Document:

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                       MORGAN STANLEY SELECT EQUITY TRUST
            MORGAN STANLEY HIGH-TECHNOLOGY 35 INDEX PORTFOLIO 2001-3
                            REFERENCE TRUST AGREEMENT

     This Reference Trust Agreement dated June 19, 2001 between MORGAN STANLEY
DW INC., as Depositor, and The Bank of New York, as Trustee, sets forth certain
provisions in full and incorporates other provisions by reference to the
document entitled "Morgan Stanley Dean Witter Select Equity Trust, Trust
Indenture and Agreement" (the "Basic Agreement") dated September 30, 1993 as
amended on December 30, 1997. Such provisions as are incorporated by reference
constitute a single instrument (the "Indenture").

                                WITNESSETH THAT:

     In consideration of the premises and of the mutual agreements herein
contained, the Depositor and the Trustee agree as follows:

                                       I.

                     STANDARD TERMS AND CONDITIONS OF TRUST

     Subject to the provisions of Part II hereof, all the provisions contained
in the Basic Agreement are herein incorporated by reference in their entirety
and shall be deemed to be a part of this instrument as fully and to the same
extent as though said provisions had been set forth in full in this instrument
except that the Basic Agreement is hereby amended as follows:

     A. The first sentence of Section 2.01 is amended to add the following
language at the end of such sentence: "and/or cash (or a letter of credit in
lieu of cash) with instructions to the Trustee to purchase one or more of such
Securities which cash (or cash in an amount equal to the face amount of the
letter of credit), to the extent not used by the Trustee to purchase such
Securities within the 90-day period following the first deposit of Securities in
the Trust, shall be distributed to Unit Holders on the Distribution Date next
following such 90-day period or such earlier date as the Depositor and the
Trustee determine".

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                                      -2-

     B. Section 2.03 is amended to add the following to the end of the first
paragraph thereof. The number of Units may be increased through a split of the
Units of decreased through a reverse split thereof, as directed by the
Depositor, which revised number of Units shall be recorded by Trustee on its
books.

     C. The first sentence of Section 2.06 is amended to add the following
language after "Securities"))": "and/or cash (or a letter of credit in lieu of
cash) with instructions to the Trustee to purchase one or more Additional
Securities which cash (or cash in an amount equal to the face amount of the
letter of credit), to the extent not used by the Trustee to purchase such
Additional Securities within the 90-day period following the first deposit of
Securities in the Trust, shall be distributed to Unit Holders on the
Distribution Date next following such 90-day period or such earlier date as the
Depositor and the Trustee determine".

     D. Article III, entitled "Administration of Trust", Section 3.01 Initial
Cost shall be amended as follows:

     Section 3.01 Initial Cost shall be amended to substitute the following
language:

     SECTION 3.01. INITIAL COST The costs of organizing the Trust and sale of
the Trust Units shall, to the extent of the expenses reimbursable to the
Depositor provided below, be borne by the Unit Holders, PROVIDED, HOWEVER, that,
to the extent all of such costs are not borne by Unit Holders, the amount of
such costs not borne by Unit Holders shall be borne by the Depositor and,
PROVIDED FURTHER, HOWEVER, that the liability on the part of the Depositor under
this section shall not include any fees or other expenses incurred in connection
with the administration of the Trust subsequent to the deposit referred to in
Section 2.01. Upon notification from the Depositor that the primary offering
period is concluded, the Trustee shall withdraw from the Account or Accounts
specified in the Prospectus or, if no Account is therein specified, from the
Principal Account, and pay to the Depositor the Depositor's reimbursable
expenses of organizing the Trust and sale of the Trust Units in an amount
certified to the Trustee by the Depositor. If the balance of the Principal
Account is insufficient to make such withdrawal, the Trustee shall, as di-

