Exhibit 10.0.7

 

September 6, 2002

 

Ms. Karen E. Salem

[ADDRESS]

 

Dear Karen:

 

This letter will serve as an offer of Winn-Dixie Stores, Inc. to employ you as
our Senior Vice President, Chief Information Officer. We anticipate that your
employment will commence on September 18, 2002. It will be recommended to the
Board of Directors at its next meeting that you be elected an Officer of the
Company as of the date you commence employment.

 

Base Salary, Annual and Long-Term Incentive

 

From the start of your employment through the fiscal year ending June 25, 2003,
we will pay you a base salary of $300,000 per full year, payable monthly in
arrears on the last banking day of the month. Based on the proposed start date
above, you will also be granted a prorated annual Perquisite Benefit of
approximately $19,300 for 2002. For the fiscal year ended June 25, 2003, you
will be eligible to receive the prorated cash annual incentive bonus provided
under the Company’s Officer Compensation Program, which shall be targeted at 60%
of your base salary (which is partially uncapped). In addition, you will receive
options to purchase approximately 18,950 shares of the Company’s common stock,
at an exercise price per share equal to the New York Stock Exchange close on the
date determined by the Program. You will also be granted at that time,
approximately 5,275 shares of the Company’s restricted stock. (Note that the
number of options and shares shown above are based on the market closing price
of $15.38 on September 5, 2002 and a start date of September 16, 2002. Actual
numbers granted will be based upon a closing stock price for a future date, and
may therefore be different. In addition, if your starting date changes, the
number of shares and/or options granted may also change.) You will also be
granted a contingent cash payment (for purposes of partially offsetting the tax
consequences of the restricted stock) equal to the value, when issued, of the
aforementioned restricted stock. These options, restricted stock, and contingent
cash payments will vest over a three-year period starting August 7, 2002, with
the first one-third vesting on August 7, 2003. More detailed information
regarding the terms of these stock options and restricted shares will be
supplied to you in due course.

 

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September 6, 2002

 

Full Year Example:

 

The following chart illustrates the value of a full year’s compensation at “on
target” performance:

 

Base salary

   $ 300,000  

Perquisite Benefit

   $ 25,000  

Annual Incentive

   $ 180,000 (partially uncapped)

Long Term Incentive

        

•      Stock Options

   $ 210,000  

•      Restricted Stock

   $ 105,000  

•      Contingent Cash

   $ 105,000       

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Total

   $ 925,000  

 

You will have the various Company benefits, including four weeks of paid
vacation, and be entitled to participate in the various plans generally
available to Officers of the Company. The Company will also reimburse you for
your COBRA expenses during the waiting period (first of the month following 90
days of service) for medical and dental benefits, less the employee
contributions that would have been required had you been covered on the
Winn-Dixie plans.

 

Severance and Change-in-Control

 

You will be covered by our Officer Severance Policy, which calls for severance
of 18 months base salary, plus 1 year of target bonus, plus 18 months of benefit
continuation for involuntary termination other than “for cause”. (All components
are promoted during the first year of employment.)

 

In the event of a Change-in-Control as defined in the Officer Compensation
Program, in conjunction with your involuntary termination other than “for cause”
within one year of the Change-in-Control, or your resignation due to a material
change in your work responsibilities, title, location, or reduction of
compensation within one year of a Change-in-Control, severance will be payable.

 

Relocation

 

In connection with your relocation, we have agreed that the Company, upon
receipt of appropriate documentation, will reimburse you for your reasonable
expenses, as provided in our Relocation Policy number 7001 (attached). Please
read the document and sign the agreement inserted in the back of the policy,
once you accept our offer of employment. Send the original back with the signed
copy of your offer letter, but fax back this form as directed on the form, to
start the relocation process in the meantime. Note that if you voluntarily leave
the company one year or less after your start date, you will be required to
repay back to Winn-Dixie one hundred percent of the relocation costs and
associated expenses paid on your behalf. If you voluntarily leave the company
between one and two years of your start date, you will be required to repay back
to Winn-Dixie fifty percent of the relocation costs and associated expenses paid
on your behalf.

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Page Three

September 6, 2002

 

Our offer of employment at Winn-Dixie Stores, Inc., is of course, contingent
upon your submission of satisfactory proof of your identity and your legal
authorization to work in the United States, along with successful completion of
the Company’s drug test and background check.

 

The terms set forth in this letter shall be binding on Winn-Dixie and you
through September 16, 2003, subject to your satisfactory performance of the
duties of your position. After that date, your employment will be at the will
and discretion of Winn-Dixie on the one hand, and you on the other hand, and
either party may terminate such employment at any time with or without reason or
cause.

 

If this letter correctly states your understanding of the offer which you have
accepted, please so indicate by signing and returning the enclosed copy of this
letter to August B. Toscano, Senior Vice, Human Resources, in an envelope marked
Personal & Confidential, at your earliest convenience.

 

We look forward to having you with us.

 

Very truly yours,

 

/s/ Al Rowland

 

/s/ Karen E. Salem

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9/9/02

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Agreed To

 

Date

 

Encl.

 

cc: A. Toscano

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February 20, 2004

 

Mrs. Karen Salem

[ADDRESS]

 

Dear Karen:

 

In recognition of your contribution to the Company and the value your efforts
have on the organization, I am pleased to advise you that your base salary will
be increased as of March 1, 2004, from $300,000 per year to $320,000 per year.

 

In addition, I am pleased to advise you that on March 1, 2004, you will be
granted 50,000 non-qualified stock options with a strike price of the closing
price on that day. Also, on that date, you will be granted 20,000 shares of
restricted stock, and a contingent cash grant equal to the value of those shares
based on the grant date’s closing price. The options, restricted stock, and
contingent cash will vest 50% on March 1, 2006, and the remaining 50% on March
1, 2007, if you remain employed by the Company through those dates.

 

In addition, your protection under a Change In Control (as defined in the
Restricted Stock Plan) has been increased to three times your then-current base
salary, plus three times your target annual incentive. Also, severance for
involuntary termination without cause* has been increased to two times your
then-current base salary, plus two times your annual target incentive.

 

I want to personally thank you for your continued support.

 

Sincerely,

 

/s/ Frank Lazaran

 

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Frank Lazaran

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* Cause is defined as gross misconduct in the performance of duties or
conviction of any felony involving moral turpitude.