Exhibit (c)(8)
Pathmark Stores, Inc.
February 1, 1999
Mr. Myron Waxberg
c/o Pathmark Stores, Inc.
200 Milik Street
Carteret, New Jersey 07008
Employment Agreement
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Dear Mr. Waxberg:
The following sets forth the agreement between Pathmark Stores, Inc.
(the "Company") and you regarding the terms and conditions of your employment as
an employee of the Company during the Term.
1. Term of Employment Under the Agreement. The term of this
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Agreement (the "Term") shall commence on February 1, 1999 (the "Effective Date")
and shall continue until the second anniversary of the Effective Date. 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
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employed as a 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.
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(a) Salary. As compensation to you for all services rendered to the
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Company, the Company will pay you a base salary (the "Salary") at the rate of
$148,520 per
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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
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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 50% 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
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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
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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) In the event of a Sale of the Company (as
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hereinafter defined) 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 sale bonus (the "Sale Bonus") equal to the
Maximum Bonus Amount multiplied by two; 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 Sale Bonus shall be paid to
you in cash within five days following the closing date of the Sale of the
Company; provided, however, that in no event shall the Sale Bonus be payable to
you until the selling equity holders, which holders may be at the level of the
Company PTK Holdings, Inc., Supermarkets General Holdings Corporation or SMG-II
Holdings Corporation (the "Sellers") shall have received the
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full amount of the cash and property paid by the buyer in consideration of the
sale. The parties hereto acknowledge and agree that you shall be entitled to
receive only one Sale Bonus under this Agreement in connection with the first
Sale of the Company occurring during the Term and that in the event any
additional Sale of the Company occurs during the Term you will not be entitled
to any Sale Bonus as a consequence thereof.
(b) Single Sales Bonus. The parties hereto acknowledge and agree that
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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.
(c) Sale of the Company. (i) Events Constituting a Sale of the
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Company. "Sale of the Company" shall been deemed to have occurred at the time
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that the Company, SMG-II Holdings Corporation ("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
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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
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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
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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
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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,
the Company shall pay you a severance amount (the "Severance Amount") equal to
your annual rate of Salary, based on the annual rate then in effect immediately
prior to such Involuntary Termination, (A) multiplied by a fraction the
numerator of which shall be the months remaining in the Term and the denominator
of which shall be twelve and (B) multiplied by one. The Severance Amount shall
be payable in installments during the period beginning on the Date of
Termination and ending on the last day of the Term in accordance with the
Company's ordinary payroll practices.
(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 Term, (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 6 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
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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
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employment ends at any time during the Term as a result of your resignation
without Good Reason (as defined in Section 5(g) below) or a termination by the
Company for Cause (as defined in Section 5(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
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a result of your death or Disability (as defined in Section 5(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
5(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.
(d) Date and Notice of Termination. Any termination of your
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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
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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) Mitigation Requirement. The parties hereto acknowledge and agree
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that, in the event of your Involuntary Termination, you will be required to
mitigate your damages by affirmatively seeking other employment. In the event
you obtain such other employment during the period that you are entitled to
receive any portion of the Severance Amount, such Severance Amount shall be
reduced in an amount equal to any compensation you receive from your subsequent
employer. You hereby agree promptly to provide the Company with such information
as it may reasonably request regarding your efforts to seek other employment,
and with notice of your subsequent employment and your compensation in
connection therewith.
(f) Breach of Protective Covenants. If, following the Effective Date,
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you breach any of the provisions of Section 6 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.
(g) Definitions. For purposes of this Agreement, the following
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defined terms shall apply:
(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
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this Agreement, including, but not limited to, any breach of the covenants set
forth in Section 6 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 or (B) any other material breach by the Company of the Agreement. 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.
6. Protective Covenants.
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(a) No Competing Employment. During the period beginning on the
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Effective Date and ending on the last day of the Term (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 6(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 6(a) may extend beyond the
Term.
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(b) No Solicitation of Employees and Certain Other Persons. During
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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 6(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 6(b) may extend beyond the Term.
(c) Confidentiality. You recognize that the services you perform for
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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 6(c) are
perpetual and, in any case, shall extend beyond the Restricted Period.
(d) Injunctive Relief. Without limiting the remedies available to the
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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
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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 6 or such other relief as may be required to specifically enforce
any of the covenants in this Section 6.
7. Successors; Binding Agreement.
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(a) Assumption by Successor. The Company will require any successor
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(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
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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.
8. Notice. For the purpose of this Agreement, notices and all other
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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.
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(a) No Rights to Continued Employment. Neither this Agreement nor any
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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 5 above, for any reason, with or without Cause.
(b) Amendments, Waivers, Superceding Agreement. No provision of this
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Agreement may be modified, waived or discharged unless such waiver, modification
or
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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.
(c) Validity; Severability. The invalidity or unenforceability of any
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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,
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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
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all applicable federal, state and local wage withholdings.
(f) Headings. The headings contained in this Agreement are intended
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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
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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/ James L. Donald
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Name: James L. Donald
Title: President and Chief
Executive Officer
Agreed to as of this 1st day of February, 1999.
/s/ Myron Waxberg
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Myron Waxberg