Document:

EX-10.7

 Exhibit 10.7 

June 30, 2014 
 Brenton L. Saunders 

c/o Forest Laboratories, Inc. 
 909 Third Avenue 

New York, New York 10022 
 Dear Mr. Saunders: 

Actavis, Inc., a Nevada corporation (the “Company”) and a wholly-owned subsidiary of Actavis plc, an Irish public limited company
(“Actavis plc”), is delighted to extend to you an offer of employment by the Company. If you accept this offer of employment, you shall serve as President and Chief Executive Officer of the Actavis Group. You will not be an employee
of Actavis plc and will at all times be an employee of the Company. During the Agreement Term (as defined below), you shall have all duties customary for the Chief Executive Officer of a publicly traded company of like size to Actavis plc. In
connection with your appointment as Chief Executive Officer of the Actavis Group, you shall also be nominated for election to the Board of Directors of Actavis plc (the “Board”) during the Agreement Term, unless such nomination is
contrary to applicable law. If you accept this offer, your start date shall be July 01, 2014 (the “Effective Date”) and this agreement (the “Agreement”) shall terminate on December 31, 2019 (the
“Agreement Term”), unless earlier terminated or extended in writing in accordance with the provisions of this Agreement. On or prior to the date on which Actavis plc holds its 2015 annual meeting of the stockholders of Actavis plc,
the Board shall use its commercially reasonable best efforts to cause you to be nominated and elected to serve as a member of the Board. This Agreement serves as confirmation of our offer on the terms and subject to the conditions set forth below.
You and the Company agree that your employment with the Company constitutes “at-will” employment and this employment relationship may be terminated at any time, upon written notice to the other party, for any reason, at the option of
either you or the Company, as set forth in Section 3(a). 
 The elements of your employment package are as follows: 

 

	 	1.	Location. Your principal office shall be at the Company’s U.S. administrative headquarters, though you shall be expected to perform your duties at, and travel to, such other offices of the Company and its
subsidiaries and controlled affiliates, and elsewhere, as required to fulfill your duties and obligations as President and Chief Executive Officer of the Actavis Group. 

 

	 	2.	Compensation and Benefits. 

  

	 	(a)	Annual Base Salary. You shall receive an annual base salary of $1,000,000 (“Base Salary”), paid in accordance with the Company’s customary payroll practices. Starting with fiscal year 2015
and consistent with the Company’s regular practices for reviewing base salaries paid to other executive officers of the Company, the Compensation Committee of the Board (the “Compensation Committee”) shall periodically review
your Base Salary in light of competitive practices, the base salaries paid to other executive officers of the Company, and your performance, and may, in its discretion, increase the Base Salary by an amount it determines to be appropriate.

  

	 	(b)	 Annual Incentive Award. You shall be eligible to participate in Actavis plc’s Annual Cash Incentive Plan and any successor plan thereto
throughout the Agreement Term and receive an annual cash incentive (an “Annual Bonus”) for 

	 	
each fiscal year of the Company during which you are employed, with a target Annual Bonus opportunity of 150% of your Base Salary (the “Target Bonus”), subject to adjustment of
between 0% and 225% of your Target Bonus. The actual amount of your Annual Bonus, if any, shall be based upon the attainment or surpassing of corporate financial targets and broad strategic initiatives previously approved by the Compensation
Committee, in consultation with you, no later than the first quarter of each fiscal year. The Annual Bonus shall be paid by no later than 74 days following the end of the fiscal year in respect of which it is earned. Such Annual Bonus shall be
prorated for the portion of fiscal year 2014 during which you are employed by the Company and shall be based on the same financial metrics used to determine annual bonuses for other senior executives of the Company in respect of fiscal year 2014 and
such other individual performance objectives as shall be established by the Compensation Committee for you. 

  

	 	(c)	Long-Term Incentive Awards. As an inducement to commence employment with the Company, on the Effective Date, you shall be granted (i) options (the “Options”) to purchase ordinary shares of
Actavis plc, par value $0.0001 per share (the “Ordinary Shares”), having an aggregate grant date value of $8,550,000 (determined based on the Black-Scholes valuation model assuming each of dividend yield, risk-free interest rate,
and stock price volatility as measured on the date of grant, and as otherwise determined in a manner consistent with the methodology used by Actavis plc in its most recent financial statements), and (ii) a target award of performance-based
restricted stock units in respect of Ordinary Shares (“Performance RSUs”) having an aggregate grant date value of $25,650,000, based the closing price of an Ordinary Share on the New York Stock Exchange on the date of grant. The
Options and the Performance RSUs shall be subject to such terms and conditions as approved by the Compensation Committee, which shall not be less favorable to you than the terms afforded to other senior executives, as well as the Amended and
Restated 2013 Incentive Award Plan (as amended from time to time) and the related Notice of Grant and Signature Page for the Options and Performance RSUs. 

  

	 	(d)	Merger Success Award. You shall be eligible to receive a performance-based award under the Company’s Amended and Restated 2013 Incentive Award Plan (the “Merger Success Award”) adopted by Actavis
plc, with a target award of $15,000,000 (the “Merger Success Award Target Award”), up to a maximum of 200% of the Merger Success Award Target Award. The goals under the Merger Success Award will be established by the Compensation
Committee and communicated to you in writing, and the payment of the Merger Success Award shall be in a form approved by the Compensation Committee, which shall not be less favorable to you than the terms afforded to other senior executives, subject
to the Amended and Restated 2013 Incentive Award Plan (as amended from time to time) and related Notice of Grant and Signature Page. 

  

	 	(e)	Vacation. You shall be entitled to five weeks of vacation annually, with any unused vacation time forfeited at the end of the year in respect of which it was accrued. 

 

	 	(f)	Employee Benefits. During your employment with the Company, you shall be eligible for employee benefits and perquisites, including medical and dental coverage, life insurance and disability insurance, provided to
other senior executives of the Company generally from time to time. 

