Exhibit 10.8

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of the 9th day of
March, 2009 (the “Effective Date”) by and between Rite Aid Corporation, a
Delaware corporation (the “Company”) and Marc A. Strassler (the “Executive”).

 

WHEREAS, Executive desires to provide the Company with his services and the
Company desires to hire and employ Executive on the terms and subject to the
conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and Executive (individually a “Party” and together the “Parties”),
intending to be legally bound, agree as follows:

 

1.                                      Term Of Employment.

 

The term of Executive’s employment under this Agreement shall commence on the
Effective Date and, unless earlier terminated pursuant to Section 5 below, shall
continue for a period ending on the date that is two (2) years following the
Effective Date (the “Original Term of Employment”).  The Original Term of
Employment shall be automatically renewed for successive one-year terms (the
“Renewal Terms”) unless at least 120 days prior to the expiration of the
Original Term of Employment or any Renewal Term, either Party notifies the other
Party in writing that he or it is electing to terminate this Agreement at the
expiration of the then current Term of Employment .  “Term” shall mean the
Original Term of Employment and all Renewal Terms.  For purposes of this
Agreement, except as otherwise provided herein, the phrase “year during the
Term” or similar language shall refer to each 12-month period commencing on the
Effective Date or applicable anniversaries thereof.

 

2.                                      Position And Duties.

 

2.1                               Generally.  During the Term, Executive shall
serve as General Counsel of the Company and shall have the titles, duties,
responsibilities and authority as are customary for such position(s) and such
other titles, duties, responsibilities and authorities as shall be assigned by
the Company from time to time consistent with such position(s). Executive shall
devote his full working time, attention, knowledge and skills faithfully and to
the best of his ability, to the duties and responsibilities assigned by the
Company in furtherance of the business affairs and activities of the Company and
its subsidiaries, affiliates and strategic partners. Following termination of
Executive’s employment for any reason, Executive shall immediately resign from
all offices and positions he holds with the Company or any subsidiary.

 

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Other than necessary travel in connection with the performance of his duties
hereunder, the Executive shall be based at the Company’s headquarters.

 

2.2                               Other Activities.  Anything herein to the
contrary notwithstanding, nothing in this Agreement shall preclude the Executive
from engaging in the following activities: (i) serving on the board of directors
of a reasonable number of other corporations or the boards of a reasonable
number of trade associations and/or charitable organizations, subject to the
Company’s approval, which shall not be unreasonably withheld, (ii) engaging in
charitable activities and community affairs, and (iii) managing his personal
investments and affairs, provided that such activities do not violate Sections 6
or 7 below or materially interfere with the proper performance of his duties and
responsibilities under this Agreement.  Executive shall at all times be subject
to, observe and carry out such lawful rules, regulations, policies, directions,
and restrictions as the Company may from time to time establish for officers of
the Company.

 

3.                                      Compensation.

 

3.1                               Base Salary.  During the Term, as compensation
for his services hereunder, Executive shall receive a salary at the annualized
rate of Four Hundred Ten Thousand Dollars ($410,000.00) per year (“Base Salary”
as may be adjusted from time to time pursuant to this Agreement), which shall be
paid in accordance with the Company’s normal payroll practices and procedures,
less such deductions or offsets required by applicable law or otherwise
authorized by Executive.

 

3.2                               Annual Performance Bonus.  The Executive shall
participate each fiscal year during the Term in the Company’s annual bonus plan
as adopted and approved by the Board or the Compensation Committee from time to
time.  For the first fiscal year (Fiscal Year 2010), Executive’s annual bonus
opportunity pursuant to such plan shall equal 60% (the “Annual Target Bonus”) of
the Base Salary, which shall be prorated based upon the Effective Date.  For
subsequent fiscal years, the Annual Target Bonus may be adjusted (including
eliminated or reduced, with such elimination and/or reductions to the same
extent that annual bonus opportunities for similarly situated senior management
employees are also eliminated or reduced, as the case may be) and shall be based
upon the Board approved annual bonus plan for that year.

 

3.3                               Equity Awards.

 

(a)                                  At the first regular meeting of the
Compensation Committee of the Board of Directors following the Effective Date,
Executive will be granted an option (the “Option”) to purchase 750,000 shares
(which shall be proportionally adjusted to give effect to any reverse stock
split or other change in capitalization) of the Company’s Common Stock, par
value $1.00 per share (“Company Stock”).  The Option shall (i) be a
non-qualified stock option, (ii) have an exercise price equal to the closing
price of the Company Stock as reported on the New York Stock Exchange (“NYSE “)
on the date of grant, (iii) have a term of ten (10) years following the date of
grant, (iv) vest and become exercisable as to one-fourth of the shares of the
Company Stock subject to the option on each of the

 

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first four (4) anniversaries from the date of grant, (v) be subject to the
acceleration exercise and termination provisions set forth in Section 3.3(c) and
Article 5 hereof and (vi) otherwise be evidenced by and subject to the terms of
the Company’s stock option and equity plans.

 

(b)                                 At the first meeting of the Compensation
Committee of the Board of Directors following the Effective Date that grants
under the equity incentive program are made and subject to the approval of the
Compensation Committee, Executive will be recommended for participation in the
Company’s Executive Equity Plan (the “EEP”).  For the first fiscal year (FY
2010) only, Executive’s participation in the EEP will be on a prorated basis.

 

(c)                                  Upon the occurrence of a Change in Control
of the Company and prior to the termination of Executive’s employment with the
Company, the Options awarded pursuant to subsection (a) above then held by
Executive shall immediately vest and become exercisable in full.  For purposes
of this Agreement “Change in Control” shall have the meaning set forth in the
attached Appendix A.

