Rite Aid Corporation (NYSE:RAD) Files An 8-K Entry into a Material Definitive Agreement

Rite Aid Corporation (NYSE:RAD) Files An 8-K Entry into a Material Definitive Agreement

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Item 1.01. Entry into a Material Definitive
Agreement
.

Asset Purchase Agreement

On June28, 2017, Rite Aid Corporation (Rite Aid) entered into an
Asset Purchase Agreement (the Asset Purchase Agreement) with
Walgreens Boots Alliance,Inc., a Delaware corporation (WBA) and
Walgreen Co., an Illinois corporation and wholly owned direct
subsidiary of WBA (Buyer). to the terms and subject to the
conditions set forth in the Asset Purchase Agreement, Buyer will
purchase from Rite Aid 2,186 stores (the Acquired Stores) and
certain distribution and other specified assets related thereto
for a purchase price of approximately $5.175 billion, on a
cash-free, debt-free basis, plus Buyers assumption of certain
liabilities of Rite Aid and its affiliates (the Sale).

Consummation of the Sale is subject to various closing
conditions, including but not limited to (i)the waiting period
(and any extension thereof) applicable to the Sale and the other
transactions contemplated by the Asset Purchase Agreement under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, shall have expired or been earlier terminated, (ii)the
absence of a material adverse effect on the stores and
distribution centers being acquired in the Sale and (iii)a
duplicate copy of Rite Aids prescription dispensing system being
operational.

The parties to the Asset Purchase Agreement have each made
customary representations and warranties. Rite Aid has agreed to
various covenants and agreements, including, among others, Rite
Aids agreement to conduct its business at the Acquired Stores in
the ordinary course during the period between the execution of
the Asset Purchase Agreement and the closing of the Sale, subject
to certain exceptions, Rite Aids agreement not to solicit
proposals from third parties for the purchase of the remainder of
Rite Aid or over 50% of its stock or assets for sixty (60) days
after the date of the Asset Purchase Agreement subject to certain
exceptions and the parties agreement to use their reasonable best
efforts to obtain all authorizations and approvals from
governmental authorities. Rite Aid has agreed to provide
transition services to Buyer for up to (3)three years after
closing of the Sale.

The Asset Purchase Agreement contains specified termination
rights for Rite Aid and WBA, including a mutual termination right
in the event any court of competent jurisdiction or other
governmental entity shall have issued a final and nonappealable
legal restraint that prevents, makes illegal, prohibits,
restrains or enjoins the completion of the Sale, and a
termination right for WBA in the event Rite Aid enters into an
agreement to sell all of the remainder of Rite Aid or over 50% of
its stock or assets to a third party. Under the terms of the
Asset Purchase Agreement, Rite Aid has the option to purchase
pharmaceutical drugs through an affiliate of WBA under terms,
including cost, that are substantially equivalent to WBA for a
period of ten (10)years.

The foregoing descriptions of the Asset Purchase Agreement and
the transactions contemplated thereby do not purport to be
complete and are qualified in their entirety by reference to the
Asset Purchase Agreement, a copy of which is filed as Exhibit10.1
hereto and incorporated herein by reference. The Asset Purchase
Agreement contains representations and warranties by each of the
parties to the Asset Purchase Agreement, which were made only for
purposes of that agreement and as of specified dates. The
representations, warranties and covenants in the Asset Purchase
Agreement were made solely for the benefit of the parties to the
Asset Purchase Agreement; are subject to limitations agreed upon
by the contracting parties, including being qualified by
confidential disclosure schedules; may have been made for the
purposes of allocating contractual risk between the parties to
the Asset Purchase Agreement instead of establishing these


matters as facts; and are subject to standards of materiality
applicable to the contracting parties that may differ from
those applicable to investors. Investors should not rely on the
representations, warranties and covenants or any descriptions
thereof as characterizations of the actual state of facts or
condition of the Rite Aid, WBA or Buyer or any of their
respective subsidiaries or affiliates. Moreover, information
concerning the subject matter of the representations,
warranties and covenants may change after the date of the Asset
Purchase Agreement, which subsequent information may or may not
be fully reflected in Rite Aids public disclosures.

The information set forth in Item 1.02 of this Form8-K is
incorporated herein by reference.

Item 1.02. Termination of a Material
Definitive Agreement
.