  
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	 	(g)	Perquisites. During your employment with the Company, the Company shall provide you with (i) financial and tax planning services, per the applicable Company policy, (ii) an automobile and a driver and
(iii) any other benefits as are made available to other senior executives of the Company generally from time to time. You (including your spouse and other immediate family members and guests when accompanying you) shall also be entitled to up
to $110,000 per calendar year of private air transportation for personal use during the Agreement Term that provides you with security and productivity to address bona fide business-oriented security concerns and productivity needs. The Company
shall, at the Company’s expense, make available to you, the Company or other private aircraft for business and personal use at your reasonable discretion (and subject to the monetary limits on personal use in the preceding sentence). The value
of the personal use of any such aircraft shall be determined by the Company’s accountants in accordance with applicable proxy reporting and other laws and regulations, and shall be based upon the actual incremental costs of such use (for
example, per air hour charges, fuel, catering and other related charges), but shall not include depreciation, management fees, or other fixed costs unless required by law. In the event you exceed the $110,000 per calendar year limit in incremental
costs for personal aircraft usage, you shall promptly (and in the same fiscal year as the incremental usage occurred) reimburse the Company for the amount of the overage. The Company shall report the value of your personal use of any Company or
other private aircraft paid by the Company in your W-2 (or similar annual reporting form) filed with the Internal Revenue Service and applicable state and local taxing authorities and in accordance with the provisions of the Treasury Regulations
promulgated under the Internal Revenue Code of 1986, as amended, or any successor thereto, as may be in effect from time to time (the “Code”). The Company shall comply with all applicable laws and regulations of the Securities and
Exchange Commission, Federal Aviation Administration, Internal Revenue Service and other agencies and offices with respect to the calculation and reporting of the value of any personal aircraft use by you, and shall provide your accountants with a
reasonable opportunity to review and comment on such calculation methods. Within forty five (45) days after the end of each calendar quarter during the Agreement Term, the Company shall provide you with a report showing its calculation of the
value of any personal travel by you and your immediate family during the preceding quarter. 

  

	 	(h)	Expenses. 

  

	 	(i)	You shall be reimbursed for all customary business expenses incurred by you in the course of performing the duties of your position in accordance with the Company’s policies, as in effect from time to time.

  

	 	(ii)	 The Company will reimburse you for reasonable costs incurred in traveling from your current residence to the Company’s corporate headquarters in
the event the Company headquarters relocate outside of a seventy-five (75) mile radius of the city limits of Parsippany, New Jersey, including, if necessary, airfare and rental expenses of an executive apartment. If, at any time during the
Agreement Term, you 

  
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shall agree to relocate from your current residence, you shall be reimbursed for reasonable expenses incurred in connection with such relocation pursuant to the Company’s then existing
relocation policy applicable to other senior executives of the Company. If no such policy shall then exist, the parties hereto shall negotiate in good faith a reasonable relocation package for you. 

 

	 	3.	Termination of Employment. 

  

	 	(a)	Termination. The Company may terminate your employment at any time upon written notice to you. You may resign your employment at any time upon at least thirty (30) days’ prior written notice to the
Company, unless such termination is for Good Reason (as defined below), in which case you may resign upon written notice to the Company, subject to any applicable Cure Period (as defined below). Your employment with the Company shall automatically
terminate upon your death or Disability (as defined below). Upon your termination of employment for any reason, you shall resign from all positions with the Company and its affiliates (including any positions on the board of directors of the
Company, Actavis plc and their affiliates) unless otherwise requested by the Company. Upon termination of your employment for any reason, you shall be entitled to receive any and all amounts which are vested or which, at or subsequent to the date of
your termination, you are otherwise entitled to receive by law or under the terms of or in accordance with any plan, policy, practice or program of, or any contract or agreement with, the Company or any of its subsidiaries, including, without
limitation, any rights under any long-term incentive awards (including, but not limited to, those referenced in Section 2(c) and 2(d) hereof) or other equity-based awards held by you at the date of such termination. 

 

	 	(b)	Severance Benefits for the Period Commencing on the Effective Date and Ending on the Third Anniversary of the Effective Date. If (i) the Company terminates your employment without Cause (as defined below) or
(ii) you resign your employment with the Company for Good Reason (together, a “Qualifying Termination”) at any time during the period commencing on the Effective Date and ending on the third (3rd) anniversary of the Effective Date, then, subject to (A) your execution, delivery, and non-revocation of a general release of claims in favor of the Company and its affiliates in a form
prepared by the Company that shall contain provisions that are reasonable and customary and not less favorable to you than those used by the Company in the ordinary course of business and consistent with past practices (the
“Release”) within sixty (60) days following the effective date of your termination of employment (the “Termination Date”), and (B) your continued compliance with the covenants set forth in this Agreement,
you will be entitled to receive the benefits as set forth in Section 6(a) of that certain Employment Agreement, by and between you and Forest Laboratories, Inc. dated as of October 1, 2013 (the “Change of Control
Agreement”). In no event shall the severance benefits payable to you under this Section 3(b), if any, be less than the severance benefits that would have been payable under the Change of Control Agreement had your employment terminated
at the Effective Date and without regard to any changes in your compensation effective pursuant to this Agreement. 

  
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	 	(c)	Severance Benefits for the Period Commencing on the Third Anniversary of the Effective Date through the End of the Agreement Term. If you experience a Qualifying Termination at any time during the period
commencing on the third (3rd) anniversary of the Effective Date through the end of the Agreement Term, then, subject to (i) your execution, delivery, and non-revocation of the Release
within sixty (60) days following the Termination Date, and (ii) your continued compliance with the covenants set forth in this Agreement, (A) you shall be entitled to receive an amount equal to two times the sum of (I) your
then-current Base Salary and (II) your Target Bonus, payable in a lump sum in cash within ten (10) days commencing on the date that is sixty (60) days after the Termination Date and (B) the Company shall continue health care coverage
(medical and dental) for you and any of your eligible dependents for the twenty-four (24) month period following your Termination Date, or until you become eligible for health care coverage from another employer, whichever is earlier, with such
coverage to be on the same terms and conditions and at the same cost as for active senior executive officers of the Company, provided that the cost thereof borne by the Company will be reported to the applicable tax authorities as taxable income to
you to the extent necessary to avoid tax penalties to either you or the Company. 

  

	 	(d)	Severance Benefits for the Period Commencing on the Third Anniversary of the Effective Date through the End of the Agreement Term in Connection with a Change of Control. If you experience a Qualifying Termination
(i) at any time during the period commencing on the third (3rd) anniversary of the Effective Date through the end of the Agreement Term and (ii) such Qualifying Termination occurs
within ninety (90) days prior to or twelve (12) months following a Change of Control (as defined below), then, subject to (A) your execution, delivery, and non-revocation of the Release within sixty (60) days following the
Termination Date, and (B) your continued compliance with the covenants set forth in this Agreement, (I) you shall be entitled to receive an amount equal to three times the sum of (x) your then-current Base Salary and (y) your
Target Bonus, payable in a lump sum in cash within ten (10) days commencing on the date that is sixty (60) days after the Termination Date, (II) the Company shall continue health care coverage (medical and dental) for you and any of your
eligible dependents for the thirty-six (36) month period following your Termination Date, or until you become eligible for health care coverage from another employer, whichever is earlier, with such coverage to be on the same terms and
conditions and at the same cost as for active senior executive officers of the Company, provided that the cost thereof borne by the Company will be reported to the applicable tax authorities as taxable income to you to the extent necessary to avoid
tax penalties to either you or the Company and (III) any Actavis plc equity awards held by you will be treated in accordance with the terms set forth in the applicable award agreement. 

