Exhibit 10.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT (this "Agreement") by and between
Rite Aid Corporation, a Delaware corporation (the "Company "), and Xxxxx X.
Xxxxxxx (the "Employee"), is entered into as of this 27th day of June, 2002 and
shall become effective at the close of business on June 27, 2002 (the "Effective
Date").
WITNESSETH
WHEREAS, the Company and the Employee are parties to the Employment
Agreement dated as of December 5, 1999 (the "Original Employment Agreement");
and
WHEREAS, the Company wishes to provide for the continued services of
Employee, and the Employee wishes to continue to serve the Company on the terms
and conditions set forth in this Agreement; and
WHEREAS, Employee and the Company deserve to settle fully all
employment related matters between them arising prior to the Effective Date
including, but not limited to, any differences that might have arisen under the
Original Employment Agreement based on Employee's change of position with the
Company;
NOW, THEREFORE, as of the Effective Date, and except as otherwise
expressly set forth herein, the Original Employment Agreement is hereby amended
and restated as follows (with this Agreement superseding the Original Employment
Agreement from and after the Effective Date in its entirety):
1. TERM. Subject to earlier termination in accordance with the
provisions of Section 4, the term of Employee's employment under this Agreement
(such period, commencing as of the Effective Date, being referred to herein as
the "Employment Period") shall end on February 26, 2005.
2. POSITION AND DUTIES. As of the Effective Date, Employee hereby
resigns as Senior Executive Vice President and Chief Administrative Officer of
the Company and from all other offices and positions he holds with the Company
and its subsidiaries. During the Employment Period, the Employee shall continue
to be an employee of the Company, with such duties and responsibilities as may
from time to time be assigned to him by the Company's Chief Executive Officer
(or his or her designee) or the Board of Directors of the Company (the "Board").
As an employee, Employee shall make himself available to provide services to the
Company and its subsidiaries from time to time on such project(s) relating to
the business, affairs and management of the Company as may be assigned to him.
The Company acknowledges that Employee will have other activities, obligations
and engagements that will command his time and attention, subject to the
provisions of Section 8 and the other provisions hereof. In no event shall the
period of services (which shall include travel time) required hereunder exceed
an average of six (6) hours per week calculated on a weekly basis. The duties of
Employee may be performed in Portland, Oregon (or such other place where
Employee principally resides) and Employee shall be provided with office space
in the Company's Portland, Oregon office, which shall include secretarial and
other support services.
3. COMPENSATION. (a) BASE SALARY. During the Employment Period, the
Company shall pay Employee an annual base salary ("Annual Base Salary") of
$150,000. The Annual Base Salary shall be payable in accordance with the
Company's regular payroll practice, as in effect from time to time (but in no
event less frequently than monthly).
(b) INCENTIVE COMPENSATION. With respect to the 2003 fiscal year
only, Employee shall be entitled to participate on the same basis as other
executives in the bonus plan authorized by the Company's Board of Directors (the
"Board") on April 3, 2002. Employee's bonus level shall be based upon sixty
percent (60%) of Employee's current annualized Base Salary ($600,000 per year)
in effect on the day preceding the Effective Date even though the entire
$600,000 Base Salary for fiscal year 2003 will not be paid to Employee as a
result of this Agreement, and (ii) if bonuses under that plan are not earned,
the bonus payment, if any, to Employee shall be approved by the Board. Any
salary paid pursuant to section 3(a) of this Agreement shall not be taken into
account for purposes of determining the payment, if any, pursuant to this
subsection (b). Employee shall not be entitled to participate in such plan or
any successor thereto for any fiscal year after fiscal year 2003. In the event
the Company pays a performance or other bonus with respect to fiscal year 2003
in lieu of or in addition to the bonus under the plan, Employee shall not be
entitled to participate therein. Employee's death or disability shall not affect
or diminish any payment of the bonus which would otherwise be due and payable.
(c ) CERTAIN OTHER BENEFITS During the Employment Period, except as
and to the extent otherwise provided herein, (i) the Company shall, subject to
the immediately succeeding sentence, continue to maintain Employee's term life
insurance on the Employee's life, in the face amount of $1,500,000 (in the form
currently provided) and (ii) Employee shall be entitled to participate in
employee discounts, Internet access arrangements and Company- sponsored health
benefits and health plans which will provide the same coverage and benefits
(which shall be continuous and uninterrupted) as those plans in which Executive
employees of the Company are generally able to participate, subject in the case
of health benefits and health plans to any generally applicable eligibility
requirements and the other generally applicable terms (including, but not
limited to contribution requirements) thereof, other than any requirements
relating to minimum hours worked or scheduled to work. The Employee agrees to
cooperate with the Company in maintaining such term life insurance, including
submitting to a physical examination if required to do so by the insurance
carrier. The beneficiary of each of the aforementioned policies shall be
designated by the Employee and if not so designated shall be his estate. In
addition, during the Employment Period, the Company shall promptly reimburse
Employee against receipts for (x) all necessary and reasonable business expenses
incurred by the Employee in connection with the discharge of his duties
hereunder, and (y) all reasonable costs and expenses incurred by Employee in the
course of meeting with Company directors and officers.