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                                      -3-

rected by the Depositor, sell Securities identified by the Depositor, or
distribute to the Depositor Securities having a value, as determined under
Section 4.01 as of the date of distribution, sufficient for such reimbursement.
The reimbursement provided for in this section shall be for the account of the
Unitholders of record at the conclusion of the primary offering period and shall
not be reflected in the computation of the Unit Value prior thereto. As used
herein, the Depositor's reimbursable expenses of organizing the Trust and sale
of the Trust Units shall include the cost of the initial preparation and
typesetting of the registration statement, prospectuses (including preliminary
prospectuses), the indenture, and other documents relating to the Trust, SEC and
state blue sky registration fees, the cost of the initial valuation of the
portfolio and audit of the Trust, the initial fees and expenses of the Trustee,
and legal and other out-of-pocket expenses related thereto, but not including
the expenses incurred in the printing of preliminary prospectuses and
prospectuses, expenses incurred in the preparation and printing of brochures and
other advertising materials and any other selling expenses. Any cash which the
Depositor has identified as to be used for reimbursement of expenses pursuant to
this Section shall be reserved by the Trustee for such purpose and shall not be
subject to distribution or, unless the Depositor otherwise directs, used for
payment of redemptions in excess of the per-Unit amount allocable to Units
tendered for redemption.

     E. The third paragraph of Section 3.05 is hereby amended to add the
following sentence after the first sentence thereof: "Depositor may direct the
Trustee to invest the proceeds of any sale of Securities not required for the
redemption of Units in eligible money market instruments selected by the
Depositor which will include only negotiable certificates of deposit or time
deposits of domestic banks which are members of the Federal Deposit Insurance
Corporation and which have, together with their branches or subsidiaries, more
than $2 billion in total assets, except that certificates of deposit or time
deposits of smaller domestic banks may be held provided the deposit does not
exceed the insurance coverage on the instrument (which currently is $100,000),
and provided further that the Trust's aggregate holding of certificates of
deposit or time deposits issued by the Trustee may not ex-

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                                      -4-

ceed the insurance coverage of such obligations and U.S. Treasury notes or
bills (which shall be held until the maturity thereof) each of which matures
prior to the earlier of the next following Distribution Date or 90 days after
receipt, the principal thereof and interest thereon (to the extent such interest
is not used to pay Trust expenses) to be distributed on the earlier of the 90th
day after receipt or the next following Distribution Date."

     F. The first sentence of each of Sections 3.10, 3.11 and 3.12 is amended to
insert the following language at the beginning of such sentence, "Except as
otherwise provided in Section 3.13,".

     G. The following new Section 3.13 is added

     Section 3.13. EXTRAORDINARY EVENT-SECURITY RETENTION AND VOTING. In the
event the Trustee is notified of any action to be taken or proposed to be taken
by holders of the securities held by the Trust in connection with any proposed
merger, reorganization, spin-off, split-off or split-up by the issuer of stock
or securities held in the Trust, the Trustee shall take such action or refrain
from taking any action, as appropriate, so as to insure that the securities are
voted as closely as possible in the same manner and in the same general
proportion as are the securities held by owners other than the Trust. If stock
or securities are received by the Trustee, with or without cash, as a result of
any merger, reorganization, spin-off, split-off or split-up by the issuer of
stock or securities held in the Trust, the Trustee at the direction of the
Depositor may retain such stock or securities in the Trust. Neither the
Depositor nor the Trustee shall be liable to any person for any action or
failure to take action with respect to this section.

     H. Section 1.01 is amended to add the following definition: (9) "Deferred
Sales Charge" shall mean any deferred sales charge payable in accordance with
the provisions of Section 3.14 hereof, as set forth in the prospectus for a
Trust. Definitions following this definition (9) shall be renumbered.

     I. Section 3.05 is hereby amended to add the following paragraph after the
end thereof: On each Deferred Sales Charge payment date set forth in the
prospectus for

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                                      -5-

a Trust, the Trustee shall pay the account created pursuant to Section 3.14 the
amount of the Deferred Sales Charge payable on each such date as stated in the
prospectus for a Trust. Such amount shall be withdrawn from the Principal
Account from the amounts therein designated for such purpose.

