
4. Registration Rights Agreement dated as of June 27, 2001
between Rite Aid Corporation and the Exchanging Holders listed therein.
5. Registration Rights Agreement dated as of June 27, 2001
between Rite Aid Corporation and the Purchasers listed therein.
6. Registration Rights Agreement dated as of June 27, 2001
between Rite Aid Corporation, Transamerica Investment Management LLC, and the
Other Purchasers listed therein.
EXHIBIT A
Selling Restrictions for Offers and
Sales outside the United States
(1)(a) The Securities and the Stock issuable upon conversion
thereof have not been and will not be registered under the Act and may not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except in accordance with Regulation S under the Act or
pursuant to an exemption from the registration requirements of the Act or unless
registered under the Act. The Initial Purchaser represents and agrees that,
except as otherwise permitted by Section 4(a)(i) or (ii) of the Agreement to
which this is an exhibit, it has offered and sold the Securities, and will offer
and sell the Securities, (i) as part of their distribution at any time; and (ii)
otherwise until one year after the later of the commencement of the offering and
the Closing Date, only in accordance with Rule 903 of Regulation S under the
Act. Accordingly, each Initial Purchaser represents and agrees that neither it,
nor any of its Affiliates nor any person acting on its or their behalf has
engaged or will engage in any directed selling efforts with respect to the
Securities, and that it and they have complied and will comply with the offering
restrictions requirement of Regulation S. Each Initial Purchaser agrees that it
will not engage, directly or indirectly, in hedging transactions with regard to
the Securities or the shares of Stock issuable upon conversion thereof prior to
the expiration of one year after the later of the commencement of the offering
and the Closing Date unless in compliance with the Act. Each Initial Purchaser
agrees that, at or prior to the confirmation of sale of Securities (other than a
sale of Securities pursuant to Section 4(a)(i) or (ii) of the Agreement to which
this is an exhibit), it shall have sent to each distributor, dealer or person
receiving a selling concession, fee or other remuneration that purchases
Securities from it during the one year distribution compliance period a
confirmation or notice to substantially the following effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933 (the "Act") and may not be
offered or sold within the United States or to, or for the
account or benefit of, U.S. persons (i) as part of their
distribution at any time or (ii) otherwise until one year
after the later of the commencement of the offering and
November 19, 2001, except in either case in accordance with
Regulation S or Rule 144A under the Act. Hedging transactions
with regard to the Securities or the shares of Stock issuable
upon conversion of the Securities may not be conducted,
directly or indirectly, prior to the expiration of one year
after the later of the commencement of the offering and
January 26, 2000 unless in compliance with the Act. Terms used
above have the meanings given to them by Regulation S."
(b) Each Initial Purchaser also represents and agrees that it
has not entered and will not enter into any contractual arrangement with any
distributor with respect to the distribution of the Securities, except with its
Affiliates or with the prior written consent of the Company.
(c) Terms used in this section have the meanings given to them
by Regulation S.
(2) Each Initial Purchaser represents and agrees that (i) it
has not offered or sold, and prior to the expiration of the period of six months
from the issue date of the Securities will not offer or sell, any Securities in
the United Kingdom, other than to persons whose ordinary business it is to buy,
hold, manage or dispose of investments (whether as principal or agent) for the
purposes of their businesses or otherwise in circumstances which do not
constitute an offer to the public within the meaning of the Public Offers of
Securities Regulation 1995 or the Financial Services Xxx 0000 of the United
Kingdom; (ii) it has complied and will comply with all applicable provisions of
the Financial Services Xxx 0000 of the United Kingdom with respect to anything
done by it in relation to the notes in, from or otherwise involving the United
Kingdom and (iii) it has only issued or passed on and will only issue or pass
on, in the United Kingdom, any document received by it in connection with the
issue of the notes, if that person is of a kind described in Article 11(3) of
the Financial Services Xxx 0000 (Investment Advertisements) (Exemptions) Order
1996 or is a person to whom the document may otherwise lawfully be issued or
passed on.
A-1
EXHIBIT B
[Form of Lock-Up Agreement]
[Letterhead of officer or director]
Rite Aid Corporation
Xxxxxxx Xxxxx Barney Inc.
X.X. Xxxxxx Securities Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
This letter is being delivered to you in connection with the
proposed Purchase Agreement (the "Purchase Agreement"), between Rite Aid
Corporation, a Delaware corporation (the "Company"), and you as Representatives
of the several Initial Purchasers named therein, relating to a placement of
$200,000,000 aggregate principal amount of Convertible Notes Due 2006
($250,000,000 if the over-allotment option is exercised by the Initial
Purchaser).
In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the undersigned will not, without the prior written consent
of Xxxxxxx Xxxxx Barney Inc., offer, sell, contract to sell, pledge or otherwise
dispose of (or enter into any transaction which is designed to, or might
reasonably be expected to, result in the disposition of (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) directly or indirectly, including the filing of (or participation in
the filing of)), a registration statement with the Securities and Exchange
Commission in respect of, or establish or increase a put equivalent position or
liquidate or decrease a call equivalent position within the meaning of Section
16 of the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission promulgated thereunder
with respect to, any shares of common stock ("Common Stock") of the Company or
any securities convertible into, or exercisable or exchangeable for such Common
Stock, or publicly announce an intention to effect any such transaction, for a
period of 90 days after the date of the Purchase Agreement, other than shares of
Common Stock disposed of as bona fide gifts approved by Xxxxxxx Xxxxx Xxxxxx
Inc.; provided, however, that, without such consent, the undersigned may
participate in the filing of any registration statement which the Company is
permitted to file pursuant to the Purchase Agreement.
If for any reason the Purchase Agreement shall be terminated
prior to the Closing Date (as defined in the Purchase Agreement), the agreement
set forth above shall likewise be terminated.
Very truly yours,
-----------------------------------
Signature
------------------------------------
Print Name
B-1