(d) DEFERRED COMPENSATION. As of the first day of each month
through and including February 1, 2003, the Company shall continue to credit
Employee's account under the New Deferred Compensation Plan established under
the Original Employment Agreement with an amount equal to $10,000. The Employee
shall be fully vested at all times in his account balance under the New Deferred
Compensation Plan. In addition, Employee shall have the right to defer all or
any portion of the Annual Base Salary receivable after the Effective Date
hereunder pursuant to deferred compensation arrangements to be established in
good faith after the Effective Date.
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(e) EQUITY AWARDS. As of the Effective Date, Employee holds the
options ("Options") to purchase Company common stock and the shares of
restricted Company common stock ("Restricted Stock") set forth on Schedule I
hereto (collectively, the "Company Securities"). Except as otherwise provided
herein, the time vesting provisions applicable to the Options and the Restricted
Stock shall continue to apply after the Effective Date based solely upon the
lapse of time until such Options have vested and restrictions had lapsed in
full; provided, however, that upon a Change in Control (as defined in Appendix
A) all Options shall vest in full and all restrictions on the Restricted Stock
shall lapse in full. The exercise period of the Options shall not be shortened
by virtue of any provision of this Agreement or any termination of Employee's
status as an employee of the Company, and in all events, each Option shall
remain exercisable by Employee, his estate or successors for ten (10) years from
the date of its grant. To the extent Company has a withholding obligation with
respect to any vesting of Restricted Stock, Employee shall either pay such
amount to Company or make an election (if made within 5 business days of such
vesting or such longer period as is provided to all executive officers of the
Company)to receive a net amount of vested shares of Restricted Stock based on
cancellation of the number of shares equal to such withholding obligation
calculated at the fair market value of such shares as determined under the
relevant plan or, if not so determined, by the Board of Directors or
compensation committee in good faith. Except as expressly provided herein, the
terms and conditions of the Company Securities in effect immediately prior to
the Effective Date shall remain in full force and effect from and after the
Effective Date.
(f) INDEMNIFICATION. The Company shall (a) indemnify and hold
Employee harmless, to the full extent permitted under applicable law, for, from
and against any and all losses, claims, costs, expenses, damages, liabilities or
actions (including security holder actions, in respect thereof) related to or
arising out of the Employee's employment with or his service to the Company
prior to and after the Effective Date as an officer or employee of the Company
and (b) advance and pay all reasonable costs, expenses and attorney's fees
incurred by Employee in connection with or relating to the defense of any such
loss, claim, cost, expense, damage, liability or action. The Company shall cause
any director and officer liability insurance policies applicable to the Employee
to remain in effect for six (6) years following the termination of employment
for any reason. The provisions of this Section 3(f) shall survive termination of
this Agreement for any reason.
4. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY. The Employee's
employment shall terminate automatically upon the Employee's death during the
Employment Period. The Company shall be entitled to terminate the Employee's
employment because of the Employee's Disability during the Employment Period.
"Disability" means that Employee has been unable, for six consecutive months, to
perform the Employee's duties under this Agreement, as a result of physical or
mental illness or injury. The effective date of any termination of Employee's
employment for Disability is referred to herein as the "Disability Effective
Date." A termination of the Employee's employment by the Company for Disability
shall be communicated to the Employee by written notice, and shall be effective
on the 30th day after receipt of such notice by the Employee, unless the
Employee is able to return to the performance of the Employee's duties before
the Disability Effective Date. During any period prior to the Disability
Effective Date during which Employee is unable to fully perform his duties with
the Company due to such physical or mental illness or injury, there shall be no
diminution in the amounts payable or benefits available to Employee hereunder.
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(b) TERMINATION BY THE COMPANY. The Company may terminate the
Employee's employment at any time during the Employment Period for Cause.