     J. Section 3.06B(3) shall be amended by adding the following: "and any
Deferred Sales Charge paid".

     K. Section 3.08 shall be amended by adding the following at the end
thereof: "In order to pay the Deferred Sales Charge, the Trustee shall sell or
liquidate an amount of Securities at such time and from time to time and in such
manner as the Depositor shall direct such that the proceeds of such sale or
liquidation shall equal the amount required to be paid to the Depositor pursuant
to the Deferred Sales Charge program as set forth in the prospectus for a Trust.

     L. Section 3.14 shall be added as follows:

     Section 3.14. Deferred Sales Charge. If the prospectus for a Trust
specifies a Deferred Sales Charge, the Trustee shall, on the dates specified in
and as permitted by the prospectus, withdraw from the Income Account if such
account is designated in the prospectus as the source of the payments of the
Deferred Sales Charge, or to the extent funds are not available in that account
or if such account is not so designated, from the Principal Account, an amount
per Unit specified in the prospectus and credit such amount to a special,
non-Trust account maintained at the Trustee out of which the Deferred Sales
Charge will be distributed to the Depositor. If the Income Account is not
designated as the source of the Deferred Sales Charge payment or if the balances
in the Income and Principal Accounts are insufficient to make any such
withdrawal, the Trustee shall, as directed by the Depositor, either advance
funds, if so agreed to by the Trustee, in an amount equal to the proposed
withdrawal and be entitled to reimbursement of such advance upon the deposit of
additional monies in the Income Account or the Principal Account, sell
Securities and credit the proceeds thereof to such special Depositor's account
or credit Securities in kind to such special Depositor's Account. Such
directions shall identify the Securities, if any, to be

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                                      -6-

sold or distributed in kind and shall contain, if the Trustee is directed by the
Depositor to sell a Security, instructions as to execution of such sales. If a
Unit Holder redeems Units prior to full payment of the Deferred Sales Charge,
the Trustee shall, if so provided in the prospectus, on the Redemption Date,
withhold from the Redemption Price payment to such Unit Holder an amount equal
to the unpaid portion of the Deferred Sales Charge and distribute such amount to
such special Depositor's account or, if the Depositor shall purchase such Unit
pursuant to the terms of Section 5.02 hereof, the Depositor shall pay the
Redemption Price for such Unit less the unpaid portion of the Deferred Sales
Charge. The Depositor may at any time instruct the Trustee to distribute to the
Depositor cash or Securities previously credited to the special Depositor's
account.

     M. Reference to "Morgan Stanley Dean Witter Select Equity Trust" is
replaced by "Morgan Stanley Select Equity Trust".

     N. Reference to "Dean Witter Reynolds Inc." is replaced by "Morgan Stanley
DW Inc."

     O. Section 2.03 is amended to add the following to the end of the first
paragraph thereof. The number of Units may be increased through a split of the
Units of decreased through a reverse split thereof, as directed by the
Depositor, which revised number of Units shall be recorded by Trustee on its
books.

                                      II.

                      SPECIAL TERMS AND CONDITIONS OF TRUST

     The following special terms and conditions are hereby agreed to:

     A. The Trust is denominated Morgan Stanley Select Equity Trust Morgan
Stanley High-Technology 35 Index Portfolio 2001-3 (the "High-Tech Trust").

     B. The publicly traded stocks listed in Schedule A hereto are those which,
subject to the terms of this Indenture, have been or are to be deposited in
trust under this Indenture.

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                                      -7-

     C. The term, "Depositor" shall mean Morgan Stanley DW Inc.

     D. The aggregate number of Units referred to in Sections 2.03 and 9.01 of
the Basic Agreement is 24,659 for the High-Tech Trust.

