March 4: Form T-3 (QUALIFICATION OF INDENTURE)
____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-3
APPLICATION FOR QUALIFICATION OF INDENTURE
UNDER THE TRUST INDENTURE ACT OF 1939
RITE AID CORPORATION
(Name of Applicant)
30 Hunter Lane
Camp Hill, Pennsylvania 17011
(Address of Principal Executive Offices)
SECURITIES TO BE ISSUED UNDER THE
INDENTURE TO BE QUALIFIED
TITLE OF CLASS AMOUNTSenior Secured Notes due March 15, 2006 Up to $149,500,000 Aggregate principal amount
Approximate date of proposed public offering: As soon as practicable after the date of effectiveness of this Application for Qualification.
Name and address of agent for service: Copies to be sent to:Elliot S. Gerson, Esq. Stacy J. Kanter, Esq.Senior Executive Vice President Skadden, Arps, Slate, Meagher and General Counsel & Flom LLPRite Aid Corporation 4 Times Square30 Hunter Lane New York, New York 10036Camp Hill, Pennsylvania 17011 (212) 735-3000(717) 761-2633
1. General Information
(a) The Applicant is a corporation.
(b) The Applicant was organized under the laws of the State of Delaware, on April 15, 1968.
2. Securities Act Exemption Applicable
The Applicant, certain directors, its former chief executive officer Martin Grass, its former president Timothy Noonan, its former chief financial officer Frank Bergonzi, and its former auditor KPMG LLP were named as defendants in a number of lawsuits, most of which purport to be class actions, brought on behalf of stockholders who purchased the Applicant's securities on the open market between May 2, 1997 and November 10, 1999. Most of the complaints asserted claims under Sections 10 and 20 of the Securities Exchange Act of 1934, based upon the allegation that the Applicant's financial statements for fiscal 1997, fiscal 1998 and fiscal 1999 fraudulently misrepresented the Applicant's financial position and results of operation for those periods. All of these cases were consolidated in the United States District Court for the Eastern District of Pennsylvania (the "District Court"). On November 8, 2000, certain of the defendants in this action, including the Applicant and the Applicant's outside director defendants, entered into a memorandum of understanding (the "MOU") setting forth a global resolution of the claims in the class action lawsuits pending in the District Court and in the Delaware Court of Chancery. The non-settling defendants are Frank Bergonzi, Martin Grass, Timothy Noonan and KPMG. Thereafter, on December 19, 2000, the parties to the MOU entered into a stipulation and agreement of settlement (the "Settlement").
The terms of the Settlement, inter alia, contemplate that, the Applicant will pay $43,500,000 in cash (the "Cash Consideration"), which will be fully funded by the Applicant's officers' and directors' liability insurance. In addition, the Applicant is required to issue to the plaintiffs 20,000,000 shares of the Applicant's common stock, valued over a 10-day trading period in January 2002. The valuation determined was less than $7.75 per share. In accordance with the terms of the Settlement, if the value determined was less than $7.75 per share, the Applicant has the option to deliver any combination of common stock, cash and notes, with a total value of $149,500,000. As additional consideration for the Settlement, the Applicant has assigned to the plaintiffs all of the Applicant's claims against the above named executives and KPMG LLP.
On December 20, 2000, the District Court preliminarily approved the Settlement, set a hearing as to the fairness, reasonableness and adequacy of the Settlement for April 6, 2001, and authorized notice of the proposed Settlement to be sent to all class members. The notice informed class members of their rights including their rights to object to the proposed Settlement and pursue their claims separately. The hearing occurred on April 6, 2001.
On June 8, 2001, the District Court issued a memorandum and order, declining to approve the Settlement. The District Court found that the "economic aspects" of the settlements "have great merit and manifestly benefit the Class and Rite Aid," but that the proposed bar orders were unacceptable. Leave was granted to the settling parties to submit revised settlement stipulations by June 25, 2001. Prior to June 25, 2001, the settling parties submitted revised settlement stipulations in accordance with the District Court's order. On August 17, 2001, the District Court issued a revised order of final judgment and dismissal, overruling objections that were filed and approving the revised Settlement, including the revised bar order. Thereafter, also on August 17, 2001, the case was dismissed with prejudice as to the settling parties and without prejudice as to the non-settling parties. In September 2001, certain non-settling parties appealed the District Court's orders. The appeals (the "Appeals") are before the U.S. Court of Appeals for the Third Circuit, and oral argument is scheduled for April 2002.