"Cause" shall mean only an act of fraud, embezzlement or misappropriation by the
Employee, in any such case intended by the Employee to result in substantial
personal enrichment at the expense of the Company. Notwithstanding the
foregoing, Employee shall not be deemed to have been terminated for Cause unless
and until there shall have been delivered to Employee a copy of a resolution
duly adopted by the affirmative vote of not less than two-thirds of the
non-employee members of the Board at a meeting of the Board called and held for
such purpose (after reasonable written notice to Employee setting forth in
reasonable detail the specific conduct of the Employee upon which the Board
relied in reaching its determination, and an opportunity for Employee, together
with his counsel, to be heard before the Board), finding that in the good faith
opinion of the Board, Employee was guilty of conduct constituting Cause as
defined above, Employee shall be entitled to receive all compensation and
benefits hereunder pending the delivery of such resolution. The effective date
of any termination for Cause shall be the date such resolution is delivered to
Employee.
(c) GOOD REASON. (i) The Employee may terminate employment for Good
Reason or without Good Reason. "Good Reason" shall mean the occurrence of any
one of the following:
A. any failure by the Company to comply with any provision of
Section 3 of this Agreement;
B. any other material breach of this Agreement by the Company;
provided, however, that the Company shall have the right, within ten
(10) days after receipt of notice from Employee of the Company's
violation of subparagraphs A or B (or such longer period provided
below) to cure in full the event or circumstances giving rise to such
Good Reason, in the event of which cure such event or circumstances
shall be deemed not to constitute Good Reason hereunder.
A termination of employment by the Employee for Good Reason shall be
effectuated by giving the Company written notice ("Notice of Termination for
Good Reason") of the termination, setting forth in reasonable detail the
specific conduct of the Company that constitutes Good Reason and the specific
provision(s) of this Agreement on which the Employee relies, provided, that
Employee's continued employment shall not be deemed to constitute consent to, or
a waiver of rights with respect to, any act, omission or other grounds
constituting Good Reason hereunder. For clarity, it is understood that the
requirement of setting forth such specific conduct and specific provisions(s) is
intended (i) to permit the Company to make a reasonable evaluation of Employee's
claim of termination for Good Reason and (ii) to permit the Company, where
applicable, to cure such conduct, but not to require Employee to specify each
act, omission or other grounds constituting Good Reason, there being no
intention of the parties that failure to so specify will function as an estoppel
with respect to any claim by Employee. A termination of employment by the
Employee for Good Reason shall be effective on the latest of (i) the fifth
business day following the expiration of the Company's cure period described
above, if applicable, (ii) the date specified by Employee in the Notice of
Termination for Good Reason or (iii) 45 days following the date the Notice of
Termination for Good Reason is delivered to the Company.
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In addition, a Change of Control of the Company (as defined in Appendix
A) during the Employment Period shall be deemed to constitute a termination of
employment by the Employee for Good Reason (provided that the Employee need not
actually terminate his employment before or after such Change in Control). In
such event, in addition to the provisions of Section 5(a), the Company shall pay
to the Employee, not later than ten (10) days following the Date of Termination,
an amount equal to the following (but not less than zero):
(x) $2,880,000;
less
----
(y) the gross amount, if any that Employee realizes (which
amount Employee agrees to promptly report to the Company) with respect
to the Options (other than with respect to the Options granted in
January 2002 set forth in Schedule I which shall not be included as an
offset) at any time prior to or as a result of the Change in Control
(with any Options converted into immediately freely tradeable
securities as of the date of the Change of Control being deemed to be
realized and valued by the Board of Directors of the Company in good
faith at such date of closing).
(ii) A termination of the Employee's employment by the Employee without
Good Reason shall be effected by giving the Company at least 90 days' written
notice of such termination, and shall be effective on the date specified by
Employee in such notice, provided, however, that no such notice period shall be
required with respect to any such termination as to which such written notice of
termination is delivered to the Company following a Change in Control of the
Company.
(d) DATE OF TERMINATION. The "Date of Termination" means the date
of the Employee's death, the Disability Effective Date, or the date on which the
termination of the Employee's employment by the Company for Cause or by the
Employee for Good Reason or without Good Reason becomes effective, as the case
may be. On the Date of Termination, the Employment Period shall terminate.
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) FOR GOOD REASON OR
FOR OTHER THAN FOR CAUSE, DEATH OR DISABILITY. If, during the Employment Period,
the Company terminates the Employee's employment for any reason other than
Cause, Death or Disability, or the Employee terminates his employment for Good
Reason;
(1) the Company shall continue to pay (as and when due under this
Agreement) to the Employee: (A) his Annual Base Salary through the end
of the Employment Period, (B) the incentive compensation as provided in
Section 3(b) above, payable when generally paid under such Plan, (C)
any other compensation and benefits accrued (and, where applicable,
vested) through the Date of Termination under the terms of the
Company's compensation and benefit plans, programs or arrangements
applicable to Employee hereunder as in effect immediately prior to the
Date of Termination (or, if in any case providing a greater benefit to
Employee, as in effect immediately prior to an event constituting Good
Reason), and (D) any amounts of reimbursable business expenses incurred
through the Date of Termination.