 

(d)                                 It is understood and acknowledged by
Executive that the securities underlying the Options may not be subject to an
effective registration statement under the federal securities laws until some
time after the Effective Date.  The Company agrees that if, as of the date of
termination of Executive’s employment under the circumstances described in
Sections 5.2 (except termination for Cause), 5.3 and 5.5, the securities
underlying the then vested and exercisable portion of the Options are not
subject to an effective registration statement, the 90-day periods in
Section 5.2 (except termination for Cause), 5.3 and 5.5, as applicable, will be
deemed to run from the first date such securities become subject to an effective
registration statement.

 

4.                                      Additional Benefits.

 

4.1                                     Employee Benefits.  During the Term,
Executive and, as to welfare plans the Executive’s eligible immediate family, as
the case may be, shall be entitled to participate in the employee benefit plans
(including, but not limited to medical, dental and life insurance plans,
short-term and long-term disability coverage, the Supplemental Executive
Retirement Plan (which shall provide for benefits, to the extent provided, at
the level as other similarly situated participants) and 401(k) plans) in which
senior management employees of the Company are generally eligible to
participate, subject to any eligibility requirements and the other generally
applicable terms of such plans.

 

4.2                                     Expenses.  During the Term, the Company
shall reimburse Executive for any expenses reasonably incurred by him in
furtherance of his duties hereunder, including without limitation travel, meals
and accommodations, upon submission of vouchers or receipts and in compliance
with such rules and policies relating thereto as the Company may from time to
time adopt or as may be required in order to permit such payments to be taken as
proper deductions by the Company or any subsidiary under the Internal Revenue
Code of 1986, as amended, and the rules and regulations adopted pursuant thereto
now or

 

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hereafter in effect. The provisions of Section 14.2 shall apply to all
reimbursements made under this Section 4.2 to the extent Section 14.2 applies.

 

4.3                                     Vacation.  Executive shall be entitled
to four (4) weeks paid vacation during each year of the Term.

 

4.4                                     Automobile Allowance.  During the Term,
the Company shall provide Executive with an automobile allowance of $1,000 per
month.

 

4.5                                     Annual Financial Planning Allowance. 
During each year of the Term, the Company shall provide Executive with an
executive planning allowance in the amount of $3,000.

 

4.6                                     Relocation Expenses.  Subject to
Executive providing reasonable documentation to Company, the Company shall
reimburse Executive up to a total of $135,000 for transportation, commuting,
lodging and other relocation expenses (including but not limited to moving,
house hunting trips and other direct costs incurred in connection with
Executive’s relocation) incurred by Executive for a period of up to twenty-four
(24) months from the Effective Date (collectively, the “Relocation Benefits
Payments”).  To the extent the Relocation Benefits Payments are subject to
federal, state or local income tax payments by Executive, Company shall also pay
to Executive an additional amount (the “Gross-Up Payment”) such that the net
amount retained by the Executive, after deduction of the applicable federal,
state and local income taxes on the Relocation Benefits Payments and the
applicable federal, state and local income taxes upon the Gross-Up Payment shall
be equal to the total Relocation Benefits Payments.

 

4.7                                     Indemnification.  The Company shall
(a) indemnify and hold Executive 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) relating to or arising out of the Executive’s employment with
and service as an officer of the Company or as an officer or director of an
entity other than the Company at the request of the Company and enforcement of
its rights hereunder; and (b) pay all reasonable costs, expenses and attorney’s
fees incurred by Executive in connection with or relating to the defense of any
such loss, claim, cost, expense, damage, liability or action, subject to
Executive’s undertaking to repay in the event it is ultimately determined that
Executive is not entitled to be indemnified by the Company.  Following
termination of the Executive’s employment or service with the Company, the
Company shall cause any Director and Officer liability insurance policies
applicable to the Executive prior to such termination to remain in effect for
six (6) years following the date of termination of employment.

 

5.                                      Termination.

 

5.1                                     Termination of Executive’s Employment by
the Company for Cause.  The Company may terminate Executive’s employment
hereunder for Cause (as defined below).  Such termination shall be effected by
written notice thereof delivered by the

 

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Company to Executive, indicating in reasonable detail the facts and
circumstances alleged to provide a basis for such termination, and shall be
effective as of the date of such notice in accordance with Section 12 hereof.
“Cause” as determined in reasonable good faith by a committee comprised of three
senior officers (one of which shall be Executive’s supervisor and, if
Executive’s supervisor is not the Company’s Chief Executive Officer or Chief
Operating Officer, the Company’s Chief Executive Officer or Chief Operating
Officer)  of the Company or the Board of Directors shall mean: (i) Executive’s
gross negligence or willful misconduct in the performance of the duties or
responsibilities of his position with the Company or any subsidiary, or failure
to timely carry out any lawful and reasonable directive of the Company;
(ii) Executive’s misappropriation of any funds or property of the Company or any
subsidiary; (iii) the conduct by Executive which is a material violation of this
Agreement or Company Policy or which materially interferes with the Executive’s
ability to perform his duties, provided, however that the Company has provided
written notice (which shall set forth in reasonable detail the specific conduct
of the Executive that constitutes Cause and the specific provisions of this
Agreement on which the Company relies) to the Executive of the existence of any
condition described in this subsection (iii) within 30 days of the date that the
Executive’s supervisor has actual knowledge of the initial existence of such
condition, and the Executive has not cured the condition within 30 days of the
receipt of such notice.  Any termination of employment by the Company for Cause
pursuant to this Section 5.1 must occur no later than the date that is the
second anniversary of the Company’s actual knowledge of the initial existence of
the condition giving rise to the termination right; (iv) the commission by
Executive of an act of fraud or dishonesty toward the Company or any subsidiary;
(v) Executive’s gross negligence or willful misconduct which damages or injures
the Company or the Company’s reputation; (vi) Executive is convicted of or
pleads guilty to a felony involving moral turpitude; or (vii) the use or
imparting by Executive of any confidential or proprietary information of the
Company, or any subsidiary in material violation of Section 6 below.

