Exhibit 10.24
Pathmark
Stores, Inc.
February 1, 1999
Mr. Marc Strassler
c/o Pathmark Stores, Inc.
200 Milik Street
Carteret, New Jersey 07008
Employment
Agreement
Dear Mr. Strassler:
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
February 1, 1999 (the “ Effective Date ”) and
shall continue until the second anniversary of the Effective Date;
provided , however , that, commencing on February 1,
2000 and on each successive February 1 st 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 5
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 a Senior 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 $200,000 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, for the first Fiscal
Year ending during the Term, you will be eligible to earn an annual
bonus (the “ Annual Bonus ”) of up to 55% of
your actual Salary earned during the applicable Fiscal Year (the
“ Maximum Bonus Amount ”), based on targets set
by the Board 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.
Sale Bonus . (a) General Terms . In the event of a
Sale of the Company (as defined in Section 4(d) hereof) during your
employment by the Company pursuant to this Agreement and within the
twelve-month period after the Effective Date (the “ Sale
Bonus Period ”), you shall receive a sales bonus (the
“ Sale Bonus ”) equal to the greater of (i) your
then current Salary multiplied by two and (ii) an amount equal to
one percent of the fair market value of the cash and property
received by the equity holders of both preferred and common stock
of SMG-II Holdings Corporation (“ Holdings ”)
and its wholly-owned subsidiaries (the “ Sale Price
”) as a result of the Sale of the Company; provided ,
however , that in the event of your Involuntary Termination
on or after September 1, 1999 and prior to a Sale of the Company,
you shall receive the Sale Bonus in the event of a Sale of the
Company in accordance with the terms of this Section 4 in the same
manner as if your employment with the Company had continued. The
determination of whether a Sale of the Company has
occurred,
the Sale Price and the Sale Bonus shall be made
in good faith by the Board of Directors of Holdings immediately
prior to the consummation of the Sale of the Company and, absent
manifest error, shall be final and binding on you, the Company,
Holdings and all other interested parties.
(b)
Payment of Sales Bonus . (i) Sale of the Company—No
Post Closing Adjustment . In the event that either the Sale
Bonus shall be calculated according to Section 4(a)(i) above or, if
the alternative calculation pursuant to Section 4(a)(ii) shall be
applied, the transaction resulting in a Sale of the Company does
not include any provisions either (A) for an earn-out with respect
to which a part of the Sale Price will be paid to the selling
equity holders (which holders may be at the level of the Company,
PTK Holdings, Inc., Supermarkets General Holdings Corporation or
Holdings, or any successor thereto) (the “ Sellers
”) either in full or in part in one or more installments
after the closing date of the Sale of the Company (the “
Closing Date ”) or any similar deferral of the payment
of the Sale Price or (B) that would potentially require the Sellers
to reimburse any portion of the Sale Price to the purchaser or
require the purchaser to pay to the Sellers any amount in addition
to the Sale Price, as a result of a post-closing adjustment or any
other reason, after the Closing Date (either (A) or (B), a “
Post-Closing Adjustment ”), the Company shall pay to
you the Sale Bonus within five days following the Closing Date;
provided , however , that in no event shall the Sale
Bonus be payable to you until the Sellers shall have received the
full amount of the Sale Price.
(ii)
Sale of the Company—Post-Closing Adjustment . In the
event that the Sale Bonus shall be calculated according to Section
4(a)(ii) and the Sale of the Company transaction includes
provisions for any Post-Closing Adjustment, the Company shall pay
the Sale Bonus according to the terms of this Section
4(b)(ii).
(A) In
the event that the Sale of the Company transaction includes a
Post-Closing Adjustment described in Section 4(b)(i)(A) above, the
Company shall pay you a portion of the Sale Bonus within five days
after the Closing Date equal to one percent of the portion of the
Sale Price paid to the Sellers on or about the Closing Date.
Thereafter, as soon as practicable after any additional portion of
the Sale Price is paid to the Sellers, the Company shall pay you a
portion of the Sale Bonus equal to one percent of the additional
portion of the Sale Price then paid to the Sellers.
