Exhibit 10.15


 


AMENDMENT NO. 4 TO


EMPLOYMENT AGREEMENT


 


THIS
AMENDMENT NO. 4 TO EMPLOYMENT AGREEMENT by and between Rite Aid Corporation, a
Delaware corporation (the “Company”) and Mary F. Sammons (the “Executive”) is
dated and effective as of the close of business on January 21, 2010 (the “Effective
Date”).


 


1.              Introductory Statement


 


Executive
is Chairman of the Board (“Chairman”) and Chief Executive Officer of the
Company under the Original Employment Agreement (as defined below).  The parties mutually desire Executive to
continue as Chairman and Chief Executive Officer of the Company until the
annual general meeting of stockholders in June 2010 (the close of business on
such date is herein referred to as the “2010 AGM Date”) and thereafter to
continue employment in the Chairman’s position from the 2010 AGM Date through
the close of business on June 30, 2012 or such other earlier date in June 2012
when the Company’s annual general meeting of stockholders occurs (the “2012 AGM
Date”).  As used herein, the term “Employment
Period” shall mean the period commencing on the Effective Date and ending on
the close of business on 2012 AGM Date (the “Expiration Date”), subject to the
terms and conditions herein.


 


2.              Agreement of Employment


 


(a)         Except as otherwise expressly set forth
herein, the terms of the Original Employment Agreement between the Company and
Executive as Chairman and Chief Executive Officer shall continue in full force
and effect in accordance with the original terms thereof until the 2010 AGM Date.
As of the 2010 AGM Date, the Original Employment Agreement automatically shall
be amended and restated on a prospective basis as set forth or incorporated by
reference herein.  As of the 2010 AGM
Date, Executive hereby agrees to resign as Chief Executive Officer, which
resignation shall not constitute a breach of the Original Employment Agreement
or termination of employment of the Executive under the Original Employment
Agreement, as amended by this Amendment No. 4.


 


Subject
to earlier termination in accordance with the Original Employment Agreement,
during the period commencing on the 2010 AGM Date and ending on the Expiration
Date (the “Extended Term”), the Executive shall serve as the Chairman, subject
to the terms hereof.  As Chairman, during
the Extended Term, Executive will have such duties as are customarily assigned
to such position, including presiding at all meetings of the Company’s
stockholders and of the Board of Directors, and shall continue to represent the
Company on the National Association of Chain Drug Stores Board of Directors and
Executive Committee and have such other duties appropriate to the office of
chairman as may be from time to time assigned by the Company’s Board of
Directors or requested by the Chief Executive Officer.  In her capacity as 


 

















 


Chairman,
Executive shall report to the Board of Directors and shall have no direct
reports.


 


(b)         During the Extended Term, and excluding
any periods of vacation and sick leave to which Executive is entitled, the
Executive shall devote such attention and time during normal business hours as
she believes in good faith shall be reasonably necessary to carry out her
duties as Chairman, provided in no event shall Executive’s duties (or her
travel on Company business) be inconsistent with her personal and other
business activities from time-to-time. 
Without limiting the generality of the foregoing, the Executive may
serve on corporate, industry, civic or charitable boards and committees, may
engage or be interested in any other business or businesses (except as
expressly restricted by Section 8 of the Original Employment Agreement as
incorporated herein) and shall be permitted to make and manage her personal
investments.  Nothing herein shall
prohibit Executive from entering into employment with one or more third parties
during the Extended Term, so long as Executive believes in good faith that such
employment does not reasonably interfere with Executive’s duties and is not
expressly restricted by Section 8 of the Original Employment Agreement as
incorporated herein.


 


(c)          During the Extended Term, in connection
with the performance of her duties, the Company shall maintain an office and
administrative support for the Executive at the Company’s headquarters in the
Harrisburg, Pennsylvania area (whether or not she is based at such office) and
shall reimburse the Executive for reasonable expenses incurred at her home
office currently located in Portland, Oregon and reasonable cost of travel
between her home office and the Company’s headquarters as well as for travel
otherwise on behalf of the Company.


 


3.              Compensation, etc.


 


(a)         During the portion of the Employment
Period from the Effective Date through the 2010 AGM Date, the terms of the
Original Employment Agreement shall continue in full force and effect in
accordance with the original terms thereof except as expressly set forth
herein.


