EXECUTION COPY
RITE AID CORPORATION
$150,000,000
9.25% Senior Notes Due 2013
Purchase Agreement
New York, New York
May 13, 2003
Citigroup Global Markets Inc.
X.X. Xxxxxx Securities Inc.
Fleet Securities, Inc.
As Representatives of the Initial Purchasers
c/o Citigroup Global Markets 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, $150,000,000 principal amount
of its 9.25% Senior Notes Due 2013 (the "Securities"). The Securities are to be
issued under an indenture (the "Indenture"), to be dated as of May 20, 2003,
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 May 20, 2003, among the Company
and the Initial Purchasers, pursuant to which the Company has agreed to file
with the Commission (i) a registration statement under the Securities Act
registering an issue of senior notes of the Company (the "Exchange Notes"),
which are identical in all material respects to the Securities (except that the
Exchange Notes will not contain terms with respect to transfer restrictions) and
(ii) under certain circumstances, a shelf registration statement pursuant to
Rule 415 under the Securities Act. 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. Certain terms used herein are defined in Section
17 hereof. Capitalized terms used but not defined herein shall have the meanings
given to such terms in the Final Memorandum (as defined below).
The sale of the Securities to the Initial Purchasers will be
made without registration of the Securities under the Securities Act in reliance
upon exemptions from the registration requirements of the Securities Act.
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In connection with the sale of the Securities, the Company has
prepared a final offering memorandum, dated May 13, 2003 (as amended or
supplemented at the Execution Time, including any and all exhibits thereto and
any information incorporated by reference therein, the "Final Memorandum"),
which sets forth certain information concerning the Company and the Securities.
The Company hereby confirms that it has authorized the use of 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) 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 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 any of 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
or anyone acting on their behalf, 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 Securities Act.
(c) Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf (other than the Initial Purchasers
or anyone acting on their behalf, 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 Securities Act.
(e) Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf (other than the Initial Purchasers
or anyone acting on their behalf, 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.
(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
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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, is validly existing as a corporation and is 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 Company, Read's, Inc., Thrifty PayLess Health
Services, L.L.P. 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.
(n) The statements in the Final Memorandum under the headings
"Certain United States Federal Tax Considerations for Non-United States
Holders", "Description of Notes", "Exchange Offer; Registration
Rights", "Business-Regulation" and "Business-Legal Proceedings",
"Description of Other Indebtedness" and "Risk Factors" fairly summarize
the matters therein described.
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(o) 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, good faith and fair dealing, regardless of whether in a
proceeding at law or in 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, good faith
and fair dealing, regardless of whether in a proceeding at law or in
equity); 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, good faith and fair dealing, regardless of whether in a
proceeding at law or in 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).
(p) 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 Securities Act and the Trust Indenture Act (with respect to
the Registration Rights Agreement), 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.
(q) 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,
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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.
(r) 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 Securities Act and the Exchange 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.
(s) 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).
(t) 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.
(u) 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.
(v) 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 in 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 Securities Act and the applicable published rules and regulations
thereunder.
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(w) 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 or the
issuance or sale by the Company of the Securities.
(x) 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, 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, except as
set forth in or contemplated in the Final Memorandum (exclusive of any
amendment or supplement thereto).
(y) 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, except as set forth in or
contemplated in the Final Memorandum (exclusive of any amendment or
supplement thereto).
(z) 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 or replace 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, except as set forth in or
contemplated in the Final Memorandum (exclusive of any amendment or
supplement thereto).
(aa) 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.
(bb) 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
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aggregate, if the subject of an unfavorable decision, ruling or
finding, 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).
(cc) 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 Effect, except as set forth 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, 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.
(dd) 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.
(ee) 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 as otherwise referenced in the Final
Memorandum or 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.
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(ff) The Company maintains, and has maintained during the
periods covered by the financial statements incorporated by reference
in the Final Memorandum, disclosure controls and procedures (as such
term is defined in Rule 13a-14 under the Exchange Act) that are
effective in ensuring that information required to be disclosed in the
reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported with the time periods specified in
the rules and forms of the Commission, including, without limitation,
effective controls and procedures designed to ensure that information
required to be so described is accumulated and communicated to the
Company's management, including its principal executive officer or
officers, and its principal financial officer or officers, as
appropriate to allow timely decisions regarding required disclosure,
except as disclosed in such reports with respect to the Company's 1997
fiscal year and that the Company restated its financial statements for
the 1998 and 1999 fiscal years.