     E. A Unit is hereby declared initially equal to 1/24,659th for the
High-Tech Trust.

     F. The term "In-Kind Distribution Date" shall mean August 27, 2002.

     G. The term "Record Dates" shall mean March 1, 2002, and
September 25, 2002 and such other date as the Depositor may direct.

     H. The term "Distribution Dates shall mean March 15, 2002 and on or about
October 2, 2002 and such other date as the Depositor may direct.

     I. The term "Termination Date" shall mean September 25, 2002.

     J. The Depositor's Annual Portfolio Supervision Fee shall be a maximum of
$0.25 per 100 Units.

     K. The Trustee's Annual Fee as defined in Section 6.04 of the Indenture
shall be $0.72 per 100 Units.

     L. For a Unit Holder to receive an "in-kind" distribution during the life
of the Trust, such Unit Holder must tender at least 25,000 Units for redemption.
There is no minimum amount of Units that a Unit Holder must tender in order to
receive an "in-kind" distribution on the In-Kind Date or in connection with a
rollover.

     M. The Indenture is amended to provide that the period during which the
Trustee shall liquidate the Trust Securities shall not exceed 20 business days
commencing on the first business day following the In-Kind Date.

               (Signatures and acknowledgments on separate pages)

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                                      -8-

     The Schedule of Portfolio Securities in the prospectus included in this
Registration Statement is hereby incorporated by reference herein as Schedule A
hereto.<PAGE>

                                                                    EXHIBIT 10.1

                              PATHMARK STORES, INC.
                                200 MILIK STREET
                           CARTERET, NEW JERSEY 07008

March 29, 2001

Mr. James L. Donald
200 Milik Street
Carteret, NJ 07008

                    RESTATED AND AMENDED EMPLOYMENT AGREEMENT

Dear Mr. Donald:

                  The following sets forth the agreement between Pathmark
Stores, Inc. (the "COMPANY") and you regarding the terms and provisions of your
employment as a director, officer and employee of the Company during the Term,
as restated as of September 19, 2000 (the "AGREEMENT"). Capitalized words which
are not otherwise defined herein shall have the meanings assigned to such words
in Section 7 of this Agreement. The parties hereto acknowledge and agree that
this Agreement is intended to amend, restate and supercede in its entirety the
employment agreement signed by you on November 6, 1996, as amended May 9, 1999
and July 1, 2000. The parties hereto further acknowledge that this Agreement and
the Sale and Retention Bonus Agreement dated February 1, 2000, as amended on
July 1, 2000, set forth the full and complete understanding between such parties
regarding your employment by the Company and shall supercede all other
agreements, whether written or oral, between the parties.

                  1. TERM OF EMPLOYMENT UNDER THE AGREEMENT. The Term of your
employment under this Agreement (the "TERM") shall commence on October 8, 1996
(the "EFFECTIVE DATE") and shall continue until October 8, 2005. 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 the Chairman, President and Chief Executive Officer of the Company
and shall report directly to the Board of Directors of the Company (the
"BOARD"), and your duties and responsibilities to the Company shall be
consistent in all respects with such positions. During the Term, the Company
will take all reasonable steps to assure that you continue to be elected or
appointed to the Board. You shall devote substantially all of your business
time, attention, skills and efforts exclusively to the business and affairs 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 as established from time to time, although you understand and agree
that you will be required to travel from time to time for business purposes.

<PAGE>

                  3.       Compensation During the Term.

                  (a) BASE 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 (i) $600,000 per annum through the first quarter of Fiscal 2001,
and (ii) $700,000 per annum thereafter, which will be reviewed annually by the
Board and may be increased but not decreased by the Board on the basis of such
review. Your Salary will be paid to you in accordance with the Company's regular
payroll practices applicable to its executive officers.

