Kmart Corporation
December 16, 1996
Rite Aid Corporation
00 Xxxxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxxx X. Grass
Chief Executive Officer
Dear Mr. Grass:
Reference is hereby made to the Agreement, dated as of
October 13, 1996, by and between Rite Aid Corporation, a
Delaware corporation ("Parent"), Kmart Corporation, a
Michigan corporation ("Kmart"), and joined in by the
Individual Stockholders for the purpose set forth in
Section 11 therein (the "Stockholder Agreement"). All
capitalized terms used herein shall have the meanings
assigned to such terms in the Stockholder Agreement,
unless otherwise defined herein.
In accordance with Section 4 of Appendix A to the
Stockholder Agreement, Kmart hereby requests that Parent
effect the registration with the SEC under and in
accordance with the Securities Act of all Registrable
Securities to be received by Kmart pursuant to the Merger
in exchange for the 10,622,714 shares of Company Common
Stock owned by Kmart. (Based upon the Exchange Ratio as
defined in the Merger Agreement, such shares of Company
Common Stock owned by Kmart would be converted into
6,904,764 shares of Parent Common Stock.) In furtherance
thereof, Kmart hereby requests that the registration be
in the form of a Shelf Registration using a Registration
Statement on Form S-3, that such Registration Statement
be effective as of the Effective Time or as soon
thereafter as practicable and that such Registration
Statement be kept effective until the earlier of (i) 360
days (or longer period in the event of a Registration
Hold Period, as contemplated by the Stockholder
Agreement) and (ii) such time as all Registrable
Securities covered by such Registration Statement have
ceased to be Registrable Securities. The plan of
distribution set forth in the Registration Statement
shall be as provided in Exhibit A hereto.
If Parent requires any additional information from Kmart
for inclusion in the Registration Statement, please
notify our attorneys at the address set forth in Section
10(e) of the Stockholder Agreement.
Sincerely,
Xxxxxx X. Xxxxx III
Senior Vice President
and Chief Financial Officer
cc: Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Profusak
EXHIBIT A
PLAN OF DISTRIBUTION
The Selling Stockholder [Kmart] or its pledgees,
donees, transferees or other successors in interest may
offer the Shares [Registrable Securities] from time to
time depending on market conditions and other factors, in
one or more transactions on the New York Stock Exchange
or other national securities exchanges on which the
Shares are traded, in the over-the-counter market or
otherwise, at market prices prevailing at the time of
sale, at negotiated prices or at fixed prices. The
Shares may be offered in any manner permitted by law,
including through underwriters, brokers, dealers or
agents, and directly to one or more purchasers. Sales of
the Shares may involve (a) sales to underwriters who will
acquire Shares for their own account and resell them in
one or more transactions at fixed prices or at varying
prices determined at time of sale, (b) a block
transaction in which the broker or dealer so engaged will
attempt to sell the Shares as agent but may position and
resell a portion of the block as principal to facilitate
the transaction, (c) purchases by a broker or dealer as
principal and resale by such broker or dealer for its
account, (d) an exchange distribution in accordance with
the rules of any such exchange, and (e) ordinary
brokerage transactions and transactions in which a broker
solicits purchasers. Brokers and dealers may receive
compensation in the form of underwriting discounts,
concessions or commissions from the Selling Stockholder
and/or purchasers of Shares for whom they may act as
agent (which compensation may be in excess of customary
commissions). The Selling Stockholder and any broker or
dealer that participates in the distribution of Shares
may be deemed to be underwriters and any commissions
received by them and any profit on the resale of Shares
positioned by a broker or dealer may be deemed to be
underwriting discounts and commissions under the
Securities Act of 1933, as amended (the "Securities
Act"). In the event the Selling Stockholder engages an
underwriter in connection with the sale of the Shares, to
the extent required, a Prospectus Supplement will be
distributed, which will set forth the number of Shares
being offered and the terms of the offering, including
the names of the underwriters, any discounts, commissions
and other items constituting compensation to
underwriters, dealers or agents, the public offering
price and any discounts, commissions or concessions
allowed or reallowed or paid by underwriters to dealers.
In addition, the Selling Stockholder may from time
to time sell Shares in transactions under Rule 144
promulgated under the Securities Act.
Pursuant to the Stockholder Agreement, dated as of
October 13, 1996 (the "Stockholder Agreement"), by and
between the Company [Parent] and the Selling Stockholder,
the Company will pay all registration expenses in
connection with all registrations of the Shares upon the
written request of the Selling Stockholder, and the
Selling Stockholder will pay (a) any fees or
disbursements of counsel to the Selling Stockholder and
(b) all underwriting discounts and commissions and
transfer taxes, if any, and other fees, costs and
expenses of the Selling Stockholder relating to the sale
or disposition of the Selling Stockholder's Shares
pursuant to the registration statement. The Selling
Stockholder and the Company have agreed to indemnify each
other against certain civil liabilities, including
certain liabilities under the Securities Act.