 

	 	(e)	 Expiration of the Agreement Term. At least three (3) months prior to the expiration of the Agreement Term, each of you and the Company
shall notify the other party of your intention whether to extend the Agreement Term and of any proposed changes to the terms and conditions contained in the Agreement. In the event you and the Company have duly notified each other of the intent to
extend the Agreement Term but have not executed a new employment agreement (or amendment to this Agreement), you shall continue in your employment with the 

  
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Company subject to all the terms of the then-expired Agreement until such time as you and the Company mutually agree and execute a new employment agreement or amendment to this Agreement, or
until either you or the Company terminates your employment by providing at least thirty (30) days prior written notice of termination. If, at the conclusion of the Agreement Term or at any subsequent time thereafter when you remain employed by
the Company, the Company elects not to continue your employment on substantially the same terms in effect at the expiration of this Agreement or on other mutually agreeable terms, you shall be paid all earned but unpaid amounts, all unreimbursed
expenses and a pro rata bonus (based on your then current Target Bonus) for the year in which your employment is terminated and shall receive severance benefits as set forth in Section 3(c) of this Agreement. Any pro rata bonus to be paid to
you pursuant to the immediately preceding sentence shall be calculated and paid after the end of such fiscal year for which it was earned, and shall be calculated based upon actual Company performance. If, at the end of the Agreement Term, you
retire from the Company or do not agree to enter into a new employment agreement or amendment to this Agreement extending your employment for a period of at least three years on substantially the same terms in effect at the expiration of this
Agreement, you shall be paid all earned but unpaid amounts, all unreimbursed expenses and a pro rata bonus (based on your then current Target Bonus) for the year in which your employment is terminated, but shall not receive any additional severance
benefits. Any pro rata bonus to be paid to you pursuant to the immediately preceding sentence shall be calculated and paid after the end of such fiscal year for which it was earned, and shall be calculated based upon actual Company performance.
Notwithstanding anything herein to the contrary, in the event the Company elects not to continue your employment as contemplated by this Section 3(e), any equity awards granted to you prior to the date of your termination of employment with the
Company, and which remain unvested as of the date of your employment termination, shall continue to vest in accordance with their current vesting schedule and performance criteria as long as (a) you have executed and delivered to the Company
the Release, and (b) you do not breach the covenants set forth in Section 5 of this Agreement prior to those equity awards becoming fully vested. Any equity awards which cease to vest pursuant to the immediately preceding sentence shall be
immediately forfeited. 

  

	 	(f)	Certain Definitions. 

  

	 	(i)	 For purposes of this Agreement, “Cause” shall mean your (A) refusal to perform or substantially perform your duties with the
Company, other than due to periods of illness, injury or incapacity, or to follow the lawful instructions of the Board; (B) illegal conduct or gross misconduct; (C) material breach of your obligations under this Agreement, including
without limitation the covenants in Section 5 of this Agreement; (D) conviction of, or entry of a plea of guilty or nolo contendere with respect to, a felony or a crime involving moral turpitude; (E) prohibition or restriction from
performing any material portion of your duties by applicable law; or (F) a willful breach of the material policies of the Company to which you are subject and which have been previously made available to you; provided, however, that, prior to
effecting any termination for Cause in respect of conduct described in any of clauses 

  
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(A), (C), (E), and (F) above, the Company shall provide you with reasonably detailed written notice of the conduct alleged to give rise to Cause and you will have thirty (30) days
following receipt of such written notice during which you may remedy the condition if such condition is reasonably subject to cure, and in the event that you shall remedy the condition that would otherwise have given rise to Cause during the
applicable cure period, such conduct shall not constitute Cause. 

  

	 	(ii)	For purposes of this Agreement, “Disability” means your absence from your duties with the Company on a full-time basis for one hundred twenty (120) consecutive calendar days or one hundred eighty
(180) calendar days within any twelve (12) month period as a result of incapacity due to mental or physical illness. 

  

	 	(iii)	For purposes of this Agreement, “Good Reason” means, in the absence of your written consent, (A) a material diminution in your Base Salary; (B) the assignment to you of duties that are
materially inconsistent with your position, duties, or responsibilities; (C) any change in the geographic location at which you perform your services to the Company outside of a seventy-five (75) mile radius of the city limits of
Parsippany, New Jersey; or (D) any other material breach of this Agreement; provided that (I) in order to invoke a termination for Good Reason, you shall provide written notice to the Company of the existence of one or more of the
conditions described in clauses (A) through (D) within thirty (30) days following your knowledge of the initial existence of such condition or conditions, specifying in reasonable detail the conditions constituting Good Reason, and
the Company shall have thirty (30) days following receipt of such written notice (the “Cure Period”) during which it may remedy the condition if such condition is reasonably subject to cure, and (II) in the event that the
Company fails to remedy the condition constituting Good Reason during the applicable Cure Period, your termination of employment must occur, if at all, within thirty (30) days following the expiration of such Cure Period in order for such
termination as a result of such condition to constitute a termination for Good Reason. 

  

	 	(iv)	 For purposes of this Agreement, “Change of Control” means (a) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”), (i) of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of Ordinary Shares of Actavis plc which, when added to the common stock beneficially owned by such Person, represents more than fifty percent (50%) of either (A) the total fair market value of the then outstanding
Ordinary Shares of Actavis plc (the “Outstanding Actavis plc Ordinary Shares”) or (B) the combined voting power of the then outstanding voting securities of Actavis plc entitled to vote generally in the election of directors
(the “Outstanding Actavis plc Voting Securities”), or (ii) during any 12-month period, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)

  
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of securities of Actavis plc representing fifty percent (50%) or more of the Outstanding Actavis plc Voting Securities; provided, however, that for purposes of this subsection (a), the
following acquisitions of securities of Actavis plc shall not constitute a Change of Control: (V) any acquisition directly from Actavis plc, (W) any acquisition by Actavis plc, (X) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by Actavis plc or any corporation controlled by Actavis plc, (Y) any acquisition made by a Person who is eligible under the provisions of Rule 13d-1 under the Exchange Act as in effect on the date hereof
to report such acquisition on Schedule 13G, or (Z) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 3(f)(iv); or
(b) individuals who, as of the date hereof, constitute the board of directors of Actavis plc (the “Incumbent Board”) cease for any reason to constitute at least a majority of the board of directors of Actavis plc; provided,
however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by Actavis plc’s shareholders, was approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest
with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the board of directors of Actavis plc; or (c) consummation of a reorganization, merger
or consolidation or sale or other disposition of all or substantially all (defined as more than 50% of the total gross fair market value) of the assets of Actavis plc (a “Business Combination”), in each case unless, following such
Business Combination, (i) Persons who were the beneficial owners, respectively, of the Outstanding Actavis plc Ordinary Shares and Outstanding Actavis plc Voting Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than fifty percent (50%) of the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the
corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns Actavis plc or all or substantially all of Actavis plc’s assets either directly or through one or more
subsidiaries), (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of Actavis plc or such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, more than fifty percent (50%) of the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and
(iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the
board of directors of Actavis plc providing such Business Combination. 

