Pathmark Stores, Inc.

November 20, 2002

Ms. Eileen Scott
c/o Pathmark Stores, Inc.
200 Milik Street
Carteret, New Jersey 07008

Amended and Restated Employment Agreement

Dear Ms. Scott:

        The following sets forth the amended and restated terms and conditions of the agreement between Pathmark Stores, Inc. (the "Company") and you regarding your employment as an officer and employee of the Company and your service as a director of the Company during the Term (the "Agreement"). The parties hereto acknowledge and agree that this Agreement is intended to amend, restate and supersede in its entirety the employment agreement signed by you on March 1, 1999, as amended April 15, 1999, and as amended further by the Side Letter to the Sale and Retention Bonus Agreement, the Employment Agreement and Certain Additional Understanding, dated July 1, 2000 (collectively, the "Prior Agreements").

        1.    Term of Employment Under the Agreement.    The term of this Agreement (the "Term") shall commence on October 16, 2002 (the "Effective Date") and shall continue until the second anniversary of the Effective Date; provided, however, that, commencing on October 16, 2003 and on each successive October 16^th 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 4 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 Chief Executive Officer of the Company and shall report directly to the Board of Directors of the Company (the "Board"), 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. During the Term, the Company will take all responsible steps to assure that you continue to be elected or appointed to the Board. 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. It shall not be considered a violation of the foregoing for you to continue your service on any corporate, industry, civic or charitable boards or committees on which you serve on the Effective Date and to serve on any other such boards or committees, with the advance written approval of the Board. 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 $550,000 per annum, which will be reviewed annually by the Board and may be increased but not decreased by the Board or a duly appointed committee of the Board (the "Committee") on the basis of such review. 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, you will be eligible to earn an annual bonus (the "Annual Bonus") in an amount up to a maximum specified percentage of your actual Salary earned during the applicable Fiscal Year (the "Maximum Bonus Amount") set by the Compensation Committee (the "Compensation Committee") of the Board in accordance with the terms of the EIP and based upon targets set by the Compensation Committee 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)    Option Grant.    The following confirms the grant to you on October 22, 2002 (the "Date of Grant"), of an option (the "Option") to purchase 500,000 shares of common stock of the Company (the "Common Stock"), at an exercise price equal to $4.75, which was the fair market value of the Common Stock on the Date of Grant. The Option shall vest in substantially equal installments on each of the first through fourth anniversaries of the Date of Grant, subject to your continued employment on each such date, shall be subject to accelerated vesting in the event of a change in control of the Company (as defined in the applicable option agreement) and shall be subject to the terms and conditions set forth in the Pathmark Stores, Inc. 2000 Employee Equity Plan and the form of option agreement approved by the Compensation Committee for option grants thereunder.

        (d)    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, unless you and the Company have signed a supplemental retirement agreement.

        (e)    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.    Effect of Termination of Employment.    Definitions of terms first used and not otherwise defined in this Section 4 are set forth in Section 4(g).

        (a)    Involuntary Termination.    (i) Subject to 4(f) below, in the event of your Involuntary Termination (as defined in Section 4(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 4(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(e) above.

        (ii)  In addition, in the event of your Involuntary Termination during the Term, the Company shall pay you a severance amount equal to your Salary, as in effect on the Date of Termination, multiplied by two (the "Severance Amount"). You shall receive the Severance Amount in installments during the period beginning on the Date of Termination and ending on the second anniversary thereof (the "Severance Period") in accordance with the Company's ordinary payroll practices.


 

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