                  (b) ANNUAL BONUS. During the Term, you shall be eligible to
participate in the Company's Executive Incentive Plan (the "EIP"). Under the
EIP, for each full twelve-month Fiscal Year occurring during the Term, you will
be eligible to earn an annual bonus (the "ANNUAL BONUS") of up to 125% of your
Salary paid (including deferrals pursuant to subparagraph 3(c)(i) hereof) to you
on account of such Fiscal Year, based on targets set by the Compensation
Committee of the Board for your Annual Bonus for such Fiscal Year. The target
for your Annual Bonus for any partial Fiscal Year occurring during the Term
shall be prorated by multiplying the target by a fraction (not greater than
one), the numerator of which shall be the number of days in such Fiscal Year
occurring during the Term and the denominator of which shall be 365.
Notwithstanding the foregoing, the minimum Annual Bonus paid to you for the
partial Fiscal Year that includes the Effective Date shall be $175,000 and the
minimum annual bonus for the first full Fiscal Year during the Term shall be
$425,000. Annual Bonus payments for each of the remaining full Fiscal Years
during the Term will not be less than 25% of the Salary paid to you for such
Fiscal Year. 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) DEFERRAL ARRANGEMENT. (i) RIGHT TO DEFER. You will be
permitted to defer some or all the Annual Bonus and up to 50% of the Salary
payable to you hereunder. Any deferral of an Annual Bonus shall be irrevocable
and must be requested by you in writing prior to the start of the Fiscal Year to
which such Annual Bonus relates (except that any deferral election for the
Fiscal Year that includes the Effective Date may be made within thirty (30) days
following the Effective Date). Any deferral of Salary shall be irrevocable and
must be requested by you in writing prior to the start of the calendar year to
which such Salary relates (except that the deferral election for the calendar
year that includes the Effective Date may be made within thirty (30) days
following the Effective Date, but will relate only to amounts payable after the
election is received by the Company). An election for a given Fiscal Year or
calendar year shall be deemed a continuing election for each subsequent Fiscal
Year or calendar year, as the case may be, unless a subsequent election to defer
(or not to defer) is provided to the Company by you prior to the start of such
Fiscal Year or calendar year.

                  (ii) BOOKKEEPING ACCOUNT AND GRANTOR TRUST. Any amounts
deferred by you hereunder will be credited to a bookkeeping account established
on the books and records of the Company for this purpose. In addition, the
Company will deposit in a separate, irrevocable grantor trust established by the
Company an amount in cash equal to the amounts deferred by you. Such amounts
will be deposited in the trust within thirty (30) days following the date such
amount would otherwise have been payable to you but for the deferral election.
In connection with the deferral election, you shall have the right to specify
general investment categories for the investment of the amounts deposited in the
trust, and the Company shall cause the trustee to invest the assets of the trust
in one or more publicly-traded mutual funds, government securities,

<PAGE>

or other similar investment vehicles corresponding to the investment categories
selected by you. Thereafter the value of your account with the Company will be
adjusted to reflect income, gains and losses on the assets of the trust. The
parties hereto agree that to the extent that any investment vehicle that you
select results in a loss to the bookkeeping account, the Company will have no
obligation to compensate you for such loss or to make any compensatory
adjustment to the bookkeeping account to make up for such loss.

                  (iii) DISTRIBUTIONS. The timing of the payment of all amounts
deferred by you shall be specified in your initial deferral election and may not
be subsequently changed by you without the prior written approval of the Board.
Your initial deferral may specify a lump sum payment or up to five (5) annual
installment payments to be paid out in their entirety by no later than the sixth
anniversary of the Date of Termination; PROVIDED, HOWEVER, that, notwithstanding
your deferral election, all amounts will be paid to you within thirty (30) days
following a Change in Control or the date of your Involuntary Termination.

                  (d) 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. In addition, the Company will provide you with (i) a company
car and (ii) $4.5 million in term life insurance during the first twelve (12)
months of the Term and $3.2 million of life insurance thereafter during the
Term, subject to your insurability. In the event that such life insurance is not
available to the Company, you will be provided with an alternative arrangement
which will provide amounts equal to the benefits contemplated herein, the
details of which will be negotiated between you and the Company in good faith.
The Company will also provide you with relocation benefits in accordance with
its current policies for executive employees; PROVIDED, HOWEVER, that the
Company will have no obligation to purchase your current residence.

