Exhibit 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT, made and entered into as of the 11th day of
November, 2002, by and between THE GREAT ATLANTIC & PACIFIC TEA COMPANY OF
CANADA LIMITED (the "Company"), and Xxxx Xxxxx (the "Employee").
W I T N E S S E T H
WHEREAS, the Company and the Employee (the "Parties") have
agreed to enter into this agreement (the "Agreement) relating to the employment
of the Employee by the Company;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable consideration, the
Parties, intending to be legally bound, agree as follows:
30. Term of Employment.
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(a) The Company agrees to continue to employ the Employee, and the Employee
agrees to remain in the employment of the Company, in accordance with the terms
and provisions of this Agreement, for the period set forth below (the
"Employment Period").
(b) The Employment Period under this Agreement shall commence as of (employment
date) and, subject only to the provisions of Sections 7, 8 and 9 below relating
to termination of employment, shall continue until (i) the close of business on
(18 months from employment date) or (ii) such later date as shall result from
the operation of subparagraph (c) below (the "Terminal Date").
(c) Commencing on (18 months from employment date), and on the first business
day of each month thereafter (such date and each such first business day, the
"Renewal Date") the Terminal Date set forth in subparagraph (b) above shall be
extended so as to occur eighteen months from the Renewal Date unless either the
Company or the Employee shall have given written notice to the other Party on or
before such Renewal Date that the Terminal Date is not to be extended.
31. Duties.
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It is the intention of the Parties that during the term of his
employment under this Agreement, the Employee will serve as Chief Executive
Officer and President of the Company. The Employee will devote his full business
time and attention to the affairs of the Company and his duties as its Chief
Executive Officer and President. The Employee will have such duties as are
appropriate to his position as Chief Executive Officer and President of the
Company, and will have such authority as required to enable him to perform these
duties. Consistent with the foregoing, the Employee shall comply with all
reasonable instructions of the Chairman and Chief Executive Officer of The Great
Atlantic and Pacific Tea Company, Inc., the parent of the Company (the "Parent
Company"). The Employee will be based in Etobicoke, Ontario and his services
will be rendered there except insofar as travel may be involved in connection
with his regular duties. The Employee will report directly to the Chairman and
Chief Executive Officer of The Great A&P Tea Company, Inc., the parent of the
Company.
32. Salary and Bonus.
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32.1 Salary. The Company will pay the Employee a base salary at an initial
annual rate of not less than CN$500,000, which base salary as in effect from
time to time will not be reduced and will be reviewed periodically (at intervals
of not more than twelve (12) months) by the Chairman and Chief Executive Officer
and the Senior Vice President--People Resources and Services of the Parent
Company, and the Compensation Committee of the Board of Directors of the Parent
Company (the "Parent Board") for the purpose of considering increases thereof.
In evaluating increases in the Employee's base salary, the Chairman and Chief
Executive Officer and the Senior Vice President--People Resources and Services
of the Parent Company, and the Compensation Committee of the Parent Board will
take into account such factors as corporate performance, individual merit, and
such other considerations as it deems appropriate. The Employee's base salary
will be paid in accordance with the standard practices for other corporate
executives of the Company.
32.2 Bonuses.
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The Employee will be eligible to receive annually or otherwise
any bonus awards, whether payable in cash, shares of common stock of the Parent
Company or otherwise, which the Parent Company, the Compensation Committee of
the Parent Board or such other authorized committee of the Parent Board
determines to award or grant.
33. Benefit Programs.
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4.1 Other Benefits. The Employee will receive such benefits
and awards, including without limitation stock options and restricted share
awards, as the Compensation Committee of the Parent Board shall determine and
will be eligible to participate in all employee benefit plans and programs of
the Company from time to time in effect for the benefit of senior executives and
managers comparable to their level in the Company, including, but not limited
to, pension and other retirement plans, group life insurance, hospitalization
and surgical and major medical coverages, sick leave, salary continuation
arrangements, vacations and holidays, long-term disability, and such other
benefits as are or may be made available from time to time to senior executives
and managers comparable to their level in the Company.
34. Business Expenses and Perquisites.
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The Employee will be reimbursed for all reasonable expenses
incurred by him in connection with the conduct of the business of the Company,
provided he properly accounts therefor in accordance with the Company's
policies.
35. Office and Services Furnished.
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The Company shall furnish the Employee with office space, secretarial assistance
and such other facilities and services as shall be suitable to the Employee's
position and adequate for the performance of his duties hereunder.
36. Termination of Employment by the Company.
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36.1 Involuntary Termination by the Company Other Than For Permanent and Total
Disability or For Cause. The Company may terminate the Employee's employment at
any time and for any reason by giving him a written notice of termination to
that effect at least 45 days before the date of termination. In the event the
Company terminates the Employee's employment for any reason other than for
Permanent and Total Disability, as provided in Section 7.2, below, or for Cause,
as provided in Section 7.3, below, the Employee shall be entitled to the
benefits described in Section 10 or Section 11, whichever is applicable.
36.2 Termination Due to Permanent and Total Disability. If the Employee incurs a
Permanent and Total Disability, as defined below, the Company may terminate the
Employee's employment by giving him written notice of termination at least 45
days before the date of such termination. In the event of such termination of
the Employee's employment because of Permanent and Total Disability, the
Employee shall be entitled to receive (i) his base salary pursuant to Section
3.1 and any other compensation and benefits to the extent actually earned by the
Employee pursuant to this Agreement or any benefit plan or program of the
Company as of the date of such termination of employment at the normal time for
payment of such salary, compensation or benefits, and (ii) any reimbursement
amounts owing under Section 5. For purposes of this Agreement, the Employee
shall be considered to have incurred a Permanent and Total Disability if he is
unable to substantially carry out his duties under this Agreement by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months. The existence of such Permanent
and Total Disability shall be evidenced by such medical certification as the
Secretary of the Company shall require and shall be subject to the approval of
the Compensation Committee of the Board of Directors of the Parent Company.
36.3 Termination for Cause. The Company may terminate the Employee's employment
for Cause if (i) the Employee willfully, substantially, and continually fails to
perform the duties for which he is employed by the Company, (ii) the Employee
willfully fails to comply with the reasonable instructions of the Chairman and
Chief Executive Officer of the Parent Company, (iii) the Employee willfully
engages in conduct which is or would reasonably be expected to be materially and
demonstrably injurious to the Company, (iv) the Employee willfully engages in an
act or acts of dishonesty resulting in material personal gain to the Employee at
the expense of the Company, (v) the Employee is convicted of a felony, (vi) the
Employee engages in an act or acts of gross malfeasance in connection with his
employment hereunder, (vii) the Employee commits a material breach of the
confidentiality provision set forth in Section 15, or (viii) the Employee
exhibits demonstrable evidence of alcohol or drug abuse having a substantial
adverse effect on his job performance hereunder. The Company shall exercise its
right to terminate the Employee's employment for Cause by giving him written
notice of termination at least 45 days before the date of such termination
specifying in reasonable detail the circumstances constituting such Cause. In
the event of such termination of the Employee's employment for Cause, the
Employee shall be entitled to receive (i) his base salary pursuant to Section
3.1 and any other compensation and benefits to the extent actually earned
pursuant to this Agreement or any benefit plan or program of the Company as of
the date of such termination at the normal time for payment of such salary,
compensation or benefits and (ii) any amounts owed under the reimbursement
policy of Section 5.