 


(b)         During the portion of the Employment
Period from the 2010 AGM Date through the balance of the Company’s 2011 fiscal
year (i.e., through February 26, 2011) (the “Initial Extended Term”), the
provisions of Section 3(a) (“Base Salary” (i.e. providing for an annual
Base Salary of not less than $1,000,000), 3(b) (“Incentive Compensation”) (i.e.
targeted at 200% of the Annual Base Salary), 3(c) (“Other Benefits”), 3(d) (“Deferred
Compensation; Service Credit”) and 3(f) (“Indemnification”) under the Original
Employment Agreement shall continue to apply in their entirety in accordance
with the original terms thereof, notwithstanding that Executive’s position
shall have changed on the 2010 AGM Date to Chairman from Chairman and Chief
Executive Officer.  Such provisions are
incorporated herein by reference.


 


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(c)          During the portion of the Employment
Period commencing after the Initial Extended Term through the Expiration Date
(the “Subsequent Extended Term”), the Company shall pay Executive an annual
base salary of $350,000, in accordance with the Company’s regular payroll
practice for its senior executives as in effect from time to time (but in no
event less frequently than monthly). 
Executive shall also be entitled in their entirety to (i) continued
benefits as provided under Section 3(c) (“Other Benefits”) of the Original
Employment Agreement except for the personal use of Company-owned aircraft
which shall cease after the Initial Extended Term, (ii) continued compensation
as provided under Section 3(d) (“Deferred Compensation; Service Credit”) and (iii)
continued rights under Section 3(f) (“Indemnification”) of the Original
Employment Agreement.  Such provisions
are incorporated herein by reference. 
Executive shall not be entitled to participate in any Incentive
Compensation or bonus plans (or any successor thereto) accruing during the
Subsequent Extended Term.


 


(d)         Notwithstanding anything to the contrary
herein or in the Original Employment Agreement, following any termination for
any reason (other than Cause) of the Executive’s employment with the Company,
the Company shall make an annual payment (as previously agreed) to the
Executive during her life (and thereafter to her surviving spouse for his life)
equal to the cost to the Executive, on an after-tax basis, of purchasing
medical coverage substantially comparable in all material respects to the
coverage provided by the Company to its senior executives (and their spouses
and dependents) immediately prior to such termination.  Notwithstanding the foregoing, the payment
described in the preceding sentence shall not be made to the Executive with
respect to any period during which the Company provides such medical coverage
to the Executive and her spouse and dependents pursuant to Section 5(a) or 5(b)
of the Original Employment Agreement or pursuant to such provisions as
incorporated herein.


 


(e)          From the Effective Date through the end
of the Initial Extended Term, Executive shall be eligible to receive stock
options, restricted stock awards and performance awards pursuant to the Company’s
Long Term Incentive Program in her capacity as Chairman and Chief Executive
Officer.  Subsequent to the 2010 AGM
Date, Executive shall be entitled to receive stock options and restricted stock
awards in accordance with the Company’s policy for members of the Board of
Directors as in effect from time to time.


 


(f)           For the avoidance of doubt, compensation
and other rights and benefits accruing in favor of Executive during a
particular portion of the Employment Period (e.g. fiscal year 2011 Incentive
Compensation payable in fiscal 2012) shall apply in accordance with their terms
and not be limited even though not payable until or paid in a subsequent
period.


 


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4.              Termination of Employment


 


Unless
a different time period is specified herein, the following provisions shall
take effect as of the Effective Date superseding and modifying any conflicting
or inconsistent provision in Section 4 of the Original Employment Agreement:


 


(a)         Death or Disability. 
The Executive’s employment shall terminate automatically upon the
Executive’s death during the Employment Period. 
The Company shall be entitled to terminate the Executive’s employment
because of the Executive’s Disability during the Employment Period.  “Disability” means that Executive has been
unable, for six (6) consecutive months, to perform the Executive’s applicable
duties under the Original Employment Agreement through the 2010 AGM Date and
under this Amendment No. 4 for the balance of the Employment Period as a result
of physical or mental illness or injury. 
The effective date of any termination of Executive’s employment for
Disability is referred to herein as the “Disability Effective Date”.  A termination of the Executive’s employment
by the Company for Disability shall be communicated to the Executive by written
notice, and shall be effective on the 30th day after receipt of such notice by the
Executive, unless the Executive returns to required performance of the
Executive’s duties before the Disability Effective Date.  During any period prior to the Disability
Effective Date during which Executive is absent from the required performance
of her duties with the Company due to such physical or mental illness or
injury, the Company shall continue to pay in the ordinary course and the
Executive will be entitled to receive her applicable compensation under the
Original Employment Agreement or this Amendment No. 4.


