Attached files
EXHIBIT
10.1
EMPLOYMENT
AGREEMENT
AGREEMENT,
made and entered into as of the 22nd day of January, 2010, by and between THE
GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. (the “Company”), and RONALD
MARSHALL (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 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 February 8, 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 February 28, 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
February 28, 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 February of the succeeding
calendar year (an "Extended Termination Date") unless either Party gives written
notice to the other Party at least 60 days 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. The Parties
recognize and agree that, during the Employment Period, the Employee may engage
in non-profit, civic and charitable activities that do not conflict with the
business and affairs of the Company or interfere with the Employee’s performance
of his duties hereunder.
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, 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; provided, however, that the Employee shall not
be entitled to an incentive compensation award for the Company’s fiscal year
ending in 2010. The Employee’s annual incentive compensation award
for the first full fiscal year falling during the Employment Period shall be no
less than $1,000,000.
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) time-vested
restricted stock units having a value on the Effective Date of $1,000,000,
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 (ii) stock options
having a value on the Effective Date of $1,000,000, 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. The value of such time-vested restricted stock
units and stock options shall be determined by the Compensation Committee in
good faith, which, in the case of the stock options, will be based on the
Black-Scholes option valuation model. The terms and conditions of
such time-vested restricted stock units and stock options will be substantially
the same as the terms and conditions of comparable awards made under the LTIP in
2009, except as provided in subsection (f) of Section 10 of this
Agreement.
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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 up to 6
months of temporary housing under the Company’s Senior Executive Relocation
Program (rather than the 60 days of temporary housing provided for in such
program) and (ii) basic term life insurance of $1,000,000 during the Employment
Period (rather than the basic term life insurance coverage of $500,000 provided
for in the Company’s BeneFlex Program).
4.2 Annual LTIP
Grants. Effective as of the date the annual awards are made
under the LTIP in 2010 (the “2010 Grant Date”), the Company will grant to the
Employee under the LTIP (i) time-vested restricted stock units having a value on
the 2010 Grant Date of $1,333,333, vesting at the rate of 1/4 on the first
anniversary of the 2010 Grant Date and 3/4 on the third anniversary of the 2010
Grant Date if the Employee remains in the employment of the Company until the
applicable date, (ii) time-vested restricted stock units having a value on the
2010 Grant Date of $444,444, vesting at the rate of 100% on the third
anniversary of the 2010 Grant Date if the Employee remains in the employment of
the Company until the applicable date, (iii) performance-based restricted stock
units having a value on the 2010 Grant Date of $888,889, vesting at the rate of
100% on the second anniversary of the 2010 Grant Date if the Employee remains in
the employment of the Company until the applicable date and the performance
conditions are met, and (iv) stock options having a value on the 2010 Grant Date
of $1,333,333, becoming exercisable at the rate of 1/3 on the first anniversary
of the 2010 Grant Date, 1/3 on the second anniversary of the 2010 Grant Date and
1/3 on the third anniversary of the 2010 Grant Date if the Employee remains in
the employment of the Company until the applicable date. The value of
such time-vested restricted stock units, performance-based restricted stock
units and stock options shall be determined by the Compensation Committee in
good faith, which, in the case of the stock options, will be based on the
Black-Scholes option valuation model. The terms and conditions of
such time-vested restricted stock units, performance-based restricted and stock
options will be substantially the same as the terms and conditions of comparable
awards granted by the Company to other senior executives of the Company in
2010. In subsequent years, 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.
4.3 Legal
Expenses. The Company agrees to reimburse the Employee for his
reasonable legal expenses incurred in the negotiation of this Agreement, but
such reimbursement shall not exceed $25,000.
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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.
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
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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.
(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-
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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; provided, however, that (except as provided in the next sentence) in the
case of a termination pursuant to clause (i) or (ii) of the preceding sentence,
the Company shall give the Employee at least 10 days’ written notice of such
failure and the termination shall occur at the end of such 10-day period unless
the Employee shall have cured such failure to the reasonable satisfaction of the
Board within such 10-day period. The proviso in the preceding
sentence requiring 10 days’ written notice in the case of a termination pursuant
to clause (i) or (ii) shall apply only the first time that the Company seeks to
terminate the Employee’s employment pursuant to said clause (i) or
(ii). 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.
