Exhibit 10.14
AMENDMENT TO SEVERANCE AGREEMENT
Xxxxxxxx Drug Stores, Inc. (the "Company"), by authorization
of its Board of Directors, and __________________ (the "Executive") hereby adopt
the following Amendment to the Severance Agreement, dated as of
___________________, by and between the Company and such Executive (the
"Agreement"):
1. Section 3 of the Agreement is amended by replacing each
reference therein to "Section 4" with the term "Sections 4 and 5".
2. The last sentence of Section 4(a)(ii) of the Agreement is
amended by deleting therefrom the clause "Without otherwise limiting the
purposes or effect of Section 5,".
3. Section 4(c) of the Agreement is amended by replacing the
reference therein to "Section 7" with the term "Sections 5 and 7".
4. Section 5 of the Agreement is amended in its entirety to
read as follows:
"5. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event that this Agreement becomes operative and
it is determined (as hereafter provided) that any payment or
distribution by the Company or any of its affiliates to or for the
benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise
pursuant to or by reason of any other agreement, policy, plan, program
or arrangement, including without limitation any stock option, stock
appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing
(a "Payment"), would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code") (or
any successor provision thereto), by reason of being considered
"contingent on a change in ownership or control" of the Company, within
the meaning of Section 280G of the Code (or any successor provision
thereto) or to any similar tax imposed by state or local law, or any
interest or penalties with respect to such tax (such tax or taxes,
together with any such interest and penalties, being hereafter
collectively referred to as the "Excise Tax"), then the Executive will
be entitled to receive an additional payment or payments (collectively,
a
"Gross-Up Payment"); provided, however, that no Gross-up Payment will
be made with respect to the Excise Tax, if any, attributable to (i) any
incentive stock option, as defined by Section 422 of the Code ("ISO")
granted prior to the execution of this Agreement or (ii) any stock
appreciation or similar right, whether or not limited, granted in
tandem with any ISO described in clause (i). The Gross-Up Payment will
be in an amount such that, after payment by the Executive of all taxes
on such Gross-Up Payment (including any interest or penalties imposed
with respect to such taxes and any Excise Tax imposed upon the Gross-Up
Payment), the remaining amount payable to the Executive will equal the
Excise Tax imposed upon the Payment.
(b) Subject to the provisions of Section 5(f), all
determinations required to be made under this Section 5, including
whether an Excise Tax is payable by the Executive and the amount of
such Excise Tax and whether a Gross-Up Payment is required to be paid
by the Company to the Executive and the amount of such Gross-Up
Payment, if any, will be made by a nationally recognized accounting
firm (the "Accounting Firm") selected by the Executive in his sole
discretion. The Executive will direct the Accounting Firm to submit its
determination and supporting calculations in reasonable detail to both
the Company and the Executive within 30 calendar days after the
Termination Date, if applicable, and any such other time or times as
may be reasonably requested by the Company or the Executive. If the
Accounting Firm determines that any Excise Tax is payable by the
Executive, the Company will pay the required Gross-Up Payment to the
Executive within five business days after receipt of such determination
and calculations with respect to any Payment to the Executive. If the
Accounting Firm determines that no Excise Tax is payable by the
Executive, it will, at the same time as it makes such determination,
furnish the Company and the Executive an opinion to that effect. As a
result of the possible uncertainty in the application of Section 4999
of the Code (or any successor provision thereto) and the possibility of
similar uncertainty regarding applicable state or local tax law at the
time of any determination by the Accounting Firm hereunder, it may be
that Gross-Up Payments which have not been made by the Company as
aforesaid should have been made (together with, if applicable, interest
and penalties which may be due thereon, an "Underpayment"), consistent
with the calculations required to be made hereunder. In the event that
the Company exhausts or fails to pursue its remedies pursuant to
Section 5(f) and the Executive thereafter is required to make a payment
of any Excise
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Tax, the Executive will direct the Accounting Firm to determine the
amount of the Underpayment that has occurred and to submit its
determination and detailed supporting calculations to both the Company
and the Executive as promptly as possible. Any such Underpayment will
be promptly paid by the Company to, or for the benefit of, the
Executive within five business days after receipt of such determination
and calculations.
(c) The Company and the Executive will each provide
the Accounting Firm access to and copies of any books, records and
documents in the possession of the Company or the Executive, as the
case may be, reasonably requested by the Accounting Firm, and otherwise
cooperate with the Accounting Firm in connection with the preparation
and issuance of the determinations and calculations contemplated by
Section 5(b). Any determination by the Accounting Firm as to the amount
of the Gross-Up Payment will be binding upon the Company and the
Executive.
