Document:

ex10-1.htm

 Exhibit 10.1

 

SEPARATION AGREEMENT AND RELEASE

 

This Separation Agreement and Release (“Separation Agreement”) dated as of October 14, 2011 is entered into by and between George R. Jensen, Jr. (“Executive” or “you”) and USA Technologies, Inc. (the “Company”), and confirms the agreement that has been reached with you in connection with your separation from the Company.

 

1.             Termination of Employment.  You agree that your separation shall be effective as of October 14, 2011 (the “Separation Date”) and, as of such date, you shall resign from and cease to be employed by the Company and each and every subsidiary or affiliate of the Company in your capacity as Chairman and Chief Executive Officer and execute the Resignation Letter annexed hereto as Exhibit A.  As of the Separation Date, you shall also resign as a member of the Board of Directors of the Company as well as of the Board of Directors of any of the Company’s subsidiaries.

 

2.             Separation Pay and Benefits.  In consideration of your execution of this Separation Agreement and your complete compliance with its terms and conditions, the Company agrees to pay by wire transfer or provide you (subject to the terms and conditions set forth in this Separation Agreement) with the separation pay and benefits described in this paragraph 2:

 

a.  Within two (2) business days of your execution of this Separation Agreement, the sum of Three Hundred Sixty-Five Thousand Dollars ($365,000) representing one year’s base salary otherwise payable by the Company to you pursuant to the Amended and Restated Employment and Non-Competition Agreement dated September 27, 2011 between you and the Company (the “Jensen Employment Agreement”);

 

b.  Within two (2) business days of your execution of this Separation Agreement, the sum of Seventeen Thousand Eight Hundred Seventy-Five Dollars ($17,875) representing one year’s car allowance otherwise payable by the Company to you pursuant to the Jensen Employment Agreement;

 

  

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c.  For the one year period from the Separation Date and ending October 13, 2012, the Company will provide you with group medical and dental insurance coverage in accordance with paragraph 5 hereof, but the Company will not provide you with  paid vacation, holidays, any 401(k) plan contributions, any life insurance coverage and any long-term group disability coverage or supplemental disability coverage; and

 

d.  Within two (2) business days of your execution of this Separation Agreement, the sum of Twenty-Eight Thousand Seventy-Seven Dollars ($28,077) representing the amount attributable to Executive’s four weeks of unused vacation otherwise payable by the Company to you pursuant to the Jensen Employment Agreement.

 

3.             Stock.  In addition to the 50,000 shares of Company stock issued to you on September 27, 2011 pursuant to the Jensen Employment Agreement which have already vested, and in addition to the separation pay and benefits set forth in paragraph 2 hereof in consideration of your execution of this Separation Agreement and your complete compliance with its terms and conditions, the Company will vest and provide you (subject to the terms and conditions set forth in this Separation Agreement) with the following Company stock:

 

a.  41,667 shares of Company common stock which were awarded to you in connection with the April 14, 2011 amendment to the Amended and Restated Employment and Non-Competition Agreement dated September 24, 2009 between you and the Company (the “Prior Jensen Employment Agreement”);

 and

 

  

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b.  50,000 shares of Company common stock which would have been issued to you on September 27, 2012 pursuant to the Jensen Employment Agreement.

 

The certificate representing the 41,667 shares referred to in paragraph 3.a shall be issued to you within five (5) business days of the date hereof. The certificate representing the 50,000 shares referred to in paragraph 3 and the certificate representing the 50,000 shares referred to in paragraph 3.b shall be issued to you within five (5) business days after the filing by the Company with the Securities and Exchange Commission (the “SEC”) of a Form S-8 registration statement covering the shares underlying the Company’s 2011 Stock Incentive Plan. The Company shall file such a registration statement with the SEC within two weeks of the date hereof.

 

4.             No Other Payments, Benefits or Stock.  After the Separation Date, you have relinquished any right to receive, and you will not receive, base salary, annual or other bonus, any further Company stock, life insurance coverage, long-term disability coverage, supplemental disability coverage, automobile allowance, 401(k) plan contributions or paid vacation and holidays compensation. You shall not participate or receive any benefits under the Company’s 2012 Performance Share Plan that was approved by the Board of Directors of the Company (the “Board”) on September 15, 2011. The only payments, benefits and stock you shall receive are those set forth in paragraphs 2, 3 and 5 hereof, together with the indemnification rights in accordance with paragraph 14 hereof.

 

5.             COBRA.  If you timely elect continued group medical and dental coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company will pay directly or reimburse you for: (a) the COBRA premium payments for you and your eligible dependents under the Company’s group medical and dental insurance plans for the first twelve (12) months following the Separation Date; and (b) the applicable contribution to your HSA account for the first twelve month period following the Separation Date.