37. Termination of Employment by the Employee.
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(a) Good Reason. The Employee may terminate his employment for Good Reason by
giving the Company a written notice of termination at least 45 days before the
date of such termination specifying in reasonable detail the circumstances
constituting such Good Reason. In the event of the Employee's termination of his
employment for Good Reason, the Employee shall be entitled to the benefits
described in Section 10 or Section 11, whichever is applicable. For purposes of
this Agreement, Good Reason shall mean (i) a significant reduction in the scope
of the Employee's authority, functions, duties or responsibilities from that
which is contemplated by this Agreement, (ii) the relocation of the Employee's
office location to a location more than 50 miles away from the Employee's
principal place of employment on November 1, 2000, (iii) any reduction in the
Employee's base salary, or (iv) a significant reduction in the employee benefits
provided to the Employee other than in connection with an across-the-board
reduction similarly affecting substantially all senior executives of the
Company. If an event constituting a ground for termination of employment for
Good Reason occurs, and the Employee fails to give notice of termination within
3 months after the occurrence of such event, the Employee shall be deemed to
have waived [his] right to terminate employment for Good Reason in connection
with such event (but not for any other event for which the 3-month period has
not expired).
(b) Other. The Employee may terminate [his] employment at any time and for any
reason, other than pursuant to subsection (a) above, by giving the Company a
written notice of termination to that effect at least 45 days before the date of
termination. In the event of the Employee's termination of [his] employment
pursuant to this subsection (b), the Employee shall be entitled to receive (i)
[his]base salary pursuant to Section 3.1 and any other compensation and benefits
to the extent actually earned by the Employee pursuant to this Agreement or any
benefit plan or program of the Company as of the date of such termination at the
normal time for payment of such salary, compensation or benefits, and (ii) any
reimbursement amounts owing under Section 5.
38. Termination of Employment By Death. In the event of the death of the
Employee during the course of his employment hereunder, the Employee's estate
shall be entitled to receive (i) his base salary pursuant to Section 3.1 and any
other compensation and benefits to the extent actually earned by the Employee
pursuant to this Agreement or any other benefit plan or program of the Company
as of the date of such termination at the normal time for payment of such
salary, compensation or benefits, and (ii) any reimbursement amounts owing under
Section 5. In addition, in the event of such death, the Employee's beneficiaries
shall receive any death benefits owed to them under the Company's employee
benefit plans.
39. Benefits Upon Termination Without Cause or For Good Reason (No Change of
Control). If (a) the Employee's employment with the Company shall terminate (i)
because of termination by the Company pursuant to Section 7.1 other than for
Cause and other than because of Permanent and Total Disability, or (ii) because
of termination by the Employee for Good Reason pursuant to Section 8(a), and (b)
such termination of employment does not occur within 13 months following a
"Change of Control" of the Company (as defined in Section 12), the Employee
shall be entitled to the following:
(a) The Company shall pay to the Employee his base salary pursuant to Section
3.1 and any other compensation and benefits to the extent actually earned by the
Employee under this Agreement or any benefit plan or program of the Company as
of the date of such termination at the normal time for payment of such salary,
compensation or benefits.
(b) The Company shall pay the Employee any reimbursement amounts owing
under Section 5.
(c) The Company shall pay to the Employee as a severance benefit for each month
during the 24 month period beginning with the month next following the date of
termination of the Employee's employment an amount equal to one-twelfth of the
sum of (i) his annual rate of base salary immediately preceding his termination
of employment, and (ii) the average of his three highest annual bonuses awarded
under the Company's annual management incentive bonus plan for any of the five
calendar years preceding his termination of employment (or, if he was not
eligible for a bonus for at least three calendar years in such five-year period,
then the average of such bonuses for all of the calendar years in such five-year
period for which he was eligible, and if he was not eligible for such a bonus in
any previous year, then 100% of [his] target annual bonus for the year of
termination of his employment), with any deferred bonuses counting for the year
earned rather than the year paid. Each such monthly benefit shall be paid no
later than the last day of the applicable month. In the event that the Employee
dies before the end of such 24-month period, the payments for the remainder of
such period shall be made to the Employee's estate.
(d) The Company shall pay to the Employee as a bonus for the year of termination
of his employment an amount equal to a portion (determined as provided in the
next sentence) of the bonus that the Employee would actually have received under
the Company's annual management incentive bonus plan for the calendar year of
termination of the Employee's employment if his employment had not terminated
(determined on the basis of his actual bonus opportunity and the actual degree
of achievement of the applicable performance goals) or, if no bonus opportunity
for that year had been established for the Employee at the time of such
termination of employment, such portion of the bonus awarded to him under the
Company's annual management incentive bonus plan for the calendar year
immediately preceding the calendar year of the termination of his employment,
with deferred bonuses counting for the year earned rather than the year paid.
Such portion shall be determined by dividing the number of days of the
Employee's employment during such calendar year up to his termination of
employment by 365 (366 if a leap year). Such payment shall be made on or about
the date on which bonuses for the applicable year are paid to executives of the
Company generally under the Company's annual management incentive bonus plan,
and the Employee shall have no right to any further bonuses under said plan.
(e) During the period of 24 months beginning on the date of the Employee's
termination of employment, the Employee shall remain covered by the medical,
dental, vision, life insurance, and, if reasonably commercially available
through nationally reputable insurance carriers, long-term disability plans of
the Company that covered him immediately prior to his termination of employment
as if he had remained in employment for such period. In the event that the
Employee's participation in any such plan is barred, the Company shall arrange
to provide the Employee with substantially similar benefits (but, in the case of
long-term disability benefits, only if reasonably commercially available). Any
medical insurance coverage for such 24-month period pursuant to this subsection
(e) shall become secondary upon the earlier of (i) the date on which the
Employee begins to be covered by comparable medical coverage provided by a new
employer, or (ii) the earliest date upon which the Employee becomes eligible for
Medicare or a comparable Government insurance program.
40. Benefits Upon Termination Without Cause or For Good Reason (Change of
Control). If (a) the Employee's employment with the Company shall terminate (i)
because of termination by the Company pursuant to Section 7.1 other than for
Cause and other than because of Permanent and Total Disability, (ii) because of
termination by the Employee for Good Reason pursuant to Section 8(a), or (iii)
for any reason during the 30 days beginning on the first anniversary of a Change
of Control, and (b) such termination of employment occurs within 13 months
following a "Change of Control" of the Company (as defined in Section 12), the
Employee shall be entitled to the following:
(a) The Company shall pay to the Employee his base salary pursuant to Section
3.1 and any other compensation and benefits to the extent actually earned by the
Employee under this Agreement or any benefit plan or program of the Company as
of the date of such termination at the normal time for payment of such salary,
compensation or benefits.
(b) The Company shall pay the Employee any reimbursement amounts owing under
Section 5.
(c) The Company shall pay to the Employee as a severance benefit an amount equal
to three (3) times the sum of (i) his annual rate of base salary immediately
preceding his termination of employment, and (ii) the average of his three
highest annual bonuses awarded under the Company's annual management incentive
bonus plan for any of the five calendar years preceding his termination of
employment (or, if he was not eligible for a bonus for at least three calendar
years in such five-year period, then the average of such bonuses for all of the
calendar years in such five-year period for which he was eligible, and if he was
not eligible for such a bonus in any previous year, then 100% of his target
annual bonus for the year of termination of his employment), with any deferred
bonuses counting for the year earned rather than the year paid. Such severance
benefit shall be paid in a lump sum within 45 days after the date of such
termination of employment.