 

5.2                                     Compensation upon Termination by the
Company for Cause or by Executive without Good Reason.  In the event of
Executive’s termination of employment (i) by the Company for Cause or (ii) by
Executive voluntarily without Good Reason:

 

(a)                                  Executive shall be entitled to receive
within ten (10) business days of the date of termination (i) all amounts of
accrued but unpaid Base Salary through the effective date of such termination,
(ii) reimbursement for reasonable and necessary expenses incurred by Executive
through the date of such termination, to the extent otherwise provided under
Section 4.2 above and (iii) all other vested payments and benefits to which
Executive may otherwise be entitled pursuant to the terms of the applicable
benefit plan or arrangement through the effective date of such termination ((i),
(ii) and (iii), the (“Accrued Benefits”). All other rights of Executive (and,
except as provided in Section 5.6 below, all obligations of the Company)
hereunder or otherwise in connection with Executive’s employment with the
Company shall terminate effective as of the date of such termination of
employment and Executive shall not be entitled to any payments or benefits not
specifically described in this subsection (a) or (b) below.

 

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(b)                                 Except as provided in Section 3.3(d), any
portion of any restricted stock or any other equity incentive awards as to which
the restrictions have not lapsed or as to which any other conditions shall not
have been satisfied prior to the date of termination shall be forfeited as of
such date and any portion of Executive’s stock options that have vested and
become exercisable prior to the date of termination shall remain exercisable for
a period of 90 days following the date of termination of employment (or, such
later date as may be permitted by the relevant stock option or equity plan, or,
if earlier, until the expiration of the respective terms of the options),
whereupon all such options shall terminate; provided, however, in the event of
termination of Executive by the Company for Cause, any stock options that have
not been exercised prior to the date of termination shall immediately terminate
as of such date.

 

Any termination of Executive’s employment by Executive voluntarily without Good
Reason shall be effective upon 30 days’ notice to the Company or such earlier
date as the Company determines in its discretion and designates in writing, it
being agreed that the Company may reduce or eliminate the notice period and pay
the Executive his Base Salary, pro rated as applicable, for the number of days
in the shortened notice period; provided, however, if the Company elects to
eliminate the notice period, then in such event there shall be no additional
payment to Executive. A termination of Executive’s employment by the Company for
Cause or by the Executive other than for Good Reason shall not constitute a
breach of this Agreement.

 

5.3                               Compensation upon Termination of Executive’s
Employment by the Company Other Than for Cause or by Executive for Good Reason. 
Executive’s employment hereunder may be terminated by the Company other than for
Cause or by Executive for Good Reason.  In the event that Executive’s employment
hereunder is terminated by the Company other than for Cause or by Executive for
Good Reason:

 

(a)                                  Executive shall be entitled to receive
(i) within ten (10) business days of the date of termination the Accrued
Benefits, (ii) an amount equal to two times Executive’s then Base Salary as of
the date of termination of employment, such amount payable in equal installments
pursuant to the Company’s standard payroll procedures for management employees
over a period of two years following the date of termination of employment, and
(iii) continued health insurance coverage for Executive and his immediate family
for a period of two years following the date of termination of employment.  In
addition, if such termination occurs following the start of the Company’s fiscal
year, Executive shall also be entitled to receive to the extent not previously
paid (which shall be paid at the same time paid to other eligible participants
in the bonus plan and following determination by the Board of Directors that the
Company has achieved or exceeded its annual performance targets for the fiscal
year) a pro rata annual bonus equal to the product of (A) the maximum annual
bonus (based upon Executive’s applicable Annual Target Bonus) that Executive
would have earned (based upon actual results and had Executive remained
employed) for all bonus measurement periods during or prior to the date
Executive’s employment termination occurs, and (B)  a fraction, (x) the
numerator of which is (1) the number of days between the beginning of the then
current fiscal year of the Company and the date of termination of employment for
any applicable partial fiscal year or (2) for any applicable

 

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completed fiscal year, 365, and (y) the denominator of which is 365.  For any
period during which the Executive would be entitled to continuation coverage
through the application of Internal Revenue Code Section 4980B (“COBRA”), this
coverage shall be provided at the expense of the Company.  For any period after
the expiration of the period required by COBRA, but prior to the end of the
month in which the second anniversary of the Date of Termination occurs, this
coverage will be provided at the expense of the Executive (or his beneficiaries
or estate).  Executive (or his beneficiaries or estate) shall remit payment by
check to the Company in the amount of the then current amount used to calculate
premiums for participants entitled to receive continuation coverage under
COBRA.  The Company shall, on the last day of each month, provide the Executive
(or his beneficiaries or estate) with a payment sufficient to place the
Executive (or his beneficiaries or estate) in the same economic position had
such individuals or entity not been required to pay the premium described in the
preceding sentence.

