Pathmark Stores, Inc. Form 8-K





Exhibit 10.2





Pathmark Stores, Inc.


December 12, 2002




Mr. Herbert Whitney

c/o Pathmark Stores, Inc.

200 Milik Street

Carteret, New Jersey 07008


Employment Agreement


Dear Art:


          The following sets forth the agreement between Pathmark
Stores, Inc. (the “Company”) and you regarding the terms and conditions
of your employment as an officer and employee of the Company during the Term.


          1. Term of Employment Under the Agreement. The
term of this Agreement (the “Term”) shall commence on December 1, 2002
(the “Effective Date”) and shall continue until the second anniversary of
the Effective Date; provided, however, that, commencing on December 1, 2003 and on
each successive December 1st thereafter (each a “Renewal
Date”), the Term shall automatically extend for one additional year, unless at
least thirty days prior to the next Renewal Date the Company has delivered to you or you
have delivered to the Company written notice of the desire not to extend the Term. For
purposes of this Agreement, “Fiscal Year” means the Company’s fiscal
year. Subject to the provisions of Section 4 below, either party may terminate your
employment under this Agreement at any time.


          2. Employment During the Term. During the Term,
you shall be employed as an Executive Vice President of the Company, and your duties and
responsibilities to the Company shall be consistent in all respects with such position. In
addition, pursuant to this Agreement, in the sole discretion of the Company and for no
additional consideration, you agree to serve as an officer of any subsidiary or parent
corporation of the Company. You shall devote substantially all of your business time,
attention, skills and efforts exclusively to the business of the Company, other than de
minimis amounts of time devoted by you to the management of your personal finances or
to engaging in charitable or community services. Your principal place of employment shall
be the executive offices of the Company, although you understand and agree that you will
be required to travel from time to time for business purposes.


          3. Compensation During the Term.







          (a) Salary. As compensation to you for all
services rendered to the Company, the Company will pay you a base salary (the
“Salary”) at the rate of $231,000 per annum, which will be reviewed
annually by the Chief Executive Officer of the Company and may be increased but not
decreased by the Board of Directors of the Company (the “Board”) or
a duly appointed committee of the Board (the “Committee”) on the basis of
the recommendation of the Chief Executive Officer. Hereinafter any reference to the Board
shall be interpreted to mean either the Board or, in the event that the Board has
delegated its authority or responsibility in such context to the Committee, the Committee.
Your Salary will be paid to you in accordance with the Company’s regular payroll
practices.


          (b) Annual Bonus. During the Term, you shall be
eligible to participate in the Company’s Executive Incentive Plan (the
“EIP”). Under the EIP, you will be eligible to earn an annual bonus (the
“Annual Bonus”) in an amount up to a maximum specified percentage of your
actual Salary earned during the applicable Fiscal Year (the “Maximum Bonus
Amount”), set by the Compensation Committee (the “Compensation
Committee”) of the Board in accordance with the terms of the EIP and based upon
targets set by the Compensation Committee, for your Annual Bonus for such Fiscal Year. The
Maximum Bonus Amount will be reviewed annually by the Board and may be increased but not
decreased pursuant to such review. The Maximum Bonus Amount for any partial Fiscal Year
occurring during the Term shall be prorated. The Annual Bonus earned by you for any Fiscal
Year will be paid to you within 120 days following the end of such Fiscal Year.


          (c) Benefits. During the Term, you shall be
eligible to participate in each pension, welfare and fringe benefit program made available
generally to executives of the Company in accordance with the terms and provisions of each
such program; provided, however, that the Company shall not be obligated to provide
any supplemental retirement plan or any similar arrangement to you.


          (d) Business Expenses. The Company will reimburse
you upon presentation by you of appropriate documentation for business expenses reasonably
incurred by you in connection with the performance of your duties under this Agreement.


          4. Effect of Termination of Employment.
Definitions of terms first used and not otherwise defined in this Section 4 are set forth
in Section 4(g).


