EMPLOYMENT AGREEMENT
Exhibit 10.1
AGREEMENT, made and entered into as of the 22nd day of July, 2010, by and between THE GREAT
ATLANTIC & PACIFIC TEA COMPANY, INC. (the “Company”), and XXX XXXXXX (the “Employee”).
WITNESSETH
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 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 July 29, 2010 (the
“Effective Date”) and, subject only to the provisions of Sections 7, 8 and 9 below relating
to termination of employment, shall continue until the close of business on July 31, 2013
or, if the Employment Period is extended pursuant to subsection (c) of this Section 1, the
close of business on the Extended Termination Date (as defined in subsection (c) of this
Section 1).
(c) On July 31, 2013 and on each Extended Termination Date (as hereinafter defined),
the Employment Period will automatically be extended for an additional 12-month period so as
to end on the the last of July of the succeeding calendar year (an “Extended Termination
Date”) unless either Party gives written notice to the other Party at least 6 months in
advance of the date on which the Employment Period would otherwise end that the Employment
Period not 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 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 Board of Directors of the Company
(the “Board”). The Employee will be based at the headquarters of the Company,
which are currently located at 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 to the Board.
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 $1,000,000, 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
Management Development and Compensation Committee (the “Compensation Committee”) of the Board of
Directors of the Company (the “Board”) for the purpose of considering increases thereof. In
evaluating increases in the Employee’s base salary, the Compensation Committee will take into
account such factors as corporate performance in relation to the business plan approved by the
Board, 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 Incentive Compensation. The Employee will be eligible to receive annually or
otherwise any incentive compensation awards, whether payable in cash, shares of common stock of the
Company or otherwise, which the Company, the Compensation Committee or such other authorized
committee of the Board determines to award or grant. For each fiscal year of the Company falling
in whole or in part during the Employment Period, the Employee’s target annual incentive
compensation opportunity will be no less than 100% of his base salary for the portion of the
Employment Period falling within that fiscal year and the Employee’s maximum annual incentive
compensation opportunity will be no less than 200% of his base salary for the portion of the
Employment Period falling within that fiscal year. With respect to the annual incentive
compensation award for the fiscal year in which the Effective Date falls, the performance goals
shall be established by the mutual agreement of the Compensation Committee and the Employee.
3.3 Inducement Grant. Effective as of the Effective Date, the Company shall grant to
the Employee under The Great Atlantic & Pacific Tea Company, Inc. 2008 Long-Term Incentive and
Share Award Plan (the “LTIP”) (i) performance-based restricted share units with respect to 750,000
shares of the Company’s common stock, vesting at the rate of 1/3 on the first anniversary of the
Effective Date, 1/3 on the second anniversary of the Effective Date and 1/3 on the third
anniversary of the Effective Date if the Employee remains in the employment of the Company until
the applicable date, (ii) time-vested restricted share units with respect to 375,000 shares of the
Company’s common stock, vesting at the rate of 1/4 on the first anniversary of the Effective Date
and 3/4 on the third anniversary of the Effective Date if the Employee remains in the employment of
the Company until the applicable date, and (iii) stock options with respect to 375,000 shares of
the Company’s common stock, becoming exercisable at the rate of 1/3 on the first anniversary of the
Effective Date, 1/3 on the second anniversary of the Effective Date and 1/3 on the third
anniversary of the Effective Date if the Employee remains in the employment of the Company until
the applicable date. With respect to the performance-based restricted share units described in
clause (i) of the preceding sentence, the performance goals shall be established by the mutual
agreement of the Compensation Committee and the Employee. The terms and conditions of such
performance-based restricted share units, time-vested restricted
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share units and stock options will be substantially the same as the terms
and conditions of comparable awards made under the LTIP in 2010 except as otherwise set forth in
this Section 3.3.
