Termination of the Merger Agreement with WBA and the Pending Asset Sale to WBA	3 Months Ended
Jun. 03, 2017
Termination of the Merger Agreement with WBA, and the Pending Asset Sale to WBA,
Termination of the Merger Agreement with WBA,and the Pending Asset Sale to WBA	3. Termination of the Merger Agreement with WBA and the Pending Asset Sale to WBA Termination of Merger Agreement with Walgreens Boots Alliance, Inc. On October 27, 2015, Rite Aid, Walgreens Boots Alliance, Inc. (NASDAQ: WBA) (“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 January 29, 2017 (the “Amendment”)) (the “Merger Agreement”). Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub was to merge with and into Rite Aid (the “Merger”), with Rite Aid surviving the Merger as a 100 percent owned direct subsidiary of WBA. On June 28, 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 would pay to Rite Aid a termination fee in the amount of $325,000. Rite Aid received the termination fee payment on June 30, 2017. 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. Termination of the Divestiture Asset Purchase Agreement with Fred’s As previously disclosed, on December 19, 2016, Rite Aid entered into an Asset Purchase Agreement (the “Divestiture Asset Purchase Agreement”) with AFAE, LLC, a Tennessee limited liability company (“AFAE”), Fred’s, Inc., a Tennessee corporation (“Fred’s”) (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). Pursuant to the terms and subject to the conditions set forth in the Divestiture Asset Purchase Agreement, Rite Aid agreed to sell 865 Rite Aid stores and certain specified assets to Fred’s (the “Divestiture Sale”). In connection with the Merger and pursuant to the terms and subject to the conditions set forth in the Divestiture Asset Purchase Agreement, AFAE was to purchase from Rite Aid 865 stores and certain specified assets related thereto. On June 28, 2017, Rite Aid, AFAE, Fred’s and WBA entered into a letter agreement (the “APA Termination Agreement” and together with the Merger Termination Agreement, the “Terminations”) under which the parties agreed to terminate the Divestiture Asset Purchase Agreement. Subject to limited customary exceptions, the APA Termination Agreement also mutually releases the parties from any claims of liability to one another relating to the contemplated sale transaction. Entry Into Asset Purchase Agreement with WBA On June 28, 2017, Rite Aid entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with WBA and Walgreen Co., an Illinois corporation (“Walgreen’s”) and wholly owned direct subsidiary of WBA (“Buyer”). Pursuant 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”), three (3) distribution centers, related inventory and other specified assets related thereto for a purchase price of approximately $5.175 billion, on a cash-free, debt-free basis (the “Sale”). Completion 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, (iii) a duplicate copy of Rite Aid’s prescription dispensing system being operational and (iv) receipt of required licenses and lease consents. 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 Aid’s 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 Aid’s 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 Walgreen’s for a period of ten (10) years.

3. Termination of the Merger Agreement with WBA and the Pending Asset Sale to WBA

Termination of Merger Agreement with Walgreens Boots Alliance, Inc.

On October 27, 2015, Rite Aid, Walgreens Boots Alliance, Inc. (NASDAQ: WBA) (“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 January 29, 2017 (the “Amendment”)) (the “Merger Agreement”). Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub was to merge with and into Rite Aid (the “Merger”), with Rite Aid surviving the Merger as a 100 percent owned direct subsidiary of WBA. On June 28, 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 would pay to Rite Aid a termination fee in the amount of $325,000. Rite Aid received the termination fee payment on June 30, 2017. 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.

Termination of the Divestiture Asset Purchase Agreement with Fred’s

As previously disclosed, on December 19, 2016, Rite Aid entered into an Asset Purchase Agreement (the “Divestiture Asset Purchase Agreement”) with AFAE, LLC, a Tennessee limited liability company (“AFAE”), Fred’s, Inc., a Tennessee corporation (“Fred’s”) (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). Pursuant to the terms and subject to the conditions set forth in the Divestiture Asset Purchase Agreement, Rite Aid agreed to sell 865 Rite Aid stores and certain specified assets to Fred’s (the “Divestiture Sale”). In connection with the Merger and pursuant to the terms and subject to the conditions set forth in the Divestiture Asset Purchase Agreement, AFAE was to purchase from Rite Aid 865 stores and certain specified assets related thereto. On June 28, 2017, Rite Aid, AFAE, Fred’s and WBA entered into a letter agreement (the “APA Termination Agreement” and together with the Merger Termination Agreement, the “Terminations”) under which the parties agreed to terminate the Divestiture Asset Purchase Agreement. Subject to limited customary exceptions, the APA Termination Agreement also mutually releases the parties from any claims of liability to one another relating to the contemplated sale transaction.

Entry Into Asset Purchase Agreement with WBA

On June 28, 2017, Rite Aid entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with WBA and Walgreen Co., an Illinois corporation (“Walgreen’s”) and wholly owned direct subsidiary of WBA (“Buyer”). Pursuant 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”), three (3) distribution centers, related inventory and other specified assets related thereto for a purchase price of approximately $5.175 billion, on a cash-free, debt-free basis (the “Sale”).

Completion 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, (iii) a duplicate copy of Rite Aid’s prescription dispensing system being operational and (iv) receipt of required licenses and lease consents.

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 Aid’s 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 Aid’s 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 Walgreen’s for a period of ten (10) years.