(d) The Company shall pay to the Employee as a bonus for the year of termination
of his employment an amount equal to a portion (determined as provided in the
next sentence) of the bonus that the Employee would actually have received under
the Company's annual management incentive bonus plan for the calendar year of
termination of the Employee's employment if his employment had not terminated
(determined on the basis of his actual bonus opportunity and the actual degree
of achievement of the applicable performance goals) or, if no bonus opportunity
for that year had been established for the Employee at the time of such
termination of employment, such portion of the bonus awarded to him under the
Company's annual management incentive bonus plan for the calendar year
immediately preceding the calendar year of the termination of his employment,
with deferred bonuses counting for the year earned rather than the year paid.
Such portion shall be determined by dividing the number of days of the
Employee's employment during such calendar year up to his termination of
employment by 365 (366 if a leap year). Such payment shall be made on or about
the date on which bonuses for the applicable year are paid to executives of the
Company generally under the Company's annual management incentive bonus plan,
and the Employee shall have no right to any further bonuses under said plan.
(e) During the period of 36 months beginning on the date of the Employee's
termination of employment, the Employee shall remain covered by the medical,
dental, vision, life insurance, and, if reasonably commercially available
through nationally reputable insurance carriers, long-term disability plans of
the Company that covered him immediately prior to his termination of employment
as if he had remained in employment for such period. In the event that the
Employee's participation in any such plan is barred, the Company shall arrange
to provide the Employee with substantially similar benefits (but, in the case of
long-term disability benefits, only if reasonably commercially available). Any
medical insurance coverage for such 36-month period pursuant to this subsection
(e) shall become secondary upon the earlier of (i) the date on which the
Employee begins to be covered by comparable medical coverage provided by a new
employer, or (ii) the earliest date upon which the Employee becomes eligible for
Medicare or a comparable Government insurance program.
41. Change of Control. For the purposes of this Agreement, a "Change of Control"
shall be deemed to have occurred if (a) any person or persons acting together
which would constitute a "group" for purposes of Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (other than the Parent
Company, any subsidiary of the Parent Company, and Tengelmann
Warenhandelsgesellschaft (a partnership organized under the laws of the Federal
Republic of Germany or any successor to such partnership, hereinafter
"Tengelmann")) shall beneficially own (as defined in Rule 13d-3 of the Exchange
Act), directly or indirectly, at least 51% of the total voting power of all
classes of capital stock of the Company entitled to vote generally in the
election of the Company's Board of Directors; (b) the shareholders of the Parent
Company approve (i) a plan of complete liquidation of the Company or (ii) an
agreement providing for the merger or consolidation of the Company other than a
merger or consolidation in which (x) the holders of the common stock of the
Company immediately prior to the consolidation or merger have, directly or
indirectly, at least a majority of the common stock of the continuing or
surviving corporation immediately after such consolidation or merger or (y) the
Company's Board of Directors immediately prior to the merger or consolidation
would, immediately after the merger or consolidation, constitute a majority of
the board of directors of the continuing or surviving corporation; or (c) the
shareholders of the Company approve an agreement (or agreements) providing for
the sale or other disposition (in one transaction or a series of transactions)
of all or substantially all of the assets of the Company.
42. Entitlement to Other Benefits.
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Except as otherwise provided in this Agreement, this Agreement shall not be
construed as limiting in any way any rights or benefits that the Employee or
his spouse, dependents or beneficiaries may have pursuant to any other plan or
program of the Company.
43. Non-Competition.
------------------------
The Employee agrees that during the term of this Agreement and
for a period of eighteen months following termination of his employment, the
Employee will not, within any of the geographical areas of the United States or
Canada in which the Company is then conducting business (either directly or
through franchisees), directly or indirectly, own, manage, operate, control, be
employed by, participate in, provide consulting services to, or be connected in
any manner with the ownership, management, operation or control of any business
similar to any of the types of businesses conducted by the Company or the Parent
Company to any significant extent during his employment or on the date of
termination of his employment, except the Employee may own for investment
purposes up to 1% of the capital stock of any company whose stock is publicly
traded, and during such eighteen month period following termination of his
employment the Employee will not contact or solicit employees of the Company or
the Parent Company for the purpose of inducing such employees to leave the
employ of the Company or the Parent Company.
44. Confidential Information and Trade Secrets.
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The Employee hereby acknowledges that he will have access to
and become acquainted with various trade secrets and proprietary information of
the Company and the Parent Company and other confidential information relating
to the Company and the Parent Company. The Employee covenants that he will not,
directly or indirectly, disclose or use such information except as is necessary
and appropriate in connection with his employment by the Company and that he
will otherwise adhere in all respects to the Company's policies against the use
or disclosure of such information.
45. Arbitration; Injunctive Relief.
------------------------------
Any controversy or claim arising out of or relating to this
Agreement, directly or indirectly, or the performance or breach thereof, will be
settled by arbitration in accordance with the rules of the Arbitrations Act of
Ontario, and judgment upon the award rendered by the arbitrators may be entered
in any court having jurisdiction thereof. The arbitration will be held in
Xxxxxxx, Xxxxxxx, or such other place as may be agreed upon at the time by the
parties to the arbitration. The parties shall bear their own expenses in
connection with any arbitration or proceeding arising out of or relating to this
Agreement, directly or indirectly, or the performance or breach thereof;
provided, however, that in the event that the Employee substantially prevails,
the Company agrees promptly to reimburse the Employee for all expenses
(including costs and fees of witnesses, evidence and attorneys fees and
expenses) reasonably incurred by him in investigating, prosecuting, defending,
or preparing to prosecute or defend any action, proceeding or claim arising out
of or relating to this Agreement, directly or indirectly, or the performance or
breach thereof. The parties acknowledge and agree that a breach of Employee's
obligations under Sections 14 or 15 could cause irreparable harm to Company for
which Company would have no adequate remedy at law, and further agree that,
notwithstanding the agreement of the parties to arbitrate controversies or
claims as set forth above, the Company may apply to a court of competent
jurisdiction to seek to enjoin preliminarily or permanently any breach or
threatened breach of the Employee's obligations under Sections 14 and 15.
46. Indemnification.
------------------------
The Company shall indemnify and hold the Employee harmless to
the fullest extent legally permissible under the laws of the Province of
Ontario, against any and all expenses, liabilities and losses (including
attorney's fees, judgments, fines and amounts paid in settlement) reasonably
incurred or suffered by him by reason of any claim or cause of action asserted
against him because of his service at any time as a director or officer of the
Company. The Company shall advance to the Employee the amount of his expenses
incurred in connection with any proceeding relating to such service to the
fullest extent legally permissible under the laws of the Province of Ontario .
Notwithstanding the foregoing, the Company's obligations pursuant to this
Section 17 shall not apply in the case of any claim or cause of action by or in
the right of the Company or any subsidiary thereof.
47. Liability Insurance.
----------------------------
To the extent that Company maintains a directors and officers
liability insurance policy in effect, the Company will take all steps necessary
to ensure that the Employee is covered under such policy for his service as a
director or officer of the Company or any subsidiary of the Company with respect
to claims made at any time with respect to such service.
48. No Duty to Seek Employment. The Employee shall not be under any duty or
obligation to seek or accept other employment following termination of
employment, and no amount, payment or benefits due to the Employee hereunder
shall be reduced or suspended if the Employee accepts subsequent employment.
49. Deductions and Withholding.
-----------------------------------
All amounts payable or which become payable under any
provision of this Agreement shall be subject to any deductions authorized by the
Employee and any deductions and withholdings required by law.