In accordance with the terms of the Settlement, as approved by the District Court, the Applicant will issue to the plaintiffs the Cash Consideration and Senior Secured Notes due March 15, 2006 (the "Notes") having an aggregate principal amount of $149,500,000 and bearing interest at (i) up to and including the date of the resolution of the Appeals, the Initial Floating Interest Rate (as defined in the Indenture), and (ii) following the date of the resolution of the Appeals, the Reset Interest Rate (as defined in the Indenture), pursuant to an indenture (the "Indenture") between the Applicant and BNY Midwest Trust Company, as trustee (the "Trustee"), to be dated upon effectiveness of this Application. The Notes will be issued by the Applicant and held in escrow by First Union National Bank, as escrow agent, pending the resolution of the Appeals and the determination of the Reset Interest Rate.
The Applicant relies upon the exemption set forth in Section 3(a)(10) of the Securities Act of 1933, as amended (the "Act"), as the basis for the issuance of the Notes pursuant to the Indenture without registration under the Act.
AFFILIATIONS
3. Affiliates
The following table sets forth the holders of more than five percent of the common stock of Rite Aid Corporation as of February 15, 2002, including their respective percentages of voting securities, or other bases of control.
Percentage of Voting Securities Owned(1)Leonard I. Green.............................. 11.3%(2)Jonathan D. Sokoloff.......................... 11.3%(3)Green Equity Investors III, L.P............... 11.2%(4)Putnam Investments, LLC....................... 10.5%(5)FMR Corporation............................... 8.7%(6)Putnam Investment Management, LLC............. 7.6%(7)J.P. Morgan Chase & Co........................ 7.1%(8)
1 Based on the number of shares of Common Stock outstanding as of December 29, 2001.
2 This amount includes 64,799,299 shares beneficially owned by Green Equity Investors III, L.P., which is affiliated with Leonard Green & Partners, L.P., of which Mr. Green is an executive officer and equity owner, and 990,000 shares owned by Verdi Group, Inc., over which Mr. Green has beneficial ownership. Mr. Green is a director of the Applicant.
3 This amount includes 64,799,299 shares beneficially owned by Green Equity Investors III, L.P., which is affiliated with Leonard Green & Partners, L.P., of which Mr. Sokoloff is an executive officer and equity owner. Mr. Sokoloff is a director of the Applicant.
4 Assuming conversion of all Class D preferred stock by Green Equity Investors III, L.P.
5 This amount, which is disclosed in a report on Schedule 13G dated February 5, 2002, includes 39,099,432 shares in respect of which Putnam Investments, LLC and Putnam Investment Management, LLC share dispositive power and 15,108,552 shares in respect of which Putnam Investments, LLC and The Putnam Advisory Company, LLC share dispositive power.
6 This amount, which is disclosed in a report on Schedule 13G dated February 14, 2002 by FMR Corporation, includes 39,308,273 shares in respect of which Fidelity Management & Research Company holds sole dispositive power and 3,872,033 shares over which Fidelity Management Trust Company holds sole dispositive power (including 3,035,533 shares over which it also holds voting power). Both Fidelity Management Research Company and Fidelity Management Trust Company are wholly owned subsidiaries of FMR Corporation. This amount also includes 1,866,500 shares over which Fidelity International Limited holds sole voting and dispositive power. A partnership controlled by Edward C. Johnson III, who also controls FMR Corporation, has the right to cast 39.89% of the votes cast by holders of Fidelity International Limited voting stock. FMR Corporation and Fidelity International Limited state that the shares held by Fidelity International Limited need not be aggregated for the purposes of
Section 13(d) of the Securities Act of 1934, as amended; however, FMR Corporation has voluntarily filed its report as if all the shares were beneficially owned by FMR Corporation. Abigail P. Johnson and Edward C. Johnson 3d, together with members of their family, are the predominant owners of the Class B shares of common stock of FMR Corporation, representing approximately 49% of the voting power of FMR Corporation. Ms. Johnson owns 24.5% of the voting stock and is a director of FMR Corporation. Mr. Johnson owns 12.0% of the voting stock and is Chairman of FMR Corporation. Members of the Johnson family and other Class B Stockholders are parties to a voting agreement under which each party agrees to vote its Class B Shares in accordance with the vote of the majority vote of shares of the parties.