Any certificate signed by any officer of the Company and
delivered to the 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, 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 96.726% of the principal amount thereof, plus accrued interest, if any,
from May 20, 2003 to the Closing Date, the principal amount of Securities set
forth opposite such Initial Purchaser's name on Schedule I hereto.
3. Delivery and Payment. Delivery of and payment for the
Securities shall be made at 10:00 A.M., New York City time, on May 20, 2003,
which date and time may be postponed by agreement between the Representatives
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").
Delivery of the Securities shall be made to the Representatives for the
respective accounts of the several Initial Purchasers 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 the
Representatives shall otherwise instruct.
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 Securities Act) or an institutional accredited investor
(as defined in Rule 501(a) under the Securities 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
Securities Act) and that, in connection with each such sale, it has
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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.
(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 or any subsidiary 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 that
have been acquired by any of them.
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(f) Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf (other than the Initial Purchasers
or anyone acting on their behalf, as to whom the Company makes no
agreement) 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 under the
Securities Act.
(g) Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf (other than the Initial Purchasers
or anyone acting on their behalf, as to whom the Company makes no
agreement) 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 are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities
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 Securities 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
or anyone acting on their behalf, as to whom the Company makes no
agreement) 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 offer, sell, contract to sell, grant
any other option to purchase or otherwise dispose of, directly or
indirectly, or announce the offering of, or file a registration
statement for, any debt securities issued or guaranteed by the Company
or any of its direct or indirect subsidiaries, or enter into any
agreement to do any of the foregoing (other than (i) the Securities and
the Exchange Securities, (ii) exchange notes issued in exchange for the
9 1/2% Notes on the same basis, and having the same terms, as the 9
1/2% Notes, (iii) exchange notes issued in exchange for the 8.125%
Notes on the same basis, and having the same terms, as the 8.125%
Notes, (iv) pursuant to any credit facility permitted under the
Indenture, (v) purchase money debt permitted under the Indenture and
(vi) notes on similar terms to the 9 1/2% Notes or the 8.125% Notes in
order to refinance or in exchange for the 12.5% Notes) for a period of
90 days from the date the Securities are issued without the prior
written consent of Citigroup Global Markets Inc.
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(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 Final Memorandum and
each amendment or supplement thereto; (iii) the printing (or
reproduction) and delivery (including postage, air freight charges and
charges for counting and packaging) of such copies of the Final
Memorandum, and all amendments or supplements thereto, as may 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; (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; (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 this 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 and expenses of
their counsel.
6. Conditions to the Obligations of the Initial Purchasers.
The obligations of the Initial Purchasers to purchase the Securities 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, 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 Sari, Esq., general counsel for the
Company, in form and substance satisfactory to the Initial Purchasers,
substantially in the form set forth in Schedule II or as otherwise
agreed to by the parties hereto.
12
(b) The Initial Purchasers shall have received three opinions,
dated the Closing Date, of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP,
counsel for the Company, in form and substance satisfactory to the
Initial Purchasers, substantially in the forms set forth in Schedules
III, IV and V or as otherwise agreed to by the parties hereto.
(c) The Representatives shall have received from Cravath,
Swaine & Xxxxx LLP, 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
(ii) since the date of the most recent financial
statements included or incorporated by reference 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 Securities Act and the Exchange Act and the
respective applicable rules and regulations adopted by the Commission
thereunder, and stating in effect that:
(i) in their opinion the audited financial statements
included or incorporated 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
13
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 Securities Act;
(ii) on the basis of a reading of the latest
unaudited financial statements made available by the Company
and its subsidiaries; 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 March 1, 2003, nothing came to their
attention which caused them to believe that:
(1) with respect to the period subsequent to
March 1, 2003, 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 increases in the stockholders'
deficit of the Company as compared with the amounts
shown on the March 1, 2003 consolidated balance sheet
included or incorporated in the Final Memorandum, or
for the period from March 2, 2003 to such specified
date there were any decreases, as compared with the
corresponding period in the preceding year, in
revenues, increases in 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, increases 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
(2) 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;
and
(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 "Summary", "Risk Factors", "Use of Proceeds",
"Capitalization", "Selected Consolidated Financial
Information", "Management's Discussion and Analysis of
Financial Condition and Results of Operations", "Business",
"Management", "Security Ownership of Certain Beneficial Owners
14
and Management", "Certain Relationships and Related
Transactions", "Description of Other Indebtedness" and
"Description of Notes" 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, other
than any repurchase of indebtedness, (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).
