FORM OF
INDEMNIFICATION AGREEMENT
This
Indemnification Agreement, made and entered into as of the 4
th day of August, 2009 (“Agreement”),
by and between The Great Atlantic & Pacific Tea Company, Inc.,
a Maryland corporation (“Company”), and [ ]
(“Indemnitee”):
WHEREAS, highly
competent persons have become more reluctant to serve corporations
as directors, officers or in other capacities unless they are
provided with adequate protection through insurance or adequate
indemnification against inordinate risks of claims and actions
against them arising out of their service to and activities on
behalf of such corporations;
WHEREAS, the Board
of Directors of the Company (the “Board”) has
determined that, in order to attract and retain qualified
individuals, the Company will attempt to maintain on an ongoing
basis, at its sole expense, liability insurance to protect persons
serving the Company and its subsidiaries from certain liabilities.
Although the furnishing of such insurance has been a customary and
widespread practice among United States-based corporations and
other business enterprises, the Company believes that, given
current market conditions and trends, such insurance may be
available to it in the future only at higher premiums and with more
exclusions. At the same time, directors, officers, and other
persons in service to corporations or business enterprises are
being increasingly subjected to expensive and time-consuming
litigation relating to, among other things, matters that
traditionally would have been brought only against the business
enterprise itself;
WHEREAS, the
uncertainties relating to such insurance and to indemnification
have in-creased the difficulty of attracting and retaining such
persons;
WHEREAS, the Board
has determined that the increased difficulty in attracting and
retaining such persons is detrimental to the best interests of the
Company’s stockholders and that the Company should act to
assure such persons that there will be increased certainty of such
protection in the future;
WHEREAS, this
Agreement is a supplement to and in furtherance of the charter of
the Company (the “Charter”) and the by-laws of the
Company (the “By-Laws”) and any resolutions adopted
pursuant thereto, and shall not be deemed a substitute therefor,
nor to diminish or abrogate any rights of Indemnitee
thereunder;
WHEREAS,
Section 2-418 of the Maryland General Corporation Law (the
“MGCL”) expressly recognizes that the indemnification
provisions of such section are not exclusive of any other rights to
which a person seeking indemnification may be entitled under the
Charter, the By-Laws, a resolution of stockholders or directors,
any agreement or otherwise;
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WHEREAS, the
indemnification provisions of the Charter and By-Laws are
nonexclusive and, therefore, contemplate that contracts may be
entered into with respect to indemnification of directors,
officers, employees and agents;
WHEREAS, it is
reasonable, prudent and necessary for the Company contractually to
obligate itself to indemnify, and to advance expenses on behalf of,
such persons to the fullest extent permitted by applicable law so
that they will serve or continue to serve the Company free from
undue concern that they will not be so indemnified; and
WHEREAS,
Indemnitee is willing to serve, continue to serve and to take on
additional service for or on behalf of the Company on the condition
that Indemnitee be so indemnified;
NOW, THEREFORE, in
consideration of the premises and the covenants contained herein,
the Company and Indemnitee, intending to be legally bound, do
hereby covenant and agree as follows:
Section 1.
Services by Indemnitee.
Indemnitee agrees
to serve as a director, officer, employee and/or agent of the
Company and/or any of its subsidiaries and may serve, at the
request of the Company, as a director, officer, employee and/or
agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise (a “Relevant
Enterprise”). Indemnitee may at any time and for any reason
resign from such position (subject to any other contractual
obligation or any obligation imposed by operation of law), in which
event the Company shall have no obligation under this Agreement to
continue Indemnitee in such position. This Agreement shall not be
deemed an employment contract between the Company (or any of its
subsidiaries) and Indemnitee. Indemnitee specifically acknowledges
that Indemnitee’s employment with the Company (or any of its
subsidiaries), if any, is “at will,” and Indemnitee may
be discharged at any time for any reason, with or without cause,
except as may be otherwise provided in any written employment
contract between Indemnitee and the Company (or any of its
subsidiaries), other applicable formal severance policies duly
adopted by the Board, or, with respect to service as a director of
the Company and/or any of its subsidiaries, under applicable law,
by the relevant company’s charter or by-laws (or other
relevant organizational documents). The foregoing notwithstanding,
this Agreement shall continue in force after Indemnitee has ceased
to serve as a director, officer, employee and/or agent, as the case
may be, of the Company and its subsidiaries or of a Relevant
Enterprise.
