Exhibit 10.1
FIRST AMENDMENT TO
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This First Amendment to the
Amended and Restated Employment Agreement (the “First
Amendment”) is made this 22nd day of December, 2005 by and
between Pathmark Stores, Inc. (the “Company”) and Frank
G. Vitrano (the “Executive”) in consideration of the
mutual covenants herein contained and benefits to be derived
herefrom.
W I T N E S S E T
H:
WHEREAS, the Company and
Executive have entered into an Amended and Restated Employment
Agreement dated November 20, 2002 (the “Employment
Agreement”).
WHEREAS, the Company and
Executive have agreed to amend certain provisions of the Employment
Agreement as set forth herein.
NOW THEREFORE, it is hereby
agreed as follows:
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1.
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Definitions . All capitalized terms used herein and
otherwise defined shall have the same meaning herein as in the
Employment Agreement.
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2.
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Amendment to
Section 2 . The
provisions of Section 2 of the Employment Agreement are hereby
amended as follows:
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By deleting the first sentence of
said Section 2 in its entirety and substituting the following in
its stead:
“During the Term, you shall
be employed as Co-President and Chief Financial Officer of the
Company, and your duties and responsibilities to the Company shall
be consistent in all respects with such position.”
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3.
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Amendments
to Section 3 . The
provisions of Section 3 of the Employment Agreement are hereby
amended as follows:
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(a)
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by deleting
subsection (b) of Section 3 of the Employment Agreement in its
entirety and substituting the following in its stead:
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“(b) Annual Bonus .
During the Term, you shall be eligible to earn an annual bonus
(“Annual Bonus ”) pursuant to the
Company’s Executive Incentive Plan. For each full fiscal year
of the Company during the Term your target Annual Bonus shall equal
100% of your actual Annual Salary earned during the applicable
fiscal year. Annual Bonus targets and adjustments for performance
above and below the target will be reasonably set by the Board in
good faith after consultation with the Chief Executive Officer,
such matrix to provide that the Annual Bonus will increase above
the target of 100% for performance above target. Your target Annual
Bonus for each partial fiscal year during the Term shall be
prorated based on the number of days in such fiscal year occurring
during the Term (including any partial fiscal year ending at the
expiration of the Term due to a non-renewal by either party, in
which case the Annual Bonus shall be calculated based on
performance through the Date of Termination). The Annual Bonus for
each year, if earned, shall be paid to you in cash within 75 days
of the end of the applicable fiscal year.”
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(b)
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By deleting
subsection (c) of Section 3 of the Employment Agreement in its
entirety and substituting the following in its stead:
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“(c) Equity Awards .
The Company shall grant you the following equity awards (the
‘Equity Awards’):
“(i) On December 22, 2005
(the “ Grant Date ”), an award of stock options
under the 2000 Employee Equity Plan (the “Plan”) to
purchase 600,000 shares of the Company’s Common Stock
(“Common Stock”) at an exercise price equal to the Fair
Market Value of such Common Stock on the Grant Date, pursuant to
the terms of an award agreement in the form of Attachment A.;
and
(ii) On the Grant Date, an award
under the Plan of 100,000 restricted shares of Common Stock,
pursuant to the terms of an award agreement in the form of
Attachment B.”
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(c)
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By adding a new
subsection (f) of Section 3 of the Employment Agreement as
follows:
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“(f) Indemnification
. The Company shall (i) indemnify, defend and hold you
harmless, to the full extent permitted under applicable law, for,
from and against any and all losses, claims, costs, expenses,
damages, liabilities or actions (including security holder actions)
related to or arising out of your employment with and service as an
officer of the Company and/or its subsidiaries (including with
respect to the appointment of officers and other employees), and
(ii) pay as incurred all reasonable costs, expenses and
attorneys’ fees incurred by you in connection with or
relating to the defense of any such losses, claims, costs,
expenses, damages, liabilities or actions or the enforcement of any
indemnification right hereunder. You shall be entitled to coverage
under any director and officer liability insurance policies of the
Company to the extent of any other officer of the
Company.”
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4.
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Amendments
to Section 4 . The
provisions of Section 4 of the Employment Agreement are hereby
amended as follows:
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(a)
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By deleting
romanette (ii) of subsection (a) of Section 4 of the Employment
Agreement in its entirety and substituting the following in its
stead:
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“(ii) subject to your
execution of a general release of claims against the Company in the
form of Attachment C, an amount (the “ Severance
Amount ”) equal to (A) two times the sum of your
Salary plus your target Annual Bonus on the Date of Termination,
plus (B) a pro rata portion of your target Annual Bonus for
the applicable year (assuming for this purpose that you have met
all the necessary performance targets for such year at 100% of the
performance target) based upon the number of days occurring in such
year through and including the Date of Termination.