                  (e) 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.

                  (a) INVOLUNTARY TERMINATION. (i) Subject to Sections 4(f) and
4(g) below, in the event of your Involuntary Termination, the Company shall pay
you (w) the full amount of the accrued but unpaid Salary you have earned through
the date of such Involuntary 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 Involuntary Termination; (x) 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; (y) any unpaid reimbursement for
business expenses you are entitled to receive under Section 3(e) above; and (z)
a Severance Amount equal to four times your annual rate of Salary, based upon
the annual rate then in effect immediately prior to the Date of Termination,
payable in monthly installments over the Severance Period.

<PAGE>

                  (ii) In the event of your Involuntary Termination, you and
your eligible dependents shall continue to be eligible to participate during the
Benefit Continuation Period in the medical, dental, health and life 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.

                  (iii) Except as otherwise provided in this Section 4(a) or 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) TERMINATION EVENT. In the event your employment ends at
any time during the Term as a result of a Termination Event, 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(e) 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. In
addition, 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 during the Term, the Company shall
pay you (or, in the event of your death, your Beneficiary) 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(e) 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.

                  (d) RESIGNATION AFTER A CHANGE IN CONTROL. During the
thirty-day period beginning six (6) months after a Change in Control, you shall
be eligible to resign from the Company for no stated reason and receive the
Severance Amounts, benefits and consideration described in Section 4(a) above.
Any such resignation by you in such thirty-day period following a Change in
Control shall be treated as an Involuntary Termination for all purposes of this
Agreement.

                  (e) 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

<PAGE>

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 (30) 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);
and (iii) if your employment is terminated by the Company for Cause, the later
of (x) the date specified in the Notice of Termination and (y) 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. If the basis for your Involuntary
Termination is your resignation for Good Reason (which shall include your
resignation for any reason or no stated reason after a Change in Control
pursuant to Section 4(d) above), the Date of Termination shall be the later of
(x) the date specified in the Notice of Termination and (y) 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 (it being
understood that no cure period shall apply if your resignation is pursuant to
Section 4(d) above). The Date of Termination for a resignation of employment
other than for Good Reason shall be the date set forth in the applicable notice,
which shall be no earlier than thirty (30) days after the date such notice is
received by the Company. The Date of Termination in the event of your death
shall be the date of your death.

                  (f) MITIGATION. You will have no duty to mitigate the
Severance Amount. Notwithstanding the previous sentence, any Severance Amount
payable during the second year of the Severance Period will be reduced by any
compensation or benefits you earn in connection with any employment by another
employer during the second year of the Severance Period. You agree promptly to
provide the Company with any evidence of amounts received in connection with
such other employment which the Company shall reasonably request.

                  (g) BREACH OF PROTECTIVE COVENANTS. If, following the
Effective Date, you breach any of the provisions of Section 5(a), 5(b) or 5(c)
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
hereunder shall thereupon cease.

                  (h) D&O LIABILITY INSURANCE. As of the Plan Effective Date,
the Company shall purchase a six-year "tail" on its directors and liability
insurance policy.

                  5.  Protective Covenants.

                  (a) NO COMPETING EMPLOYMENT. During the Restricted Period, you
shall not, without the prior written consent of the Board, directly or
indirectly, whether as owner, consultant, employee, partner, venturer, or agent,
through stock ownership, investment of capital, lending of money or property,
rendering of services, or otherwise (except ownership of less than 5% of the
number of shares outstanding of any securities which are publicly traded),
compete with the retail supermarket 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 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

<PAGE>

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 5% ownership of
publicly traded securities. The restrictions imposed by this Section 5(a) shall
not apply to any geographic area in which the Company, its parent or its
subsidiaries are not engaged in the Business at the Date of Termination.

