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Exhibit 10.1
EMPLOYMENT AGREEMENT
AGREEMENT, made and entered into by and between THE GREAT ATLANTIC
&
PACIFIC TEA COMPANY, INC. (the "Company"), and DR. ANDREAS GULDIN
(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 promises and mutual
covenants
contained herein and for other good and valuable consideration, the
Parties,
intending to be legally bound, agree as follows:
1. Term of Employment.
(a) The Company agrees to continue to employ the Employee, and
the
Employee agrees to remain in the employment of the Company, in
accordance with
the terms and provisions of this Agreement, for the period set
forth below (the
"Employment Period").
(b) The Employment Period under this Agreement shall commence as of
May
1, 2007 and, subject only to the provisions of Sections 7, 8 and 9
below
relating to termination of employment, shall continue until (i) the
close of
business on April 30, 2010 or (ii) such later date as shall result
from the
operation of subparagraph (c) below (the "Terminal Date").
(c) Commencing on December 1, 2008, and on the first day of each
month
thereafter (such date and each such first day, the "Renewal Date")
the Terminal
Date set forth in subparagraph (b) above shall be extended so as to
occur
eighteen months from the Renewal Date unless either the Company or
the Employee
shall have given written notice to the other Party on or before
such Renewal
Date that the Terminal Date is not to be extended.
2. Duties. It is the intention of the Parties that during the term
of
his employment under this Agreement, the Employee will serve as the
Executive
Managing Director, Strategy & Corporate Development, reporting
to the Executive
Chairman of the Company. The Employee will devote his full business
time and
attention to the affairs of the Company and his duties as Executive
Managing
Director, Strategy & Corporate Development. The Employee will
have such duties
as are appropriate to his position, and will have such authority as
required to
enable him to perform these duties. The Employee will also serve as
a member of
the Board of Directors, as Tengelmann's representative.
3. Salary and Incentive Compensation.
3.1 Salary. The Company will pay the Employee a base salary at
an
initial annual rate of not less than $450,000.00, which base salary
as in effect
from time to time will not be reduced and will be reviewed
periodically (at
intervals of not more than twelve (12) months) by the Compensation
Committee of
the Board of Directors (the "Board") for the purpose of considering
increases
thereof. In evaluating increases in the Employee's base salary, the
Compensation
Committee of the Board will take into account such factors as
corporate
performance, individual merit, and such other considerations as it
deems
appropriate. The Employee's base salary will be paid in accordance
with the
standard practices for other corporate executives of the
Company.
3.2 Annual 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 of the Board or such other authorized
committee of
the Board determines to award or grant. For fiscal year 2007, the
Employee will
participate in the Management Incentive Program at an annual
incentive target of
77.7% of annual base salary ($350,000.00).
3.3 Long-Term Incentive. Effective May 1, 2007, the Employee
will
participate in the 2007 Long Term Incentive Plan (LTIP) at a Total
LTIP Target
of $1,200,000.00, which is 150% of the Employee's total annual
cash
compensation. Of the Total LTIP Target, 75% will be issued to the
Employee in
the form of a grant of Restricted Stock Units (Units) pursuant to
the Company's
1998 Long Term Incentive and Share Award Plan (the "Plan"), and 25%
will be
issued to the Employee in the form of a grant of Non-Qualified
Stock Options
(Options), also pursuant to the Plan. The grant letter will provide
that the
options will not be forfeited in the event the Employee's
employment with the
Company ends in connection with his reactivation of employment with
Tengelmann
Warenhandelsgesellschaft KG or any of its affiliates ("Tengelmann")
and as long
as he remains an employee of Tengelmann on all of the vesting dates
set forth in
the grant letter. In addition, if the Employee terminates his
employment in
connection with his commencement of employment with Tengelmann, the
Compensation
Committee of the Board shall have the authority to provide for such
treatment of
outstanding Units to the Employee (including, without limitation,
the
accelerated vesting of all or any portion of any such awards) and
the payout of
benefits to the Employee as the Compensation Committee determines
in its sole
discretion to be equitable under the circumstances.
3.4 Special Award. Effective May 1, 2007, the Company will grant to
the
Employee 15,000 Performance Restricted Stock Units pursuant to the
Company's
1998 Long Term Incentive and Share Award Plan, 5,000 of which will
vest on the
closing date of the Pathmark transaction, 5,000 of which will vest
on the
one-year anniversary of the closing date, and the remaining 5,000
of which will
vest on the two-year anniversary of the closing date. The grant
letter will
provide that any earned RSU's will not be forfeited in the event
the Employee's
employment with the Company ends in connection with his
reactivation of
employment with Tengelmann and as long as he remains an employee of
Tengelmann
on all of the vesting dates set forth in the grant letter.
4. Benefit Programs. The Employee will receive such benefits
and
awards, including without limitation stock options and restricted
share awards,
as the Compensation Committee of the Board shall determine and will
be eligible
to participate in all employee benefit plans and programs of the
Company from
time to time in effect for the benefit of senior executives of the
Company,
including, but not limited to, pension and other retirement plans,
group life
insurance, hospitalization and surgical and major medical coverage,
sick leave,
salary continuation arrangements, vacations and holidays, long-term
disability,
and such other benefits as are or may be made available from time
to time to
senior executives of the Company. In addition, the Company will
permit the
Employee to take up to 20 business days of unpaid leave per
calendar year. The
Employee must submit requests for such leave, which at a minimum
must be five
consecutive business days in duration, to the Executive Chairman
for approval.