(B) In
the event that the Sale of the Company transaction is a
Post-Closing Adjustment described in Section 4(b)(i)(B) that would
potentially require the Sellers to reimburse any portion of the
Sale Price to the purchaser after the Closing Date, within five
days after the Closing Date the Company shall pay you a portion of
the Sale Bonus determined in good faith by the Board of Directors
of Holdings immediately prior to the consummation of the Sale of
the Company, less an amount that shall take into account the
potential adjustment to the Sales Price (the “ Withheld
Amount ”). As soon as practicable after the Sellers know
with certainty the portion, if any, of the Sale Price that the
Sellers must reimburse to the purchaser and the Sellers make such
reimbursement, if any, the Company shall pay to you a prorated
portion of the Withheld Amount corresponding to the portion of the
maximum potential amount that
Sellers may have been required to
reimburse to the purchaser less the amount actually
reimbursed.
(C) In
the event that the Sale of the Company transaction is a
Post-Closing Adjustment described in Section 4(b)(i)(B) that would
potentially require the purchaser to pay to the Sellers any amount
in addition to the Sale Price after the Closing Date, within five
days after the Closing Date, the Company shall pay you the Sale
Bonus. Thereafter, as soon as practicable after the purchaser knows
with certainty the additional amount that such purchaser must pay
to the Sellers, if any, and the purchaser makes such payment to the
Sellers, the Company shall pay to you an additional amount
determined in good faith by the Board that shall take into account
the additional payment made by the purchaser to the
Sellers.
(c)
Single Sales Bonus . The parties hereto acknowledge and
agree that you shall be entitled to receive only one Sale Bonus
under this Agreement which shall become payable in connection with
the first Sale of the Company occurring during the twelve-month
period following the Effective Date and that in the event any
additional Sale of the Company occurs during such twelve-month
period or otherwise during the Term, you will not be entitled to
any Sale Bonus as a consequence thereof.
(d)
Sale of the Company . (i) Events Constituting a Sale of
the Company . “ Sale of the Company ” shall
been deemed to have occurred at the time that the Company, Holdings
or any subsidiary enters into a binding agreement the end result of
which shall be any of the following events:
(A) any
transaction through which an Independent Third Party (as
hereinafter defined) directly acquires, in exchange for cash, stock
or property, fifty percent or more of the aggregate equity
securities of Holdings for which the MLCP Investors and the
Equitable Investors (as defined in the Amended and Restated
Stockholders Agreement among Holdings and its Stockholders dated
January 22, 1998) (together, the “ Stockholders
”) are Beneficial Owners (as hereinafter defined) as of the
Effective Date. For purposes of this Agreement, “
Beneficial Owner ” shall have the meaning given to
such term in Rule 13d-3 under the Securities Exchange Act of 1934,
as amended, and “ Independent Third Party ”
shall mean any entity other than any of the Stockholders or any
entity controlled by or under common control with any of the
Stockholders; and
(B) any
transaction through which an Independent Third Party that is
engaged in any business that is classified within Section 42,
Section 44, or Section 45 of the 1997 edition of the U.S.
government publication North American Industry Classification
System, directly acquires in exchange for cash, stock or property
fifty percent or more of either (I) the aggregate equity securities
of the Company, PTK Holdings, Inc. or Supermarkets General Holdings
Corporation, or (II) the Company’s assets.
(ii)
Events Not Constituting a Sale of the Company . A Sale of
the Company shall not include any change of ownership resulting
from either (A) a public offering of any of the securities of the
Company, Holdings or any of their affiliates pursuant to an
effective registration statement under the Securities Act of 1933,
as amended, or (B) except as provided in Sections 4(d)(i)(A) and
4(d)(i)(B), any private placement of any of the securities of the
Company, Holdings or any of their affiliates.
5.
Effect of Termination of Employment . Definitions of terms
first used and not otherwise defined in this Section 5 are
set forth in Section 5(g).
(a)
Involuntary Termination . (i) Subject to 5 (f) below,
in the event of your Involuntary Termination (as defined in Section
5(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 5(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. If such Involuntary Termination occurs on or after September
1, 1999, you will continue to be eligible to receive the Sale Bonus
in accordance with the terms of Section 4 hereof.
(ii) In
the event of your Involuntary Termination during the Term prior to
a Sale of the Company, the Company shall pay you a severance amount
equal to your annual r