          (a) Involuntary Termination. (i) Subject to 4(f)
below, in the event of your Involuntary Termination (as defined in Section 4(g) below)
during the Term, the Company shall pay you (A) the full amount of the accrued but unpaid
Salary you have earned through the Date of Termination (as defined in Section 4(d) below),
plus a cash payment (calculated on the basis of your rate of Salary then in effect) for
all unused vacation time which you may have accrued as of the Date of Termination; (B) the
amount of any earned but unpaid Annual Bonus for any Fiscal Year of the Company ended on
or prior to the Date of Termination; and (C) any unpaid reimbursement for business
expenses you are entitled to receive under Section 3(d) above.


          (ii) In the event of your Involuntary Termination during
the Term, the Company shall pay you a severance amount equal to your annual rate of
Salary, based on the annual rate then in effect immediately prior to such Involuntary
Termination, multiplied by two (the “Severance Amount”); provided,
however, that in no event shall the Severance Amount be greater than twice your annual
rate of Salary. The Severance Amount shall be payable in installments during the period
beginning on the Date of Termination and ending on the second anniversary thereof (the
“Severance Period”) in accordance with the Company’s ordinary
payroll practices.



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          (iii) In the event of your Involuntary Termination during
the Term, you and your eligible dependents shall continue to be eligible to participate
during the Benefit Continuation Period (as hereinafter defined) in the welfare benefit
plans, including medical, dental, health, life and similar insurance plans applicable to
you immediately prior to your Involuntary Termination on the same terms and conditions in
effect for you and your dependents immediately prior to such Involuntary Termination. For
purposes of this Agreement, “Benefit Continuation Period” shall mean, in
connection with your Involuntary Termination, the period beginning on the Date of
Termination and ending on the earliest to occur of (A) the end of the Severance Period,
(B) the date you are eligible to be covered under the benefit plans of a subsequent
employer, and (C) the date of your breach of any provision of Section 4 hereof.


          (iv) Except as otherwise provided in the provisions of
any employee benefit plan in which you are a participant, in the event of your Involuntary
Termination, as of the Date of Termination, you will relinquish the right to any
additional payments or benefits from the Company under this Agreement or otherwise.


          (b) Voluntary Resignation; Termination for Cause.
In the event your employment ends at any time during the Term as a result of your
resignation without Good Reason (as defined in Section 4(g) below) or a termination by the
Company for Cause (as defined in Section 4(g) below), the Company shall pay you the full
amount of the accrued but unpaid Salary you have earned through the Date of Termination,
plus a cash payment (calculated on the basis of your rate of Salary then in effect) for
all unused vacation time which you may have accrued as of the Date of Termination and any
unpaid reimbursement for business expenses you are entitled to receive under Section 3(d)
above. You shall immediately relinquish the right to any other payments or benefits from
the Company under this Agreement or otherwise, except with respect to any employee benefit
plan that provides otherwise.


          (c) Death or Disability. If your employment with
the Company ends as a result of your death or Disability (as defined in Section 4(g)
below) during the Term, the Company shall pay you (or, in the event of your death, your
Beneficiary (as hereinafter defined)) the full amount of the accrued but unpaid Salary you
have earned through the Date of Termination, plus a cash payment (calculated on the basis
of your rate of Salary then in effect) for all unused vacation time which you may have
accrued as of the Date of Termination and any unpaid reimbursement for business expenses
you are entitled to receive under Section 3(d) above. In addition, the Company shall pay
you the amount of any earned but unpaid Annual Bonus for any Fiscal Year of the Company
ended on or prior to the Date of Termination. Except as otherwise provided in this Section
4(c) or the provisions of any employee benefit plan in which you are a participant, as of
the Date of Termination, you will relinquish the right to any additional payments or
benefits from the Company under this Agreement or otherwise. For purposes of this
Agreement, “Beneficiary” shall mean the person or persons designated by
you in writing to receive any benefits payable to you hereunder in the event of your death
or, if no such persons are so designated, your estate. No Beneficiary designation shall be
effective unless it is in writing and received by the Company prior to the date of your
death.