The Severance Amount shall be
payable in cash in 24 equal monthly installments commencing on the
date 30 days after the Date of Termination (such 24-month period
being referred to as the “Severance Period
”); provided that, to the extent required under
Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”) to avoid the imposition of additional tax under
that section to you, any payment of the Severance Amount shall
commence on the six-month anniversary of your separation from
service with the Company (or, if earlier, the date of your death)
and continue in equal monthly installments over the remainder of
the Severance Period; provided further that, to the extent
permitted under Section 409A of the Code without the imposition of
additional tax under that section to you, the Severance Amount
shall be paid (A) in an immediate lump-sum in the event such
Involuntary Termination occurs on or after a Change in Control or
(B) in an immediate lump sum at the time of a Change in
Control (less any amounts previously paid to you) in the event that
your Involuntary Termination occurs within six months prior to a
Change in Control. The Company agrees that, in the event that your
employment with the Company terminates as a result of the
Company’s delivering a notice of non-renewal in accordance
with Section 1 above within six months prior to a Change in
Control, such termination will be treated as an Involuntary
Termination for purposes of this Section 4(a).”
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(b)
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(1) By deleting
clause (D) in the definition of “Good Reason” in
romanette (iii) of subsection (g) of Section 4 of the Employment
Agreement in its entirety and substituting the following in its
stead:
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“(D) any failure by the
Company to maintain your principal place of employment and the
executive offices of the Company in the Carteret, New Jersey
area”.
(2) By adding the following at
the end of clause (E) in the definition of “Good
Reason” in romanette (iii) of subsection (g) of Section 4 of
the Employment Agreement:
“or your failure at any
time to report directly to the Chief Executive Officer, it being
understood that this clause (E) will not be triggered should the
Company replace the Executive as Chief Financial Officer so long as
the Chief Financial Officer reports directly to the
Executive.”
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(c)
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By adding the
following new definitions to subsection (g) of Section 4 of the
Employment Agreement:
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“(v)
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‘Business’ shall mean the retail or
wholesale grocery business.
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(vi)
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‘
Change in Control’ shall mean:
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(A) the individuals
who, as of the date of the First Amendment, constitute the Board,
and subsequently elected members of the Board whose election is
approved or recommended by at least a majority of the members of
the Board as of the date of the First Amendment 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
any Person (as defined below) other than the Board), cease for any
reason to constitute at least a majority of the Board;
(B) the acquisition of
beneficial ownership, within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended
(the ‘ Exchange Act’), of 35% or more of
the Common Stock then outstanding, by any person, entity or group
(a ‘ Person’ ), within the meaning of Section
13(d)(3) or Section 14(d)(2) of the Exchange Act, other than
(1) the Company or any of its subsidiaries, (2) an
employee benefit plan of the Company or trustee or other fiduciary
holding securities under an employee benefit plan of the Company or
person or entity organized, appointed or established by the Company
for or pursuant to the terms of any such employee benefit plan,
(3) an underwriter temporarily holding securities pursuant to
an offering of such securities, (4) an entity owned, directly
or indirectly, by the Company’s stockholders in substantially
the same proportions as their ownership of Common Stock or
(5) Yucaipa; provided, however, that a reverse
subsidiary merger or similar transaction shall not be a Change in
Control under this Section 5(g)(vi)(B) if it would not otherwise be
a Change in Control under Section 5(g)(vi)(C) below; or
(C) the consummation
in one or a series of transactions, or the approval of the
Company’s stockholders in the case of clause (1), of either
(1) a plan of complete liquidation or dissolution of the
Company or (2) a merger, amalgamation or consolidation of the
Company with any Person, the issuance of voting securities of the
Company or any subsidiary in connection with a merger,
consolidation or recapitalization of the Company or a subsidiary,
the sale or other disposition of all or substantially all of the
assets of the Company to any Person or the acquisition of assets of
any Person or other business combination or transaction (each, a
‘ Business Combination’ ), unless, in each case
of a Business Combination, immediately following such Business
Combination, all or substantially all of the individuals and
entities who were the beneficial owners of the Common Stock
outstanding immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of the then
outstanding shares of Common Stock and 50% of the combined voting
power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
entity resulting from such Business Combination (including, without
limitation, an entity which as a result of such transaction owns
the Company or all or substantially all of the assets of the
Company and its subsidiaries either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the
Common Stock.
