Exhibit 10.12
PATHMARK STORES, INC.
2000 NON-EMPLOYEE DIRECTORS EQUITY PLAN
1. Purpose
The purpose of the Pathmark Stores, Inc. 2000 Non-Employee Directors
Equity Plan (the "Plan") is to promote the long-term growth and financial
success of the Company by attracting, motivating and retaining non-employee
directors of outstanding ability and assisting the Company in promoting a
greater identity of interest between the Company's non-employee directors and
its stockholders.
2. Definitions
For purposes of the Plan, the following terms shall be defined as
follows:
"Annual Meeting" means an annual meeting of the Company's stockholders.
"Board" means the Board of Directors of the Company.
"Change in Control" shall mean any of the following:
(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, but shall not include any
such acquisition by any employee benefit plan of the Company, any
Person or entity organized, appointed or established by the Company for
or pursuant to the terms of any such employee benefit plan; 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 September 19, 2000 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) consummation after approval by the shareholders of Pathmark of
either (A) a plan of complete liquidation or dissolution of Pathmark or
(B) a merger, amalgamation or consolidation of Pathmark with any other
corporation, the issuance of voting securities of Pathmark in
connection with a merger or consolidation of Pathmark or sale or other
disposition of all or substantially all of the assets of Pathmark or
the acquisition of assets of another corporation (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 Pathmark's assets either
directly or through one or more subsidiaries) in substantially the same
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proportions as their ownership, immediately prior to such Business
Combination, of the Common Stock; or
(iii) the individuals who, as of September 19, 2000, 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.
For purposes of the above definition of Change in Control only, the
following defined terms shall apply:
"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.
"Person" means 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, (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 Pathmark in substantially the same proportions as their
ownership of stock of Pathmark.
"Subsidiary" means with respect to any Person, any entity of
which: 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 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.
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"Common Stock" means the Common Stock of the Company, par value $.01
per share, or such other class or kind of shares or other securities as may be
applicable under Section 11 below.
"Company" or "Pathmark" means Pathmark Stores, Inc., a Delaware
corporation, or any successor thereto, and its Subsidiaries.
"Date of Grant" means, with respect to any Director Option, the date on
which such Director Option is granted to a Non-Employee Director.
"Director Option" means a right to purchase shares of Common Stock
granted to a Non-Employee Director pursuant to Section 6 hereof.
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"Effective Date" means the effective date of the Plan
provided for in Section 9 below.
"Fair Market Value" means, with respect to a share of Common Stock, the
fair market value thereof as of the relevant date of determination, as
determined in accordance with a valuation methodology approved by the Board, and
according to the following, as applicable:
(i) If the Common Stock is quoted on the NASDAQ National
Market , in the absence of any alternative valuation methodology
approved by the Board, the Fair Market Value of a share of Common Stock
shall equal the per share closing price quoted on the day immediately
prior to the date of grant as reported in the transactions index of
each such exchange, as published in The Wall Street Journal, or, if no
closing price was quoted in any such index for such date, then as of
the next preceding date on which such a closing price was quoted;
(ii) If the Common Stock is not quoted on the NASDAQ National
Market, but is publicly traded on another national securities exchange
or quoted on an automated system, the Fair Market Value of a share of
Common Stock shall equal the per share closing price quoted on the day
immediately prior to the date of grant as reported in the transactions
index of each such exchange or automated system, as published in The
Wall Street Journal, or, if no closing price was quoted in any such
index for such date, then as of the next preceding date on which such a
closing price was quoted; and
(iii) If the Common Stock is not publicly traded on a national
securities exchange or quoted on the NASDAQ National Market or any
other automated system, the Fair Market Value of a share of Common
Stock shall be reasonably determined in good faith by the Board.
"Non-Employee Director" means a member of the Board who is not an
employee of the Company or any of its Subsidiaries.