 

  

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6.             Tax Obligations.  You have agreed that the Company may deduct from the payments to be made to you pursuant to paragraphs 2.a, 2.b and 2.d any and all required income and payroll taxes which it has customarily withheld from you prior to the Separation Date.  Any and all income and payroll tax withholding obligations of the Company in connection with the 41,667 shares of Company common stock issued to you pursuant to paragraph 3.a hereof, the 50,000 shares of Company common stock issued to you on September 27, 2011 under the Jensen Employment Agreement pursuant to paragraph 3 hereof and the 50,000 shares of Company common stock issued to you pursuant to paragraph 3.b hereof shall be paid by you either through cancellation of the appropriate amounts of the foregoing shares of Company common stock or your cash payment to the Company, as provided in the Jensen Employment Agreement. As the amount of your obligations under this paragraph 6 are not known as of the date hereof, and in order to evidence your obligations under this paragraph 6, the certificates representing the 41,667 shares to be issued to you pursuant to paragraph 3.a hereof, the 50,000 shares to be issued to you pursuant to paragraph 3 hereof, and the 50,000 shares to be issued to you pursuant to paragraph 3.b hereof will bear the following legend: “The shares represented by this certificate are subject to all of the terms and conditions of paragraph 6 of the Separation Agreement and Release dated October 14, 2011, a copy of which is on file and available for inspection during normal business hours at the Company’s principal office.” The Company shall have this legend removed following your satisfaction of your obligations under this Section 6 with respect to the shares evidenced by the certificate.

 

  

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As of October 14, 2011, the Company will become obligated to make payroll and withholding tax payments in connection with the 41,667 shares previously issued to you on April 14, 2011 in connection with the Prior Jensen Employment Agreement, the amount of which will become known at the close of trading on October 14, 2011. Within two (2) business days following the date hereof, you shall advise the Company to either withhold such amount from the payment otherwise due to you under paragraph 2.a or to cancel the appropriate number of shares otherwise issuable to you under paragraph 3 in satisfaction of your obligations pursuant to this paragraph 6 in connection with such shares.

 

7.             Continuing Obligations.  You have agreed to continue to be bound by the provisions in Sections 4, 5 and 6 of the Jensen Employment Agreement, notwithstanding the provisions of paragraph 11 hereof, which shall remain in full force and effect as to you subsequent to the Separation Date.  The Company has agreed to continue to be bound by the Jensen Stock Agreement dated September 27, 2011 between you and the Company (the “Jensen Stock Agreement”), which agreement shall remain in full force and effect.

 

8.             Cooperation.  On and after the Separation Date, you agree that you will reasonably cooperate with the Company, its subsidiaries and affiliates, and any of their officers, directors, shareholders, or employees: (a) concerning requests for information about the business of the Company or its subsidiaries or affiliates or your involvement and participation therein; (b) in connection with any investigation or review by the Company, the Company’s insurance carriers, or any federal, state or local regulatory, quasi-regulatory or self-governing authority (including, without limitation, the SEC), as any such investigation or review relates to events or occurrences that transpired while you were employed by the Company; and (c) with respect to transition and succession matters.  Your cooperation shall include, but not be limited to (taking into account your personal and professional obligations, including those to any new employer or entity to which you provide services), being available to meet and speak with officers or employees of the Company and/or the Company’s counsel at reasonable times and locations, executing accurate and truthful documents and taking such other actions as may reasonably be requested by the Company and/or the Company’s counsel to effectuate the foregoing.  You shall be entitled to reimbursement, upon receipt by the Company of suitable documentation, for reasonable and necessary travel and other expenses, which you may incur at the specific request of the Company and as approved by the Company in advance and in accordance with its policies and procedures established from time to time.

 

  

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9.             Company Property.  On or prior to the Separation Date, you shall return to the Company all Company property in your possession or use, including, without limitation, all minute books and minutes of the Company’s Board of Directors, all Company business plans, all automobiles, fax machines, printers, cell phones, credit cards, building-access cards and keys, other electronic equipment, and any records, software or other data from your personal computers or laptops which are not themselves Company property, however stored, relating to the Company’s confidential information.

 

10.           Taxes.  The parties acknowledge and agree that: the form and timing of the Separation Amount and the other payments and benefits to be provided pursuant to this Agreement are intended to be exempt from or to comply with one or more exceptions to the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and applicable Treasury Regulations thereunder (“Section 409A”).  The parties further acknowledge and agree that, for purposes of Section 409A, you do not have discretion with respect to the timing of the payment of any amounts provided under this Separation Agreement. Notwithstanding any provision of this Separation Agreement to the contrary, the Company, its affiliates, subsidiaries, successors, and each of their respective officers, directors, employees and representatives, neither represent nor warrant the tax treatment under any federal, state, local, or foreign laws or regulations thereunder (individually and collectively referred to as the “Tax Laws”) of any payment or benefits contemplated by this Separation Agreement including, but not limited to, when and to what extent such payments or benefits may be subject to tax, penalties and interest under the Tax Laws.

