Exhibit 10.24
RESIGNATION AGREEMENT
AGREEMENT (the "Agreement"), dated as of November 4, 1997 (the
"Effective Date"), among Pathmark Stores, Inc., a Delaware corporation (the
"Company") and SMG-11 Holdings Corporation ("SMG-II), a Delaware corporation
(collectively, with each of their respective subsidiaries and affiliates, the
"Companies"), and Xxxxx Xxxxxxx ("Executive").
WITNESSETH:
WHEREAS, the Company, SMG-II and Executive are parties to an Employment
Agreement, dated as of May 23, 1994 (the "Employment Agreement"), relating to
the terms and conditions of Executive's services as an employee and officer of
the Company and SMG-II; and
WHEREAS, the parties have agreed that Executive's services as an
employee and officer of the Companies shall end on the Effective Date in
accordance with the terms and provisions set forth below;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
I . Resignation in Certain Capacities. As of the Effective Date,
Executive hereby resigns as an employee and officer of the Companies, and in
each other capacity in which he serves the Companies. Executive agrees to take
any and all further action as shall be reasonably necessary to effect or
memorialize the foregoing resignations.
2. Termination of Employment Agreement. As of the Effective Date, the
Employment Agreement shall terminate and be of no further force and effect.
3. Severance Payments and Benefits in Connection with the Resignation.
(a) Salary Continuation Payments. Subject to Section 6 below,
the Company will continue to pay Executive his base salary at the annual rate of
$288,399.28 per year during the period commencing on the day following the
Effective Date and ending on July 31, 1999 (or the date of Executive's death, if
earlier) (the "Severance Period"). Such salary continuation payments shall be
paid in accordance with the Company's payroll practices, commencing on the next
payroll date following the Effective Date, in an amount equal to the amount paid
to Executive by the Company for the payroll period immediately prior to the
Effective Date.
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(b) Bonus Continuation. Subject to Section 6 below, Executive
shall be entitled to receive as severance the portion of the bonus or bonuses
attributable to the financial targets set forth for the Company under the
Company's Executive Incentive Plan (the "EIP") that Executive would have earned
had his employment continued through January 31, 1998, determined in accordance
with the EIP and based on the same percentage of base compensation used to
calculate bonuses for Executive on the Effective Date and subject to the Company
reaching the applicable financial targets set under the EIP or any other bonus
plans. Any bonus payments payable to Executive hereunder shall be paid in
accordance with the Company's current practice for paying bonuses commencing
within two months after the Company's fiscal year-end.
(c) Health and Insurance Continuation. Subject to Section 6
below, Executive will be entitled to receive continued coverage through the
Severance Period under the Company's health and insurance plans applicable to
Executive immediately prior to the Effective Date or, if any such plan does not
permit continued coverage, the Company will arrange to provide Executive with a
benefit substantially similar to and no less favorable than the benefits
Executive was entitled to under such plan.
(d) Company Car. Executive may, at his option, purchase his
Company car at its fair market value, as determined by the leasing company.
(e) Mitigation. The severance payments and benefits provided
in Sections 3(a), 3(b) and 3(c) above (hereinafter, the "Severance Benefits")
shall be reduced by any compensation or benefits Executive is entitled to
receive in connection with any employment by another employer during the
Severance Period. Executive shall promptly provide the Company with any evidence
of amounts received in connection with his employment during the Severance
Period which the Company shall reasonably request.
(f) Breach of Protective Covenants. If, following the
Effective Date, Executive breaches any of the provisions of Section 6 hereof,
Executive shall not be eligible, as of the date of such breach, for the
Severance Benefits, and all obligations of the Company to pay Severance Benefits
hereunder shall thereupon cease; provided, however, that this Section 3(f) shall
not in any way impair Executive's rights to extend medical coverage, at his
expense, under Section 4980B(f) of the Internal Revenue Code of 1986, as
amended, and the applicable rules and regulations thereunder (the "Code").
(g) Tax Withholding. The payments and benefits provided to
Executive under this Agreement shall be subject to all applicable income tax or
other withholding required by applicable federal, state or local law, and the
Company shall have no obligation to make any such payment or to provide any such
benefits to Executive until
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arrangements reasonably acceptable to the Company have been made to satisfy such
withholding obligations.
(h) Section 28OG of the Code. In the event that any Severance
Benefits would not be deductible in whole or in part, in the calculation of
federal income tax owed by the Company or any of its affiliates, or any other
person or entity making such payment or providing such benefit by reason of
Section 28OG of the Code, such Severance Benefits shall be reduced until no
portion of the Severance Benefits is not deductible by reason of Section 28OG of
the Code.
