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# 7 JANUARY 2004 ARGUMENT COURT
PHILIP MARKOVITZ,
Plaintiff
V.
RITE AID CORPORATION,
Defendant
IN THE COURT OF COMMON PLEAS
DAUPHIN COUNTY, PENNSYLVANIA
NO. 3377 CV 2003
CIVIL ACTION - LAW
BEFORE TURGEON, CLARK AND BRATTON, JJ.
ORDER '
co
AND NOW, this 26th day of May, 2004, upon notice by the parties that their
attempt to mediate this dispute has failed, this Court hereby directs, in consideration of the
Defendant's preliminary objections, as follows: Whereas this action and Rite Aid Corporation v.
Philip Markovitz, which is currently pending in Cumberland County (03-3060 Civil Term,
Cumberland County Court of Common Pleas), involve common questions of law and fact that
arise from the same transactions and occurrences, this action is hereby ordered transferred to
Cumberland County and coordinated with the Cumberland County action. Pa.R.C.P. 213.1(a)-
(d)
Pursuant to Rule 213.1(e), this Order shall be considered notice to both parties of the
order of coordination. Pa.R.C.P. 213.1(e). It is further directed that costs associated with
coordination, if any, shall be equally borne by the parties. Id.
The Dauphin County Prothonotary's Office is hereby directed to send a certified copy of
this coordination order to the Cumberland County Court. Id.
BY THE COURT:
Jeami urgeon,Jud
Wge
alter Phillips, QQ
Walter Phillips, Jr„ Esquire, One South Broad St, Ste 1500, Philadelphia, PA 19107
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William Slaughter, Esquire, 1735 Market St., 5161 Fl., Philadelphia, PA 19103 1Y?N
Thomas Lee - Dauphin County Argument Court Attorney 1 t y Y - %
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PrPr nnctary
Date: 512712004 Dauphin County User: LGARCIA
Time: 02:16 PM RDA Report
Page 1 of 1 Case: 2003-CV-3377-CV
Current Judge: No Judge
Philip Markovitz vs. Rite Aid Corporation
Civil
Date Judge
8/512003 New Civil Case Filed This Date. No Judge
Filing: Complaint Paid by: Hoyle Fickler Herschel & Mathes Receipt No Judge
number: 0039711 Dated: 8/512003 Amount: $105.00 (Check)
Plaintiff: Markovitz, Philip Attorney of Record: Walter M. Phillips Jr No Judge
811812003 Complaint: Sheriffs Return filed stating service was completed. So No Judge
answers J.R. Lotwick, Sheriff. Rite Aid Corporation Assigned to Dauphin
Cc Sheriffs Office Service fee $46.00 Served 811812003
812212003 Barley, Snyder, Senft & Cohen, by: Stephanie Carfley, Esq. enters No Judge
appearance on behalf of defendant, Good Samaritan Hospital of Lebanon.
Rule is issued upon Plaintiff to file a Complaint within 20 days of service or No Judge
suffer entry of Judgment of Non Pros.
Preliminary objections to complaint, filed No Judge
911112003 Response of plaintiff Philip Markovitz to the preliminary objections to No Judge
complaint of defendant Rite Aid Corporation, filed
9/1 912 0 0 3 Memorandum of law of Rite Aid Corporation in support of its preliminary No Judge
objections to plaintiffs complaint, filed
Notice to file a responsive brief, filed No Judge
Certificate of service of Memorandum of Law of Rite Aid Corporation in No Judge
Support of its Preliminary Objections to Plaintiff's Complaint, and Notice to
File a Responsive Brief, was served upon plaintiffs counsel, Walter M.
Phillips, Jr., Esq., filed
10/20/2003 Memorandum of law in opposition to Rite Aid Corporation's preliminary No Judge
objections and in support of the Coordination and transfer of Rite Aid's
Cumberland County Action to this court, filed
12/1612003 Reply memorandum of law of Rite Aid Corporation in support of its No Judge
preliminary objections to plaintiffs complaint, filed
12/1812003 Praecipe to List for Argument, filed by Defendant No Judge
1/28/2004 Consideration of Defendant's Preliminary Objections is hereby stayed for No Judge
60 days upon the parties' agreement to pursue mediation. See Order filed
copies dist 1/29/04
411 912004 Disposition of Defendant's Preliminiary Objections is hereby stayed pending Jeannine Turgeon
further notice by the parties on the status of mediation. See Order filed
copies dist 4120104
5126/2004 Upon notice by the parties that their attempt to mediate this dispute has Jeannine Turgeon
failed, this Court hereby directs, in consideration of the Defendant's
Preliminary objections, as follows: Whereas this action and Rite Aid
Corporation v. Phili Markovitz, which is currently pending in
CumberiandCounty (03-3060 Civil Term, Cumberland County Court of
Common Pleas), involve common questions of law and fact that arise from
the same transactions and occurences, this action is hereby transferred to
Cumberland County and coordinated with the Cumberland County action.
Pa.R.C.P. 213.1 (a)-(d). Pursuant to Rule 213.1(e), this Order shall be
considered notice to both parties of the Order of coordination. Pa.R.C.P. MAY 213.1(e). It is further directed that costs associated with coordination, if any, 1Y 2 7 2w+
shall be equally borne by the parties. Id. The Dauphin County
Prothonotary's Office is hereby directed to send a certified copy of this j hGr9by j!y that the fOffy^pj?
coordination order to the Cumberland County Court. Id. See Order filed tr0a artd carrict aco ige t th of reg a
copies dirt 5126104 EIS ?+1
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HOYLE, FICKLER, HERSCHEL &
MATHES LLP
BY: Walter M. Phillips, Jr., I.D. No. 22788
R. David Walk, Jr., I.D. No. 43549
Kevin J. Kotch, I.D. No. 71006
One South Broad Street, Suite 1500
Philadelphia, PA 19107
(215) 981-5700
PHILIP MARKOVITZ
1 Laurel Ridge Road
Hershey, Pennsylvania 17033
V.
RITE AID CORPORATION
30 Hunter Lane
Camp Hill, Pennsylvania 17011
Attorneys for Plaintiff,
d
Philip Markovitz P
a?
r'
DAUPHIN COUNTY
COURT OF COMMON PLEAS
TRIAL DIVISION
Term, 2003
No. da03 G/ 3377 G/
JURY TRIAL DEMANDED
NOTICE TO DEFEND
YOU HAVE BEEN SUED IN COURT. If you wish to defend against the claims
set forth in the following pages, you must take action within twenty (20) days after this
Complaint and Notice are served, by entering a written appearance personally or by
attorney and filing in writing with the Court your defenses or objections to the claims set
forth against you. You are warned that if you fail to do so the case may proceed without
you and a judgment may be entered against you by the Court without further notice for
any money claimed in the Complaint or for any other claim or relief requested by the
Plaintiff. You may lose money or property or other rights important to you.
YOU SHOULD TAKE THIS PAPER TO YOUR
LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER
OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE
OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU
CAN GET LEGAL HELP.
DAUPHIN COUNTY LAWYER REFERRAL SERVICE
213 North Front Street
Harrisburg, PA 17101
(717) 232-7536
AVISO
USTED HA SIDO DEMANDADO/A EN CORTE. Si usted desea defenderse de
las demandas que se presentan mas adelante on las siguientes paginas, debe tomar accion
dentro de los proximos veinte (20) dias despues de la notificacion de esta Demanda y
Aviso radicando personalmente o per medio de un abogado una comparecencia escrita y
radicando on la Corte por escrito sus defensas de, y objecciones a, las demandas
presentadas aqui on contra suya. Se la advierte de que si usted falla de tomar accion
como se describe anteriormente, el caso puede proceder sin usted y un fallo per cualquier
suma de dinero reclamada en la demanda o cualquier otra reclamacion o remedio
solicitado per el demandante puede ser dictado on contra suya per la Corte sin mas aviso
adicional. Usted puede perder dinero o propiedad u otros derechos importantes para
usted.
USTED DEBE LLEVAR ESTE DOCUMENTO A SU
ABOGADO INMEDIATAMENTE. SI USTED NO TIENE UN
ABOGADO O NO PUEDE PAGARLE A UNO, LLAME O
VAYA A LA SIGUIENTE OFICINA PARA AVERIGUAR
DONDE PUEDE ENCONTRAR ASISTENCIA LEGAL.
DAUPHIN COUNTY LAWYER REFERRAL SERVICE
213 North Front Street
Harrisburg, PA 17101
(717) 232-7536
2
HOYLE, FICKLER, HERSCHEL &
MATHES LLP
BY: Walter M. Phillips, Jr., I.D. No. 22788
R. David Walk, Jr., I.D. No. 43549
Kevin J. Kotch, I.D. No. 71006
One South Broad Street, Suite 1500
Philadelphia, PA 19107
(215) 981-5700
PHILIP MARKOVITZ
1 Laurel Ridge Road
Hershey, Pennsylvania 17033
V.
RITE AID CORPORATION
30 Hunter Lane
Camp Hill, Pennsylvania 17011
Attorneys for Plaintiff,
Philip Markovitz
DAUPHIN COUNTY
COURT OF COMMON PLEAS
TRIAL DIVISION
Term, 2003
No.,==3 G/ 3377 CV
JURY TRIAL DEMANDED
COMPLAINT - CIVIL ACTION
Plaintiff Philip Markovitz brings this Complaint against defendant Rite Aid Corporation
and alleges as follows:
Parties
1. Plaintiff Philip Markovitz ("Markovitz") is an adult individual, who is a citizen of the
Commonwealth of Pennsylvania residing in Dauphin County at 1 Laurel Ridge Road, Hershey,
Pennsylvania 17033.
2. Defendant Rite Aid Corporation (" Rite Aid" or "Company") is a Delaware
corporation with its principal place of business located at 30 Hunter Lane, Camp Hill,
Pennsylvania 17011.
3. Rite Aid is in the business of operating drug stores throughout the United States.
Jurisdiction And Venue
4. This Court has jurisdiction over defendant Rite Aid in that this cause of action
arose out of transactions or occurrences that took place in whole or in part in Dauphin County,
Pennsylvania.
5. Venue in this Court is proper pursuant to Pennsylvania Rules of Civil Procedure
1006 and 2179 in that defendant regularly conducts business and the cause of action arose in
Dauphin County, Pennsylvania.
Facts Common To All Counts
6. In 1971, plaintiff Markovitz was hired by Rite Aid and was assigned to its real estate
division. Plaintiffs primary responsibility was to find store locations for Rite Aid and to
negotiate and enter into leases on behalf of the Company.
7. For the next 29 years, plaintiff performed his job duties in an exemplary fashion and
received various promotions. In 1985, plaintiff was promoted to Vice President of Real Estate,
and in 1991 he was promoted to Senior Vice President in charge of the Real Estate Department
reporting directly to the Chief Executive Officer ("CEO") of Rite Aid.
8. In 1995, Martin Grass ("Grass") became CEO of Rite Aid.
9. In 1996, Rite Aid put in place a Deferred Compensation Agreement ("1996
Agreement') available to certain valued officers of the Company as an inducement to remain
with Rite Aid. See Attachment "A." Plaintiff was one of those officers.
10. The 1996 Agreement provided that, upon reaching age 65, an officer would be
entitled to retire and receive monthly one-twelfth of 50 percent of the average of the three
highest annual base salaries paid or accrued in the previous ten years. The 1996 Agreement also
required that the officer have completed 20 years of service with Rite Aid in order to be eligible.
11. In or about June 1998, in a meeting with plaintiff, Grass raised the subject of
Markovitz's retirement from Rite Aid, suggesting that maybe it was time to bring along new
leadership and that plaintiff should consider retiring in the year 2000. Markovitz responded that
he would be amenable to retiring in 2000, but he at that time would only be 59 years of age and,
while he had put in more than 20 years of service with the Company, he would not be eligible
under the 1996 Agreement for deferred compensation because he would not yet be 65. Grass
replied that he would agree on behalf of Rite Aid that Markovitz would be eligible for retirement
benefits under the 1996 Agreement when he retired in 2000 even though he would not yet be 65
years of age, and that the monthly payments under the 1996 Agreement would commence
immediately upon plaintiffs retirement. Grass also agreed that Markovitz's deferred
compensation would be based on 50 percent of his highest annual salary and highest annual
bonus during the three years preceding his retirement; further, that any stock options plaintiff
held at the time of his retirement would vest and be exercisable in whole or in part for 36 months
and that these options would survive Markovitz's death. Grass stated to Markovitz that Rite Aid
had similarly amended the deferred compensation agreements of other senior officers of Rite Aid
who were contemplating retirement before the age of 65. Upon information and belief, Rite Aid
is currently paying deferred compensation benefits similar to those which Grass agreed that
Markoviz would receive to other executives of Rite Aid who retired before age 65.
12. Based on the representations and promises made by Grass, plaintiff Markovitz
assisted in identifying a successor to his position as Senior Vice President in charge of the Real
Estate Department.
13. On or about October 18, 1999, Grass was forced to resign as Chairman and CEO of
Rite Aid.
14. Shortly after Grass's resignation, plaintiff Markovitz approached Franklin Brown
("Brown"), who was then Vice Chairman of the Board of Directors of Rite Aid and the
Company's General Counsel. Plaintiff advised Brown about the agreement he had made with
Grass in June 1998, specifically the promised changes to the 1996 Agreement that Grass said he
would make with respect to Markovitz, and the fact that this agreement was never reduced to
writing.
15. Thereafter, Brown provided Markovitz with a letter signed by Grass, dated June 12,
1998, memorializing the agreement entered into by Grass at their meeting and which made
plaintiff eligible under the 1996 Agreement. See Attachment "B."
16. In or about January 2000, Robert Miller ("Miller"), Rite Aid's new Chairman and
Chief Executive Officer, met with plaintiff Markovitz and asked that he resign before the end of
the fiscal year in February 2000. In addition, Miller requested that Markovitz sign a separation
agreement and release which honored the substantive terms of the 1996 Agreement, as amended
by Grass. In consideration of Rite Aid's agreement to so honor the 1996 Agreement, plaintiff
acceded to both of Miller's requests.
17. On January 24, 2000, plaintiff signed an Executive Separation Agreement and
General Release ("Separation Agreement") with Rite Aid that incorporated the terms of the 1996
Agreement, as amended by Grass in June 1998. See Attachment "C."
18. Plaintiff retired from Rite Aid as of February 4, 2000.
19. Pursuant to the Separation Agreement, Rite Aid made monthly payments to plaintiff
through the middle of June 2003, but has made no payments since.
4
20. By letter dated June 26, 2003 to plaintiffs attorney, Rite Aid, through its general
counsel, advised plaintiff Markovitz that it was discontinuing all payments under the Separation
Agreement on the ground that plaintiff had "procured (the) Separation Agreement by fraud."
21. Plaintiff did not engage in any fraud in entering into the Separation Agreement with
defendant Rite Aid.
22. Defendant Rite Aid, also in its June 26, 2003 letter, demanded that payments made to
plaintiff in 1999 pursuant to a 1995 Long Term Incentive Plan be returned to Rite Aid.
Defendant offered no reasons for its demand that these monies be returned by plaintiff.
COUNT I -- BREACH OF CONTRACT
(SEPARATION AGREEMENT AND GENERAL RELEASE)
23. Markovitz incorporates the allegations of paragraphs 1 through 22 of this Complaint
as if set forth herein in full.
24. Rite Aid has an obligation under the Separation Agreement to make monthly
payments of $17946.90 to Markovitz, commencing in March 2000 and continuing for 20 years.
25. Rite Aid made its last payment under the Separation Agreement in June, 2003.
26. By letter dated June 26, 2003, Rite Aid said it would no longer make any payments
under the Separation Agreement.
27. Rite Aid is in breach of the Separation Agreement, has an obligation to make the
outstanding payments under the Separation Agreement and has an obligation to make future
payments under the Separation Agreement.
WHEREFORE, Plaintiff Philip Markovitz demands judgment in its favor and against
defendant Rite Aid Corporation, for:
(a) amounts due and owing under the Separation Agreement;
(b) an order directing defendant Rite Aid to continue making payments under the
Separation Agreement;
(c) pre judgment interest;
(d) court costs;
(e) post judgment interest; and
(f) such other relief as the Court deems just and appropriate.
COUNT II -- BREACH OF CONTRACT
(1996 DEFERRED COMPENSATION AGREEMENT)
28. Markovitz incorporates by this reference the allegations of paragraphs 1 through 27 of
this Complaint as if set forth herein in full.
29. In the event the Separation Agreement and General Release is not enforceable, the
1996 Deferred Compensation Agreement, as amended by CEO Grass in June 1998, is
enforceable.
30. Rite Aid is in breach of the 1996 Deferred Compensation Agreement, as amended by
CEO Grass, and it has an obligation to make the outstanding payments and it has an obligation to
make future payments.
WHEREFORE, Plaintiff Philip Markovitz demands judgment in its favor and against
defendant Rite Aid Corporation, for:
(a) amounts due and owing under the contract;
(b) an order directing defendant Rite Aid to continue making payments under the
1996 Deferred Compensation Agreement, as amended by Grass in June 1998;
(c) pre judgment interest;
(d) court costs;
(e) post judgment interest; and
(f) such other relief as the Court deems just and appropriate.
COUNT III -- DECLARATORY JUDGMENT
31. Markovitz incorporates the allegations of paragraphs 1 through 30 of the Complaint
as if set forth herein in full.
32. An actual, immediate and justiciable controversy exists between plaintiff Markovitz
and defendant Rite Aid with regard to payments to be made to Markovitz under the agreements
reached regarding his early retirement. A declaratory judgment by this Court will affect the
rights and interests of the parties.
33. By letter dated June 26, 2003, Rite Aid said it would no longer make any payments
under the Separation Agreement.
34. Accordingly, Markovitz seeks relief in the nature of a declaration that Rite Aid has a
continuing obligation to make payments to Markovitz under the Separation Agreement and/or
the 1996 Deferred Compensation Agreement.
WHEREFORE, Plaintiff Philip Markovitz demands judgment in his favor and against
Defendant Rite Aid Corporation, for:
(a) a declaration that Defendant Rite Aid Corporation is obligated to continue making
payments under the 2000 Separation Agreement and Release;
(b) a declaration that Defendant Rite Aid Corporation is not entitled to repayment of
the Long Term Incentive Program payment made to Plaintiff Philip Markovitz in August 1999;
(c) court costs;
(d) attorney's fees;
(e) such other relief as the Court deems just and appropriate.
COUNT IV -- PENNSYLVANIA WAGE PAYMENT
AND COLLECTION ACT, 43 P.S. § 260.1, et seq.
35. Markovitz incorporates the allegations of paragraphs 1 through 34 of this Complaint
as if set forth fully herein.
36. Defendant Rite Aid was plaintiffs employer within the meaning of the Pennsylvania
Wage Payment and Collection Act ("PWPCA"), 43 P. S. § 260. 1, et seg.
37. Payments under the Separation Agreement are "wages" and "fringe benefits"
or "wage supplements" within the meaning of the PWPCA.
38. Defendant Rite Aid has failed to make payment of wages that are due and owing to
Markovitz pursuant to the Separation Agreement and/or the 1996 Deferred Compensation
Agreement, as amended by CEO Grass in 1998.
39. Defendant Rite Aid has willfully failed to make payments under the Separation
Agreement and therefore is in violation of PWPCA.
WHEREFORE, Plaintiff Philip Markovitz demands judgment in his favor and against
Defendant Rite Aid Corporation, for:
(a) • payment of wages due and owing;
(b) prejudgment interest;
(c) post judgment interest;
(d) liquidated damages in an amount equal to 25 percent of the total amount of wages
and fringe benefits or wage supplements due;
(e) court costs;
(f) attorneys' fees;
(g) such other relief as the Court deems just and appropriate.
HOYLE, FICKLER, HERSCHEL &
MATHES LLP
By: (it I .l 9VI ?
Walter M. Phillips, Jr.
R. David Walk, Jr. V
Kevin J. Kotch
One South Broad Street, Suite 1500
Philadelphia, PA 19107
(215) 981-5700
Attorneys for Plaintiff
Philip Markovitz
Dated: August 5, 2003
RUG-05-2003 11:24
VERIFICATION
I, Philip Mwkovitz, verify that the statements in the foregoing complaint
are true and correct to the best of my personal knowledge, information and belief, and
that I understand that the statements made herein are made subject to the penalties of 18
Pa. Cons. Stat. Ann. § 4904, relating to unworn falsification to authorities. /" xm/:Y,
13Y... Philip Markowitz
Dated: August S 2003
P. 02/0:
TOTAL P.02
08/05/2003 TUE 11:08 [TX/RX NO 61001 9 002
Exhibit A
DEFERRED COMPENSATION AGREEMENT
AGREEMENT entered into as of the 12th day of April,
1996, by and between RITE AID CORPORATION, with offices at 30
Hunter Lane, Camp Hill, Pennsylvania 17011 ("Corporation"),
and the employee named on the signature page of this
Agreement ("Employee").
WHEREAS, Employee is rendering and Corporation desires
that Employee continue to render valuable services to
Corporation; and
WHEREAS, to assist Employee in providing for the
contingencies of death, disability and old age dependency,
Corporation and Employee desire to enter into this Agreement
("Agreement") to provide Employee with deferred compensation.
NOW, THEREFORE, Corporation and Employee hereby agree as
follows:
1. (a) In the event that Employee's employment with
Corporation terminates after Employee has reached age sixty
five (65) and has completed at least twenty (20) years of
service with Corporation, Employee shall be entitled to
retirement ("Retirement") with the compensation provided in
this Agreement. In such event, the Corporation shall pay to
Employee, monthly, an amount equal to one twelfth (1/12) of
fifty (50%) percent of the average of the three (3) highest
annual base salaries paid or accrued in respect of three (3)
fiscal years of the Corporation within the last ten (10)
fiscal years of the Corporation prior to termination of
Employee's employment; provided, however, that in the event
Employee's Retirement commences after at least six (6) months
of the fiscal year in which Employee's Retirement takes place
have elapsed, that fiscal year shall be included as the tenth
year in the calculation of the Retirement Allowance and
Employee shall be deemed to have been paid an annual base
salary for that entire fiscal year at the highest rate paid
to Employee in that fiscal year. The monthly amount of such
payments shall hereinafter be referred to as the "Retirement
Allowance". Monthly payments of Retirement Allowance shall
commence on the first day of the month next following
Employee's Retirement and shall continue for one hundred
eighty (180) months. All payments of Retirement Allowance
2
under this Agreement shall be made subject to such
withholding and deductions as may be required by law.
(b) If the Employee's service with the Corporation is
terminated or suspended by reason of disability
("Disability"), then regardless of the Employee's age or
length of service, and provided Employee is not then
receiving disability payments under Corporation's Long Term
Disability Plan, if requested by Employee and if approved by
the Board of Directors in its sole discretion, Corporation
shall pay to Employee, monthly, commencing on the first day
of the third month next following its receipt of Employee's
request, so much of the Retirement Allowance (determined at
the date of Employee's Disability) as the Board of Directors
shall deem appropriate. Such monthly payments shall continue
until the earlier of: (i) the cessation of Employee's
Disability (whether or not Employee returns to active
employment with Corporation or with another employer) or (ii)
the payment of an aggregate amount of the product of 180 and
the Retirement Allowance or (ii) Employee's death.
Employee shall be deemed to have incurred a Disability
only if according to certification of competent medical
authority approved or selected by Corporation's Board of
3
Directors ("Board of Directors"), Employee is incapable of
performing normal duties with Corporation by reason of a
medically determinable physical or mental impairment which
will persist for an indeterminate period of time.
(c) If after receiving monthly Disability payments
under this Agreement, Employee returns to employment with
Corporation, the total dollar amount of Retirement Allowance
received by Employee during Employee's Disability shall, in
any manner deemed equitable by the Board of Directors, be
subtracted from the aggregate Retirement Allowance to which
Employee may later become entitled at such time as that
Retirement Allowance becomes payable under this Agreement.
However, there shall not be subtracted from the Retirement
Allowance any payments received under any other disability
insurance or program not arising out of this Agreement.
2. (a) If Employee dies while employed by Corporation
or while subject to a Disability, Corporation shall pay to
Employee's beneficiary designated pursuant to Section 5 or as
otherwise provided in that Section, a Retirement Allowance
the amount of which shall be calculated as if the death had
occurred (i) after Employee had completed twenty (20) years
of service with Corporation and (ii) after Employee had
4
reached age sixty five (65), reduced by one-180th of the
aggregate amount, if any, paid to Employee under section
1(b). Monthly payment of that Retirement Allowance shall
commence on the first day of the month next following the
date of Employee's death and shall continue for one hundred
eighty (180) months.
(b) If Employee dies after payments under Section
1 have commenced, but before payments have been completed,
the remaining payments shall be continued to Employee's
beneficiary designated pursuant to Section 5 or as otherwise
provided in that Section.
3. If Employee's employment with Corporation
terminates for any reason other than Retirement, disability
or death, this Agreement shall terminate and no benefits
shall be payable to Employee or to any person or entity
claiming by, from or through Employee.
4. If at any time Employee is discharged for good
cause by Corporation with the acquiescence of the Board of
Directors, or if subsequent to Employee's retirement,
disability or death, it is discovered that Employee committed
an act which could have resulted in Employee's discharge for
5
good cause by Corporation, had it been known to Corporation,
this Agreement shall terminate and any and all rights and
benefits of Employee and of any person claiming by, from or
through Employee under this Agreement shall be forfeited and
any benefits then being paid or to be paid in the future
shall cease. In the case of an after-discovered fact, the
Board of Directors shall determine whether there has been an
act which would have justified a discharge for good cause,
using reasonable and non-discriminatory standards.
5. Employee shall designate in writing on a form
delivered to the Board of Directors (Attention: Chairman) a
beneficiary or beneficiaries and successor beneficiaries
(including address) to receive the benefits, if any, payable
under this Agreement upon Employee's death. The Board of
Directors shall decide which beneficiary or beneficiaries, if
any, shall have been validly designated. Such designation of
beneficiary may be revoked and changed by Employee, from time
to time, in writing on a form delivered to the Board of
Directors (Attention: Chairman), and shall be revoked
automatically if the designated beneficiary or beneficiaries
predecease Employee, in which case a new designation of
beneficiary or beneficiaries may be made. If, at the time of
Employee's death no designation of beneficiary is then in
6
effect, or following Employee's death, upon the death of all
successor beneficiaries designated by Employee, all remaining
Retirement Allowance shall be paid to Employee's estate.
6. Employee's rights under this Agreement and the
rights of Employee's beneficiary or estate may not be
assigned, transferred, pledged or encumbered.
7. In determining Employee's length of service with
Corporation for purposes of this Agreement there shall be
counted any period of: (a) employment with any business
entity controlling, controlled by or under common control
with Corporation; (b) employment with any business entity at
the request of Corporation; (c) service prior to the date of
this Agreement with any business entity referred to in (a)
and (b) of this Section and (d) any period of Disability
(whether or not payments of the Retirement Allowance were
made to Employee as a result thereof).
8. Nothing contained in this Agreement shall be
construed as conferring upon Employee the right to continue
in the employ of Corporation in any capacity and the
employment rights of Employee shall be determined as if this
Agreement had never been executed.
7
9. If at any time after Retirement Employee, without
the prior consent of the Board of Directors, undertakes
employment with or provides consulting or advisory services
to any person or entity engaged in the continental United
States: (a) in any business in which Corporation or any
entity, employment with which would, for purposes of this
Agreement, constitute employment by the Corporation, is
engaged (whether or not in competition with Corporation or
such entity) or (b) in the operation of pharmacy benefit
manager, Employee's right to any remaining Retirement
Allowance otherwise payable under this Agreement shall at
that time cease and terminate permanently. The provisions of
this Section 9 shall not be applicable with respect to
employment by or consulting services to a trade association
of persons or entities referred to in (a) of this Section.
10. The benefits, if any, payable to Employee in
accordance with this Agreement shall not constitute a
segregation of funds or other property for the benefit of
Employee or of any person or entity claiming by, from or
through Employee. Nothing contained in this Agreement and no
action taken pursuant to the provision of this Agreement
shall create or be construed as creating a trust of any kind
or a fiduciary relationship between Corporation and Employee
8
or any person or entity claiming by, from or through Employee
and neither Employee nor any person or entity claiming by,
from or through Employee shall have rights with respect to
the benefits under this Agreement greater than the rights of
an unsecured general creditor of the Corporation.
7
11. (a) The Board of Directors shall have full power
and authority to interpret, construe and administer this
Agreement and shall not be liable to Employee or any person
or entity claiming by, from or through Employee for any
action taken or omitted in connection with the
interpretation, construction or administration or this
Agreement and no action taken or omitted by the Board of
Directors in connection with the interpretation, construction
or administration of any similar or dissimilar agreement
between Corporation and any other employee of Corporation
shall by reason of this Agreement create any cause of action
in Employee or any person or entity claiming by, from or
through Employee. All decisions, interpretations and actions
of the Board of Directors taken in connection with this
Agreement, including any claims for benefits made under this
Agreement, shall be conclusive, final and binding on all
parties.