 

  

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11.           Jensen Employment Agreement.  Except to the extent expressly preserved herein, the provisions of the Jensen Employment Agreement are no longer binding on the Company or you and are hereby deemed null and void subsequent to the Separation Date.

 

12.           Standstill Agreement.  You will not do any of the following, directly or indirectly, without the prior written consent of the Company’s Board for a period commencing on the Separation Date hereof and ending on October 13, 2014:

 

a.  acquire or seek to acquire, in the aggregate, more than ten percent (10%) of the then outstanding Common Stock or Series A Convertible Preferred Stock of the Company (jointly and severally, the “Voting Securities”);

 

b.  solicit proxies (or written consents), become a “participant” in a “solicitation,” as such terms are defined in Instruction 3 of Item 4 of Schedule 14A and Rule 14a-1 of Regulation 14A, respectively, under the Exchange Act or join in or participate in any “group” (within the meaning of Section 13(d)(3) of the Exchange Act) soliciting proxies (or written consents) in each case with respect to any Voting Securities of the Company in opposition to the recommendation or proposal of the Board with respect to (i) the election of directors to the Board, (ii) any Section 14a-8 shareholder proposals to be voted on at an annual or special meeting of shareholders, or (iii) the amendment of any provision of the Company’s Articles of Incorporation or By-laws;

 

  

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c.  nominate persons for election to, or seek to remove any person from, the Board or propose any other business at any annual or special meeting of shareholders, or solicit written consents to take any action that would require that notice to the Company be provided pursuant to Section 3.02 of the Company’s By-laws;

 

d.  seek to initiate or join in, directly or indirectly, any merger, consolidation, recapitalization, liquidation or other business combination that would be in opposition to the recommendation or proposal of the Board with respect thereto;

 

e.  seek to become an officer, a director or the Chairman of the Board of the Company or seek to remove any officer, director or general counsel of the Company;

 

f.  commence, encourage or support any derivative action in the name of the Company or any class action against the Company with respect to any facts or events relating to your resignation or the reasons therefor;

 

g.  knowingly take any action to (i) advise, assist, encourage or finance any person in connection with any of the foregoing, (ii) publicly suggest or announce a desire to engage in a transaction that would result in any of the foregoing, or (iii) waive, modify or amend any provision of this paragraph 12; or

 

h.  make any comment on any Internet message or bulletin board or other public medium about the Company or its securities or encourage any other person to make any comment on any Internet message or bulletin board or other public medium about the Company or its securities.

 

  

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Notwithstanding the foregoing, nothing in this Separation Agreement shall prohibit or restrict you from (A) voting any or all of your Voting Securities of the Company in your discretion, or (B) complying with any disclosure or other obligations under the rules and regulations of the SEC or other securities laws.

 

13.           Release.

 

a.  You agree that, in consideration of this Separation Agreement, you hereby fully, forever, irrevocably and unconditionally remise, waive, release and discharge any and all claims, rights, complaints, causes of action, suits, damages, costs, attorneys’ fees, charges, liabilities, or obligations of any kind, nature or description whatsoever, which you ever had, now have or may have in the future against the Company and any of its subsidiaries or affiliated companies, and their respective successors and assigns, current and former officers, agents, directors, attorneys, representatives and employees, benefits and audits, committees, and their respective successors and assigns, heirs, executors and personal and legal representatives (jointly, the “Company Released Parties” or severally, a “Company Released Party”), based on any act, event or omission occurring before you execute this Separation Agreement arising out of, during or relating to your employment or services with the Company or the termination of such employment or services, or any other actions or omissions whatsoever taken by any Company Released Party occurring from the beginning of time to the present.  This waiver and release includes, but is not limited to, any claims which could be asserted now or in the future, known or unknown, under: common law, including, but not limited to, claims for attorneys fees, expenses, breach of express or implied duties, wrongful termination, defamation, negligence, fraud, invasion of privacy, promissory estoppel, interference with contractual relations, or violation of public policy; any policies, practices, or procedures of the Company; any federal or state statutes or regulations including, but not limited to, Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq., the Civil Rights Act of 1866 and 1871, the Americans With Disabilities Act, 42 U.S.C. § 12101 et seq., the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq. (excluding those rights relating exclusively to employee pension benefits as governed by ERISA), the Family and Medical Leave Act, 29 U.S.C. § 2601 et. seq.; the Pennsylvania Human Relations Act; any contract of employment, express or implied; and any provision of any other law, common or statutory, of the United States, Pennsylvania or any applicable state.

 

  

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Notwithstanding the foregoing, nothing contained in this Separation Agreement shall be deemed to release, acquit or discharge any Company Released Party from: (i) claims to enforce this Separation Agreement; (ii) claims to rights of defense or indemnification, or to be held harmless, or coverage under the directors and officers liability insurance or Company rights of indemnification or claims of contribution or advancement of expenses that you have; or (iii) claims to employee benefits which have accrued or which have become due to you prior to the Separation Date, in accordance with the terms of the applicable benefit plans.