50. Governing Law.
----------------------
The validity, interpretation and performance of this Agreement
will be governed by the laws of the Province of Ontario without regard to the
conflict of law provisions.
51. Notice.
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Any written notice required to be given by one Party to the
other Party hereunder will be deemed effected if mailed by registered mail:
To the Company at: The Great Atlantic & Pacific Tea Company
0 Xxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
To the Employee at: Xxxx Xxxxx
00 Xxxxxxxxxx Xxxxxxxx
Xxxxxxx, Xxx Xxxxxxxxx
X0X 0X0
or such other address as may be stated in a notice given as hereinbefore
provided.
52. Severability.
---------------------
If any one or more of the provisions contained in this
Agreement is held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability will not affect any other provision
hereof.
53. Successors and Assigns.
-------------------------------
This Agreement will be binding upon and inure to the benefit
of the Parties hereto and their personal representatives, and, in the case of
the Company, its successors and assigns. To the extent the Company's obligations
under this Agreement are transferred to any successor or assign, such successor
or assign shall be treated as the "Company" for purposes of this Agreement.
Other than as contemplated by this Agreement, the Employee may not assign his
rights or duties under this Agreement.
54. Continuing Effect.
--------------------------
Wherever appropriate to the intention of the Parties hereto,
the respective rights and obligations of the Parties, including the obligations
referred to in Sections 10, 11, 14, and 15, hereof, will survive any termination
or expiration of the term of this Agreement.
55. Entire Agreement.
-------------------------
This Agreement constitutes the entire agreement between the
Parties and supersedes any and all other agreements and understandings between
the Parties in respect of the matters addressed in this Agreement.
56. Amendment and Waiver.
-----------------------------
No amendment or waiver of any provision of this Agreement
shall be effective, unless the same shall be in writing and signed by the
Parties, and then such amendment, waiver or consent shall be effective only in
the specific instance or for the specific purpose for which such amendment,
waiver or consent was given.
57. Counterparts.
---------------------
This Agreement may be executed in any number of counterparts, each
of which when so executed shall be deemed an original but all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its duly authorized officer and the Employee has hereunto set his
hand as of the day and year first above written.
THE GREAT ATLANTIC & PACIFIC TEA COMPANY OF CANADA, LIMITED
------------------------------------
Xxxx Xxxxx
President, and Chief Executive Officer
October 22, 2002
Xx. Xxxx Xxxxx
00 Xxxxxxxxxx Xxxxxxxx
Xxxxxxx, Xxx Xxxxxxxxx
X0X 0X0
Dear Xxxx,
The management team at The Great Atlantic & Pacific Tea Company joins me in
offering you the position of Chief Executive Officer and President of our
Canadian Company reporting directly to me. In this role, you will be a member of
the Executive Committee of the Company. This offer is conditioned on a
satisfactory reference check. Below are the details:
Your base salary will be CN$500,000 per annum, payable in bi-weekly
increments (26 times per year) at a rate of CN$19,230.69. In
consideration of your key role at A&P, Board of Directors approval will
be sought for a one-time grant of 75,000 stock options upon your
employment with A&P. The option price is 100% of market price on the
date of grant, i.e., the effective date of your employment with A&P.
You will participate in the Fiscal Year 2002 Management Incentive Plan,
on a guaranteed basis, pro-rated to your hire date, at a target bonus
rate of 60% of your base salary. Additionally, based upon individual
and company performance and approval by the Board of Directors, you
will be eligible for stock options under the A&P Stock Options Plan at
the beginning of Fiscal Year 2004. The current annual stock option
target guideline for your position is 25,000 shares.
You will receive relocation benefits as outlined in the enclosed
Company Relocation Benefits Program. In addition you are eligible for a
company car as per the Company Lease Car Plan including maintenance and
fuel costs. We also anticipate your entering into the company's
Executive Employment Agreement.
You will be enrolled in the Canadian A&P Corporate Retirement Pension
Plan after one year of service. Effective with your employment date,
you will also be eligible to participate in the Supplemental Executive
Retirement Plan (SERP). SERP provides an annuity of up to 60% of final
(5 year) average salary at age 65, with 20 years of service. A copy of
our complete benefits package will be forwarded to you under separate
cover. However, enclosed is a copy of a "Summary of Executive Benefits"
for your review. Please note that as a Company Officer, you are
eligible for an annual physical.
Xxxx, we are delighted with your decision to join A&P. We believe your
association with our organization will be extremely beneficial to both of us.
Sincerely,
Enclosed is a duplicate copy of this letter and a Code of Conduct both of which
I would appreciate your signing and returning indicating agreement with the
above.
------------------------------------- -----------------------
XXXX XXXXX DATE
Exhibit 10.10
September 18, 2002
Xxxxx Xxxxxxxx
0000 Xxx Xxxxxxxx Xxxx.
Xxxxxxxxxx, XX 00000
Dear Xxxxx:
The management team at The Great Atlantic & Pacific Tea Company joins me in
offering you the position of Senior Vice President and Chief Strategy Officer,
effective October 2, 2002. You will report to Xxxxxxxxx Xxxx, Chairman of the
Board and Chief Executive Officer. In this role, you will be a member of the
Executive Committee of the Company. This offer is conditioned on a satisfactory
reference check and substance abuse testing. Below are the details:
Your base salary will be $325,000 per annum, payable in bi-weekly
increments (26 times per year) at a rate of $12,500. In consideration
of your key role at A&P, Board of Directors approval will be sought for
a one-time grant of 25,000 stock options upon your employment with A&P.
The option price is 100% of market price on the date of grant, i.e.,
the effective date of your employment with A&P.
You will participate in the Management Incentive Plan at a target bonus
rate of 40% of your base salary, pro-rated to your hire date. Your
bonus will be guaranteed for the first twelve months of employment.
Additionally, based upon individual and company performance and
approval by the Board of Directors, you will be eligible for stock
options under the A&P Stock Options Plan at the beginning of Fiscal
Year 2003. The current annual stock option target guideline for your
position is 25,000 shares.
You will receive relocation benefits as outlined in the enclosed
Company Relocation Benefits Program. If necessary, temporary living
expenses will be approved for up to an additional three months to that
provided through the Relocation Program.
You will be eligible to participate in the A&P Retirement and Savings
Plan upon completion of one year of employment. A copy of our complete
benefits package is enclosed for your review. Please note that as a
Company Officer, you are eligible for an annual physical examination
with the Executive Health Group. You will be entitled to four weeks of
vacation on an annual basis. Furthermore, we anticipate your entering
into the Company's Executive Employment Agreement.
Xxxxx, we are delighted with your decision to join A&P. We believe your
association with our organization will be extremely beneficial to both of us.
Sincerely,
Enclosed is a duplicate copy of this letter and a Code of Conduct both of which
I would appreciate your signing and returning indicating agreement with the
above.
------------------------------------- ------------------
XXXXX XXXXXXXX DATE
Exhibit 10.14
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT, made and entered into as of the 28th day of October
2002, by and between THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. (the
"Company"), and Xxxxx Xxxxx (the "Employee").
W I T N E S S E T H
WHEREAS, the Company and the Employee (the "Parties") have
agreed to enter into this agreement (the "Agreement) relating to the employment
of the Employee by the Company;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable consideration, the
Parties, intending to be legally bound, agree as follows:
1. Term of Employment.
---------------------------
(a) The Company agrees to continue to employ the Employee, and the Employee
agrees to remain in the employment of the Company, in accordance with the terms
and provisions of this Agreement, for the period set forth below (the
"Employment Period").