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          (d) Date and Notice of Termination. Any
termination of your employment by the Company or by you during the Term shall be
communicated by a notice of termination to the other party hereto (the “Notice of
Termination”). The Notice of Termination shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of your employment under the
provision so indicated. The date of your termination of employment with the Company (the
“Date of Termination”) shall be determined as follows: (i) if your
employment is terminated for Disability, thirty days after a Notice of Termination is
given (provided that you shall not have returned to the full-time performance of your
duties during such thirty-day period); (ii) if your employment is terminated by the
Company in an Involuntary Termination, the date specified in the Notice of Termination (or
if no date is specified in the Notice of Termination, the date the Notice of Termination
is delivered to you); (iii) if your employment is terminated by the Company for Cause, the
later of (A) the date specified in the Notice of Termination and (B) the expiration of the
applicable period set forth in the definition of Cause during which you may effect a cure
or meet with the Board if such period expires without such cure being effected by you and
without a reversal on the part of the Board regarding its decision to terminate you for
Cause; (iv) if the basis for your Involuntary Termination is your resignation for Good
Reason, the Date of Termination shall be the later of (A) the date specified in the Notice
of Termination and (B) the expiration of the applicable cure period set forth in the
definition of Good Reason if such period expires without such cure being effected by the
Company; (v) in the event of your resignation of employment other than for Good Reason,
the Date of Termination shall be the date set forth in the Notice of Termination, which
shall be no earlier than thirty days after the date such notice is received by the
Company; and (vi) the Date of Termination in the event of your death shall be the date of
your death.


          (e) No Mitigation or Reduced Severance Amount. The
parties hereto acknowledge and agree that, in the event of your Involuntary Termination,
you will not be required to mitigate your damages by affirmatively seeking other
employment or to accept a reduced Severance Amount in the event that you obtain other
employment after such termination.


          (f) Breach of Protective Covenants. If, following
the Effective Date, you breach any of the provisions of Section 5 below, you shall not be
eligible, as of the date of such breach, for any Severance Amount, and all obligations of
the Company to pay any Severance Amount or Sale Severance Amount hereunder shall thereupon
cease.


          (g) Definitions. For purposes of this Agreement,
the following defined terms shall apply:



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          (i) “Cause” shall mean the termination of
your employment with the Company because of (A) your willful and repeated failure
(other than by reason of incapacity due to physical or mental illness) to perform the
material duties of your employment with the Company after notice from the Company of such
failure and your inability or unwillingness to correct such failure within thirty days of
such notice, (B) your conviction of a felony or your plea of no contest to a felony, (C)
perpetration by you of a material dishonest act or fraud against the Company or any parent
or subsidiary thereof or (D) any material breach by you of this Agreement, including, but
not limited to, any breach of the covenants set forth in Section 5 hereof.


          (ii) “Disability” shall mean your
absence from continuous full-time employment with the Company for a period of at least 180
consecutive days by reason of a mental or physical illness.


          (iii) “Good Reason” shall mean your
resignation because of (A) the failure of the Company to pay any material amount of
compensation to you when due, (B) any other material breach by the Company of the
Agreement, (C) receipt of notice by you pursuant to Section 1 hereof of the Company’s
decision not to extend the Term, (D) notice by the Company to you of the relocation of
your principal place of business to a location more than fifty miles from Carteret, New
Jersey unless you consent to such relocation, or (E) a material, adverse reduction or
diminution in your title, duties, positions or responsibilities with the Company. In order
to constitute Good Reason, you must provide written notification of your intention to
resign within sixty days after you know or have reason to know of the occurrence of any
such event. After you provide such written notice to the Company, the Company shall have
thirty days from the date of receipt of such notice to effect a cure of the condition
constituting Good Reason, and, upon cure thereof by the Company (which cure shall be
retroactive with respect to any monetary matter), such event shall no longer constitute
Good Reason.