 

(b)                                 The Executive’s stock option awards held by
Executive shall vest and become immediately exercisable and the restrictions
with respect to any awards of restricted stock shall lapse, in each case to the
extent such options would otherwise have become vested and exercisable (or such
restrictions would have lapsed) had Executive remained in the employ of the
Company for a period of two years following the date of termination. Except as
provided in Section 3.3(d), such portion of Executive’s stock options (together
with any portion of Executive’s stock options that have vested and become
exercisable prior to the date of termination) shall remain exercisable for a
period of 90 days following the date of termination of employment (or, such
later date as may be permitted by the relevant stock option or equity plan, or,
if earlier, until the expiration of the respective terms of the options),
whereupon all such options shall terminate. Any remaining portion of Executive’s
stock options that have not vested (or deemed to have vested) as of the date of
termination shall terminate as of such date; and all shares of restricted stock
as to which the restrictions shall not have lapsed (or deemed to have lapsed) as
of the date of termination shall be forfeited as of such date.

 

(c)                                  All other rights of Executive (and, except
as provided in Section 5.6 below, all obligations of the Company) hereunder or
otherwise in connection with Executive’s employment with the Company shall
terminate effective as of the date of such termination of employment and
Executive shall not be entitled to any payments or benefits not specifically
described in 5.3(a) through (c).

 

Any termination of employment pursuant to this Section 5.3 shall be effective
upon thirty (30) days notice thereof or the Company may elect in its sole
discretion to reduce or eliminate the notice period and pay the Executive his
Base Salary, prorated as applicable for the number of days in the shortened
notice period; provided, however if the Company elects to eliminate the notice
period, then in such event there shall be no additional payment to Executive . A
termination of Executive’s employment by the Company other than for Cause or by
the Executive for Good Reason shall not constitute a breach of this Agreement. 
To be eligible for the payment, benefits and stock rights described in
Section 5.3(a)(ii)-(iii), (b) and (c) above, Executive must execute, not revoke
and abide by a release (which shall be substantially in the form attached hereto
as Appendix C) of all

 

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other claims, reasonably cooperate (subject to reimbursement by the Company of
reasonable costs and expenses incurred by Executive) with the Company in the
event of litigation (other than by Executive) involving the Company and fully
comply in all material respects with Executive’s obligations under Sections 6
and 7 below.

 

5.4                              Definition of Good Reason.  For purposes of
this Agreement, “Good Reason” shall mean the occurrence of any one of the
following:

 

(a)                                  the assignment to Executive of any
responsibilities materially inconsistent with Executive’s status as General
Counsel of the Company; or

 

(b)                                 any decrease in Executive’s Base Salary as
set forth in Section 3.1 to which Executive has not agreed in writing; or

 

(c)                                  a material breach by the Company of this
Agreement;

 

provided, however that the Executive has provided written notice (which shall
set forth in reasonable detail the specific conduct of the Company that
constitutes Good Reason and the specific provisions of this Agreement on which
Executive relies) to the Company of the existence of any condition described in
any one of subparagraphs a , b or c within 30 days of the Executive’s actual
knowledge of the initial existence of such condition, and the Company has not
cured the condition within 30 days of the receipt of such notice.  Any
termination of employment by the Executive for Good Reason pursuant to
Section 5.3 must occur no later than the date that is the second anniversary of
the Executive’s actual knowledge of the initial existence of the condition
giving rise to the termination right.

 

5.5                               Compensation upon Termination of Executive’s
Employment by Reason of Executive’s Death or Total Disability.  In the event
that Executive’s employment with the Company is terminated by reason of
Executive’s death or Total Disability (as defined below):

 

(a)                                 Executive or Executive’s estate, as the case
may be, shall be entitled to receive (i) within ten (10) business days of the
date of termination the Accrued Benefits, (ii) promptly any other benefits
payable under the then current disability and/or death benefit plans, as
applicable, in which Executive is a participant and (iii) continued health
insurance coverage for Executive and/or his immediate family, as applicable, for
a period of one year following the date of termination of employment.

 

(b)                                All stock option awards held by Executive
shall vest and become immediately exercisable and the restrictions with respect
to any awards of restricted stock shall lapse, in each case to the extent such
options would otherwise have become vested and exercisable (or such restrictions
would have lapsed) had Executive remained in the employ of the Company for a
period of two years following the date of termination. Except as provided in
Section 3.3(d) such portion of Executive’s stock options (together with any
portion of Executive’s stock options that have vested and become exercisable
prior to the date of termination) shall remain exercisable for a period of 90
days following

 

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the date of termination of employment (or, such later date as may be permitted
by the relevant stock option or equity plan, or, if earlier, until the
expiration of the respective terms of the options), whereupon all such options
shall terminate.  Any remaining portion of Executive’s stock options that have
not vested (or deemed to have vested) as of the date of termination shall
terminate as of such date; and all shares of restricted stock as to which the
restrictions shall not have lapsed as of the date of termination shall be
forfeited as of such date.

 

(c)                                  All other rights of Executive (and, except
as provided in Section 5.6 below, all obligations of the Company) hereunder or
otherwise in connection with Executive’s employment with the Company shall
terminate effective as of the date of such termination of employment and
Executive shall not be entitled to any payments or benefits not specifically
described in Section 5.5(a) through (c).

 

“Total Disability” shall mean any physical or mental disability that prevents
Executive from: (a)(1)  performing one or more of the essential functions of his
position for a period of not less than 90 business days in any 12-month period
and (ii)  which is expected to be of permanent or indeterminate duration but
expected to last at least 12 continuous months or result in death of the
Executive as determined (y) by a physician selected by the Company or its
insurer or (z) pursuant to the Company’s benefit programs; or (b)  reporting to
work for 90 or more consecutive business days or unable to engage in any
substantial activity.