(b) The Employment Period under this Agreement shall commence as of November 11,
2002 and, subject only to the provisions of Sections 7, 8 and 9 below relating
to termination of employment, shall continue until (i) the close of business on
November 10, 2005 or (ii) such later date as shall result from the operation of
subparagraph (c) below (the "Terminal Date").
(c) Commencing on May 11, 2004, and on the first business day of each month
thereafter (such date and each such first business day, the "Renewal Date") the
Terminal Date set forth in subparagraph (b) above shall be extended so as to
occur eighteen months from the Renewal Date unless either the Company or the
Employee shall have given written notice to the other Party on or before such
Renewal Date that the Terminal Date is not to be extended.
2. Duties.
---------------
It is the intention of the Parties that during the term of his
employment under this Agreement, the Employee will serve as U.S. Chief Executive
Officer and President of the Company. The Employee will devote his full business
time and attention to the affairs of the Company and his duties as its U.S.
Chief Executive Officer and President. The Employee will have such duties as are
appropriate to his position as U.S. Chief Executive Officer and President, and
will have such authority as required to enable him to perform these duties.
Consistent with the foregoing, the Employee shall comply with all reasonable
instructions of the Chairman and Chief Executive Officer of the Company. The
Employee will be based in Montvale, New Jersey and his services will be rendered
there except insofar as travel may be involved in connection with his regular
duties. The Employee will report directly to the Chairman and Chief Executive
Officer of the Company.
3. Salary and Bonus.
-------------------------
3.1 Salary. The Company will pay the Employee a base salary at an initial annual
rate of not less than $500,000.00, which base salary as in effect from time to
time will not be reduced and will be reviewed periodically (at intervals of not
more than twelve (12) months) by the Compensation Committee of the Board of
Directors (the "Board") for the purpose of considering increases thereof. In
evaluating increases in the Employee's base salary, the Compensation Committee
of the Board will take into account such factors as corporate performance,
individual merit, and such other considerations as it deems appropriate. The
Employee's base salary will be paid in accordance with the standard practices
for other corporate executives of the Company.
3.2 Bonuses.
----------------
The Employee will be eligible to receive annually or otherwise
any bonus awards, whether payable in cash, shares of common stock of the Company
or otherwise, which the Company, the Compensation Committee of the Board or such
other authorized committee of the Board determines to award or grant.
4. Benefit Programs.
-------------------------
The Employee will receive such benefits and awards, including
without limitation stock options and restricted share awards, as the
Compensation Committee of the Board shall determine and will be eligible to
participate in all employee benefit plans and programs of the Company from time
to time in effect for the benefit of senior executives of the Company,
including, but not limited to, pension and other retirement plans, group life
insurance, hospitalization and surgical and major medical coverages, sick leave,
salary continuation arrangements, vacations and holidays, long-term disability,
and such other benefits as are or may be made available from time to time to
senior executives of the Company.
5. Business Expenses and Perquisites.
------------------------------------------
The Employee will be reimbursed for all reasonable expenses
incurred by him in connection with the conduct of the business of the Company,
provided he properly accounts therefor in accordance with the Company's
policies. He will also be entitled to such other perquisites as are customary
for senior executives of the Company.
6. Office and Services Furnished.
---------------------------------------
The Company shall furnish the Employee with office space, secretarial
assistance and such other facilities and services as shall be suitable to the
Employee's position and adequate for the performance of his duties hereunder.
7. Termination of Employment by the Company.
-------------------------------------------------
7.1 Involuntary Termination by the Company Other Than For Permanent and Total
Disability or For Cause. The Company may terminate the Employee's employment at
any time and for any reason by giving him a written notice of termination to
that effect at least 45 days before the date of termination. In the event the
Company terminates the Employee's employment for any reason other than for
Permanent and Total Disability, as provided in Section 7.2, below, or for Cause,
as provided in Section 7.3, below, the Employee shall be entitled to the
benefits described in Section 10 or Section 11, whichever is applicable.
7.2 Termination Due to Permanent and Total Disability. If the Employee incurs a
Permanent and Total Disability, as defined below, the Company may terminate the
Employee's employment by giving him written notice of termination at least 45
days before the date of such termination. In the event of such termination of
the Employee's employment because of Permanent and Total Disability, the
Employee shall be entitled to receive (i) his base salary pursuant to Section
3.1 and any other compensation and benefits to the extent actually earned by the
Employee pursuant to this Agreement or any benefit plan or program of the
Company as of the date of such termination of employment at the normal time for
payment of such salary, compensation or benefits, and (ii) any reimbursement
amounts owing under Section 5. For purposes of this Agreement, the Employee
shall be considered to have incurred a Permanent and Total Disability if he is
unable to substantially carry out his duties under this Agreement by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months. The existence of such Permanent
and Total Disability shall be evidenced by such medical certification as the
Secretary of the Company shall require and shall be subject to the approval of
the Compensation Committee of the Board of Directors of the Company.
7.3 Termination for Cause. The Company may terminate the Employee's employment
for Cause if (i) the Employee willfully, substantially, and continually fails to
perform the duties for which he is employed by the Company, (ii) the Employee
willfully fails to comply with the reasonable instructions of the Chairman and
Chief Executive Officer of the Company, (iii) the Employee willfully engages in
conduct which is or would reasonably be expected to be materially and
demonstrably injurious to the Company, (iv) the Employee willfully engages in an
act or acts of dishonesty resulting in material personal gain to the Employee at
the expense of the Company, (v) the Employee is convicted of a felony, (vi) the
Employee engages in an act or acts of gross malfeasance in connection with his
employment hereunder, (vii) the Employee commits a material breach of the
confidentiality provision set forth in Section 15, or (viii) the Employee
exhibits demonstrable evidence of alcohol or drug abuse having a substantial
adverse effect on his job performance hereunder. The Company shall exercise its
right to terminate the Employee's employment for Cause by giving him written
notice of termination at least 45 days before the date of such termination
specifying in reasonable detail the circumstances constituting such Cause. In
the event of such termination of the Employee's employment for Cause, the
Employee shall be entitled to receive (i) his base salary pursuant to Section
3.1 and any other compensation and benefits to the extent actually earned
pursuant to this Agreement or any benefit plan or program of the Company as of
the date of such termination at the normal time for payment of such salary,
compensation or benefits and (ii) any amounts owed under the reimbursement
policy of Section 5.
8. Termination of Employment by the Employee.
--------------------------------------------------
(a) Good Reason. The Employee may terminate his employment for Good Reason by
giving the Company a written notice of termination at least 45 days before the
date of such termination specifying in reasonable detail the circumstances
constituting such Good Reason. In the event of the Employee's termination of his
employment for Good Reason, the Employee shall be entitled to the benefits
described in Section 10 or Section 11, whichever is applicable. For purposes of
this Agreement, Good Reason shall mean (i) a significant reduction in the scope
of the Employee's authority, functions, duties or responsibilities from that
which is contemplated by this Agreement, (ii) the Employee being required to
report directly to someone other than the Chairman and Chief Executive Officer
of the Company, (iii) the relocation of the Employee's office location to a
location more than 50 miles away from the Employee's principal place of
employment on November 1, 2000, (iv) any reduction in the Employee's base
salary, or (v) a significant reduction in the employee benefits provided to the
Employee other than in connection with an across-the-board reduction similarly
affecting substantially all senior executives of the Company. If an event
constituting a ground for termination of employment for Good Reason occurs, and
the Employee fails to give notice of termination within 3 months after the
occurrence of such event, the Employee shall be deemed to have waived his right
to terminate employment for Good Reason in connection with such event (but not
for any other event for which the 3-month period has not expired).