9
(b) If the Board of Directors denies the claim of
an Employee or of any person claiming by, from or through
Employee (a "Claimant") for payment of the Retirement
Allowance under this Agreement, the Board of Directors shall
provide written notice,. within sixty (60) days after receipt
of the claim, setting forth in a manner calculated to be
understood by the Claimant;
(i) the specific reasons for such denial;
(ii) the specific reference to the provisions
of this Agreement on which denial is based;
(iii) a description of any additional material
or information necessary to perfect the claim and an
explanation of why such material or information is
needed; and
(iv) an explanation of this Agreement's claim
review procedure and the time limitations of this
subsection applicable thereto.
Employee or any Claimant whose claim for payment of
the Retirement Allowance has been denied may request review
10
by the Board of Directors of the denied claim by notifying
the Board of Directors in writing within sixty (60) days
after receipt of the notification of claim denial. As part
of said review procedure, the Employee or Claimant or their
authorized representatives may review pertinent documents and
submit issues and copments to the Board of Directors in
writing. The Board of Directors shall render its decision to
Employee or the Claimant in writing in a manner calculated to
be understood by the Employee or Claimant not later than
sixty (60) days after receipt of the request for review,
unless special circumstances require an extension of time, in
which case decision shall be rendered as soon after the sixty
(60) day period as possible, but not later than one hundred
twenty (120) days after receipt of the request for review.
The decision on review shall state the specific reasons
therefor and the specific Agreement references on which it is
based.
12. This Agreement shall be binding upon and inure to
the benefit of this Corporation, its successors and assigns,
and Employee, Employee's beneficiary, heirs, executors,
administrators and legal representatives.
11
13. Failure to insist upon strict compliance with any
of the terms, covenants or conditions hereof shall not be
deemed a waiver of such term, covenant or condition, nor
shall any waiver or relinquishment of any right or power
hereunder at any one time or more times be deemed a waiver or
relinquishment of spch right or power at any other time or
times.
14. If any clause, sentence, paragraph, section or part
of this Agreement shall be held by any court of competent
jurisdiction to be invalid, such judgment shall not affect,
impair or invalidate the remainder hereof.
15. Any notice required or permitted to be given under
this Agreement shall be sufficient if in writing and sent by
registered or certified mail; if to Employee, to the address
shown on the books of Corporation; and if to Corporation, to
the address shown above or such other address as Corporation
may have designated in writing, or if actually received by
the person to whom sent.
16. This Agreement shall be subject to and construed in
accordance with the laws of the Commonwealth of Pennsylvania
12
where it is made without giving effect
conflict of law.
to principles of
IN WITNESS WHEREOF, Corporation has caused this Agreement
to be executed by its duly authorized officer and
Employee has hereundgr set Employee's hand as of the date first
above written.
RITE
By:
Chairman of the Board and
Chief Executive Officer
EMPLOYEE
Name: P ilip Mar 6 itz
13-
DESIGNATION OF BENEFICIARY
To: The Board of Directors of Rite Aid Corporation
Attention: Chairman
In accordance with the Defected Compensation Agreement granted to me
by Rite Aid Corporation, I hereby designate the following beneficiaries to receive any
payments which may be due following my deceit: -
Primary Beadiciary (or Beneficiaries):%
Social
Name Percentage Address Security Number
Mary Markovitz 100% 1 Laurel Ridge Road REDACTED
Hershey, PA 17033
Secondary Beneficiary (or Beneficiaries) if all Primary Beneficiaries are deceased:
Social
Name Percentage Address Security Number
Linda Markovitz 100% 201 South 18th Street REDACTED
Apt. 812
Philadelphia, PA 19103
If more than one Primary or Contingent beneficiary is named, specify the
percentage to be paid to each; if percentages are not specified, payments will be made
equally to the beneficiaries then living.
. I understand that this Designation is subject to the terms of the Agreement,
and that I may amend or revoke this Designation at any time or times in the manner
provided for in the Agreement.
Date. / G=am 1?"" ' `
• --April iS, tggF Signature:
Philip 'rarkovitz
DSCJ26068.1
Exhibit B
Rite Aid Corporation
MARTIN L. GRASS
Chairman
Chief Executive Officer
June 12, 1998
Mr. Philip Markovitz
One Laurel Ridge Road
Hershey, PA 17033
Dear Phil,
• MAILING ADDRESS
P.O. Box 3165
Harrisburg, PA 17105
• GENERAL OFFICE
30 Hunter Lane
Camp Hill, PA 17011
•(717)975-5701
• (717) 975-5905 Fax
I think we had a very productive discussion on the restructuring of the senior management of the
real estate department. I appreciated your candor and your showing of intense cooperation and
loyalty. By agreeing to early retirement, you are permitting us to bring in a new generation so that
we can train it for a few years berore you would turn over the reins completely. This will enable you
and me to experiment, make evaluations and select the correct successor.
We have agreed that you will be retiring upon your attaining age 59, at the end of March, 2000.
In consideration of your accepting this somewhat early retirement, the Company hereby amends your
deferred compensation contract as follows:
(a) The payments under the deferred compensation contract will commence effective
upon your retirement at age 59 and will continue for 15 years beyond the normal
retirement age of 65.
(b) The calculation of your retirement benefit will be based on 50% of your highest
annual salary plus your highest annual bonus during the three fiscal years preceding
your date of retirement.
In addition, as to any stock options held by you at the time of your retirement: they shall then vest
and be exercisable in whole or in part from time to time for a period up to 36 months. Exercisability
shall survive your death.
I am confident that you will apply yourself to the task with the same vigor and loyalty as you have
demonstrated in the past.
/isk
Exhibit C
EXECUTIVE SEPARATION AGREEMENT AND GENERAL RELEASE
This Executive Separation Agreement and General Release ("Agreement") by and
between Philip Markovitz ("Executive") and Rite Aid Corporation (the "Company") is entered
into as of January 24, 2000, subject to the revocation and effectiveness provisions of Section 14
below.
WHEREAS, Executive has for many years served as an officer and employee of
the Company and its subsidiaries; and
WHEREAS, the Company has provided Executive with a letter agreement, dated
June 12, 1998 (the "Letter Agreement"), setting forth certain terms regarding Executive's
retirement from the Company; and
WHEREAS, the Company and Executive have determined that Executive's
employment with the Company shall terminate effective as of February 4, 2000; and
WHEREAS, the Company and Executive have determined to further memorialize
Executive's retirement compensation, as set forth in the Letter Agreement, and certain other
matters, subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and covenants set forth
herein, and for other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by the parties hereto, Executive and the Company hereby agree as follows:
1. Resignation of Positions. Executive hereby voluntarily resigns his
employment with the Company effective as of February 4, 2000 (the "Termination Date"), and
the Company hereby accepts such resignation. Executive hereby further resigns, effective as of
the Termination Date, from all positions he may hold as an officer or director of the Company
and its subsidiaries and affiliates, and the Company hereby accepts such resignations. Executive
covenants and agrees to execute all such instruments and take all such other actions as the
Company may reasonably deem necessary or desirable to evidence or accomplish the foregoing
in full.
2. Severance Benefits. In consideration for Executive's resignations and
release of claims set forth herein, but subject to (i) the forfeiture provisions set forth in Sections 7
and 8 and (ii) expiration of the Revocation Period (as defined in Section 14) without Executive's
revocation of this Agreement, the Company shall provide Executive with the following benefits
(the "Severance Benefits"):
(a) During the period commencing on the Termination Date and
ending on March 31, 2000 (the "Severance Period"), the Company shall continue payment of
Executive's annual base salary at the rate in effect on the Termination Date, such amounts to be
payable at such times and otherwise in accordance with the Company's standard payroll
procedures for officers.
23003640markovitz-mv2.wpd
(b) During the Severance Period, the Company shall provide
Executive with continued coverage under such of the Company's medical benefits plans in effect
from time to time as are generally applicable to senior executives of the Company, subject to all
applicable terms and conditions of such plans. Without limiting the generality of the foregoing,
Executive shall be responsible for any premiums, co-payments, deductibles and other amounts
payable by participants pursuant to the terms of such plans.
(c) All 245,000 stock options held by Executive as of the Termination
Date shall become immediately vested and exercisable and shall remain vested and exercisable
through March 31, 2003 (or, if earlier, through the end of the stated term of such stock options),
whereupon any such options that have not theretofore been exercised shall terminate and expire
in their entirety. A schedule with respect to the details of those options is attached as Exhibit A.
(d) That certain Deferred Compensation Agreement, dated April 12,
1996 between Executive and the Company (the "Deferred Compensation Agreement"), is hereby
amended to provide that (i) Executive shall be eligible to receive payment of benefits under the
Deferred Compensation Agreement commencing April 1, 2000; (ii) unless earlier terminated in
accordance with the terms of the Deferred Compensation Agreement or the terms hereof, such
benefits shall be payable to Executive or Executive's beneficiary through and including March
31, 2021; and (iii) the amount of the retirement benefit payable under the Deferred Compensation
Agreement shall be calculated based upon 50% of Executive's highest annual salary plus
Executive's highest annual bonus paid during the 1998, 1999 and 2000 fiscal years of the
Company (ie, 50% of the sum of (i) $218,545.60 (Executive's annual salary in fiscal 1999) and
(ii) $212,180.00 (Executive's annual bonus paid with respect to fiscal 1999)). Other than as set
forth herein, the terms and conditions of the Deferred Compensation Agreement shall remain in
full force and effect.
(e) Executive shall be eligible to receive benefits under any applicable
pension and welfare benefit plans (including the 401(k) Plan) maintained by the Company in
which Executive is a participant as of the Termination Date in accordance with the terms and
conditions of such plans. Nothing herein shall be construed as providing Executive the right to
continued vesting or accrual of benefits under any such plan during the Severance Period or
thereafter.
(f) The Company shall (i) indemnify Executive to the full extent
permitted by the Company's Certificate of Incorporation (subject to any limitations imposed
under applicable law) and provide advancement of attorneys' fees in connection therewith, and
(ii) continue coverage for Executive for a period of six (6) years following termination of his
employment with the Company under any Director and Officer insurance policies maintained
from time to time by the Company; provided, that Executive shall (and hereby does) undertake to
repay the Company any such amounts advanced with respect to any action, claim or other
proceeding as to which it is ultimately determined under applicable law that Executive shall not
be entitled to indemnification from the Company; and provided, further, that-Executive agrees to
execute any similar or related undertaking in such form as shall be required of other officers and
directors of the Company.
23003640mwkovi4-re 2. pd
Notwithstanding anything herein to the contrary, Executive acknowledges
and agrees that (i) he shall not receive or be entitled to receive any annual or other bonus in
respect of the Company's fiscal year ending in or about February 2000, (ii) he shall not receive or
be entitled to receive any payment in respect of any long-term bonus or incentive plan in which
Executive has at any time been a participant prior to the Termination Date, (iii) he shall not
receive or be entitled to receive any annual, long-term or other bonus in respect of the Severance
Period or any portion thereof, (iv) he shall not receive or be entitled to receive pension credits or
otherwise be eligible for retirement plan contributions in connection with the Severance Benefits
and (v) other than as set forth in this Section 2, Executive shall not receive or be entitled to
receive any amounts or benefits under any stock-based or other incentive, bonus or other
compensation, severance or fringe benefits plan, program, policy, agreement or arrangement of
the Company. Executive shall not 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 Executive under this Section 2, and such amounts, benefits and other
compensation shall not be reduced in respect of any amounts actually earned by Executive from
subsequent employment.
3. Full Discharge. Executive agrees and acknowledges that the Severance
Benefits provided to Executive under this Agreement and referred to in Section 2 above (i)
exceed in the aggregate any sums or other payments of benefits to which Executive would
otherwise be entitled in respect of his employment with the Company and the termination thereof
under any policy, plan, or procedure of, or any agreement or understanding with, the Company or
its subsidiaries or affiliates and (ii) except as provided in Section 4(a), is in full discharge of any
and all claims the Executive has or may have against the Releasees, as defined in Section 4(a),
including without limitation for wages, benefits (including plan contributions), or attorney's fees,
and any amounts which Executive would otherwise be entitled to receive under the Letter
Agreement.
4. General Release.
(a) In consideration of the Severance Benefits, Executive, for himself
and for his heirs, executors, administrators, representatives, successors and assigns (hereinafter
collectively referred to as the "Releasors"), releases and forever discharges the Company and
any and all of its subsidiaries, divisions, affiliated entities, representatives, successors and
assigns, and any and all of its or their employee benefit or pension plans or funds, and any and all
of its or their past or present officers, directors, stockholders, agents, trustees, administrators,
employees, successors or assigns (whether acting as agents for such entities or in their individual
capacities) (hereinafter collectively referred to as the "Releasees"), from and against any and all
claims, charges, complaints, demands, actions, causes of action, agreements, promises,
contributions, fees, losses, expenses and liabilities of any kind whatsoever (based upon any legal
or equitable theory, whether contractual, common-law, statutory, federal, state, local or
otherwise), whether known or unknown, which Releasors ever had, now have or may have
against Releasees by reason of any actual or alleged act, omission, transaction, practice, conduct,
occurrence, or other matter up to and including the Release Effective Date (as defined in Section
14); provided, that such release shall not apply with respect to (i) any rights of indemnification
73003640.arkovit -revlwpd
and advancement to which Executive is entitled as of the Termination Date and (ii) Executive's
rights under this Agreement.
(b) Without limiting the generality of the foregoing, this Agreement is
intended to and shall release the Releasees from any and all claims arising out of Executive's
employment by or other service with Releasees, or the resignation or termination of Executive's
employment or other service with Releasees, including without limitation, (i) any claim under the
Age Discrimination in Employment Act, as amended by, among other laws, the Older Workers
Benefit Protection Act; (ii) any claim under Title VII of the Civil Rights Act of 1964, as amended
by, among other laws, the Civil Rights Act of 1991; (iii) any claim under the Americans with
Disabilities Act; (iv) any claim under applicable Pennsylvania employment or other laws; (v)
any other claim of discrimination or retaliation in employment (whether based on federal, state or
local law, statutory or decisional); (vi) any claim under the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"); (vii) any claim under the National Labor Relations
Act, as amended; (viii) any claim under the Worker Adjustment and Retraining Notification Act;
(ix) any claim for tort or for breach of contract; and (x) any claim for attorneys' fees, costs,
disbursements or the like, except to the extent any such claim relates to (A) any rights of
indemnification and advancement to which Executive is entitled as of the Termination Date and
(B) Executive's rights under this Agreement.
(c) Executive further agrees that he will not seek or accept any award
or settlement from any source or proceeding with respect to any claim or right covered by this
Section 4 and Section 5 below.
5. No Claims. Executive agrees, to the fullest extent permitted by law, not to
commence, maintain, prosecute or participate in any action or proceeding of any kind, nor
encourage anyone else to do so, against any of the Releasees, arising out of any act, omission,
transaction or occurrence occurring up to and including the Release Effective Date (other than
with respect to any action, omission, transaction or occurrence that is expressly subject to the
proviso in Section 4(a)), and Executive represents and warrants that he has not done so at any
time prior to or as of the Release Effective Date.
6. No Injurious Conduct. Executive acknowledges that he has not and agrees
that he will not intentionally engage in any conduct that is injurious to Releasees' reputation or
interest, including but not limited to (i) divulging, communicating, or in any way making use of
any confidential or proprietary information acquired in the performance of Executive's duties for
Releasees (except as may be required pursuant to Section 7 below or by applicable law); and (ii)
publicly disparaging (or inducing or encouraging others to publicly disparage) any of the
Releasees.
7. Cooperation.
(a) Executive shall at all times cooperate fully with the Company and
its subsidiaries and affiliates and its counsel in connection with any investigation by the
Company relating to any matter in which Executive was or is involved or of which Executive has
23003640markovitz-mv2.wpd 4
knowledge by virtue of his employment or other position with Releasees or any other aspect of
the Company's affairs, including without limitation the pending investigation of the Company's
accounting practices and related matters. Without limiting the generality of the foregoing,
Executive shall (i) make himself available to be interviewed upon reasonable notice and
otherwise on a reasonable basis and for a reasonable period of time relating to any such
investigation, (ii) provide truthful, accurate and complete information and responses in the course
thereof (including without limitation during interviews) and (iii) provide any and all requested
documentation, to the extent that any such documentation is in his possession.
(b) Executive agrees that, in the event he is subpoenaed by any person
or entity to give testimony (in a deposition, court proceeding or otherwise) which in any way
relates to Executive's employment or other position with Releasees, any investigation,
proceeding or litigation or otherwise relates to the subject matter of this Agreement, Executive
shall give prompt notice of such request to the Company's General Counsel at the address listed
below.
(c) The Company shall reimburse Executive for his reasonable and
properly documented travel expenses relating to the discharge of his obligations pursuant to this
Section 7.
(d) Notwithstanding anything herein to the contrary, if the Company
shall determine, in its reasonable discretion, that Executive has in a material respect failed to
perform his obligations set forth in this Section 7, the Company shall have the right to terminate
immediately payment and provision of the Severance Benefits in their entirety (other than vested
benefits protected under ERISA and Executive's rights to indemnification and advancement as
set forth in Section 2(f)), and such Severance Benefits shall thereupon be forfeited by Executive.
For clarity, it is understood and agreed by Executive that (i) such forfeiture shall result in, among
other things, (x) the immediate termination of all benefits under the Deferred Compensation
Agreement (notwithstanding anything to the contrary therein) and (y) the immediate termination
of any otherwise then exercisable stock options; and (ii) the termination of payment and
provision of Severance Benefits pursuant to this Section 7(e) shall in no way affect the
continuing validity and enforceability of the release provided in Section 4 and Executive's other
covenants and agreements hereunder.
8. Cause. If at any time the Company shall become aware of evidence on the
basis of which it shall reasonably determine that during the period of his employment with the
Company, Executive committed an act of a material nature which could have resulted in
Executive's discharge for cause by the Company, had it been known to the Company, the
Company shall have the right to terminate immediately payment and provision of the Severance
Benefits in their entirety (other than vested benefits protected under ERISA), and such Severance
Benefits shall thereupon be forfeited by Executive. For purposes of this Agreement and the
Deferred Compensation Agreement, acts which shall be deemed to have resulted in Executive's
discharge by the Company for "cause" shall include (i) any act of fraud, embezzlement,
dishonesty or concealment relating to the business of the Company or any subsidiary or affiliate,
(ii) knowing falsification of records of the Company or any subsidiary or affiliate, (iii) gross
23003640m"kovitz-ml pd
misconduct or willful malfeasance in the performance of his duties with the Company or any
subsidiary or affiliate, (iv) commission of any felony or securities law violation, or (v) any other
act or omission that would permit the Company to terminate Executive's employment for cause
under applicable decisional or statutory law. For clarity, it is understood and agreed by
Executive that (i) such forfeiture shall result in, among other things, (x) the immediate
termination of all benefits under the Deferred Compensation Agreement and (y) the immediate
termination of any otherwise then exercisable stock options; (ii) the termination of payment and
provision of the Severance Benefits pursuant to this Section 8 shall in no way affect the
continuing validity and enforceability of the release provided in Section 4 and Executive's other
covenants and agreements hereunder; and (iii) it shall be no defense to the forfeiture provisions
of this Section 8 that one or more acts constituting grounds for discharge for cause may actually
have been known to the Company or to any officer or director thereof (or of any subsidiary or
affiliate) during the period of Executive's employment with or service as an officer or director of
the Company (the Company acknowledges that it does not know of any such grounds for
discharge).
9. Non-Disclosure. The terms and conditions of this Agreement, the
disclosure information attached as Exhibit B, and the circumstances and discussions giving rise
to this Agreement are and shall be deemed to be confidential, and shall not be disclosed by
Executive to any person or entity without the prior written consent of the Chairman and Chief
Executive Officer of the Company, except if required by law, or to Executive's accountants,
attorneys, spouse or members of his immediate family, provided that these latter persons each
agree to maintain the confidentiality of this Agreement, the disclosure information and the
circumstances and discussions giving rise to the Agreement. Executive further represents that he
has not disclosed the terms and conditions of this Agreement or the disclosure information or the
circumstances and discussions giving rise to the Agreement to anyone other than his attorneys,
accountants or spouse.
10. Confidentialitv. Executive acknowledges that during the course of his
employment with the Company, its subsidiaries and affiliates, he has been exposed to documents
and other information regarding the confidential affairs of the Company, its subsidiaries and
affiliates, including without limitation information about their past, present and future financial
condition, the markets for their products, key personnel, past, present or future actual or
threatened litigation, trade secrets, 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 and affiliates not readily available to the
public (the "Confidential Information"). In recognition of the foregoing, the Executive covenants
and agrees as follows:
(a) Except as required by law, at no time shall Executive ever divulge,
disclose, or otherwise use any Confidential Information, unless and until such information is
readily available in the public domain by reason other than Executive's unauthorized disclosure
or use thereof, unless such disclosure or use is expressly authorized by the Chairman and Chief
Executive Officer of the Company in writing in advance of such disclosure or use.
23003640=kovitz-ro 2.vpd 6
(b) Promptly following the Termination Date, Executive shall deliver
to the Company's offices in Camp Hill, Pennsylvania all of the property and equipment of the
Company and its subsidiaries (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, successors or assigns, and/or their respective past and present officers,
directors, employees, agents or consultants (collectively, the "Company Property, Records and
Files"); it being expressly understood that Executive shall not be authorized to retain any of the
Company Property, Records and Files, except to the extent expressly so authorized in writing by
the Company's Chairman and Chief Executive Officer.
11. Non-Solicitation. From the Termination Date through March 31, 2002,
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, successors or assigns to terminate his, her or its employment or other relationship with
the Company or its subsidiaries, affiliates, successors or assigns for the purpose of associating
with any competitor of the Company or its subsidiaries, affiliates, 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, successors or assigns for any
other reason. For purposes of this Section 11, the term "competitor of the Company" shall be
defined as any person or entity which directly or indirectly through one or more subsidiaries and
affiliates owns and/or operates 200 or more retail drugstores in the United States.
Notwithstanding anything contained in this Agreement or in the Deferred Compensation
Agreement to the contrary, nothing contained herein or therein shall prohibit Executive from
engaging or being employed by or serving as a consultant to a business engaged in the general
development of real estate even if a tenant or prospective tenant or purchaser or prospective
purchaser of any such real estate is an operator of retail drug stores.
12. Rights and Remedies upon Breach. If Executive breaches, or threatens to
commit a material breach of, any of the provisions of Sections 6, 10 or 11 above (the "Restrictive
Covenants"), and in the case of breaches subject to being cured, after notice to the Executive and,
if not cured by the Executive within 15 days of such notice, the Company and its subsidiaries,
affiliates, 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, successors or assigns at law or in equity:
(a) 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, successors or assigns, as the case
may be, and that money damages would not provide an adequate remedy to the Company or its
subsidiaries, affiliates, successors or assigns, as the case may be.
23003640mukovi=.mv2.wpd
(b) The right and remedy to require Executive to account for and pay
over to the Company or its subsidiaries, affiliates, 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.
(c) 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.
(d) 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 reduce the duration or scope of
such provision, as the case may be, to render such provision enforceable (it being the intent of the
parties that any such reduction be limited to the minimum extent necessary to render such
provision enforceable), and, in its reduced form, such provision shall then be enforceable.
(e) 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 anyone 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, successors or assigns to the relief provided herein in the courts of any other jurisdiction
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.
In addition to the foregoing remedies, in the event Executive materially breaches
any of the provisions of the Restrictive Covenants, the Company shall have the right to terminate
immediately payment and provision of the Severance Benefits in their entirety (other than vested
benefits protected under ERISA and Executive's rights to indemnification and advancement as
set forth in Section 2(f)), and such Severance Benefits shall thereupon be forfeited by Executive.
The provisions of Section 11 of the Deferred Compensation Agreement shall be applicable to any
decision by the Company to terminate payment and provision of Severance Benefits and the
second sentence of Section 7(d) shall apply to the preceding sentence.
13. No Violation. The making of this Agreement is not intended to, and shall
not, be construed as an admission that Releasees have violated any federal, state or local law
(statutory or decisional), ordinance or regulation, breached any agreement, contract,
understanding, policy or practice, or committed any wrong whatsoever against Releasors. The
parties further agree that this Agreement may be used as evidence only in a subsequent
proceeding in which any of the parties alleges a breach of this Agreement.
23003640markovi4-r IwN 8
14. Review and Revocation Period. Executive shall have up to forty-five (45)
days from the date of receipt hereof to consider the terms and conditions of this Agreement.
Executive may accept this Agreement by signing it before a notary and returning it to Mr. Robert
G. Miller, Chairman and Chief Executive Officer, Rite Aid Corporation, at 30 Hunter Lane,
Camp Hill, Pennsylvania 17011, by no later than the close of business on the forty-fifth (45th)
day after Executive receives this Agreement ("Agreement and Release Return Date"). After
signing this Agreement, Executive shall have seven (7) days (the "Revocation Period") to revoke
this Agreement by indicating his desire to do so in writing (i) addressed to Mr. Miller at the
address listed above, and (ii) received in hand by Mr. Miller no later than the close of business on
the seventh (7th) day following the date Executive executes this Agreement. The effective date
of this Agreement shall be the eighth (8th) day after Executive executes it (the "Release Effective
Date"). If the last day of the Agreement and Release Return Date or the Revocation Period falls
on a Saturday, Sunday, or holiday, the last day of the Agreement and Release Return Date or the
Revocation Period, respectively, will be deemed to be the next business day. In the event
Executive does not accept this Agreement as set forth above, or in the event Executive revokes
this Agreement during the Revocation Period, this Agreement, including but not limited to the
obligation of the Company to provide the Severance Benefits referred to in Section 2, shall
automatically be deemed null and void; provided, that notwithstanding anything herein to the
contrary, the date of termination of Executive's employment with the Company shall at all events
be February 4, 2000.
15. Acknowledgment. Executive acknowledges that: (a) he has carefully read
this Agreement in its entirety; (b) he has been offered and had an opportunity to consider fully
the terms of this Agreement and the disclosure information attached as Exhibit A provided
pursuant to the Older Workers Benefit Protection Act, for a period of at least forty-five (45) days,
or where applicable has waived the necessity of a full 45 days; (c) he has been advised by the
Company in writing to consult with an attorney of Executive's choice before signing this
Agreement; (d) he fully understands the significance of all of the terms and conditions of this
Agreement and he has discussed them with his independent legal counsel, or has had a
reasonable opportunity to do so; (e) he has had answered to his satisfaction any questions he has
asked with regard to the meaning and significance of any of the provisions of this Agreement;
and (f) he is signing this Agreement voluntarily and of his own free will and assents to all the
terms and condition contained herein.
16. Successors. This Agreement is binding upon, and shall inure to the benefit
of, the parties and their respective heirs, executors, administrators, representatives, successors
and assigns.
17. Survival. Executive's obligations under Sections 4, 5, 6, 7, 9, 10 and 11 of
this Agreement and the Company's rights hereunder shall survive the payment of the Severance
Benefits.
18. Severabilitv. Subject to Section 12, if any provision of this Agreement
shall be held by a court of competent jurisdiction to be illegal, void, or unenforceable, such
provision shall be of no force and effect. However, the illegality or unenforceability of such
23003640.ukovitz-m2. wpd
provision shall have no effect upon, and shall not impair the enforceability of, any other
provision of this Agreement; provided, however, that, upon any finding by a court of competent
jurisdiction that the release and covenants provided for by Sections 4 and 5 of this Agreement are
illegal, void, or unenforceable, Executive agrees either to return promptly to the Company the
Severance Benefits theretofore paid and provided to him under this Agreement in their entirety or
to execute a release, waiver or covenant (reasonably satisfactory to the Company) that is legal
and enforceable and has to the extent permissible under applicable law substantially the effect of
the release and covenants provided for by Sections 4 and 5 of this Agreement. Further, if
Executive seeks to challenge the validity of or otherwise vitiate this Agreement or any provision
thereof (including, without limitation, Sections 4 and 5), Executive shall, as a precondition, be
required to repay to the Company the Severance Benefits theretofore paid and provided to him
under this Agreement in their entirety.
19. 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:
If to the Company: Rite Aid Corporation
30 Hunter Lane
Camp Hill, Pennsylvania 17011
Attention: General Counsel
Fax: (717) 760-7867
with a copy to: Kaye, Scholer, Fierman, Hays & Handler, LLP
1999 Avenue of the Stars
Los Angeles, CA 90067
Attention: Andrew Ash, Esq.
Fax: 310/788-1200
If to Executive: Philip Markovitz
One Laurel Ridge Road
Hershey, Pennsylvania 17033
Fax:
with a copy to: Ramon R. Obod, Esquire
Fox, Rothschild, O'Brien & Frankel
2000 Market Street
Philadelphia, PA 19103
Fax: 215-299-2150
Any party may change such party's address for notices by notice duly given pursuant hereto.
20. Governing Law; Venue. This Agreement shall be governed by the laws of
the Commonwealth of Pennsylvania and the parties in any action arising out of this Agreement
23003640mukovih-m2. wpd 10
shall be subject to the jurisdiction and venue of the federal and state courts, as applicable, in the
County of Cumberland, Commonwealth of Pennsylvania.