 

b.  For the purpose of implementing a full and complete release, you understand and agree that this Separation Agreement is intended to waive and release all claims, if any, which you may have and which you may not now know or suspect to exist in your favor against any Company Released Party and this Separation Agreement extinguishes those claims.

 

c.  By signing this Separation Agreement, you represent that you have not and will not in the future commence any action or proceeding arising out of the matters released hereby, and that you will not seek or be entitled to any award of legal or equitable relief in any such action or proceeding that may be commenced on your behalf; provided, however, that nothing contained herein shall prevent or prohibit you from bringing an action and seeking relief to enforce your rights under this Separation Agreement.  You further represent that you understand and agree that the Company is under no obligation to offer this Separation Agreement, and that you are under no obligation to consent to this waiver and release of claims.

 

  

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14.           Indemnification of You.  The Company hereby agrees that you are entitled to coverage under, and use of, the Company’s existing directors and officer’s liability insurance, rights to Company indemnification and claims to contribution or advancement of expenses, subject to the terms of the applicable existing insurance, applicable law, applicable agreement, and the by-laws or certificate of incorporation of the Company.

 

15.           Severability.  If any provision of this Separation Agreement is held by a court of competent jurisdiction to be illegal, void or unenforceable, such provision shall have no effect; provided, however, the remaining provisions shall be enforced to the maximum extent possible.  Further, if a court should determine that any portion of this Separation Agreement is overbroad or unreasonable, such provision shall be given effect to the maximum extent possible by narrowing or enforcing in part that aspect of the provision found overbroad or unreasonable.

 

16.           No Admission.  This Separation Agreement is not intended, and shall not be construed, as an admission that either you or the Company have violated any federal, state or local law (statutory or decisional), ordinance or regulation, breached any contract or committed any wrong whatsoever.

 

  

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17.           Specific Performance.  You and the Company acknowledge and agree that irreparable injury to the other party hereto would occur in the event any of the provisions of this Separation Agreement were not performed in accordance with its specific terms or were otherwise breached, and that such injury would not be adequately compensable in damages.  It is accordingly agreed that you and the Company shall each be entitled to specific enforcement of, and injunctive relief to prevent any violation of, the terms hereof and the other party hereto will not take any action, directly or indirectly, in opposition to the party seeking relief on the grounds that any other remedy or relief is available at law or in equity, and each party further agrees to waive any requirement for the security or posting of any bond in connection with such remedy.  In the event any party brings an action to enforce or for breach of any of the terms of this Separation Agreement, such action shall only be brought in the Court of Common Pleas of Chester County, Pennsylvania, and you and the Company agree to not object to the jurisdiction of that court to resolve the dispute.

 

18.           No Waiver.  Any waiver by any party of a breach of any provision of this Separation Agreement shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Separation Agreement.  The failure of a party to insist upon strict adherence to any term of this Separation Agreement on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Separation Agreement.

 

19.           Successors and Assigns.  All the terms and provisions of this Separation Agreement shall inure to the benefit of, and shall be enforceable by and binding upon, the heirs, personal representatives, successors and assigns of each of the parties hereto.  You may not assign either this Separation Agreement or any of its rights, interest or obligations hereunder without the prior written approval of the Company.

 

  

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20.           Entire Agreement.  This Separation Agreement, including Exhibit A hereto, contains the entire understanding of the parties with respect to the subject matter hereof and supersedes any and all agreements, understandings and discussions, whether written or oral, between you and the Company, including the Jensen Employment Agreement except to the extent that it is expressly preserved herein, and excluding the Jensen Stock Agreement in accordance with paragraph 7 hereof.  There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings other than those expressly set forth in this Separation Agreement.  This Separation Agreement may be amended only by a written instrument duly executed by you and the Company or their respective heirs, personal representatives, successors or assigns.  Each of the parties hereto acknowledges that it and he has been represented by counsel of its or his choice throughout all negotiations that have preceded the execution of this Separation Agreement, and that it or he has executed the same with the advice of such counsel.  Each party and its or his counsel cooperated and participated in the drafting and preparation of this Separation Agreement and the documents referred to herein.  Accordingly, any rule of law or any legal decision that would require interpretation of any ambiguities in this Separation Agreement against any party that drafted or prepared it is of no application and is hereby expressly waived by each of the parties hereto, and any controversy over interpretations of this Separation Agreement shall be decided without regard to events of drafting or preparation.

 

21.           Headings.  The paragraph headings contained in this Separation Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Separation Agreement.