(b) Other. The Employee may terminate his employment at any time and for any
reason, other than pursuant to subsection (a) above, by giving the Company a
written notice of termination to that effect at least 45 days before the date of
termination. In the event of the Employee's termination of his employment
pursuant to this subsection (b), the Employee shall be entitled to receive (i)
his base salary pursuant to Section 3.1 and any other compensation and benefits
to the extent actually earned by the Employee pursuant to this Agreement or any
benefit plan or program of the Company as of the date of such termination at the
normal time for payment of such salary, compensation or benefits, and (ii) any
reimbursement amounts owing under Section 5.
9. Termination of Employment By Death. In the event of the death of the Employee
during the course of his employment hereunder, the Employee's estate shall be
entitled to receive (i) his base salary pursuant to Section 3.1 and any other
compensation and benefits to the extent actually earned by the Employee pursuant
to this Agreement or any other benefit plan or program of the Company as of the
date of such termination at the normal time for payment of such salary,
compensation or benefits, and (ii) any reimbursement amounts owing under Section
5. In addition, in the event of such death, the Employee's beneficiaries shall
receive any death benefits owed to them under the Company's employee benefit
plans.
10. Benefits Upon Termination Without Cause or For Good Reason (No Change of
Control). If (a) the Employee's employment with the Company shall terminate (i)
because of termination by the Company pursuant to Section 7.1 other than for
Cause and other than because of Permanent and Total Disability, or (ii) because
of termination by the Employee for Good Reason pursuant to Section 8(a), and (b)
such termination of employment does not occur within 13 months following a
"Change of Control" of the Company (as defined in Section 12), the Employee
shall be entitled to the following:
(a) The Company shall pay to the Employee his base salary pursuant to Section
3.1 and any other compensation and benefits to the extent actually earned by the
Employee under this Agreement or any benefit plan or program of the Company as
of the date of such termination at the normal time for payment of such salary,
compensation or benefits.
(b) The Company shall pay the Employee any reimbursement amounts
owing under Section 5.
(c) The Company shall pay to the Employee as a severance benefit for each month
during the 24 month period beginning with the month next following the date of
termination of the Employee's employment an amount equal to one-twelfth of the
sum of (i) his annual rate of base salary immediately preceding his termination
of employment, and (ii) the average of his three highest annual bonuses awarded
under the Company's annual management incentive bonus plan for any of the five
calendar years preceding his termination of employment (or, if he was not
eligible for a bonus for at least three calendar years in such five-year period,
then the average of such bonuses for all of the calendar years in such five-year
period for which he was eligible, and if he was not eligible for such a bonus in
any previous year, then 100% of his target annual bonus for the year of
termination of his employment), with any deferred bonuses counting for the year
earned rather than the year paid. Each such monthly benefit shall be paid no
later than the last day of the applicable month. In the event that the Employee
dies before the end of such 24-month period, the payments for the remainder of
such period shall be made to the Employee's estate.
(d) The Company shall pay to the Employee as a bonus for the year of termination
of his employment an amount equal to a portion (determined as provided in the
next sentence) of the bonus that the Employee would actually have received under
the Company's annual management incentive bonus plan for the calendar year of
termination of the Employee's employment if his employment had not terminated
(determined on the basis of his actual bonus opportunity and the actual degree
of achievement of the applicable performance goals) or, if no bonus opportunity
for that year had been established for the Employee at the time of such
termination of employment, such portion of the bonus awarded to him under the
Company's annual management incentive bonus plan for the calendar year
immediately preceding the calendar year of the termination of his employment,
with deferred bonuses counting for the year earned rather than the year paid.
Such portion shall be determined by dividing the number of days of the
Employee's employment during such calendar year up to his termination of
employment by 365 (366 if a leap year). Such payment shall be made on or about
the date on which bonuses for the applicable year are paid to executives of the
Company generally under the Company's annual management incentive bonus plan,
and the Employee shall have no right to any further bonuses under said plan.
(e) During the period of 24 months beginning on the date of the Employee's
termination of employment, the Employee shall remain covered by the medical,
dental, vision, life insurance, and, if reasonably commercially available
through nationally reputable insurance carriers, long-term disability plans of
the Company that covered him immediately prior to his termination of employment
as if he had remained in employment for such period. In the event that the
Employee's participation in any such plan is barred, the Company shall arrange
to provide the Employee with substantially similar benefits (but, in the case of
long-term disability benefits, only if reasonably commercially available). Any
medical insurance coverage for such 24-month period pursuant to this subsection
(e) shall become secondary upon the earlier of (i) the date on which the
Employee begins to be covered by comparable medical coverage provided by a new
employer, or (ii) the earliest date upon which the Employee becomes eligible for
Medicare or a comparable Government insurance program.
11. Benefits Upon Termination Without Cause or For Good Reason (Change of
Control). If (a) the Employee's employment with the Company shall terminate (i)
because of termination by the Company pursuant to Section 7.1 other than for
Cause and other than because of Permanent and Total Disability, (ii) because of
termination by the Employee for Good Reason pursuant to Section 8(a), or (iii)
for any reason during the 30 days beginning on the first anniversary of a Change
of Control, and (b) such termination of employment occurs within 13 months
following a "Change of Control" of the Company (as defined in Section 12), the
Employee shall be entitled to the following:
(a) The Company shall pay to the Employee his base salary pursuant to Section
3.1 and any other compensation and benefits to the extent actually earned by the
Employee under this Agreement or any benefit plan or program of the Company as
of the date of such termination at the normal time for payment of such salary,
compensation or benefits.
(b The Company shall pay the Employee any reimbursement amounts owing under
Section 5.
(c) The Company shall pay to the Employee as a severance benefit an amount equal
to three (3) times the sum of (i) his annual rate of base salary immediately
preceding his termination of employment, and (ii) the average of his three
highest annual bonuses awarded under the Company's annual management incentive
bonus plan for any of the five calendar years preceding his termination of
employment (or, if he was not eligible for a bonus for at least three calendar
years in such five-year period, then the average of such bonuses for all of the
calendar years in such five-year period for which he was eligible, and if he was
not eligible for such a bonus in any previous year, then 100% of his target
annual bonus for the year of termination of his employment), with any deferred
bonuses counting for the year earned rather than the year paid. Such severance
benefit shall be paid in a lump sum within 45 days after the date of such
termination of employment.
(d) The Company shall pay to the Employee as a bonus for the year of termination
of his employment an amount equal to a portion (determined as provided in the
next sentence) of the bonus that the Employee would actually have received under
the Company's annual management incentive bonus plan for the calendar year of
termination of the Employee's employment if his employment had not terminated
(determined on the basis of [his] actual bonus opportunity and the actual degree
of achievement of the applicable performance goals) or, if no bonus opportunity
for that year had been established for the Employee at the time of such
termination of employment, such portion of the bonus awarded to him under the
Company's annual management incentive bonus plan for the calendar year
immediately preceding the calendar year of the termination of his employment,
with deferred bonuses counting for the year earned rather than the year paid.