21. Entire Agreement. This Agreement and Exhibits A and B hereto and the
Deferred Compensation Agreement as amended by this Agreement constitute the complete
understanding between the parties and supersede any and all prior agreements, understandings,
and discussions, whether written or oral, between the parties. Without limiting the generality of
the foregoing, Executive further acknowledges that this Agreement supersedes the Letter
Agreement in its entirety, and that the Letter Agreement shall be of no further force or effect
from and after the Release Effective Date. No other promises or agreements shall be binding
unless in writing and executed after the Release Effective Date by the parties to be bound
thereby.
22. Amendment, Waiver. 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 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.
23. No Conflict with Other Agreements. Executive represents and warrants
that neither his execution of this Agreement nor the full and complete performance of his
obligations hereunder will violate or conflict in any respect with any written or oral agreement or
understanding with any person or entity.
24. Headinas. The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of this Agreement.
23003640markovi?a 2.wpd 11
25. 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.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant
to due authorization, the Company has caused this Agreement to be executed in its name and on
its behalf, all as of the day and year set forth below.
RPORATION
RI024--?v E AID CO
Date: By: Robert G. Miller
/ Its: Chairman and Chief Executive Officer
Date:
Philip Markovitz
COMMONWEALTH OF PENNSYLVANIA )
:ss
COUNTY OF CUMBERLAND
On this day o T o 000, before me personally came Philip Mazkovitz,
to me known and known to me to be the person described in and who executed the Executive
Separation Agreement and General Release, and he duly acknowledged to me that he executed'
the same.
Notary blic
Notarial Seal ;`
COMMONWEALTH OF PENNSYLVANIA ) Mary E. Nantz, Notary Publ?
Camp HIII Boro, Cumberland County
: ss My Commission Expires Jan. 6, 2003
COUNTY OF CUMBERLAND )
On this- day of Fes, 2400, before me personally came Robert G. Miller,
who acknowledged that he is the Chairman and Chief Executive Officer of Rite Aid Corporation
to me known and known to me to be the person described in and who executed the Executive;
Separation Agreement and General Release, and he duly acknowledged to me that he ezecuttd ' '
the same on behalf of Rite Aid Corporation.
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EXHIBIT B
Severance benefits have been offered to Timothy Noonan and William Titelman in connection
with the termination of their employment with the Company pursuant to individually negotiated
arrangements.
Name Age Title
Timothy Noonan 58 Interim Chief Executive Officer, President and
COO
William Titelman 53 Executive Vice President
(pifiLr of r r"i?4,criff
Mary Jane Snyder
Real Estate Deputy
William T. Tully
Solicitor
Dauphin County
Harrisburg, Pennsylvania 17101
ph: (717) 255-2660 fax: (717) 255-2889
Jack Lotwick
Sheriff
Commonwealth of Pennsylvania
J. Darnel Basile
Chief Deputy
Michael W. Rinehart
Assistant Chief Deputy
County of Dauphin 0, j
O
b w -ty
Sheriff's Return C col ::r)
No. 3377-CV - - -2003
x
x? W C7MI
aC? C
AND NOW:AUgust 18, 2003 at 2:19PM served the within -X
COMPLAINT upon i"
RITE AID CORPORATION by personally handing
(CUMBERLAND CO)
to BRANDI GLADWIN, PARALEGAL 1 true attested copy(ies)
of the original COMPLAINT and making known
to him/her the contents thereof at 30 HUNTER LANE
CAMP HILL, PA 17011-0000
So Answers,
Ael?-
Sheriff of Dauphin County, Pa.
Plaintiff: MARKOVITZ PHILIP
Sheriff's Costs-. $46.00 PD 08/11/2003 RCPT NO 181595
BALLARD SPAHR ANDREWS & INGERSOLL, LLP
By: Alan J. Davis
William A. Slaughter
Hara K. Jacobs
Peter C. Amuso
PA ID Nos. 03853, 30637, 74832 & 80182
1735 Market Street, 51 st Floor
Philadelphia, PA 19103-7599
(215)665-8500
PHILIP MARKOVITZ,
Plaintiff,
V.
RITE AID CORPORATION,
Defendant.
Attorneys for Plaintiff
Rite Aid Corporation
COURT OF COMMON PLEAS
DAUPHIN COUNTY,
PENNSYLVANIA
CIVIL ACTION - LAW
v
NO. 2003 CV 3377 CV
JURY TRIAL DEMANDEI(-,
- r•..
PRELIMINARY OBJECTIONS TO COMPLAINT
Defendant, Rite Aid Corporation ("Rite Aid" or the "Company'), by its
undersigned counsel, pursuant to Pa. R. Civ. P. 1028(a)(6), presents the following preliminary
objections to the Complaint of plaintiff, Philip Markovitz ("Markovitz"). A true and correct
copy of the Complaint is attached as Exhibit A to these preliminary objections. Defendant's
brief in support of these preliminary objections will be filed with this Court in accordance with
the deadline set by Dauphin County Local Rule of Civil Procedure 211C(1)(a).
On June 27, 2003, Rite Aid commenced an action against Markovitz by
Writ of Summons in the Court of Common Pleas of Cumberland County (the "Cumberland
County Action"). A true and correct copy of the Writ is attached as Exhibit B to these
preliminary objections.
PHL A #1784522 v3 2
2. On August 5, 2003, while the Cumberland County Action was pending,
Markovitz commenced this action against Rite Aid by filing the Complaint in this Court (the
"Dauphin County Action").
3. On August 7, 2003, Rite Aid filed its Complaint against Markovitz in the
prior Cumberland County Action. A true and correct copy of Rite Aid's Complaint in the
Cumberland County Action is attached as Exhibit C to these preliminary objections.
4. The Cumberland County Action is a prior pending action because it was
instituted by Writ of Summons over one month before the Dauphin County Action.
5. The Dauphin County Action and prior pending Cumberland County
Action present the same parties - Rite Aid and Markovitz. (Cumberland County Compl, ¶ $ 1-
2; Dauphin County Compl., ¶ ¶ 1-2).
6. The Dauphin County Action and prior pending Cumberland County
Action present the same case and the same operative facts.
a. Markowitz is one of several former Rite Aid executives who
received a fraudulently back-dated employment agreement, purporting to obligate the Company
to pay substantial sums to him upon the termination of his employment; and who received
payment of substantial sums under a long term incentive plan (known as LTIP I), even though
the requirements for payment had not been met.
b. Markovitz has since pled guilty, in the United States District Court
for the Middle District of Pennsylvania, to having participated in a conspiracy to obstruct justice,
by lying to the Company, to the FBI, and the grand jury about when he had received the
fraudulently back-dated employment agreement.
PHL_A #1784522 v3
C. Upon learning of Markovitz's deception, Rite Aid terminated
Markovitz's separation agreements with the Company and demanded repayment of the sums
paid to Markovitz thereunder. Rite Aid has also demanded repayment of the sums Markovitz
received under LTIP I. Markovitz has refused Rite Aid's demands.
d. In both Actions, the parties seek a determination whether
Markowitz was legally entitled to receive compensation from Rite Aid under the separation
agreements and whether Markowitz was legally entitled to receive the amounts paid to him by
Rite Aid under LTIP I.
The Dauphin County Action seeks the mirror image of the relief sought in
the prior pending Cumberland County Action. In the Cumberland County Action, Rite Aid seeks
repayment of the amounts it has paid to Markovitz under the separation agreements and LTIP I.
In the Dauphin County Action, Markovitz seeks a resumption of payments to him under the
separation agreements and a declaratory judgment that Rite Aid is not entitled to repayment of
LTIP I.
8. Additionally, the Separation Agreement, which Markovitz seeks to
enforce in the Dauphin County Action, states that "the parties in any action arising out of this
Agreement shall be subject to the jurisdiction and venue of the federal and state courts, as
applicable, in the County of Cumberland, Commonwealth of Pennsylvania." (Dauphin County
Compl., Exhibit C at 10-11).
9. In sum, the Dauphin County Action presents the same parties, the same
case, and the same requests for relief as the prior pending Cumberland County Action.
Plaintiffs Complaint should be dismissed under Rule 1028(a)(6) because a prior action is
pending.
PHL_A #1784522 0
10. In the alternative, the Dauphin County Action should be stayed because
litigation of the two Actions would create a duplication of efforts, waste judicial resources and
created an unseemly spectacle of a race to judgment. Rite Aid has commenced actions against
several other former Rite Aid executives for repayment of amounts paid under their separation
agreements and LTIP I, all of which are currently pending in the Court of Common Pleas of
Cumberland County.
WHEREFORE, defendant respectfully requests that this Court dismiss Counts I
through IV of the complaint with prejudice. In the alternative, defendant respectfully requests
that this Court stay this action pending the outcome of the Cumberland County Action. If the
Court does not dismiss or stay this action, defendant respectfully requests that this Court
consolidate this action with the Cumberland County Action in the Court of Common Pleas of
Cumberland County.
Dated: August 22, 2003
Alan J. Davis
William A. Sl ughter
Hara K. Jacobs
Peter C. Amuso
BALLARD SPAHR ANDREWS &
INGERSOLL, LLP
1735 Market Street, 51 s1 Floor
Philadelphia, PA 19130-7599
(215) 665-8500
Attorneys for Rite Aid Corporation
PHL A #1784522 v3
Exhibit A
:r •
HOYLE, FICKLER, HERSCHEL &
MATHES LLP
BY: Walter M. Phillips, Jr., I.D. No. 22788
R David Walk, Jr., I.D. No. 43549
Kevin J. Kotch, I.D. No. 71006
One South Broad Street, Suite 1500
Philadelphia, PA 19107
(215) 981-5700
Attorneys for Plaintiff
Philip Markovitz
PHILIP MARKOVITZ
1 Laurel Ridge Road
Hershey, Pennsylvania 17033
V.
RITE AID CORPORATION
.30 Hunter Lane
Camp Hill, Pennsylvania 17011
DAUPHIN COUNTY
COURT OF COMMON PLEAS
TRIAL DIVISION
r-
tJ Tema, 2003
No. d' 003 'Y 337 CV . .
JURY TRIAL DEMANDED
NOTICE TO DEFEND
YOU HAVE BEEN SUED IN COURT. If you wish to defend against the claims
set forth in the following pages, you must take action within twenty (20) days after this
Complaint and Notice are served, by entering a written appearance personally or by
attorney and filing in writing with the Court your defenses or objections to the claims set
forth against you. You are warned that if you fail to do so the case may proceed without
you and a judgment may be entered against you by the Court without further notice for
any money claimed in the Complaint or for any other claim or relief requested by the
Plaintiff. You may lose money or property or other rights important to you.
YOU SHOULD TAKE THIS PAPER TO YOUR
LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER
OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE
OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU
CAN GET LEGAL HELP.
DAUPHIN COUNTY LAWYER REFERRAL SERVICE
213 North Front Street
Harrisburg, PA 17101
(717) 232-7536
,r
0 0
A SO
USTED HA SIDO DEMANDADO/A EN CORTE. Si usted desea defenderse de
las demandas que se presentan mas adelante en las siguientes paginas, debe tomar accion
dentro de los proximos veinte (20) dias despues de Is notificacion de esta Demanda y
Aviso radicando personalmente o por medio de un abogado una comparecencia escrita y
radicando en Is Corte por escrito sus defensas de, y objecciones a, las demandas
presentadas aqui on contra suya. Se Is advierte de quo si usted fella de tomar accion
como se describe anteriormente, el caso puede proceder sin usted y un fallo por cualquier
suma de dinero reclamada en Is demands o cualquier otra reclamacion o remedio
solicitado por el demandante puede ser dictado en contra suya por Is Corte sin mas aviso
adicional. Usted puede perder dinero o propiedad u otros derechos importantes pare
usted.
USTED DEBE LLEVAR ESTE DOCUMENTO A SU
ABOGADO INMEDIATAMENTE. SI USTED NO TIENE UN
ABOGADO O NO PUEDE PAGARLE A UNO, LLAME O
VAYA A LA SIGUIENTE OFICINA PARA AVERIGUAR
DONDE PUEDE ENCONTRAR ASISTENCIA LEGAL.
DAUPHIN COUNTY LAWYER REFERRAL SERVICE
213 North Front Street
Harrisburg, PA 17101
(717) 232-7536
2
HOYLE, FICKLER, HERSCHEL &
MATHES LLP
BY: Walter M. Phillips, Jr., I.D. No. 22788
R. David Walk, Jr., I.D. No. 43549
Kevin L Kotch, I.D. No. 71006
One South Broad Street, Suite 1500
Philadelphia, PA 19107
(215) 981-5700
PHILIP MARKOVITZ
i Laurel Ridge Road
Hershey, Pennsylvania 17033
V.
Attorneys for Plaintiff,
Philip Markovitz
DAUPHIN COUNTY
COURT OF COMMON PLEAS
TRIAL DIVISION
C7
Term, 2003
w
RITE AID CORPORATION
30 Hunter Lane No. ?003 G/ W-n CV
Camp Hill, Pennsylvania 17011
JURY TRIAL DEMANDED
COMPLAINT - CIVIL ACTION
U1
c.
Uri
i
Plaintiff Philip Markovitz brings this Complaint against defendant Rite Aid Corporation
and alleges as follows:
Parties
1. Plaintiff Philip Markovitz ("Markovitz") is an adult individual, who is a citizen of the
Commonwealth of Pennsylvania residing in Dauphin County at 1 Laurel Ridge Road, Hershey,
Pennsylvania 17033.
2. Defendant Rite Aid Corporation (" Rite Aid" or "Company") is a Delaware
corporation with its principal place of business located at 30 Hunter Lane, Camp Hill,
Pennsylvania 17011.
3. Rite Aid is in the business of operating drug stores throughout the United States.
• •
Jurisdiction And Venue
4. This Court has jurisdiction over defendant Rite Aid in that this cause of action
arose out of transactions or occurrences that took place in whole or in part in Dauphin County,
Pennsylvania.
5. Venue in this Court is proper pursuant to Pennsylvania Rules of Civil Procedure
1006 and 2179 in that defendant regularly conducts business and the cause of action arose in
Dauphin County, Pennsylvania.
Facts Common To All Counts
6. In 1971, plaintiff Markovitz was hired by Rite Aid and was assigned to its real estate
division. Plaintiff s primary responsibility was to find store locations for Rite Aid and to
negotiate and enter into leases on behalf of the Company.
7.. For the next 29 years, plaintiff performed his job duties in an exemplary fashion and
received various promotions. In 1985, plaintiff was promoted to Vice President of Real Estate,
and in 1991 he was promoted to Senior Vice President in charge of the Real Estate Department
reporting directly to the Chief Executive Officer ("CEO") of Rite Aid.
8. In 1995, Martin Grass ("Grass") became CEO of Rite Aid.
9. In 1996, Rite Aid put in place a Deferred Compensation Agreement (" 1996
Agreement') available to certain valued officers of the Company as an inducement to remain
with Rite Aid. See Attachment "A." Plaintiff was one of those officers.
10. The 1996 Agreement provided that, upon reaching age 65, an officer would be
entitled to retire and receive monthly one-twelfth of 50 percent of the average of the three
highest annual base salaries paid or accrued in the previous ten years. The 1996 Agreement also
required that the officer have completed 20 years of service with Rite Aid in order to be eligible.
2
0 •
11. In or about June 1998, in a meeting with plaintiff', Grass raised the subject of
Markovitz's retirement from Rite Aid, suggesting that maybe it was time to bring along new
leadership and that plaintiff should consider retiring in the year 2000. Markovitz responded that
he would be amenable to retiring in 2000, but heat that time would only be 59 years of age and,
while he had put in more than 20 years of service with the Company, he would not be eligible
under the 1996 Agreement for deferred compensation because he would not yet be 65. Grass
. replied that he would agree on behalf of Rite Aid that Markovitz would be eligible for retirement
benefits under the 1996 Agreement when he retired in 2000 even though he would not yet be 65 .
years of age; and that the monthly payments under the 1996 Agreement would commence
immediately upon plaintiffs retirement. Grass also agreed that Markovitz's deferred
compensation would be based on 50 percent of his highest annual salary and highest annual
bonus during the three years preceding his retirement; further, that any stock options plaintiff
held at the time of his retirement would vest and be exercisable in whole or in part for 36 months
and that these options would survive Markovitz's death. Grass stated to Markovitz that Rite Aid
had similarly amended the deferred compensation agreements of other senior officers of Rite Aid
who were contemplating retirement before the age of 65. Upon information and befief; Rite Aid
is currently paying deferred compensation benefits similar to those which Grass agreed that
Markoviz would receive to other executives of Rite Aid who retired before age 65.
12. Based on the representations and promises made by Grass, plaintiff Markovitz
assisted in identifying a successor to his position as Senior Vice President in charge of the Real
Estate Department.
13. On or about October 18, 1999, Grass was forced to resign as Chairman and CEO of
Rite Aid.
• 0
14. Shortly after Grass's resignation, plaintiff Markovitz approached Franklin Brown
("Brown"), who was then Vice Chairman of the Board of Directors of Rite Aid and the
Company's General Counsel. Plaintiff advised Brown about the agreement he had made with
Grass in June 1998, specifically the promised changes to the 1996 Agreement that Grass said he
would make with respect to Markovitz, and the fact that this agreement was never reduced to
writing.
15. Thereafter, Brown provided Markovitz with a letter signed by Grass, dated June 12,
1998, memorializing the agreement entered into by Grass at their meeting and which made
plaintiff eligible under the 1996 Agreement. See Attachment "B."
16. In or about January 2000, Robert Miller ("Miller"), Rite Aid's new Chairman and
Chief Executive Officer, met with plaintiff Markovitz and asked that he resign before the end of
the fiscal year in February 2000. In addition, Miller requested that Markovitz sign a separation
agreement and release which honored the substantive terms of the 1996 Agreement, as amended
by Grass. In consideration of Rite Aid's agreement to so honor the 1996 Agreement, plaintiff
acceded to both of Miller's requests.
17. On January 24, 2000, plaintiff signed an Executive Separation Agreement and
General Release ("Separation Agreement") with Rite Aid that incorporated the terms of the 1996
Agreement, as amended by Grass in June 1998. See Attachment "C."
18. Plaintiff retired from Rite Aid as of February 4, 2000.
19. Pursuant to the Separation Agreement, Rite Aid made monthly payments to plaintiff
through the middle of June 2003, but has made no payments since.
4
•
20. By letter dated June 26, 2003 to plaintiffs attorney, Rite Aid, through its general
counsel, advised plaintiff Markovitz that it was discontinuing all payments under the Separation
Agreement on the ground that plaintiff had "procured (the) Separation Agreement by fraud."
21. Plaintiff did not engage in any fraud in entering into the Separation Agreement with
defendant Rite Aid.
22. Defendant Rite Aid, also in its June 26, 2003 letter, demanded that payments made to
plaintiff in 1999 pursuant to a 1995 Long Term Incentive Plan be returned to Rite Aid.
Defendant offered no reasons for its demand that these monies be returned by plaintiff.
COUNT I - BREACH OF CONTRACT
(SEPARATION AGREEMENT AND GENERAL RELEASE)
23. Markovitz incorporates the allegations of paragraphs 1 through 22 of this Complaint
as if set forth herein in full.
24. Rite Aid has an obligation under the Separation Agreement to make monthly
payments of $17946.90 to Markovitz, commencing in March 2000 and continuing for 20 years.
25. Rite Aid made its last payment under the Separation Agreement in June, 2003.
26. By letter dated June 26, 2003, Rite Aid said it would no longer make any payments
under the Separation Agreement.
27. Rite Aid is in breach of the Separation Agreement, has an obligation to make the
outstanding payments under the Separation Agreement and has an obligation to make future
. payments under the Separation Agreement.
WHEREFORE, Plaintiff Philip Markovitz demands judgment in its favor and against
defendant Rite Aid Corporation, for:
(a) amounts due and owing under the Separation Agreement;
5
C
0
(b) an order directing defendant Rite Aid to continue maldng payments under the
Separation Agreement;
(c) prejudgment interest;
(d) court costs;
(e) post judgment interest; and
(f) such other relief as the Court deems just and appropriate.
COUNT H - BREACH OF CONTRACT
(1996 DEFERRED COMPENSATION AGREEMENT)
i
28. Markovitz incorporates by this reference the allegations of paragraphs 1 through 27 of
this Complaint as if set forth herein in full.
29. In the event the Separation Agreement and General Release is not enforceable, the
1996 Deferred Compensation Agreement, as amended by CEO Grass in June 1998, is
enforceable.
30. Rite Aid is in breach of the 1996 Deferred Compensation Agreement, as amended by
CEO Grass, and it has an obligation to make the outstanding payments and it has an obligation to
make future payments.
WHEREFORE, Plaintiff Philip Markovitz demands judgment in its favor and against
defendant Rite Aid Corporation, for:
(a) amounts due and owing under the contract;
(b) an order directing defendant Rite Aid to continue making payments under the
1996 Deferred Compensation Agreement, as amended by Grass in June 1998;
(c) pre judgment interest;
(d) court costs;
(e) post judgment interest; and
6
E
(f) such other relief as the Court deems just and appropriate.
COUNT III - DECLARATORY JUDGMENT
31. Markovitz incorporates the allegations of paragraphs 1 through 30 of the Complaint
as if set forth herein in full.
32. An actual, immediate and justiciable controversy exists between plaintiff Markovitz
and defendant Rite Aid with regard to payments to be made to Markovitz under the agreements
reached regarding his early retirement. A declaratory judgment by this Court will affect the
rights and interests of the parties.
33. By letter dated June 26, 2003, Rite Aid said it would no longer make any payments
under the Separation Agreement.
34. Accordingly, Markovitz seeks relief in the nature of a declaration that Rite Aid has a
continuing obligation to make payments to Markovitz under the Separation Agreement and/or
the 1996 Deferred Compensation Agreement.
WHEREFORE, Plaintiff Philip Markovitz demands judgment in his favor and against
Defendant Rite Aid Corporation, for:
(a) a declaration that Defendant Rite Aid Corporation is obligated to continue making
payments under the 2000 Separation Agreement and Release;
(b) a declaration that Defendant Rite Aid Corporation is not entitled to repayment of
the Long Tenn Incentive Program payment made to Plaintiff Philip Markovitz in August 1999;
(c) court costs;
(d) attorney's fees;
(e) such other relief as the Court deems just and appropriate.
COUNT IV - PENNSYLVANIA WAGE PAYMENT
AND COLLECTION ACT, 43 P.S. § 260.1, et seq.
35. Markovitz incorporates the allegations of paragraphs 1 through 34 of this Complaint
as if set forth fully herein.
36. Defendant Rite Aid was plaintiffs employer within the meaning of the Pennsylvania
Wage Payment and Collection Act ("PWPCA'J, 43 P.S. § 260. 1, et seq.
37. Payments under the Separation Agreement are "wages" and 'fringe benefits"
or "wage supplements" within the meaning of the PWPCA.
38. Defendant Rite Aid has failed to make payment of wages that are due and owing to
Markovitz pursuant to the Separation Agreement and/or the 1996 Deferred Compensation
Agreement, as amended by CEO Grass in 1998.
39. Defendant Rite Aid has willfully failed to make payments under the Separation
Agreement and therefore is in violation of PWPCA.
WHEREFORE, Plaintiff Philip Markovitz demands judgment in his favor and against
Defendant Rite Aid Corporation, for:
(a) payment of wages due and owing;
(b) prejudgment interest;
(c) post judgment interest;
(d), liquidated damages in an amount equal to 25 percent of the total amount of wages
and fringe benefits or wage supplements due;
(e) court costs;
8
(f) attorneys' fees;
(g) such other relief as the Court deems just and appropriate.
HOYLE, FICKLER, H&,RSCHEL &
MATHES LLP
By:
Walter M.-Phillips, 7r.
R. David Walk, Jr. '
Kevin L Kotch
One South Broad Street, Suite 1500
Philadelphia, PA 19107
(215) 981-5700
Attorneys for Plaintiff
Philip Markovitz
1
Dated: August 5, 2003
9
ALr-05-2003 1124 P. 02/02
VIMCATION
I, Philip Madrovitz, verify that the statements in the foregoing oomplaint
are true and corned to the best of my personal knowlodge, information and behet and
that I understand that the statements made herein are made subjed to the penalties of 18
Pa. Coos. 3tat. Am. § 4904, relafigg to uoswom falsification to authorities.
Br-
Philip Marko
miz
Dated: Aug" ?1* 2003
TOTAL P.02
08/05/2009 TUE 11:08 tTI/RI NO 61001 Q002
•
EXHIBIT A
DEFERRED COMPENSATION AGREEIfF-NT
AGREEMENT entered into as of the 12th day of April,
1996, by and between RITE AID CORPORATION, with offices at 30
Hunter Lane, Camp Hill, Pennsylvania 17011 ("Corporation"),
and the employee named on the signature page of this
Agreement ("Employee").
WHEREAS, Employee is rendering and Corporation desires
that Employee continue to render valuable services to
Corporation; and
WHEREAS, to assist Employee in providing for the
contingencies of death, disability and old age dependency,
Corporation and Employee desire to enter into this Agreement
("Agreement") to provide Employee with deferred compensation.
NOW, THEREFORE, Corporation and Employee hereby agree as
follows:
1. (a) In the event that Employee's employment with
corporation terminates after Employee has reached age sixty
five (65) and.has completed at least twenty (20) years of
service with Corporation, Employee shall be entitled to
retirement ("Retirement") with the compensation provided in
this Agreement. In such event, the Corporation shall pay to
Employee, monthly, an amount equal to one twelfth (1/12) of
fifty (50%) percent of the average of the three (3.) highest
annual base salaries paid or accrued in respect of three (3)
fiscal years of the Corporation within the last ten (10)
fiscal years of the Corporation prior to termination of
Employee's employment; provided, however, that in the event
Employee's Retirement commences after at least six (6) months
of the fiscal year in which Employee's.Retirement takes place
have elapsed, that fiscal year shall be included as the tenth
year in the calculation of the Retirement Allowance and
Employee shall be deemed to have been paid an annual base
salary for that entire fiscal year at the highest rate paid
to Employee,in that fiscal year. The monthly amount of such
payments shall hereinafter be referred tows the "Retirement
Allowance". Monthly payments of Retirement Allowance shall
commence on the first day of the month next following
Employee's Retirement and shall continue for one hundred
eighty (180) months
All payments of Retirement Allowance
2
under this Agreement.shall be made subject to such
withholding and deductions as may be required by law.
(b) If the Employee's service with the Corporation is
terminated or suspended by reason of disability
("Disability'), then regardless of the Employee's age or,
length of service, and provided Employee is not then
receiving disability payments under Corporation's Long Term
Disability Plan, if requested by Employee and if approved by
the Board of Directors in its sole discretion, Corporation
shall pay to Employee, monthly, commencing on the first day
of the third month next following its receipt of Employee's
request, so much of the Retirement Allowance (determined at
the date of Employee's Disability) as the Board of Directors
shall deem appropriate. Such monthly payments shall continue
until the earlier of: M the cessation of Employee's
Disability (whether or not Employee returns to active
employment with Corporation or with another employer) or (ii)
the payment of an aggregate amount of the product of 180 and
the Retirement Allowance or (ii) Employee's death:
Employee shall be deemed to have incurred a. Disability
only if according to certification of competent medical
authority approved or selected by Corporation's Board of
3
Directors ("Board of Directors"), Employee is incapable of
performing normal duties with Corporation by reason of a
medically determinable physical or mental impairment which
will persist for an indeterminate period of time.
(c) If after receiving monthly Disability payments
under this. Agreement, Employee returns to employment with
Corporation, the total dollar amount of Retirement Allowance
received by Employee during Employee's Disability shall, in
any manner deemed equitable by the Board of Directors, be
subtracted from the aggregate Retirement Allowance to which
Employee may later become entitled at such time as that
Retirement Allowance becomes' payable, under this Agreement.
However, there shall not be subtracted from the Retirement
Allowance any payments received under any other disability
insurance or program not arising out of this Agreement.
2. (a) If Employee dies while employed by Corporation
or while subject to a Disability, Corporation shall pay to
Employee's beneficiary designated pursuant to Section 5 or as
otherwise provided in that Section, a Retirement Allowance
the amount of which shall be calculated as if the death had
. occurred (i) after Employee had completed twenty (20) years
of service with Corporation and (ii) after Employee had
4
reached age sixty five (65), reduced by one-180th of the.
aggregate amount, if any, paid to Employee under Section
1(b). Monthly payment of that Retirement Allowance shall
commence.on the first day of the month next following the
date of Employee's death and shall continue for one hundred
eighty (180) months..
(b) If Employee dies after payments under Section
1 have commenced, but before payments have been completed,
the remaining payments shall be continued to Employee's
beneficiary designated pursuant to Section 5 or as otherwise
provided in that Section.
3. If Employee's employment with Corporation
terminates for any reason other than Retirement, disability
or death, this Agreement shall terminate and no benefits
shall. be payable to Employee or to any person or entity
claiming by, from or through Employee.