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(2) health benefits provided to the Employee immediately prior to the
Date of Termination (or, at Employee's sole discretion, medical
coverage provided to the Employee immediately prior to the occurrence
of any event constituting Good Reason) and the life insurance set forth
in Section 3(c) shall continue to be provided by the Company to the
Employee (and, if applicable, his spouse and dependents) through
February 26, 2005;
(3) all of the Employee's then outstanding Options shall vest and
become fully exercisable as of the Date of Termination and the Options
shall remain fully vested and exercisable by Employee, his estate or
successor for ten (10) years from the date of its grant;
(4) all remaining restrictions applicable to the Restricted Stock shall
immediately lapse; and
(5) if the date of termination is prior to February 1, 2003, the
Company shall continue to credit Employee's account under the New
Deferred Compensation Plan as provided in Section 3(d) above through
and including February 1, 2003.
(b) DEATH AND DISABILITY. If the Employee's employment is
terminated by reason of the Employee's death or Disability during the Employment
Period;
(1) the Company shall pay to the Employee or, in the case of the
Employee's death, to the Employee's designated beneficiaries (or, if
there is no such beneficiary, to the Employee's estate or legal
representative), in a lump sum in cash within ten (10) days after the
Date of Termination (or, if later, when payable in accordance with the
relevant Plans), (a) any earned but unpaid Annual Base Salary through
the Date of Termination, (b) the incentive compensation, as provided in
Section 3(b) above, payable when generally paid under such Plan, and
(c) any unreimbursed business expenses (collectively, the "Accrued
Benefits").
(2) health benefits provided to the Employee immediately prior to the
Date of Termination shall continue to be provided by the Company (i) in
the event of Disability, to the Employee (and, if applicable, his
spouse and dependents) or (ii) in the event of Employee's death, to his
surviving spouse (and, if applicable, his dependents), through February
26, 2005;
(3) all of the Employee's then outstanding Options shall vest and
become fully exercisable as of the Date of Termination and (i) the
Options shall remain fully vested and exercisable by Employee, his
estate or successor for ten (10) years from the date of its grant;
(4) all remaining restrictions applicable to the Restricted Stock shall
immediately lapse; and
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(5) if the termination date is prior to February 1, 2003, the Company
shall continue to credit Employee's account under the New Deferred
Compensation Plan as provided in Section 3(d) above through and
including February 1,2003.
(c) BY THE COMPANY FOR CAUSE. If the Employee's employment is
terminated by the Company for Cause during the Employment Period, (1) the
Company shall pay to the Employee the Accrued Benefits within ten (10) days
after the Date of Termination , (2) Employee's outstanding vested Options shall
remain exercisable for the remainder of their term and Employee's unvested
Options shall terminate and be immediately canceled, and (3) any portion of the
Restricted Stock as to which time vesting restrictions have not lapsed prior to
the Date of Termination shall terminate and be immediately canceled.
(d) BY THE EMPLOYEE OTHER THAN FOR GOOD REASON. If the Employee's
employment is terminated by Employee (other than for Good Reason) during the
Employment Period, (1) the Company shall pay to the Employee the Accrued
Benefits, within ten (10) days after the Date of Termination; (2) Employee's
outstanding vested Options shall remain exercisable for the remainder of their
term and Employee's unvested Options shall continue to vest based on the lapse
of time as if Employee's employment with the Company had continued uninterrupted
in full and thereafter remain exercisable for the remainder of their term, in
each case without any regard to any early termination provision, and (3) the
restrictions on the Restricted Stock shall continue to lapse as if Employee's
employment with the Company had continued uninterrupted until such restrictions
had lapsed in full.