Such portion shall be determined by dividing the number of days of the
Employee's employment during such calendar year up to his termination of
employment by 365 (366 if a leap year). Such payment shall be made on or about
the date on which bonuses for the applicable year are paid to executives of the
Company generally under the Company's annual management incentive bonus plan,
and the Employee shall have no right to any further bonuses under said plan.
(e) During the period of 36 months beginning on the date of the Employee's
termination of employment, the Employee shall remain covered by the medical,
dental, vision, life insurance, and, if reasonably commercially available
through nationally reputable insurance carriers, long-term disability plans of
the Company that covered him immediately prior to his termination of employment
as if he had remained in employment for such period. In the event that the
Employee's participation in any such plan is barred, the Company shall arrange
to provide the Employee with substantially similar benefits (but, in the case of
long-term disability benefits, only if reasonably commercially available). Any
medical insurance coverage for such 36-month period pursuant to this subsection
(e) shall become secondary upon the earlier of (i) the date on which the
Employee begins to be covered by comparable medical coverage provided by a new
employer, or (ii) the earliest date upon which the Employee becomes eligible for
Medicare or a comparable Government insurance program.
12. Change of Control. For the purposes of this Agreement, a "Change of Control"
shall be deemed to have occurred if (a) any person or persons acting together
which would constitute a "group" for purposes of Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (other than the Company,
any subsidiary of the Company, and Tengelmann Warenhandelsgesellschaft (a
partnership organized under the laws of the Federal Republic of Germany or any
successor to such partnership, hereinafter "Tengelmann")) shall beneficially own
(as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, at least
30% of the total voting power of all classes of capital stock of the Company
entitled to vote generally in the election of the Board and such voting power
exceeds the then current voting power of Tengelmann; (b) control of Tengelmann
is acquired by any person or persons other than family members or entities
controlled by family members of Xxxxxx Xxxx; (c) Current Directors (as herein
defined) shall cease for any reason to constitute at least a majority of the
members of the Board (for this purpose, a "Current Director" shall mean any
member of the Board as of the date hereof and any successor of a Current
Director whose election, or nomination for election by the Company's
shareholders, was approved by at least two-thirds of the Current Directors then
on the Board); (d) the shareholders of the Company approve (i) a plan of
complete liquidation of the Company or (ii) an agreement providing for the
merger or consolidation of the Company other than a merger or consolidation in
which (x) the holders of the common stock of the Company immediately prior to
the consolidation or merger have, directly or indirectly, at least a majority of
the common stock of the continuing or surviving corporation immediately after
such consolidation or merger or (y) the Board immediately prior to the merger or
consolidation would, immediately after the merger or consolidation, constitute a
majority of the board of directors of the continuing or surviving corporation;
or (e) the shareholders of the Company approve an agreement (or agreements)
providing for the sale or other disposition (in one transaction or a series of
transactions) of all or substantially all of the assets of the Company.
13. Entitlement to Other Benefits.
---------------------------------------
Except as otherwise provided in this Agreement, this Agreement shall
not be construed as limiting in any way any rights or benefits that the
Employee or his spouse, dependents or beneficiaries may have pursuant to any
other plan or program of the Company.
14. Non-Competition.
------------------------
The Employee agrees that during the term of this Agreement and
for a period of eighteen months following termination of his employment, the
Employee will not, within any of the geographical areas of the United States or
Canada in which the Company is then conducting business (either directly or
through franchisees), directly or indirectly, own, manage, operate, control, be
employed by, participate in, provide consulting services to, or be connected in
any manner with the ownership, management, operation or control of any business
similar to any of the types of businesses conducted by the Company to any
significant extent during his employment or on the date of termination of his
employment, except the Employee may own for investment purposes up to 1% of the
capital stock of any company whose stock is publicly traded, and during such
eighteen month period following termination of his employment the Employee will
not contact or solicit employees of the Company for the purpose of inducing such
employees to leave the employ of the Company.
15. Confidential Information and Trade Secrets.
---------------------------------------------------
The Employee hereby acknowledges that he will have access to
and become acquainted with various trade secrets and proprietary information of
the Company and other confidential information relating to the Company. The
Employee covenants that he will not, directly or indirectly, disclose or use
such information except as is necessary and appropriate in connection with his
employment by the Company and that he will otherwise adhere in all respects to
the Company's policies against the use or disclosure of such information.
16. Arbitration; Injunctive Relief.
------------------------------
Any controversy or claim arising out of or relating to this
Agreement, directly or indirectly, or the performance or breach thereof, will be
settled by arbitration in accordance with the rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. The arbitration will be held
in New York, New York, or such other place as may be agreed upon at the time by
the parties to the arbitration. The parties shall bear their own expenses in
connection with any arbitration or proceeding arising out of or relating to this
Agreement, directly or indirectly, or the performance or breach thereof;
provided, however, that in the event that the Employee substantially prevails,
the Company agrees promptly to reimburse the Employee for all expenses
(including costs and fees of witnesses, evidence and attorneys fees and
expenses) reasonably incurred by him in investigating, prosecuting, defending,
or preparing to prosecute or defend any action, proceeding or claim arising out
of or relating to this Agreement, directly or indirectly, or the performance or
breach thereof. The parties acknowledge and agree that a breach of Employee's
obligations under Sections 14 or 15 could cause irreparable harm to Company for
which Company would have no adequate remedy at law, and further agree that,
notwithstanding the agreement of the parties to arbitrate controversies or
claims as set forth above, the Company may apply to a court of competent
jurisdiction to seek to enjoin preliminarily or permanently any breach or
threatened breach of the Employee's obligations under Sections 14 and 15.
17. Indemnification.
------------------------
The Company shall indemnify and hold the Employee harmless to
the fullest extent legally permissible under the laws of the State of Maryland,
against any and all expenses, liabilities and losses (including attorney's fees,
judgments, fines and amounts paid in settlement) reasonably incurred or suffered
by him by reason of any claim or cause of action asserted against him because of
his service at any time as a director or officer of the Company. The Company
shall advance to the Employee the amount of his expenses incurred in connection
with any proceeding relating to such service to the fullest extent legally
permissible under the laws of the State of Maryland. Notwithstanding the
foregoing, the Company's obligations pursuant to this Section 17 shall not apply
in the case of any claim or cause of action by or in the right of the Company or
any subsidiary thereof.
18. Liability Insurance.
----------------------------
To the extent that Company maintains a directors and officers
liability insurance policy in effect, the Company will take all steps necessary
to ensure that the Employee is covered under such policy for his service as a
director or officer of the Company or any subsidiary of the Company with respect
to claims made at any time with respect to such service.
19. Certain Additional Payments by the Company.
---------------------------------------------------
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution made, or benefit provided (including, without limitation, the
acceleration of any payment, distribution or benefit and the accelerated
exercisability of any stock option), to or for the benefit of the Employee
(whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise, but determined without regard to any additional
payments required under this Section 19) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (or any similar excise tax) or any interest or penalties are incurred by
the Employee with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Employee shall be entitled to receive from the Company
an additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Employee of all taxes (including any Excise Tax, income tax or
employment tax and taking into account any lost or reduced tax deductions on
account of such Gross-Up Payment) imposed upon the Gross-Up Payment and any
interest or penalties imposed with respect to such taxes, the Employee retains
from the Gross-Up Payment an amount equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 19(c), all
determinations required to be made under this Section 19, including
determination of whether a Gross-Up Payment is required and of the amount of any
such Gross-up Payment, shall be made by Price Waterhouse (the "Accounting
Firm"), which shall provide detailed supporting calculations both to the Company
and the Employee within 15 business days of the date of termination of the
Employee's employment, if applicable, or such earlier time as is requested by
the Company, provided that any determination that an Excise Tax is payable by
the Employee shall be made on the basis of substantial authority. The initial
Gross-Up Payment, if any, as determined pursuant to this Section 19(b), shall be
paid to the Employee within five business days of the receipt of the Accounting
Firm's determination. If the Accounting Firm determines that no Excise Tax is
payable by the Employee, it shall furnish the Employee with a written opinion
that he has substantial authority not to report any Excise Tax on his Federal
income tax return. Any determination by the Accounting Firm meeting the
requirements of this Section 19(b) shall be binding upon the Company and the
Employee; subject only to payments pursuant to the following sentence based on a
determination that additional Gross-Up Payments should have been made,
consistent with the calculations required to be made hereunder (the amount of
such additional payments is referred to herein as the "Gross-Up Underpayment").