4. If at any time Employee is discharged for good
cause by Corporation with the acquiescence of the Board of
Directors, or if subsequent to Employee's retirement,
disability or death, it is discovered that Employee committed
an act which could have resulted in Employee's discharge for
5
E
good cause by Corporation, had it been known to Corporation,
this Agreement shall terminate and any and all rights and
benefits of Employee and of any person claiming by, from or
through Employee under this Agreement shall be forfeited and
any benefits then being paid or to be paid in the future
shall cease. In the case of an after-discovered fact, the.
Board of Directors shall determine whether there has been an
act which would have justified a discharge for good cause,
using reasonable and non-discriminatory standards.
5. Employee shall designate in writing on a form
1
delivered to the Board of Directors (Attention: Chairman) a
beneficiary or beneficiaries and successor beneficiaries
(including address) to receive the benefits, if any, payable
under this Agreement upon Employee's death. The Board of
Directors shall decide which beneficiary or beneficiaries, if
any, shall have been validly designated. Such designation of
beneficiary may be revoked and changed by Employee, from time
to time, in writing on a form delivered to the Board of
Directors (Attention: Chairman), and shall be revoked
automatically if the designated beneficiary or beneficiaries
predecease Employee, in which case a new designation of
beneficiary or beneficiaries may be made. If, at the time of
Employee's death no designation of beneficiary is then in
6
effect, or following Employee's death, upon the death of all
successor beneficiaries designated by Employee, all remaining
Retirement Allowance shall be paid to Employee's estate.
6. Employee's rights under this Agreement and the
rights of Employee's beneficiary or estate may not be
assigned, transferred, pledged or encumbered.
7. In determining Employee's length of service with
Corporation for purposes of this Agreement there shall be
counted any period of: (a) employment with any business
entity controlling, controlled by or under common control
with Corporation; (b) employment with any business entity at
the request of Corporation; (c) service prior to the date of
this Agreement with any business entity referred to in (a)
and (b) of this Section and (d) any period-of Disability
(whether or not payments of the Retirement Allowance were
made to Employee as a.result thereof).
8. Nothing contained in this Agreement shall be
construed as conferring upon Employee the right to continue
in the employ of Corporation in any capacity and the
employment rights of Employee shall be determined as if this
Agreement had never been executed.
7
0.
9. If at any time after Retirement Employee, without
the prior consent of the Board of Directors, undertakes
employment with or provides consulting or advisory services
to any person or entity engaged in the continental United
States: (a) in any business in which Corporation or any
entity, employment with which would, for purposes of this
Agreement, constitute employment by the Corporation, is
engaged (whether or not-in competition with Corporation or
such entity) or (b) in the operation of pharmacy benefit
manager, Employees right to any remaining Retirement
Allowance otherwise payable under this Agreement shall at
that time cease and terminate permanently. The provisions of
this Section 9 shall not be applicable with respect,to
employment by or consulting services to a trade association
of persons or entities referred to in (a) of this section.
10. The benefits, if any, payable to Employee in
accordance with this Agreement shall not constitute a.
segregation of funds or other property for the benefit of
Employee or of any person or entity claiming by, from or
through Employee. Nothing contained in this Agreement and no
action taken pursuant to the provision of this Agreement
shall create or be construed as creating a trust of any kind
or a fiduciary relationship between Corporation and Employee
8
•
or any person or entity claiming by, from or through Employee
and neither Employee nor any person or entity claiming by,
from or through Employee shall have rights with respect to
the benefits under this Agreement greater than the rights of
an unsecured general creditor of the Corporation.
11. (a) The Board of Directors shall have full power
and authority to interpret, construe and administer this
Agreement and shall not be liable to Employee or any person
or entity claiming by, from or through Employee for any
action taken or omitted in connection with the
interpretation; construction or,administration or this
Agreement and no action taken or omitted by the Board of
Directors in connection with the interpretation, construction
or administration of any similar or dissimilar agreement
between Corporation and any other employee of Corporation
shall by reason of this Agreement create any cause of action
in Employee or any person or entity claiming by, from or
through Employee. All decisions, interpretations and actions
of the Board of Directors taken in connection with this
Agreement, including any claims for benefits made under this
Agreement, shall be conclusive, final and binding on all
parties.
9
E
(b) If the Board of Directors denies the claim of
an Employee or of any person claiming by, from or through
Employee (a "Claimant") for payment of the Retirement
Allowance under this Agreement, the Board of Directors shall
provide written notice,. within sixty (60) days after receipt
of the claim, setting forth in a manner calculated to be
understood by the Claimant;
(i) the specific reasons for such denial;
(ii) the specific reference to the provisions
of this Agreement on which denial is based;
(iii) a description of any additional material
or information necessary to perfect the claim and an
explanation of why such material or information is
needed; and
(iv) an explanation of this Agreement's claim
review procedure and the time limitations of this
subsection applicable thereto.
Employee or any Claimant whose claim for payment of
the Retirement Allowance has been denied may request review
10
by the Board of Directors of the denied claim by notifying
the Board of Directors in writing within sixty (60) days
after receipt of the notification of claim denial. As part
of said review procedure, the Employee or Claimant or their
authorized representatives may review pertinent documents and
submit issues and comments to the Board of Directors in
:writing. The Board of Directors shall render its decision to
Employee or the Claimant in writing in a manner calculated to
be understood by the Employee or Claimant not later than
sixty (60) days after receipt of the request for review,
unless special circumstances require an extension of time, in
which case decision shall be rendered as soon after the sixty
(60) day period as possible, but not later than one hundred
twenty (120) days after receipt of the request for review.
The decision on review shall state the specific reasons
therefor and the specific Agreement references on which it is
based.
12. This Agreement shall be binding upon and inure to
the benefit of this Corporation, its successors and assigns,
and Employee, Employee's beneficiary, heirs, executors,
administrators and legal representatives.
11
0
13. Failure to insist upon strict compliance with any
of the terms, covenants or conditions hereof shall not be
deemed a waiver of such term, covenant or condition, nor
shall any waiver or relinquishment. of any right or power
hereunder at any one time or more times be deemed a waiver or
relinquishment of such right or power at any other time or
times.
14. If any clause, sentence, paragraph, section or part
of this Agreement shall be held by any court of competent
jurisdiction to be invalid, such judgment shall not affect,
impair or invalidate the remainder hereof.
15. Any notice required or permitted to be given under
this Agreement shall be sufficient if in writing and sent by
registered or certified mail; if to Employee, to the address
shown on the books of Corporation; and if to Corporation, to
the address shown above or such other address as Corporation
may have designated in writing, or if actually received by
the person to whom sent.
16. This Agreement shall be subject to and construed in
accordance with the laws of the Commonwealth of Pennsylvania
12
11
•
where it is made without giving effect
conflict of law.
to principles of
IN WITNESS WHEREOF, Corporation has caused this Agreement
to be executed by its duly authorized officer and
Employee has hereunder set Employees hand as of the date first
above written.
RITE
By:
114r EnL f the Boar d and
Chief Executive Officer
EMPLOYEE
Name: lip Mar itz
-13-
DESIGNATION OF BENEFICIARY
To: The Board of Directors of Rite Aid Corporation
Attention: Chairman
In accordance with the Dekard Compensation Agreement granted to we
by Rite Aid Corporation, I hereby designate the following beneficiaries to receive say
paymads which may be doe following my death::.
1Primary Beadichtry (or BeseSclartea
Social
Name Percentage Address Security Number
Mary Markowitz 1008 1 Laurel Ridge Road REDACTED
Hershey, PA 17033
Secondary Beneficiary (or Beneficiaries) if all Primary Beneficiaries m deceased:
Social
Name Percentage Address Sectu* Number
Linda Markowitz 1008 201 South 18th Street REDACTED
Apt. 812
Philadelphia, PA 19103
If more than one Primary or Contingent beneficiary is named, specify the
percentage to be paid to each; if percentages are not specified, payments will be made
equally to the beneficiaries then living. '
I understand that this Designation is subject to the terms of the Agreement,
and that I may amend or revoke this Designation at any time or times in the manner
provided for in the Agreement
Date: Apri i i -;, i qq6
Signature:
Philip rkowitz
DSC-316WL1
s ?
EXHIBIT B
RITE
AID
Rite Aid Corporation
MARTIN L GRASS
Chairman
Chief Executive Ocher
June 12, 1998
Mr. Philip Markovitz
One Laurel Ridge Road
Hershey, PA 17033
Dear Phil,
•
• MAILING ADDRESS
P.O. Box 3165
Harrisburg, PA 17105
• GENERAL OFFICE
30 Hunter Lane,
Camp Hill, PA 17011
• (717) 975-57d1
• (717) 975.5905 Fax
I think we had a very productive discussion on the restructuring of the senior management of the
real estate department I appreciated your candor and your showing of intense cooperation and
loyalty. By agreeing to early retirement, you are permitting us to bring in a new generation so that
we can train it for a feel years berofe you would turn over the reins completely. This will enable you
and me to experiment, make evaluations and select the coned successor.
We have agreed that you will be retiring upon your attaining age 59, at the end of Mardi, 2000.
In consideration of your accepting this somewhat early retirement, the Company hereby amends your
deferred compensation contract as follows:
(a) The payments under the deferred compensation contract will commence effective
upon your retirement at age 59 and will continue for 15 years beyond the normal
retirement age of 65.
(b) The calculation of your refinement benefit will be based on 50% of your highest
annual salary plus your highest annual bonus during the three fiscal years preceding
your date of retirement.
In addition, as to any stock options held by you at the time of your retirement: they shall then vest
and be exercisable in whole or in part from time to time for a period up to 36 months. 1 mtrisabiilty
shall survive your death.
I am confident that you will apply yourself to the task with the same vigor and loyalty as you have
demonstrated in the past.
/jsk
i 0
EXHIBIT C
EXECUTIVE SEPARATION AGREEMENT AND GENERAL RELEASE
This Executive Separation Agreement and General Release ("Agreement") by and
between Philip Markovitz ("Executive) and Rite Aid Corporation (the "Company') is entered
into as of January 24, 2000, subject to the revocation and effectiveness provisions of Section 14
below.
WHEREAS, Executive has for many years served as an officer and employee of
the Company and its subsidiaries; and
WHEREAS, the Company has provided Executive with a letter agreement, dated
June 12, 1998 (the "Letter Agreement"), setting forth certain terms regarding Executive's
retirement from the Company; and
WHEREAS, the Company and Executive have determined that Executive's
employment with the Company shall terminate effective as of February 4, 2000; and
WHEREAS, the Company and Executive have determined to further memorialize
Executive's retirement compensation, as set forth in the Letter Agreement, and certain other
matters, subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and covenants set forth
herein, and for other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by the parties hereto, Executive and the Company hereby agree as follows:
1. Resignation of Positions. Executive hereby voluntarily resigns his
employment with the Company effective as of February 4, 2000 (the "Termination Date"), and
the Company hereby accepts such resignation. Executive hereby further resigns, effective as of
the Termination Date, from all positions he may hold as an officer or director of the Company
and its subsidiaries and affiliates, and the Company hereby accepts such resignations. Executive
covenants and agrees to execute all such instruments and take all such other actions as the
Company may reasonably deem necessary or desirable to evidence or accomplish the foregoing
in M.
2. Severance Benefits. In consideration for Executive's resignations and
release of claims set forth herein, but subject to (i) the forfeiture provisions set forth in Sections 7
and 8 and (ii) expiration of the Revocation Period (as defined in Section 14) without Executive's
revocation of this Agreement, the Company shall provide Executive with the following benefits
(the "Severance Benefits"):
(a) During the period commencing on the Termination Date and
ending on March 31, 2000 (the "Severance Period"), the Company shall continue payment of
Executive's annual base salary at the rate in effect on the Termination Date, such amounts to be
payable at such times and otherwise in accordance with the Company's standard payroll
procedures for officers.
23003610matowd 1WPd
(b) During the Severance Period, the Company shall provide
Executive with continued coverage under such of the Company's medical benefits plans in effect
from time to time as are generally applicable to senior executives of the Company, subject to all
applicable terms and conditions of such plans.. Without limiting the generality of the foregoing,
Executive shall be responsible for any premiums, co-payments, deductibles and other amounts
payable by participants pursuant to the terms of such plans.
(c) All 245,000 stock options held by Executive as of the Termination
Date shall become immediately vested and exercisable and shall remain vested and exercisable
through March 31, 2003 (or, if earlier, through the end of the stated term of such stock options),
whereupon any such options that have not theretofore been exercised shall tmmunate and expire
in their entirety. A schedule with respect to the details of those options is attached as Exhibit A.
(d) That certain Deferred Compensation Agreement, dated April 12,
1996 between Executive and the Company (the "Deferred Compensation Agreement"), is hereby
amended to. provide that (i) Executive shall be eligible to receive payment of benefits under the
Deferred Compensation Agreement commencing April 1, 2000; (ii) unless earlier terminated in
accordance with the terms of the Deferred Compensation Agreement or the terns hereof, such
benefits shall be payable to Executive or Executive's beneficiary through and including March
31, 2021; and (iii) the amount of the retirement benefit payable under the Deferred Compensation
Agreement shall be calculated based upon 50% of Executive's highest annual salary plus
Executive's highest annual bonus paid during the 1998, 1999 and 2000 fiscal years of the
Company (ie, 50%.of the sum of (i) $218,545.60 (Executive's annual salary in fiscal 1999) and
(ii) $212,180.00 (Executive's annual bonus paid with respect to fiscal 1999)). Other than as set
forth herein, the terms and conditions of the Deferred Compensation Agreement shall remain in
full force and effect.
(e) Executive shall be eligible to receive benefits under any applicable
pension and welfare benefit plans (including the 401(k) Plan) maintained by the Company in
which Executive is a participant as of the Termination Date in accordance with the terms and
conditions of such plans. Nothing herein shall be construed as providing Executive the right to
continued vesting or accrual of benefits under any such plan during the Severance Period or
thereafter.
(f) The Company shall (i) indemnify Executive to the full extent
permitted by the Company's Certificate of Incorporation (subject to any limitations imposed
under applicable law) and provide advancement of attorneys' fees in connection therewith, and
(i) continue coverage for Executive for a period of six (6) years following termination of his
employment with the Company under any Director and Officer insurance policies maintained
from time to time by the Company; ro ' ed that Executive shall (and hereby does) undertake to
repay the Company any such amounts advanced with respect to any action, claim or other
proceeding as to which it is ultimately determined under applicable law that Executive shall not
be entitled to indemnification from the Company; and r vid further, that.Executive agrees to
execute any similar or related undertaking in such form as shall be required of other officers and
-directors of the Company.
23W3640mukn-dX4e 1VTd 2
Notwithstanding anything herein to the contrary, Executive acknowledges
and agrees that (i) he shall not receive or be entitled to receive any annual or other bonus in
respect of the Company's fiscal year ending in or about February 2000, (ii) he shall not receive or
be entitled to receive any payment in respect of any long-term bonus of incentive plan in which
Executive has at any time been a participant prior to the Termination Date, (iii) he shall not
receive or be entitled to receive any annual, long-term or other bonus in respect of the Severance
Period or any portion thereof, (iv) he shall not receive or be entitled to receive pension credits or
otherwise be eligible for retirement plan contributions in connection with the Severance Benefits
and (v) other than as set forth in this Section 2, Executive shall not receive or be entitled to
receive any amounts or benefits under any stock-based or other incentive, bonus or other
compensation, severance or fiinge benefits plan, program, policy, agreement or.arrangement of
the Company. Executive shall not 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 Executive under this Section 2, and such amounts, benefits and other
compensation shall not be reduced in respect of any amounts actually earned by Executive from
subsequent employment.
3. Full Discharge.. Executive agrees and acknowledges that the Severance
Benefits provided to Executive under this Agreement and referred to in Section 2 above (i)
exceed in the aggregate any sums or other payments of benefits to which Executive would
otherwise be entitled in respect of his employment with the Company and the termination thereof
under any policy, plan, or procedure of, or any agreement or understanding with, the Company or
its subsidiaries or affiliates and (ii) except as provided in Section 4(a), is in full discharge of any
and all claims the Executive has or may have against the Releasees, as defined in Section 4(a),
including without limitation for wages, benefits (including plan contributions), or attorney's fees,
and any amounts which Executive would otherwise be entitled to receive under the Letter
Agreement-
4. General Release.
(a) In consideration of the Severance Benefits, Executive, for himself
and for his heirs, executors, administrators, representatives, successors and assigns (hereinafter
collectively referred to as the "Releasors"), releases and forever discharges the Company and
any and all of its subsidiaries, divisions, affiliated entities, representatives, successors and
assigns, and any and all of its or their employee benefit or pension plans or funds, and any and all
of its or their past or present officers, directors, stockholders, agents, trustees, administrators,
employees, successors or assigns (whether acting as agents for such entities or in their individual
capacities) (hereinafter collectively referred to as the "Releasees'), from and against any and.all
claims,. charges, complaints, demands, actions, causes of action, agreements, promises,
contributions, fees, losses, expenses and liabilities of any kind whatsoever (based upon any legal
or equitable theory, whether contractual, common-law, statutory, federal, state, local or
otherwise), whether known or unknown, which Releasors ever had, now have or may have
against Releasees by reason of any actual or alleged act, omission, transaction, practice, conduct,
occurrence, or other matter up to and including the Release Effective Date (as defined in Section
14); rovid that such release shall not apply with respect to (i) any rights of indemnification
23WMQMwWvWAcY2.wO
and advancement to which Executive is entitled as of the Termination Date and (ii) Executive's
rights under this Agreement
. (b) Without limiting the generality of the foregoing, this Agreement is
intended to and shall release the Releasees from any and all claims arising out of Executive's..
employment by or other service with Releasees, or the resignation or termination of Executive's
employment or other service with Releasees, including without limitation, (i) any claim under the
Age Discrimination in Employment Act, as amended by, among other laws, the Older Workers
Benefit Protection Act; (ii) any claim under Title VII of the Civil Rights Act of 1964, as amended
by, among other laws, the Civil Rights Act of 1991; (iii) any claim under the Americans with
Disabilities Act; (iv) any claim under applicable Pennsylvania employment or other laws; (v)
any other claim of discrimination or retaliation in employment (whether based on federal, state or
local law, statutory or decisional); (vi) any claim under the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"); (vii) any claim under the National Labor Relations
Act, as amended; (viii) any claim under the Worker Adjustment and Retraining Notification Act;
(ix) any claim for tort or for breach of contract; and (x) any claim for attorneys' fees, costs,
disbursements' or the like, except to the extent any such claim relates to (A) any rights of
indemnification and advancement to which Executive is entitled as of the Termination Date and
(B) Executive's rights under this Agreement. .
(c) Executive further agrees that he will not seek or accept any award
or settlement from any source or proceeding with respect to any claim or right covered by this
Section 4 and Section 5 below.
5. No Claims. Executive agrees, to the fiillest extent permitted by law, not to
commence, maintain, prosecute or participate in any action or proceeding of any kind, nor
encourage anyone else to do so, against any of the Releasees, arising out of any act, omission,
transaction or occurrence occurring up to and including the Release Effective Date (other than
with respect to any action, omission, transaction or occurrence that is expressly subject to the
proviso in Section 4(a)), and Executive represents and warrants that he has not done so at any
time prior to or as of the Release Effective Date.
6. No Injurious Conduct Executive acknowledges that he has not and agrees
that he will not intentionally engage in any conduct that is injurious to Releasees' reputation or
interest, including but not limited to (i) divulging, communicating, or in any way making use of
any confidential or proprietary information acquired in the performance of Executive's duties for
Releasees (except as may be required pursuant to Section 7 below or by applicable law); and (i)
publicly disparaging (or inducing or encouraging others to publicly disparage) any of the
Releasees.
7. Cooperation.
(a) Executive shall at all times cooperate fully with the Company and
its subsidiaries and affiliates and its counsel in connection with any investigation by the
Company relating to any matter in which Executive was or is involved or of which Executive has
n003640m,Jowtz4M.aupd 4
knowledge by virtue of his employment or other position with Releasees or any other aspect of
the Company's affairs, including without limitation the pending investigation of the Company's
accounting practices and related matters. Without limiting the generality of the foregoing,
Executive shall (i) make himself available to be interviewed upon reasonable notice and
otherwise on a reasonable basis and for a reasonable period of time "relating to any such .
investigation, (ii) provide truthful, accurate and complete information and responses in the course
thereof (including without limitation during interviews) and (iii) provide any and all requested
documentation, to the extent that any such documentation is in his possession.
(b) Executive agrees that, in the event he is subpoenaed by any person
or entity to give testimony (in a deposition, court proceeding or otherwise) which in any way
relates to Executive's employment or other position with Releasees, any investigation,
proceeding or litigation or otherwise relates to the subject matter of this Agreement, Executive
shall give prompt notice of such request to the Company's General Counsel at the address listed
below.
(c) The Company shall reimburse Executive for his reasonable and
properly documented travel expenses relating to the discharge of his obligations pursuant to this
Section 7.
(d) Notwithstanding anything herein to the contrary, if the Company
shall determine, in its reasonable discretion, that Executive has in a material respect failed to
perform his obligations set forth in this Section 7, the Company shall have the right to terminate
immediately payment and provision of the Severance Benefits in their entirety (other than vested
benefits protected under ERISA and Executive's rights to indemnification and advancement as
set forth in Section 2(f)), and such Severance Benefits shall thereupon be forfeited by Executive.
For clarity, it is understood and agreed by Executive that (i) such forfeiture shall result in, among
other things, (x) the immediate termination of all benefits under the Deferred Compensation
Agreement (notwithstanding anything to the contrary therein) and (y) the immediate termination
of any otherwise then exercisable stock options; and (ii) the termination of payment and
provision of Severance Benefits pursuant to this Section 7(e) shall in no way affect the
continuing validity and enforceability of the release provided in Section 4 and Executive's other
covenants and agreements hereunder.
8. Cause. If at any time the Company shall become aware of evidence on the
basis of which it shall reasonably determine that during the period of his employment with the
Company, Executive committed an act of a material nature which. could have resulted in
Executive's discharge for cause by the Company, had it been known to the Company, the
Company shall have the right to terminate immediately payment and provision of the Severance
Benefits in their entirety (other than vested benefits protected under ERISA), and such Severance
Benefits shall thereupon be forfeited by Executive. For purposes of this Agreement and the
Deferred Compensation Agreement, acts which shall be deemed to have resulted in Executive's
discharge by the Company for "cause" shall include (i) any act of fraud, embezzlement,
dishonesty or concealment relating to the business of the Company or any subsidiary or affiliate,
(ii) knowing falsification of records of the Company or any subsidiary or affiliate, (iii) gross
2300 6Q=d3Mtz- Z%Pd
• .0
misconduct or willful malfeasance in the performance of his duties with the Company or any
subsidiary or affiliate, (iv) commission of any felony or securities law violation, or (v) any other
act or omission that would permit the Company to terminate Executive's employment for cause
under applicable decisional or statutory law. For clarity, it is understood and agreed by
Executive that (i) such forfeiture shall result in, among other things, (x) the immediate
termination of all benefits under the Deferred Compensation Agreement and (y) the immediate
termination of any otherwise then exercisable stock options; (ii) the termination of payment and
provision of the Severance Benefits pursuant to this Section 8 shall in no way affect the
continuing validity and enforceability of the release provided in Section 4 and Executive's other
covenants and agreements hereunder, and (iii) it shall be no defense to the forfeiture provisions
of this Section 8 that one or more acts constituting grounds for discharge for cause may actually
have been known to the Company or to any officer or director thereof (or of any subsidiary or
affiliate) during the period of Executive's employment with or service as an officer or director of
the Company (the Company acknowledges that it does not know of any such grounds for
discharge).
9. Non-Disclosure. The terms and conditions of this Agreement, the
disclosure information attached as Exhibit B, and the circumstances and discussions giving rise
to this Agreement are and shall be deemed to be confidential, and shall not be disclosed by
Executive to any person or entity without the prior written consent of the Chairman and Chief
Executive Officer of the Company, except if required by law, or to Executive's accountants,
attorneys, spouse or members of his immediate family, provided that these latter persons each
agree to maintain the confidentiality of this Agreement, the disclosure information and the
circumstances and discussions giving rise to the Agreement Executive further represents that he
has not disclosed the terms and conditions of this Agreement or the disclosure information or the
circumstances and discussions giving rise to the Agreement to anyone other than his attorneys,
accountants or spouse.
10. Confidentiality. Executive acknowledges that during the course of his
employment with the Company, its subsidiaries and affiliates, he has been exposed.to documents
and other information regarding the confidential affairs of the Company, its subsidiaries and
affiliates, including without limitation information about their past, present and future financial
condition, the markets for their products, key personnel, past, present or future actual or
threatened litigation, trade secrets, 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 and affiliates not readily available to the
public (the "Confidential Information"). In recognition of the foregoing, the Executive covenants
and agrees as follows:
(a) Except as required by law, at no time shall Executive ever divulge,
disclose, or otherwise use any Confidential Information, unless and until such information is
readily available in the public domain by reason other than Executive's unauthorized disclosure
or use thereof, unless such disclosure or use is expressly authorized by the Chairman and Chief
Executive Officer of the Company in writing in advance of such disclosure or use.
23003640mwtawtz 2.wpd
(b) Promptly following the Termination Date, Executive shall deliver
to the Company's offices in Camp Hill, Pennsylvania all of the property and equipment of the,
Company and its subsidiaries (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, successors or assigns, and/or their respective past and present officers,
directors, employees, agents or consultants (collectively, the "Company Property, Records and
Files"); it being expressly understood that Executive shall not be authorized to retain any of the
Company Property, Records and Files, except to the extent expressly so authorized in writing by
the Company's Chairman and ChiefExecutive Officer.
11. Non-Solicitation. From the Termination Date through lvlarch 31, 2002,
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, successors or assigns to terminate his, her or its employment or other relationship with
the Company or its subsidiaries, affiliates, successors or assigns for the purpose of associating
with any competitor of the Company or its subsidiaries, affiliates, 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, successors or assigns for any
other reason. For purposes of this Section 11, the tern "competitor of the Company" shall be
defined as any person or entity which directly or indirectly through one or more subsidiaries and
affiliates owns and/or operates 200 or more retail drugstores in the United States.
Notwithstanding anything contained in this Agreement or in the Deferred Compensation
Agreement to the contrary, nothing contained herein or therein shall prohibit Executive from
engaging or being employed by or serving as a consultant to a business engaged in the general
development of real estate even if a tenant or prospective tenant or purchaser or prospective
purchaser of any such real estate is an operator of retail drug stores.
12. Ri¢hts and Remedies upon Breach. If Executive breaches, or threatens to
commit a material breach of, any of the provisions of Sections 6, 10 or I 1 above (the "Restrictive
Covenants'), and in the case of breaches subject to being cured, after notice to the Executive and,
if not cured by the Executive within 15 days of such notice, the Company and its subsidiaries,
affiliates, 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, successors or assigns at law or in equity:
(a) 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, successors or assigns, as the case
may be, and that money damages would not provide an adequate remedy to the Company or its
subsidiaries, affiliates, successors or assigns, as the case may be.
23oo3640markvvM-rWZ.ma 7
(b) The right and remedy to require Executive to account for and pay
over to the Company or its subsidiaries, affiliates, 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.
(c) 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.
(d) 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 reduce the duration or scope of
such provision, as the case may be, to render such provision enforceable (it being the intent of the
parties that any such reduction be limited to the minimum extent necessary to render such
provision enforceable), and, in its reduced form, such provision shall then be enforceable.
(e) 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, successors or assigns to the relief provided herein in the courts of any other jurisdiction
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.
In addition to the foregoing remedies, in the event Executive materially breaches
any of the provisions of the Restrictive Covenants, the Company shall have the right to terminate
immediately payment and provision of the Severance Benefits in their entirety (other than vested
benefits protected under ERISA and Executive's rights to indemnification and advancement as
set forth in Section 2(t)), and such Severance Benefits shall thereupon be forfeited by Executive.
The provisions of Section 11 of the Deferred Compensation Agreement shall be applicable to any
decision by the Company to terminate payment and provision of Severance Benefits and the
second sentence of Section 7(d) shall apply to the preceding sentence.
13. No Violation. The making of this Agreement is not intended to, and shall
not, be construed as an admission that Releasees have violated any federal, state or local law
(statutory or decisional), ordinance or regulation, breached any agreement, contract,
understanding, policy or practice, or committed any wrong whatsoever against Releasors. The
parties further agree that this Agreement may be used as evidence only in a subsequent
proceeding in which any of the parties alleges a breach of ths Agreement.
2=640maft%-Ma 2 .wpd
14. Review and Revocation Period. Executive shall have up to forty-five (45)
days from the date of receipt hereof to consider the terms and conditions of this Agreement.