5. Business Expenses and Perquisites. The Employee will be
reimbursed
for all reasonable expenses incurred by him in connection with the
conduct of
the business of the Company, provided he properly accounts therefor
in
accordance with the Company's policies. He will also be entitled to
such other
perquisites as are customary for senior executives of the Company.
The Employee
will also be reimbursed for housing costs for up to three years
from May 1,
2007.
6. Office and Services Furnished. The Company shall furnish the
Employee with office space, secretarial assistance and such other
facilities and
services as shall be suitable to the Employee's position and
adequate for the
performance of his duties hereunder.
7. Termination of Employment by the Company.
7.1 Involuntary Termination by the Company Other Than For Permanent
and
Total Disability or For Cause. The Company may terminate the
Employee's
employment at any time and for any reason (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 or Section 11, whichever is applicable.
7.2 Termination Due to Permanent and Total Disability. If the
Employee
incurs a Permanent and Total Disability, as defined below, the
Company may
terminate the Employee's employment by giving him written notice of
termination
at least 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 is unable to substantially carry out his duties
under this
Agreement by reason of any medically determinable physical or
mental impairment
which can be expected to result in death or which has lasted or can
be expected
to last for a continuous period of not less than 12 months. The
existence of
such Permanent and Total Disability shall be determined by the
Compensation
Committee of the Board of Directors of the Company and shall be
evidenced by
such medical certification as the Secretary of the Company shall
require.
7.3 Termination for Performance. The Company may terminate the
Employee's employment for Performance if the Employee fails to
meet
satisfactorily the performance goals established for the Employee.
The
determination as to whether the Employee has met satisfactorily
such performance
goals shall be determined by the Company 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 the
Employee failed to
meet. In the event of such termination of the Employee's employment
for
Performance, 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
reimbursement
amounts owing under Section 5. Furthermore, the Employee, upon his
execution of
a Confidential Separation and Release Agreement, shall be entitled
to the
following:
(a) The Company shall pay to the Employee as a severance benefit
a
total of fifty-two (52) weeks of base salary continuation. Such
salary
continuation payments will be made to the Employee on the Company's
normal and
routine bi-weekly pay dates. In the event that the Employee dies
before the end
of such 52-week period, the payments for the remainder of such
period shall be
paid to the Employee's estate.
(b) 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 (b) 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 (b).
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 reasonable
instructions, (iii)
the Employee willfully engages in conduct which is or would
reasonably be
expected to be materially and demonstrably injurious to the
Company, (iv) the
Employee willfully engages in an act or acts of dishonesty
resulting in material
personal gain to the Employee at the expense of the Company, (v)
the Employee is
convicted of a felony, (vi) the Employee engages in an act or acts
of gross
malfeasance in connection with his employment hereunder, (vii) the
Employee
commits a material breach of the confidentiality provision set
forth in Section
15, or (viii) the Employee exhibits demonstrable evidence of
alcohol or drug
abuse having a substantial adverse effect on his job performance
hereunder. The
Company shall exercise its right to terminate the Employee's
employment for
Cause by giving him written notice of termination 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 (i) his base salary
pursuant to
Section 3.1 and any other compensation and benefits to the extent
actually
earned pursuant to this Agreement or any benefit plan or program of
the Company
as of the date of such termination at the normal time for payment
of such
salary, compensation or benefits and (ii) any amounts owed under
the
reimbursement policy of Section 5.
8. Termination of Employment by the Employee.
(a) Good Reason. The Employee may terminate his employment for
Good
Reason by giving the Company a written notice of termination at
least
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
or
Section 11, whichever is applicable. For purposes of this
Agreement,
Good Reason shall mean (i) a significant reduction in the scope of
the
Employee's authority, functions, duties or responsibilities from
that
which is contemplated by this Agreement, (ii) any reduction in
the
Employee's base salary, or (iii) a significant reduction in the
employee benefits provided to the Employee other than in
connection
with an across-the-board reduction similarly affecting
substantially
all senior executives of the Company. If an event constituting a
ground
for termination of employment for Good Reason occurs, and the
Employee
fails to give notice of termination within 3 months after the
occurrence of such event, the Employee shall be deemed to have
waived
his right to terminate employment for Good Reason in connection
with
such event (but not for any other event for which the 3-month
period
has not expired).
(b) Other. The Employee may terminate his employment at any time
and
for any reason, other than pursuant to subsection (a) above, by
giving
the Company a written notice of termination to that effect at least
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
(No
Change of Control). If (a) the Employee's employment with the
Company
shall terminate (i) because of termination by the Company pursuant
to
Section 7.1 other than for Cause or Performance or Permanent and
Total
Disability, or (ii) because of termination by the Employee for
Good
Reason pursuant to Section 8(a), and (b) such termination of
employment
does not occur within 13 months following a "Change of Control" of
the
Company (as defined in Section 12), the Employee, upon execution of
a
Confidential Separation and Release Agreement, shall be entitled to
the
following:
(a) The Company shall pay to the Employee his base salary pursuant
to
Section 3.1 and any other compensation and benefits to the
extent
actually earned by the Employee under this Agreement or any
benefit
plan or program of the Company as of the date of such termination
at
the normal time for payment of such salary, compensation or
benefits.
(b) The Company shall pay the Employee any reimbursement amounts
owing
under Section 5.
(c) The Company shall pay to the Employee as a severance benefit
for
each month during the 18-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 i
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