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 pur-
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suant 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:
(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.
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(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 management
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.
(f) Subject
to the Employee’s timely execution of a Confidential Separation and Release
Agreement as provided in Section 23 of this Agreement, the Employee shall become
fully vested on the date of his termination of employment in all of the
time-vested restricted stock units and stock options described in Section 3.3 of
this Agreement.
11. Benefits Upon Non-Extension
of Employment Period. If the Employee’s employment with the
Company shall terminate on February 28, 2013 or an Extended
Termina-
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tion Date
by reason of the non-extension of the Employment Period pursuant to Section 1(c)
of this Agreement as a result of notice of non-extension given by the Employee
or by both the Employee and the Company pursuant to said Section 1(c), 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. If the Employee’s employment with the Company
shall terminate on February 28, 2013 or an Extended Termination Date by reason
of the non-extension of the Employment Period pursuant to Section 1(c) of this
Agreement as a result of notice of non-extension given by the Company pursuant
to said Section 1(c), 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) 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.
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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 three 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 stock units but do not include unvested restricted
stock 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.
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. 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 connec-
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tion 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 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
Sections 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.
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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 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 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 an amount
from the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments. Notwithstanding the foregoing provisions of this Section
19(a), if it shall be determined that the Employee is entitled to a Gross-Up
Payment, but that the portion of the Payments that would be treated as
“parachute payments” under Section 280G of the Code does not exceed by more than
$150,000 the greatest amount (the “Safe Harbor Amount”) that could be paid to
the Employee such that the receipt of Payments would not give rise to any Excise
Tax, then no Gross-up Payment shall be made to the Employee and the amount
payable under Section 10(c) of this Agreement shall be reduced so that the
Payments, in the aggregate, are reduced to the Safe Harbor
Amount. For purposes of reducing the payments to the Safe Harbor
Amount, only amounts payable under this Agreement (and no other Payments) shall
be reduced. If the reduction of the amounts payable under this Agreement would
not result in a reduction of the Payments to the Safe Harbor Amount, no amounts
payable under this Agreement shall be reduced pursuant to this Section
19(a).
(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 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 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 pur-
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suant 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 and reasonably acceptable to the Employee,
(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 sue for a
refund or contest the claim in any permissible manner, and the Employee agrees
to prosecute such contest to a deter-
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mination
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 sue 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, in his sole discretion, 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.
(e) Anything
in this Section 19 to the contrary notwithstanding, the Gross-Up Payments shall
be made no later than the end of the calendar year next following the calendar
year in which the Employee remits the related taxes.
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
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(“Covered
Deferred Compensation”), then notwithstanding anything in this Agreement to the
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. Such
Confidential Separation and Release Agreement shall (i) include a similar
release and similar non-disparagement and other covenants to be made by the
Company in favor of the Employee except in cases of fraud, dishonesty, gross
malfeasance or gross negligence on the part of the Employee, and (ii) not
require that the Employee release his rights under the Company’s directors and
officers liability insurance policy, the Company’s By-laws or the laws of the
State of Maryland governing the indemnification of officers. 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
|
|
|
2
Paragon Drive
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||
|
Montvale,
New Jersey 07645
|
||
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Attention: General
Counsel
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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
-16-
Agreement. Other
than as contemplated by this Agreement, the Employee may not assign his rights
or duties under this Agreement.
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
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) except as disclosed to the Company by the Employee,
the Employee is not a party to or bound by any employment agreement, transition
services agreement, noncompetition agreement, nonsolicitation agreement or
confidentiality agreement with any other 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.
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|
THE
GREAT ATLANTIC & PACIFIC TEA
COMPANY,
INC.
|
|
By: /s/ Christian
Haub
|
|
Name: Christian Haub
Title: Executive Chairman
|
|
/s/ Ronald Marshall
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Ronald
Marshall
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