Executive may accept this Agreement by signing it before a notary and returning it to Mr. Robert
G. Miller, Chairman and Chief Executive Officer, Rite Aid Corporation, at 30 Hunter Lane,
Camp Hill, Pennsylvania 17011, by no later than the close of business on the forty-fifth (45th)
day after Executive receives this Agreement ("Agreement and Release Return Date"). After
signing this Agreement, Executive shall have seven (7) days (the "Revocation Period") to revoke
this Agreement by indicating his desire to do so in writing (i) addressed to Mr. Miller at the
address listed above, and (ii) received in hand by Mr. Miller no later than the close of business on
the seventh (7th) day following the date Executive executes this Agreement. The effective date
of this Agreement shall be the eighth (8th) day after Executive executes it (the "Release Effective
Date"). If the last day of the Agreement and Release Return Date or the Revocation Period falls
on a Saturday, Sunday, or holiday, the last day of the Agreement and Release Return Date or the
Revocation Period, respectively, will be deemed to be the next business day. In the event
Executive does not accept this Agreement as set forth above, or in the event Executive revokes
this Agreement during the Revocation Period, this Agreement, including but not limited to the
obligation of the Company to provide the Severance Benefits referred to in Section 2, shall
automatically be deemed null and void; rovid that notwithstanding anything herein to the
contrary, the date of termination of Executive's employment with the Company shall at all events
be February 4, 2000.
15. Acknowledsnent. Executive acknowledges that: (a) he has carefully read
this Agreement in its entirety; (b) he has been offered and had an opportunity to consider fully
the teams of this Agreement and the disclosure information attached as Exhibit A provided
pursuant to the Older Workers Benefit Protection Act, for a period of at least forty-five (45) days,
or where applicable has waived the necessity of a full 45 days; (c) he has been advised by the
Company in writing to consult with an attorney of Executive's choice before signing this
Agreement; (d) he fully understands the significance of all of the terms and conditions of this
Agreement and he has discussed them with his independent legal counsel, or has had a
reasonable. opportunity to do so; (e) he has had answered to his satisfaction any questions he has
asked with regard to the meaning and significance of any of the provisions of this Agreement;
and (f) he is signing this Agreement voluntarily and of his own free will and assents to all the
terms and condition contained herein.
16. Successors. This Agreement is binding upon, and shall inure to the benefit
of, the parties and their respective heirs, executors, administrators, representatives, successors
and assigns.
17. Survival. Executive's obligations under Sections 4, 5, 6, 7, 9, 10 and 11 of
this Agreement and the Company's rights hereunder shall survive the payment of the Severance
Benefits.
18. Severability. Subject to Section 12, if any provision of this Agreement
shall be held by a court of competent jurisdiction to be illegal, void, or unenforceable, such
provision shall be of no force and effect. However, the illegality or unenforceability of such
zi0M"0m.huVih4CV2V O 9
• •
provision shall have no effect upon, and shall not impair the enforceability of, any other
provision of this Agreement; provided, however, that, upon any finding by a court of competent
jurisdiction that the release and covenants provided for by.Sections 4 and 5 of this Agreement are
illegal, void, or unenforceable, Executive agrees either to return promptly to the Company the
Severance Benefits theretofore paid and provided to him under this Agreement in their entirety or
to execute a release, waiver or covenant (reasonably satisfactory to the Company) that is legal
and enforceable and has to the extent.permissible under applicable law substantially the effect of
the release and covenants provided for by Sections 4 and 5 of this Agreement. Further, if
Executive seeks to challenge the validity of or otherwise vitiate this Agreement or any provision
thereof (including, without limitation, Sections 4 and 5), Executive shall, as a precondition, be
required to repay to the Company the Severance Benefits theretofore paid and provided to him
under this Agreement in their entirety.
19. . Notices. All notices and other communications under this Agreement
shall be in writing and shall be given by fax or fast 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:
If to the Company: Rite Aid Corporation
30 Hunter Lane
Camp Bill, Pennsylvania 17011
Attention: General Counsel
Fax: (717) 760-7867
with a copy to: Kaye, Scholer, Herman, Hays & Handler, LLP
1999 Avenue of the Stars
Los Angeles, CA 90067
Attention: Andrew Ash, Esq.
Fax: 310/788-1200
If to Executive: Philip Markovitz
One Laurel Ridge Road
Hershey, Pennsylvania 17033
Fax:
with a copy to: Ramon R. Obod, Esquire
Fox, Rothschild, O'Brien & Frankel
2000 Market Street
Philadelphia, PA 19103
Fax: 215-299-2150
Any party may change such party's address for notices by notice duly given pursuant hereto.
20. Governing Law; Venue. This Agreement shall be governed by the laws of
the Commonwealth of Pennsylvania and the parties in any action arising out of this Agreement
3003640m,d 0Mft-W %pd 10
shall be subject to the jurisdiction and venue of the federal and state courts, as applicable, in the
County of Cumberland, Commonwealth of Pennsylvania
21. Entire Agreement. This Agreement and Exhibits A and B.hereto and the
Deferred Compensation Agreement as amended by this Agreement constitute the complete
understanding between the parties and supersede any and all prior agreements, understandings,
and discussions, whether written or oral, between the parties. Without limiting the generality of
the foregoing, Executive further acknowledges that this Agreement supersedes the Letter
Agreement in its entirety, and that the Letter Agreement shall be of no fiuther force or effect
from and after the Release Effective Date. No other promises or agreements shall be binding
unless in writing and executed after the Release Effective Date by the parties to be bound
thereby.
22. Amendment; Waiver. 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 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.
23. No Conflict with Other Agreements. Executive represents and warrants
that neither his execution of this Agreement nor the full and complete performance of his
obligations hereunder will violate or conflict in any respect with any written or oral agreement or
understanding with any person or entity.
24. Headings. The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of this Agreement.
23OO-36 oMVkMM?Zwpd 11
25. 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.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant
to due authorization, the Company has caused this Agreement to be executed in its name and on
its behalf, all as of the day and year set forth below.
RITE AID CORPORATION
Date:
By- Robert G. Miller
Its: QChairman and Chief Executive Officer
Date:
Philip oviti
COMMONWEALTH OF PENNSYLVANIA
COUNTY OF CUMBERLAND
:as
On thisday o ` 000, before me personally came Philip Mackovitz,
to me known and known to me to be the person described in and who executed the Executive
Separation Agreement and General Release, and he duly acknowledged to me that he executed'
the same.
,-
`Ibhc
COMMONWEALTH OF PENNSYLVANIA
COUNTY OF CUMBERLAND
Notary
I
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4.
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On this day of Ferrery, 2?, before me personally came Robert G. Miller,
who acknowledged that he is the Chairman and Chief Executive Officer of Rite Aid Corporation
to me known and known to me to be the person described in and who executed the Ex"'
,
Separation Agreement and General Release, and he duly acknowledged to me that he executf
the same on behalf of Rite Aid Corporation :?,? ';:? f• ? : y y "t
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otarial Seal r. t-'q ? 4 eL
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EXHIBIT B
Severance benefits have been offered to Timothy Noonan and William Titelman in connection
with the termination of their employment with the Company pursuant to individually negotiated
arrangements-
Name Age- Title
Timothy Noonan 58 Interim Chief Executive Officer, President and
coo
William Titelman 53 Executive Vice President
Exhibit B
BALLARD SPAHR ANDREWS & INGERSOLL, LLP
By. Alan J. Davis
William A. Slaughter
Eric W. Sitarchuk
Peter C. Amuso
Douglas L. Flitter
PAIDNos. 03853,30637,39082,80182&81479
1735 Market Street, 51" Floor
Philadelphia, PA 19130-7599
(215) 665-8500
RITE AID CORPORATION
30 Hunter Lane
Camp Hill, PA 17011
Plaintiff,
V.
PHILIP MARKOVITZ
1 Laurel Ridge Road
Hershey, PA 17033
Defendant.
Attorneys for Corporate Plaintiff
Rite Aid Corporation
: COURT OF COMMON PLEAS
: CUMBERLAND COUNTY,
: PENNSYLVANIA
: CIVIL ACTION - LAW
NO. n3 - ??06, 0
PRAECIPE TO ISSUE WRIT OF SUMMONS
TO THE PROTHONOTARY:
f
-
C- c f
rn f.: _
::.
N
cn _:-m
y
mac"
Kindly issue the attached Writ of Summons in a Civil Action in the above-
captioned action.
Dated: June 27, 2003
Alan J. Davis
William A. Slaughter
Eric W. Sitarchuk
Peter C. Amuso
Douglas L. Flitter
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street, 5181 Floor
Philadelphia, PA 19130-7599
(215) 665-8500
Attorneys for Rite Aid Corporation
0
BALLARD SPAHR ANDREWS & INGERSOLL, LLP
By: Alan J. Davis
Williain A. Slaughter
Eric W. Sitarchuk
Peter C. Amuso
Douglas L. Flitter
PA ID Nos. 03853, 30637, 39082, 80182 & 81479
1735 Market Street, 51" Floor
Philadelphia, PA 19130-7599
(215) 665-8500
Attorneys for Corporate Plaintiff
Rite Aid Corporation
IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY
Ninth Judicial District of Pennsylvania
Carlisle, Pennsylvania
RITE AID CORPORATION
30 Hunter Lane
Camp Hill, PA 17011
V.
Plaintiff,
PHILIP N ARKOVITZ
1 Laurel Ridge Road
Hershey, PA 17033
Defendant.
CIVIL ACTION - LAW
NO. n3- 3rY?O
WRIT OF SUMMONS IN A CIVIL ACTION
TO: PHILIP MARKOVITZ
You are hereby notified that Rite Aid Corporation has commenced an action
against you. •?
Dated:-jLL'-)F » aC CURTIS R. LONG, Prothon y
Bye ZfZ0 _1" .
SEAL OF THE COURT Deputy Prothonotary
PLAINTIFF: DEFENDANT:
Rite Aid Corporation Philip Markovitz
30 Hunter Lane T"RUE COPY FROM-E)ROad
Camp Hill, PA 17011 to Testimony Wnereof, I here R* hk%33
Pa.
and the seal of Bald Coo aL-2
chic .?T4day of 1 azna4
.
\ /Jil nom.. a P
(Pfi)ce of k ?s4zr *f
Mary Jane Snyder
Real Estate Deputy
William T. Tully
Solicitor
Dauphin County
Harrisburg, Pennsylvania 17101
ph: (717) 255-2660 fax: (717) 255-2889
Jack Lotwick
Sheriff
Commonwealth of Pennsylvania RITE AID CORPORATION
vs
County of Dauphin MARKOVITZ PHILIP
Sheriff's Return
J. Daniel Basile
Chief Deputy
Michael W. Rinehart
Assistant Chief Deputy
No. 1611-T - - -2003
OTHER COUNTY NO. 03 3060
AND NOW:July 7, 2003 at 8:55PM served the within
WRIT OF SUMMONS upon
MARKOVITZ PHILIP' by personally handing
to MAY MARKOVITZ (WIFE) 1 true attested copy(ies)
of the original WRIT OF SUMMONS and making known
to him/her the contents thereof at 1 LAUREL RIDGE ROAD
HERSHEY, PA 17032-0000
Sworn and subscribed to
efore me this 8TH a of JULY, 2003
? ?1lJil.?J
PROTHONOTARY
So Answers,
4?7?
r?
Sher' of Daup n Co ty, Pa.
By
Deput heriff
Sheriff's Costs: $30.50 PD 07/02/2003
RCPT NO 180323
DC
In The Court of Co Yvon Pleas of Cumberlan?County, Pennsylvania
Rite Aid Corporation
vs.
Philip Markovitz
SERVE: same No 03-3060 civil
Now, July _l, 2003 , I, SHERIFF OF CUMBERLAND COUNTY, PA, do
hereby deputize the Sheriff of Dauphin County to execute this Writ, this
deputation being made at the request and risk of the Plaintiff.
Sheriff of Cumberland County, PA
Affidavit of Service
Now, 120 at o'clock M. served the
within
upon
at
by handing to
a . . copy of the original
and made known to the contents thereof.
So answers,
Sheriff of County, PA
COSTS
Sworn and subscribed before SERVICE $
me this _ day of 120 MILEAGE
AFFIDAVIT
SHERIFF'S RETURN - OUT OF COUNTY
-CASE NO: 2003-030600 •
COMMONWEALTH OF PENNSYLVANIA:
COUNTY OF CUMBERLAND
RITE AID CORPORATION
VS
MARKOVITZ PHILIP
R. Thomas Kline
, Sheriff or Deputy Sheriff who being
duly sworn according to law, says, that.he made a diligent search and
and inquiry for the within named DEFENDANT , to wit:
MARKOVITZ PHILLIP
but Was unable to locate Him
deputized the sheriff of DAUPHIN
in his bailiwick. He therefore
County, Pennsylvania, to
serve the within WRIT OF SUMMONS
On July 10th , 2003 , this office was in receipt of the
attached return from DAUPHIN
Sheriff's Costs: So answers_;-
Docketing 18.00 Out of County 9.00 ,> ?sv
Surcharge 10.00 R. Thomas Kline
Dep Dauphin County 30.50 Sheriff of Cumberland County
.00
67.50
07/10/2003
BALLARD SPAHR ANDREWS INGERSOL
Sworn and subscribed to before me
this day of
A. D.
Prothonotary
Exhibit C
1 1781589x2
BALLARD SPAHR ANDREWS & INGERSOLL, LLP
By: Alan J. Davis
William A. Slaughter
Peter C. Amuso
PA ID Nos. 03853, 30637 & 80182
1735 Market Street, 5 Floor
Philadelphia, PA 19130-7599
(215) 665-8500
I
RITE AID CORPORATION
30 Hunter Lane
Camp Hill, PA 17011
1 Plaintiff,
V.
PHILIP MARKOVITZ
1 Laurel Ridge Road
1 Hershey, PA 17033
Defendant.
NOTICE
You have been sued in court. If you wish to defend
against the claims set forth in the following pages, you
must take action within twenty (20) days after this
complaint and notice are served, by entering a written
appearance personally or by attorney and filing in
writing with the court your defenses or objections to
the claims set forth against you. You are warned that if
you fail to do so the case may proceed without you and
a judgment may be entered against you by the court
without further notice for any money claimed in the
complaint or for any other claim or relief requested by
the plaintiff. You may lose money or property or other
rights important to you.
YOU SHOULD TAKE THIS PAPER TO YOUR
LAWYER AT ONCE. IF YOU DO NOT HAVE A
LAWYER OR CANNOT AFFORD ONE, GO TO OR
TELEPHONE THE OFFICE SET FORTH BELOW TO
FIND OUT WHERE YOU CAN GET HELP.
Cumberland County Bar Association
2 Liberty Avenue
Carlisle, PA 17013
(717) 249-3166
JURY TROEMANDED
THIS IS NOT AN ARBITRATION CASE, AN
ASSESSMENT OF DAMAGES IS REQUIRED
Attorneys for Plaintiff
Rite Aid Corporation
f'S r
71 t
CUMBERLAND COUN W,-,
COURT OF COMMON P S ?
CIVIL ACTION z -,
NO. 03-3060 COMPLAINT - CIVIL ACTION
AVISO
O
51
ZID
Le han demandado a usted en U corte. Si usted quiere
defenderse de estas demand" ex-puestas en las
paginas siguientes, usted tiene veinte (20) digs de plazo
al partir de Is fecha de Is demanda y Is notification.
Hace falta asentar una comparencia escrita o en
persona o con on abogado y entregar a la corte en
forma escrita sus defenses o sus objeciones a las
demandas en contra de so persona. Sea avisado que si
usted no se defiende, Is corte tomara medidas y puede
continuer la demands en contra suya sin previo aviso o
notification. Ademas, Is corte puede decidir a favor
del demandante y requiere que voted cumpla con todas
las provisions de esta demands. Usted puede perder
dinero o sus propiedades u otros derechos importantes
pars usted.
LLEVE ESTA DEMANDA A UN ABOGADO
INMEDIATAMENTE. SI NO TIENE ABOGADO O SI
NO TIENE EL DINERO SUFICIENTE DE PAGAR
TAL SERVICO, VAYA EN PERSONA O LLAME FOR
TELEFONO A LA OFICINA CUYA DIRECCION SE
ENCUENTRA ESCRITA ABAJO PARA AVERIGUAR
DONDE SE PUEDE CONSEGUIR ASISTENCIA
LEGAL.
Cumberland County Bar Association
2 Liberty Avenue
Carlisle, PA 17013
(717) 249-166
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COMPLAINT
Plaintiff, Rite Aid Corporation ("Rite Aid" or the "Company"), by its undersigned
counsel, for its complaint against Philip Markovitz ("Markovitz"), avers as follows:
THE PARTIES
1. Rite Aid is a Delaware corporation with its principal place of business in
Camp Hill, Permsylvania. Rite Aid is one of the nation's leading drugstore chains, operating
approximately 3400 stores in 28 states.
2. Markovitz, who was formerly Rite Aid's Senior Vice President, Store
Planning and Construction until the termination of his employment in early 2000, resides at 1
1 Laurel Ridge Road, Hershey, Pennsylvania 17033.
JURISDICTION AND VENUE
3. This action arises out of events, transactions and occurrences that took
place in Cumberland County, Pennsylvania, where Rite Aid's principal place of business is
located. Markovitz resides and is subject to service in Pennsylvania. Accordingly, this Court
0 has jurisdiction over Markovitz and venue is proper pursuant to Pa. R.C.P. 1006.
SUBSTANTIVE ALLEGATIONS
Background
4. In October of 1999, Rite Aid's Chairman and Chief Executive Officer
Martin L. Grass and its former Chief Financial Officer Franklyn M. Bergonzi were dismissed
from their positions with the Company by the Company's Board of Directors after the Board
0 discovered that financial statements of the Company prepared by Grass and Bergonzi and filed
with the Securities and Exchange Commission would have to be restated. The restatement of
Rite Aid's financial statements, originally estimated to require a reduction of $500 million in the
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Company's reported earnings over three years, ultimately required a cumulative earnings
reduction of over $1.6.
5. Grass and Bergonzi were subsequently indicted and pleaded guilty to a
criminal conspiracy to defraud Rite Aid, its shareholders, investors, Board of Directors and
vendors, among others. In addition to the misstatement of the Company's financial results, such
conspiracy involved: payments of substantial sums to selected Company executives purportedly
under a long term incentive plan (known as LTIP 1), even though the requirements for payment
under LTIP I as established by the Company's Board had not been met; and the creation of
fraudulently back-dated employment agreements in favor of selected Company executives,
purporting to obligate the Company to pay substantial sums to such employees upon the
termination of their employment with the Company.
6. Markovitz was among the Company executives who received payment
under LTIP I and who received a back-dated employment agreement.
The LTIP I Payment
7. In March of 1995, at the request and recommendation of Grass, Rite Aid's
Board of Directors adopted a long term incentive plan denominated LTIP I under which certain
executives of the Company would be entitled to receive shares of the Company's stock or the
dollar equivalent value of such shares in the event the Company's earnings per share grew at
certain rates over the ensuing four years. Under the terms of LTIP I, the Board authorized
payment only if the Company's earnings per share grew at a minimum rate of at least 8% per
year, compounded annually. The measurement period under LTIP I began in March of 1995 and
concluded in March of 1999, covering the results of the Company's 1995 through 1999 fiscal
years.
8. Even though the Company had not met the minimum earnings per share
0 growth target required for payment under LTIP I, in July of 1999 Grass and Bergonzi caused the
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Company to make a payment to Markovitz thereunder, falsely representing to the Board that the
minimum earnings per share growth target required for payment under LTIP I had been met. In
or about July 1999, Markovitz received a substantial payment from the Company purportedly on
account of his earning the right to receive shares of the Company's common stock under LTIP I.
9. Despite the Company's request, Markovitz has failed and refused to repay
such sum.
The Back-Dated Severance Agreement
10. In late 1999 or early 2000, after Grass had been dismissed by the Board
and no longer had any authority to act on the Company's behalf, he created, executed and
delivered letters to several Company executives, purporting to obligate Rite Aid to pay such
executives substantial sums upon the termination of their employment with the Company.
Markovitz was one of the Company executives to receive such a letter.
11. The letter addressed to Markovitz was falsely dated June 12, 1998,
falsely purported to have been written on Rite Aid stationary, and falsely purported to have been
executed by Grass in his capacity as Rite Aid's Chief Executive Officer at a time when Grass
was authorized to act in that capacity. In fact, the letter was a fabrication, typed on ersatz Rite
Aid stationary and backdated to appear as though written over a year earlier when Grass was the
Company's CEO. A copy of the back-dated letter from Grass to Markovitz is attached hereto as
Exhibit A.
12. The back-dated letter to Markovitz purported to enhance the benefits
Markovitz would otherwise have been entitled to receive under the standard deferred
compensation agreement then in place between Markovitz and the Company in several material
respects: it purported to increase the amount of the annual payments Markovitz would be entitled
to receive; it purported to extend the period of time over which Markovitz would receive such
payments; it purported to accelerate the time when such payments would commence; it purported
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to accelerate the vesting of stock options granted to Markovitz; and it purported to eliminate one
of the material conditions to payment, the requirement that Markovitz continue employment with
the Company until age 65. None of such enhanced benefits had been approved by any person
with authority to act for the Company.
13. After receiving the letter from Grass, and knowing it to be a back-dated
fabrication, Markovitz caused the letter to be presented to the new management of Rite Aid,
falsely representing that it was a genuine written obligation of the Company, intending that the
Company rely on the letter's bona fides and intending that the Company honor the purported
obligations assumed in the letter in accordance with its terms.
14. Unaware of Markovitz's deception, the Company honored the terms of
the back-dated letter presented to new management by Markovitz by entering into an Executive
Separation Agreement and General Release dated January 24, 2000 (the "Separation
Agreement"), which, among other things, amended a Deferred Compensation Agreement dated
April 12, 1996 between Markovitz and the Company (the "Deferred Compensation Agreement").
A copy of the Separation Agreement is attached hereto as Exhibit B and a copy of the Deferred
Compensation Agreement is attached hereto as Exhibit C.
15. Like the fabricated back-dated letter from Grass, the Separation
Agreement entitled Markovitz to receive benefits superior to those payable under the Deferred
Compensation Agreement then in place between Markovitz and the Company in several material
respects: it increased the amount of the annual payments Markovitz would be entitled to receive;
it extended the period of time over which Markovitz would receive such payments; it accelerated
the time when such payments would commence; it accelerated the vesting of Markovitz's stock
options; and it eliminated the requirement that Markovitz continue employment with the
Company until age 65 to receive benefits.
16. Markovitz resigned from employment with Rite Aid upon the execution
of the Separation Agreement. Rite Aid has paid Markovitz substantial amounts under the
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Separation Agreement and under the Deferred Compensation Agreement as amended by the
Separation Agreement.
17. Among its other provisions, the Separation Agreement required
Markovitz to cooperate fully and honestly with the Company and its counsel in connection with
any investigation relating to any matter in which Markovitz was involved while a Company
employee. Specifically, the Separation Agreement provided:
[Markovitz] shall at all times cooperate fully with the Company
and its subsidiaries and affiliates and its counsel in connection with
any investigation by the Company relating to any matter in which
[Markovitz] was or is involved or of which [Markovitz] has
knowledge by virtue of his employment or other position with
Releasees or any other aspect of the Company's affairs, including
without limitation the pending investigation of the Company's
accounting practices and related matters. Without limiting the
generality of the foregoing, [Markovitz] shall (i) make himself
available to be interviewed upon reasonable notice and otherwise
on a reasonable basis and for a reasonable period of time relating
to any such investigation, (ii) provide truthful, accurate and
complete information and responses in the course thereof
(including without limitation during interviews) and (iii) provide
any and all requested documentation, to the extent that any such
documentation is in his possession.
18. The Separation Agreement further provided that the Company could
terminate the Separation Agreement in the event Markovitz failed to cooperate fully with the
Company in connection with any such investigation, in which case all of Markovitz's benefits
under the Separation Agreement would be forfeited:
Notwithstanding anything herein to the contrary, if the Company
shall determine, in its reasonable discretion, the [Markovitz] has in
a material respect failed to perform his obligations set forth in this
Section 7, the Company shall have the right to terminate
immediately payment and provision of the Severance Benefits in
their entirety ...and such Severance Benefits shall thereupon be
forfeited by [Markowitz]. For clarity, it is understood and agreed
by [Markovitz] that (i) such forfeiture shall result in, among other
things, (x) the immediate termination of all benefits under the
Deferred Compensation Agreement ... and (y) the immediate
termination of any otherwise then exercisable stock options.
19. Markovitz violated his obligations under Section 7 of the Separation
Agreement by failing to give truthful, accurate and complete information and responses to
counsel for the Company in connection with investigations by the Company into matters in
which Markovitz was involved during the course of his employment with the Company.
Specifically, Markovitz lied to such counsel concerning the back-dated letter he received from
Grass, falsely stating that he had received such letter while Grass was still employed by the
Company as its CEO. Markovitz similarly lied to the FBI and to the grand jury regarding such
matters.
20. The Deferred Compensation Agreement amended by the Separation
Agreement further provided for the forfeiture of any rights Markovitz might otherwise have
thereunder in the event of his discharge for good cause or in the event of the discovery by the
Company of his having committed an act that could have resulted in his discharge for good
cause. Specifically, the Deferred Compensation Agreement states:
If at any time [Markovitz] is discharged for good cause by
Corporation with the acquiescence of the Board of Directors,
or if subsequent to [Markovitz's] retirement, disability or
death, it is discovered that [Markovitz] committed an act which
could have resulted in [Markovitz's] discharge for good cause
by Corporation, had it been known to Corporation, this
Agreement shall terminate any and all rights and benefits of
[Markovitz] and of any person claiming by, from or through
[Markovitz] under this Agreement shall be forfeited and any
benefits then being paid or to be paid in the future shall cease.
21. On July S, 2003, Markovitz pleaded guilty to having participated in a
conspiracy to obstruct justice, by lying to the Company, to the FBI and to the grand jury
regarding the back-dated severance letter he received from Grass.
22. Upon learning of Markovitz's deception, Rite Aid's Board terminated the
Separation Agreement the Deferred Compensation Agreement and demanded repayment of the
sums paid to Markovitz thereunder. Despite Rite Aid's request, Markovitz has failed and refused
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to repay the amounts paid to him by Rite Aid under his Separation Agreement and under his
Deferred Compensation Agreement as amended by his Separation Agreement.
COUNT I (UNJUST ENRICHMENT)
23. The foregoing averments are incorporated herein by reference.
24. Under the terms of LTIP I, Rite Aid's Board authorized payment to plan
participants only in the event the Company's earnings per share grew at a compound rate of at
least 8% per annum during fiscal years 1996 through 1999.
25. Rite Aid's earnings per share did not grow at a compound rate of 8% per
annum during fiscal years 1996 through 1999. To the contrary, the Company's earnings declined
during that period and the Company suffered substantial losses in 1998 and 1999.
26. Markovitz nevertheless received payment under LTIP I and has been
unjustly enriched at the Company's expense to the extent of that payment.
27. Despite the Company's request, Markovitz has failed and refused to
repay the amount he received from the Company on account of LTIP I.
WHEREFORE, Rite Aid demands judgment in its favor and against Markovitz
in an amount in excess of $50,000, together with interest, delay damages, and costs, including
reasonable attorney's fees, and such other and further relief as the Court deems just and proper.
COUNT II (MISTAKE)
28. The foregoing averments are incorporated herein by reference.
29. Rite Aid paid Markovitz under LTIP I based upon a mutual mistake of
fact, to wit: the belief that the Company's had experienced growth in its earnings per share over
the relevant period sufficient to meet the target required to justify payment to Markovitz under
LTIP I when in fact the Company had not achieved such growth in its earnings per share.
30. Despite having received payment under LTIP I by mistake, and despite
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Rite Aid's demand for repayment, Markovitz has failed and refused to repay the amount he
received from the Company on account of LTIP I.
WHEREFORE, Rite Aid demands judgment in its favor and against Markovitz
in an amount in excess of $50,000, together with interest, delay damages, and costs, including
reasonable attorney's fees, and such other and further relief as the Court deems just and proper.
COUNT III (FRAUD)
31. The foregoing averments are incorporated herein by reference
32. After receiving his letter from Grass, and knowing it to be a back-dated
fabrication, Markovitz caused the letter to be presented to the new management of Rite Aid,
falsely representing that it was a genuine written obligation of the Company, intending that the
Company rely on the letter's bona fides and intending that the Company honor the purported
obligations assumed in the letter in accordance with its terms.
33. Such misrepresentations were material and were reasonably and
justifiably relied upon Rite Aid in negotiating and agreeing to the Separation Agreement, in
amending the Deferred Compensation Agreement, and in paying Markovitz thereunder.
34. As a direct and proximate result of Markovitz's fraudulent conduct, Rite
Aid has suffered damages.
WHEREFORE, Rite Aid demands judgment in its favor and against Markovitz
in an amount in excess of $50,000, together with interest, delay damages, and costs, including
reasonable attorney's fees, and such other and further relief as the Court deems just and proper.
COUNT IV BREACH OF CONTRACT)
35. The foregoing averments are incorporated herein by reference.
36. Under the Separation Agreement, Markovitz undertook to "at all times
cooperate fully with the Company and its subsidiaries and affiliates and its counsel in connection
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with any investigation by the Company relating to any matter in which [Markovitz] was or is
involved," and specifically to "provide truthful, accurate and complete information and
responses in the course thereof (including without limitation during interviews)."
37. Markovitz breached his obligations under the Separation Agreement by
failing to cooperate fully with the Company and its counsel in connection with Company
investigations relating to matters in which Markovitz was involved, by failing to provide truthful,
accurate and complete information and responses to Company counsel and by lying to such
counsel about the back-dated letter he had received from Grass.