                  (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.

                  (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 and the
Severance Period.

                  (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 5 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 obtain a temporary

<PAGE>

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, including, without limitation, as a result of a Change in
Control or by operation of law.

                  7.  DEFINITIONS. For purposes of this Agreement, the following
capitalized words shall have the meanings set forth below:

                  "AFFILIATE" means, with respect to any Person, any other
entity which (i) is a Subsidiary of such Person, (ii) is, directly or
indirectly, under common control with such Person, or (iii) is, directly or
indirectly, controlling such Person.

                  "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.

                  "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 (i) the end of the Severance Period, (ii)
the date you are eligible to be covered under the benefit plans of a subsequent
employer and (iii) the date of your breach of any provision of Section 5 hereof.

                  "CAUSE" shall mean the termination of your employment with the
Company because of (i) 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 (30) days of such notice, (ii) your conviction of a felony or your plea
of no contest to a felony, or (iii) perpetration by you of a material dishonest
act or fraud against the Company or any parent or subsidiary thereof; PROVIDED,
HOWEVER, that, before the Company may terminate you for Cause, the Board shall
deliver to you a written notice of the Company's intent to terminate you for
Cause, including the reasons for such termination, and the Company must

<PAGE>

provide you, and your legal counsel, an opportunity to meet once with the Board
prior to such termination.

                  A "CHANGE IN CONTROL" shall be deemed to have occurred on or
after the Plan Effective Date on the date that any of the following shall have
occurred:

                  (i) the acquisition by any Person of beneficial ownership
         (within the meaning of Rule 13d-3 promulgated under the Exchange Act of
         35% or more of the Common Stock then outstanding, and the individuals
         who, as of the Plan Effective Date, constitute the Board and
         subsequently elected members of the Board whose election is approved or
         recommended by at least a majority of such current members or their
         successors whose election was so approved or recommended (other than
         any subsequently elected members whose initial assumption of office
         occurs as a result of an actual or threatened election contest with
         respect to the election or removal of directors or other actual or
         threatened solicitation of proxies or consents by or on behalf of a
         Person other than the Board) cease for any reason to constitute at
         least a majority of such Board; PROVIDED, HOWEVER, that in no event
         shall a Change in Control be deemed to have occurred upon any such
         acquisition by (A) any employee benefit plan of the Company, (B) any
         Person or entity organized, appointed or established by the Company for
         or pursuant to the terms of any such employee benefit plan, or (C) any
         Person (other than any of Fidelity Management & Research Company or
         Fidelity Management Trust Company or by any fund or account associated
         with either Fidelity Management & Research Company or Fidelity
         Management Trust Company) who as of the Plan Effective Date was the
         beneficial owner of 15% or more of the shares of Common Stock
         outstanding on such date unless and until such Person, together with
         all Affiliates of such Person, becomes the beneficial owner of 35% or
         more of the shares of Common Stock then outstanding whereupon a Change
         in Control shall be deemed to have occurred;

                  (ii) the Company enters into a binding agreement with one or
         more Persons to directly acquire, in exchange for cash, stock, claims
         or property, 50% or more of the aggregate equity securities of the
         Company; or

                  (iii) the Company enters into a binding agreement providing
         for a merger, consolidation, reorganization or other business
         combination upon consummation of which one or more Persons would own or
         control 50% or more of either (A) the aggregate voting securities of
         the Company, or (B) the aggregate value of the assets of the Company.

                  "COMMON STOCK" shall mean common stock of the Company.

                  "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.

                  "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.