Section 2.
Indemnification — General
The Company,
without duplication, shall indemnify, and advance Expenses (as
hereinafter defined) to, Indemnitee (a) as provided in this
Agreement and (b) (subject to the provisions of this Agreement) to
the fullest extent permitted by applicable law in effect on the
date hereof and as amended from time to time. The rights of
Indemnitee provided under the preceding sentence shall include, but
shall not be limited to, the rights set forth in the other Sections
of this Agreement.
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Section 3.
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Proceedings Other Than Proceedings
by or in the
Right of the Company and/or any of its
Subsidiaries.
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Indemnitee shall
be entitled to the rights of indemnification provided in this
Section 3 if, by reason of his or her Corporate Status (as
hereinafter defined), he or she is, or is threatened to be made, a
party to or a participant in any Proceeding (as hereinafter
defined), other than a Proceeding by or in the right of the Company
and/or any of its subsidiaries. Pursuant to this Section 3,
Indemnitee shall be indemnified against all Expenses (including all
interest, assessments and other charges paid or payable in
connection with or in respect of such Expenses), judgments,
penalties, fines and amounts paid in settlement actually and
reasonably incurred by him or her or on his or her behalf in
connection with such Proceeding or any claim, issue or matter
therein, unless it is established that (a) the act or omission
of Indemnitee was material to the matter giving rise to the
Proceeding and (i) was committed in bad faith or (ii) was
the result of active and deliberate dishonesty, (b) Indemnitee
actually received an improper personal benefit in money, property
or services, or (c) in the case of any criminal Proceeding,
Indemnitee had reasonable cause to believe that his or her conduct
was unlawful.
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Section 4.
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Proceedings by or in the Right of
the
Company and/or any of its Subsidiaries.
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Indemnitee shall
be entitled to the rights of indemnification provided in this
Section 4 if, by reason of his or her Corporate Status, he or
she is, or is threatened to be made, a party to or a participant in
any Proceeding brought by or in the right of the Company and/or any
of its subsidiaries to procure a judgment in its favor. Pursuant to
this Section 4, Indemnitee shall be indemnified against all
Expenses (including all interest, assessments and other charges
paid or payable in connection with or in respect of such Expenses),
judgments, penalties, tines and amounts paid in settlement actually
and reasonably incurred by him or her or on his or her behalf in
connection with such Proceeding, unless it is established that
(a) the act or omission of Indemnitee was material to the
matter giving rise to such a Proceeding and (i) was committed
in bad faith or (ii) was the result of active and deliberate
dishonesty or (b) Indemnitee actually received an improper
personal benefit in money, property or services. Indemnitee is not
entitled to indemnification in connection with any Proceeding by or
in the right of the Company in which he or she was adjudged liable
to the Company, except as provided in Section 5 of this
Agreement.
Section 5.
Court-Ordered Indemnification.
Notwithstanding
any other provision of this Agreement, a court of appropriate
jurisdiction, upon application of Indemnitee and such notice as the
court shall require, may order indemnification in the following
circumstances:
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(a) if it
determines Indemnitee is entitled to indemnification under the
MGCL, the court may order indemnification, in which case Indemnitee
shall be entitled to recover, among other amounts, the expenses of
securing such indemnification; or
(b) if it
determines that Indemnitee is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances, whether
or not Indemnitee (i) has met the standards of conduct set
forth in Section 2-418(b) of the MGCL or (ii) has been
adjudged liable for receipt of an improper personal benefit under
Section 2-418(c) of the MGCL, the court may order such
indemnification as the court shall deem proper. However,
indemnification with respect to any Proceeding by or in the right
of the Company or in which liability shall have been adjudged in
the circumstances described in Section 2-418(c) of the MGCL,
shall be limited to Expenses.
Section 6.
Partial Indemnification.