          (iv) “Involuntary Termination”
shall mean either (A) your termination of employment by the Company other than for
Cause or Disability or (B) your resignation of employment with the Company for Good
Reason.


          5. Protective Covenants.


          (a) No Competing Employment. During the period
beginning on the Effective Date and ending on the later of (i) the last day of the Term,
or (ii) the last day of the Severance Period (the “Restricted Period”),
you shall not, without the prior written consent of the Board, directly or indirectly,
whether as owner, consultant, employee, partner, joint venturer, or agent, through stock
ownership, investment of capital, lending of money or property, rendering of services, or
otherwise (except ownership of less than 1% of the number of shares outstanding of any
securities which are publicly traded), compete with the retail supermarket or drugstore
business, or any other business contributing at least 15% of the consolidated revenues, of
the Company or any parent or subsidiary of the Company (such businesses are individually
and as a group hereinafter referred to as the “Business”), provide
services to, whether as an employee or consultant, own, manage, operate, control,
participate in or be connected with (as a stockholder, partner, or any similar ownership
interest) any corporation, firm, partnership, joint venture, sole proprietorship or other
entity which so competes with the Business, except for the aforementioned 1% ownership of
publicly traded securities. The restrictions imposed by this Section 5(a) shall not apply
to any state within the United States in which the Company, its parent or its subsidiaries
are not engaged in the Business and do not have an articulated plan to engage in the
Business in the future as of the Date of Termination. You understand and agree that the
rights and obligations set forth in this Section 5(a) may extend beyond the Term.




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          (b) No Solicitation of Employees and Certain Other
Persons. During the Restricted Period, you shall not, without the prior written
consent of the Board, directly or indirectly (i) solicit in competition with the Business
any person, group or class of persons who at any time either during the Term or during the
Restricted Period have any business relationship with the Business, the loss, diminution
or moderation of which would likely be detrimental to the Business; (ii) solicit or
recruit, directly or indirectly, any employee or independent contractor of the Company for
the purpose of being employed by you, directly or indirectly, or by any competitor of the
Company on behalf of which you are acting as an agent, representative or employee; (iii)
solicit, influence, or attempt to influence, for a purpose or in a manner that would
likely be materially detrimental to the Business, any provider of services or products to
the Business with respect to its relationship with the Business, including, without
limitation, any person or entity which has been a provider of services or products to the
Business during the Executive’s employment with the Company, or take any action
detrimental to the existing or prospective relationships between the Business and any
provider of services; or (iv) assist or encourage any other person in carrying out,
directly or indirectly, any activity that would be prohibited by the provisions of this
Section 5(b) if such activity were carried out by you, and, in particular, you agree that
you will not, directly or indirectly, induce any employee of the Business to carry out any
such activity. You understand and agree that the rights and obligations set forth in this
Section 5(b) may extend beyond the Term.


          (c) Confidentiality. You recognize that the
services you perform for the Company are special, unique and extraordinary in that you may
acquire confidential information and trade secrets concerning the operations of the
Company, its parent and its subsidiaries, the use or disclosure of which could cause the
Company substantial loss and damages which could not be readily calculated, and for which
no remedy at law would be adequate. Accordingly, you covenant and agree with the Company
that you will not at any time, except in performance of your obligations to the Company
hereunder or with the prior written consent of the Board, directly or indirectly, disclose
any secret or confidential information that you may learn by reason of your association
with the Company. The term “confidential information” includes, without
limitation, information not previously disclosed to the public or to the trade by the
Company’s management with respect to the Company or any of its parent’s or
subsidiaries’ business plans, prospects and opportunities, the identity of any
suppliers, proprietary information regarding customers, operational strengths and
weaknesses, trade secrets, know-how and other intellectual property, systems, procedures,
manuals, confidential reports, product price lists, marketing plans or strategies, and
financial information. You understand and agree that the rights and obligations set forth
in this Section 5(c) are perpetual and, in any case, shall extend beyond the Restricted
Period.