 

5.6                               Survival.  In the event of any termination of
Executive’s employment , Executive and the Company nevertheless shall continue
to be bound by the terms and conditions set forth in Section 4.7 above and
Sections 6 through 10 below, which shall survive the expiration of the Term.

 

5.7                               Excise Tax Gross-Up.

 

(a)                                  In the event that any payment or benefit
received or to be received by the Executive pursuant to the terms of this
Agreement or 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 Executive, at the time specified in Section 5.7(b) below an additional
amount (the “Gross-Up Payment”) such that the net amount retained by the
Executive, 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
company Executive 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 “excise 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

 

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acceptable to Executive and selected by the Company, 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)(1) 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 Tax Counsel 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 Executive shall be deemed to
pay federal income taxes at the highest marginal rates of federal income
taxation applicable to 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 Executive’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.

 

(b)                                 The Gross-Up Payment provided for in
Section 5.7(a) hereof shall be made upon the earlier of (i) thirty (30)  days
following the date of termination of Executive’s employment or (ii) the
imposition upon the Executive or payment by the Executive of any Excise Tax.

 

(c)                                  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 5.7(a)
hereof, the Executive shall repay to the Company within thirty (30) days of the
Executive’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
Executive if and to the extent that such repayment results in a reduction in
Excise Tax and a dollar-for-dollar reduction in the Executive’s taxable income
and wages for the purpose of federal, state and local income taxes) plus any
interest received by the Executive 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 5.7(a)
in respect of such excess within thirty (30) days of the Company’s receipt of
notice of such final determination or proceeding. The Executive 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.

 

(d)                                  In the event of any change in, or further
interpretation of, sections 280G or 4999 of the Code and the regulations
promulgated thereunder, the Executive shall

 

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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 Tax Counsel incurred in
connection with this Agreement shall be borne by the Company.

 

5.8                                 No Other Severance or Termination Benefits. 
Except as expressly set forth herein, Executive shall not be entitled to damages
or to any severance or other benefits upon termination of employment with the
Company under any circumstances and for any or no reason, including, but not
limited to any severance pay under any Company severance plan, policy or
practice.

 

6.                                      Protection of Confidential Information.

 

Executive acknowledges that during the course of his employment with the
Company, its subsidiaries, affiliates and strategic partners, he will be exposed
to documents and other information regarding the confidential affairs of the
Company, its subsidiaries, affiliates and strategic partners, including without
limitation information about their past, present and future financial condition,
pricing strategy, prices, suppliers, cost information, business and marketing
plans, the markets for their products, key personnel, past, present or future
actual or threatened litigation, trade secrets and other intellectual property,
current and prospective customer lists, operational methods, acquisition plans,
prospects, plans for future development and other business affairs and
information about the Company and its subsidiaries, affiliates and strategic
partners not readily available to the public (the “Confidential Information”).
Executive further acknowledges that the services to be performed under this
Agreement are of a special, unique, unusual, extraordinary and intellectual
character. In recognition of the foregoing, the Executive covenants and agrees
as follows:

 

6.1                               No Disclosure or Use of Confidential
Information.  At no time shall Executive ever divulge, disclose, or otherwise
use any Confidential Information (other than as necessary to perform his duties
under this Agreement and in furtherance of the Company’s best interests or as
otherwise required by law, regulation or legal process or with respect to a
lawsuit with the Company, its affiliates, subsidiaries or parents), unless and
until such information is readily available in the public domain by reason other
than Executive’s disclosure or use thereof in violation of the first clause of
this Section 6.1. Executive acknowledges that Company is the owner of, and that
Executive has no rights to, any trade secrets, patents, copyrights, trademarks,
know-how or similar rights of any type, including any modifications or
improvements to any work or other property developed, created or worked on by
Executive during the Term of this Agreement.

 

6.2                                Return of Company Property, Records and
Files.  Upon the termination of Executive’s employment at any time and for any
reason, or at any other time the Board may so direct, Executive shall promptly
deliver to the Company’s offices in Harrisburg, Pennsylvania all of the property
and equipment of the Company, its subsidiaries, affiliates and strategic
partners (including any cell phones, pagers, credit cards, personal computers,

 

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etc.) and any and all documents, records, and files, including any notes,
memoranda, customer lists, reports or any and all other documents, including any
copies thereof, whether in hard copy form or on a computer disk or hard drive,
which relate to the Company, its subsidiaries, affiliates, strategic partners,
successors or assigns, and/or their respective past and present officers,
directors, employees or consultants (collectively, the “Company Property,
Records and Files”); it being expressly understood that, upon termination of
Executive’s employment at any time and for any reason, Executive shall not be
authorized to retain any of the Company Property, Records and Files, any copies
thereof or excerpts therefrom.