7 This amount, which is disclosed in a report on Schedule 13G dated February 5, 2002, includes 39,099,432 shares in respect of which Putnam Investment Management, LLC and Putnam Investments, LLC share dispositive power.
8 This amount, as reflected in a report on Form 4 filed on April 10, 2001 by J.P. Morgan Chase & Co., consists of 36,657,610 shares of common stock.
Percentage of Entity's Voting Securities OwnedName of Subsidiary or Controlled Directly or Subsidiary of Indirectly by ApplicantAnn & Government Streets - Mobile, Alabama, LLC Harco, Inc. 100.0%Apex Drug Stores, Inc. Perry Drug Stores, Inc. 100.0%Baltimore/Annapolis Boulevard and Governor RichieHighway-Glen Burnie, Maryland, LLC Rite Aid of Maryland, Inc. 100.0%Broadview and Wallings-Broadview Heights Ohio, Inc. Rite Aid Corporation 100.0%Central Avenue and Main Street - Petal, MS, LLC K & B Mississippi Corporation 100.0%Dominion Action One Corporation Rite Aid Corporation 100.0%Dominion Action Two Corporation Rite Aid Corporation 100.0%Dominion Action Three Corporation Rite Aid Corporation 100.0%Dominion Action Four Corporation Rite Aid Corporation 100.0%Dominion Drug Stores Corporation Rite Aid Corporation 100.0%Drug Fair, Inc. Rite Aid Corporation 100.0%Drug Fair of PA, Inc. Rite Aid Corporation 100.0%Eagle Managed Care Corp. Rite Aid Corporation 100.0%Eighth and Water Streets-Uhrichsville, Ohio, LLC Rite Aid of Ohio, Inc. 100.0%England Street - Asheland Corporation Rite Aid Corporation 100.0%Fairground, LLC Rite Aid of Virginia, Inc. 100.0%GDF, Inc. Rite Aid Corporation 100.0%Gettysburg and Hoover - Dayton, Ohio, LLC Rite Aid of Ohio, Inc. 100.0%Gray Drug Stores, Inc. Rite Aid Corporation 100.0%Gratiot & Center-Saginaw Township, Michigan, LLC Rite Aid of Michigan, Inc. 100.0%Harco, Inc. Rite Aid Corporation 100.0%Jaime Nathan Travis Corporation Rite Aid Corporation 100.0%K & B, Incorporated Rite Aid Corporation 100.0%K & B Alabama Corporation Virginia Corporation 100.0%K & B Florida Corporation Virginia Corporation 100.0%K & B Louisiana Corporation Virginia Corporation 100.0%K & B Mississippi Corporation Virginia Corporation 100.0%K & B Services, Incorporated Virginia Corporation 100.0%K & B Tennessee Corporation Virginia Corporation 100.0%K & B Texas Corporation Virginia Corporation 100.0%K & B Trainees, Inc. Virginia Corporation 100.0%Katz & Bestoff, Inc. Virginia Corporation 100.0%Keystone Centers, Inc. Rite Aid Corporation 100.0%Lakehurst and Broadway Corporation Rite Aid Corporation 100.0%Laverdiere's Enterprises, Inc. Rite Aid of Maine, Inc. 100.0%Mayfield & Chillicothe Roads - Chesterland, LLC Rite Aid of Ohio, Inc. 100.0%Munson & Andrews, LLC Rite Aid of Ohio, Inc. 100.0%Name Rite, LLC Thrifty PayLess, Inc. 100.0%Northline & Dix - Toledo - Southgate, LLC Rite Aid of Michigan, Inc. 100.0%Ocean Acquisition Corporation Rite Aid Corporation 100.0%PDS-1 Michigan, Inc. Perry Drug Stores, Inc. 100.0%P.L.D. Enterprises, Inc. Thrifty PayLess, Inc. 100.0%PL Xpress, Inc. Thrifty PayLess, Inc. 100.0%Patton Drive and Navy Boulevard Property Corporation Rite