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          (d) Injunctive Relief. Without limiting the
remedies available to the Company, you acknowledge that a breach of any of the covenants
contained in this Section 6 may result in material irreparable injury to the Company for
which there is no adequate remedy at law, that it will not be possible to measure damages
for such injuries precisely and that, in the event of such a breach or threat thereof, the
Company shall be entitled to seek a temporary restraining order or a preliminary or
permanent injunction restraining you from engaging in activities prohibited by this
Section 5 or such other relief as may be required to specifically enforce any of the
covenants in this Section 5.


          6. Successors; Binding Agreement.


          (a) Assumption by Successor. 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.


          (b) Enforceability; Beneficiaries. This Agreement
shall be binding upon and inure to the benefit of you (and your personal representatives
and heirs) and the Company and any organization which succeeds to substantially all of the
business or assets of the Company, whether by means of merger, consolidation, acquisition
of all or substantially all of the assets of the Company or otherwise.


          7. Notice. For the purpose of this Agreement,
notices and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered by hand, sent by telecopier or
mailed by United States registered mail, return receipt requested, postage prepaid,
addressed to the Chief Executive Officer, Pathmark Stores, Inc., 200 Milik Street,
Carteret, New Jersey 07008, telecopier number (732) 499-3100, with a copy to the General
Counsel of the Company, telecopier number (732) 499-3460, or to you at the address set
forth on the first page of this Agreement or to such other address as either party may
have furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.


          8. Miscellaneous.


          (a) No Rights to Continued Employment. Neither
this Agreement nor any of the rights or benefits evidenced hereby shall confer upon you
any right to continuance of employment by the Company or interfere in any way with the
right of the Company to terminate your employment, subject to the provisions of Section 4
above, for any reason, with or without Cause.




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          (b) Amendments, Waivers, Superceding Agreement. No
provision of this Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing by the parties hereto. No waiver by
either party hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or
at any prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement, and this Agreement shall
supersede all prior agreements, negotiations, correspondence, undertakings and
communications of the parties, oral or written, with respect to the subject matter hereof.
Notwithstanding the previous sentence, this Agreement shall not supercede the Supplemental
Retirement Agreement dated October 4, 2001 between you and the Company.


          (c) Validity; Severability. The invalidity or
unenforceability of any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in full force
and effect. If the final determination of a court of competent jurisdiction or arbitrator
declares, after the expiration of the time within which judicial review (if permitted) of
such determination may be perfected, that any term or provision hereof is invalid or
unenforceable, (i) the remaining terms and provisions hereof shall be unimpaired and (ii)
the invalid or unenforceable term or provision shall be deemed replaced by a term or
provision that is valid and enforceable and that comes closest to expressing the intention
of the invalid or unenforceable term or provision.


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


          (e) Withholding. Amounts paid to you hereunder
shall be subject to all applicable federal, state and local wage withholdings.


          (f) Headings. The headings contained in this
Agreement are intended solely for convenience of reference and shall not affect the rights
of the parties to this Agreement.


          (g) Governing Law. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of the State
of New Jersey applicable to contracts entered into and performed in such state.




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          If this letter sets forth our agreement on the subject
matter hereof, kindly sign and return to the Company the enclosed copy of this letter,
which will then constitute our agreement on this subject.






Sincerely,



PATHMARK STORES, INC.



By: /s/ Eileen Scott

Name: Eileen Scott

Title: Chief Executive Officer




Agreed to as of this 12th day of December, 2002.



/s/ Herbert Whitney

Herbert Whitney



#29135-1







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