Document:

Exhibit 10.5

AMENDMENT NO. 3 TO

EMPLOYMENT AGREEMENT

 

THIS AMENDMENT
NO. 3 TO EMPLOYMENT AGREEMENT, by and between Rite Aid Corporation, a Delaware
Corporation (the “Company”) and Robert G. Miller (“Executive”) is entered into
as of the 23rd day of December, 2008. 
The provisions of this Amendment shall be effective as of January 1,
2005 (the “Effective Date”).

 

WHEREAS,
Executive and the Company previously entered into that certain employment
agreement, dated as of April 9, 2003, and subsequently amended on April 28,
2005 and March 28, 2008 (collectively, the “Employment Agreement”); and

 

WHEREAS, the
Company and the Executive now desire to amend the Employment Agreement to
ensure compliance with Internal Revenue Code Section 409A and the final
regulations promulgated thereunder;

 

NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Company and the Executive hereby agree as
follows:

 

1.                                       New
Section 9.  Effective as of the
Effective Date, the following new Section 9 shall be inserted into the
Employment Agreement.  In the event of an
inconsistency between this new Section 9 and the remaining provisions of
the Employment Agreement, Section 9 shall govern.

 

“9.                                 COMPLIANCE WITH CODE SECTION 409A  Notwithstanding anything in this Employment
Agreement to the contrary, effective as of January 1, 2005, the following
provisions shall govern:  The provisions
listed below are intended to be compliant with Internal Revenue Code Section 409A
and the final regulations promulgated thereunder (‘409A’) as in effect on the
date hereof and shall be construed to be so compliant.

 

(a)                                  Good Reason:
Any termination for ‘Good Reason’ is intended to comply with the safe harbor
definition of ‘good reason’ in 409A, including the condition giving rise to
such termination and the notice and cure period provided for in 409A.  In connection therewith, the following
specific provisions will be effective as of January 1, 2005:

 

(i)                                     Section 4(c)(A)(i) of
the Agreement shall be modified by inserting the word ‘material’ at the
beginning thereof.

 

(ii)                                  Section 4(c)(A)(iii) of
the Agreement shall be modified by deleting the parenthetical at the end
thereof.

 

 

(iii)                               Section 4(c)(E) of
the Agreement shall be modified to read as follows:

 

“E.                                any
other material breach of the Original Employment Agreement or this Agreement,
as applicable, by the Company; provided, however that the Executive has
provided notice to the Company of the existence of any condition described in
any one of subparagraphs A, B, C, D or E within 90 days of the initial
existence of such condition to the extent then known by the Executive by giving
the Company a written notice (the “Notice of Termination for Good Reason”),
setting forth in reasonable detail the specific conduct of the Company which
constitutes Good Reason and the specific provisions of this Agreement on which
the Executive relies, provided, that Executive’s continued employment shall not
be deemed 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 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 to cure such
conduct to the extent curable.  The Company
shall have 30 days from the receipt of the Notice of Termination for Good
Reason to cure the condition giving rise to the Good Reason.  Any termination of employment by the
Executive under this paragraph must occur no later than the date that is the
second anniversary of the initial existence of the condition giving rise to the
termination right.’

 

(iv)                              Section 4(c)(ii) is
hereby amended in its entirety to read as follows:

 

‘(ii)                              Any
termination of employment by Executive within a six month period commencing on
the date of a Change in Control of the Company (as defined in Section 8)
shall not be treated as a termination of the Executive for Good Reason,
however, it shall entitle the Executive to all benefits described in Section 5(a) as
if the Executive had terminated for Good Reason.  However, the provisions of Section 9(c) of
this Agreement shall apply to the payment of all such benefits.’

 

(b)                                 Medical
Benefits:  The provision of
medical benefits after separation from service shall be done in a manner to, to
the extent

 

 

possible, exempt such benefits from the application of 409A.  Without limiting the generality of the
foregoing, the following specific provisions will be effective as of January 1,
2005:

 

Section 5(a)(2) and 5(b)(2) of
the Agreement shall be modified by adding the following to the end thereof:

 

‘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 third
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.’

 

(c)                                  Payment of
Benefits:  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 Executives 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.

 

 

Without limiting the generality of the foregoing, the following
specific provisions will be effective as of January 1, 2005:

 

Section 5(d)(1) of the Agreement shall be amended by
inserting the following language at the end thereof:

 

“Effective as of January 1, 2005, the provisions of Section 9(c) shall
apply to payments made under this Section. 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’

 

(d)                                 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:

 

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

(2)                                  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

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

 

2.                                       Employment
Agreement to Remain in Effect.      Except
as modified by this Amendment No. 3, the Employment Agreement shall remain
in full force and effect in accordance with its terms.  Except to the extent explicitly required by
409A, nothing herein is intended to nor shall be construed to reduce any
material benefit of Executive under the Employment Agreement or to require any
repayment or reduction of any benefit provided to Executive prior to the date
hereof.  In the event of a conflict
between the provisions of this Amendment No. 3 and the Employment
Agreement, this Amendment No. 3 shall be controlling.