3.4 Sign-On Bonus. The Company agrees to pay the Employee a cash bonus in the amount
of $276,000 on February 28, 2011, provided either (i) the Employee remains in the employment of the
Company through February 28, 2011 or (ii) the Employee’s employment with the Company terminates
before February 28, 2011 for any reason other than (A) termination by the Company for Cause or (B)
termination by the Employee without Good Reason.
4. Benefit Programs.
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 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, medical coverages,
sick leave, salary continuation arrangements, vacations and holidays, relocation program, long-term
disability, and such other benefits as are or may be made available from time to time to senior
executives of the Company. The Company agrees to provide the Employee with temporary housing and
relocation benefits in accordance with Company policies. The Company agrees to provide the
Employee with term life insurance of $1,000,000 at Company expense during the Employment Period
(rather than the term life insurance coverage of $500,000 provided for at Company expense in the
Company’s BeneFlex Program).
4.2 Annual LTIP Grants. The Employee, provided he remains in the employment of the
Company, shall be considered for awards under the LTIP on the same basis as other senior executives
of the Company; provided, however, that no awards shall be made to the Employee under the LTIP for
the fiscal years of the Company beginning in 2010, 2011 or 2012 (unless the Compensation Committee
in its sole discretion shall determine otherwise).
4.3 Legal Expenses. The Company agrees to reimburse the Employee for his reasonable
legal expenses in connection with the preparation, negotiation and execution of this Agreement, but
such reimbursement shall not exceed $25,000.
5. Business Expenses.
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.
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.
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7. Termination of Employment by the Company.
7.1 Involuntary Termination by the Company Other Than For Permanent and Total Disability,
For Performance or For Cause. The Company may terminate the Employee’s employment at any time
and for any reason (other than for Permanent and Total Disability as provided in Section 7.2 below,
for Performance as provided in Section 7.3 below or for Cause as provided in Section 7.4 below) by
giving him a written notice of termination to that effect at least 14 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, for Performance as
provided in Section 7.3 below or for Cause as provided in Section 7.4 below), the Employee shall be
entitled to the benefits described in Section 10.
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 14 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 becomes
disabled within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”) and the regulations thereunder. The existence of such Permanent and Total Disability shall
be determined by the Compensation Committee and shall be evidenced by such medical certification as
the Compensation Committee shall require.
7.3 Termination for Performance. After March 1, 2012, the Company may terminate the
Employee’s employment for Performance if the Company fails to achieve the results called for in the
business plan approved by the Board for the Company’s fiscal year beginning in 2011 or any
subsequent fiscal year. The determination as to whether the Employee has achieved the results
called for in the business plan shall be made by the Board in its sole discretion. The Company
shall exercise its right to terminate the Employee’s employment for Performance by giving him
written notice of termination on or before the date of such termination specifying the performance
goal or goals that were not met. In the event of such termination of the Employee’s employment for
Performance, 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.
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(c) Subject to the Employee’s timely execution of a Confidential Separation and Release
Agreement as provided in Section 23 of this Agreement, the Company shall pay to the Employee
as a severance benefit for each month during the 12-month period beginning with the month
next following the date of termination of the Employee’s employment an amount equal to
one-twelfth of his annual rate of base salary immediately preceding his termination of
employment. 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 12-month
period, the payments for the remainder of such period shall be paid to the Employee’s
estate. The commencement of payments pursuant to this subsection shall be subject to
Section 22 of this Agreement.
(d) Subject to the Employee’s timely execution of a Confidential Separation and Release
Agreement as provided in Section 23 of this Agreement, during the period of 12 months
beginning on the date of the Employee’s termination of employment, the Employee shall remain
covered by the medical 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. Any medical insurance coverage
for such 12-month period pursuant to this subsection (d) 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. The Employee’s
COBRA entitlements shall become effective at the end of the extended benefit coverage
provided pursuant to this subsection (d). The commencement of payments pursuant to this
subsection shall be subject to Section 22 of this Agreement.