(i) Special Payment. The Company will make a cash lump sum
payment to Executive in the amount of $192,074 on or prior to April 15, 1998.
(j) Accrued Vacation. Promptly following the Effective Date,
the Company shall pay Executive his accrued but unused vacation benefits in
accordance with existing Company policy for retirees.
4. Options. SMG-11 and Executive are parties to an option agreement
(the "Option Agreement") granted under the SMG-11 Management Investors 1987
Stock Option Plan (the "Option Plan") which entitle Executive to purchase up to
a maximum of 1,000 shares of Class A Common Stock of SMG-11 in accordance with
the terms and provisions of the Option Agreement. Executive and SMG-II each
agree that the provisions of the Option Agreement is hereby amended to provide
that the option evidenced by such Option Agreement shall be exercisable until
the Expiration Date (as defined in Section 2 of the Option Agreement), subject
to Section 6 of the Option Agreement. Executive understands and agrees that any
option which is so extended shall no longer qualify as an incentive stock option
for purposes of the Code. For purposes of the Option Agreement, Executive's
resignation hereunder shall be treated as a resignation for "Good Reason."
5. No Other Compensation or Benefits. Except for the obligations of the
Company under Sections 3, and 4 of this Agreement, Executive shall not be
entitled to any other compensation or benefits from any of the Companies in
connection with his resignation of employment or otherwise, and Executive shall
not be eligible for or entitled to any other severance, termination or any
similar benefits under any plan, program, policy or arrangement, whether formal
or informal, written or unwritten, of any of the Companies.
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6. Protecting the Interests of the Company.
(a) No Competing Employment. During the Restricted Period (as
hereinafter defined), Executive shall not, unless he receives after the
Effective Date the prior written consent of the Board, directly or indirectly,
whether as owner, consultant, employee, partner, venturer, 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 Companies as of the Effective Date (such
businesses are hereinafter referred to as the "Business"), or assist, become
interested in or be connected with 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 6(a) shall not apply to
Executive's employment within any geographic area in which the Companies are not
engaged in the Business at the time of termination. The "Restricted Period"
shall mean the period beginning on the Effective Date and ending on July 31,
1999.
(b) No Interference. During the Restricted Period, Executive
shall not, whether for his own account or for the account of any other
individual, partnership, firm, corporation or other business organization or
entity (other than the Companies), intentionally solicit, endeavor to entice
away from the Companies, or any of their affiliates, or otherwise interfere with
the relationship of the Companies, or any of their affiliates, with any person
who is employed by any of the Companies, or any of their affiliates (including,
but not limited to, any independent sales representatives or organizations), or
any person or entity who is, or was within the then most recent 12- month
period, a customer or client (other than an individual retail consumer) of the
Companies, or any of their affiliates.
(c) Secrecy. Executive recognizes that the services he
performed for the Companies were special, unique and extraordinary in that, by
reason of his past employment with the Companies he has acquired confidential
information and trade secrets concerning the operations of the Companies and
their affiliates, the use or disclosure of which could cause the Companies
substantial loss and damages which could not be readily calculated, and for
which no remedy at law would be adequate. Accordingly, Executive covenants and
agrees with the Companies that he will not at any time, except in performance of
Executive's obligations to the Companies hereunder, or with the prior written
consent of the Board, directly or indirectly, disclose any secret or
confidential information that he has learned by reason of his association with
the
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Companies, or any predecessors to the business of the Companies, or use any such
information to the detriment of the Companies or any of their affiliates. The
term "confidential information" includes, without limitation, information not
previously disclosed to the public or to the trade by the Companies' management
with respect to the Companies' or any of their respective subsidiaries' or
affiliates' business plans, prospects and opportunities, the identity of
clients, suppliers or customers, information regarding 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. Executive understands and agrees that
the rights and obligations set forth in this Section 6(c) are perpetual and, in
any case, shall extend beyond the Restricted Period and the Severance Period.
(d) Exclusive Property. Executive confirms that all
confidential information is and shall remain the exclusive property of the
Companies. All business records, papers and documents kept or made by Executive
relating to the business of the Companies shall be and remain the property of
the Companies and shall be promptly delivered to the Company within three days
following the Effective Date. Executive shall not, without the consent of the
Board, retain copies of any written materials not previously made available to
the public, records and documents made by Executive or coming into his
possession concerning the business or affairs of the Companies. Executive may
retain records relating exclusively to the terms and conditions of his
employment relationship with the Companies and this Agreement. Executive
understands and agrees that the rights and obligations set forth in this Section
6(d) are perpetual and, in any case, shall extend beyond the Restricted Period
and the Severance Period. All other property of the Companies in Executive's
possession (such as business credit cards, keys and pass cards, computer
hardware and computer software) shall be returned to Company within three days
following the Effective Date.