38. Asa result of such breach Rite Aid properly terminated the Separation
Agreement and Markovitz forfeited the benefits he would otherwise have been entitled to receive
thereunder, including benefits payable under his Deferred Compensation Agreement as amended
by the Separation Agreement.
39. Despite Rite Aid's demand, Markovitz has failed and refused to repay the
amounts paid to him by Rite Aid under the Separation Agreement and under his Deferred
Compensation Agreement as amended by the Separation Agreement.
WHEREFORE, Rite Aid demands judgment in its favor and against Markovitz
in an amount in excess of $50,000, together with interest, delay damages, and costs, including
reasonable attorney's fees, and such other and further relief as the Court deems just and proper.
COUNT V BREACH OF CONTRACT)
40. The forgoing averments are incorporated herein by reference.
41. Under the Deferred Compensation Agreement as amended by the
Separation Agreement, if Markovitz were discharged for good cause by Rite Aid, or if after
Markovitz's retirement, disability or death the Company discovered Markovitz had committed an
act which could have resulted in his discharge for good cause by the Company had it been
known to the Company, the Deferred Compensation Agreement terminated, in which case
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Markovitz forfeited any past or future benefits payable to him under the Deferred Compensation
Agreement.
42. As alleged more fully above, Markovitz was guilty of acts which could
have resulted in his discharge for cause had they been known to the Company, including his
submission of a fraudulently back-dated letter agreement to the Company as alleged herein.
43. Using reasonable and non-discriminatory standards, the Board of
Directors of the Company has determined that Markovitz was guilty of an act which would have
justified his discharge for good cause by the Company and has terminated the Deferred
Compensation Agreement.
44. Despite the Company's request, Markovitz has failed and refused to
repay those sums previously paid to Markovitz by the Company under his Deferred
Compensation Agreement.
WHEREFORE, Rite Aid demands judgment in its favor and against Markovitz
in an amount in excess of $50,000 together with interest, delay damages, and costs, including
reasonable attorney's fees, and such other and further relief as the Court deems just and proper.
COUNT VI (BREACH OF FIDUCIARY DUTY)
45. The foregoing averments are incorporated herein by reference.
46. By virtue of his position as a senior officer of the Company, Markovitz
owed the Company a fiduciary duty of undivided loyalty.
47. Markovitz breached that duty by engaging in the conduct that is alleged
herein, including submitting to the Company a fraudulently back-dated letter agreement
intending that the Company honor the agreement in accordance with its terms, and accepting
payment under LTIP I even though the requirements established by the Board of the Company
for payment thereunder had not been met.
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48. As the result of such breach of fiduciary duty, the Company has been
I damaged.
WHEREFORE, Rite Aid demands judgment in its favor and against Markovitz
in an amount in excess of $50,000 together with interest, delay damages, and costs, including
1 reasonable attorney's fees, and such other and further relief as the Court deems just and proper.
1 Dated: August 6, 2003
Alan J. Davis
William A. Slaughter
Peter C. Amuso
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BALLARD SPAHR ANDREWS
& INGERSOLL, LLP
1735 Market Street, 5 Floor
Philadelphia, PA 19130-7599
(215),66$-8500
Attorneys for Rite Aid Corporation
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EXHIBIT A
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EXHIBIT B
• EXFCLrrIVE SEPARATION AGRFFir1FNT AND GENERAL RFi FASE
This Executive Separation Agreement and General Release ("Agreement") by and
between Philip Markovit- ("Executive") and Rite Aid Corporation (the "Company") is entered
into as of January 24, 2000, subject to the revocation and effectiveness provisions of Section 14
below.
WHEREAS, Executive has for many years served as an officer and employee of
the Company aid in subsidiaries; and
WHEREAS, the Company has provided Executive with a letter agreement, dated
June 12. 1998 (the "Letter Agrsemam"setting forth certain terms regarding Executive's
retirement from the Compaq, and
WHEREAS, the Company and Executive have dete mined that Execumve's
employmem with the Company shall terminate effective as of February 4. 2000; tad
WHEREAS. the Company sad Executive have determined to further memorialize
Exectmve's retirement cr •y,.- am forth in the Lem(" Agreement, aid certain other
maters, subject to the terms and conditions set heth herein
NOW, THEREFORE, in consideration of the premises and covenants set forth
herein, and for other good and valuable consideration, the rempt and sufficiency of which is
hereby sclmewledged by the parties hereto, Executive and the Company hereby agree as follows:
'• 1. Reeien.tim of PM+ri. Executive hereby voluntarily resigns his
employment with the Company effective as of February 4. 2000 (the "Termination Date"), aid
the Company he ebY accepts rich resigmtien. Executive hereby fiather eensm, effective as of
the.Termination Date, from all poor-, he may bold as m ofoeror directorof the Company
and in subsidiaries and affil-sus and the Company hereby socepts such resignation Executive
covenants and agrees to execute all rich imtetmems and tape all such other actions as the
Company may reasonably deem necessary or desirable to evidence at socomplis i the foregoing
in M.
2. Sever.? B~fin In consideration for Executive's tesigoa ' and
release of claims set forth herein, but subject to (i) the fix 6 inae provisions set forth in Sections 7
and 8 and (ii) a xpiretian of the Revocation Period (as defined in Section 14) without Executive's
revocation of this Agreement, the Company shall provide Executive with the following beme6
(the "Serveraaoe BemeSs'):
(a) During the period commmw ft on the Termination Date and
ending on March 31. 2000 (the "Severance Period"), the Company shall contiim payment of
Exe mnive's smud base salary at the tale in effect on the Termination Date, rich amounts to be
payable at such times and otherwise in accordance with the Company's standard payroll
procedures for officers. .
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• ,,, (b) During the Severance Period, the Company shall provide
Executive with continued coverage under such of the Company's medical benefits plans in effect
from time to time as are generally applicable to senior executives of the Company, subjeut to all
applicable terms and conditions of such plans. Without limiting the generality of the fotegoma,
Executive shall be responsible for any premiums, co-payments, deductibles and other anwuats
payable by participants pursuant to the terms of such plans.
(c) All 245,000 stock options held by Executive as of the Termination
Date shall become immediately vested and exercisable and shall remain vested and "usia"
through March 31, 2003 (or. if earlier, through the end of the stated feria of such stock options).
whereupon any such options that have not theretofore been exercised shill terminate and expire
in their entirety. A schedule with respect to the details of those options is attached as Exhibit A.
(d) That attain Deferred Co- ..i-tion Agreement, dated, April 12.
u 19% between Executive and the Company (the'Defesred Ctt•y, *? "on Agremsent"), is busby
attended to provide that (i) Executive shall be eligible to receive payment of I en 1 R under the
Deferrsd Cnnupr'-^oa Agreemat ro--.- - i4 April 1, 2000; (ii) unless adier taemmsM I in
accordance with the terms of the Deferred C&hr. -•--von Agreement or the farms bow& asap
benefits" be payable to Executive or Executive's beneficiary trrougb and including March
31,2021; and (iii) the amount of the retirement benefit payable under the Deferred C: -F:-
Agreement shall be calculated based upon 50% of Executive's highest annual salary piss
Executive's highest annual bums paid during the 1998.1999 and 2000 Saul yes of this
Company (ie, 501A of the sum of (i) S218,545.60 (Executive's annual salary in fiscal 1999) and
(ii) 5212.180.00 (Executive's annual bonus paid with respect to fiscal 1999)). Other than a set
• forth herein, the terms and conditions of the Deferred Compensation Agreement shall ramam in
full force and effect
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(e) Executive shall be eligible to receive benefits under any applicable
pension and welfare betnefit plans (including the 401(k) Plan) maintained by the Company in
which Executive is a participam as of the Termination Date in accordance with the teems and
condition of such plain. Nothing basis shall be construed a providing Executive this right to
1 consinued vesting or accrual of benefits under any such plan during the Severance Period or
thersaRer.
(f) The Company shall (i) indemnity Executive to the frill e>etaot
permitted by the Company's Certificate of Incorporation (subject to any limitations imposed
under apphcabk law) and provide advaDCGmem of attorneys' fees in coanectton thaesnth. and
(ii) continue coverage for Executive for a period of six (6) yeas following sambas ion of his
employment with the Compemy under army Director and Officer insurance policies maintained
from time to time by the Compor, =MkL thin Executive sMU (and busby don) undertake to
repay the Company any arch amounts advanced with respect to any action, claim or other
procKdimg as to which it is ultimately determined under applicable law that Executive shall tot
be entitled to indemnification from the Company; and !»MXi&IL AULhI& that Executive agrees w
execute say similar or related undertaking in such form as shall be n quoted of otherolStxrs and
directs of the Company.
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IXVI4C r a m2"d 2
be
• Notwithstanding anything herein to the contrary, Executive acknowledges
and agrees that M be shall not receive or be entitled to receive any annual or other bonus in
respect of the Companys fiscal year ending in or about February 2000. (u) he shaU not receive or
be entitled to receive any payment in respect of any long-term bonus or incentive plan in which
Executive has at any time been a participant prior to the Termination Date, (iii) he shall riot
receive or be entitled to receive any annual. long-term or other bonus in respeet of the Severance
Period or any portion thereof. (iv) he shall not receive or be entitled to receive pension credits or
otherwise be eligible for retirement plan contributions in connection with the Severance Benefits
and (v) other then as as forth in this Section 2, Executive shall not receive or be entitled to
receive any amounts or benefits under any stock-bred or other incentive, bonus or other
compensatiom severance or fringe benefits plan, program, policy, agreement or arrangement of
the Company. Executive shall not be obligated to seek other employment or take say other
action by way of mitigation of the amounts, benefits and other cowpm non payable or
otherwise provided to Executive under this Section 2, and such mounts, I , , Rs and other
u :o_., . d -a shall not be reduced in rsv; of ray amounts atuuaUy earned by Executive fiom
subsequent mapbymeat.
3. Full Diua..a. Executive aglla and admowledges that the Seversaa
Beneft provided to Executive under this Agreement and sofa. to in Section 2 above (1)
exceed in the aggregate any sums or other payments of beaeR to which Executive would
s otherwise be entitlod in rapers of his employment with the Company and the termination thereof
under say Pte. PI, or procedure of or any agreement or tmdemending with, the Company or
its subsidiaries or a>bliaa and (u) except as provided in Section 4(a), is in NO discharge of any
and all claims the Executive has or may have against the Releasers, as defined in Section 4(a),
including without limitation for wags, benefits (including plan contributions), or attorney's fees,
1 and any amounts which Executive would otherwise be entitled to receive under the Lefler
Agreement.
4. cr+ rat Rpl -
(a) In consideration of the Severaoa Benefits, Executive, for himself
,umd for his heirs, executers, a.1u6uia k t. myl,...aAl v m successors and assigns (hereinafter
collectively referred to a the "Relesaors'? rokass and forever diseharges the Company and
any and all of its subsidiaries. divisions, affiliated entities, reprseotstives. successors and
assigns, and say and all of its or their employee beaafit or pagan plans or funds, and any and all
of its or their pat at present officers, dneetom noftoldas, agesus, tnateos, administrators,
employes, successors or assigns (whether acting a agena for such entities or in their individual
capacities) (hereinafteroollectively refereed to as the "Releaaees"), from and against any and all
claims, chars, complamas, demands, actions, causes of action, agreements, promises,
conributions, fee, lops, upenss and liabilities of say kind whatsoever (based upon say legal
or equitable tbeory, wbr tber contractual. Amon-law, statutory, flit, stale, loal or
otherwwu wbaher known or vnknews, which Releasm ever bed, now have or may have
against Releasers by reason of any actual or alleged at, omission. transaction, practice, conduct,
oecuatence, or other menu up to and including the Release Effective Due (a defined in Section
14); g@ , that such release shall tut apply with respect n(i) any rights of ins ftific"tion
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• ^ and advancement to which Executive is entitled as of the Termination Date and (ii) Executive's
rights under this Agreement.
(b) without limiting the generality of the foregoing, this Agreemew is
intended to and shall release the Releasees from any and all claims arising out of Executive's
employment by or other service with Relasees, or the resignation or termination of Executive's
employment or other service with Releasees including without limitation. (i) any claim under the
Age Discrimination in Employment Act, as amended by, among other laws, the Older Workers
Benefit Protection Act; (ii) any claim under ride V11 of the Civil Rights Act of 1964. as amended
by, among other laws, the Civil Rights Act of 1991; (iii) any claim under the Americans with
Disabilities Act; (iv) any claim under applicable Pennsylvania employment or other lays; (v)
any other claim of discrimination or retaliation in employment (whether based on federal. stars or
local law. statutory or decisional); (vu) any claim under the Employee Ratiremam Income
Security Act of 1974, a amended CVUSA'9; (vii) any claim under the National Labor Relations
Act, a amended; (viii) soy claim under the Wodter Adjustment and Regaining Notification Act;
(ix) any claim for tort or for breath of convect; and (x) any claim for attorneys' has. costs.
disbursements or the hike, a= to the e2ttem any such claim release to (A) any rights of
inAwe.Nfica+on and advancement o which Exeanive is entitled a of the Termination Dee and
(B) Executive's rights under this AgreememL
1 (c) Executive f tuber agrees that W will not seek or accept any award.
or settlement from any source or proceeding with aspec t to any claim or right covered by this
Section 4 and Section S below.
5. No Cjaim. Executive agrees to the fullest extent permitted by law, not to
commence, ttminain, prosecute or participate in any action or proceeding of any kind, nor
encourage anyone else to do so. against any of the Releasees, arising out of any act, omission,
transaction or occurrence occurring tap to and including the Release Effective Dan (other than
with respect to nay action, omission, transaction or occurrence tbat is exprtasly subject to the
proviso in Section 4(a)), and Executive represents and warrants that he has not done so at any
time prior to or as of the Release Effective Dee.
6. No Inimicon Coni+-l. Executive acknowledges that he has not and agrees
that he will not intentionally engage in any conduct that is injurious to Releaseea' repmati m or
interes4 including but not limited to (i) divulging, commit nianng, or in any way making use of
any confidential or proprietary iafotmntion acquired in the performance of Executive's duties for
Releases (accept as may be required pursuant an Section 7 below or by applicable law); and (ii)
publicly disparaging (or inducing or encouraging others to publicly disparage) any of the
Releases.
7. Coomroman
(a) Executive shall at all times cooperate fully with the Company and
its subsidiaries and affiliate and its counsel in connection with any investigation by the
Company relating to any matter in which Executive was or is involved or of which Executive ha
2WWt • .c._ +.r 4
L7
i knowledge by vi?tW of his employment or other position with Releasees or any other aspect of
the Company's affairs, including without limitation the pending investigation of the Company's
accounting practices and related matters. Without limiting the generality of the foregoing,
Executive shin (i) make himself available to be interviewed upon reasonable notice and
otherwise on a reasonable basis and for a reasonable period of time relating to any such
investigation. (ii) provide truthfitl. accurate and complete information and responses in the course
thereof (including without limitation during interviews) and (iii) provide any and all requested
documentation, to the extent that any such documentation is in his possession.
n (b) Executive
agree that, in the event be is subpoensed by any pent
or entity to give testimony (in a deposition, court proceeding or otherwise) which in any way
relates to Executive's employment or other position with Relasees, my investigation,
proceeding or litigation or otherwise relate to the subject mater of this Agreement, Executive
shall give prompt notice of such request to the Company's Cmieral Counsel at the address listed
1 below.
(c) The Company shall reimbm a Exavtive for his reasonable and
properly documented travel expenses relating to the dacbeage of his obngaiotu pursuit to this
Section 7.
1 (d) Notwithstanding anything herein to the contrary, if the Company
shall determine, in its reasonable discretion, that Executive has in a material respect failed to
C perform his obligations set forth in this Section the Company shall bow the right to terminate
immediately payment and provision of the Severance Benefits in tbeir entirety (other than vested
• benefits protected under ERISA and Executive's ft is to indemnification and advancement as
set forth in Section 20)), and such Severance bens its shall thereupon be forfeited by Executive.
For clarity, it is understood and agreed by Executive that (i) such forfeiture shall result in. among
other things, (x) the immediate termination of all I , n R under the Deferred Co"vw?-tint
Agranrmant (motwitbsundimg anything to the contrary therein) and (y) the immediate termination
of any otherwise then exercisable stock option; and (h7 the te+minstion of paymm and
Provision of Severance Benefits punu m to this Section 7(e) sbsn in no way affect the
g _condnmg validity and enforceability of the release provided in Section 4 and Executive's other
covenmu and agr amanes bereunda
S. CM& If at my *0 that company shall become aware of evidence on the
basis of which it shall reaaomabiy determine drat dmimg the period of his , fl_ f.r. A witb the
Company, Exsewive oommimed an sat of a mw isl nosts which could bave mulud im
t Executive's discharge for cruse by the Company, had it been known to the Cou p M, the
Company then have the right te terminate itttttt ly payment and provision of the Severance
Benefits im their emorety (other dm vested timeft prometd wader ERM), and such Severance
Benefits "tberempon be forfeited by Exatmdm For purposes of this Agreement and the
Deferred Co nF ,, -t;an Agreement, sets which than be deemed to have ramped in Executive's
discbwp by the Company Or "cruse" shall Wdude (i) any net of fiatd, mnbrtr.s6mmK
p dishonesty or cotrc"t+m? relating to the basins of the Company or any mbWiwy or affiliate,
(u) knowing fils>Satiottof records of the Compmy orsmysubndiwy or af$liate, (iu)grm
v_ - • .,.A.O S
r•
0
. f` misconduct or willful malfeasance in the performance of his duties with the Company or any
subsidiary or affiliate, (iv) commission of any felony or securities law violation. or (v) army other
act or omission that would permit the Company to terminate Executive's employment for Caine
under applicable decisional or statutory law. For clarity, it is understood and agmed by
Executive that (i) such forfeiture shall result In, among other things, (x) the immediate
termination of all benefits under the Deferred Compensation Agreement and (y) the immediate
termination of any otherwise then exercisable stock options; (h7 the termination of payment and
provision of the Severance Benefits pursuant to this Section 8 shall in no way affect the
continuing validity and enforceability of the release provided in Section 4 and Executive's other
r covenants and ag<etmaenta hereutndn, and (ih) it shall be no defmae to the forfeiture provisions
of this Section 8 that one or mote acts constituting grounds for discharge for cause may actually,
have bow known to the Company or to any officer or director thereof (or of any subsidiary or
affiliate) during the period of Executive's employment with or service as an officer or director of
the Company (the Company acknowledges that it does no know of any such grounds for
u discharge).
9. Non-Diwlovm The terms and conditions of this Ag eemeot, the
disclosure information attached as Exhibit B, and the ciretmsstaoces and discussim giving rise
to this Agreement are and shall be deemed to be conf nti-1, and shall not be disclosed by
Executive to any person or entity without the prior written consort of the Chairman and Chief
t Executive Officer of the Company, except if required by law, or to Executive's --m w - s
attorneys, spouse or members of his immediate f tinily, provided that these Ina persons each
agree to maintain the confidentiality of this Agreement, the disclosure information and the
circumstances and discussions giving rise to the Agreement. Executive further repmems that he
• has not disclosed the terms and conditions of this Agreement or the disclosure informations or the
circumstances and discussions giving rise to the Agreement to anyone other then his anomeys,
accountants or spouse.
10. ConfiA-nti-city. Executive acknowledges that during the comas of his
employment with the Company, in mbsidiaries and affiliate, he has been exposed to documems
and otherinformation neSan' the confides" aftins of the Company, in subsidiaries and
affiliates, imcltrdmg witbmx limitation information abott their pats, present and fame financial
condition, the markets for their products, key peasoonel; past, pees ist or Smtre actual at
threatened litigatim trade seeerueta, currem and prospective customer lists, operational methods,
acquisition plsM1Ir,Pec? plain for furure development and other business affairs and
information about the Company and its subsidiaries and affiliates not readily avail" to the
public (the "Confidential Infeemstien"). in recognition of the foregoing, the Executive covenants
p and sprees as follows:
(a) Except as required by law, at no time shall Executive eve divulge,
disclose, or otherwise use any Confidential Information, union and until such udbrmsom is
readily available in the public domain by mum other than Executive's umauhorixed discloarc
or use thaw& unless such ehsebsne or use is expressly authorized by the Chairman and Chid
b Executive officer of the Company in writing in advance of such disclosure or use.
0 J
ir07lVC Y.e.J.2N?
Ej
D
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(b) Promptly following the Termination Date, Executive dull deliver
to the Company's offices in Camp Hill, Pennsylvania all of the property and equipment of the
Company and its subsidiaries (including any cell phones, pagers, credit cards, personal
computes, etc.) and any and all documents, records, and files, including any notes, memoranda,
customer lists, repotts or any and all other documents, including any copies thereon, whether in
hard copy form or on a computer disk or hard drive, which relate to the Company, its
subsidiaries. affiliates, successors or assigns, and/or their respective past and present officers,
directors, employees, agents or consultants (collectively, the "Company Property, Records and
a Files"); it being expressly understood that Executive shall not be authorized to retain any of the
Company Property, Records and Files, except to the extent expressly so authotized in writing by
the Company's Chairman and Chief Executive Officer.
11. tlon-Soficit-ti L From the Terminatim Data tbtough March 31, 2002,
Executive shall net, directly or iodieecdy, solids, induce. or entente to solicit or ladvas slay
officer, director, employee, agent or consultant of the Company or any of its subsidiaries.
affiliates, successors or assigns to terminate Ida, ber or its wWlvvm. d or other relationship with
the Company or its subsidiaries, of nieces, mrooesam or assigns for the purpose of snodaft
with any competitor of the Company or its subsidiaries, affiliaoes, mcessars or assigns, or
otherwise encourage my such person ar eadw to lave or sever his, hera its pk,,v".a a
other relationship with the Company or its subsidiaries, afStiaw successors or assigns hr any
I other reason. For purposes of this Section 11, the term "competitor of the Company""be
de5ned as any person or entity which directly or indirectly through one or more subsidiaries and
affiliates owns and/or operates 200 or in= retail dntgstota in the United State.
Norwithsunding anything contained in this Agreement or in the Deferred Co--4,
• Agreement to the contrary, nothing contained laereim or tbawn shall prohibit Executive ficlus
1 engaging or being employed by or serving as a consultant to a business engaged in the general
development of real estate even if a tensmt of prospective team[ or purchaser or prospective
purchaser of any such real elute is not operator of retail drag stone.
12. (tivhee ..yea R?eM ,..r+n Bra. If Executive breaches, or thresrant m
commit a material beach of atry of the provisions of Seldom 6,10 or 11 above (the "Restrictive
Covemsats"? and is the can of breaches subject to bows cured, after notice to the Executive and,
if not cured by the Executive within 15 days of web notice, the Company and its sarhian"eati
afSliata, suceeasors or assigns shall have the following rights and remedies, eseh of which shall
be independent of the others and aeveraily enforceable, and each of which shall be im addition to.
and not in lieu a& any other tion or remedies avaibble to the Comprmy or its subsidiaries.
affiliates, successors or asedsm at law or in equity.
(a) The right and remedy to have the Restrictive Covemota
spwificdiy enforced by any court of competent jurisdiction by injuateave 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, successors or a-sips. es the case
may be, and that money damages would not provide an adequate remedy to the Company or its
subsidiaties, affiliate, successors or assigns, as the ease may be.
U
(b) The right and remedy to require Executive to account for and pay
over to the company or its subsidiaries. affiliates, 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.
(c) 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
form and effect without regard to the invalid portions.
(d) If my cant determines that any of the Restrictive Covenants. or
any part tbemo$ is unenforceable because of the duration or mope of such provision, such cast
shall have the power (and is hereby ina ructed by the parties) to reduce the dunaion or scope of
such provision, as the can may be. to render such provision enforce" (it being the imeot of the
patties that any such reduction be limited to the minimum extent necessary to render such
provision eoforce"X and, in its reduced form, such provision shall then be enforceable.
(e) 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 coons of gay one or rose of such jurisdictions bold 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, successors or assign to the relief provided herein in the courts of any other jurisdiction
within the geogrephie scope of such covenants, a>; to beaches of such covenants in such other
respective jurisdictions, such covenants as they relate to each jurisdiction being, for this purpose,
severableinto diverse and indepeodeat covenants.
In addition to the foregoing remedies, in the event Executive mmerully breaches
!try of the provisions of the Restrictive Covenants, the Company shall have the right to terminate
immediately payment and provision of the Severance Bane6ts in their emimy (other than vested
benefits protected under ERMA and Executive's rights to i+4rmn+f -moo and advanxmem es
set forth in Section 2(f)), and such Severance Benefits shall thereupon be forfeited by Executive.
The provisions of Section 11 of the Deferred Comprw-lion Agreement shall be applicable to any
decision by the Company to tenmioate payment and provision of Severance Benefits and the
second seaomoe of Section 7(d) shall apply to the preceding sentence.
13. No Viol"nn The making of this Agreement is not intended to, and shall
not, be cownued as an admission that Releaiees have violated any federal. Mae or local law
(satutory or decisional), ordinance or regulaiom breached any agreement, contract.
und&,standing, policy or practice, or committed any wrong whatsoever against Releaaom The
parties ftnrtber agree that this Agreement may be used as evidence only in a subsequent
proceeding in which any of the parries alleges a breach of this Agreement
00
9 •
• 14, Review and Revocation Period Executive shall have up to forty-five (45)
days from the date of receipt hereof to consider the terms and conditions of this Agreement
Executive may accept this Agreement by signing it before a notary and returning it to Mr. Robert
G. Miller. Chairman and Chief Executive Officer, Rite Aid Corporation, at 30 Hunter Laos,
Camp Hill, Pennsylvania 17011, by no later than the close of business on the forty-fifth (45th)
day after Executive receives this Agreement ("Agreement and Release Return Daw"), After
signing this Agreement. Executive shall have seven (7) days (the -Revocation Period'I to revoke
this Agreement by indicating his desire to do so in writing (i) addressed to Mr. Miller at the
address listed above, and (ii) received in had by Mr. Miller to later than the close of business on
the seventh (7th) day following the dm Executive executes this Agreement. The effective dame
of this Agreement shall be the eighth (8th) day after Executive executes it (the "Release Effective
Date"). If the last day of the Agreement and Release Return Date or the Revocation Period falls
on a Sanrday, Sonday, or holiday, the last day of the Agreement and Release Rearm Data or the
Revocation Period. respectively, will be deemed to be the am business day. In the went
Executive does not swept this Agreement as set forth above, or in the event Exective revokes
this Agreement during the Revocation Period. this Agreement, including ben not limited to the
obligation of the Company to provide the Severance Benefits referent to in Seetiaa 2, sball
automatically be deemed null and void; gqvided, that notwithstanding anything basin to the
contrary, the date of termination of Executive's employment with the Company shall at aU events
be Febndry 4.2000.
15. Acknowledmnean_ Executive acknowledges that: (a) he has carefully toad
this Agreement in its entirety; (b) be has been offered and had an opportunity to consider Rtty
the tams of this Agreement and the disclostae information attached as Exhibit A provided
pursuant to the Older Workers Benefit Protection Act, for a period of at least forty-five (45) days,
or where applicable has waived the necessity of a full 45 days; (c) he has been advised by the
1• Company in writing to consult with an attorney of Executive's choice before signing this
Agreement; (d) he fully understands the significance of all of the arms and conditions of this
Agreement and he has discussed them with his independent legal counsel. or b" ]tad a
reasonable opportunity to do so, (e) he has had aaawered to his satisfaction any questions be hat
4*W with regard to the manning and signifies= of any of the provisions of this Agreement;
aced (f) he is signing this Agree met voltmtarily and of his own free will and assets to all the
t terms and condition contained ban=
16. Slomm This Agreement is binding upon, and shall lines to the benefit
of, the parties and their respective beink executors, administrators, represettutivea, sueexssors
and "signs.
17. Suan(. Exehcuave's obligationsunder Sections 4, 5, 6.7, 9, 10 sad l l of
this Agreement and the Company's rights hereunder shall survive the payment of the Severance
Benefits.
It. Severabil . Subject to Section 12, if any provision of this Agreement
shall be held by a corm of competent jurisdiction to be illegal, void, or unenforceable, such
provision shall be of no forte and effect However, the illegalrty or tmenforceability of such
xrawe° U -L"t 9 -
V
t
provision shall have no effect upon, and shall not impair the enforceability of, any other
• provision of this Agreement; provided, however, that, upon any finding by a court of competent
jurisdiction that the release and covenants provided for by Sections 4 and S of this Agreement ate
illegal, void, or unenforceable, Executive agrees either to ream promptly to the Company the
Severance Benefits theretofore paid and provided to him under this Agreement in their entirety or
to execute a releue, waiver or covenant (reasonably satisfactory to the Company) that is leW
and enforceable and has to the extent permissible under applicable law substantially the effect of
the release and covenants provided for by Sections 4 and 5 of this Agreement. Further, if
Executive seeks to challenge the validity of or otherwise vitiate this Agreement or any provision
thereof Cmeluding, without limitation. Sections 4 and 5), Executive shall, as a precondition. be
required to repay to the Company the Severance Benefits theretofore paid and provided to him
under this Agreement in their entirely.