 

22.           Notices.  All notices, demands and other communications to be given or delivered under, or by reason of, the provisions of this Separation Agreement shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt), (b) upon sending (on the date sent if a business day, or if not sent on a business day, the first business day thereafter) if sent by facsimile, with electronic confirmation thereof, provided, however, that a copy is sent on the same day by registered mail, return receipt requested, in each case to the appropriate mailing and facsimile addresses set forth below, (c) one (1) day after being sent by a nationally recognized overnight carrier to the addresses set forth below or (d) when actually delivered if sent by any other method that results in delivery (with written confirmation of receipt):

 

  

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	 	If to the Company:
	 	 	 
	 	USA Technologies, Inc.
	 	Suite 140
	 	100 Deerfield Lane
	 	Malvern, PA 19355
	 	Attn:	Stephen P. Herbert
	 	Facsimile: 	610-989-0704
	 	 	 
	 	with a copy to:
	 	 	 
	 	Ballard Spahr LLP
	 	1735 Market Street
	 	51st Floor
	 	Philadelphia, PA 19103
	 	Attn: 	Justin P. Klein, Esquire
	 	Facsimile:	215-864-8999
	 	 	 
	 	If to Executive:
	 	 	 
	 	George R. Jensen, Jr.
	 	P.O. Box 2424
	 	West Chester, PA 19380
	 	 	 
	 	with a copy to:
	 	 	 
	 	Pepper Hamilton LLP
	 	3000 Two Logan Square
	 	Eighteenth and Arch Streets
	 	Philadelphia, PA 19103
	 	Attn: 	Jay Dubow, Esquire
	 	Facsimile:   	215-981-4750

 

in each case, or to such other address as the person to whom notice is given may have previously furnished to the others in writing in the manner set forth in this paragraph.

 

  

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23.           Governing Law.  This Separation Agreement shall be governed by and construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania without reference to the conflict of laws principles thereof.

 

24.           Counterparts.  This Separation Agreement may be executed in counterparts and by facsimile or e-mail in portable documents format (.pdf), each of which shall be an original, but all of which together shall constitute one and the same Separation Agreement.

 

  

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	 	IN WITNESS WHEREOF, the parties have executed this Separation Agreement as of the date set forth below.
	 	 	 	 	 
	 	 	 	 	 
	 	Signature: 	/s/ George R. Jensen, Jr.  	Date:  October 14, 2011	 
	 	 	
George R. Jensen, Jr.

	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	USA Technologies, Inc.
	 	 	 	 	 
	 	Signature:  	/s/ Stephen P. Herbert	Date:  October 14, 2011	 
	 	 	 	 	 
	 	Title:  	President and COO	 	 

 

  

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Exhibit A

Resignation letter

[Letterhead of George Jensen]

USA Technologies, Inc.

Suite 140

100 Deerfield Lane

Malvern, PA 19355

October 14, 2011

To the Corporate Secretary of USA Technologies, Inc.:

I hereby resign as Chairman and Chief Executive Officer and from the Board of Directors of USA Technologies, Inc. and each and every subsidiary or affiliate thereof, effective immediately.

Sincerely,

George R. Jensen, Jr.

17Walgreen Co. Section 162(m) Deferred Compensation Plan

 Exhibit 10.1 
 Walgreen Co. 
 Section 162(m) Deferred Compensation Plan

 (Conformed Copy - October 1994 Plan, as amended and restated through November 1, 2011) 

 Walgreen Co. Section 162(m) Deferred Compensation Plan 

Contents 
  

							
	 	  	 	  	Page	 
	 Article 1.
	  	 Establishment and Purposes
	  	 	1	  
			
	 Article 2.
	  	 Definitions
	  	 	1	  
			
	 Article 3.
	  	 Administration
	  	 	2	  
			
	 Article 4.
	  	 Bonus Deferral and Payment
	  	 	3	  
			
	 Article 5.
	  	 Deferred Compensation Accounts
	  	 	5	  
			
	 Article 6.
	  	 Rights of Participants
	  	 	6	  
			
	 Article 7.
	  	 Withholding of Taxes
	  	 	6	  
			
	 Article 8.
	  	 Amendment and Termination
	  	 	6	  
			
	 Article 9.
	  	 Miscellaneous
	  	 	6	  

 Walgreen Co. Section 162(m) Deferred Compensation Plan 

 

	Article 1.	Establishment and Purposes 

  

	 	1.1.	Establishment. Walgreen Co., an Illinois corporation (the “Company”), hereby establishes, effective as of September 1, 1994, a deferred
compensation plan for key employees as described herein, which shall be known as the Walgreen Co. Section 162(m) Deferred Compensation Plan (the “Plan”). 

 

	 	1.2.	Purpose. The primary purpose of the Plan is to provide for mandatory deferrals of compensation by certain key employees of the Company in order to preserve the
Company’s tax deduction for such amounts under Section 162(m) of the Code. 

