Exhibit 10.3

 

October 26, 2015

 

Mr. Marc A. Strassler

Executive Vice President, General Counsel

Rite Aid Corporation

30 Hunter Lane

Camp Hill, PA 17011

 

RE:                           Agreement dated as of March 9, 2009 by and between
Rite Aid Corporation (the “Company”) and Marc A. Strassler (the “Executive”), as
amended from time to time (the “Agreement”)

 

Dear Marc:

 

You have agreed to assume a new Securities and Exchange Commission reporting and
governance support role with the Company to which the Board of Directors, in
recognition of your experience and deep knowledge of the Company, has appointed
you.  Accordingly, this letter agreement (the “Letter Agreement”) hereby amends
your Agreement to reflect your new role, effective October 26, 2015.

 

In consideration of your appointment and of other good and valuable
consideration, the receipt of which is acknowledged:

 

1.                                      By executing this Letter Agreement, you
agree that the change in your title and role and the related changes to your
compensation, benefits, duties, responsibilities or reporting obligations set
forth herein will not by itself constitute, or be deemed to constitute, Good
Reason under your Agreement or any other plan or agreement entered into with or
sponsored by the Company or any of its affiliates which contain such a term or
any substantially similar terms.

 

2.                                      Section 2.1 of the Agreement (“Positions
and Duties — Generally”) is hereby deleted in its entirety and replaced with the
following provision:

 

Generally.  As of October 25, 2015 (the “Amendment Effective Date’), Executive
shall serve the Company in a Securities and Exchange Commission reporting and
governance support capacity with the title of Corporate Counsel and shall no
longer be an executive officer of the Company.  Executive shall devote such
working time, attention, knowledge and skills as Executive and the Company
determine in good faith to be necessary and appropriate to perform the duties
and responsibilities assigned by the Company and consistent with the agreed upon
responsibilities  in the furtherance of the business affairs of the Company and
its subsidiaries, affiliates and strategic partners.  Executive shall report to
the Company’s General Counsel.  Following the 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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The Company and the Executive agree that while Executive may perform his duties
from time to time at the Company’s headquarters, Executive shall have the
discretion to perform his duties at other locations including from home.

 

3.                                      Section 3.1 of the Agreement (“Base
Salary”) is hereby deleted in its entirety and replaced with the following
provision:

 

Base Salary.  Following the Amendment Effective Date, as compensation for his
services hereunder, Executive shall receive a base salary at the annualized rate
of $300,000 per year (“Base Salary”).  The Base Salary 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.

 

4.                                      Section 3.2 of the Agreement (“Annual
Performance Bonus”) is hereby deleted in its entirety and replaced with the
following provision:

 

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.  Following the
Amendment Effective Date, Executive’s annual bonus opportunity under such plan
shall equal 30% of Executive’s Base Salary (the “Annual Target Bonus”).  For
subsequent fiscal years, commencing with Fiscal Year 2017, the Annual Target
Bonus may be adjusted (however, in no event shall it be less than 30%) and shall
be based upon the Board approved plan for that year.

 

To the extent that an annual performance bonus is payable under the Company’s
annual bonus plan after the Amendment Effective Date, including in respect of
Fiscal Year 2016, such annual performance bonus shall take into account the
change in Executive’s base salary and Annual Target Bonus following the
Amendment Effective Date.  By way of example for Fiscal Year 2016, assuming the
achievement of the applicable financial goals at target for Fiscal Year 2016,
Executive would be eligible to receive 75% of Executive’s base salary prior to
the Amendment Effective Date, pro-rated to reflect the number of working days in
Fiscal Year 2016 prior to the Amendment Effective Date, plus 30% of Base Salary,
pro-rated to reflect the number of working days in Fiscal Year 2016 following
the Amendment Effective Date.

 

5.                                      Clause 5.4(a) of Section 5.4 of the
Agreement (“Definition of Good Reason”) is hereby deleted in its entirety and
replaced with the following provision:

 

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

 

6.                                      Section 5.7 of the Agreement (“Excise
Tax Gross-Up”) is hereby deleted in its entirety and replaced with the following
provision:

 

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Change in Control Best Payments Determination.  Any other provision of this
Agreement to the contrary notwithstanding, if any portion of any payment or
benefit under this Agreement either individually or in conjunction with any
payment or benefit under any other plan, agreement or arrangement (all such
payments and benefits, the “Total Payments”) would constitute an “excess
parachute payment” within the meaning of Internal Revenue Code Section 280G,
that is subject to the tax imposed by Section 4999 of such Code (the “Excise
Tax”), then the Total Payments to be made to Executive shall be reduced, but
only to the extent that Executive would retain a greater amount on an after-tax
basis than he would retain absent such reduction, such that the value of the
Total Payments that Executive is entitled to receive shall be $1 less than the
maximum amount which the Employee may receive without becoming subject to the
Excise Tax.  For purposes of this Section 5.7, the determination of whichever
amount is greater on an after-tax basis shall be (x) based on maximum federal,
state and local income and employment tax rates and the Excise Tax that would be
imposed on Executive and (y) made at the Company’s expense by independent
accountants selected by the Company and Executive (which may be the Company’s
income tax return preparers if Executive so agrees) which determination shall be
binding on both Executive and the Company. Any such reduction as may apply under
this Section 5 7 shall be applied in the following order: (i) payments that are
payable in cash the full amount of which are treated as parachute payments under
Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary,
to zero), with amounts that are payable last reduced first; (ii) payments and
benefits due in respect of any equity the full amount of which are treated as
parachute payments under Treasury Regulation Section 1.280G-1, Q&A 24(a), with
the highest values reduced first (as such values are determined under Treasury
Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that
are payable in cash that are valued at less than full value under Treasury
Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced
first, will next be reduced; (iv) payments and benefits due in respect of any
equity valued at less than full value under Treasury Regulation Section
1.280G-1, Q&A 24, with the highest values reduced first (as such values are
determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be
reduced; and (v) all other non-cash benefits not otherwise described in clauses
(ii) or (iv) will next be reduced pro-rata.

 

7.                                      General Terms and Conditions.  All other
terms and conditions of the Agreement, not amended hereunder, shall remain in
full force and effect, as applicable. This Letter Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth of Pennsylvania,
without regard to principles of conflicts of laws that would cause the
application of laws of another jurisdiction. This Amendment may be executed in
any number of counterparts, each of which will be an original, but such
counterparts will together constitute but one and the same Amendment.  The
exchange of copies of this Amendment and of signature pages by facsimile, pdf
transmission, email or other electronic means shall constitute effective
execution and delivery of this Amendment for all purposes.  Signatures

 

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of the parties hereto transmitted by facsimile, pdf transmission, email or other
electronic means shall be deemed to be their original signatures for all
purposes.

 

If you are in agreement with the changes described in the above paragraphs,
please sign both copies of this Letter Agreement below where indicated,
returning one copy to me and retaining one copy for your records.

 

 

 

 

Sincerely,

 

 

 

 

 

Rite Aid Corporation

 

 

 

 

 

 

 

 

 

 

By:

/s/ James J. Comitale

 

 

 

Name:  James J. Comitale

 

 

 

Title:    SVP and General Counsel

 

 

 

Agreed:

 

 

 

 

 

 

 

 

/s/ Marc A. Strassler

 

 

Marc A. Strassler

 

 

 

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