Exhibit 10.4

 

 

October 26, 2015

 

Mr. Kenneth Martindale

President & COO

Rite Aid Corporation

30 Hunter Lane

Camp Hill, PA 17011

 

RE:                           Agreement dated as of December 3, 2008 by and
between Rite Aid Corporation (the “Company”) and Kenneth Martindale (the
“Executive”), as amended from time to time (the “Agreement”)

 

Dear Ken:

 

On June 20, 2013, the Board of Directors elected you to the position of
President of the Company. Accordingly, Section 2.1 of the Agreement is hereby
updated by deleting the term “Senior Executive Vice President” and replacing it
with the term “President” in the first sentence of said Section 2.1. Further,
you shall report solely to the Chief Executive Officer and/or the Board of
Directors of the Company. Additionally, Section 3.1 of the Agreement is hereby
updated by deleting the term “$600,000” and replacing it with the term
“$900,000” in the first sentence of said Section 3.1.

 

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

 

1.                                      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 Compensation Committee from time to time. For the current fiscal
year (Fiscal Year 2016), Executive’s annual bonus opportunity pursuant to such
plan shall be equal to one hundred fifty percent (150%) (the “Annual Target
Bonus”) of the annualized Base Salary. For subsequent fiscal years, the Annual
Target Bonus may be adjusted (however in no event shall it be less than one
hundred fifty percent (150%)) and shall be based upon the Board approved plan
for that year.

 

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

 

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

 

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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 be next reduced pro-rata.

 

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

 

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Sincerely,

 

 

 

 

Rite Aid Corporation

 

 

 

 

 

 

 

By:

/s/ James Comitale

 

 

Name:

James Comitale

 

 

Title:

SVP and General Counsel

 

 

 

Agreed:

 

 

 

 

 

 

 

 

/s/ Kenneth Martindale

 

 

 

Kenneth Martindale

 

 

 

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