(e) Stock Ownership. Other than as provided in Section 6(a)
hereof, nothing in this Agreement shall prohibit Executive from acquiring or
holding any issue of stock or securities of any company or other business
entity, provided that, with respect to any class of voting securities listed on
a national securities exchange or quoted on the automated quotation system of
the National Association of Securities Dealers, Inc., Executive and members of
his immediate family do not own at any time during the Restricted Period more
than 5% of the issued and outstanding shares of such class of securities.
(f) No Public Comment; Press Release. Executive shall refrain
now, or at any time in the future, from directly or indirectly making any
negative or derogatory public comment concerning any of the Companies or their
respective employees, officers,
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directors and shareholders to the press, any employees of any of the Companies,
or any individual or entity with whom any of the Companies has a business
relationship. In connection with Executive's resignation hereunder, Executive
and the Company agree to the issuance of an internal statement in the form
attached hereto as Exhibit A.
(g) Cooperation in Litigation. In consideration of the
payments hereunder, Executive agrees to cooperate fully with the Companies in
the preparation and assertion of any claim or defense in connection with any
action, suit or proceeding brought by or against any of the Companies; provided,
however, that Executive's obligation under this Section 6(g) shall apply only to
matters in which Executive was involved, or in respect of which Executive
acquired information, as a result of his services as an employee, officer or
director of any of the Companies. The Company shall reimburse Executive for all
reasonable expenses incurred by him (including reasonable attorneys' fees and
expenses) as a result of any request by the Company under this Section 6(g).
(h) Injunctive Relief. Without intending to limit the remedies
available to the Companies, Executive acknowledges that a breach of any of the
covenants contained in this Section 6 may result in material irreparable injury
to the Companies 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 Companies shall be entitled to
obtain a temporary restraining order and/or a preliminary or permanent
injunction restraining Executive 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. Release; Covenant Not to Xxx. In consideration of the benefits
contained in this Agreement:
(a) Covenant Not to Xxx. Executive promises not to file a
complaint or charge or to commence any legal proceedings against the Companies,
their directors, officers and employees (the "Released Parties") at an
administrative agency, or in a court of law or equity, exclusive of a claim to
enforce this Agreement, which shall be governed by Section 8 below ("Permitted
Claims"). Executive represents that he has not filed any such complaint or
charge, or commenced any legal proceedings as of the Effective Date. Executive
understands that if his representation contained in the preceding sentence is
untrue on the date he signs the Agreement, or should he bring any lawsuit
against the Released Parties or file any charge or complaint with any
administrative agency relating to, or arising out of, his employment
relationship or the commencement or termination of that relationship (other than
a Permitted Claim), then he will be in breach of this
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Agreement and will be required to return any benefits received, will forfeit
rights to any further benefits, and his stock options will automatically be
deemed to be canceled.
(b) Release. Executive, on behalf of himself, his heirs,
administrators, executors, successors and assigns, hereby releases and forever
discharges the Released Parties from any and all claims, actions, suits, causes
of action, damages, judgments and demands whatsoever, in law or in equity (all
hereinafter "Claims"), known or unknown, fixed or contingent, suspected or
asserted, including, but not limited to, all Claims against the Released Parties
he ever had or may have based upon disability, age, sex, national origin, race,
color, religion, marital status or any other factor; torts or personal injury
(including claims of wrongful discharge, defamation or emotional distress);
breach of contract, express or implied; breach of the covenant of good faith and
fair dealing; violation of any constitutional or statutory right, whether
arising under the Federal Age Discrimination in Employment Act of 1967, as
amended, the New Jersey Law Against Discrimination, as amended, Title VII of the
Civil Rights Act of 1964, as amended, the Equal Pay Act, the New Jersey
Conscientious Employee Protection Act, the Constitution of the United States,
the constitution of any individual state, any other federal, state or local law,
regulation or ordinance; and/or the common law of any state. This release is for
any relief, including back pay, front pay, compensatory damages, counsel fees,
punitive damages or damage for pain and suffering.
(c) Executive understands that this release does not apply to
any claims for benefits he may have under the Agreement.
(d) Executive further understands that he may cancel the
Agreement within seven (7) days after he signs it and until the seven days have
passed, this Agreement shall neither be effective nor enforceable. Executive
understands that should he cancel the Agreement, he will not be entitled to the
benefits in the Agreement, but will receive only those benefits for which the
Company is responsible under the Employment Agreement.
(e) Executive understands that by signing the Agreement he
does not waive rights or claims that arise after the date of this Agreement.