7.4 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 Board, (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 con-victed 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 on or 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 (A) 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 (B) any amounts owed under the
reimbursement policy of Section 5.
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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 14 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. 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 Board, (iii)
any reduction in the Employee’s base salary, (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 or (v) the
relocation, without the Employee’s consent, of the Employee’s place of work to a location
outside a 50-mile radius of Montvale, New Jersey. 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 14 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. If the Employee’s
employment with the Company shall terminate (i) because of termination by the Company pursuant to
Section 7.1 other than (A) for Cause, (B) for Performance or (C) because
of Permanent and Total Disability, or (ii) because of termination by the Employee for Good
Reason pursuant to Section 8(a), the Employee shall be entitled to the following:
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(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) Subject to the Employee’s timely execution of a Confidential Separation and Release
Agreement as provided in Section 23 of this Agreement, 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 fiscal years
immediately preceding the fiscal year of his termination of employment (or, if he was not
eligible for a bonus for at least three fiscal years in such five-year period, then the
average of such bonuses for all of the fiscal years in such five-year period for which he
was eligible, and if he was not eligible for such a bonus in any previous fiscal year, then
100% of his target annual bonus for the fiscal year in which the termination occurred), with
any deferred bonuses counting for the fiscal year in which they were earned rather than the
fiscal year in which they were 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. The commencement of payments pursuant to this subsection shall be
subject to Section 22 of this Agreement.
(d) Subject to the Employee’s timely execution of a Confidential Separation and Release
Agreement as provided in Section 23 of this Agreement, the Company shall pay to the Employee
as a bonus for the fiscal year in which the termination of his employment occurred 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 fiscal 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 fiscal year immediately preceding the fiscal year of the
termination of his employment, with deferred bonuses counting for the fiscal year in which
they were earned rather than the fiscal year in which they were paid. Such portion shall be
determined by dividing the number of days of the Employee’s employment during such
fiscal year up to his termination of employment by 365 (366 if a leap year). Subject
to Section 22 of this Agreement, such payment shall be made on the date on which bonuses for
the applicable fiscal year are paid to executives of the Company generally under the
Company’s annual manage-
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ment incentive bonus plan, and the Employee shall have no right to
any further bonuses under said plan.
(e) Subject to the Employee’s timely execution of a Confidential Separation and Release
Agreement as provided in Section 23 of this Agreement, 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. The Employee’s COBRA entitlements
shall become effective at the end of the extended benefit coverage provided pursuant to this
subsection (e). The commencement of payments pursuant to this subsection shall be subject
to Section 22 of this Agreement.
11. Benefits Upon Non-Extension of Employment Period. If the Employee’s employment
with the Company shall terminate on July 31, 2013 or an Extended Termination Date by reason of the
non-extension of the Employment Period pursuant to Section 1(c) of this Agreement, 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 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 and (ii) any amounts owed under the reimbursement policy of
Section 5.
12. Stock Ownership Requirement. While employed by the Company, the Employee shall be
expected to maintain ownership of common stock or stock equivalents having a value equal to five
times his base salary in accordance with guidelines established by the Compensation Committee. For
purposes of these guidelines, stock ownership includes shares over which the Employee has direct or
indirect ownership or control. Stock equivalents for this purpose include vested restricted share
units but do not include unvested restricted share units, unvested restricted stock or unexercised
stock options. The Employee is expected to meet this ownership requirement within five years after
the Effective Date.
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.
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14. Non-Competition.