Termination of Merger Agreement with WBA

As previously disclosed, on October27, 2015, Rite Aid, WBA and
Victoria Merger Sub,Inc. (Merger Sub), a Delaware corporation
and a wholly owned subsidiary of WBA, entered into an Agreement
and Plan of Merger (as amended by Amendment No.1, dated as of
January29, 2017 (the Amendment)) (the Merger Agreement). On
June28, 2017, Rite Aid, WBA and Merger Sub entered into a
Termination Agreement (the Merger Termination Agreement) under
which the parties agreed to terminate the Merger Agreement. The
Merger Termination Agreement provides that WBA will pay to Rite
Aid a termination fee in the amount of $325,000,000. Subject to
limited customary exceptions, the Merger Termination Agreement
also mutually releases the parties from any claims of liability
to one another relating to the contemplated merger transaction.

The foregoing descriptions of the Merger Agreement and Merger
Termination Agreement are subject to, and qualified in their
entirety by, the full text of the Merger Agreement, which was
filed as Exhibit2.1 to the Current Report filed by Rite Aid on
October29, 2015, the full text of the Amendment, which was
filed as Exhibit2.2 to the Current Report filed by Rite Aid on
January30, 2017, and the full text of the Merger Termination
Agreement, which is attached hereto as Exhibit10.2, and each of
which is incorporated herein by reference.

Termination of the Asset Purchase Agreement with Freds

As previously disclosed, on December19, 2016, Rite Aid entered
into an Asset Purchase Agreement (the Divestiture Asset
Purchase Agreement) with AFAE, LLC, a Tennessee limited
liability company (AFAE), Freds,Inc., a Tennessee corporation
(Freds) (solely for the purposes set forth in the Divestiture
Asset Purchase Agreement) and WBA (solely for the purposes set
forth in the Divestiture Asset Purchase Agreement). In
connection with the previously announced proposed acquisition
of Rite Aid by WBA and to the terms and subject to the
conditions set forth in the Divestiture Asset Purchase
Agreement, AFAE would purchase from Rite Aid 865 stores and
certain specified assets related thereto. On June28, 2017, Rite
Aid, AFAE, Freds and WBA entered into a letter agreement (the
APA Termination Agreement) under which the parties agreed to
terminate the Divestiture Asset Purchase Agreement.

The foregoing descriptions of the Divestiture Asset Purchase
Agreement and the APA Termination Agreement are subject to, and
qualified in their entirety by, the full text of the
Divestiture Asset Purchase Agreement, which was filed as
Exhibit2.3 to the Annual Report filed by Rite Aid on May3, 2017
and the full text of the APA Termination Agreement, which is
filed herewith as Exhibit10.3 and each of which is incorporated
herein by reference.


Item 2.02. Results of Operations and Financial
Condition.

On June29, 2017, Rite Aid reported its financial position and
results of operations as of and for the thirteen week period
ended June3, 2017. The press release includes non-GAAP
financial measures, Adjusted EBITDA, Adjusted Net Income (Loss)
and Adjusted Net Income (Loss) per Diluted Share. Rite Aid uses
these non-GAAP measures in assessing its performance in
addition to net loss, the most directly comparable GAAP
financial measure. A reconciliation of Adjusted EBITDA,
Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per
Diluted Share to net income (loss) is included in the press
release, which is furnished as Exhibit99.1 hereto.

Rite Aid believes Adjusted EBITDA serves as an appropriate
measure in evaluating the performance of its business and helps
its investors better compare Rite Aids operating performance
with its competitors. Rite Aid defines Adjusted EBITDA as net
income (loss) excluding the impact of income taxes, interest
expense, depreciation and amortization, LIFO adjustments,
charges or credits for facility closing and impairment,
inventory write-downs related to store closings, debt
retirements and other items (including stock-based compensation
expense, severance for distribution center closures, gain or
loss on sale of assets and revenue deferrals related to Rite
Aids customer loyalty program). Rite Aid references this
non-GAAP financial measure frequently in its decision-making
because it provides supplemental information that facilitates
internal comparisons to historical periods and external
comparisons to competitors. In addition, incentive compensation
is based in part on Adjusted EBITDA and Rite Aid bases certain
of its forward-looking estimates and budgets on Adjusted
EBITDA.

Rite Aid defines Adjusted Net Income (Loss) as net income
(loss) excluding the impact of amortization of EnvisionRx
intangible assets, merger and acquisition-related costs, loss
on debt retirements and LIFO adjustments. Rite Aid calculates
Adjusted Net Income (Loss) per Diluted Share using Rite Aids
above-referenced definition of Adjusted Net Income (Loss). Rite
Aid believes Adjusted Net Income (Loss) and Adjusted Net Income
(Loss) per Diluted Share serve as appropriate measures to be
used in evaluating the performance of its business and help its
investors better compare Rite Aids operating performance over
multiple periods.

Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted Net
Income (Loss) per Diluted Share should not be considered in
isolation from, and are not intended to represent alternative
measures of, operating results or of cash flows from operating
activities, as determined in accordance with GAAP. Rite Aids
definitions of Adjusted EBITDA, Adjusted Net Income (Loss) and
Adjusted Net Income (Loss) per Diluted Share may not be
comparable to similarly titled measurements reported by other
companies or similar terms in Rite Aids debt facilities.

In addition, a copy of Rite Aids Earnings Release Supplement
for the first quarter of fiscal 2018 is being furnished as
Exhibit99.2 to this Form8-K.

The information (including Exhibits 99.1 and 99.2) being
furnished to this Item 2.02. Results of Operations and
Financial Condition shall not be deemed to be filed for the
purposes of Section18 of the Securities Exchange Act of 1934,
as amended, or the Exchange Act, or otherwise subject to the
liabilities of that section and shall not be deemed to be
incorporated by reference into any filing under the Securities
Act of 1933, as amended, or the Securities Act, or the Exchange
Act regardless of any general incorporation language in such
filing.


Item 8.01. Other Events.

As a result of the Merger Termination Agreement and the APA
Termination Agreement, the special meeting of Rite Aids
stockholders, which was to be held for the purpose of voting on
the Merger Agreement and proposed transactions related thereto,
will not take place. Rite Aids stockholders should disregard
the preliminary proxy statement filed with the U.S. Securities
and Exchange Commission on March3, 2017. Further, Rite Aid
hereby withdraws the preliminary proxy statement.

Item 9.01. Financial Statements and Exhibits.

(d)Exhibits.

10.1* Asset Purchase Agreement, dated June28, 2017, among Rite
Aid Corporation, Walgreens Boots Alliance,Inc., and Walgreen
Co.

10.2 Termination Agreement, dated as of June28, 2017, among
Rite Aid Corporation, Walgreens Boots Alliance,Inc., and
Victoria Merger Sub,Inc.

10.3 Letter Agreement, dated as of June28, 2017, among Rite Aid
Corporation, Walgreens Boots Alliance,Inc., AFAE, LLC, and
Freds,Inc.

99.1 Press Release, dated June29, 2017

99.2 First Quarter Fiscal 2018 Supplemental Information

* Certain schedules have been omitted to Item 601(b)(2) of
Regulation S-K. Rite Aid hereby undertakes to furnish
supplemental copies of any of the omitted schedules upon
request by the Securities and Exchange Commission.


to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.

RITE AID CORPORATION

Dated: June29, 2017

By:

/s/ James J. Comitale

Name: James J. Comitale

Title: Senior Vice President, General Counsel


EXHIBITINDEX

ExhibitNo.

Description

10.1*

Asset Purchase Agreement, dated June28, 2017, among Rite
Aid Corporation, Walgreens Boots Alliance,Inc., and
Walgreen Co.

10.2

Termination Agreement, dated as of June28, 2017, among
Rite Aid Corporation, Walgreens Boots Alliance,Inc., and
Victoria Merger Sub,Inc.

10.3

Letter Agreement, dated as of June28, 2017, among Rite
Aid Corporation, Walgreens Boots Alliance,Inc., AFAE,
LLC, and Freds,Inc.

99.1

Press Release, dated June29, 2017

99.2

First Quarter Fiscal 2018 Supplemental Information

* Certain schedules have been omitted



RITE AID CORP Exhibit
EX-10.1 2 a17-15896_1ex10d1.htm EX-10.1 Exhibit 10.1   EXECUTION VERSION       ASSET PURCHASE AGREEMENT   By and Among   WALGREENS BOOTS ALLIANCE,…
To view the full exhibit click here
About Rite Aid Corporation (NYSE:RAD)

Rite Aid Corporation is a retail drugstore chain. The Company’s segments include Retail Pharmacy and Pharmacy Services. The Company operates under The Rite Aid name. It operates approximately 4,560 stores in over 30 states across the country and in the District of Columbia. The Company’s Retail Pharmacy segment consists of Rite Aid stores, RediClinic and Health Dialog. It sells brand and generic prescription drugs, as well as an assortment of front-end products, including health and beauty aids, personal care products, seasonal merchandise, and a private brand product line. Its front-end products include over-the-counter medications, health and beauty aids, personal care items, cosmetics, household items, food and beverages, greeting cards, seasonal merchandise and numerous other everyday and convenience products. The Company’s Pharmacy Services segment consists of EnvisionRx, which provides a range of pharmacy benefit services.

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