(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 Securities 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) On or prior to the Closing Date, the Registration Rights
Agreement shall be in form and substance satisfactory to the
Representatives, shall have been executed and delivered by the parties
thereto and shall be in full force and effect.
(j) 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
15
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 LLP, 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 Citigroup Global Markets 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.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Initial Purchaser, the directors, officers,
employees, affiliates and agents of each Initial Purchaser and each person who
controls any Initial Purchaser within the meaning of either the Securities 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
Securities 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 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 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 Purchasers through the Representatives
specifically for inclusion therein. 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 Securities 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 such Initial Purchaser through the Representatives
specifically for inclusion in 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
16
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; (ii) the sentences related to
concessions and reallowances; and (iii) the paragraph related to stabilization,
syndicate covering transactions and penalty bids in the Final Memorandum,
constitute the only information furnished in writing by or on behalf of the
Initial Purchasers for inclusion in the Final Memorandum (or in any amendment or
supplement thereto).
(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
17
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 agreement 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 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 in the Final Memorandum or this
Agreement. 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
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Initial Purchasers' obligation
to contribute pursuant to this Section 8(d) are several in proportion to their
respective purchase obligations and not joint. For purposes of this Section 8,
each person who controls an Initial Purchaser within the meaning of either the
Securities Act or the Exchange Act and each director, officer, employee,
affiliate 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 Securities 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
18
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
Exchange or trading in securities generally on the New York Stock Exchange or
the Pacific 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).
11. 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.
12. 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 Citigroup Global Markets Inc. General Counsel
(fax no.: (000) 000-0000) and confirmed to the General Counsel, Citigroup Global
Markets 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 Sari, Esq. (fax no.: (000) 000-0000) and confirmed to Xxxxxx
Sari, Esq., Rite Aid Corporation, 00 Xxxxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxxxx 00000.
13. 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.
19
14. 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.
15. 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.
16. Headings. The section headings used herein are for
convenience only and shall not affect the construction hereof.
17. Definitions. The terms which follow, when used in this
Agreement, shall have the meanings indicated.
"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 Securities
Act.
"Regulation S" shall mean Regulation S under the Securities
Act.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Trust Indenture Act" shall mean the Trust Indenture Act of
1939, as amended, and the rules and regulations of the Commission promulgated
thereunder.
20
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:
21
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
Citigroup Global Markets Inc.
X.X. Xxxxxx Securities Inc.
Fleet Securities, Inc.
By: Citigroup Global Markets Inc.
by
----------------------
Name:
Title:
For themselves and the other several Initial Purchasers named in Schedule I to
the foregoing Agreement.
22
SCHEDULE I
Principal Amount
of Securities
Initial Purchasers to be Purchased
Citigroup Global Markets Inc.................................. $90,000,000
X.X. Xxxxxx Securities Inc.................................... $56,250,000
Fleet Securities, Inc......................................... $ 3,750,000
----------------
Total................................................... $150,000,000
23
SCHEDULE II
Form of Opinion of Xxxxxx Sari, Esq., General Counsel of the Company
(1) Each of Rite Aid Corporation (the "Company") and its
subsidiaries has been duly incorporated or formed and is an existing corporation
or limited liability company in good standing under the laws of its respective
state of incorporation or formation, with corporate, limited liability company
or other 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 offering
memorandum, dated May 13, 2003 (the "Final Memorandum").
(2) Each of the Company and its subsidiaries, is duly
qualified as a foreign corporation, entity or limited liability company to
transact business and is in good standing as a foreign corporation, entity or
limited liability company, as the case may be, under the laws of each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure to be so qualified or to be in good standing could not reasonably be
expected to have a Material Adverse Effect (as defined in the Purchase
Agreement).