  
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	 	4.	Certain Reductions of Payments. 

  

	 	(a)	Reduced Amount. Anything in this Agreement to the contrary notwithstanding, in the event that the Accounting Firm (as defined in Section 4(e)) shall determine that receipt of all Payments (as defined in
Section 4(e)) would subject you to tax under Section 4999 of the Code, the Accounting Firm shall determine whether some amount of Payments meets the definition of “Reduced Amount” (as defined in Section 4(e)). If the
Accounting Firm determines that there is a Reduced Amount, then the aggregate Payments shall be reduced to such Reduced Amount. 

  

	 	(b)	Determinations. If the Accounting Firm determines that the aggregate Payments should be reduced to the Reduced Amount, the Company shall promptly give you notice to that effect and a copy of the detailed
calculation thereof, and you may then elect, in your sole discretion, which and how much of the Payments shall be eliminated or reduced (as long as after such election the Present Value (as defined in Section 4(e)) of the aggregate Payments
equals the Reduced Amount); provided that you shall not be permitted to elect to reduce any Payment that constitutes “nonqualified deferred compensation” for purposes of Section 409A of the Code, and shall advise the Company in
writing of your election within ten (10) days of your receipt of notice. If no such election is made by you within such ten (10) day period or if the election made by you within such ten (10) day period does not sufficiently reduce
the Payments to the Reduced Amount, the Company shall reduce the Payments (or, the remaining Payments) in the following order. For any Payments made for the period of employment commencing on the Effective Date through the third (3rd) anniversary of the Effective Date: (i) by reducing amounts payable pursuant to Section 6(a)(i)(B) of the Change of Control Agreement (and, to the extent applicable,
Section 6(a)(i)(A)(2) of the Change of Control Agreement), then (ii) by reducing payments payable in respect of equity awards subject to performance-based vesting criteria, then (iii) by reducing amounts payable pursuant to
Section 6(a)(ii) of the Change of Control Agreement, then (iv) by reducing amounts payable pursuant to Section 6(a)(iii) of the Change of Control Agreement, then (v) by reducing amounts payable pursuant to Section 6(a)(iv)
of the Change of Control Agreement, and then (vi) by reducing payments payable in respect of equity awards subject to time-based vesting criteria. For any Payments made for the period of employment commencing on the third (3rd) anniversary of the Effective Date through the end of the Agreement Term: (i) by reducing amounts payable pursuant to Section 3(d)(I) of this Agreement, then (ii) by reducing
amounts payable pursuant to Section 3(d)(II) of this Agreement, and then (iii) by reducing amounts payable pursuant to Section 3(d)(III) of this Agreement. All determinations made by the Accounting Firm under this Section 4 shall
be binding upon the Company and you and shall be made within sixty (60) days of your Date of Termination. In connection with making determinations under this Section 4, the Accounting Firm shall take into account the value of any
reasonable compensation for services to be rendered by you before or after the Change of Control, including any noncompetition provisions that may apply to you and the Company shall cooperate in the valuation of any such services, including any
noncompetition provisions. 

  

	 	(c)	 Overpayments; Underpayments. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial
determination by the 

  
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Accounting Firm hereunder, it is possible that Payments will have been made by the Company that should not have been made (“Overpayment”) or that additional Payments that will
have not been made by the Company could have been made (“Underpayment”), in each case, consistent with the calculation of the Reduced Amount hereunder. In the event that the Accounting Firm, based upon the assertion of a deficiency
by the Internal Revenue Service against either the Company or you that the Accounting Firm believes has a high probability of success, determines that an Overpayment has been made, any such Overpayment paid or distributed by the Company to or for
your benefit shall be repaid by you to the Company together with interest at the Applicable Federal Rate provided for in Section 7872(f)(2) of the Code; provided, however, that no such repayment shall be required if and to the extent such
payment would not either reduce the amount on which you are subject to taxation under Section 1 and Section 4999 of the Code or generate a refund of such taxes. In the event that the Accounting Firm, based upon controlling precedent or
substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for your benefit together with interest at the Applicable Federal Rate provided for in Section 7872(f)(2) of
the Code. 

  

	 	(d)	Fees and Expenses. All fees and expenses of the Accounting Firm in implementing the provisions of this Section 4 shall be borne by the Company. 

 

	 	(e)	Certain Definitions. The following terms shall have the following meanings for purposes of this Agreement: 

  

	 	(i)	A “Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for your benefit, whether paid or payable pursuant to
this Agreement or otherwise; 

  

	 	(ii)	“Net After-Tax Receipt” shall mean the Present Value of a Payment net of all taxes imposed on you with respect thereto under Sections 1, 3121 and 4999 of the Code and under applicable state and
local laws, determined by applying the highest marginal rate under Section 1 of the Code and under state and local laws which applied to your taxable income for the immediately preceding taxable year, or such other rate(s) as you shall certify,
in the your sole discretion, as likely to apply to you in the relevant tax year(s); 

  

	 	(iii)	“Accounting Firm” shall mean such nationally recognized certified public accounting firm as may be designated by the Company; 

 

	 	(iv)	“Present Value” of a Payment shall mean the present value as of the date of the change of control for purposes of Section 280G of the Code of the portion of such Payment that constitutes a
“parachute payment” under Section 280G(b)(2), as determined by the Accounting Firm for purposes of determining whether and to what extent the excise tax under Section 4999 of the Code will apply to such Payment; and

  

	 	(v)	 “Reduced Amount” shall mean the amount of Payments that (A) has a Present Value that is less than the Present Value of all
Payments and 

  
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(B) results in aggregate Net After-Tax Receipts for all Payments that are greater than the Net After-Tax Receipts for all Payments that would result if the aggregate Present Value of
Payments were any other amount that is less than the Present Value of all Payments. 