19. SaiM All novas and other cc .......-ii •'ii w under this Agreement
1 shall be in writing and shall be given by fix or first clan mail. certified or tegtuered with return
receipt requested, and shall be deemed to have been duly given three (3) days after mailing or
twenty four (24) hours after L&Aw issiod of a fort to the respective persons mermaid below:
If to the Company: Rise Aid Corporation
30 Hamer Lame
? Camp Hill, Petmaylvamin 17011
Aneation: General Counsel
Fax: (717) 760.71167
• with a copy to: Kaye, Scbola, Fireman, Hays A Handla, LLP
1999 Avenue of the States
? Los Angela, CA 90067
Anmtiam Andrew Ash, Esq.
Fax:31Mgi-1200
if to Executive: Philip Markovitz
One Laurel Ridge Road
Hershey, P"naylVA" 17033
Fax:
with a copy m: Ramm L Obod. Esquire
Fare, Rothschild, O'Brien A Frankel
2000 Market Suva
PWbde*h* PA 19103
Fax: 215-299-2150
Any party may change such party's addros for notices by wdee duly given ptmsuam hereto.
20. Goveminy Law: Ver-. This Agreement shall be governed by the laws of
the Commonwealth of Pennsylvania and the parties in any statia arising out of this Agreemem
r_tv- a._.iwc 10
?J
• shall be subject to the jurisdiction and venue of the federal and state courts, as appliutable, in the
County of Cumberland, Commonwealth of Pennsylvania
21. Entire Ai reement This Agreement and Exhibits A and B hereto and the
Deferred Compensation Agreement as amended by this Agreement constitute the complete
understanding between the parties and supersede any and all prior agreements, understwAhkp,
and discussions, whether written or oral, between the parties. Without limiting the gene a ft of
the foregoing, Executive Rather acknowledges that this Agreement supersedes the Letter
Agreement in its entirety, and that the Letter Agreemem shall be of no further force or effm
from and after the Release Effective Dan. No other promises or agreemems " be binding
unless in writing and executed after the Release Effective Due by the parties to be bound'
thereby.
22. A Wtv?. This Agreement nay be amended, modifwd,
superseded, canceled, renewed or extended, and the term or covenants hereof may be waived,
only by a written inarumrm exe=W by the parties, or in the case of a waiver, by the pwW
waiving eomplisoce. The failure of any party at cry time or times to require Ft, fit •• -+ra of MW
provision hereof shall in no mamrer affect the right of such party at a lacer tins to aatoette the
same. No waiver by any party of the breach of any term or coveoam comaired in We
Agreement, whether by conduct or otherwise. in my one or mere instances, shall be deemed to
be, or construed as, a further or continuing waiver of any such breach, or a waiver of drc breach
of any other term or eovensm cormired in this Agreement.
23. No Conflict with Other AateetnenV Executive represents mW wwranp
• that neither his execution of this Agreement nor the full and Complete p..f6uAW4 of his
l obligations hereunder will violate or eonflia in nay respect with ay written or oral agreement or
undemanding with cry person or entity.
24. 1 Udjpgg. The section headings contained herein we for reference
purposes only and shall not in any way affect the meaning or interpretation of this Agreement.
s?o7Y- _:r.iwa 11
W
• 25. CountemaM. This Agreement may be executed by the patties 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.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant
to due authorization, the Company has caused this Agreement to be executed in its name and on
its behalf, all as of the day and year set forth below.
RITE AID CORPORATION
Date QOPJ4 m4aL
Dr Rabat G. Miller
Its: Chairmen and Chief Ex Officer
Darr
Philip Maloovttz
i COMMONWEALTH OF PENNSYLVANIA )
sea
COUNTY OF CUMHERI.AND )
Th
1 Oo thisy0%y of•Trtitewerj.
2000, before me puxsandky came Phiikp Matkcovitz.
to me known and (mown to we to be the person deaczkbed in and who executed the Executive
Separation Agreement and General Release, and be duly acknowledged to we that he execmed
the same.
_ ??Y 7 !/0F-?
1
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MUL c = twtoftuarnNyrFdM
COMMONWEALTH OF PENNSYLVANIA ) wceen.ra?t+q*waR
:sea
COUNTY OF CUMBERLAND )
1 ^'
On this,eday of Fs u"- , 2Y00. before me personally cam Robert G. Miller.
who aaknawledged that he is the Chairman and Chief Exect ve Officer of Rite Aid Corporation
to me known and !mown to me to be the parson described in and who executed the Executive
Separation Agraemem and Geaaai Rcle"g, and he duly acknowledged to me that he executed
1 the same on behalf of Rite Aid Corporation.
V •.,...J anel seat
tisa A. aoearain
Cam No bwrpa• oww"naed C AU*
1• _ *iws 12 W commusioa L*fts Mann 13.2000.
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EXHIBIT B
Severance benefas have been offered to Timothy Noonan and William Titelman in connection
with the termination of their employment with the Company pursuant to individuWy wgodmd
arraneemean•
New An mat
Timothy Noonan 58 Interim Chief Executive O1Tca. President and
Coo
William Titeln= 53 Exec Live Via President
1 -
1
1
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10 rs-°-- r - -a.r+ 13
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EXHIBIT C
i
•
DEFERPWD COMPENSATION AGFVr"+:NT
1
AGREEMENT entered into as of the 12th day of April,
( 1996, by and between RITE AID CORPORATION, with offices at 30
Hunter Lane, Camp Hill, Pennsylvania 17011 ("Corporation"),
and the employee named on the signature page of this
Agreement ("Employee").
WHEREAS, Employee is rendering and Corporation desires
to that Employee continue to render valuable services to
Corporation; and
WHEREAS, to assist Employee in providing for the
1
contingencies of death, disability and old age dependency,
Corporation and Employee desire to enter into this Agreement
("Agreement") to provide Employee with deferred compensation.
NOW, THEREFORE, Corporation and Employee hereby agree as
J
10
follows:
0
n
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I. (a) In the event that Employee's employment with
Corporation terminates after Employee has reached age sixty
five (65) and has completed at least twenty (20) years of
i service with Corporation, Employee shall be entitled to
retirement ("Retirement") with the compensation provided in
this Agreement. In such event, the Corporation shall pay to
Employee, monthly, an amount equal to one twelfth (1/12) of
1
fifty (50%) percent of the average of the three (3) highest
annual base salaries paid or accrued in respect of three (3)
fiscal years of the Corporation within the last ten (10)
1
fiscal years of the Corporation prior to termination of
Employee's employment; provided, however, that in the event
• Employee's Retirement commences after at least six (6) months
1
of the fiscal year in which Employee's Retirement takes place
have elapsed, that fiscal year shall be included as the tenth
year in the calculation of the Retirement Allowance and
0
Employee shall be deemed to have been paid an annual base
salary for that entire fiscal year at the highest rate paid
to Employee in that fiscal year. The monthly amount of such
payments shall hereinafter be referred to as the "Retirement
Allowance". Monthly payments of Retirement Allowance shall
commence on the first day of the month next following
Employee's Retirement and shall continue for one hundred
eighty (180) months. All payments of Retirement Allowance
9•
2
9
• 0
•
i under this Agreement shall be made subject to such
withholding and deductions as may be required by law.
(b) If the Employee's service with the Corporation is
terminated or suspended by reason of disability
('Disability"), then regardless of the Employee's age or
length of service, and provided Employee is not then
receiving disability payments under Corporation's Long Term
Disability Plan, if requested by Employee and if approved by
the Board of Directors in its sole discretion, Corporation
shall pay to Employee, monthly, commencing on the first day
of the third month next following its receipt of Employee's
19 request, so much of the Retirement Allowance (determined at
the date of Employee's Disability) as the Board of Directors
shall deem appropriate. Such monthly payments shall continue
until the earlier of: (i) the cessation of Employee's
I Disability (whether or not Employee returns to active
employment with Corporation or with another employer) or (ii)
the payment of an aggregate amount of the product of 180 and
the Retirement Allowance or (ii) Employee's death.
Employee shall be deemed to have incurred a Disability
I only if according to certification of competent medical
authority approved or selected by Corporation's Board of
3
010
0
i
•
Directors ("Board of Directors"), Employee is incapable of
performing normal duties with Corporation by reason of a
medically determinable physical or mental impairment which
will persist for an indeterminate period of time.
(c) If after receiving monthly Disability payments
1
under this Agreement, Employee returns to employment with
Corporation, the total dollar amount of Retirement Allowance
received by Employee during Employee's Disability shall, in
any manner deemed equitable by the Board of Directors, be
subtracted from the aggregate Retirement Allowance to which
Employee may later become entitled at such time as that
• Retirement Allowance becomes payable under this Agreement.
1 However, there shall not be subtracted from the Retirement
Allowance any payments received under any other disability
insurance or program not arising out of this Agreement.
1
2. (a) If Employee dies while employed by Corporation
or while subject to a Disability, Corporation shall pay to
/ Employee's beneficiary designated pursuant to Section 5 or as
otherwise provided in that Section, a Retirement Allowance
the amount of which shall be calculated as if the death had
1 occurred (i) after Employee had completed twenty (20) years
of service with Corporation and (ii) after Employee had
4
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0
•
•
reached age sixty five (65), reduced by one-180th of the
aggregate amount, if any, paid to Employee under Section
1(b). Monthly payment of that Retirement Allowance shall
commence on the first day of the month next following the
1
date of Employee's death and shall continue for one hundred
eighty (180) months.
(b) If Employee dies after payments under Section
1 have commenced, but before payments have been completed,
the remaining payments shall be continued to Employee's
1
beneficiary designated pursuant to section 5 or as otherwise
provided in that Section.
10 3. If Employee's employment with corporation
terminates for any reason other than Retirement, disability
or death, this Agreement shall terminate and no benefits
/ shall be payable to Employee or to any person or entity
claiming by, from or through Employee.
/ 4. If at any time Employee is discharged for good
cause by Corporation with the acquiescence of the Board of
Directors, or if subsequent to Employee's retirement,
1 disability or death, it is discovered that Employee committed
an act which could have resulted in Employee's discharge for
5
Ile
0
good cause by Corporation, had it been known to Corporation,
this Agreement shall terminate and any and all rights and
benefits of Employee and of any person claiming by, from or
through Employee under this Agreement shall be forfeited and
i
any benefits then being paid or to be paid in the future
shall cease. In the case of an after-discovered fact, the
Board of Directors shall determine whether there has been an
act which would have justified a discharge for good cause,
using reasonable and non-discriminatory standards.
1
5. Employee shall designate in writing on a form
delivered to the Board of Directors (Attention: Chairman) a
. beneficiary or beneficiaries and successor beneficiaries
1
(including address) to receive the benefits, if any, payable
under this Agreement upon Employee's death. The Board of
Directors shall decide which beneficiary or beneficiaries, if
1
any, shall have been validly designated. Such designation of
beneficiary may be revoked and changed by Employee, from time
to time, in writing on a form delivered to the Board of
Directors (Attention: Chairman), and shall be revoked
automatically if the designated beneficiary or beneficiaries
predecease Employee, in which case a new designation of
beneficiary or beneficiaries may be made. If, at the time of
Employee's death no designation of beneficiary is then in
be
6
• 0
•
effect, or following Employee's death, upon the death of all
successor beneficiaries designated by Employee, all remaining
Retirement Allowance shall be paid to Employee's estate.
6. Employee's rights under this Agreement and the
rights of Employee's beneficiary or estate may not be
assigned, transferred, pledged or encumbered.
7. In determining Employee's length of service with
Corporation for purposes of this Agreement there shall be
1
counted any period of: (a) employment with any business
entity controlling, controlled by or under common control
• with Corporation; (b) employment with any business entity at
the request of Corporation; (c) service prior to the date of
this Agreement with any business entity referred to in (a)
and (b) of this Section and (d) any period of Disability
1 (whether or not payments of the Retirement Allowance were
made to Employee as a result thereof).
1 8. Nothing contained in this Agreement shall be
construed as conferring upon Employee the right to continue
in the employ of Corporation in any capacity and the
employment rights of Employee shall be determined as if this
Agreement had never been executed.
7
D ID
0
•
•
0
9. If at anytime after Retirement Employee, without
the prior consent of the Board of Directors, undertakes
employment with or provides consulting or advisory services
i to any person or entity engaged in the continental United
states: (a) in any business in which Corporation or any
entity, employment with which would, for purposes of this
Agreement, constitute employment by the Corporation, is
1
engaged (whether or not in competition with Corporation or
such entity) or (b) in the operation of pharmacy benefit
manager, Employee's right to any remaining Retirement
Allowance otherwise payable under this Agreement shall at
that time cease and terminate permanently. The provisions of
• this Section 9 shall not be applicable with respect to
1
employment by
or consulting
services to a trade association
of persons or entities referred to in (a) of this Section.
1 10. The benefits, if any, payable to Employee in
accordance with this Agreement shall not constitute a
segregation of funds or other property for the benefit of
0 Employee or of any person or entity claiming by, from or
through Employee. Nothing contained in this Agreement and no
action taken pursuant to the provision of this Agreement
0 shall create or be construed as creating a trust of any kind
or a fiduciary relationship between Corporation and Employee
6•
8
a
or any person or entity claiming by, from or through Employee
and neither Employee nor any person or entity claiming by,
from or through Employee shall have rights with respect to
the benefits under this Agreement greater than the rights of
an unsecured general creditor of the Corporation.
11. (a) The Board of Directors shall have full power
i
and authority to interpret, construe and administer this
1
Agreement and shall not be liable to Employee or any person
or entity claiming by, from or through Employee for any
action taken or omitted in connection with the
interpretation, construction or administration or this
• Agreement and no action taken or omitted by the Board of
1
Directors in connection with the interpretation, construction
or administration of any similar or dissimilar agreement
between Corporation and any other employee of Corporation
0 shall by reason of this Agreement create any cause of action
in Employee or any person or entity claiming by, from or
through Employee. All decisions, interpretations and actions
b of the Board of Directors taken in connection with this
Agreement, including any claims for benefits made under this
Agreement, shall be conclusive, final and binding on all
0 parties.
6•
9
0
0 (b) if the Board of Directors denies the claim of
an Employee or of any person claiming by, from or through
Employee (a •Claimant") for payment of the Retirement
Allowance under this Agreement, the Board of Directors shall
provide written notice, within sixty (60) days after receipt
of the claim, setting forth in a manner calculated to be
understood by the Claimant;
(i) the specific reasons for such denial;
(ii) the specific reference to the provisions
of this Agreement on which ',denial is based;
1• (iii) a description of any additional material
or information necessary to perfect the claim and an
explanation of why such material or information is
1 needed; and
(iv) an explanation of this Agreement's claim
/ review procedure and the time limitations of this
subsection applicable thereto.
1 Employee or any Claimant whose claim for payment of
the Retirement Allowance has been denied may request review
10
0•
0
• •
U
by the Board of Directors of the denied claim by notifying
the Board of Directors in writing within sixty (60) days
after receipt of the notification of claim denial. As part
of said review procedure, the Employee or Claimant or their
authorized representatives may review pertinent documents and
submit issues and comments to the Board of Directors in
writing. The Board of Directors shall render its decision to
Employee or the Claimant in writing in a manner calculated to
be understood by the Employee or Claimant not later than
sixty (60) days after receipt of the request for review,
I unless special circumstances require an extension of time, in
which case decision shall be rendered as soon after the sixty
. (60) day period as possible, but not later than one hundred
1 twenty (120) days after receipt of the request for review.
The decision on review shall state the specific reasons
therefor and the specific Agreement references on which it is
0 based.
12. This Agreement shall be binding upon and inure to
the benefit of this Corporation, its successors and assigns,
and Employee, Employee's beneficiary, heirs, executors,
administrators and legal representatives.
1
11
140
b
E
13. Failure to insist upon strict compliance with any
of the terms, covenants or conditions hereof shall not be
deemed a waiver of such term, covenant or condition, nor
shall any waiver or relinquishment of any right or power
i
hereunder at any one time or more times be deemed a waiver or
relinquishment of such right or power at any other time or
times.
14. If any clause, sentence, paragraph, section or part
of this Agreement shall be held by any court of competent
jurisdiction to be invalid, such judgment shall not affect,
impair or invalidate the remainder hereof.
040 15. Any notice required or permitted to be given under
this Agreement shall be sufficient if in writing and sent by
registered or certified mail; if to Employee, to the address
1 shown on the books of Corporation; and if to Corporation, to
the address shown above or such other address as Corporation
may have designated in writing, or if actually received by
1 the person to whom sent.
16. This Agreement shall be subject to and construed in
b accordance with the laws of the Commonwealth of Pennsylvania
12
u
0
•
where it is made without giving effect to principles of
conflict of law.
IN WITNESS WHEREOF, Corporation has caused this Agreement
' to be executed by its duly authorized officer and
Employee has hereunder set Employee's hand as of the date first
above written.
i
RITE Al R IU EMPLOYEE
1 By,
?Grkss Name: ?ip Mar itz
of the Board and.
Chief Executive Officer
1•
1
1
I
-13-
6•
D
DESIGNATION OF BENEFICIARY
n
U
To: The Board of Directors of Rite Aid Corporation
Attention Chairman
In accordance with the Deferred Compensation Agreement granted to me
by Rite Aid Corporation, I hereby designate the following beneficiaries to receive any
payments which may be due following my death: - -
Primary Bestatielary (or Beneficiaries): -
Social
Name
i
Percentage
Address
Seca* Number
Mary Markovitz 1009 1 laurel Ridge Road #333-34-6134
Hershey, PA 17033
1
Secondary Beneficiary (or Beneficiaries) if all Primary Beneficiaries are deceased:
Social
Name Percentage Address Security Numbs
1•
Linda Markovitz 1009 201 South 18th Street #210-48-2150
Apt. 812
Philadelphia, PA 19103
If more than one Primary or Contingent beneficiary is named, specify the
percentage to be paid to each; if percentages are not specified, payments will be made
equally to the beneficiaries then living.
I understand that this Designation is subject to the tams of the Agreement,
1 and that I may amend or revoke this Designation at any time or times in the manna
provided for in the Agreement.
ioe7
Date: ter,.; i i s. i cmr Signature:
'
Philip kovitz
g10
b
VERIFICATION
I, Robert B. Sari, hereby state that I am the Senior Vice President, General
Counsel & Corporate Secretary of Rite Aid Corporation; that I am authorized to make this
verification on behalf of plaintiff in the foregoing action; that I have personal knowledge of the
statements made in the foregoing Complaint; and that the statements made in the Complaint are
true and correct to the best of my knowledge, information and belief.
I understand that the statements in this verification are made subject to the
penalties of 18 Pa.C.S. § 4904 relating to unsworn falsification to authorities.
Robert B. Sari
1
1
1
b
6
VERIFICATION
I, James J. Comitale, hereby state that I am the Senior Associate Counsel & Assistant
Secretary of Rite Aid Corporation; that I am authorized to make this verification on behalf of
defendant in the foregoing action; that I have personal knowledge of the statements made in the
foregoing Preliminary Objections; and that the statements made in the Preliminary Objections
are true and correct to the best of my knowledge, information and belief. I understand that the
statements in this verification are made subject to the penalties of 18 Pa.C.S. § 4904 relating to
unworn falsification to authorities.
J sJ.C m e ?1?1 I a3
PHL_A #1784522 v2
BALLARD SPAHR ANDREWS & INGERSOLL, LLP
By: Alan J. Davis
William A. Slaughter
Hara K. Jacobs
Peter C. Amuso
PA ID Nos. 03853, 30637, 74832 & 80182
1735 Market Street, 51st Floor
Philadelphia, PA 19103-7599
(215) 665-8500
PHILIP MARKOVITZ,
Plaintiff,
V.
Attorneys for Plaintiff
Rite Aid Corporation
COURT OF COMMON PLEAS
DAUPHIN COUNTY,
PENNSYLVANIA
CIVIL ACTION - LAW
RITE AID CORPORATION,
Defendant.
NO. 2003 CV 3377 CV
JURY TRIAL DEMANDED
CERTIFICATE OF SERVICE
I hereby certify that on August 22, 2003, true and correct copies of the
preliminary objections of defendant Rite Aid Corporation were served via first class mail,
postage prepaid upon:
Walter M. Phillips, Jr., Esq.
Hoyle, Fickler, Herschel & Mathes LLP
One South Broad Street, Suite 1500
Philadelphia, PA 19107
Attorney for Plaintiff
PHL_A #1784522 v3
k Y. e
"AGED
HOYLE, FICKLER, HERSCHEL &
MATHES LLP
BY: Walter M. Phillips, Jr., I.D. No. 22788
R. David Walk, Jr., I.D. No. 43549
Kevin J. Kotch, I.D. No. 70116
One South Broad Street, Suite 1500
Philadelphia, PA 19107
(215) 981-5700
PHILIP MARKOVITZ
1 Laurel Ridge Road
Hershey, Pennsylvania 17033
? h)
G
d
TY w -LP
C N
CD
c
Attorneys for Plai*"f, E15
Philip Markovitz -< ?
DAUPHIN COUNTY
COURT OF COMMON PLEAS
V.
RITE AID CORPORATION
30 Hunter Lane
Camp Hill, Pennsylvania 17011
CIVIL ACTION - LAW
No. 2003 CV 3377 CV
JURY TRIAL DEMANDED
RESPONSE OF PLAINTIFF PHILIP MARKOVITZ
TO THE PRELIMINARY OBJECTIONS TO
COMPLAINT OF DEFENDANT RITE AID CORPORATION
Although defendant Rite Aid Corporation's ("Rite Aid") Preliminary Objections
do not contain a notice to plead and therefore require no response under Pa. R. Civ. P.
1028, plaintiff Philip Markovitz ("Markovitz") nevertheless responds to Rite Aid's
Preliminary Objections as follows:
Admitted that Exhibit B to Rite Aid's Preliminary Objections contains a
copy of a Writ of Summons, along with other documents, and that the Writ of Summons
was filed in the Cumberland County Court of Common Pleas on June 27, 2003.
Admitted that plaintiff Markovitz filed a complaint against defendant Rite
Aid in the Dauphin County Court of Common Pleas on August 5, 2003.
Admitted that Rite Aid filed a complaint in the Cumberland County Court
of Common Pleas on August 7, 2003.
4. Denied. Paragraph 4 contains conclusions of law which require no
responsive pleading and are deemed denied. By way of further response, a complaint
was first filed in Dauphin County and thus, pursuant to Pa. R. Civ. P. 213. 1, this Court
should stay the Cumberland County action.
Admitted that Markovitz and Rite Aid are parties in the Dauphin County
Action and the Cumberland County Action.
6. Denied. Paragraph 6 contains conclusions of law which require no
responsive pleading and are therefore denied.
a. Denied. As set forth in plaintiffs complaint, which is incorporated
herein pursuant to Pa. R. Civ. P. 1019(g), Markovitz is entitled to the payments he
received after he resigned from Rite Aid, after twenty nine years of service to Rite Aid,
and to the payment he received under the Long Term Incentive Program.
b. Denied as stated. Admitted only that Markovitz pleaded guilty to
one count of obstruction of justice based on his testimony before a federal grand jury.
C. Admitted in part; denied in part. Admitted only that Rite Aid has
refused to make payments to Markovitz under the separation agreement, has demanded
repayment of monies paid to Markovitz under the separation agreeement and has
demanded repayment of monies Markvoitz received under the LTIP. It is also admitted
that Markovitz has not repaid any monies to Rite Aid. Any remaining allegations are
denied.
d. Denied. The complaints in the Cumblerland County Action and
the Dauphin County Action, being documents, speak for themselves.
2
7. Denied. Paragraph 7 contains conclusions of law which require no
responsive pleading and are therefore denied. It is also denied that the Dauphin County
Action and the Cumberland County Actions are "mirror images" of each other. Even
Rite Aid's Preliminary Objections show that the Dauphin County Action is not the
"mirror image" of the Cumberland County Action. Rite Aid alleges that it seeks
"repayment of the amounts it has paid to Markovitz under the separation agreement...."
in the Cumberland County Action and that Markovitz "seeks a resumption of payments to
him under the separation agreemens and a declaratory judgment that Rite Aid is not
entitled to repayment of LTIP I", two different remedies that may or may not entail
similar factual and legal issues. Further, Markovitz is seeking recovery under the
Pennsylvania Wage Payment and Collection Act, 43 P.S. § 260. 1, et seq., which would
entitle Markovitz to recover liquidated damages and attorneys' fees.
Denied as stated. The Separation Agreement, being a document, speaks
for itself. It is denied that the quoted language requires that any action under the
Separation Agreement be brought in Cumberland County. By way of further response,
the LTIP and 1996 Deferred Compensation Agreement do not contain the quoted
language.
9. Denied. Paragraph 9 contains conclusions of law which require no
responsive pleading and are therefore denied.
10. Denied. Paragraph 10 contains conclusions of law which require no
responsive pleading and are therefore denied. By way of further response, this Court, as
the Court where a complaint was first filed, should stay the Cumberland County Action
pursuant to Pa. R. Civ. P. 213. 1, for the reasons to be set forth fully in Plaintiff s brief to
3
be filed pursuant to Dauphin County Rule of Civil Procedure 211C(1)(a). By way of
further response, Plaintiff is entitled to proceed in this forum. After reasonable
investigation, plaintiff is without sufficient information regarding other actions brought
by Rite Aid against other former Rite Aid executives and these allegations are denied.
Even assuming there were other actions pending in Cumberland County, this would not
present cause to stay plaintiff's action here as this action will focus on Markovitz's
actions and state of mind while the purported actions against other persons will
undoubtedly focus on their specific conduct and state of mind.
HOYLE, FICKLER, HERSCHEL &
MATHES LLP
By: 4 )AI -H l
Walter M. Phillips, Jr.
R. David Walk, Jr.
Kevin J. Kotch
One South Broad Street, Suite 1500
Philadelphia, PA 19107
(215) 981-5700
Attorneys for Plaintiff
Philip Markovitz
Dated: September 10, 2003
4
VERIFICATION
I, Philip Markovitz, verify that the statements in the foregoing response to
preliminary objections are true and correct to the best of my personal knowledge,
information and belief; and that I understand that the statements made herein are made
subject to the penalties of 18 Pa. Cons. Stat. Ann. § 4904, relating to unswom
ralsltlcanon to autnontles.
By: ?l"" '
Philip ) arovi
Dated: September L0 2003
CERTIFICATE OF SERVICE
I hereby certify that on this 10th day of the September 2003, I caused a true and
correct copy of the foregoing response to preliminary objections to be served on counsel
for defendant Rite Aid Corporation by U.S. mail, postage pre-paid, addressed as follows:
Alan J. Davis, Esquire
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street, 51st Floor
Philadelphia, PA 19103-7599
01
Kevin J. otch
%%lov
D
(3 r? r%
r.- U
# 7 JANUARY 2004 ARGUMENT COURT
PHILIP MARKOVITZ,
Plaintiff
V.
RITE AID CORPORATION,
Defendant
IN THE COURT OF COMMON PLEAS
DAUPHIN COUNTY, PENNSYLVANIA
NO. 3377 CV 2003
rn co
e? c5 ?
CIVIL ACTION - LAW
BEFORE TURGEON, CLARK AND BRATTON, JJ.
ORDER
Dc
? F 'Y\Jl
AND NOW, this _a L-- day of January, 2004, consideration of Defendant's
Preliminary Objections is hereby stayed for 60 days upon the parties' agreement to pursue
mediation.
PER CURIAM
Distribution:
Walter Phillips, Jr., Esquire, One South Broad St., Ste 1500, Philadelphia, PA 19107
William Slaughter, Esquire, 1735 Market St., 51' Fl., Philadelphia, PA 19103
Thomas Lee - Dauphin County Argument Court Attorney
Copies Distributed
Date '11261'x` Wdals L 9
# 7 JANUARY 2004 ARGUMENT COURT
PHILIP MARKOVITZ,
Plaintiff
V.
RITE AID CORPORATION,
Defendant
MA"ED
IN THE COURT OF COMMON PLEAS
DAUPHIN COUNTY, PENNSYLVANIA
NO. 3377 CV 2003 ?--?
CIVIL ACTION - LAW
a CDiTrn
N : *1 n
BEFORE TURGEON, CLARK AND BRATTON, JJ.
N
ORDER
AND NOW, this 10 day of April, 2004, disposition of Defendant's Preliminary
Objections is hereby stayed pending further notice by the parties on the status of mediation.
BY THE COURT:
f
Turgeon, "Judge
Distribution:
Walter Phillips, Jr., Esquire, One South Broad St., Ste 1500, Philadelphia, PA 19107
William Slaughter, Esquire, 1735 Market St., 5151 Fl., Philadelphia, PA 19103
Thomas Lee - Dauphin County Argument Court Attorney
b
i
i
c`
..p v
i ?'
1903056x2
BALLARD SPAHR ANDREWS & INGERSOLL, LLP
By: William A. Slaughter
Peter C. Amuso
PA ID Nos. 30637 & 80182
1735 Market Street, 5 Floor
Philadelphia, PA 19103-7599
(215) 864-8114
PHILIP MARKOVITZ
1 Laurel Ridge Road
Hershey, PA 17033
Plaintiff,
V.