  

	Article 2.	Definitions 

 Whenever used herein, the
following terms shall have the meanings set forth below, and, when the defined meaning is intended, the term is capitalized: 
  

	 	(a)	“Account” or “Deferred Compensation Account” means an individual bookkeeping account established and maintained for each Participant pursuant
to Article 5 herein. 

  

	 	(b)	“Board” or “Board of Directors” means the Board of Directors of the Company. 

 

	 	(c)	“Code” means the Internal Revenue Code of 1986, as amended. 

 

	 	(d)	“Committee” means the Compensation Committee of the Board or a subcommittee thereof, as appointed by the Board. 

 

	 	(e)	“Company” means Walgreen Co., an Illinois corporation, and any subsidiary of the Company. 

 

	 	(f)	“Compensation” means all compensation or any other remuneration for services performed by an Eligible Employee which, as determined by the Committee,
is subject to the deduction limit under Code Section 162(m), any successor statute and the regulations promulgated thereunder with respect to any Year. 

 

	 	(g)	“Effective Date” means the date the Plan becomes effective, as set forth in Section 1.1 herein. 

 

	 	(h)	“Eligible Employee” means a “Covered Employee” under Code Section 162(m) and the regulations promulgated thereunder.

  

	 	(i)	“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor Act thereto.

  

	 	(j)	“Participant” means an Eligible Employee who is participating in the Plan, as provided in Section 4.1 herein. 

  
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	 	(k)	“Plan” means the Walgreen Co. Section 162(m) Deferred Compensation Plan. 

 

	 	(l)	“Year” means the fiscal year of the Company. 

  

	Article 3.	Administration 

  

	 	3.1.	Authority of the Committee. The Plan shall be administered by the Committee. The members of such Committee shall be appointed by and shall serve at the
discretion of the Board. 

 Subject to the provisions herein, the Committee shall have full power to determine
which Eligible Employees of the Company are Participants; to determine the terms and conditions of each Employee’s participation in the Plan; to construe and interpret the Plan and any agreement or instrument entered into under the Plan; to
establish, amend, or waive rules and regulations for the Plan’s administration; to amend (subject to the provisions of Article 8 herein) the terms and conditions of the Plan and any agreement entered into under the Plan; and to make other
determinations which may be necessary or advisable for the administration of the Plan. 
 Subject to the terms of the Plan, the
Bylaws of the Company and applicable law, the Committee may delegate any or all of its authority granted under the Plan to any individual or entity, including but not limited to an executive or executives of the Company. 

 

	 	3.2.	Decisions Binding. All determinations and decisions of the Committee as to any disputed question arising under the Plan, including questions of construction and
interpretation, shall be final, conclusive, and binding on all parties. 

  

	 	3.3.	Indemnification. Each person who is or shall have been a member of the Committee, or of the Board, shall be indemnified and held harmless by the Company against
and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party, or in which he or she may be
involved by reason of any action taken or failure to act under the Plan, and against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in
any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf.

 The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which
such persons may be entitled under the Company’s Articles of Incorporation or Bylaws, as a matter of law or otherwise, or any power that the Company may have to indemnify them or hold them harmless. 

  
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	Article 4.	Compensation Deferral and Payment 

  

	 	4.1.	Eligibility and Participation. Those Eligible Employees whose Compensation exceeds one million dollars ($1,000,000) in any taxable year of the Company, as
determined by the Committee, shall automatically be deemed to be Participants in the Plan as of the date such Compensation exceeded one million dollars ($1,000,000). Notwithstanding the foregoing, effective on or after July 1, 2011, the Plan
shall be frozen and no Eligible Employee shall first become a Participant in the Plan for any purpose under the terms of the Plan on or after such date. Therefore, any eligible employee who had not become a participant in the Plan on or before
July 1, 2011 shall not become a Participant on or after such date. 

  

	 	4.2.	Amount Deferred. The Committee may designate that up to and including one hundred percent (100%) of Compensation in excess of one million dollars
($1,000,000) payable to a Participant in any Year shall be deferred pursuant to the terms of the Plan. In its discretion, the Committee may also designate that all or a portion of such excess Compensation that is attributable to base pay and that is
payable to a Participant during a calendar year shall be deferred pursuant to the terms of the Plan. To the extent that the excess Compensation that the Committee designates for deferral is attributable to base pay, such designation must be made on
or before January 1 of the calendar year in which such base pay will be earned. To the extent that the excess Compensation that the Committee designates for deferral is attributable to a bonus, such designation must be made on or before the
first day of the Year in which the bonus is earned; provided, however, that if the bonus qualifies as “performance-based compensation” within the meaning of Code Section 409A, such designation may be made on or before the last day of
the sixth month of such Year. In the absence of a specific designation by the Committee as to the amount of such excess Compensation to be deferred during a Year or calendar year, the full amount of such excess Compensation shall be deemed to have
been designated for deferral. Notwithstanding the foregoing, effective for Compensation earned during Years beginning on or after July 1, 2011, no amount shall be designated for deferral under the Plan by the Committee.