  

	 	5.	Covenants. 

  

	 	(a)	Outside Activities. Except with the prior written consent of the Board, as appropriate, you will not during the Agreement Term undertake or engage in any other employment, occupation or business enterprise, other
than ones in which you are a passive investor. You may engage in civic and not-for-profit activities and manage your personal business affairs so long as such activities do not materially interfere with the performance of your duties hereunder. In
addition, during the Agreement Term, you agree not to acquire, assume or participate in, directly or indirectly, any position, investment or interest known by you to be adverse to or in conflict with the interest of the Company, its business or
prospects, financial or otherwise. By way of clarification, nothing contained in this Agreement shall prevent you from holding, for investment purposes only, no more than one percent (1%) of the capital stock of any publicly traded company.

  

	 	(b)	Confidentiality. You agree that, during your employment with the Company and at all times thereafter, you will hold for the benefit of the Company all secret or confidential information, knowledge, or data
relating to the Company or any of its affiliates, and their respective businesses, which has been obtained by you during your employment by, or service with, the Company, and which shall not be or become public knowledge (other than by acts by you
or your representatives in violation of this Agreement). Except in the good-faith performance of your duties for the Company, you will not, without the prior written consent of the Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge, or data to anyone other than the Company and those designated by it. In addition, you agree to execute the standard employee confidentiality and intellectual property agreement prior to the
Effective Date. 

  

	 	(c)	Nonsolicitation. You agree that, while you are employed by the Company and during the one (1) year period following the termination of your employment with the Company (the “Restricted
Period”) for any reason, you will not directly or indirectly, (i) solicit any individual who is, on the Termination Date (or was, during the six (6) month period prior to such date), employed by the Company or any of its
affiliates to terminate or refrain from renewing or extending such employment or to become employed by or become a consultant to any other individual or entity other than the Company or one of its affiliates, (ii) initiate discussions with any
such employee or former employee for any such purpose or authorize or knowingly cooperate with the taking of any such actions by any other individual or entity, or (iii) induce or attempt to induce any then current customer, any person or
entity as to which you were personally involved, during the six (6) month period prior to your Termination Date, in the Company’s efforts to secure such person or entity as a customer, or any supplier, licensee, or other business associate
of the Company or any its affiliates to cease doing business with the Company or such an affiliate, or to interfere with the relationship between any such customer, person or entity, supplier, licensee, or business associate, on the one hand, and
the Company or any of its affiliates, on the other hand. 

  
 11 

	 	(d)	Noncompetition. In consideration for the Company entering into this Agreement, including without limitation in respect of the payments set forth in Section 3 of this Agreement, you agree that, during the one
(1) year period following any termination of your employment that entitles you to receive the severance benefits payable under Section 3, you will not engage in Competition (as defined below). In addition, at the Company’s option, in
consideration for the payment of the sum of (i) your then-current Base Salary and (ii) your Target Bonus, payable in a lump sum in cash within ten (10) days commencing on the date that is sixty (60) days after the Termination
Date, you agree that, during the one (1) year period following any termination of your employment that does not entitle you to receive the severance benefits payable under Section 3, you will not engage in Competition. You will be deemed
to be engaging in “Competition” if you, directly or indirectly, in any jurisdiction in which the Company or any of its affiliates conducts business, own, manage, operate, control, or participate in the ownership, management,
operation, or control of or provide services as an officer, employee, partner, director, consultant, or otherwise in respect of any business (whether through a corporation or other entity) that is engaged in the development, manufacture, and sale
(other than at the retail level) of branded and generic drug products and that is in material and direct competition with any of the five (5) products that, over the four (4) fiscal quarters immediately preceding your Termination Date,
accounted for the greatest amount of revenues for the Company or any of its affiliates, taken as a whole. Ownership for personal investment purposes only of less than five percent (5%) of the voting stock of any publicly held corporation or
less than five percent (5%) of any privately held business (without any other involvement in the management or operation of such business) shall not constitute a violation hereof. 

 

	 	(e)	Non-Disparagement. Without limiting any other of your or the Company’s obligations pursuant to this Agreement, each of you and the Company hereby covenant and agree that, except as may be required by
applicable law, during the Agreement Term and the twenty four (24) month period following your termination of employment, each of you and the Company shall not make any statement, written or verbal, in any forum or media, or take any other
action in disparagement of, (in your case) the Company or its subsidiaries or affiliates or their respective past or present products, officers, directors, employees or agents or (in the case of the Company) you. Nothing in this Section 5(e)
shall preclude you or the Company from providing truthful testimony or other evidence or documents in connection with (i) any action to enforce either party’s rights hereunder or under any other agreement between the parties or
(ii) in response to any judicial or administrative subpoena, or from otherwise participating in any investigation or inquiry being conducted by a judicial or administrative body having competent jurisdiction. 

 

	 	(f)	 Cooperation. During and for twenty four (24) months following your employment with the Company, you shall assist and cooperate with the
Company upon reasonable advance notice (which shall include due regard to the extent reasonably feasible for your then employment or other business obligations and prior commitments) with respect to any investigation or the Company’s (or an

  
 12 

	 	
affiliate’s) defense or prosecution of any existing or future claims or litigations or other proceeding relating to matters in which you were involved or had knowledge by virtue of your
employment with the Company. The Company will reimburse you for reasonable out-of-pocket travel costs and expenses incurred (in accordance with Company policy) as a result of providing such requested assistance, upon the submission of the
appropriate documentation to the Company. 

  

	 	(g)	Enforcement; Remedies. You understand that the provisions of this Section 5 do not impose a greater restraint than is necessary to protect the goodwill or other business interests of the Company, are
reasonable limitations as to scope and duration, and are not unduly burdensome to you. You further agree that the Company would be irreparably harmed by any actual or threatened breach of the covenants set forth in this Section 5 and that, in
addition to any other remedies at law, including money damages and the right to withhold payments otherwise due to you, the Company shall be entitled to seek a preliminary injunction, temporary restraining order, or other equivalent relief,
restraining you from any actual or threatened breach of this Agreement in any court that may have competent jurisdiction over the matter. With respect to any provision of this Section 5 finally determined by a court of competent jurisdiction to
be unenforceable, you hereby agree that a court shall reform such provisions, including the duration or scope of such provisions, as the case may be, so that they are enforceable to the maximum extent permitted by law. If any of the covenants set
forth in this Section 5 are determined to be wholly or partially unenforceable in any jurisdiction, such determination shall not be a bar to or in any way diminish the rights of the Company to enforce any such covenant in any other
jurisdiction. 

  

	 	6.	Indemnification and Advancement. In the event you are made, or threatened to be made, a party to any legal action or proceeding, by reason of the fact that you are or were an employee or officer of the Company or
serve or served any other entity in any capacity at the Company’s request, you shall be fully indemnified by the Company, and the Company shall advance your related expenses when and as incurred, including, but not limited, to attorney fees to
the fullest extent permitted or authorized by the certificate of incorporation, bylaws or indemnification agreements maintained by the Company or such other entity you have served at the request of the Company. During your employment with the
Company and thereafter so long as you may have liability arising out of your service as an officer or director of the Company, the Company agrees to continue and maintain a directors and officers liability insurance policy covering you with coverage
no less than that available to active directors and officers of the Company, as described above. 