 

7.                                        Noncompetition and Other Matters.

 

7.1                                Noncompetition.  During the Executive’s
employment with the Company and for the two-year period immediately following
the date of termination of Executive’s employment (the “Restricted Period”) 
Executive shall not, directly or indirectly, in any city, town, county, parish
or other municipality in any state of the United States (the names of each such
city, town, parish, or other municipality, including, without limitation, the
name of each county in the Commonwealth of Pennsylvania being expressly
incorporated by reference herein), or any other place in the world, where the
Company, or its subsidiaries, affiliates, strategic partners, successors, or
assigns, engages in the ownership, management and operation of retail drugstores
(i) engage in a Competing Business for Executive’s own account; (ii) enter the
employ of, or render any consulting or contracting services to, any Competing
Business; or (iii) become interested in or otherwise associated or connected
with any Competing Business in any capacity, including, without limitation, as
an individual, partner, shareholder, officer, director, principal, agent,
trustee, employee, contractor, consultant or management position with any entity
providing consulting services to a Competing Business; provided, however,
Executive may (i) own, directly or indirectly, solely as a passive investment,
securities of any entity traded on any national securities exchange if Executive
is not a controlling person of, or a member of a group which controls, such
entity and does not, directly or indirectly, own 1% or more of any class of
securities of such entity.  For purposes of this Section 7.1, the phrase
“Competing Business” shall mean any entity a majority of whose business involves
the ownership and operation of retail or internet based drug stores.

 

7.2                                Noninterference.  During the Restricted
Period , Executive shall not, directly or indirectly, solicit, induce, or
attempt to solicit or induce any officer, director, employee, agent or
consultant of the Company or any of its subsidiaries, affiliates, strategic
partners, successors or assigns to terminate his, her or its employment or other
relationship with the Company or its subsidiaries, affiliates, strategic
partners, successors or assigns for the purpose of associating with any
competitor of the Company or its subsidiaries, affiliates, strategic partners,
successors or assigns, or otherwise encourage any such person or entity to leave
or sever his, her or its employment or other relationship with the Company or
its subsidiaries, affiliates, strategic partners, successors or assigns for any
other reason.

 

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7.3                                Nonsolicitation.  During the Restricted
Period, Executive shall not, directly or indirectly, solicit, induce, or attempt
to solicit or induce any customers, clients, vendors, suppliers or consultants
then under contract to the Company or its subsidiaries, affiliates, strategic
partners, successors or assigns, to terminate, limit or otherwise modify his,
her or its relationship with the Company or its subsidiaries, affiliates,
strategic partners, successors or assigns, for the purpose of associating with
any competitor of the Company or its subsidiaries, affiliates, strategic
partners, successors or assigns, or otherwise encourage such customers, clients,
vendors, suppliers or consultants then under contract to terminate his, her or
its relationship with the Company or its subsidiaries, affiliates, strategic
partners, successors or assigns for any reason. During the Restricted Period,
Executive shall not hire, either directly or through any employee, agent or
representative, any field and corporate management employee of the Company or
any subsidiary or any such person who was employed by the Company or any
subsidiary within 180 days of such hiring.

 

8.                                        Rights and Remedies upon Breach.

 

If Executive breaches, or threatens to commit a breach of, any of the provisions
of Sections 6 or 7 above (the “Restrictive Covenants”), the Company and its
subsidiaries, affiliates, strategic partners, successors or assigns shall have
the following rights and remedies, each of which shall be independent of the
others and severally enforceable, and each of which shall be in addition to, and
not in lieu of, any other rights or remedies available to the Company or its
subsidiaries, affiliates, strategic partners, successors or assigns at law or in
equity.

 

8.1                                Specific Performance.  The right and remedy
to have the Restrictive Covenants specifically enforced by any court of
competent jurisdiction by injunctive decree or otherwise, it being agreed that
any breach or threatened breach of the Restrictive Covenants would cause
irreparable injury to the Company or its subsidiaries, affiliates, strategic
partners, successors or assigns and that money damages would not provide an
adequate remedy to the Company or its subsidiaries, affiliates, strategic
partners, successors or assigns.

 

8.2                               Accounting.  The right and remedy to require
Executive to account for and pay over to the Company or its subsidiaries,
affiliates, strategic partners, successors or assigns, as the case may be, all
compensation, profits, monies, accruals, increments or other benefits derived or
received by Executive as a result of any transaction or activity constituting a
breach of any of the Restrictive Covenants.

 

8.3                               Severability of Covenants.  Executive
acknowledges and agrees that the Restrictive Covenants are reasonable and valid
in geographic and temporal scope and in all other respects. If any court
determines that any of the Restrictive Covenants, or any part thereof, is
invalid or unenforceable, the remainder of the Restrictive Covenants shall not
thereby be affected and shall be given full force and effect without regard to
the invalid portions.

 

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8.4                                   Modification by the Court.  If any court
determines that any of the Restrictive Covenants, or any part thereof, is
unenforceable because of the duration or scope of such provision, such court
shall have the power (and is hereby instructed by the parties) to modify or
reduce the duration or scope of such provision, as the case may be (it being the
intent of the parties that any such modification or reduction be limited to the
minimum extent necessary to render such provision enforceable), and, in its
modified or reduced form, such provision shall then be enforceable.

 

8.5                                   Enforceability in Jurisdictions. 
Executive intends to and hereby confers jurisdiction to enforce the Restrictive
Covenants upon the courts of any jurisdiction within the geographic scope of
such covenants. If the courts of any one or more of such jurisdictions hold the
Restrictive Covenants unenforceable by reason of the breadth of such scope or
otherwise, it is the intention of Executive that such determination not bar or
in any way affect the right of the Company or its subsidiaries, affiliates,
strategic partners, successors or assigns to the relief provided herein in the
courts of any other jurisdiction within the geographic scope of such covenants,
as to breaches of such covenants in such other respective jurisdictions, such
covenants as they relate to each jurisdiction being, for this purpose, severable
into diverse and independent covenants.

 

8.6                                   Extension of Restriction in the Event of
Breach.  In the event that Executive breaches any of the provisions set forth in
this Section 8, the length of time of the Restricted Period shall be extended
for a period of time equal to the period of time during which Executive is in
breach of such provision.