Notwithstanding the foregoing, in
no event shall a Change in Control result from (I) any increase in
Yucaipa’s beneficial ownership of equity of the Company or
(II) the acquisition by Yucaipa of all or substantially all of
the business or assets of the Company.
(vii) ‘Excluded
Location’ means a
25-mile radius of any location where the Company operates its
business.
(viii) ‘Fair Market
Value’ means Fair
Market Value as defined in the Plan as on the date of the First
Amendment .
(ix)‘Yucaipa’
means The Yucaipa Companies, LLC,
and each Person or entity controlled by, controlling or under
common control with The Yucaipa Companies, LLC, including, without
limitation, investment funds or other investment
entities.”
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(b)
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By adding a new
subsection (h) to Section 4 of the Employment Agreement as
follows:
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“(h) Treatment of
Equity Awards. The treatment of your Equity Awards in
connection with the termination of your employment with the Company
shall be as set forth in the award agreements described in Section
3(c) above.”
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5.
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Amendments
to Section 5 . The
provisions of Section 5 of the Employment Agreement are hereby
amended as follows:
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By deleting subsection (a) of
Section 5 of the Employment Agreement in its entirety and
substituting the following in its stead:
“(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) to
the extent you are being paid Severance Amounts, the last day of
the Severance Period (the “ Restricted Period
”), you shall not, without the prior written consent of the
Company, 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), (i) compete in any Excluded Location with the Business or
(ii) 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 that competes with the Business in any Excluded
Location, except for the aforementioned 5% ownership of publicly
traded securities. Notwithstanding the foregoing provisions of this
Section 6(a), (i) an entity will be treated as competing with
the Business in an Excluded Location only if such entity operates
(A) a store that is typically considered to be a
“supermarket” or “supercenter” or (B) a
“wholesale grocery business” (as such terms are
reasonably and customarily understood in the Business) in such
Excluded Location; and (ii) you will not be in violation of
this Section 6(a) if you are employed by or providing services to a
regional chain of stores that is affiliated with another entity
that competes with the Business in an Excluded Location, so long as
(A) such regional chain does not compete with the Business in
any Excluded Location and (B) you do not render services in
any capacity to such other entity other than the services rendered
to such regional chain.”
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6.
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Amendments
to Section 9 . The
provisions of Section 9 of the Employment Agreement are hereby
amended as follows:
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By adding a new subsection (h) of
Section 9 of the Employment Agreement as follows:
“(h) Section 409A.
The provisions of this Employment Agreement are intended to satisfy
the applicable requirements of Section 409A and shall be performed
and interpreted consistent with such intent. If any provision of
this Agreement does not satisfy such requirements or could
otherwise cause you to be subject to the interest and penalties
under Section 409A, you and the Company agree to negotiate in good
faith an appropriate modification to maintain, to the maximum
extent practicable, the original intent of the applicable provision
without violating the requirements of Section 409A (or causing the
imposition of additional tax on you under Section
409A).”
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7.
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Except as
provided herein, all terms and conditions of the Employment
Agreement remain in full force and effect.
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IN WITNESS WHEREOF, the parties
hereto have caused this First Amendment to be executed on the date
first above written.
PATHMARK STORES, INC.
By: /s/ John T. Standley
John T. Standley
Chief Executive Officer
/s/ Frank G. Vitrano
Frank G. Vitrano
ATTACHMENT A
Pathmark Stores,
Inc.
200 Milik Street
Carteret, New Jersey 07008
December 22, 2005
Mr. Frank Vitrano
2 Thatchwood Court
North Brunswick, NJ 08902
Award Agreement
Dear Mr. Vitrano:
Pursuant
to and subject to the terms and conditions set forth in this award
agreement (“ Award Agreement ”), Pathmark
Stores, Inc. (the “ Company ”) hereby
grants you, effective as of the date hereof (the “Grant
Date”), a stock option (“ Stock Option ”)
under its 2000 Employee Equity Plan (the “Plan”) to
purchase the number of shares of Common Stock set forth below.
Terms not defined in this Award Agreement, but defined in the
Amended and Restated Employment Agreement dated November 20,
200