  

	 	7.	Representations. You represent and warrant to the Company that, as of the Effective Date, you are not a party to any agreement, written or oral, containing any noncompetition or nonsolicitation provisions or any
other restrictions (including, without limitation, any confidentiality provisions) that would result in any restriction on your ability to accept and perform this or any other position with the Company or any of its affiliates. 

  
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	 	8.	Miscellaneous. 

  

	 	(a)	Entire Agreement; Amendment. This Agreement shall supersede any other agreement or understanding, written or oral, with respect to the matters covered herein, except with respect to the sections of the Change of
Control Agreement referenced in Section 3(b) of this Agreement. Notwithstanding the foregoing, nothing in this Agreement shall be construed to modify, limit or impair in any way any rights that you have in respect of any equity awards that you
held in connection with your employment with Forest Laboratories prior to the Effective Date, which awards shall continue in effect and/or be payable or settled in accordance with the terms thereof. This Agreement may not be amended or modified
other than by a written instrument signed by the parties hereto; provided, however, that, notwithstanding the foregoing, the Company may amend or modify this Agreement if it determines it is necessary to do so in order to comply with
applicable legal and/or regulatory requirements or guidance or any changes in applicable law, rules, or regulations or in the formal and conclusive interpretation thereof by any regulator or agency of competent jurisdiction. 

 

	 	(b)	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, and this Agreement shall be construed
as if such invalid or unenforceable provision were omitted (but only to the extent that such provision cannot be appropriately reformed or modified). 

  

	 	(c)	 Tax Matters. The Company may withhold from any amounts payable to you such federal, state, local, or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation. It is intended that the payments and benefits provided under this Agreement shall comply with the provisions of Section 409A of the Code and the regulations relating thereto, or an
exemption to Section 409A, and this Agreement shall be interpreted accordingly. Any payments or benefits that qualify for the “short-term deferral” exception or another exception under Section 409A shall be paid under the
applicable exception. Each payment under this Agreement shall be treated as a separate payment for purposes of Section 409A. All payments that constitute “nonqualified deferred compensation” under Section 409A that are to be made
upon a termination of employment under this Agreement may only be made upon a “separation from service” under Section 409A. In addition, to the extent that any payments of “nonqualified deferred compensation” due under this
Agreement are subject to the effectiveness of the Release, and the period for executing, delivery, and not revoking such Release begins and ends in different tax years for you, all such “nonqualified deferred compensation” shall be paid or
settled in the later taxable year. If you become entitled to a payment of “nonqualified deferred compensation” as a result of your termination of employment and at such time you are a “specified employee” (within the meaning of
Section 409A and as determined in accordance with the methodology established by the Company as in effect on the Termination Date), such payment shall be postponed to the extent necessary to satisfy Section 409A, and any amounts so
postponed shall be paid in a lump sum on the first (1st) business day that is six (6) months and one (1) day after your separation from service (or any earlier date of your death).
If the compensation and benefits provided under this Agreement would subject you to taxes or penalties under Section 409A, the Company and you shall cooperate diligently to amend the terms of this

  
 14 

	 	
Agreement to avoid such taxes and penalties, to the extent possible under applicable law; provided that in no event shall the Company be responsible for any Section 409A taxes or penalties
that arise in connection with any amounts payable or benefits provided under this Agreement or otherwise. 

  

	 	(d)	Successors. This Agreement is personal to you and without the prior written consent of the Company will not be assignable by you. This Agreement and any rights and benefits hereunder will inure to the benefit of
and be enforceable by your legal representatives, heirs, or legatees. This Agreement and any rights and benefits hereunder will inure to the benefit of and be binding upon the Company and its successors and assigns. 

 

	 	(e)	Governing Law. The provisions of this Agreement shall be construed in accordance with the internal laws of the State of New Jersey, without regard to the conflict of law provisions of any state.

  

	 	(f)	Arbitration. To provide a mechanism for rapid and economical dispute resolution, you and the Company agree that except as provided in Section 5, any and all disputes, claims, or causes of action, in law or
equity, arising from or relating to this Agreement (including the Release) or its enforcement, performance, breach, or interpretation, will be resolved, to the fullest extent permitted by law, by final, binding, and confidential arbitration held in
the New York City, New York, metropolitan area (or such other major metropolitan region where the Company is then headquartered) and conducted by the American Arbitration Association, under its then-existing Employment Rules and Procedures. Nothing
in this Section 8(f) or in this Agreement is intended to prevent either you or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration. This Section 8(f) shall not
apply to any claims of violation of any federal or state employment discrimination laws. 

  

	 	(g)	Headings. The headings in this Agreement are for convenience of reference only and do not affect the interpretation of this Agreement. 

 

	 	(h)	Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which taken together constitute one and the same instrument.

  

	 	(i)	Attorneys’ Fees. If either party hereto brings any action or other proceeding to enforce his or its rights hereunder, the prevailing party in any such action or proceeding shall be entitled to recover his or
its reasonable attorneys’ fees and costs incurred in connection with such action or proceeding. The Company shall reimburse you for your reasonable attorneys’ fees incurred in connection with the negotiation and preparation of this
Agreement, not to exceed $15,000. 

  

	 	(j)	 Company Policies. You will be subject to all policies of the Company, including, without limitation, any stock ownership guidelines, the
Company’s anti-hedging policy and any additional anti-hedging policies applicable to senior executives of the Company, as each policy is adopted or amended from time to time. In addition, all equity awards (including any proceeds, gains or
other economic benefit actually or constructively received by you upon any receipt or exercise of 

  
 15 

	 	
any equity award or upon the receipt or resale of any Ordinary Shares of Actavis plc underlying an equity award) shall be subject to the provisions of any claw-back policy implemented by the
Company, including, without limitation, any claw-back policy adopted to comply with the requirements of applicable law, including without limitation the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations
promulgated thereunder, to the extent set forth in such claw-back policy and/or in the applicable equity award. 

 We are looking forward to
you joining the Company. We are excited about the important contributions you will make to the Company and look forward to your acceptance of our offer. 

[Remainder of the page left intentionally blank] 

  
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 Please sign your acceptance of the offer of employment as set forth in this Agreement and return it to me. If you
have any questions, please contact me as soon as possible. 
  

			
	Sincerely,
	
	ACTAVIS, INC.
		