RITE AID CORPORATION
30 Hunter Lane
Camp Hill, PA 17011
Defendant.
Attorneys for Defendant
Rite Aid Corporation
CUMBERLAND COUNTY,
COURT OF COMMON PLEAS
CIVIL ACTION
NO. 04-2858
CIVIL ACTION
NOTICE TO PLEAD
To: Philip Markovitz
c/o Hoyle, Fickler, Herschel & Mathes LLP
One South Broad Street, Suite 1500
Philadelphia, PA 19107
You are hereby notified to file a written response to the enclosed New Matter and
Counterclaim within twenty (20) days from service hereof or a default judgment may be entered
against you.
Dated: September 24, 2004
4WII?i?ani A. Slaughter
Peter C. Amuso
BALLARD SPAHR ANDREWS
& INGERSOLL, LLP
1735 Market Street, 5 Floor
Philadelphia, PA 19103-7599
(215) 864-8114
Attorneys for Rite Aid Corporation
BALLARD SPAHR ANDREWS & INGERSOLL, LLP
By: William A. Slaughter
Peter C. Amuso
PA ID Nos. 30637 & 80182
1735 Market Street, 5 Floor
Philadelphia, PA 19103-7599
(215) 864-8114
PHILIP MARKOVITZ
1 Laurel Ridge Road
Hershey, PA 17033
Attorneys for Defendant
Rite Aid Corporation
CUMBERLAND COUNTY,
COURT OF COMMON PLEAS
CIVIL ACTION
Plaintiff,
V.
NO. 04-2858
RITE AID CORPORATION
30 Hunter Lane
Camp Hill, PA 17011
Defendant.
CIVIL ACTION
ANSWER TO COMPLAINT NEW MATTER AND COUNTERCLAIM
Plaintiff, Rite Aid Corporation ("Rite Aid" or the "Company"), by its undersigned
counsel, answers the complaint of Philip Markovitz ("Markovitz") as follows:
PARTIES
Denied. Rite Aid is without knowledge or information sufficient to form a
belief as to the truth of the allegations set forth in paragraph 1.
2. Admitted.
Admitted.
JURISDICTION AND VENUE
4. Denied as conclusion of law. By way of further response, this action
arises out of events, transactions and occurrences that took place in Cumberland County,
Pennsylvania, where Rite Aid's principal place of business is located and which Markovitz was
employed.
5. Denied as conclusion of law. By way of further response, this action
arises out of events, transactions and occurrences that took place in Cumberland County,
Pennsylvania, where Rite Aid's principal place of business is located and where Markovitz was
employed.
FACTS COMMON TO ALL COUNTS
6. Admitted in part and denied in part. Rite Aid admits that Markovitz began
working at Rite Aid in 1971 and was Rite Aid's Senior Vice President, Store Planning and
Construction until the termination of his employment in early 2000. Rite Aid is without
knowledge or information sufficient to form a belief as to the truth of the remaining allegations
set forth in paragraph 6.
7. Admitted in part and denied in part. Rite Aid admits that Markovitz held
the positions of Vice President and Senior Vice President in Rite Aid's real estate department
and that he reported to Martin Grass. Rite Aid is without knowledge or information sufficient to
form a belief as to the truth of the remaining allegations set forth in paragraph 7.
8. Admitted.
9. Admitted in part and denied in part. Rite Aid admits that Attachment "A"
to the complaint is a correct copy of the Deferred Compensation Agreement between the
Company and Markovitz. The remaining averments of paragraph 9 are characterizations of the
Deferred Compensation Agreement, a document which speaks for itself, and are therefore
denied.
10. Denied. The averments of paragraph 10 are characterizations of the
Deferred Compensation Agreement, a document which speaks for itself, and are therefore
denied.
11. Denied. Rite Aid is without knowledge or information sufficient to form a
belief as to the truth of the allegations set forth in paragraph 11. By way of further response, at
all relevant times, Markovitz was an at-will employee of the Company. Any oral agreements
purporting to increase or alter Markovitz's benefits, without consideration from Markovitz, were
not binding on Rite Aid.
12. Denied. Rite Aid is without knowledge or information sufficient to form a
belief as to the truth of the allegations set forth in paragraph 12. By way of further response, at
all relevant times, Markovitz was an at-will employee of the Company. Any oral agreements
purporting to increase or alter Markovitz's benefits, without consideration from Markovitz, were
not binding on Rite Aid.
13. Admitted. By way of further response, Rite Aid states that Grass was
dismissed from his positions with the Company by the Company's Board of Directors after the
Board discovered, among other things, that he had lied to the Board and concealed material
information from the Board, and that financial statements of the Company prepared by Grass and
Chief Financial Officer Franklyn Bergonzi (`Bergonzi") and filed with the Securities and
Exchange Commission would have to be restated. The restatement of Rite Aid's financial
statements ultimately required a cumulative earnings reduction of over $1.6 billion.
14. Denied. Rite Aid is without knowledge or information sufficient to form a
belief as to the truth of the allegations set forth in paragraph 14. By way of further response, at
all relevant times, Markovitz was an at-will employee of the Company. Any oral agreements
purporting to increase or alter Markovitz's benefits, without consideration from Markovitz, were
not binding on Rite Aid.
15. Denied. Rite Aid is without knowledge or information sufficient to form a
belief as to the truth of the allegations set forth in paragraph 15. By way of further response,
Rite Aid states that in late 1999 or early 2000, after Grass had been dismissed by the Board and
no longer had any authority to act on the Company's behalf, he created, executed and delivered
letters to several Company executives, purporting to obligate Rite Aid to pay such executives
substantial sums upon the termination of their employment with the Company. Markovitz was
one of the Company executives to receive such a letter.
16. Denied. After receiving the letter from Grass, and knowing it to be a
back-dated fabrication, Markovitz caused the letter to be presented to the new management of
Rite Aid, falsely representing that it was a genuine written obligation of the Company, intending
that the Company rely on the letter's bona fides and intending that the Company honor the
purported obligations assumed in the letter in accordance with its terms. Only as a result of that
deception did the Company agree to the Separation Agreement it executed with Markovitz.
17. Admitted in part and denied in part. Rite Aid denies the averments of
paragraph 17 except admits that Markovitz executed an Executive Separation Agreement and
General Release (the "Separation Agreement") on January 24, 2000 and that Exhibit C is a copy
of that Agreement. Specifically, Rite Aid denies that such Agreement "incorporated the terms of
the 1996 Agreement as amended by Grass in June 1998." By way of further response, Rite Aid
incorporates its response to paragraph 16 and states that, unaware of Markovitz's deception, the
Company accepted the bona fides of the back-dated letter presented to new management by
Markovitz by entering into the Separation Agreement.
18. Denied. Markovitz resigned from employment with Rite Aid upon the
execution of the Separation Agreement.
19. Admitted. By way of further explanation, Rite Aid states that it has paid
Markovitz substantial amounts under the Separation Agreement and under the Deferred
Compensation Agreement as amended by the Separation Agreement. Upon learning of
Markovitz's deception through the guilty plea of Grass, Rite Aid's Board terminated the
Separation Agreement and the Deferred Compensation Agreement and demanded repayment of
the sums paid to Markovitz thereunder. Despite Rite Aid's request, Markovitz has failed and
refused to repay the amounts paid to him by Rite Aid under his Separation Agreement and under
his Deferred Compensation Agreement as amended by his Separation Agreement.
20. Denied. The averments of paragraph 20 are characterizations of the letter
dated June 26, 2003, a document that speaks for itself, and are therefore denied.
21. Denied. After receiving the letter from Grass, and knowing it to be a
back-dated fabrication, Markovitz caused the letter to be presented to the new management of
Rite Aid, falsely representing that it was a genuine written obligation of the Company, intending
that the Company rely on the letter's bona fides and intending that the Company honor the
purported obligations assumed in the letter in accordance with its terms.
22. Admitted in part and denied in part. Rite Aid denies the averments of
paragraph 22 except admits that it has demanded the return of payments received by Markovitz
purportedly pursuant to the Company's 1995 long term incentive plan (LTIP I). By way of
further response, Rite Aid states that in March of 1995, at the request and recommendation of
Grass, Rite Aid's Board of Directors adopted a long term incentive plan denominated LTIP I
under which certain executives of the Company would be entitled to receive shares of the
Company's stock or the dollar equivalent value of such shares in the event the Company's
earnings per share grew at certain rates over the ensuing four years. Under the terms of LTIP I,
the Board authorized payment only if the Company's earnings per share grew at a minimum rate
of at least 8% per year, compounded annually. The measurement period under LTIP I began in
March of 1995 and concluded in March of 1999, covering the results of the Company's 1995
through 1999 fiscal years. Even though the Company had not met the minimum earnings per
share growth target required for payment under LTIP I, in July of 1999 Grass and Bergonzi
caused the Company to make a payment to Markovitz thereunder, falsely representing to the
Board that the minimum earnings per share growth target required for payment under LTIP I had
been met. In or about July 1999, Markovitz received a substantial payment from the Company
purportedly on account of his earning the right to receive shares of the Company's common
stock under LTIP I. Despite the Company's request, Markovitz has failed and refused to repay
such sum.
COUNT I - BREACH OF CONTRACT
(SEPARATION AGREEMENT AND GENERAL RELEASE)
23. Rite Aid repeats and restates the averments of paragraphs 1 through 22 of
this answer.
24. Denied. The averments of paragraph 24 are conclusions of law to which
no responsive pleading is required.
25. Admitted.
26. Denied. The averments of paragraph 26 are characterizations of the letter
dated June 26, 2003, a document that speaks for itself, and are therefore denied. By way of
further explanation, Rite Aid responds that upon learning of Markovitz's deception through the
guilty plea of Grass, Rite Aid's Board terminated the Separation Agreement and the Deferred
Compensation Agreement and demanded repayment of the sums paid to Markovitz thereunder.
27. Denied. The averments of paragraph 27 are conclusions of law to which
no responsive pleading is required.
WHEREFORE, Rite Aid respectfully requests that judgment be entered in its
favor against defendant, together with such other relief, including attorneys' fees and costs, as
the Court deems just and proper.
COUNT II - BREACH OF CONTRACT
(1996 DEFERRED COMPENSATION AGREEMENT)
28. Rite Aid repeats and restates the averments of paragraphs 1 through 27 of
this answer.
29. Denied. The averments of paragraph 29 are conclusions of law to which
no responsive pleading is required.
30. Denied. The averments of paragraph 30 are conclusions of law to which
no responsive pleading is required.
WHEREFORE, Rite Aid respectfully requests that judgment be entered in its
favor against defendant, together with such other relief, including attorneys' fees and costs, as
the Court deems just and proper.
COUNT III- DECLARATORY JUDGMENT
31. Rite Aid repeats and restates the averments of paragraphs 1 through 30 of
this answer.
32. Denied. The averments of paragraph 32 are conclusions of law to which
no responsive pleading is required.
33. Denied. The averments of paragraph 33 are characterizations of the letter
dated June 26, 2003, a document that speaks for itself, and are therefore denied. By way of
further explanation, Rite Aid responds that upon learning of Markovitz's deception through the
guilty plea of Grass, Rite Aid's Board terminated the Separation Agreement and the Deferred
Compensation Agreement and demanded repayment of the sums paid to Markovitz thereunder.
34. Denied. The averments of paragraph 34 are conclusions of law to which
no responsive pleading is required.
WHEREFORE, Rite Aid respectfully requests that judgment be entered in its
favor against defendant, together with such other relief, including attorneys' fees and costs, as
the Court deems just and proper.
COUNT IV - PENNSYLVANIA WAGE PAYMENT
AND COLLECTION ACT, 43 P.S. § 260.1, et seq.
35. Rite Aid repeats and restates the averments of paragraphs 1 through 34 of
this answer.
36. Denied. The averments of paragraph 36 are conclusions of law to which
no responsive pleading is required.
37. Denied. The averments of paragraph 37 are conclusions of law to which
no responsive pleading is required.
38. Denied. The averments of paragraph 38 are conclusions of law to which
no responsive pleading is required.
39. Denied. The averments of paragraph 39 are conclusions of law to which
no responsive pleading is required.
WHEREFORE, Rite Aid respectfully requests that judgment be entered in its
favor against defendant, together with such other relief, including attorneys' fees and costs, as
the Court deems just and proper.
NEW MATTER
FIRST AFFIRMATIVE DEFENSE
40. Plaintiffs complaint fails to state a cause of action or any claim upon
which relief can be granted.
SECOND AFFIRMATIVE DEFENSE
41. Plaintiff s complaint is barred in whole or in part by the doctrines of
waiver and/or estoppel.
THIRD AFFIRMATIVE DEFENSE
42. Plaintiff s complaint should be barred or reduced to the extent he has
failed to mitigate its alleged damages.
FOURTH AFFIRMATIVE DEFENSE
43. Rite Aid has performed each and every duty owed to plaintiff to the extent
any such duty exists or ever existed.
FIFTH AFFIRMATIVE DEFENSE
44. To the extent plaintiff t seeks punitive and/or exemplary damages or
attorneys' fees and costs with respect to its claims for breach of contract, those damages are not
recoverable as a matter of law.
WHEREFORE, Rite Aid respectfully requests that judgment be entered in its
favor against plaintiff, together with such other relief, including attorneys' fees and costs, as the
Court deems just and proper.
COUNTERCLAIM
Rite Aid hereby incorporates by reference its complaint filed with this court in
the matter of No. 03-3060 (the "Rite Aid Complaint"), and specifically reavers paragraphs 1
through 48 of that Complaint here as if set in full.
Dated: September 24, 2004 i?
i
illiam A. S' ter
Peter C. Amuso
BALLARD SPAHR ANDREWS
& INGERSOLL,LLP
1735 Market Street, 51" Floor
Philadelphia, PA 19130-7599
(215) 864-8114
Attorneys for Rite Aid Corporation
09/23/2004 10:30 FAX 717 975 5952 RITE AID LEGAL
fA003/003
VERIFICATION
I, Robert B. Sari, hereby state that I am the Senior Vice President, General
Counsel & Corporate Secretary Rite Aid Corporation; that I am authorized to make this
verification on behalf of plaintiff in the foregoing action; that I have personal knowledge of the
statements made in the foregoing Answer, New Matter, and Counterclaims; and that the
statements made in the Answer, New Matter, and Counterclaims, are true and correct to the best
of my knowledge, information and belief. I understand that the statements in this verification are
made subject to the penalties of 18 Pa.C.S. 9 4904 relating to unswom falsification to authorities. ?E-
AbbertB.
BALLARD SPAHR ANDREWS & INGERSOLL, LLP
By: William A. Slaughter
Peter C. Amuso
PA ID Nos. 30637 & 80182
1735 Market Street, 515` Floor
Philadelphia, PA 19103-7599
(215) 864-8114
PHILIP MARKOVITZ
1 Laurel Ridge Road
Hershey, PA 17033
Plaintiff,
V.
RITE AID CORPORATION
30 Hunter Lane
Camp Hill, PA 17011
Defendant.
Attorneys for Defendant
Rite Aid Corporation
CUMBERLAND COUNTY,
COURT OF COMMON PLEAS
CIVIL ACTION
NO. 04-2858
CIVIL ACTION
I hereby certify that on September 24, 2004, true and correct copies of the
foregoing Answer, New Matter and Counterclaim of Rite Aid was served by hand delivery on
Walter M. Phillips, Jr., Esq.
Hoyle, Fickler, Herschel & Mathes LLP
One South Broad Street, Suite 1500
Philadelphia, PA 19107
Attorney for Plaintiff Philip Markovitz
ete C. so
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HOYLE, FICKLER, HERSCHEL
& MATHES LLP
By: Walter M. Phillips, Jr., I.D. No. 22788
Kevin J. Kotch, I.D. No. 70116
One South Broad Street, Suite 1500
Philadelphia, PA 19107
PHILIP MARKOVITZ,
Plaintiff,
V.
RITE AID CORPORATION,
Defendant.
Attorneys for Plaintiff
Philip Markovitz
CUMBERLAND COUNTY,
COURT OF COMMON PLEAS
CIVIL DIVISION
CIVIL ACTION
No. 04-2858
REPLY OF PHILIP MARKOVITZ TO THE NEW
MATTER AND COUNTERCLAIM OF RITE AID CORPORATION
Plaintiff Philip Markovitz hereby responds to the New Matter and Counterclaim of Rite
Aid as follows:
REPLY TO NEW MATTER
40. Denied. Paragraph 40 contains conclusions of law which require no response.
41. Denied. Paragraph 41 contains conclusions of law which require no response.
42. Denied. Paragraph 42 contains conclusions of law which require no response.
43. Denied. Paragraph 43 contains conclusions of law which require no response.
44. Denied. Paragraph 44 contains conclusions of law which require no response.
WHEREFORE, Philip Markovitz is entitled to judgment in his favor and against Rite Aid
Corporation for his damages, attorneys' fees, costs and such other relief as the Court deems just
and appropriate.
REPLY TO COUNTERCLAIM
Philip Markovitz incorporates by reference his answer, new matter and counterclaim filed
with this Court in the matter of No. 03-3060, and specifically reavers paragraphs 1 through 101
as if set forth in full.
WHEREFORE, Philip Markovitz is entitled to judgment in his favor and against Rite Aid
Corporation for his damages, attorneys' fees, costs and such other relief as the Court deems just
and appropriate.
HOYLE, FICKLER, HERSCHEL &
MAT LP
By:
Walter ips,
R. David Walk, Jr.
Kevin J. Kotch
One South Broad Street, Suite 1500
Philadelphia, PA 19107
(215) 981-5700
Attorney for Plaintiff,
Phillip Markovitz
Dated: October 28, 2004
2
OCT-26-2004 11:40 P.02i02
VERMCATION
I, Philip Markovitz, verify that the statements in the foregoing response are true and
correct to the best of my personal knowledge, information and belief; and that I understand that
the statements made herein are made subject to the penalties of 18 Pa. Cons. Stat. Ann. § 4904,
relating to unsworn falsification to authorities.
By:
Dated: Octobe?? 2004
Philip Mar ovitz
TOTAL P.02
10/26/2004 TIDE 11:15 [TX/RX NO 60271 [002
CERTIFICATE OF SERVICE
I hereby certify that on October 28, 2004, true and correct copies of the foregoing Reply
of Philip Markovitz to the New Matter and Counterclaim of Rite Aid Corporation was served by
hand delivery on the following:
Peter Amuso, Esquire
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street, 51st Floor
Philadelphia, PA 19103-7599
Attorneys for Rite Aid Corporation
Kevin J. Kotch
r t..l
Czzl
vs Case No. 04-2858 Civil
Rite Aid Coropration
Statement of Intention to Proceed
To the Court:
Philip Markovitz intends to pr with the above a tioned matter.
I
Print Name Thomas W. Scott, Esq .Sign Name
Date: 10/25/07 Attorneyfor Philip Markovitz
Explanatory Comment
The Supreme Court of Pennsylvania has promulgated new Rule of Civil Procedure 230.2 governing the termination of
inactive cases and amended Rule of Judicial Administration 1901. Two aspects of the recommendation merit
comment.
1. Rule of civil Procedure
New Rule of Civil Procedure 230.2 has been promulgated to govern the termination of inactive cases within the
scope of the Pennsylvania Rules of Civil Procedure. The termination of these cases for inactivity was previously
governed by Rule of Judicial Administration 1901 and local rules promulgated pursuant to it. New Rule 230.2 is
tailored to the needs of civil actions. It provides a complete procedure and a uniform statewide practice, preempting
local rules.
This rule was promulgated in response to the decision of the Supreme Court in Shop v. Eagle, 551 Pa. 360,710 A.2d
1104 (1998) in which the court held that "prejudice to the defendant as a result of delay in prosecution is required
before a case may be dismissed pursuant to local rules implementing Rule of Judicial Administration 1901."
Rule of Judicial Administration 1901(b) has been amended to accommodate the new rule of civil procedure. The
general policy of the prompt disposition of matters set forth in subdivision (a) of that rule continues to be applicable.
II Inactive Cases
The purpose of Rule 230.2 is to eliminate inactive cases from the judicial system. The process is initiated by the
court. After giving notice of intent to terminate an action for inactivity, the course of the procedure is with the parties.
.?^ h_Jey ? r r as .,
if the parties .. do not 7sh !0 pursue :he ca,._ co, they will ill take no _ ..action °rd "the Prothonota..r}, cha.l . ?.,, ? enter an. erae. a
course terminating the matter with prejudice for failure to prosecute." If a party wishes to pursue the matter, he or she
will file a notice of intention to proceed and the action shall continue.
a. Where the action has been terminated
If the action is terminated when a party believes that it should not have been terminated, that party may proceed
under Rule230(d) for relief from the order of termination. An example of such an occurrence might be the termination
of a viable action when the aggrieved party did not receive the notice of intent to terminate and thus did not timely file
the notice of intention to proceed.
The timing of the filing of the petition to reinstate the action is important. If the petition is filed within thirty days of
the entry of the order of termination on the docket, subdivision (d)(2) provides that the court must grant the petition and
reinstate the action. If the petition is filed later than the thirty-day period, subdivision (d)(3) requires that the plaintiff
must make a show in to the court that the petition was promptly filed and that there is a reasonable explanation or
legitimate excuse both for the failure to file the notice of intention to proceed prior to the entry of the order of
termination on the docket and for the failure to file the petition within the thirty-day period under subdivision (d)(2).
B. Where the action has not been terminated
An action which has not been terminated but which continues upon the filing of a notice of intention to proceed may
have been the subject of inordinate delay. In such an instance, the aggrieved party may pursue the remedy of a
common law non pros which exits independently of termination under Rule 230.2.
sp
r
PRAECIPE FOR LISTING CASE FOR TRIAL
(Must be typewritten and submitted in duplicate)
TO THE PROTHONOTARY OF CUMBERLAND COUNTY
Please list the following case:
?X for JURY trial at the next term of civil court.
? for trial without a jury.
- - - - - -- - -- - - ---- - -- - ---- - -- - ---- - --------------------- - --------------
CAPTION OF CASE
(entire caption must be stated in full) (check one)
Philip Markovitz,
1 Laurel: Ridge Road
Hershey, PA 17033
(Plaintiff)
VS.
Rite Aid Corporation,
30 Hunter Lane (Defendant)
vs
Camp Hill, PA 17011
® Civil Action - Law
? Appeal from arbitration
(other)
The trial list w XJR&P called on 1 p / 16 / 0 7
and
Trials commence on 1 0i / 13 / 0 7
Pretrials rgield on 1 1/ 2 4/ 0 7
(Briefs are due S days before pretrials
No. 04-2858 , CIVIL Term
*This case, coordinated with Rite Aid Corporation v. Philip Markovitz,
No. 03-3060, by Order of Dauphin County Conrt at No. 3377 CV 2003
(copy attached).
Indicate the attorney who will try case for the party who files this praecipe:
Thomas W. Scott
Indicate trial counsel for other parties if known:
William A. Slaughter
This case is ready for trial.
Print Name: Thomas W. Scott
Date: October 31 , 2007
i
Attorneyfor: Philip Markovitz, Plaintiff
4
P
# 7 JANUARY 2004 ARGUMENT COURT
PHILIP MARKOVITZ, IN THE COURT OF COMMON PLES
Plaintiff DAUPHIN COUNTY, PENNSYLVANIA
V. NO. 3377 CV 2003
RITE AID CORPORATION,
Defendant CIVIL ACTION - LAW
BEFORE TURGEON, CLARK AND BRATTON, JJ.
ORDER_
AND NOW, this 26th day of May, 2004, upon notice by the parties that their
attempt to mediate this dispute has failed, this Court hereby directs, in consideration of the
Defendant's preliminary objections, as follows: Whereas this action and Rite Aid Corporation v.
Philip Markovitz, which is currently pending in Cumberland County (03-3060 Civil Term,
Cumberland County Court of Common Pleas), involve common questions of law and fact that
arise from the same transactions and occurrences, this action is hereby ordered transferred to
Cumberland County and coordinated with the Cumberland County action. Pa.R.C.P. 213.1(a)-
(d)
Pursuant to Rule 213.1(e), this; .OO rder shall be considered notice to both parties of the
order of coordination. Pa.R.C.P. 21.3.1Ee? It is further directed that costs associated with
coordination, if any, shall be equally borne by the parties. Id.
The Dauphin County Prothonotary's Office is hereby directed to send a certified copy of
this coordination order to the Cumberland County Court. Id.
BY THE COURT:
A A.
Je e Turgeon, Judge
Distribution:
Walter Phillips, Jr., Esquire, One South Broad St., Ste 1500, Philadelphia, PA 19107
William Slaughter, Esquire, 1735 Market St., 51St Fl., Philadelphia, PA 19103
Thomas Lee - Dauphin County Argument Court Attorney
ru"rP 2 6 2004
I hereby certi?j tiial t,l3a forag is
true and oirig filed c0rre?ct cooy,, of the original
.
Profh notary ???-vv
J*
RITE AID CORPORATION, :
Plaintiff
V. :
PHILIP MARKOVITZ,
Defendant.
PHILIP MARKOVITZ, :
Plaintiff,
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
Civil Action No. 03-3060*
V. Civil Action No. 04-2858*
RITE AID CORPORATION,
Defendant.
CERTIFICATE OF SERVICE
On this 31 st day of October, 2007, the foregoing Praecipe for Listing Case for Trial was
served on the following electronically, and by depositing a true and correct copy in the United
States Mail, postage prepaid, addressed to:
William A. Slaughter, Esquire
BALLARD SPAHR ANDREWS & INGERSOLL, LLP
1735 Market Street, 51st Floor
Philadelphia, PA 19130-7599
Slau ter(aballardspahr.com
Attorneys for Plaintiff Rite Aid Corporation
Tho s . Scott, Esquire
Attorney I.D. #15681
218 Pine Street
P. O. Box 886
Harrisburg, PA 17108-0886
(717) 232-1851
* Coordinated by Order of Dauphin County Court dated May 26, 2004, with Rite Aid v. Markovitz,
No. 03-3060
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RITE AID CORPORATION,
Plaintiff
V.
PHILIP MARKOVITZ,
Defendant
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
CIVIL ACTION - LAW
NO. 04-2858 CIVIL TERM
ORDER OF COURT
AND NOW, this 13th day of November, 2007, upon consideration of the attached
letter from Thomas W. Scott, the above-captioned case is stricken from the November
2007 Civil Trial List.
BY THE COURT,
illiam A. Slaughter, Esq.
1735 Market Street
51St Floor
Philadelphia, PA 19130-7599
Attorney for Plaintiff
omas W. Scott, Esq.
218 Pine Street
P.O. 886
Harrisburg, PA 17108-0886
Attorney for Defendant
J
91 AQAfj
ooz
? Hl j0
r
THbMAS W. SCOTT
JANE GOWEN PENNY
TERRENCE J. MCGOWAN
MICHAEL J. O'CONNOR•
LINDA J. OLSEN
ROBERT J. DANIELS"
MARYLAND BAR
'• NEW JERSEY BAR
THE LAW FIRM OF
KILLIAN & GEPHART, LLP r HEATHER M. FAST
218 PINE STREET (zooo-zoos
P. O. BOX 886
HARRISBURG, PENNSYLVANIA 17108-0886 Of Counsel:
JOHN D. KILLIAN
SMITH B. GEPHART
TELEPHONE (717) 232-1851
FAX NO. (717) 238-0592
www.killiangephart.com
November 6, 2007
The Honorable J. Wesley Oler, Jr.
Cumberland County Courthouse
One Courthouse Square
Carlisle, PA 17013
RE: Rite Aid Corporation v. Philip Markovitz,
Civil Action No.: 03-3060
Philip Markovitz v. Rite Aid Corporation,
Civil Action No.: 04-2858
Dear Judge Oler:
Please be advised that the two above-referenced coordinated cases, scheduled for
trial beginning on November 13, 2007, have been settled, subject to written agreement.
Accordingly, these cases may be removed from the trial list.
Thank you.
SinQ r 1
T omas W. cott
TWS/jcs
cc: Taryn N. Dixon, Esquire
William A. Slaughter, Esquire
X0`1
PHILIP MARKOVITZ,
Plaintiff,
V.
RITE AID CORPORATON,
Defendant.
IN THE COURT OF COMMON PLEAS
CUMBERLAND COUNTY,
PENNSYLVANIA
CIVIL ACTION
NO. 04-2858
PRAECIPE TO SETTLE. DISCONTINUE AND END
Please mark the above-referenced case settled, discontinued and ended, with prejudice.
Respectfully submitted,
Dated: v? f2- C) 0
Dated: S1 Al l? a V
Thomas W. Scott, Esquire
Attorney I.D. No. 15681
Killian & Gephart, LLP
218 Pine Street
P.O. Box 886
Harrisburg, PA 17108-0886
Telephone: (717) 232-1851
tscott@killiangephart.com
Attorneys for Plaintiff, Philip Markovitz
William A. Slaughter, Esquire
Attorney I.D. No. 30637
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street, 51 st Floor
Philadelphia, PA 19103-7599
Telephone: (215) 665-8500
Slau hter kballardspahr.com
Attorneys for Defendant, Rite Aid Corporation
Uzi
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