 

9.                                      No Violation of Third-Party Rights. 
Executive represents, warrants and covenants that he:

 

(i)                                     will not, in the course of employment,
infringe upon or violate any proprietary rights of any third party (including,
without limitation, any third party confidential relationships, patents,
copyrights, mask works, trade secrets, or other proprietary rights);

 

(ii)                                   is not a party to any conflicting
agreements with third parties, which will prevent him from fulfilling the terms
of employment and the obligations of this Agreement;

 

(iii)                                does not have in his possession any
confidential or proprietary information or documents belonging to others and
will not disclose to the Company, use, or induce the Company to use, any
confidential or proprietary information or documents of others; and

 

(iv)                               agrees to respect any and all valid
obligations which he may now have to prior employers or to others relating to
confidential information, inventions, discoveries or other intellectual property
which are the property of those prior employers or others, as the case may be.

 

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Executive has supplied to the Company a copy of each written agreement with any
of Executive’s prior employers, as well as any other agreements to which
Executive is subject, which includes any obligation of confidentiality,
assignment of intellectual property, nonsolicitation or non-competition.
Executive has listed each of such agreements in Appendix “B”.

 

Executive agrees to indemnify and save harmless the Company from any loss,
claim, damage, cost or expense of any kind (including without limitation,
reasonable attorney fees) to which the Company may be subjected by virtue of a
breach by Executive of the foregoing representations, warranties, and covenants.

 

10.                               Arbitration.

 

Except as necessary for the Company and its subsidiaries, affiliates, strategic
partners, successors or assigns or Executive to specifically enforce or enjoin a
breach of this Agreement (to the extent such remedies are otherwise available),
the parties agree that any and all disputes that may arise in connection with,
arising out of or relating to this Agreement, or any dispute that relates in any
way, in whole or in part, to Executive’s employment with the Company or any
subsidiary, affiliate or strategic partner, the termination of that employment
or any other dispute by and between the parties or their subsidiaries,
affiliates, strategic partners, successors or assigns, shall be submitted to
final and binding arbitration in Harrisburg, Pennsylvania according to the
National Employment Dispute Resolution Rules and procedures of the American
Arbitration Association at the time in effect. This arbitration obligation
extends to any and all claims that may arise by and between the parties or their
subsidiaries, affiliates, strategic partners, successors or assigns, and
expressly extends to, without limitation, claims or causes of action for
wrongful termination, impairment of ability to compete in the open labor market,
breach of an express or implied contract, breach of the covenant of good faith
and fair dealing, breach of fiduciary duty, fraud, misrepresentation,
defamation, slander, infliction of emotional distress, disability, loss of
future earnings, and claims under the Pennsylvania Constitution, the United
States Constitution, and applicable state and federal fair employment laws,
federal and state equal employment opportunity laws, and federal and state labor
statutes and regulations, including, but not limited to, the Civil Rights Act of
1964, as amended, the Fair Labor Standards Act, as amended, the Americans With
Disabilities Act of 1990, as amended, the Rehabilitation Act of 1973, as
amended, the Employee Retirement Income Security Act of 1974, as amended, the
Age Discrimination in Employment Act of 1967, as amended, and any other state or
federal law. Executive understands that by entering into this Agreement,
Executive is waiving Executive’s rights to have a court determine Executive’s
rights, including under federal, state or local statutes prohibiting employment
discrimination, including sexual harassment and discrimination on the basis of
age, race, color, religion, national origin, disability, veteran status or any
other factor prohibited by governing law.

 

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11.                                 Assignment.

 

Neither this Agreement, nor any of Executive’s rights or obligations hereunder,
may be assigned or otherwise subject to hypothecation by Executive, other than
by will or the laws of the descent and distribution. The Company may assign its
rights and obligations hereunder, and Executive hereby consents to any such
assignment, in whole or in part, (i) to the Company’s parent corporation; or
(ii) to any other successor or assign in connection with the sale of all or
substantially all of the Company’s assets or stock or in connection with any
merger, acquisition and/or reorganization involving the Company; provided,
however, any such assignment will not diminish or waive any of Executive’s
rights hereunder, including, without limitation, rights upon any Change in
Control of the Company.

 

12.                              Notices.

 

All notices and other communications under this Agreement shall be in writing
and shall be given by fax or first class mail, certified or registered with
return receipt requested, and shall be deemed to have been duly given three (3)
days after mailing or twenty-four (24) hours after transmission of a fax to the
respective persons named below:

 

If to the Company:

Rite Aid Corporation

 

30 Hunter Lane

 

Camp Hill, Pennsylvania 17011

 

Attention: SVP, Human Resources

 

Fax: (717) 731-3860

 

 

If to Executive:

Marc A. Strassler

 

at the most recent address on file at the Company’s payroll office

 

Any party may change such party’s address for notices by notice duly given
pursuant hereto.

 

13.                                 General.

 

13.1                       No Offset or Mitigation.  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 Executive or others whether in respect of claims made under this
Agreement or otherwise.  In no event shall the Executive 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 Executive
under any of the provisions of this Agreement, and such amounts shall not be
reduced, regardless of whether the Executive obtains other employment.

 

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13.2                       Governing Law.  This Agreement is executed in
Pennsylvania and shall be governed by and construed and enforced in accordance
with the laws of the Commonwealth of Pennsylvania without giving effect to
conflicts of laws principles thereof which might refer such interpretations to
the laws of a different state or jurisdiction. Any court action instituted by
Executive relating in any way to this Agreement shall be filed exclusively in
state or federal court in Harrisburg, Pennsylvania and Executive consents to the
jurisdiction and venue of said courts in any action instituted by or on behalf
of the Company against him.

