Exhibit 10.46



Exhibit 10.46


TRANSITION
AGREEMENT


THIS TRANSITION AGREEMENT, dated March 27, 2006,
(the “Agreement”), by and between Pathmark Stores, Inc., a Delaware corporation
(the “Company”) and Harvey M. Gutman (the “Executive”).


WHEREAS, the Company and the Executive are parties to a
certain Employment Agreement, dated as of February 1, 1999, as amended by the First Amendment to Employment
Agreement dated April 15, 1999, and by the Side Letter to the Sale and Retention Bonus Agreement, the
Employment Agreement and Certain Additional Understandings dated July 1, 2000 (the “Employment
Agreement”);


WHEREAS, the Executive has elected to retire from the
employ of the Company in accordance with the Pathmark Stores, Inc. Retirement Incentive Program offering
December 9, 2005 to January 23, 2006 (the “Program”, a copy of which is attached hereto as Schedule
A);


WHEREAS, Executive has executed
the waiver and release of claims attached to the Program (the “Release”);


WHEREAS, the Executive
has agreed, at the request of the Company, to remain in his current position
actively employed with the Company until April 8, 2006 (the “Retirement
Date”).


NOW, THEREFORE, in
consideration of the covenants and agreements hereinafter set forth in this
Agreement, the parties hereto hereby agree as follows:


1.  Retirement.  The
Executive  has  elected  to retire  pursuant  to the  Program,  effective  as of the
Retirement  Date.  Executive  agrees to remain  actively  employed with the Company until
the Retirement  Date.  The Employment Agreement shall terminate on the Retirement Date.


2.  Salary and Bonus.  In
consideration  of the covenants  set forth herein and the Release,  the Company  shall
provide the Executive the following:


(a)  Salary.
The Company  shall  continue  to pay  Executive  at his  current  weekly rate of pay
through the Retirement Date in accordance with the Employment Agreement.


(b)  Treatment
of Equity-Based Compensation.


	 	(i)
The  Stock Options previously awarded to Executive under the 2000 Employee Equity  Plan
(together with the individual award agreements applicable to  Executive’s awards,
(the “Equity  Plan”)), as  listed on Schedule B hereto (the “Stock
Options), which vested prior  to the date hereof, shall remain exercisable in
accordance with the terms of the  Equity Plan until the second anniversary of the
Retirement Date.






 


	 	(ii)
Stock Options granted on June 9, 2005 (the “June Grant”), as  listed on
Schedule B, will be treated as follows:






	 	If
Executive  remains actively employed through the Retirement Date, 50% of the June Grant
will vest on  June 9, 2006 and the remainder of the June Grant will be forfeited
immediately. The June  Grant (to the extent vested) shall remain exercisable in
accordance with the terms of the  Equity Plan until the second anniversary of the
Retirement Date.






	 	(iii)
In the event of any merger, sale or consolidation of the Company or other  transaction
affecting the Company’s Common Stock, the Compensation  Committee of the Company’s
Board of Directors, in its sole discretion and  without Executive’s consent, may
provide for:






	 	(A)
the  continuation  of the Stock  Options by the  Company (if the Company is  the
surviving corporation);






	 	(B)
the assumption of the Stock Options by the surviving corporation; and






	 	(C)
the substitution by the surviving corporation of stock option(s) with  substantially the
same terms for the outstanding Stock Options; or the  cancellation of the Stock Options
upon payment to Executive of a per share  amount in cash or cash equivalents equal to (A) the
highest price paid for  a share of the Company’s Common Stock in such merger, sale,
consolidation  or other transaction, minus (B) the exercise price of the applicable
Stock  Option.






	 	(iv)
Restricted Stock Units (“Stock Awards”) granted on June 9,  2005, as
listed on Schedule B, will be treated as follows:






	 	If
Executive  remains actively employed through the Retirement Date, 50% of the Stock Awards
will vest  on June 9, 2006 and the remainder will be forfeited immediately.






	 	(v)
Stock Awards shall be settled in accordance with the terms and provisions of the  Equity
Plan.






(c)
Pension/401(k) Plan. The Executive’s participation in the
Company’s Savings Plan, Pension Plan and Excess Benefit Plan and the
Supplemental Retirement Agreement, dated as of June 1, 1994, as amended by
Amendment No. 1, between the Company and the Executive (collectively
the “Retirement Plans”) shall terminate on the Retirement
Date. The Executive’s rights and obligations under the Retirement Plans
shall be governed by applicable law and the terms and conditions of the
Retirement Plans, as the same may be amended as provided in Section 5(c) hereof.


(d)
Bonus. In the event the Company implements a quarterly bonus plan for
2006, Executive will participate as a Senior Vice President in said plan with
respect to the first quarter of 2006 if Executive remains actively employed
through the Retirement Date.


(e)
Accrued Vacation. The Executive shall continue to accrue vacation through
the Retirement Date in accordance with Company policy. Unused vacation at the
Retirement Date will be paid to Executive promptly thereafter.


(f)
No Other Compensation or Benefits. The Executive shall not be entitled to
any compensation or benefits or to participate in any past, present or future
employee benefit programs or arrangements of the Company (including, without
limitation, any compensation or benefits under any severance plan, program or
arrangement) on or after the Retirement Date. Notwithstanding the foregoing, the
Executive shall be entitled to the payments and benefits included in the
Program.