 

 

	
   

  	
  RITE AID CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert B. Sari

  
	
   

  	
   

  	
  Robert B. Sari

  
	
   

  	
   

  	
  EVP, General Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Robert G. Miller

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Robert G. MillerExhibit 10.6

 

AMENDMENT NO. 3 TO

EMPLOYMENT AGREEMENT

 

THIS AMENDMENT NO. 3 TO EMPLOYMENT AGREEMENT, by and
between Rite Aid Corporation, a Delaware Corporation (the “Company”) and Mary
F. Sammons (“Executive”) is entered into as of the 30th day of December,
2008.  The provisions of this Amendment
shall be effective as of January 1, 2005 (the “Effective Date”).

 

WHEREAS, Executive and the Company previously
entered into that certain employment agreement, dated as of December 5,
1999, and subsequently amended on May 7, 2001 and September 30, 2003
(collectively, the “Employment Agreement”); and

 

WHEREAS, the Company and the Executive now desire to
amend the Employment Agreement to ensure compliance with Internal Revenue Code Section 409A
and the final regulations promulgated thereunder;

 

NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Company and
the Executive hereby agree as follows:

 

1.                                       New Section 14.  Effective as of the Effective Date, the
following new Section 14 shall be inserted into the Employment
Agreement.  In the event of an
inconsistence between this new Section 14 and the remaining provisions of
the Employment Agreement, Section 14 shall govern.

 

“14.                           COMPLIANCE
WITH CODE SECTION 409A  Notwithstanding anything in this Employment
Agreement (the “Agreement”) to the contrary, effective as of January 1,
2005, the following provisions shall govern: 
The provisions listed below are intended to be compliant with Internal
Revenue Code Section 409A and the final regulations promulgated thereunder
(‘409A’) as in effect on the date hereof and shall be construed to be so
compliant.

 

(a)                                  Medical
Benefits:  The
provision of medical benefits after separation from service shall be done in a
manner to, to the extent possible, exempt such benefits from the application of
409A.  Without limiting the generality of
the foregoing, the following specific provisions will be effective as of January 1,
2005:

 

(i)                                     Section 5(a)(2) and
5(b)(2) of the Agreement shall be modified by adding the following to the
end of each thereof:

 

 

‘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 third anniversary of the Date of Termination occurs,
this coverage will be provided at the expense of the Executive (or her
beneficiaries or estate).  Executive (or
her 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; provided, however, if
the coverage is not available through the Company’s benefit plans, then
Executive shall purchase and pay the premium for medical coverage substantially
comparable in all material respects to the coverage provided by the Company
during the COBRA period.  The Company
shall, on the last day of each month, provide the Executive (or her
beneficiaries or estate) with a payment sufficient to place the Executive (or
her 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)                                 Payment
of Benefits:  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 and; (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,

 

provided one or more exceptions to 409A that would
allow for an earlier payment is not available. 
The maximum payment allowable under all such exceptions combined will be
made on the date provided under the Agreement prior to this Amendment No. 3.

 

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 together with interest at the money market fund rate of the Company’s
investments from time to time to the Executive or, if applicable, his
beneficiary.

 

Without limiting the generality of the foregoing,
the following specific provisions will be effective as of January 1, 2005:

 

Section 5(d)(1) of the Agreement shall be
modified by adding the following to the end thereof:

 

‘The provisions of Section 14(b) will
apply to payments made under this Section 5(d)(1).  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’

 

(c)                                  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:

 

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

(2)                                  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

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

 

Without limiting the generality of the foregoing,
the following specific provisions will be effective as of January 1, 2005:

 

Section 3(c) of the Agreement shall be
modified to insert the following sentence at the end thereof:

 

‘The provisions of Section 14(c) shall
apply to all reimbursements made under this Section 3(c)’

 

(d)                                 Gross
Ups.  To the extent required by
409A, any ‘gross up’ payment shall be made no later than the
end of the Executive’s taxable year following the year in which the employee
remits the related taxes.

 

Without limiting the generality of the foregoing,
the following specific provisions will be effective as of January 1, 2005:

 

Section 5 shall be amended by adding the
following new Section 5(e)(v) immediately following Paragraph (iv) therof:

 

 

‘(v)                             The provisions of Section 14(d) shall
apply to all payments made under this Section 5(e)’”

 

2.                                       Employment Agreement
to Remain in Effect.      Except as
modified by this Amendment No. 3, the Employment Agreement shall remain in
full force and effect in accordance with its terms. Except to the extent
explicitly required by 409A, nothing herein is intended to nor shall be
construed to reduce any material benefit of Executive under the Employment
Agreement or to require any repayment or reduction of any benefit provided to
Executive prior to the date hereof.   In the event of a conflict between the
provisions of this Amendment No. 3 and the Employment Agreement, this
Amendment No. 3 shall be controlling.

 

 

	
   

  	
  RITE AID CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert B. Sari

  
	
   

  	
   

  	
  Robert B. Sari

  
	
   

  	
   

  	
  Executive Vice President,

  
	
   

  	
   

  	
  General Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Mary F. Sammons

  
	
   

  	
   

  
	
   

  	
  /s/ Mary F. Sammons

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