(e) GOLDEN PARACHUTE PAYMENTS. (i) In the event that any payment or
benefit received or to be received by the Employee pursuant to the terms of this
agreement or of any other plan, arrangement or agreement of the Company (or any
affiliate) (collectively, the "Payments") would be subject to the excise tax
(the "Excise Tax") imposed by Section 4999 of the Internal Revenue Code of 1986,
as amended (the "Code"), as determined as provided below, the Company shall pay
to the Employee, at the time specified in Section 5(e)(ii) below, an additional
amount (the "Gross-Up Payment") such that the net amount retained by the
Employee, after deduction of the Excise Tax on Payments and any federal, state
and local income and employment or other tax and the Excise Tax upon the
Gross-Up Payment, and any interest, penalties or additions to tax payable by the
Employee with respect thereto, shall be equal to the total Payments. For
purposes of determining whether any of the Payments will be subject to the
Excise Tax and the amounts of such Excise Tax, (1) the total amount of the
Payments shall be treated as "parachute payments" within the meaning of section
280G(b)(2) of the Code, and all "excess parachute payments" within the meaning
of section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax,
except to the extent that, in the opinion of tax counsel ("Tax Counsel")
reasonably acceptable to Employee and selected by the accounting firm which was,
immediately prior to the event giving rise to the Payment, the Company's
independent auditor (the "Auditor"), a Payment (in whole or in part) does not
constitute a "parachute payment" within the meaning of section 280G(b)(2) of the
Code, or such "excess parachute payments" (in whole or in part) are not subject
to the Excise Tax, (2) the amount of the Payments that shall be treated as
subject to the Excise Tax shall be equal to the lesser of (A) the total amount
of the Payments or (B) the amount of "excess parachute payments" within the
meaning of section 280G(b)(l) of the Code (after applying clause (1) hereof),
and (3) the value of any noncash benefits or any deferred payment or benefit
shall be determined by the Auditor in accordance with the principles of sections
280G(d)(3) and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, the Employee shall be deemed to pay federal income taxes at
the highest marginal rates of federal income taxation applicable to the
individuals in the calendar year in which the Gross-Up Payment is to be made and
state and local income taxes at the highest marginal rates of taxation
applicable to individuals as are in effect in the state and locality of the
Employee's residence in the calendar year in which the Gross-Up Payment is to be
made, net of the maximum reduction in federal income taxes that can be obtained
from deduction of such state and local taxes, taking into account any
limitations applicable to individuals subject to federal income tax at the
highest marginal rates.
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(ii) The Gross-Up Payments provided for in Section 5(e)(i)
hereof shall be made upon the earlier of (i) ten days following the Date of
Termination or (ii) the imposition upon the Employee or payment by the Employee
of any Excise Tax.
(iii) If it is established pursuant to a final determination
of a court or an Internal Revenue Service proceeding that the Excise Tax is less
than the amount taken into account under Section 5(e)(i) hereof, the Employee
shall repay to the Company within thirty (30) days of the Employee's receipt of
notice of such final determination the portion of the Gross-Up Payment
attributable to such reduction (plus the portion of the Gross-Up Payment
attributable to the Excise Tax and federal, state and local income tax imposed
on the portion of the Gross-Up Payment being repaid by the Employee if and to
the extent that such repayment results in a reduction in Excise Tax and a
dollar-for-dollar reduction in the Employee's taxable income and wages for the
purpose of federal, state and local income taxes) plus any interest received by
the Employee on the amount of such repayment. If it is established pursuant to a
final determination of a court or an Internal Revenue Service proceeding that
the Excise Tax exceeds the amount taken into account hereunder (including
without limitation by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Company shall
make an additional Gross-Up Payment pursuant to Section 5(e)(i) in respect of
such excess within thirty (30) days of the Company's receipt of notice of such
final determination or opinion. The Employee and the Company shall each
reasonably cooperate with the other in connection with any administrative or
judicial proceedings concerning the existence or amount of liability for Excise
Tax with respect to the Payments.
(iv) In the event of any change in, or further interpretation
of, sections 280G or 4999 of the Code and the regulations promulgated
thereunder, the Employee shall be entitled, by written notice to the Company, to
request an opinion of Tax Counsel regarding the application of such change to
any of the foregoing, and the Company shall use its best efforts to cause such
opinion to be rendered as promptly as practicable. All fees and expenses of the
Auditor and Tax Counsel incurred in connection with this Agreement shall be
borne by the Company.
6. [INTENTIONALLY OMITTED.]
7. FULL SETTLEMENT. The Company's obligation to make the payments
provided for in, and otherwise to perform its obligations under, this Agreement
shall not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action that the Company may have against the Employee or others
whether in respect of claims made under this Agreement or otherwise. In no event
shall the Employee be obligated to seek other employment or take any other
action by way of mitigation of the amounts, benefits and other compensation
payable or otherwise provided to the Employee under any of the provisions of
this Agreement, and such amounts shall not be reduced, regardless of whether the
Employee obtains other employment. In no event shall any amounts, benefits or
other compensation payable or otherwise provided to Employee hereunder be
reduced in respect of, or the Company's obligations to Employee hereunder be
affected by, or any other form of "clawback" provision apply to, the payment to
Employee at any time of any amounts, benefits or other compensation in respect
of his employment with any prior employer.