<PAGE>

                  "GOOD REASON" shall mean your resignation because of (i) the
failure of the Company to pay any material amount of compensation to you when
due, (ii) a material, adverse reduction or material, adverse diminution in your
titles, duties, positions or responsibilities with the Company, including, but
not limited to, failure by the Company to elect you to the office of Chief
Executive Officer, or (iii) any other material breach by the Company of the
Agreement (including a rejection or termination of the Agreement by the Company
pursuant to any provision or section of the federal bankruptcy laws of the
United States). In order to constitute Good Reason, you must provide written
notification of your intention to resign within thirty (30) business 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 fifteen (15)
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.

                  "INVOLUNTARY TERMINATION" shall mean (i) your termination of
employment by the Company other than for Cause or Disability or (ii) your
resignation of employment with the Company for Good Reason.

                  "PERSON" shall mean any person, entity or "group" within the
meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, except that
such term shall not include (i) the Company or any of its subsidiaries, (ii) a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any of its subsidiaries, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) an entity owned,
directly or indirectly, by the shareholders of the Company in substantially the
same proportions as their ownership of stock of the Company.

                  "PLAN EFFECTIVE DATE" shall mean September 19, 2000, the
effective date of the judicial consent to the Joint Prepackaged Chapter 11 Plan
of Reorganization.

                  "RESTRICTED PERIOD" shall mean the period beginning on the
Effective Date and ending on the second anniversary of the Date of Termination;
PROVIDED, HOWEVER, that, in the event of a Change in Control, the Restricted
Period shall end upon the later to occur of (i) the Termination Date and (ii)
the date of the Change in Control.

                  "SEVERANCE AMOUNT" shall mean the cash amounts payable under
Section 4(a)(i)(z).

                  "SEVERANCE PERIOD" shall mean, in the event of an Involuntary
Termination, the 24-month period commencing on the Date of Termination.

                  "SUBSIDIARY" shall mean with respect to any Person, any entity
of which:

         (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time of
determination owned or controlled, directly or indirectly, collectively or
individually, by such Person or by one or more Affiliates of such Person, and

<PAGE>

                  (ii) if a partnership, association, limited liability company
         or other entity, a majority of the partnership, membership or other
         similar ownership interest thereof is at the time of determination
         owned or controlled, directly or indirectly, collectively or
         individually, by such Person or by one or more Affiliates of such
         Person.

                  "TERM SHEET" shall mean the initial agreement to the terms of
employment between the Company and you, dated as of October 2, 1996.

                  "TERMINATION EVENT" shall mean your resignation without Good
Reason or a termination by the Company for Cause.

                  8. 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 Corporate Secretary, Pathmark Stores, Inc., 200
Milik Street, Carteret, New Jersey 07008., telecopier: (732) 499-3460, with a
copy to the General Counsel of the Company, 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.

                  9.  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.

                  (b) AMENDMENTS, WAIVERS, ETC. 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, including,
without limitation, the Term Sheet.

                  (c) VALIDITY. 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.

                  (d) REPRESENTATION. You hereby represent and warrant to the
Company that the execution and delivery by you of this Agreement to the Company
will not breach the terms of any contract, agreement or understanding to which
you are a party. You further acknowledge

<PAGE>

and agree that a breach of this representation by you shall render this
Agreement void AB INITIO and of no further force and effect.

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

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

                  (g) SOURCE OF PAYMENTS. All payments provided under this
Agreement (other than payments made pursuant to a plan which provides otherwise
or as otherwise expressly provided hereunder) shall be paid in cash from the
general funds of the Company, and no special or separate fund shall be
established, and no other segregation of assets made, to assure payment. You
will have no right, title or interest whatsoever in or to any investments which
the Company may make to aid it in meeting its obligations hereunder. To the
extent that any person acquires a right to receive payments from the Company
hereunder, such right shall be no greater than the right of an unsecured
creditor of the Company.

                  (h) 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.

                  (i) 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.

                  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/ Marc A. Strassler
                                             -------------------------
                                           Name:    Marc A. Strassler
                                           Title:   Senior Vice President

Acknowledged and Agreed as of this 29th day of March, 2001

/s/ James L. Donald
-------------------
James L. Donald

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