  

	 	4.3.	Length of Deferral. Compensation deferred under the terms of the Plan shall be deferred until the payment date described in Section 4.4(b) below.

  

	 	4.4.	Payment of Deferred Cash Compensation Payment of deferred cash Compensation amounts, together with interest earned thereon, shall be made as follows:

  

	 	(a)	Form of Payment. The form of payment shall be in accordance with the election made by the Participant (on such form or forms provided by the Committee for such
purpose), from among the following options: 

  

	 	(i)	One lump sum. 

  

	 	(ii)	Annual installments over five, 10 or 15 years, with each annual payment (made on or about January 15) equal to the remaining deferred Compensation balance
(including interest earned pursuant to Section 5.2 below), divided by the number of remaining annual payments. 

  
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	 	(b)	Timing of Payment. Payment of the Participant’s deferred Compensation amounts shall commence (or, in the case of lump-sum payments, shall be made) on or as
soon as practicable after the Default Commencement Date. The Default Commencement Date shall be January 15 of the fiscal year following the fiscal year in which the Participant has a termination of employment within the meaning of Code
Section 409A, but in no event earlier than the date which is six months after such termination of employment. A Participant may elect (on such form or forms provided by the Committee for such purpose) to defer commencement of payment to on or
about January 15 of any future year, provided that payment must commence no later than the later of: 

  

	 	(i)	On or about the five-year anniversary of the “Default Commencement Date”; or 

 

	 	(ii)	 On or about the January 15th following the Participant’s 65th birthday. 

 Any such deferral election must be made prior to the beginning of the Year or Years in which the deferred compensation subject to the election would otherwise be earned; provided, however, that should the
Committee elect to designate a portion of excess Compensation attributable to base pay for deferral in a calendar year pursuant to Section 4.2 above, then the Participant’s election to defer payment of such Compensation to a date later
than the Default Commencement Date may be made prior to the first day of the calendar in which the Compensation subject to the deferral election would otherwise be earned. 

 

	 	(c)	Notwithstanding the foregoing, deferred Compensation with respect to which no timing and/or form of payment election(s) are made by the Participant (or with respect to
which no such election(s) are made within the prescribed time frame), shall be paid in annual installments over a five-year period, commencing as of the Default Commencement Date. 

 

	 	4.5.	Payment of Deferred Stock, Deferred Stock Units or Other Non-Cash Compensation. Payment of deferred Compensation that is in the form of Company stock, stock
units or other non-cash compensation shall be made as follows: 

  

	 	(a)	Method of Payment. Unless otherwise determined by the Committee, such Compensation shall be settled in full in the form that such Compensation would have been
paid had it not been deferred under this Plan. 

  

	 	(b)	Dividends/Dividend Equivalents. Dividends and dividend equivalents shall be earned on any stock or stock units, respectively, deferred under this Plan. Such
dividends or dividend equivalents shall be converted into an equivalent amount of deferred stock or stock units based upon the fair market value of a share of Company common stock on the date the dividends or dividend equivalents are converted into
shares of deferred stock or stock units. The converted deferred stock or stock units will be fully vested upon conversion. 

  

	 	(c)	Timing of Payment. Such Compensation shall be settled and distributed as the date as of which deferred cash Compensation is first paid in accordance with
Section 4.4 above (or, to the extent there is no deferred cash Compensation, as of the date as of which deferred cash Compensation would first be paid in accordance with Section 4.4 above). 

  
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	Article 5.	Deferred Compensation Accounts 

  

	 	5.1.	Participants’ Accounts. The Committee shall establish and maintain an individual bookkeeping Account for each Participant deferring Compensation under
Article 4 herein. Each Account shall be credited as of the date the amount of Compensation deferred otherwise would have become due and payable to the Participant. 

 

	 	5.2.	Interest on Deferred Cash Compensation. Compensation deferred under Article 4 shall accrue interest on a monthly basis at a monthly compounding rate equal to the
prime lending rate of interest in effect as of the first business day of that month (as quoted by the Company’s then current leading bank financing source for commercial borrowings), plus the excess of the prime lending rate over The Federal
Funds Rate or such other rate determined by the Committee. Each Participant’s Deferred Compensation Account shall be credited on the last day of each month, with interest computed on that month’s beginning balance.

 Interest earned on deferred amounts shall be paid out to Participants at the same time and in the same manner
as the underlying deferred amounts. 
  

	 	5.3.	Charges Against Accounts. There shall be charged against each Participant’s Account any payments made to the Participant or to his or her beneficiary.