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8. CONFIDENTIAL INFORMATION; SOLICITATION. During the Employment Period
and for a period of three years following the applicable Date of Termination,
the Employee shall hold in a fiduciary capacity for the benefit of the Company
all secret or confidential information, knowledge or data relating to the
Company or any of its affiliated companies and their respective businesses that
the Employee obtains during the Employee's employment by the Company or any of
its affiliated companies and that is not public knowledge (other than as a
result of the Employee's violation of this Section 8) ("Confidential
Information") and the Employee shall not communicate, divulge or disseminate
Confidential Information at any time during such period to anyone other than the
Company, appropriate Company personnel and those other persons designated by the
Company, except (i) with the prior written consent of the Company, (ii) as
otherwise required by law or legal process, (iii) on behalf of the Company in
the furtherance of its business or in the course of performing Employee's duties
to the Company or (iv) in the course of any adversarial proceeding against the
Company. During the Employment Period (and if during the Employment Period (A)
the Employee terminates his employment with the Company without Good Reason or
(B) the Employee is terminated by the Company for Cause, then for one year after
the Date of Termination), (i) the Employee shall not, without the written
consent of the Board, directly or indirectly solicit or recruit any person
(other than persons employed in a clerical or other non-professional position)
who is then employed by the Company or who was employed by the Company or any of
its subsidiaries or affiliates at any time during the six-month period preceding
the Date of Termination for the purpose of being employed by the Employee, by
any entity or person on whose behalf the Employee is acting as an agent,
representative or employee or by any Competitor of the Company and (ii) the
Employee shall not, without the written consent of the Board, directly or
indirectly, solicit, entice, persuade or induce any person or entity doing
business with the Company and its subsidiaries and affiliates, to terminate such
relationship or to refrain from extending or renewing the same. In the event of
a breach or any threatened breach of the Section 8, Employee agrees that, in
addition to any other remedy available to the Company at law or in equity, the
Company shall be entitled to injunctive relief in a court of appropriate
jurisdiction to remedy any breach or prevent any threatened breach. Employee
further acknowledges that damages would be inadequate and insufficient to
compensate the Company for any breach of this Section 8.
9. NON-DISPARAGEMENT. Employee agrees that he will not in any public
forum (i.e., lectures, to the media, in published articles, to analysts, or in
comparable public forums) or in private conversations (i.e., social settings,
etc.) criticize, disparage, denigrate, or speak adversely of, or disclose
negative information about, the operations, management or performance of the
Company or about any director, officer, employee or agent of the Company. The
intent of this Section 9 is to ensure that Employee does not say or do anything
that damages or impairs, or might damage or impair, in any way the business
organization, goodwill, or reputation of the Company or any of its directors,
officers, employees or agents.
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10. DISPUTE RESOLUTION; ATTORNEYS' FEES. All disputes arising under or
related to the employment of the Employee by the Company or the provisions of
this agreement shall be settled by arbitration under the rules of the American
Arbitration Association then in effect, such arbitration to be held in Portland,
Oregon, as the sole and exclusive remedy of either party and judgment on any
arbitration award may be entered in any court of competent jurisdiction. The
Company agrees to reimburse all reasonable legal fees and other expenses
incurred by the Employee in any such dispute if the Employee prevails as to one
or more of the material issues in the dispute.
11. SUCCESSORS. (a) No rights or obligations of Employee under this
Agreement may be assigned or transferred by Employee other than his rights to
payments, benefits or other compensation hereunder, which (without the prior
written consent of the Company) may be transferred only by will or the laws of
descent and distribution or as otherwise provided in the applicable agreements
covering the Company's securities. Upon Employee's death, this Agreement and all
rights of Employee hereunder, including with regard to the Company's Securities
shall inure to the benefit of and be enforceable by Employee's spouse,
beneficiary or beneficiaries, personal or legal representatives, or estate, to
the extent any such person succeeds to Employee's right to benefits under this
Agreement. Employee shall be entitled to select and change a beneficiary or
beneficiaries to receive any payment, benefit or other compensation payable
hereunder following Employee's death by giving the Company written notice
thereof. In the event of Employee's death or a judicial determination of his
incompetence, reference in this Agreement to Employee shall be deemed, where
appropriate, to refer to his beneficiary or beneficiaries, estate or other legal
representative(s).
(b) No rights or obligations of the Company under this Agreement
may be assigned or transferred except that the Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would have been required to
perform it if no such succession had taken place. As used in this Agreement, the
"Company" shall mean both the Company as defined above and any successor to its
business and/or assets (by merger, purchase or otherwise) which executes and
delivers the agreement provided for in this Section 1l(b) or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law or otherwise.
12. COMPANY REPRESENTATION. The Company represents and warrants to the
Employee that (i) it has all necessary corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder in full,
(ii) the execution and delivery of this Agreement by the Company and the
performance of its obligations hereunder have been duly and validly authorized
by all necessary corporate action and (iii) no other corporate proceedings on
the part of the Company (including on the part of the shareholders of the
Company) are necessary to authorize this Agreement or perform such obligations.