(3) All of the issued and outstanding shares of capital stock
(or membership interests in the case of the Company's subsidiaries that are
limited liability companies) of each subsidiary have been duly authorized and
validly issued, are fully paid and non-assessable and, except for Rx USA, Inc.,
Rite Aid Lease Management Company, Read's Inc., Thrifty Payless Health Services,
L.L.P., and Rite Aid Risk Management Corp., are owned of record, directly or
through wholly owned subsidiaries, by the Company free and clear of any
perfected security interest, and to the best of my knowledge, after due inquiry,
any other security interests, claims, liens or encumbrances.
(4) The Company's authorized capital stock is as set forth in
the Final Memorandum under the caption "Capitalization."
(5) Each of the Transaction Documents (as defined below) has
been duly authorized, executed and delivered by the Company.
(6) To such counsel's knowledge, 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 Securities Act of 1933 (the
"Securities Act") 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 Effect.
(7) No consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in connection with the
transactions contemplated by the Purchase Agreement, the Indenture (as defined
in the Purchase Agreement) or the Registration Rights Agreement (as defined in
the Purchase Agreement), except such as will be obtained under the Securities
Act and the Trust Indenture Act in connection with the transactions contemplated
24
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 the Purchase Agreement and the Registration Rights Agreement.
(8) The execution and delivery by the Company of the Indenture, the
Purchase Agreement and the Registration Rights Agreement, the issue and sale of
the Securities (as defined in the Purchase Agreement), the consummation of any
other transactions contemplated by the Purchase Agreement, the Registration
Rights Agreement and the Indenture (together the "Transaction Documents"), and
the fulfillment of the terms of each Transaction Document, will not conflict
with, or 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 other applicable constituent
documents) or bylaws 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 in the case of
clauses (ii) and (iii) 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 the Transaction Documents, or the consummation of any of the
transactions contemplated by the Purchase Agreement or such other agreements.
(9) The statements in the Final Memorandum under the captions "Business -
Regulation" and "Business - Legal Proceedings," accurately and fairly summarize
the matters discussed therein in all material respects.
(10) The Company has the corporate or limited liability company power and
authority to consummate the transactions contemplated by the Transaction
Documents.
(11) No facts have come to such counsel's attention that have led such
counsel to believe that the Final Memorandum, as of its date or as of the date
of such opinion, 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 incorporated by reference therein or excluded therefrom.
25
SCHEDULE III
Form of Opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
(1) Rite Aid Corporation (the "Company") is validly existing
as a corporation in good standing under the laws of the state of Delaware, and
the Company has the corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Final Memorandum (as
defined in the the Purchase Agreement).
(2) The Purchase Agreement has been duly authorized, executed
and delivered by the Company.
(3) Each of the Indenture (as defined in the Purchase
Agreement) and the Registration Rights Agreement (as defined in the Purchase
Agreement) has been duly authorized, executed and delivered by the Company and
is a valid and binding agreement of the Company, enforceable against the Company
in accordance with its terms.
(4) The Securities (as defined in the Purchase Agreement) have
been duly authorized and executed by the Company and, when issued and delivered
by the Company against payment therefor in accordance with the terms of the
Purchase Agreement and the Indenture, will constitute valid and binding
obligations of the Company entitled to the benefits of the Indenture and
enforceable against the Company in accordance with their terms.
(5) To such counsel's knowledge, 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 their property that would be required to be disclosed in the
Final Memorandum if the offering were made pursuant to a registration statement
on Form S-1 under the Securities Act of 1933 (the "Securities Act") that is not
disclosed in the Final Memorandum.
(6) The Company is not, and solely after giving effect to the
issuance and sale of the Securities and the application of the net proceeds
therefrom as described in the Final Memorandum, will not be, an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended.
(7) No Governmental Approval (as defined in such opinion),
which has not been obtained or taken and is not in full force and effect, is
required to authorize or is required in connection with, the execution and
delivery of each of the Purchase Agreement, the Indenture or the Registration
Rights Agreement by the Company or the consummation by the Company of the
transactions contemplated thereby, including the issuance and sale of the
Securities.