Notwithstanding
any other provision of this Agreement, to the extent that
Indemnitee is, by reason of his or her Corporate Status, a party to
(or a participant in) and is successful, on the merits or
otherwise, in defense of any Proceeding, he or she shall be
indemnified against all Expenses actually and reasonably incurred
by him or her or on his or her behalf in connection therewith. If
Indemnitee is not wholly successful in defense of such Proceeding
but is successful, on the merits or otherwise, as to one or more
but less than all claims, issues or matters in such Proceeding, the
Company shall indemnify, without duplication, Indemnitee against
all Expenses actually and reasonably incurred by him or her or on
his or her behalf in connection with each successfully resolved
claim, issue or matter. For purposes of this Section and without
limitation, the termination of any claim, issue or matter in such a
Proceeding by dismissal, with or without prejudice, shall be deemed
to be a successful result as to such claim, issue or matter. If
Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of the
Expenses, judgments, penalties, fines and amounts paid in
settlement {including all interest, assessments and other charges
paid or payable in connection with or in respect of such Expenses,
judgments, penalties, fines and amounts paid in settlement)
actually and reasonably incurred by him or her or on his or her
behalf in connection with such Proceeding or any claim, issue or
matter therein, but not, however, for the total amount thereof, the
Company shall nevertheless indemnify, without duplication,
Indeinnitee for the portion to which Indemnitee is
entitled.
Section 7.
Indemnification for Additional Expenses.
(a) The
Company shall indemnify, without duplication, Indemnitee against
any and all Expenses and, if requested by Indemnitee, shall (within
seven (7) business days of such request) advance such Expenses
to Indemnitee, which are incurred by Indemnitee in connection with
any action brought by Indemnitee for (i) indemnification or
advance payment of Expenses by the Company under this Agreement or
any other agreement, the Charter or the By-Laws now or hereafter in
effect; or (ii) recovery under any directors’ and
officers’ liability insurance policies
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maintained by
the Company, regardless of whether Indemnitee ultimately is
determined to be entitled to such indemnification, advance expense
payment or insurance recovery, as the case may be.
(b) Notwithstanding
any other provision of this Agreement, to the extent that
Indemnitee is, by reason of his or her Corporate Status, a witness
in any Proceeding to which Indemnitee is not a party, he or she
shall be indemnified against all Expenses actually and reasonably
incurred by him or her or on his or her behalf in connection
therewith.
Section 8.
Advancement of Expenses.
The Company shall
advance, without duplication, all reasonable Expenses incurred by
or on behalf of Indemnitee in connection with any Proceeding within
seven (7) days after the receipt by the Company of a statement
or statements from Indemnitee requesting such advance or advances
from time to time, whether prior to or after final disposition of
such Proceeding. Such statement or statements shall reasonably
evidence the Expenses incurred by Indemnitee and shall include or
be preceded or accompanied by a written affirmation by Indemnitee
of lndemnitiee’s good faith belief that the standard of
conduct necessary for indemnification by the Company as authorized
by law and by this Agreement has been met and a written undertaking
by or on behalf of Indemnitee, in such form as may be required by
applicable law as in effect at the time of the execution thereof,
to repay any Expenses advanced if it shall ultimately be determined
that Indemnitee is not entitled to be indemnified against such
Expenses. The written undertaking required by this Section 8
shall be an unlimited general obligation by or on behalf of
Indemnitee and shall be accepted without reference to
Indemnitee’s financial ability to repay such advanced
Expenses and without any requirement to post security therefor.
Notwithstanding the foregoing, the obligation of the Company to
advance Expenses pursuant to this Section 8 shall be subject
to the condition that, if, when and to the extent that the Company
determines that Indemnitee would not be permitted to be indemnified
under applicable law, the Company shall be entitled to be
reimbursed, within thirty (30) days of such determination, by
Indemnitee (who hereby agrees to reimburse the Company) for all
such amounts theretofore paid; provided, however, that if
Indemnitee has commenced or thereafter commences legal proceedings
in a court of competent jurisdiction to secure a determination that
Indemnitee should be indemnified under applicable law, any
determination made by the Company that Indemnitee would not be
permitted to be indemnified under applicable law shall not be
binding and Indemnitee shall not be required to reimburse the
Company for any advance of Expenses until a final judicial
determination is made with respect thereto (as to which all rights
of appeal therefrom have been exhausted or lapsed).
Section 9.