"Permanent Disability" means a physical or mental impairment rendering
a Non-Employee Director substantially unable to function as a member of the
Board for any period of six consecutive months. Any dispute as to whether a
Non-Employee Director is Permanently Disabled shall be resolved by a physician
mutually acceptable to the Non-Employee Director and the Company, whose decision
shall be final and binding upon the Non-Employee Director and the Company.
"Person" means any individual, firm, corporation, partnership or other
entity.
"Subsidiary" means (i) a corporation or other entity with respect to
which the Company, directly or indirectly, has the power, whether through the
ownership of voting securities, by contract or otherwise, to elect at least a
majority of the members of such corporation's board of directors or analogous
governing body, or (ii) any other corporation or other entity in which the
Company, directly or indirectly, has an equity or similar interest and which the
Board designates as a Subsidiary for purposes of the Plan.
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3. Administration
(a) Administration by the Board. The Plan shall be administered by the
Board, which may adopt rules and regulations it considers necessary or
appropriate to carry out the Plan's purposes. The Board's interpretation and
construction of any Plan provision shall be final and conclusive. The Board may,
but need not, from time to time delegate some or all of its authority under the
Plan to a committee consisting of one or more members of the Board, any such
delegation to be subject to the restrictions and limits that the Board specifies
at the time of such delegation or thereafter. References in the Plan to the
"Board" shall, to the extent consistent with the terms and limitations of any
such delegation, be deemed to include a reference to any such committee to which
the Board's authority hereunder has been delegated.
(b) Award Certificate. The terms and conditions of each grant of
Director Options under the Plan shall be embodied in an award agreement or award
certificate which shall incorporate the Plan by reference, shall indicate the
date on which the Director Options were granted and the number of Director
Options granted on such date.
4. Shares Available
Subject to the provisions of Section 11 below, the maximum number of
shares of Common Stock which may be issued under the Plan (the "Section 4
Limit") shall be 130,000 shares. For purposes of determining the number of
shares of Common Stock that remain available for issuance, there shall be added
back to the Section 4 Limit and again be available under the Plan any shares of
Common Stock tendered to pay the exercise price of a Director Option. Either
authorized and unissued shares of Common Stock or treasury shares may be
delivered pursuant to the Plan.
5. Eligibility
Director Options shall be granted only to Non-Employee Directors.
6. Grants of Director Options
(a) General. A Director Option shall entitle a Non-Employee Director to
purchase a specified number of shares of Common Stock during a specified period
at an exercise price per share of Common Stock determined as provided below. All
Director Options provided for herein shall have the general terms and conditions
set forth in Section 7 below.
(b) Initial Grants. On the date of the first regularly scheduled
meeting of the Board after the Effective Date each Non-Employee Director shall
receive Director Options to purchase 3,000 shares of Common Stock. The exercise
price per share of Common Stock of each Director Option provided for in this
Section 6(b) shall be the Fair Market Value of one share of Common Stock on the
Date of Grant.
(c) Annual Grants of Director Options. As of the date of the first
regularly scheduled meeting of the Board during the Company's third fiscal
quarter (the "Third Quarter Meeting"), each Non-Employee Director shall
automatically receive Director Options to purchase 3,000 shares of Common Stock;
provided that the Non-Employee Director shall continue to serve as a director of
the Company after such meeting of the Board; and provided, further, that with
respect to Non-Employee Director who, as of any Third Quarter Meeting, has
served on the Board for less than one year, such Non-Employee Director shall
receive a pro rated number of Directors Options. The exercise price
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per share of Common Stock of each Director Option provided for in this Section
6(c) shall be the Fair Market Value of one share of Common Stock on the date of
the Date of Grant.
(d) Grants of Director Options to New Directors. On the date that a
Non-Employee Director is initially elected or appointed to the Board (other than
in connection with the Third Quarter Meeting in which case such new Non-Employee
Director shall receive his or her initial grant of Directors Options in the
ordinary course under Section 6(c) above), such Non-Employee Director shall
receive Director Options to purchase 3,000 shares of Common Stock. The exercise
price per share of Common Stock of each Director Option provided for in this
Section 6(d) shall be the Fair Market Value of one share of Common Stock on the
Date of Grant.