 

13.3                      Entire Agreement.  This Agreement sets forth the
entire understanding of the parties relating to Executive’s employment with the
Company and cancels and supersedes all agreements, arrangements and
understandings relating thereto made prior to the date hereof, written or oral,
between the Executive and the Company and/or any subsidiary or affiliate.

 

13.4                      Amendments: Waivers.  This Agreement may be amended,
modified, superseded, canceled, renewed or extended, and the terms or covenants
hereof may be waived, only by a written instrument executed by the parties, or
in the case of a waiver, by the party waiving compliance. The failure of any
party at any time or times to require performance of any provision hereof shall
in no manner affect the right of such party at a later time to enforce the same.
No waiver by any party of the breach of any term or covenant contained in this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be, or construed as, a further or continuing waiver of any such
breach, or a waiver of the breach of any other term or covenant contained in
this Agreement.

 

13.5                       Conflict with Other Agreements.  Executive represents
and warrants that neither his execution of this Agreement nor the full and
complete performance of his obligations hereunder will violate or conflict in
any respect with any written or oral agreement or understanding with any person
or entity.

 

13.6                      Successors and Assigns.  This Agreement shall inure to
the benefit of and shall be binding upon the Company (and its successors and
assigns) and Executive and his heirs, executors and personal representatives.

 

13.7                      Withholding.                        Notwithstanding
any other provision of this Agreement, 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.

 

13.8                      Severability.                            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.

 

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13.9                       No Assignment.  The rights and benefits of the
Executive 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 Executive to anticipate,
alienate, assign, sell, transfer, pledge, encumber or charge the same shall be
void. Payments hereunder shall not be considered assets of the Executive in the
event of insolvency or bankruptcy.

 

13.10                Survival.  This Agreement shall survive the termination of
Executive’s employment and the expiration of the Term to the extent necessary to
give effect to its provisions.

 

13.11                Captions.  The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement. .

 

13.12                Counterparts.  This Agreement may be executed by the
parties hereto in separate counterparts; each of which when so executed and
delivered shall be an original but all such counterparts together shall
constitute one and the same instrument.

 

14.                               Compliance with Code Section 409A.
Notwithstanding anything in this Agreement to the contrary, the following
provisions shall govern which are intended to be compliant with Internal Revenue
Code (“Code”) Section 409A and the final regulations promulgated thereunder
(‘409A’) and shall be construed to be so compliant.

 

14.1                        Payment of Benefits: To the extent necessary to
avoid adverse tax consequences, and except as described below, any payment to
which the Executive becomes entitled under the Agreement, or any arrangement or
plan referenced in this Agreement, that constitutes “deferred compensation”
under 409A, and is (a) payable upon the Executive’s termination; (b) at a time
when the Executive is a “specified employee” as defined by 409A shall not be
made if necessary to comply with the requirements of clause (a)(2(B)(i) of 409A
until the earliest of: (1)    the expiration of the six month period (the
“Deferral Period”) measured from the date of the Executive’s ‘separation from
service’ under 409A; or (2)  the date of the Executive’s death.

 

Upon the expiration of the Deferral Period, all payments that would have been
made during the Deferral Period (whether in a single lump sum or in
installments) shall be paid as a single lump sum to the Executive or, if
applicable, his beneficiary.  This section shall not apply to any payment which
constitutes “separation pay” as described in Internal Revenue Regulations
Section 409A-1(b)(9) (in general, payments (i) that are made on an involuntary
separation from service which (ii) do not exceed the lesser of two times (x) the
Executive’s annualized compensation for the taxable year preceding the year in
which the separation from service occurs or (y) the Code Section 401(a)(17)
limit on compensation for the year in which separation from service occurs and
(iii) are paid in total by the end of the second calendar year following the
calendar year in which the separation from service occurs.)

 

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Without limiting the generality of the foregoing, the Company shall pay to the
Executive the Accrued Benefits, within ten (10) days after the Date of
Termination.  Notwithstanding the foregoing, if the Executive is a ‘specified
employee’, as defined in 409A, the Company shall pay to the Executive the
Accrued Benefits on the six (6) month anniversary of the Date of Termination.

 

To the extent permissible by law, each payment and each installment described in
this Agreement shall be considered a separate payment from each other payment or
installment’

 

14.2                  Reimbursements:  To the extent required by 409A, with
regard to any provision that provides for the reimbursement of costs and
expenses, or for the provision of in-kind benefits:

 

(i)                                     The right to such reimbursement or
in-kind benefit shall not be subject to liquidation or exchange for another
benefit;

 

(ii)                                  The amount of expenses or in kind benefits
available or paid in one year shall not affect the amount available or paid in
any subsequent year; and

 

(iii)                               Such payments shall be made on or before the
last day of the Executive’s taxable year in which the expense occurred.

 

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IN WITNESS WHEREOF, Executive and the Company have executed this Agreement as of
the date first written above.

 

 

RITE AID CORPORATION

 

 

 

/s/ Steve Parsons

 

 

 

By: Steve Parsons

 

Its:  Senior Vice President, Human Resources

 

 

 

 

 

EXECUTIVE

 

 

 

 

 

/s/ Marc A. Strassler

 

 

 

Marc A. Strassler

 

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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 35% 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 35% 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.

 

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“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.

 

“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.

 

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