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
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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 ...