This Agreement has been duly and validly executed and delivered by the Company
and constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
10
13. WAIVER AND RELEASE.
(a) Employee acknowledges that there are various state, local and
federal laws that prohibit, among other things, employment discrimination on the
basis of age, sex, race, color, national origin, religion, disability, sexual
orientation or veteran status and that these laws are enforced through the Equal
Employment Opportunity Commission, Department of Labor and State or Local Human
Rights agencies. Such laws include, without limitation, Title VII of the Civil
Rights Act of 1964; the Age Discrimination in Employment Act ("ADEA"); the
Americans with Disabilities Act ("ADA"); the Employee Retirement Income Security
Act ("ERISA"); 42 U.S.C. Section 1981; the California Fair Employment and
Housing Act, etc., as each may have been amended, and other state and local
human or civil rights laws as well as other statutes which regulate employment;
and the common law of contracts and torts. Employee hereby waives and releases
any rights he may have under these or any other laws with respect to his
employment under the Original Employment Agreement (and the termination thereof)
and acknowledges that the Company has not (a) discriminated against him,
including on the basis of age, (b) breached any contract with him, (c) committed
any civil wrong (tort) against him, or (d) otherwise acted unlawfully toward
him.
Employee also waives any right to become, and promises not to consent
to become, a member of any class in a case in which claims are asserted against
any Releasee (as defined in Section 13(b) hereof) that are related in any way to
his employment under the Original Employment Agreement (and the termination
thereof), and that involve events which have occurred as of the date of this
Agreement (defined to mean the date on which Employee signs this Agreement). If
Employee, without his prior knowledge and consent, is made a member of a class
in any proceeding, he will opt out of the class at the first opportunity
afforded to him after learning of his inclusion. In this regard, Employee agrees
that he will execute, without objection or delay, an "opt-out" form presented to
him either by the court in which such proceeding is pending or by counsel for
any Releasee who is made a defendant in any such proceeding.
(b) Employee, on behalf of himself and his heirs, executors,
administrators, successors and assigns, hereby unconditionally releases and
discharges the Company, and its subsidiaries, successors, assigns, affiliates,
shareholders, directors, officers, representatives, agents and employees as well
as any benefit plan and its fiduciaries and insurors (collectively "Releasees"
and individually "Releasee") from all known and unknown claims (including claims
for attorneys' fees and costs), charges, actions and causes of action, demands,
damages, and liabilities of any kind or character, in law or equity, suspected
or unsuspected, past or present, that he ever had, may now have, or may later
assert against any Releasee, arising out of or related to his employment with
the Company prior to the Effective Date, including but not limited to severance
or other claims arising under the Original Employment Agreement or as a result
of Employee's change in position with the Company pursuant to this Agreement and
any other claims against the Company other than claims arising pursuant to the
terms of this Agreement after the Effective Date. To the fullest extent
permitted by law, this release includes, but is not limited to: (a) claims
arising under the ADEA, the Older Workers Benefit Protection Act, the Workers'
Adjustment and Retraining Notification Act, the ERISA, the Family and Medical
Leave Act of 1993, the ADA, the California Fair Employment and Housing Act, and
any other federal, state, or local law prohibiting age, race, color, gender,
creed, religion, sexual preference/orientation, marital status, national origin,
mental or physical disability, veteran status, or any other form of unlawful
discrimination or claim with respect to or arising out of Employee's employment
with the Company or this Agreement; (b) claims (whether based on common law or
otherwise) arising out of or related to any contract (whether express or
implied); (c) claims under any federal, state or local constitutions, statutes,
rules or regulations; (d) claims (whether based on common law or otherwise)
arising out of any kind of tortious conduct (whether intentional or otherwise)
including but not limited to, wrongful termination, defamation, violation of
public policy; and (e) claims included in, related to, or which could have been
included in any presently pending federal, state or local lawsuit filed by
Employee or on his behalf against any Releasee, which Employee agrees to
immediately dismiss with prejudice. Section 1542 of the Civil Code of the State
of California states:
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"A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially
affected his settlement with the debtor."
Notwithstanding the provisions of Section 1542, and for the purpose of
implementing a full and complete release and discharge of all Releasees with
respect to claims in California as well as all other jurisdictions, Employee
expressly acknowledges that this Release is intended to include not only claims
that are known, anticipated or disclosed, but also claims that are unknown,
unanticipated and undisclosed.
14. MISCELLANEOUS. (a) This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Oregon, without reference
to principles of conflict of laws. The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect. This Agreement may
not be amended or modified except by a written agreement executed by the parties
hereto or their respective successors and legal representatives.