Procedure for Determination of Entitlement to
Indemnification
(a) To
obtain indemnification under this Agreement, Indemnitee shall
submit to the Company a written request, including therein or
therewith such documentation and information as is reasonably
available to Indemnitee and is reasonably necessary to
determine
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whether and to
what extent Indemnitee is entitled to indemnification. The
Secretary of the Company shall, promptly upon receipt of such a
request for indemnification, advise the Board in writing that
Indemnitee has requested indemnification.
(b) Upon
written request by Indemnitee for indemnification pursuant to the
first sentence of Section 9(a) hereof, a determination, if required
by applicable law, with respect to Indemnitee’s entitlement
thereto shall be made in the specific case: (i) if a Change of
Control (as hereinafter defined) shall have occurred since the date
of this Agreement, by Independent Counsel (as hereinafter defined)
in a written opinion to the Board, a copy of which shall be
delivered to Indemnitee; or (ii) if a Change of Control shall
not have occurred, (A) by the Board by a majority vote of a
quorum consisting of Disinterested Directors (as hereinafter
defined), or (B) if such a quorum consisting of Disinterested
Directors cannot be obtained, then by a majority vote of a
committee of the Board consisting of two or more Disinterested
Directors, each of whom was duly designated to act in the matter by
a majority vote of the full Board in which the members of the Board
who are not Disinterested Directors may participate, or (C) if
the requirements set forth in (A) or (B) above are not
satisfied, or if directed by a quorum of Disinterested Directors or
a majority vote of a duly authorized committee satisfying the
requirements set forth in (A) or (B) above, as applicable, by
Independent Counsel in a written opinion to the Board, a copy of
which shall be delivered to Indemnitee, or (D) if so directed
by the Board, by the stockholders of the Company; and, if it is so
determined that Indemnitee is entitled to indemnification, payment
to Indemnitee shall be made within seven (7) days after such
determination. Indemnitee shall cooperate with the person, persons
or entity making such determination with respect to
Indemnitee’s entitlement to indemnification, including
providing to such person, persons or entity upon reasonable advance
request any documentation or information which is not privileged or
otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such
determination. Any costs or expenses (including attorneys’
fees and disbursements) incurred by Indemnitee in so cooperating
with the person, persons or entity making such determination shall
be borne by the Company (irrespective of the determination as to
Indemnitee’s entitlement to indemnification), and the Company
hereby agrees to indemnify and to hold Indemnitee harmless
therefrom.
(c) In
the event the determination of entitlement to indemnification is to
be made by Independent Counsel pursuant to Section 9(b) hereof, the
Independent Counsel shall be selected as provided in this
Section 9(c). The Independent Counsel shall be selected by
(A) a majority vote of a quorum consisting of Disinterested
Directors, or (B) if such a quorum consisting of Disinterested
Directors cannot be obtained, then by a majority vote of a
committee of the Board consisting of two or more Disinterested
Directors, each of whom was duly designated to act in the matter by
a majority vote of the full Board in which the members of the Board
who are not Disinterested Directors may participate, or (C) if
not selected pursuant to (A) or (B) above, by a majority
vote of the full Board in which the members of the Board who are
not Disinterested Directors may participate, and the Company shall
give written notice to Indemnitee advising him or her of the
identity of the Independent Counsel so selected. Indemnitee may,
within 10
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days after such
written notice of selection shall have been given, deliver to the
Company a written objection to such selection; provided,
however, that such objection may be asserted only on the ground
that the Independent Counsel so selected does not meet the
requirements of “Independent Counsel” as defined in
Section 18 of this Agreement, and the objection shall set
forth with particularity the factual basis of such assertion. If
such written objection is so made and substantiated, the
Independent Counsel so selected may not serve as Independent
Counsel unless and until such objection is withdrawn or a court has
determined that such objection is without merit. If, within
20 days after submission by Indemnitee of a written request
for indemnification pursuant to Section 9(a) hereof, no Independent
Counsel shall have been selected and not objected to, either the
Company or Indemnitee, as the case may be, may petition an
appropriate court of the State of Maryland (a “Maryland
Court”) for resolution of any objection which shall have been
made by the Indemnitee to the Company’s selection of
Independent Counsel and/or for the appointment as Independent
Counsel of a person selected by the Maryland Court or by such other
person as the Maryland Court shall designate, and the person with
respect to whom all objections are so resolved or
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