7. General Terms and Conditions of Directors Options
(a) Option Term. Each Director Option shall expire on the date of the
Annual Meeting held in the fifth calendar year following the date of grant,
subject to earlier expiration as provided herein.
(b) Vesting; Accelerated Vesting; Effect of Termination of Service.
(i) Vesting Generally. Each Director Option shall vest and
become with respect to one-third of the shares of Common Stock subject
to such Option on the first through the third anniversaries of the date
of grant, provided that the Non-Employee Director continues to serve as
a member of the Board on each such anniversary date. Notwithstanding
the preceding sentence, all Director Options shall be considered fully
vested and exercisable upon the earlier to occur of (X) termination of
the Non-Employee Director's service on the Board by reason of death or
Permanent Disability or (Y) a Change in Control.
(ii) Exercise Following Termination of Service. Following
termination of a Non-Employee Director's service on the Board, the
former Non-Employee Director (or the former Non-Employee Directors'
estate, personal representative or beneficiary, as the case may be)
shall have the right, subject to the other terms and conditions hereof,
to exercise all Director Options that had vested as of or in connection
with the termination of service:
(A) at any time within two years after the date of
termination of service, if such termination was by reason of
death, Permanent Disability or retirement from the Board in
accordance with the retirement policy then in effect for Board
members, or
(B) in all other cases, at any time within one year
after the date of termination of service;
subject, in all cases, to earlier expiration of the Director Option
pursuant to Section 7(a) above.
(c) Notice of Exercise. Subject to the other terms and conditions of
the Plan, a Non-Employee Director may exercise all or any portion of a vested
Director Option by giving notice of exercise to the Company or its designated
agent, provided, however, that no fewer than 10 shares of Common Stock may be
purchased upon any exercise of a Director Option unless the number of shares
purchased at such time is the total number of shares in respect of which the
Director Option is then exercisable, and provided, further, that in no event
shall the Option be exercisable for a fractional share. The date of exercise of
an Option shall be the later of (i) the date on which the Company or its agent
receives such notice or (ii) the date on which the conditions provided in
Sections 7(d) and 7(e) below are satisfied.
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(d) Payment. The exercise price of a Director Option may be paid in
cash or previously owned shares or a combination thereof or by any other method
approved by the Board.
(e) Limitation on Exercise. A Director Option shall not be exercisable
unless the Common Stock subject thereto has been registered under the Securities
Act of 1933, as amended (the "1933 Act"), and qualified under applicable state
"blue sky" laws in connection with the offer and sale thereof, or the Company
has determined that an exemption from registration under the 1933 Act and from
qualification under such state "blue sky" laws is available.
(f) Issuance of Shares. Subject to the foregoing conditions, as soon as
is reasonably practicable after its receipt of a proper notice of exercise and
payment of the exercise price for the number of shares with respect to which a
Director Option is exercised, the Company shall deliver to the exercising
Non-Employee Director, at the principal office of the Company or at such other
location as may be acceptable to the Company and the Non-Employee Director, one
or more stock certificates for the appropriate number of shares of Common Stock
issued in connection with such exercise. Such shares shall be fully paid and
nonassessable and shall be issued in the name of the Non-Employee Director.
Notwithstanding the foregoing, the Board in its discretion may, subject to rules
and procedures as it may adopt from time to time, provide Non-Employee Directors
with the opportunity to defer receipt of shares of Common Stock issuable upon
exercise of Director Options.