(b) All notices and other communications under this Agreement shall be
in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid, or by a
nationally recognized overnight courier addressed as follows:
If to the Employee:
Xxxxx X. Xxxxxxx
00000 X. X. Xxxxxx Xxxx
Xxxxxx, XX 00000
If to the Company:
Rite Aid Corporation
00 Xxxxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxxxx 00000
Attention: General Counsel
or to such other address as either party furnishes to the other in writing in
accordance with this paragraph (b) of Section 14. Notices and communications
shall be effective when actually received by the addressee.
12
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement. If any provision of this Agreement shall be held invalid or
unenforceable in part, the remaining portion of such provision, together with
all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.
(d) Notwithstanding any other provision of this Agreement, (and,
except as specifically provided in Section 3(e) above), the Company may withhold
from amounts payable under this Agreement all federal, state, local and foreign
taxes that are required to be withheld by applicable laws or regulations.
(e) The Employee's or the Company's failure to insist upon strict
compliance with any provisions of, or to assert, any right under, this Agreement
(including, without limitation, the right of the Employee to terminate
employment for Good Reason pursuant to paragraph (c) of Section 4 of this
Agreement) shall not be deemed to be a waiver of such provision or right or of
any other provision of or right under this Agreement.
(f) The rights and benefits of the Employee under this Agreement
may not be anticipated, assigned, alienated or subject to attachment,
garnishment, levy, execution or other legal or equitable process except as
required by law. Any attempt by the Employee to anticipate, alienate, assign,
sell, transfer, pledge, encumber or charge the same shall be void. Payments
hereunder shall not be considered assets of the Employee in the event of
insolvency or bankruptcy.
(g) This Agreement (together with the exhibits hereto) sets forth
the entire agreement of the parties hereto in respect of the subject matter
construed herein and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written by any party or any officer or other representative of such party in
respect of such subject matter.
(h) This Agreement may be executed in several counterparts, each of
which shall be deemed an original, and said counterparts shall constitute but
one and the same instrument.
(i) This Agreement shall survive the termination of the Employment
Period and the termination of Employee's employment hereunder under any
circumstances to the extent necessary to give effect to its provisions.
13
IN WITNESS WHEREOF, Employee and the Company have executed this
Agreement as of the date first written above.
RITE AID CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Xxxxxx X. Xxxxxx, CEO
EMPLOYEE
/s/ Xxxxx X. Xxxxxxx
-------------------------
Xxxxx X. Xxxxxxx
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APPENDIX A
A "Change in Control of the Company" shall be deemed to have occurred
if, as the result of a single transaction or a series of transactions, the event
set forth in any one of the following paragraphs shall have occurred:
(1) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 25% or more of
the combined voting power of the Company's then outstanding voting
securities; or
(2) Incumbent Directors cease at any time and for any reason
to constitute a majority of the number of directors then serving on the
Board. "Incumbent Directors" shall mean directors who either (A)are
directors of the Company as of the Effective Date or (B) are elected,
or nominated for election, to the Board with the affirmative votes of
at least a majority of the Incumbent Directors at the time of such
election or nomination (but shall not include an individual whose
election or nomination is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation,
relating to the election of directors to the Board); or
(3) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any
other corporation, other than (i) a merger or consolidation which would
result in the voting securities of the Company outstanding immediately
prior to such merger or consolidation continuing to represent (either
by remaining outstanding or by being converted into voting securities
of the surviving entity or any parent thereof) at least 60% of the
combined voting power of the securities of the Company or such
surviving entity or any parent thereof outstanding immediately after
such merger or consolidation, or (ii) a merger or consolidation
effected to implement a recapitalization of the Company (or similar
transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing 25%
or more of the combined voting power of the Company's then outstanding
voting securities; or
(4) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of the
Company's assets, other than a sale or disposition by the Company of
all or substantially all of the Company's assets to an entity, at least
60% of the combined voting power of the voting securities of which are
owned by stockholders of the Company in substantially the same
proportions as their ownership of the Company immediately prior to such
sale.
"Affiliate" shall have the meaning set forth in Rule 12b-2 under
Section 12 of the Exchange Act.
"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under
the Exchange Act, except that a Person shall not be deemed to be the Beneficial
Owner of any securities which are properly filed on a Form 13G.
15
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Person" shall have the meaning given in Section 3(a)(9)of the Exchange
Act, as modified and used in Sections 13(d)and 14(d) thereof, except that such
term shall not include (i) the Company or any of its subsidiaries, (ii) a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any of its subsidiaries, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities or (iv) a corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company.