Aid Corporation 100.0%Paw Paw Lake Road & Paw Paw Avenue-Coloma, Michigan, LLC Rite Aid of Michigan, Inc. 100.0%Perry Distributors, Inc. Perry Drug Stores, Inc. 100.0%Perry Drug Stores, Inc. Rite Aid Corporation 100.0%Portfolio Medical Services, Inc. Rite Aid Corporation 100.0%RDS Detroit, Inc. Perry Drug Stores, Inc. 100.0%Rack Rite Distributors, Inc. Rite Aid Corporation 100.0%Ram-Utica, Inc. Rite Aid Corporation 100.0%Reads, Inc. Rite Aid of Maryland, Inc. 99.9%Rite Aid Drug Palace, Inc. Rite Aid Corporation 100.0%Rite Aid Hdqtrs. Corp. Rite Aid Corporation 100.0%Rite Aid Lease Management Company Thrifty Corporation See notes 1 and 2Rite Aid of Alabama, Inc. Rite Aid Corporation 100.0%Rite Aid of Connecticut, Inc. Rite Aid Corporation 100.0%Rite Aid of Delaware, Inc. Rite Aid Corporation 100.0%Rite Aid of Florida, Inc. Rite Aid Corporation 100.0%Rite Aid of Georgia, Inc. Rite Aid Corporation 100.0%Rite Aid of Illinois, Inc. Rite Aid Corporation 100.0%Rite Aid of Indiana, Inc. Rite Aid Corporation 100.0%Rite Aid of Kentucky, Inc. Rite Aid Corporation 100.0%Rite Aid of Maine, Inc. Rite Aid Corporation 100.0%Rite Aid of Maryland, Inc. Rite Aid Corporation 100.0%Rite Aid of Massachusetts, Inc. Rite Aid Corporation 100.0%Rite Aid of Michigan, Inc. Rite Aid Corporation 100.0%Rite Aid of New Hampshire, Inc. Rite Aid Corporation 100.0%Rite Aid of New Jersey, Inc. Rite Aid Corporation 100.0%Rite Aid of New York, Inc. Rite Aid Corporation 100.0%Rite Aid of North Carolina, Inc. Rite Aid Corporation 100.0%Rite Aid of Ohio, Inc. Rite Aid Corporation 100.0%Rite Aid of Pennsylvania, Inc. Rite Aid Corporation 100.0%Rite Aid of South Carolina, Inc. Rite Aid Corporation 100.0%Rite Aid of Tennessee, Inc. Rite Aid Corporation 100.0%Rite Aid of Vermont, Inc. Rite Aid Corporation 100.0%Rite Aid of Virginia, Inc. Rite Aid Corporation 100.0%Rite Aid of Washington, D.C., Inc. Rite Aid Corporation 100.0%Rite Aid of West Virginia, Inc. Rite Aid Corporation 100.0%Rite Aid Realty Corp. Rite Aid Lease Management Company 100.0%Rite Aid Risk Management Corp. Rite Aid Corporation 100.0% (see note 3)Rite Aid Rome Distribution Center, Inc. Rite Aid Corporation 100.0%Rite Aid Transport, Inc. Rite Aid Corporation 100.0%Rite Aid Venturer #1, Inc. Rite Aid Corporation 100.0%Rite Fund, Inc. Rite Aid Corporation 100.0%Rite Investments Corp. Rite Aid Corporation 100.0%Rx Choice, Inc. Rite Aid Corporation 100.0%Script South, Inc. Harco, Inc. 100.0%Seven Mile and Evergreen - Detroit, LLC Rite Aid of Michigan, Inc. 100.0%Silver Springs Road-Baltimore, Maryland/One, LLC Sophie One Corp. 100.0%Silver Springs Road-Baltimore, Maryland/Two, LLC Sophie One Corp. 100.0%Sophie One Corp. Rite Aid Corporation 100.0%State & Fortification Streets - Jackson, Mississippi, LLC K & B Mississippi Corporation 100.0%State Street and Hill Road-Gerard, Ohio, LLC Rite Aid of Ohio, Inc. 100.0%Super Distributors, Inc. Virginia Corporation 100.0%Super Ice Cream Suppliers, Inc. Virginia Corporation 100.0%Super Laboratories, Inc. Virginia Corporation 100.0%Super Pharmacy Network, Inc. Virginia