	By:	 	 /s/ Patrick J. Eagan

		
	Name:	 	 Patrick J. Eagan

		
	Title	 	 Chief HR Officer—Global

  

	
	ACCEPTED AND AGREED:
	
	 /s/ Brenton L. Saunders

	Brenton L. Saunders

  
 17Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of the 24th day of March 2014 (the “Effective Date”) by and between Rite Aid Corporation, a Delaware corporation (the “Company”) and Dedra N. Castle (“Executive”).

 

WHEREAS, Executive desires to provide the Company with her 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 (1) year terms (the “Renewal Terms”) unless at least one hundred twenty (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 she 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 phrases “year during the Term” or similar language shall refer to each twelve (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 an Executive Vice President of the Company and shall have such officer level duties, responsibilities and authority as shall be assigned by the Company from time to time.  Executive shall devote her full working time, attention, knowledge and skills faithfully and to the best of her 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.  Contemporaneously with termination of Executive’s employment for any reason, Executive shall automatically resign from all offices and positions she holds with the Company or any subsidiary without any further action on the part of Executive or the Company.

 

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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 her personal investments and affairs, provided that Executive’s activities pursuant to clauses (i), (ii) or (iii) do not violate Sections 6 or 7 below or materially interfere with the proper performance of her duties and responsibilities under this Agreement.  Executive shall at all times be subject to, observe and carry out such rules, regulations, policies, directions, and restrictions as the Company may from time to time establish for officers of the Company or employees generally.

 

3.                                      Compensation.

 

3.1                               Base Salary.  During the Term, as compensation for her services hereunder, Executive shall receive a salary at the annualized rate of Four Hundred Twenty-Five Thousand Dollars ($425,000) per year (“Base Salary” as may be adjusted from time to time), 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 Company’s Board of Directors (the “Board”) or the Compensation Committee of the Board (the “Compensation Committee”) from time to time.  For the current fiscal year (FY 2015), Executive’s annual bonus opportunity pursuant to such plan shall equal seventy-five percent (75%) (the “Annual Target Bonus”) of the Base Salary, subject to proration.  For subsequent fiscal years, the Annual Target Bonus may be adjusted by the Compensation Committee.  Payment of any bonus earned shall be made in accordance with the terms of the Company’s annual bonus plan as in effect for the year for which the bonus is earned.

 

3.3                               Equity Awards.

 

(a)                                 On the Effective Date, the Executive will be granted shares of restricted Company Common Stock, par value $1.00 per share (“Company Stock”) valued at $425,000 (the “Restricted Stock”).  The number of shares of Restricted Stock shall be determined by dividing $425,000 by the closing price of the Company Stock on the Effective Date.  The Restricted Stock shall vest and become exercisable as to one-third (1/3) of the shares of the Restricted Stock on each of the first three (3) anniversaries from the date of grant; be subject to the acceleration, exercise and termination provisions set forth in Section 3.3(c) and Article 5 hereof; and otherwise be evidenced by and subject to the terms of the Company’s equity plans.

 

(b)                                 Per the approval of the Compensation Committee, Executive will be eligible to participate in the Company’s Senior Executive Equity Plan (the “SEEP”).

 

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Executive’s long term incentive factor will be based upon one hundred ten percent (110%) of Executive’s annual Base Salary.

 

(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 unvested portion of the Restricted Stock awarded pursuant to subsection (a) above then held by Executive shall immediately vest and all restrictions thereon shall lapse.  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 stock options and/or Restricted Stock that may be awarded to Executive from time to time may not be subject to an effective registration statement under the federal securities laws until sometime 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 4.2 (except termination for Cause), 5.3 and 5.5, the securities underlying the then vested and exercisable portion of any stock options are not subject to an effective registration statement, the ninety (90) day periods in Sections 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 shall be eligible 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 and 401(k) plans) in which management employees of the Company are generally eligible to participate, subject to satisfaction of any eligibility requirements and the other generally applicable terms of such plans.  Nothing in this Agreement shall prevent the Company from amending or terminating any employee benefit plans of the Company from time to time as the Company deems appropriate.

 

4.2                               Expenses.  During the Term, the Company shall reimburse Executive for any expenses reasonably incurred by her in furtherance of her 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 hereafter in effect (the “Code”).  The provisions of Section 14(b) shall apply to all reimbursements made under this Section 4.2.

 

4.3                               Vacation.  Executive shall be entitled to twenty (20) days of paid vacation during each year of the Term.  Vacation will replenish on Executive’s anniversaries and future increments will follow Company policy.

 

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4.4                               Automobile Allowance.  During the Term, the Company shall provide Executive with an automobile allowance of $1,000.00 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 $5,000.00.  The provisions of Section 14(b) shall apply to any payments or reimbursements made under this Section 4.5.

 

4.6                               Relocation Expenses.  Executive shall be entitled to benefits under the Company’s Executive Level relocation policy as from time to time in effect.

 

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; 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 (except for termination by the Company for Cause) 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. The provisions of Section 14(b) shall apply to any payments or reimbursements made under this Section 4.7.

 

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 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 (3) senior officers (one of which shall be Executive’s supervisor) 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 her position with the Company or any subsidiary, or failure to timely carry out any lawful 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 her duties; (iv) the commission by Executive of an act of fraud or dishonesty toward the Company or any subsidiary; (v) Executive’s misconduct or negligence 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.

 

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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 (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 notice 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.

 

(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 ninety (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 a thirty (30) day notice to the Company or such earlier date as the Company determines in its discretion and designates in writing.  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) the Accrued Benefits, (ii) an amount equal to two (2) years of Executive’s then Base Salary as of the date of termination of employment, such amount payable in equal installments pursuant to the Company’s 

 

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standard payroll procedures for management employees over a period of two (2) years following the date of termination of employment, and (iii) continued health insurance coverage for Executive and her immediate family for a period of two (2) years following the date of termination of employment.

 

(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 (2) 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 ninety (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 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 a thirty (30) day notice thereof or the Company may elect in its sole discretion to reduce or eliminate the notice period and pay the Executive her Base Salary for some or all of the notice period in lieu of notice.  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)-(iv), (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 B) of all other claims, cooperate with the Company in the event of litigation and fully comply 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 duties or responsibilities materially inconsistent with Executive’s status as an Executive Vice President of the Company; or

 

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(b)                                any decrease in Executive’s then Base Salary to which Executive has not agreed to 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 the subparagraphs a, b, or c within thirty (30) days of the initial existence of such condition, and the Company has not cured the condition within thirty (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 three (3) month anniversary 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 due to involuntary termination of Executive by the Company on account of Executive’s Total Disability (as defined below), subject to the requirements of applicable law:

 

(a)                                Executive or Executive’s estate, as the case may be, shall be entitled to receive (i) the Accrued Benefits, (ii) 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 her immediate family, as applicable, for a period of two (2) years 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 (2) 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 ninety (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 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 

 

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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)(i) performing one or more of the essential functions of her position for a period of not less than ninety (90) days in any twelve (12) month period and (ii) which is expected to be of permanent or indeterminate duration but expected to last at least twelve (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 ninety (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; provided, however, the indemnification obligations in Section 4.7 shall not survive expiration of the Term in the event of termination of Executive’s employment by the Company for Cause.