(8) The execution and delivery by the Company of each of the
Transaction Documents and the consummation by the Company of the transactions
contemplated thereby, including the issuance and sale of the Securities, will
not (i) conflict with the Certificate of Incorporation or the By-laws of the
Company, (ii) constitute a violation of, or a breach or a default under, the
terms of any Applicable Contract (as defined in such opinion) or (iii) violate
or conflict with, or result in any contravention of, any Applicable Law (as
defined in such opinion)
26
or Applicable Order (as defined in such opinion). Such counsel need not express
any opinion, however, as to whether the execution, delivery or performance by
the Company of any of the Transaction Documents or the consummation of the
transactions contemplated thereby, including the issuance and sale of the
Securities, will constitute a violation of, or a default under, any covenant,
restriction or provision with respect to financial ratios or tests or any aspect
of the financial condition or results of operations of the Company or any of its
subsidiaries.
(9) The statements in the Final Memorandum under the captions
"Description of Other Indebtedness," "Description of Notes," and "Exchange
Offer; Registration Rights," insofar as such statements purport to summarize
certain provisions of the Transaction Documents and the indentures referred to
therein, fairly summarize such provisions in all material respects.
(10) Assuming (i) the accuracy of the representations and
warranties of the Company in Section 1 of the Purchase Agreement and of the
Initial Purchasers 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, (iii) the Initial Purchasers' compliance with the
offering and transfer procedures and restrictions described in the Final
Memorandum, (iv) the accuracy of the representations and warranties made in
accordance with the Final Memorandum by purchasers to whom the Initial
Purchasers initially resell the Securities and (v) that reasonable steps have
been taken to ensure that purchasers to whom the Initial Purchasers initially
resell the Securities have been informed that the Initial Purchasers may be
relying on the exemption from the provisions of Section 5 of the Securities Act
provided by Rule 144A in connection with such sales, the offer, sale and
delivery of the Securities to the Initial Purchasers in the manner contemplated
by the Purchase Agreement and the Final Memorandum, and the initial resale of
the Securities by the Initial Purchasers in the manner contemplated in the Final
Memorandum and the Purchase Agreement, do not require registration under the
Securities Act, and the Indenture does not require qualification under the Trust
Indenture Act of 1939, as amended, it being understood that we do not express
any opinion as to any subsequent resale of any Security.
27
SCHEDULE IV
Form of Negative Assurance Opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
No facts have come to such counsel's attention that have caused such
counsel to believe that the Final Memorandum (as defined in the Purchase
Agreement), as of its date or as of the date of such opinion, 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 in each
case such counsel need not express any view as to the financial statements,
schedules and other financial data included or incorporated by reference therein
or excluded therefrom).
28
SCHEDULE V
Form of Tax Opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
The statements in the Final Memorandum (as defined in the Purchase
Agreement) under the caption "Certain United States Federal Tax Considerations
for Non-United States Holders," insofar as such statements purport to summarize
certain provisions of the laws referred to therein, fairly summarize such
provisions in all material respects.
EXHIBIT A
Selling Restrictions for Offers and
Sales outside the United States
1. (a) The Securities have not been and will not be registered
under the Securities 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 Securities Act or pursuant to an exemption from the
registration requirements of the Securities Act. Each Initial Purchaser
represents and agrees that, except as otherwise permitted by Section 4(b)(i) 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 40 days after the later of
the commencement of the offering and the Closing Date, only in accordance with
Rule 903 of Regulation S under the Securities 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, at or prior to the
confirmation of sale of Securities (other than a sale of Securities pursuant to
Section 4(b)(i) 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 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 "Securities 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 40 days after
the later of the commencement of the offering and May 20,
2003, except in either case in accordance with Regulation S or
Rule 144A under the Securities 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 expiry of six months from the closing
of the offering of the Securities will not offer or sell, any Securities to
persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding managing or disposing of investments, whether
as a principal or agent, for purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers Securities
Regulations 1995; (ii) it has only communicated or caused to be communicated and
will only communicate or cause to be communicated any invitation or inducement
to engage in investment activity (within the meaning of section 21 of the
Financial Services and Markets Act 2000 (the "FSMA")) received by it in
connection with the issue or sale of any Securities in circumstances in which
section 21(1) of the FSMA does not apply to the Company; and (iii) it has
complied and will comply with applicable provisions of FSMA with
2
respect to anything done by it in relation to the Securities in, from or
otherwise involving the United Kingdom.