The Employee agrees that during the Noncompetition Period (as hereinafter defined), 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 the Noncompetition Period 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. For purposes of this Agreement, the Noncompetition Period shall be the period beginning
on the Effective Date and ending on the date which is eighteen months after the termination of the
Employee’s employment with the Company, except that in the case of a termination entitling the
Employee to severance benefits under Section 7.3(c) or 10(c) hereof, the Noncompetition Period
shall instead end on the date which is (i) 12 months after such termination of employment if
Section 7.3(c) is applicable, and (ii) 24 months after such termination of employment if Section
10(c) is applicable. Notwithstanding any other provision of this Agreement to the contrary, if the
Employee breaches this non-competition provision, then the Company may, in addition to any other
rights and remedies available to it at law or under this Agreement, discontinue paying the Employee
any of the benefits described in Section 7.3 or 10. If, at the enforcement of this Section 14, a
court or arbitrator holds that the duration or scope stated therein is unreasonable under
circumstances then existing, the Parties agree that the maximum duration and scope reasonable under
such circumstances will be substituted for the stated duration or scope and that the court or
arbitrator should revise the restrictions contained in this Section 14 to cover the maximum
duration and scope permitted by law.
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,
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the Company agrees promptly to reimburse the Employee for all expenses (including costs and fees of
witnesses, evidence and attorney’s 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 Section 14 or 15
could cause irreparable harm to the Company for which the 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.
The Company shall maintain a directors and officers liability insurance policy and 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. Golden Parachute Reduction.
(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) (a “Payment”) would be subject to the excise tax imposed by Section
4999 of the Code (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 payments,
distributions and benefits under this Agreement shall be reduced (by the minimum possible
amounts) until no amount payable to the Employee under this Agreement gives rise to an Excise
Tax; provided, however, that no such reduction shall be made if the net after-tax payment
(after taking into account Federal, state, local and other income and excise taxes) to which
the Employee would otherwise be entitled without such reduction would be greater
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than the net after-tax payment (after taking into account Federal, state, local and other income and excise
taxes) to the Employee resulting from the receipt of such payments, distributions and benefits
with such reduction. Any reduction pursuant to the preceding sentence shall be made by first
reducing the severance benefit described in Section 7.3(c) or 10(c), whichever is applicable,
then any bonus payable under Section 10(d). If, as a result of subsequent events or
conditions (including a subsequent payment or absence of a subsequent payment under this
Agreement or other plans, programs, arrangements or agreements maintained by the Company or
any of its affiliates), it is determined that payments, distributions or benefits under this
Agreement to the Employee have been reduced by more than the minimum amount required to
prevent any payments, distributions or benefits from giving rise to the Excise Tax, then an
additional payment shall be made by the Company to the Employee on such date as shall be
determined by the Compensation Committee but no later than 60 days after the applicable event
or condition in an amount equal to the additional amount that can be paid without causing any
payment, distribution or benefit to give rise to an Excise Tax.
(b) All determinations required to be made under this Section 19 shall be made by the
accounting firm selected by the Company to audit the Company’s financial statements (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, within 15 days after receipt of written notice from the Employee
that there has been a Payment, or at such earlier time as is requested by the Company,
provided that any determination that an Excise Tax would be payable by the Employee shall be
made on the basis of substantial authority. 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. The fees and disbursements of the Accounting Firm
shall be paid by the Company.
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. Compliance with IRC Section 409A.
In the event that it shall be determined that any payments or benefits under this Agreement
constitute nonqualified deferred compensation covered by Section 409A of the Code for which no
exemption under Code Section 409A or the regulations thereunder is available (“Covered Deferred
Compensation”), then notwithstanding anything in this Agreement to the
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contrary, (i) if the Employee is a “specified employee” (within the meaning of Code Section 409A and the regulations
thereunder and as determined by the Company in accordance with said Section 409A) at the time of
the Employee’s separation from service (as defined below), the payment of any such Covered Deferred
Compensation payable on account of such separation from service shall be made no earlier than the
date which is 6 months after the date of the Employee’s separation from service (or, if earlier
than the end of such 6-month period, the date of the Employee’s death) and (ii) the Employee shall
be deemed to have terminated from employment for purposes of this Agreement if and only if the
Employee has experienced a “separation from service” within the meaning of said Section 409A and
the regulations thereunder. To the extent any payment of Covered Deferred Compensation is subject
to the 6-month delay, such payment shall be paid immediately at the end of such 6-month period (or
the date of death, if earlier). Whenever payments under this Agreement are to be made in
installments, each such installment shall be deemed a separate payment for purposes of Code Section
409A. The provisions of this Agreement relating to such Covered Deferred Compensation shall be
interpreted and operated consistently with the requirements of Code Section 409A and the
regulations thereunder. If it is found by the Internal Revenue Service that this Agreement fails
Code Section 409A in terms of written documentary compliance, the Company will indemnify the
Employee for any legal and accounting costs, any taxes, interest and penalties, and any other
associated costs, that are related solely to the documentary non-compliance. Except as set forth
in the preceding sentence, no other action or failure to act pursuant to this Section 22 shall
subject the Company to any claim, liability or expense, and the Company shall have no obligation to
indemnify or otherwise protect the Employee from the obligation to pay any taxes, interest or
penalties pursuant to Code Section 409A.