8. Transferability
Director Options may not be transferred, pledged, assigned or otherwise
disposed of except by will or the laws of descent and distribution or pursuant
to a domestic relations order, provided, however, that Director Options may be
transferred to a member or members of a Non-Employee Director's immediate family
(as defined below) or to one or more trusts or partnerships established in whole
or in part for the benefit of one or more of such immediate family members
(collectively as "Permitted Transferees"), subject to such rules and procedures
as may from time to time be adopted or imposed by the Board. If a Director
Option is transferred to a Permitted Transferee, it shall be further
transferable only by will or the laws of descent and distribution or, for no
consideration, to another Permitted Transferee of the Non-Employee Director. A
Non-Employee Director shall notify the Company in writing prior to any proposed
transfer of a Director Option to a Permitted Transferee and shall furnish the
Company, upon request, with information concerning such Permitted Transferee's
financial condition and investment experience. For purposes of the Plan, a
Non-Employee Director's "immediate family" means any child, stepchild,
grandchild, spouse, son-in-law or daughter-in-law and shall include adoptive
relationships; provided, however, that if the Company adopts a different
definition of "immediate family" (or similar term) in connection with the
transferability of employee stock options awarded to employees of the Company,
such definition shall apply, without further action of the Board, to the Plan.
9. Term
The Effective Date shall be the date of the approval of the Plan of
Reorganization of the Company and its parent companies, assuming the Plan is
approved by the stockholders of the Company prior to such date. Unless earlier
terminated in accordance with Section 10 below, the Plan shall expire on the
date of the Annual Meeting held in 2010. Grants of Director Options shall be
made in connection with the Annual Meeting held in 2010, and shall be the last
grants made under the Plan. Expiration of the Plan in connection with the Annual
Meeting held in 2010 shall not affect awards of Director Options made prior to
such Annual Meeting, which awards shall remain outstanding subject to the terms
hereof.
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10. Amendments
The Board may at any time and from time to time alter, amend, suspend
or terminate the Plan in whole of in part, including without limitation to amend
the provisions for determining the amount of or Directors Options to be issued
to a Non-Employee Director, provided, however, that:
(i) any amendment which under the requirements of applicable
law or stock exchange rule must be approved by the stockholders of the
Company shall not be effective unless and until such stockholder
approval has been obtained in compliance with such law or rule; and
(ii) except as provided in Section 11 below, the Board may
not, without the approval of the Company's stockholders, increase the
number of shares available for issuance under the Plan pursuant to
Section 4 above or reduce the exercise price of a Director Option.
No termination or amendment of the Plan that would adversely affect a
Non-Employee Director's rights under the Plan with respect to any award of
Director Options made prior to such action shall be effective as to such
Non-Employee Director unless he or she consents thereto.
11. Adjustment of and Changes in Shares
In the event of any merger, consolidation, recapitalization,
reclassification, stock dividend, distribution of property, special cash
dividend or other change in corporate structure affecting the shares, the Board,
in its discretion, may make (i) such proportionate adjustments as it considers
appropriate in the number and kind of shares authorized for issuance hereunder
in order to preserve, but not increase, the benefits or potential benefits
intended to be made available hereunder and/or (ii) such other adjustments as it
deems appropriate. The Board's determination as to what, if any, adjustments
shall be made shall be final and binding on the Company and all Non-Employee
Directors who receive grants under the Plan.
12. No Right to Re-election
Nothing in the Plan shall be deemed to create any obligation on the
part of the Board to nominate any of its members for re-election by the
Company's stockholders, nor confer upon any Non-Employee Director the right to
remain a member of the Board for any period of time, or at any particular rate
of compensation.
13. Governing Law
The Plan and all agreements entered into under the Plan shall be
construed in accordance with and governed by the laws of the State of Delaware.
14. No Restriction on Right of Company to Effect Corporate Changes
The Plan shall not affect in any way the right or power of the Company
or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or any
issue of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Common Stock or the rights thereof or which are convertible into or
exchangeable for Common Stock, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.
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15. Unfunded Plan
The Plan is unfunded. Prior to the payment or settlement of the
exercise of any Director Options, nothing contained herein shall give any
non-Employee Director any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Board may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Common Stock with respect to awards hereunder.
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