In the event that the Company exhausts its remedies pursuant to Section 19(c)
and the Employee thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Gross-Up Underpayment that has
occurred and any such Gross-Up Underpayment shall be promptly paid by the
Company to or for the benefit of the Employee. The fees and disbursements of the
Accounting Firm shall be paid by the Company.
(c) The Employee shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of a Gross-Up Payment. Such notification shall be given
as soon as practicable but not later than ten business days after the Employee
receives written notice of such claim and shall apprise the Company of the
nature of such claim and the date on which such Claim is requested to be paid.
The Employee shall not pay such claim prior to the expiration of the 30-day
period following the date on which it gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Employee in writing prior to the
expiration of such period that it desires to contest such claim and that it will
bear the costs and provide the indemnification as required by this sentence, the
Employee shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Employee harmless, on an
after-tax basis, for any Excise Tax, income tax or employment tax (taking into
account any lost or reduced tax deductions on account of such payments),
including interest and penalties with respect thereto, imposed as a result of
such representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 19(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Employee to pay the tax claimed and xxx for a
refund or contest the claim in any permissible manner, and the Employee agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Employee to pay such claim and xxx for a refund, the Company shall advance the
amount of such payment to the Employee on an interest-free basis and shall
indemnify and hold the Employee harmless, on an after-tax basis, from any Excise
Tax, income tax or employment tax (taking into account any lost or reduced tax
deductions on account of such advance), including interest or penalties with
respect thereto, imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to the payment of taxes for the
taxable year of the Employee with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore, the
Company's control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the Employee shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Employee of an amount
advanced by the Company pursuant to Section 19(c), the Employee becomes entitled
to receive any refund with respect to such claim, the Employee shall (subject to
the Company's complying with the requirements of Section 19(c)) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Employee of an amount advanced by the Company pursuant to Section 19(c), a
determination is made that the Employee shall not be entitled to any refund with
respect to such claim and the Company does not notify the Employee in writing of
its intent to contest such denial of refund prior to the expiration of 30 days
after such determination, then any obligation of the Employee to repay such
advance shall be forgiven and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
20. No Duty to Seek Employment. The Employee shall not be under any duty or
obligation to seek or accept other employment following termination of
employment, and no amount, payment or benefits due to the Employee hereunder
shall be reduced or suspended if the Employee accepts subsequent employment.
21. Deductions and Withholding.
-----------------------------------
All amounts payable or which become payable under any
provision of this Agreement shall be subject to any deductions authorized by the
Employee and any deductions and withholdings required by law.
22. Governing Law.
----------------------
The validity, interpretation and performance of this Agreement
will be governed by the laws of the State of New Jersey without regard to the
conflict of law provisions.
23. Notice.
---------------
Any written notice required to be given by one Party to the
other Party hereunder will be deemed effected if mailed by registered mail:
To the Company at: The Great Atlantic & Pacific Tea Company
0 Xxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
To the Employee at: Xxxxx Xxxxx
0000 Xxxx Xxxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxx X0X 0X0
or such other address as may be stated in a notice given as hereinbefore
provided.
24. Severability.
---------------------
If any one or more of the provisions contained in this
Agreement is held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability will not affect any other provision
hereof.
25. Successors and Assigns.
-------------------------------
This Agreement will be binding upon and inure to the benefit
of the Parties hereto and their personal representatives, and, in the case of
the Company, its successors and assigns. To the extent the Company's obligations
under this Agreement are transferred to any successor or assign, such successor
or assign shall be treated as the "Company" for purposes of this Agreement.
Other than as contemplated by this Agreement, the Employee may not assign his
rights or duties under this Agreement.
26. Continuing Effect.
--------------------------
Wherever appropriate to the intention of the Parties hereto,
the respective rights and obligations of the Parties, including the obligations
referred to in Sections 10, 11, 14, 15 and 19, hereof, will survive any
termination or expiration of the term of this Agreement.
27. Entire Agreement.
-------------------------
This Agreement constitutes the entire agreement between the
Parties and supersedes any and all other agreements and understandings between
the Parties in respect of the matters addressed in this Agreement.
28. Amendment and Waiver.
-----------------------------
No amendment or waiver of any provision of this Agreement
shall be effective, unless the same shall be in writing and signed by the
Parties, and then such amendment, waiver or consent shall be effective only in
the specific instance or for the specific purpose for which such amendment,
waiver or consent was given.
29. Counterparts.
----------------------
This Agreement may be executed in any number of counterparts,
each of which when so executed shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its duly authorized officer and the Employee has hereunto set his
hand as of the day and year first above written.
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
By:
------------------------------------------
Xxxxxxxxx Xxxx
Chairman and Chief Executive Officer
Xxxxx Xxxxx
October 23, 2002
Xx. Xxxxx Xxxxx
0000 Xxxxxx Xxxxxxxx
Xxxxxxxxxxx, Xxxxxxx X0X 0Xx
Dear Xxxxx,
I am very pleased to confirm the details of your promotion to the position of
Chief Executive Officer and President of the U.S. Company reporting directly
Xxxxxxxxx Xxxx. In this new role, you will be a member of the Executive
Committee of the Company. Below are the details:
Your base salary will be $500,000 per annum payable in bi-weekly
increments (26 times per year) at a rate of $19,230.69. In consideration
of your key role at A&P, Board of Directors approval will be sought for
a one-time grant of 100,000 stock options upon the effective date of
your promotion, October 28, 2002. The option price is 100% of market
price on the date of grant, i.e., the effective date of your promotion.
The bonus target rate for your new position is 60% of your base salary.
Your participation in the Fiscal Year 2002 Management Incentive Plan
will be based entirely on the results of the Canadian company, at a
pro-rated target bonus rate of 40% for the period prior to your
promotion and 60% effective with your promotion. The current annual
stock option target guideline for your position is 55,000 shares.
You will receive relocation benefits as per the Company Relocation
Benefits Program; a copy of which is enclosed. In addition you are
eligible for a company car as per the Company Automobile Policy. We also
anticipate your entering into the company's Executive Employment
Agreement, a copy of which has already been sent to you.
You will be eligible to participate in the A&P Retirement and Savings
(401k) Plan upon the effective date of your new position. In addition,
you will continue to participate in the Supplemental Executive
Retirement Plan (SERP). You will also be eligible to participate in the
Executive Medical Program, a description of which is attached. Please
note that as a Corporate Officer, you are eligible for an annual
physical examination with the Executive Health Group.
Xxxxx, if you have any questions, please don't hesitate to call.
Sincerely,