 


(b)         Termination by the Company. 
The Company may terminate the Executive’s employment at any time during
the Employment Period for Cause or without Cause.  “Cause” shall mean only an act of fraud,
embezzlement or misappropriation by the Executive, in any such case, intended
by the Executive to result in substantial personal enrichment at the expense of
the Company.  Notwithstanding the
foregoing, Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to Executive 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 Executive setting forth in
reasonable detail the specific conduct of the Executive upon which the Board
relies in reaching its determination and an opportunity for Executive, together
with her counsel, to be heard before the Board), finding that in the good faith
opinion of the Board, Executive was guilty of the conduct set forth in the
second sentence of this Section 4(b), and Executive 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 the
Executive.


 


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(c)          Good Reason; Without Good Reason. 
The Executive may terminate employment for Good Reason or without Good
Reason.  “Good Reason” shall mean the
occurrence of any one of the following:


 


A.            any (i) adverse alteration in Executive’s
titles, positions, status, duties, authorities, reporting relationships or
responsibilities with the Company or its subsidiaries from those specified in
the Original Employment Agreement or this Amendment No. 4 (including, in the
latter case, the failure of the Executive to be elected as a member of the
Board of Directors at the 2010 AGM or the 2011 AGM), as applicable (it being
understood that, if the Company is no longer a public company, the failure of
Executive to hold the applicable position and duties under the Original
Employment Agreement or this Amendment No. 4 with any ultimate corporate or
other parent of the Company or any successor shall be deemed to constitute such
Good Reason), (ii) assignment to Executive of any duties or responsibilities
inconsistent with Executive’s status as Chairman or Chief Executive Officer of
the Company, as applicable, or (iii) failure of Executive during the Employment
Period to be nominated or re-elected to the offices of Chairman and Chief
Executive Officer, as applicable, or the removal of Executive from either such
office under any circumstances (other than in connection with the termination
of/ Executive’s employment under circumstances not otherwise constituting “Good
Reason” and other than the resignation of Executive as Chief Executive Officer
as of the 2010 AGM Date); provided, however, that clauses (i), (ii) and (iii) of
subparagraph A of Section 4(c) hereof are hereby amended on a prospective
basis, effective as of the 2010 AGM Date, to delete all references to Executive’s
former status as Chief Executive Officer of the Company;


 


B.            any failure by the Company to comply with
any provision of Section 3 of the Original Employment Agreement or any
provision of this Amendment No. 4, as applicable;


 


C.            any failure by the Company to comply with
paragraph (b) of Section 11 of the Original Employment Agreement or the similar
provisions incorporated by reference in this Amendment No. 4; or


 


D.            any other material breach of the Original
Employment Agreement or this Amendment No. 4, as applicable, by the Company;
provided, however, that the Company shall have the right, within ten (10) days
after receipt of notice from Executive of the Company’s violation of any one of
subparagraphs A, B or D, 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.


 


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In
addition, any termination of employment by the Executive within the six (6) month
period commencing on the date of a Change in Control of the Company (as defined
in Appendix A to Exhibit A to the Original Employment Agreement inclusive of
the applicable definitions in such Appendix A) shall be treated as a
non-curable termination of employment by the Executive for Good Reason.  A termination of employment by the Executive
for Good Reason shall be effectuated by giving the Company written notice (“Notice
of Termination for Good Reason”) of the termination, setting forth (except in
the case of written notice delivered following a Change in Control of the
Company) in reasonable detail the specific conduct of the Company that
constitutes Good Reason and the specific provision(s) of this Agreement on
which the Executive relies, provided, that Executive’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 provision(s) is
intended (i) to permit the Company to make a reasonable evaluation of Executive’s
claim of termination for Good Reason and (ii) to permit the Company, where
applicable, to cure such conduct, but not to require Executive 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 Executive.  A termination of employment by the Executive
for Good Reason shall be effective on the latest of (i) the fifth (5th) business day following the
expiration of the Company’s cure period described above, if applicable, (ii) the
date specified by Executive in the Notice of Termination for Good Reason, or (ii)
forty-five (45) days following the date the Notice of Termination for Good
Reason is delivered to the Company.


 


A
termination of the Executive’s employment by the Executive without Good Reason
shall be effected by giving the Company at least ninety (90) days written notice
of such termination, and shall be effective on the date specified by Executive
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; and provided, further, that such notice period shall be reduced to no
less than thirty (30) days following the 2010 AGM Date.