Anything in this Agreement to the contrary notwithstanding, any payments or benefits under
this Agreement that are conditioned on the timely execution of a Confidential Separation and
Release Agreement and that would, in the absence of this sentence, be payable before the date which
is 60 days after the termination of the Employee’s employment shall be delayed until, and paid on,
such 60th day after the termination of the Employee’s employment (or, if such 60th day is not a
business day, on the next succeeding business day), but only if the Employee executes such
Confidential Separation and Release Agreement, and does not revoke it, in accordance with Section
23 of this Agreement.
Anything in this Agreement to the contrary notwithstanding, any reimbursements or in-kind
benefits to which the Employee is entitled under this Agreement (other than such
reimbursements or benefits that are not taxable to the Employee for federal income tax
purposes or that are otherwise exempt from coverage under Section 409A of the Code pursuant to said
Section 409A and the regulations thereunder) shall meet the following requirements: (i) the amount
of expenses eligible for reimbursement, or in-kind benefits provided, in one calendar year may not
affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other
calendar year (except that the Company’s medical plans may impose a limit on the amount that may be
reimbursed or provided), (ii) any reimbursement of an eligible expense must be made on or before
the last day of the calendar year following the calendar year in which the expense was incurred,
and (iii) the Employee’s right to reimbursement or in-kind benefits shall not be subject to
liquidation or exchange for another benefit.
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23. Confidential Separation and Release Agreement.
For purposes of this Agreement, a “Confidential Separation and Release Agreement” shall mean a
Confidential Separation and Release Agreement in the form prescribed by the Company at the
applicable time which is executed by the Employee within 50 days after the termination of the
Employee’s employment and not revoked by him. If the Employee fails to execute such Confidential
Separation and Release Agreement within such 50-day period or shall revoke his agreement thereto,
the Employee shall not be entitled to any of the payments or benefits under this Agreement that are
conditioned upon his timely execution of a Confidential Separation and Release Agreement.
24. 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.
25. 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 |
or such other address as may be stated in a notice given as
hereinbefore provided
To the Employee at such address as may be stated in a notice
given to the Company as hereinabove provided.
26. 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.
27. 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.
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28. 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 7.3, 10, 14, 15, 16,
17, 19 and 22, hereof, will survive any termination or expiration of the term of this Agreement.
29. 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.
30. 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.
31. Employee Representations.
The Employee hereby represents and warrants to the Company that (a) the execution, delivery
and performance of this Agreement by the Employee does not and will not conflict with, breach,
violate or cause a default under any contract, agreement, instrument, order, judgment or decree to
which the Employee is a party or by which he is bound, and (b) the Employee is not in violation of
any employment agreement, transition services agreement, noncompetition agreement, nonsolicitation
agreement or confidentiality agreement with any person or entity.
32. 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: | /s/ Christian W. E. Xxxx | |||
| Name: | Christian W. E. Xxxx | |||
| Title: | Executive Chairman | |||
| /s/ Xxx Xxxxxx | ||||
| Xxx Xxxxxx | ||||
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