(d) The federal, state and local income or other tax
returns filed by the Executive will be prepared and filed on a
consistent basis with the determination of the Accounting Firm with
respect to the Excise Tax payable by the Executive. The Executive will
make proper payment of the amount of any Excise Payment, and at the
request of the Company, provide to the Company true and correct copies
(with any amendments) of his federal income tax return as filed with
the Internal Revenue Service and corresponding state and local tax
returns, if relevant, as filed with the applicable taxing authority,
and such other documents reasonably requested by the Company,
evidencing such payment. If prior to the filing of the Executive's
federal income tax return, or corresponding state or local tax return,
if relevant, the Accounting Firm determines that the amount of the
Gross-Up Payment should be reduced, the Executive will within five
business days pay to the Company the amount of such reduction.
(e) The fees and expenses of the Accounting Firm for
its services in connection with the determinations and calculations
contemplated by Section 5(b) will be borne entirely by the Company. If
such fees and expenses are initially paid by the Executive, the Company
will reimburse the Executive the full amount of such fees and expenses
within five business days after receipt from the Executive of a
statement therefor and reasonable evidence of his payment thereof.
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(f) The Executive will notify the Company in writing
of any claim by the Internal Revenue Service or any other taxing
authority that, if successful, would require the payment by the Company
of a Gross-Up Payment. Such notification will be given as promptly as
practicable but no later than 10 business days after the Executive
actually receives notice of such claim and the Executive will further
apprise the Company of the nature of such claim and the date on which
such claim is requested to be paid (in each case, to the extent known
by the Executive). The Executive will not pay such claim prior to the
earlier of (i) the expiration of the 30-calendar-day period following
the date on which he gives such notice to the Company and (ii) the date
that any payment of amount with respect to such claim is due. If the
Company notifies the Executive in writing prior to the expiration of
such period that it desires to contest such claim, the Executive will:
(i) provide the Company any written
records or documents in his possession relating to
such claim reasonably requested by the Company;
(ii) take such action in connection with
contesting such claim as the Company reasonably requests in
writing from time to time, including without limitation
accepting legal representation with respect to such claim by
an attorney competent in respect of the subject matter and
reasonably selected by the Company;
(iii) cooperate with the Company in good faith in
order effectively to contest such claim; and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company will bear and pay directly all
costs and expenses (including if applicable interest and penalties)
incurred in connection with such contest and will indemnify and hold
harmless the Executive, on an after-tax basis, for and against any
Excise Tax or income tax, including if applicable interest and
penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limiting the
generality or effect of the foregoing provisions of this Section 5(f),
the Company will control all proceedings taken in connection with the
contest of any claim contemplated by this Section 5(f) and, at its sole
option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with any taxing
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authority in respect of such claim (provided, however, that the
Executive may participate therein at his own cost and expense) and may,
at its option, either direct the Executive to pay the tax claimed and
xxx for a refund or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction
and in one or more appellate courts, as the Company may determine;
provided, however, that if the Company directs the Executive to pay the
tax claimed and xxx for a refund, the Company will advance the amount
of such payment to the Executive on an interest-free basis and will
indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income or other tax, including if applicable interest
or penalties with respect thereto, imposed with respect to such
advance; and provided further, however, that any extension of the
statute of limitations relating to payment of taxes for the taxable
year of the Executive with respect to which the contested amount is
claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of any such contested claim will be
limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive will be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(g) If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 5(f), the Executive
receives any refund with respect to such claim, the Executive will
(subject to the Company's complying with the requirements of Section
5(f)) promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after any taxes applicable
thereto). If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 5(f), a determination is made that
the Executive is not entitled to any refund with respect to such claim
and the Company does not notify the Executive in writing of its intent
to contest such denial or refund prior to the expiration of 30 calendar
days after such determination, then such advance will be forgiven and
will not be required to be repaid and the amount of any such advance
will offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid by the Company to the Executive pursuant to this
Section 5."
5. The foregoing amendments shall be effective as of the date
of execution of this Amendment.
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IN WITNESS WHEREOF, the undersigned have caused this amendment
to be executed as of this 16th day of June, 1997.
The "Company"
XXXXXXXX DRUG STORES, INC.
By:
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The "Executive"
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Name:
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AMENDMENT NO. 2 TO SEVERANCE AGREEMENT
Xxxxxxxx Drug Stores, Inc. (the "Company"), by authorization of its
Board of Directors, and ______________________ (the "Executive") hereby adopt
the following Amendment No. 2 to the Severance Agreement, dated as of
___________________________, by and between the Company and such Executive (the
"Agreement"):
1. Section 1(g) of the Agreement is hereby amended by adding the word "or" after
clause (i) and deleting the phrase "or (iii) the Executive's attainment of age
65".
2. The foregoing amendment shall be effective as of the date of execution of
this Amendment No. 2.
IN WITNESS WHEREOF, the undersigned have caused this Amendment No. 2 to
be executed as of this 9th day of December, 1997.
XXXXXXXX DRUG STORES, INC.
By:
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Xxxx X. Xxxxxx
Vice President and General Counsel
The "Executive"
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