 


(d)         Date of Termination. 
The “Date of Termination” means the date of the Executive’s death, the
Disability Effective Date, the Expiration Date, or the date on which the
termination of the Executive’s employment by the Company for Cause or without
Cause or by the Executive 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.A.  Section 5(a)(1) of the Original Employment
Agreement as incorporated herein is hereby amended by adding the following at
the end of said Section 5(a)(1):


 


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“Notwithstanding anything herein to the contrary, if, during the
Extended Term, the Company terminates the Executive’s employment for any reason
other than Cause or Disability, or the Executive terminates her employment for
Good Reason, the amount payable pursuant to Section 5(a)(1)(i) of the Original
Employment Agreement shall be an amount equal to three (3) times the sum of (x)
Executive’s Annual Base Salary in effect immediately prior to the 2010 AGM Date
(without giving effect to any reductions thereto) plus (y) the Executive’s
Annual Target Bonus (as defined in Section 3(b) of the Original Employment
Agreement) in effect for fiscal 2011.


 


B.  A new subsection (f) to Section 5 of the
Original Employment Agreement shall be added on the Effective Date to the
Original Employment Agreement and incorporated herein (which shall be in
addition to and not in lieu of the provisions of the last sentence of Section 4
of Amendment No. 2 to Employment Agreement dated September 30, 2003), as
follows:


 


(f)                                   Expiration of
Employment Period.  Upon the
termination for any reason (other than termination by the Company for Cause or
by the Executive without Good Reason) of the Executive’s employment with the
Company, then, on the applicable Date of Termination;


 


(i)            all of the Executive’s then outstanding stock
options shall vest and become fully exercisable as of the Date of Termination
and all outstanding stock options shall remain fully vested and exercisable
throughout the remainder of their ten (10) year term, without regard to any
early termination provisions or other terms and conditions otherwise applicable
to such options; and


 


(ii)           all remaining restrictions applicable to all
restricted stock awards shall immediately lapse and any performance goals or
other conditions applicable to any other equity incentive awards shall
immediately be deemed to have been satisfied in full (with performance goals
being deemed to have been satisfied at targeted levels).


 


6.              Incorporation by Reference


 


Except
as modified by this Amendment No. 4 and without limiting the provisions of Section
2(a) hereof which provide for the continued application of the Original
Employment Agreement until the 2010 AGM Date, (i) the provisions of Sections 5,
6, 7, 8, 10, 11, 12, 13 and 14 of the Original Employment Agreement, (ii) the
benefits set forth in Amendment No. 2 to Employment Agreement dated September 30,
2003 (except as provided in Section 3(c) of this Amendment No. 4), (iii) the
Side Agreement dated February 12, 2002, the Letter Agreement dated September 24,
2008 and the Letter Agreement dated February 25, 2009 and (iv) the provisions
of amendment No. 3 to Employment Agreement dated December 30, 2008 shall remain
in full force and effect 


 


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throughout
the Employment Period and are incorporated by reference in this Amendment No. 4
as if set forth herein. References in provisions incorporated by reference to
capitalized terms therein shall have the meanings set forth in the capitalized
terms herein and references to this “Agreement” or “agreement” referring to the
Original Employment Agreement or this Amendment No. 4, as applicable, unless
the context otherwise requires.  In the
event of a conflict between the provisions of the Amendment No. 4 and the
Original Employment Agreement, this Amendment No. 4 shall be controlling.


 


7.              Defined Terms.


 


As
used herein, the Original Employment Agreement shall mean that certain
Employment Agreement, dated as of December 5, 1999 as amended by Amendment No. 1
to Employment Agreement dated as of May 7, 2001; Amendment No. 2 to Employment
Agreement dated September 30, 2003; Amendment No. 3 to Employment Agreement
dated December 30, 2008; Side Agreement to Employment Agreement dated as of October
11, 2006; Side Agreement dated February 12, 2002; Letter Agreement dated September
24, 2008; and Letter Agreement dated February 25, 2009.  All other capitalized terms used or
incorporated by reference herein and not otherwise specifically defined herein
shall have the meanings set forth in the Original Employment Agreement.


 


8.              Legal Fees and
Expenses.


 


Promptly
following the Effective Date, the Company shall reimburse the Executive for
legal fees and expenses incurred by Executive in negotiation of the Agreement
up to the maximum of $10,000.


 


IN
WITNESS WHEREOF, the Executive has hereunder set the Executive’s hand and,
pursuant to due authorization, the Company has caused this Agreement to be
executed in its name on its behalf, all as of the day and year first above
written.


 


	
   

  	
  RITE
  AID CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Marc A. Strassler

  
	
   

  	
  Name:

  	
  Marc
  A. Strassler

  
	
   

  	
  Title:

  	
  Executive
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Mary F. Sammons

  
	
   

  	
  Mary
  F. Sammons

  



 


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