(f) Executive agrees and admits that no representation of fact
or opinion has been made by either party, or any representative thereof, either
jointly or individually, to induce Executive to sign this Agreement. Executive
hereby agrees that the Companies do not admit liability of any sort and that the
Companies have made no representation as to liability of any sort, and that this
Agreement is made as a compromise and to terminate all controversy and/or claims
by Executive.
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(g) Executive further states that he has carefully read the
Agreement, including the release and that he knows and understands their
contents, and that he is signing the Agreement voluntarily and of his own free
will.
(h) Executive further agrees that he has been advised by the
Company to consult with an attorney, prior to executing this Agreement,
including the release, and that he fully understands the terms, conditions, and
final and binding effect of this Agreement and the release.
(i) Executive acknowledges that he has been given a period of
at least twenty-one (21) days within which to consider this Agreement, including
the release, prior to signing it.
8. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, including, but not limited to, any claim relating to the
validity, interpretation, enforceability or breach of this Agreement, which is
not settled by agreement between the parties, shall be settled by arbitration in
Newark, New Jersey before a panel of three arbitrators, one to be selected by
the Companies, one by Executive and the other by the two persons so selected,
all in accordance with the rules of the American Arbitration Association then in
effect; provided, however, that the Companies shall nevertheless be entitled to
seek relief under Section 6 above in accordance with Section 6(h) thereof. In
consideration of the parties' agreement to submit to arbitration disputes with
regard to this Agreement and with regard to any alleged tort, contract or other
claim arising out of the employment relationship, and in consideration of the
anticipated expedition and minimization of expense of this arbitration remedy,
each party agrees that the arbitration provisions of this Agreement shall
provide it with the exclusive remedy, except as provided in the preceding
sentence, and each party expressly waives any right it might have to seek
redress in any other form except as provided herein. The parties further agree
that the arbitrators acting hereunder shall be empowered to assess no remedy
other than payment of compensatory damages or an order (including temporary,
preliminary or permanent injunctive relief) enforcing the provisions of Section
6 above. Each party shall bear its own expenses in connection with the
arbitration proceeding. Any decision or order of the majority of arbitrators
shall be binding upon the parties hereto, and judgment thereon may be entered in
the Superior Court of the State of New Jersey, or any other court having
jurisdiction.
9. Nonassignability; Binding Agreement. Neither this Agreement nor any
right, duty, obligation or interest hereunder shall be assignable or delegatable
by Executive without the Company's prior written consent; provided, however,
that nothing in this Section 9 shall preclude Executive from designating any of
his beneficiaries to receive
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any benefits payable under Section 3(c) upon his death, or the executors,
administrators, or other legal representatives from assigning any rights
hereunder to the person or persons entitled thereto.
This Agreement shall be binding upon, and inure to the benefit of, the
parties hereto, any successors to or assigns of the Companies and Executive's
heirs and the personal representatives of Executive's estate.
10. Severability. If the final determination of a court of competent
jurisdiction 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, (a) the remaining terms and
provisions hereof shall be unimpaired, and (b) the invalid and 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.
11. Amendment; Waiver. This Agreement may not be modified, amended or
waived in any manner, except by an instrument in writing signed by all parties
hereto. The waiver by any party of compliance with any provision of this
Agreement by any other party shall not operate or be construed as a waiver of
any other provision of this Agreement, or of any subsequent breach by such party
of a provision of this Agreement.
12. Notices. Any notice hereunder by any party to any other shall be
given in writing by personal delivery or certified mail, return receipt
requested. If addressed to Executive, the notice shall be delivered or mailed to
Executive at the address last known to the Company, or if addressed to any of
the Companies, the notice shall be delivered or mailed to the Company at its
executive offices, to the attention of the President. A notice shall be deemed
given, if by personal delivery, on the date of such delivery or, if by certified
mail, on the date shown on the applicable return receipt.
13. Counterparts. This Agreement may be executed by any of the parties
hereto in counterpart, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same instrument.
14. Headings. The headings of sections herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
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15. Governing Law. All matters affecting this Agreement, including the
validity thereof, are to be governed by, interpreted and construed in accordance
with the laws of the State of New Jersey.
IN WITNESS WHEREOF, the Company and SMG-11 have caused the Agreement to
be signed by its officer and Executive has executed this Agreement as of the day
and year first written above.
PATHMARK STORES, INC.
By: /s/Xxxx Xxxxxxxxx
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Title: Vice President
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SMG-II HOLDINGS CORPORATION
By: /s/Xxxx Xxxxxxxxx
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Title: Vice President
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AGREED AND ACCEPTED:
/s/Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
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