 

5.7                               Change in Control Best Payments Determination.  In the event the benefits described in Section 5.3(a) and (b) (the “Severance Benefits”) are payable to Executive in connection with a Change in Control and, if paid, could subject Executive to an excise tax under Section 4999 of the Code (the “Excise Tax”), then notwithstanding the provisions of Section 5.3(a) and (b), the Company shall reduce the Severance Benefits (the “Benefit Reduction”) under Section 5.3(a) and (b) by the amount necessary to result in the Executive not being subject to the Excise Tax if such reduction would result in the Executive’s “Net After Tax Amount” attributable to the Severance Benefits described in Section 5.3(a) and (b) being greater than it would be if no Benefit Reduction was effected.  For this purpose “Net After Tax Amount” shall mean the net amount of Severance Benefits Executive is entitled to receive under this Agreement after giving effect to all federal, state and local taxes which would be applicable to such payments, including, but not limited to, the Excise Tax.  The determination of whether any such Benefit Reduction shall be affected shall be made by a nationally recognized public accounting firm selected by the Company prior to the occurrence of the Change in Control and such determination shall be binding on both Executive and 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 her employment with the Company, its subsidiaries, affiliates and strategic partners, she will be exposed to

 

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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 her duties under this Agreement and in furtherance of the Company’s best interests), 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 not 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, it subsidiaries, affiliates and strategic partners (including any cell phones, pagers, credit cards, personal computers, 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 or one of its subsidiaries and during the twelve (12) month period following the termination of Executive’s employment by the Company for Cause or by the Executive without Good Reason or during the twenty-four (24) month period following the termination of the Executive’s employment by the Company other than for Cause or by the 

 

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Executive for Good Reason (the “Restricted Period”), Executive will not, directly or indirectly, engage in Competition with the Company.  “Competition” shall mean engaging in any activity for a Competitor of the Company, whether as a principal, agent, partner, officer, director, employee, independent contractor, investor, consultant or stockholder (except as a less than one percent (1%) shareholder of a publicly traded company) or otherwise.  A “Competitor” shall mean any person, corporation or other entity (and its parents, subsidiaries, affiliates and assigns) doing business in any geographical area in which the Company or any of its subsidiaries or affiliates are doing or have imminent plans to do business, and which is engaged in the operation of a retail or internet business which includes or has imminent plans to include a pharmacy (i.e., the sale of prescription drugs) as an offering or component of its business, including but not limited to, chain drug store companies such as Walgreen Company and CVS Caremark, mass merchants such as Wal-Mart Stores, Inc. and Target Corporation, and food/drug combinations such as The Kroger Co., Safeway Inc., Ahold USA and AB Acquisition LLC.  During Executive’s employment by the Company or one of its subsidiaries and during the Restricted Period, Executive will not, directly or indirectly, engage in any activity that involves providing audit review or other consulting or advisory services with respect to any relationship between the Company and any third party.

 

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.

 

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.

 

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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.

 

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 

 

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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 she:

 

(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 her from fulfilling the terms of employment and the obligations of this Agreement;

 

(iii)                                does not have in her 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 she 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.

 

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 noncompetition.  Executive has listed each of such agreements in Appendix C.

 

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

 

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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.  Executive further understands that there is no intent herein to interfere with the Equal Employment Opportunity Commission’s right to enforce the laws it oversees or your right to file an administrative charge of employment discrimination or a similar state or local administrative agency.

 

11.                               Assignment.

 

Neither this Agreement, nor any of Executive’s rights or obligations hereunder, may be assigned or otherwise subject to hypothecation by Executive. The Company may assign its rights and obligations hereunder, and hereby consents to any such assignment, in whole or in part, (i) to any of the Company’s subsidiaries, affiliates, or parent corporations; 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.

 

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:

 

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If   to the Company:
    	
 
    	
Rite   Aid Corporation
    
	
 
    	
 
    	
30   Hunter Lane
    
	
 
    	
 
    	
Camp   Hill, Pennsylvania 17011
    
	
 
    	
 
    	
Attention:   General Counsel
    
	
 
    	
 
    	
Fax:   (717) 760-7867
    
	
 
    	
 
    	
 
    
	
If   to Executive:
    	
 
    	
Dedra   N. Castle
    
	
 
    	
 
    	
3223   Pine Valley Drive
    
	
 
    	
 
    	
Sarasota,   FL 34239
    

 

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.

 

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 court in Cumberland County, Pennsylvania 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 her.

 

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

 

14

 

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 her execution of this Agreement nor the full and complete performance of her 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 her 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.

 

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.

 

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14.                               Compliance with Code Section 409A.

 

(a)                                 Payment of Benefits:  To the extent necessary to avoid adverse tax consequences, and except as described below, any payment to which Executive becomes entitled under the Agreement, or any arrangement or plan referenced in this Agreement, that constitutes “deferred compensation” under section 409A of the Code (“409A”), and is (a) payable upon Executive’s termination; (b) at a time when the Executive is a “specified employee” as defined by 409A shall not be made until the first payroll date after the earliest of:  (1) the expiration of the six (6) month period (the “Deferral Period”) measured from the date of Executive’s “separation from service” within the meaning of such term under 409A; or (2) the date of Executive’s death.

 

On the first payroll date after 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 Executive or, if applicable, her beneficiary.  This section shall not apply to any payment which meets the short term deferral exception to 409A or constitutes “separation pay” as described in Treasury Regulation 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 (2) 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).

 

The Company shall pay to 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 by 409A, and payment of the Accrued Benefits is required to be delayed under 409A, the Company shall pay to Executive the Accrued Benefits on the first payroll date after the six (6) month anniversary of the Date of Termination.

 

For purposes of 409A, each payment and each installment described in this Agreement shall be considered a separate payment from each other payment or installment and to the extent required by 409A, a payment due upon termination of employment will only be paid upon Executive’s separation from service within the meaning of such term under 409A.

 

(b)                                 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 (1) 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/   James J. Comitale
    
	
 
    	
By:   
    	
James   J. Comitale
    
	
 
    	
Its:   
    	
Vice   President & Assistant General Counsel
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EXECUTIVE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Dedra N. Castle
    
	
 
    	
Executive
    

 

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