 



3. Return of
Property. On or prior to the Retirement Date, the Executive (except as
otherwise provided in the Consulting Agreement, as hereinafter defined) will
surrender to the Company all property of the Company in the Executive’s
possession and all property made available to the Executive in connection with
his employment by the Company, including, without limitation, the Company car,
any and all Company access and credit cards, keys, records, manuals, customer
lists, notebooks, telephones and other hand-held devices, computers, computer
programs and files, papers, electronically stored information and documents kept
or made by the Executive in connection with his employment. The Executive shall
delete all electronically stored information and documents relating to the
Company kept or made by the Executive in connection with his employment that
were stored on his personal computer and laptop.


4. Cooperation.
From and after the date hereof until the first anniversary of the termination or
expiration of the Consulting Agreement (as hereinafter defined), the Executive
shall cooperate in all reasonable respects with the Company and its respective
directors, officers, attorneys and experts in connection with the conduct of any
action, proceeding, investigation or litigation involving the Company, including
any such action, proceeding, investigation or litigation in which the Executive
is called to testify. The Company agrees to reimburse the Executive for all
reasonable out-of-pocket expenses incurred by the Executive in connection with
such cooperation.


5.  Miscellaneous.


(a)
Entire Agreement. Except as set forth in the last sentence of this
Subsection (a) of Section 5, this Agreement and the Release set forth the entire
agreement and understanding of the parties hereto with respect to the matters
covered hereby and supersedes and replaces any express or implied, written or
oral, prior agreement, plan or arrangement with respect to the terms of the
Executive’s employment and the termination thereof which the Executive may
have had with the Company including the Employment Agreement, but excluding the
Program, the Retirement Plans and, with respect to the awards listed on Schedule
B, the Equity Plan. This Agreement may be amended only by a written document
signed by the parties hereto.


(b)
Withholding Taxes. Any payments made or benefits provided to the
Executive under this Agreement shall be reduced by the lowest applicable
withholding taxes.


(c)
Section 409A. If any provision of this Agreement contravenes Section 409A
of the Code, the regulations promulgated thereunder or any related guidance
issued by the U.S. Treasury Department, this Agreement shall be reformed to
maintain to the maximum extent practicable the original intent of the provision
without violating the requirements of Section 409A of the Code. In addition, if
the Company shall, with respect to any other employee of the Company, amend any
nonqualified deferred compensation plan (as defined in Section 409A(d) of the
Code) to comply with or to conform to the provisions of Section 409A of the
Code, the Company shall similarly amend any comparable such plan with respect to
the Executive.



 



(d)
Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New Jersey.


(e)
Waiver. The failure of any party to this Agreement to enforce any of its
terms, provisions or covenants shall not be construed as a waiver of the same or
of the right of such party to enforce the same. Waiver by any party hereto of
any breach or default by another party of any term or provision of this
Agreement shall not operate as a waiver of any other breach or default.


(f)
Severability. In the event that any one or more of the provisions of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remainder of the Agreement shall not in any
way be affected or impaired thereby. Moreover, if any one or more of the
provisions contained in this Agreement shall be held to be excessively broad as
to duration, activity or subject, such provisions shall be construed by limiting
and reducing them so as to be enforceable to the maximum extent allowed by
applicable law.


(g)
Notices. Any notices required or made pursuant to this Agreement shall be
in writing and shall be deemed to have been given when delivered by hand, sent
by telecopier or mailed by United States registered mail, return receipt
requested, postage prepaid, addressed to General Counsel, Pathmark Stores, Inc.,
200 Milik Street, Carteret, New Jersey 07008, telecopier: (732) 499-6891, or to
the Executive at his current address on the books and records of the Company, or
to such other address as either party may furnish to the other in writing in
accordance with this Section 5(g). Notices of change of address shall be
effective only upon receipt.


(h)
Descriptive Headings. The paragraph headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.


(i)  Counterparts.
This Agreement may be executed in one or more counterparts,  which,  together,  shall
constitute one and the same agreement.


(j)
Successors and Assigns. Except as otherwise provided herein, this
Agreement shall inure to the benefit of and be binding upon and enforceable by
and against the Executive and the Company and their respective successors and
assigns (and in the event of the Executive’s death, the Executive’s
heirs). The Company will require any successor (whether direct or indirect , by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business or assets of the Company expressly to assume and to agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place; provided,
however, that no such assumption shall relieve the Company of its
obligations hereunder.


6.  Consulting Agreement.
The Company and Executive agree to execute a Consulting Agreement in  substantially the
form of agreement attached hereto as Schedule C (the "Consulting Agreement"),
effective as  of April 10, 2006.




 



IN WITNESS WHEREOF, the
Company has executed this Agreement as of the date first set forth above and the
Executive has executed this Agreement as of the date set forth below (or, if the
Executive does not include a date under the Executive’s signature line, the
date set forth shall be the date this Agreement, signed by the Executive, is
received by the Company).


	 	 	PATHMARK STORES, INC.
 	 
	 	 	
     By: /s/ Frank G. Vitrano	 
	 	 	Name: Frank G. Vitrano
Title: President and Chief Financial Officer	 





THE EXECUTIVE HEREBY
ACKNOWLEDGES THAT THE EXECUTIVE HAS READ THIS AGREEMENT, THAT THE EXECUTIVE
FULLY KNOWS, UNDERSTANDS AND APPRECIATES ITS CONTENTS, AND THAT THE EXECUTIVE
HEREBY ENTERS INTO THIS AGREEMENT VOLUNTARILY AND OF HIS OWN FREE WILL.


ACCEPTED AND AGREED:


/s/ Harvey M. Gutman

Harvey M. Gutman



Date: March 27, 2006