Corporation 100.0%Super Tobacco Distributors, Inc. Virginia Corporation 100.0%The Lane Drug Company Rite Aid Corporation 100.0%The Muir Company Rite Aid Corporation 100.0%Thrifty Corporation Thrifty PayLess, Inc. 100.0%Thrifty PayLess, Inc. Rite Aid Corporation 100.0%Thrifty Wilshire, Inc. Thrifty Corporation 100.0%Tyler and Sanders Road - Birmingham-Alabama, LLC Harco, Inc. 100.0%Virginia Corporation K & B, Incorporated 100.0%W.R.A.C., Inc. Rite Aid Corporation 100.0%112 Burleigh Avenue Norfolk, LLC Rite Aid of Virginia, Inc. 100.0%537 Elm Street Corporation Rite Aid Corporation 100.0%657-659 Broadway St. Corp. Rite Aid Corporation 100.0%764 South Broadway-Geneva, Ohio, LLC Rite Aid of Ohio, Inc. 100.0%1515 West State Street Boise, Idaho, LLC Thrifty PayLess, Inc. 100.0%1525 Cortyou Road - Brooklyn Inc. Rite Aid of New York, Inc. 100.0%1740 Associates, LLC Rite Aid of Michigan, Inc. 100.0%3581 Carter Hill Road - Montgomery Corp. Rite Aid Corporation 100.0%4042 Warrensville Center Road - Warrensville Ohio, Inc. Rite Aid Corporation 100.0%5277 Associates, Inc. Rite Aid Corporation 100.0%5600 Superior Properties, Inc. Rite Aid Corporation 100.0%Inactive Subsidiaries---------------------Rite Aid Funding, LLC Rite Aid Corporation 100.0%912 Elmwood Avenue - Buffalo, LLC Rite Aid of New York, Inc. 100.0%Drug Palace, Inc. Rite Aid Corporation 100.0%East Stone Drive & Bloomingdale Pike - Kingsport,Tennessee, LLC Rite Aid of Tennessee, Inc. 100.0%Euclid and Wilders Roads - Bay City, LLC Rite Aid of Michigan, Inc. 100.0%Fiona One Corp. Rite Aid Corporation 100.0%Fiona Three Corp. Rite Aid Corporation 100.0%Fiona Two Corp. Rite Aid Corporation 100.0%Gettysburg & Germantown, LLC Rite Aid of Ohio, Inc. 100.0%Grand River & Fenkell, LLC Rite Aid Corporation 100.0%Louisville Avenue & North 18th Street-Monroe, Louisiana,LLC K & B Louisiana Corporation 100.0%Main and McPherson - Clyde, LLC Rite Aid of Ohio, Inc. 100.0%Pharmacy Card, Inc. Rite Aid Corporation 100.0%Richmond Road & Monticello Boulevard - Richmond Heights,Ohio, LLC Rite Aid of Ohio, Inc. 100.0%Rite Aid of Rhode Island, Inc. Rite Aid Corporation 100.0%Rite Inventory Management Corporation Rite Aid Corporation 100.0%Route 1 & Hood Road - Fredericksburg, LLC Rite Aid of Virginia, Inc. 100.0%Route 202 at Route 124 Jaffrey-New Hampshire, LLC Rite Aid of New Hampshire, Inc. 100.0%Rx USA, Inc. Rite Aid Corporation 80.0%Sophie Three Corp. Rite Aid Corporation 100.0%Sophie Two Corp. Rite Aid Corporation 100.0%TP Retail Corporation Rite Aid Corporation 100.0%White Shield, Inc. Rite Aid of Pennsylvania, Inc. 100.0%Notes-----#1 - Rite Aid Lease Management Corp. - Common stock owned 64% Thrifty Corporation, 23% Thrifty PayLess, 13% RiteAid Corporation.#2 - Rite Aid Lease Management Corp. - Preferred stock is nonvoting participating. Owned 100% Lehman Brothers.#3 - Rite Aid Risk Management Corp. - Preferred stock is non-voting participating. Class B Preferred Stock isowned by Marsh and McLennan Companies, Inc and Class C Preferred Stock is owned by Pine Grove Associates. |