  

	 	5.4.	Designation of Beneficiary. Each Participant shall designate a beneficiary or beneficiaries who, upon the Participant’s death, will receive the amounts that
otherwise would have been paid to the Participant under the Plan. All designations shall be signed by the Participant, and shall be in such form as prescribed by the Committee. Each designation shall be effective as of the date delivered to the
Senior Vice President, Human Resources, of the Company or such other officer as may be designated by the Committee. 

 Participants may change their designations of beneficiary on such form as prescribed by the Committee. The payment of amounts deferred under the Plan shall be in accordance with the last unrevoked written
designation of beneficiary that has been signed by the Participant and delivered by the Participant to the Senior Vice President Human Resources, of the Company or such other officer as may be designated by the Committee, prior to the
Participant’s death. 
 In the event that all the beneficiaries named by a Participant pursuant to this Section 5.4
predecease the Participant, the amounts that would have been paid to the Participant or the Participant’s beneficiaries hereunder shall be paid to the Participant’s estate. 

In the event a Participant does not designate a beneficiary, or for any reason such designation is ineffective, in whole or in part, the
amounts that otherwise would have been paid to the Participant or the Participant’s beneficiaries under the Plan shall be paid to the Participant’s estate. 

  
 5 

	Article 6.	Rights of Participants 

  

	 	6.1.	Contractual Obligation. The Plan shall create a contractual obligation on the part of the Company to make payments from the Participants’ Accounts when due.
Payment of deferred amounts and interest earned thereon shall be made out of the general funds of the Company. 

  

	 	6.2.	Unsecured Interest. No Participant or party claiming an interest in deferred amounts and interest earned thereon or the Account of a Participant shall have any
interest whatsoever in any specific asset of the Company. To the extent that any party acquires a right to receive payments under the Plan, such right shall be equivalent to that of an unsecured general creditor of the Company.

  

	 	6.3.	Employment. Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant’s employment at any time, nor
confer upon any Participant any right to continue in the employ of the Company. 

  

	Article 7.	Withholding of Taxes 

 The
Company shall have the right to require Participants to remit to the Company an amount sufficient to satisfy Federal, state, and local withholding tax requirements, or to deduct from all payments made pursuant to the Plan amounts sufficient to
satisfy withholding tax requirements. 
  

	Article 8.	Amendment and Termination 

The Company hereby reserves the right to amend, modify, or terminate the Plan at any time by action of the Committee. Except as described
below in this Article 8, no such amendment or termination shall in any material manner adversely affect any Participant’s rights accrued with respect to deferred amounts and interest earned thereon without the consent of the Participant.

 The Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for a select group
of management or highly compensated employees within the meaning of Sections 201, 301, and 401 of ERISA, and therefore, to be exempt from the provisions of Parts 2, 3, and 4 of Title I of ERISA. Accordingly, the Board may terminate the Plan and
commence termination payout for all or certain Participants, or remove certain employees as Participants, if it is determined by the United States Department of Labor or a court of competent jurisdiction that the Plan constitutes an employee pension
benefit plan within the meaning of Section 3(2) of ERISA which is not so exempt. If payout is commenced pursuant to the operation of this Article 8, the payment of such amounts shall be made as provided under Section 4 herein. 

 

	Article 9.	Miscellaneous 

  

	 	9.1.	Effect on Other Benefit Plans. Amounts deferred under this Plan shall not be considered compensation for the purposes of any qualified plan maintained by the
Company. Such amounts shall be considered compensation for the purposes of other employee benefit plans or programs, unless specifically excluded by the provisions of such plans or programs. 

  
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	 	9.2.	Notice. Any notice or filing required or permitted to be given to the Company under the Plan shall be sufficient if in writing and hand delivered, or sent by
registered or certified mail to the Senior Vice President, Human Resources of the Company or such other officer as may be designated by the Committee. Notice to the Senior Vice President, Human Resources of the Company or such other officer, if
mailed, shall be addressed to the principal executive offices of the Company. Notice mailed to a Participant shall be at such address as is given in the records of the Company. Notices shall be deemed given as of the date of delivery or, if delivery
is made by mail, as of the date shown on the postmark on the receipt for registration or certification. 

  

	 	9.3.	Nontransferability. Participants’ rights to deferred amounts and interest earned thereon under the Plan may not be sold, transferred, assigned, or otherwise
alienated or hypothecated, other than by will or by the laws of descent and distribution. In no event shall the Company make any payment under the Plan to any assignee or creditor of a Participant. 

 

	 	9.4.	Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining
parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included. 

  

	 	9.5.	Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the
singular, and the singular shall include the plural. 

  

	 	9.6.	Costs of the Plan. All costs of implementing and administering the Plan shall be borne by the Company. 

 

	 	9.7.	Successors. All obligations of the Company under the Plan shall be binding on any successor to the Company, whether the existence of such successor is the result
of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company. 

  

	 	9.8.	Applicable Law. The Plan shall be governed by and construed in accordance with the laws of the state of Illinois. 

  
 7

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